The Egmont Foundation: Annual report 2012

THE EGMONT FOUNDATION Annual Report 2012 CVR No.: 11456111

The Egmont Foundation Vognmagergade 11 1148 Copenhagen K Telephone: +45 3330 5550 Fax: +45 3332 4508 www.egmont.com egmont@egmont.com Registered office: Copenhagen

Contents Management’s Review ........................................................................................................................... 4 Consolidated Financial Highlights ........................................................................................................ 4 Record Profit ....................................................................................................................................... 5 TV 2, Norway ...................................................................................................................................... 7 Nordisk Film ........................................................................................................................................ 9 Egmont Magazines .............................................................................................................................. 11 Egmont Kids Media ............................................................................................................................. 13 Egmont Books ..................................................................................................................................... 15 The Charitable Activities ...................................................................................................................... 17 Profit for the Egmont Foundation ........................................................................................................ 19 Corporate Governance ........................................................................................................................ 19 Corporate Social Responsibility ............................................................................................................ 19 Special Risks ........................................................................................................................................ 20 Outlook for 2013 ................................................................................................................................ 20 Statement by the Board of Trustees and Management Board ...................................................................... 21 Independent Auditor’s Report .................................................................................................................... 22 Consolidated Financial Statements Income Statement of the Group ........................................................................................................... 24 Statement of Comprehensive Income of the Group .............................................................................. 25 Balance Sheet of the Group ................................................................................................................. 26 Cash Flow Statement of the Group ...................................................................................................... 28 Statement of Changes in Equity of the Group ....................................................................................... 29 List of Notes to the Consolidated Financial Statements ......................................................................... 31 Notes to the Consolidated Financial Statements ................................................................................... 32 Financial Statements of the Egmont Foundation Income Statement of the Egmont Foundation ...................................................................................... 69 Balance Sheet of the Egmont Foundation ............................................................................................. 70 Notes of the Egmont Foundation ......................................................................................................... 71 Board of Trustees and Management Board of the Egmont Foundation ................................................. 74

Management’s review Consolidated financial highlights 2012 2011 2010 2009 2008

(FSA) Key figures (EUR million) Revenue

1,616.9

1,386.3

1,423.1

1,443.1

1,564.8

Profit before net financials, depreciation, amortisation and impairment

186.9

150.4

166.2

152.5

100.4

Operating profit

106.1 *

87.5

82.4

65.6

20.6

Special items

67.3

0.0

0.0

0.0

0.0

Profit/(loss) on net financials

(4.6)

6.2

(7.0)

(1.6)

(5.6)

- of which profit/(loss) from 2.1 8.3 (3.7) (8.8) (5.6) investments in associates - of which financial income and (6.7) (2.1) (3.3) 7.2 0.0 expenses, net Profit before tax (EBT)

168.7

93.7

75.3

64.0

15.1

Net profit for the year

151.2

73.6

49.6

66.2

2.6

1,604.4

1,294.8

1,267.0

1,192.4

1,111.9

Investments in intangible assets

45.1

43.6

41.6

40.6

57.7

Investments in property, plant and equipment

37.0

18.8

23.3

19.6

27.5

Net interest-bearing debt/(net balance)

119.0

(104.7)

(76.7)

31.2

145.2

Equity

676.4

505.9

461.1

421.5

382.1

Cash generated from operations

163.4

107.4

196.9

178.3

84.6

Balance sheet total

Financial ratios (%) Operating margin

6.6 *

6.3

5.8

4.5

1.3

Equity ratio

42.0

38.4

35.8

34.8

32.8

Return on equity

25.4

15.2

11.0

16.2

0.2

4,615

4,161

4,312

4,754

5,134

Average number of employees

* Calculated before special items.

The key figures and financial ratios for 2012, 2011, 2010 and 2009 have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU. The key figures and financial ratios for 2008 have not been adapted to IFRS and have been prepared in accordance with the Danish Financial Statements Act (FSA).

The financial ratios have been calculated in accordance with the Danish Society of Financial Analysts’ ‘Recommendations and Financial Ratios 2010’. Please see the definitions and terms used in the accounting policies.

4

Management’s review

Egmont is a leading media group in the Nordic region.

Our media world spans TV, films, cinemas, magazines, books and interactive games.

Egmont has 6,400 dedicated employees and publishes media in more than 30 countries.

Our vision is to be the most attractive media group for our employees and business partners as well as consumers. Creating and telling stories on all platforms is at the heart of all Egmont’s activities.

Since its inception in 1878 Egmont has sought to contribute positively to society at large – as a workplace and cultural broker and through donations to charitable causes that will help improve the lives of vulnerable children and young people.

In February 2012 Egmont acquired the remaining 50 % of the shares in TV 2, Norway, for a price of NOK 2.1 billion (EUR 281.0 million), and TV 2 was fully recognised in Egmont’s consolidated financial statements as of 1 February 2012.

The operating profit * climbed from EUR 87.5 million in 2011 to EUR 106.1 million in 2012.

Egmont’s business areas have had a strong year and have all contributed to the record performance. Income from screen-based media has developed favourably, income flows from new digital business have increased, and the company’s publications and productions have generally enjoyed success.

In 2012 special items of net EUR 67.3 million were recognised­as income, relating to the value adjustment and impairment losses of TV 2 (a net amount of EUR 75.3 million) and the costs of closing printing facilities (EUR 8.0 million)­.

Net financials (excl. profit/(loss) from investments in associates) amounted to EUR (6.7) million against EUR (2.1) million in 2011. The increase is due mainly to the financial expenses associated with acquiring the remaining 50 % shares in TV 2.

Accordingly, the Group recorded a pre-tax profit of EUR 168.7 million in 2012 against EUR 93.7 million in 2011.

Record profit Revenue Egmont’s total net revenue for 2012 amounted to EUR 1,616.9 million, a 16.6 % growth compared to 2011.

Growth in the film distribution and cinema business in Nordisk Film and organic growth in TV 2 contributed to the advance in revenue. The acquisition of the remaining 50 % shares in TV 2 had an additional impact.

Earnings Profit before net financials, depreciation, amortisation and impairment losses amounted to EUR 186.9 million in 2012, up 24.3 % on the year before.

Tax on the profit for the year amounted to an expense of EUR 17.6 million. The Group’s effective tax rate for 2012 was materially affected by the value adjustment of TV 2. When adjusting for this, the effective tax rate is 22.9 %.

The net profit for the year was EUR 151.2 million in 2012 against EUR 73.6 million the year before.

Balance sheet The balance sheet total increased by EUR 309.6 million to EUR 1,604.4 million, the main reason being the acquisition­of the remaining 50 % shares in TV 2.

* Calculated before special items

Management’s review

5

The Group’s net interest-bearing debt amounted to EUR 119.0 million compared to net deposits of EUR 104.7 million in 2011. The change from having net deposits to having net interest-bearing debt is attributable mainly to the investment in TV 2.

the return on equity would be 14.7 % for 2012, on a par with the year before.

Egmont’s equity at end-2012 amounted to EUR 676.4 million, an increase of EUR 170.5 million compared with 2011.

Cash generated from operations amounted to EUR 163.4 million compared to EUR 107.4 million in 2011.

This growth is attributable to the positive development of the cash from operating profit.

Return on equity was 25.4 % compared with 15.2 % the year before. If the equity is adjusted for special items,

6

Management’s review

The equity ratio at end-2012 came to 42.0 % relative to 38.4 % the year before.

TV 2, Norway Revenue 2012: EUR 445 million (2011: EUR 210 million) Operating profit 2012: EUR 36 million (2011: EUR 27 million) Employees 2012: 870 (2011: 415)

TV 2 is Norway’s largest commercial media house in terms of daily use, and the most important marketplace for Norwegian advertisers.

TV 2 is a leading supplier of news, sports and entertainment for TV, the internet, mobile phones and tablet computers.

In 2012 TV 2 celebrated its 20th anniversary as a healthy, leading-edge and strong media business. Its overarching vision is to create unforgettable moments for viewers.

On this premise, in 2012 TV 2 made its biggest investment yet in Norwegian quality entertainment, and TV 2’s news department began producing from Europe’s most modern news studios.

In February 2012 Egmont acquired A-Pressen’s shares in TV 2 for a price of NOK 2.1 billion, making Egmont the sole company owner.

Egmont’s shares of revenue and operating profit in TV 2 are set out in the section at the top of this page.

Calculated on a fully consolidated basis (NOK) TV 2 generated its highest revenue to date in 2012, NOK 3,441 million against NOK 3,197 million in 2011. In 2012 TV 2 achieved its second-best operating profit of NOK 338 million compared with NOK 407 million in 2011. The decline is ascribable to increased investment in programme content, which helped maintain the main channel’s market share of 19.3 % in 2012. TV 2’s total viewing share came to 26.1 % against 26.7 % in 2011.

TV 2 (main channel) Popular programmes such as Farmen, Skal vi danse and Norske talenter made the autumn season on the main channel a success for TV 2.

The most-watched programme in 2012 was the European football cup final between Spain and Italy on 1 July. The match recorded 1,183,000 viewers and a viewing share of 62.3 %.

Another memorable date for TV 2 was 16 December.

First, 1,163,000 viewers watched the team handball final between Norway and Montenegro, generating a viewing share of no less than 74.4 %. Later in the evening, the final of Farmen attracted 1,153,000 viewers, which translates into a 58.1 % viewing share.

In 2012 TV 2’s news unit bolstered its position among viewers after making a significant investment in stateof-the-art news studios in Bergen and Oslo. The new studios offer exciting opportunities for innovative news presentation. After 20 years, the news also changed its colour scheme from green to red.

TV 2 Zebra In 2012 TV 2 Zebra held a market share of 2.3 %, down 0.4 percentage points on 2011. The figures mask a solid first six months and a considerably weaker second six months. This development occurred because 500,000 households lost TV 2 Zebra in June 2012 when Canal Digital Kabel decided to stop distributing the channel.

Management’s review

7

TV 2 Bliss TV 2 Bliss maintained its market share of 1.3 % of viewers in 2012. The channel broadcasts drama, docusoaps, reality programmes and films.

TV 2 Nyhetskanalen TV 2 Nyhetskanalen celebrated its fifth anniversary on 15 January 2012. The channel has consistently increased its viewing figures since its launch in 2007, when it commanded a share of 0.5 %. It ended 2012 with a viewing share of 2.0 % against 2.2 % in 2011. The channel’s coverage of the Utøya terrorist attack on 22 July 2012 accounted for the surge in viewer numbers.

TV 2 Filmkanalen TV 2 Filmkanalen airs films almost around the clock. The channel’s share of viewers has remained stable since its launch in 2007. In 2012 the channel held a share of 0.6 % compared with 0.7 % in 2011.

TV 2 Premier League TV 2 broadcasts Premier League programmes on three HD TV channels: TV 2 PL HD 1, TV 2 PL HD 2 and TV 2 PL HD 3. The channels broadcast almost all games from the best English league in HD. In May 2012 TV 2 signed a new agreement with the FA Premier League that extends TV 2’s exclusive rights to the Barclays Premier League until the end of the 2015/2016 season.

TV 2 Sport On 6 June 2012 TV 2 relaunched the TV 2 Sport channel as a sports news channel bringing the latest in sport from morning to night. The channel is included in the basic programme packages offered by most Norwegian TV distributors. In August 2012 TV 2 secured the rights

8

Management’s review

to all English football, with the exception of the Premier League, to which it already held the rights. In addition to the existing Barclays Premier League rights, TV 2 can now offer Norwegian TV viewers FA Cup, League Cup, Championship, League 1, League 2, promotion play-off and Community Shield matches as well as the England senior and U21 internationals.

In the autumn of 2012 the pay channels TV 2 Sport 2-5 were replaced by TV 2 Sport Xtra and TV 2 Sport Xtra 2.

These channels broadcast all non-Premier League English football.

TV 2 Sumo TV 2 Sumo is Norway’s largest commercial internetbased TV supplier, reaching the 100,000 paying subscriber mark in October 2012. In mid-November TV 2 launched a new version of its web platform. TV 2 Sumo has an extensive programme library and an interactive sports centre.

Tv2.no In 2012 TV 2 enjoyed continuing growth in the number of web and mobile users. During the year tv2.no recorded 13 % growth, thus retaining its seventh place on the list of largest Norwegian websites. TV 2 mobile performed well in 2012, and with a growth rate of 95 % remained fourth on the list of largest Norwegian mobile sites.

TV 2’s subsidiaries TV 2 owns the subsidiaries OB-Team, TV 2 Torget, Vimond, Wolftech and Mosart Medialab, and holds ownership shares in RiksTV (33.33 %) and Norges Televisjon (33.33 %).

Nordisk Film Revenue 2012: EUR 339 million (2011: EUR 334 million) Operating profit 2012: EUR 18 million (2011: EUR 11 million) Employees 2012: 820 (2011: 798)

Nordisk Film is the leading developer, producer and marketer of creative content in the Nordic region. The division creates and tells stories through the media of film, live entertainment and interactive games.

Revenue increased from EUR 334 million in 2011 to EUR 339 million in 2012. Operating profit amounted to EUR 18 million in 2012 against EUR 11 million in 2011.

Strong results in the film and cinema business areas have largely driven this positive development.

Film Nordisk Film produces, co-produces and markets feature films and TV series, both as in-house productions and in association with Nordic and other international partners.

2012 was an excellent year, bringing an array of successful films across the Nordic countries.

The Norwegian epic, Kon-Tiki, produced by Nordisk Film Production, was among Nordisk Film’s most ambitious projects. Attracting 900,000 Norwegians to cinemas, the film became one of the best-selling Norwegian titles in recent years. At the start of 2013 Kon-Tiki was nominated­for a Golden Globe as well as for an Oscar in the ‘Best Foreign Language Film’ category. The inhouse production A Hijacking was also well received in Denmark and internationally, garnering several international awards and nominations in several ‘Bodil’ and ‘Robert’ award categories.

The associate company Zentropa produced a large number of commercial successes in 2012. At year-end the Oscar- and Golden Globe-nominated A Royal Affair had sold over 500,000 cinema tickets, and All You Need is Love passed the 640,000 ticket mark. The Hunt – which

did not premiere in Denmark until January 2013 – won the award for Best Actor at the Cannes Film Festival and a European Film Award for best script.

Nordisk Film released over 60 cinema titles produced either in-house or by other production companies across the Nordic region. In 2012 Nordisk Film distributed roughly one in every six films shown in the Nordic countries.­ The film arm renewed its agreement with the international film studio Summit, which welcomed Lionsgate to its fold following the merger between the two companies in 2012. Lionsgate/Summit owns the two successful global franchises Hunger Games and The Twilight Saga. The last film in the Twilight series, Breaking Dawn Part II, was seen by 1.4 million Nordic cinema guests. The first Hunger Games film in the quadrilogy enjoyed success of a similar calibre, selling 1.2 million cinema tickets across the Nordic region. Further, a four-year agreement, including all new productions, was signed with Steven Spielberg’s film company, Dreamworks.

2012 was the year when consumers truly embraced Video-On-Demand distribution. Market growth was partly driven by Netflix and iTunes, which launched their services in the Nordic markets. Nordisk Film is the Nordic region’s largest supplier of digital films for the Video-OnDemand market.

In 2012 the Nordisk Film Shortcut companies fully digitalised their postproduction activities. The closure of the laboratories in Denmark signalled the end of the analogue era.

Management’s review

9

Cinemas In 2012 the cinema market generated its highest ticket revenue in Denmark since 1982, with an increase of over 15 % compared with the previous year. Nordisk Film Cinemas sold 6.1 million cinema tickets in Denmark and 400,000 in Norway via Drammen Kino. This corresponds to a 43 % market share in Denmark and approximately 3 % in Norway.

In March Nordisk Film Cinemas opened a new cinema in Næstved, which got off to a good start. The cinema is the most technologically advanced in Denmark. In December Nordisk Film Cinemas announced plans to establish another multiplex in the Fields shopping centre in Ørestaden, Copenhagen, with the opening slated for autumn 2014.

In 2012 Nordisk Film Cinemas introduced Nordisk Film Live, an enterprise aimed at producing live entertainment for a broad audience. In partnership with Momoland and the creative trio of Nikolaj Cederholm and the Hellemann brothers, the new venture launched the theatre concert Hey Jude on 28 December. The performance was a box-office hit, selling 60,000 tickets.

During the year Nordisk Film acquired Venuepoint A/S, which handles event ticket sales via Billetlugen in Denmark, Billettportalen in Norway and Biljettforum in Sweden. Venuepoint commands a strong position in Denmark and intends to enhance its standing in Sweden and Norway to the same level.

Kino.dk runs Denmark’s leading film website, handling ticket transactions that represent approximately 70 % of all ticket sales in Denmark. Like the cinema commercials company Dansk Reklame Film, the company did well.

10

Management’s review

Nordisk Film increased its ownership share of the Norwegian film portal filmweb.no to 64.2 %. Filmweb is the Norwegian counterpart of the Danish film site kino.dk.

Nordisk Film handles a total of 13 million ticket transactions annually in the Nordic region.

Interactive games Nordisk Film Interactive is the official distributor of Sony PlayStation products in the Nordic region and Baltic countries.

Changes in market conditions put growing pressure on PlayStation’s margins and income in 2012. The total game console market dropped from 2011 to 2012, one reason being that the market is awaiting the next generation of consoles.

The PlayStation 3 console continues to be consumers’ preferred game machine. Since its launch in 2006, a total of 1.6 million PS3 machines have been sold in the Nordic region. This means that a PlayStation 3 can be found in 13.4 % of Nordic households. The PlayStation 3 console has solidified its market position in the course of the year, capturing a market share of 50 % against 45 % the previous year.

Egmont Magazines Revenue 2012: EUR 296 million (2011: EUR 296 million) Operating profit 2012: EUR 33 million* (2011: EUR 33 million) Employees 2012: 1,045 (2011: 1,044)

With more than 100 titles, Egmont Magazines is among the largest publishers of weeklies and magazines in the Scandinavian market. Catering primarily for the consumer market, the publications provide a vehicle for advertisers to reach a wide range of attractive target groups.

Egmont Magazines’ product portfolio includes family magazines, women’s and men’s magazines, illustrated weeklies, a broad selection of monthly and special interest magazines as well as digital services and other activities related to the division’s strong brands.

Financially, 2012 was a good year for Egmont Magazines, even once the costs of closing the printing facilities had been factored in. The decision to close inhouse printing facilities and partner with external printing houses instead has lowered costs and made a larger proportion of operating costs variable.

Although 2012 was influenced by weak national economies in key markets, declining advertising revenue in all three countries and a distinct drop in newsstand sales, the division managed to maintain its revenue level in its core business on a par with 2011. Revenue amounted to EUR 296 million.

A focus on effective operations enabled Egmont Magazines to successfully lower costs in key areas in 2012. The new agreements with external printing houses made the greatest impact. In addition, all three of the division’s companies have concentrated on lowering the day-to-day costs of producing magazines and digital services. Overall this means that the operating

*

profit – excluding the costs of closing printing facilities­ – amounted­to EUR 33 million in 2012, the same as in 2011. Profit including the costs of closing printing facilities­was EUR 27 million.

Family magazines In Scandinavia Egmont’s family magazines – Hjemmet, Hemmets Journal, Norsk Ukeblad, Hendes Verden and Familien – have a total weekly circulation of 677,000, a decrease of 5.7 %.

Despite this decline, family magazines remain a highly attractive part of the magazine portfolio. In Norway Hjemmet was the largest Norwegian weekly in 2012. In Denmark Hendes Verden celebrated its 75th jubilee and continues to command a strong position in the needlecraft magazine niche. In Sweden Hemmets Journal maintained its ranking among the largest Swedish weeklies.

Women’s magazines With its attractive advertising potential and the shift towards online media, the women’s magazine market is highly competitive. In Denmark Egmont Magazines leads the field with Alt for damerne, the most powerful advertising medium in the market for magazines and weeklies. Despite falling circulation, the magazine increased its readership in 2012. Eurowoman also fared well, continuing to hold a leading position. In the Norwegian market, Kamille and Det Nye withstood falling circulation figures to remain two of the market’s most-read titles. Elle held its ground well in 2012, with circulation figures finishing the year on a par with 2011.

Alt for Damerne, launched in Norway in 2011, enjoyed robust growth in 2012.

Calculated exclusive of the costs of closing printing facilities of EUR 8 million.

Management’s review

11

Men’s magazines Egmont Magazines commands a strong position in the market for men’s magazines. In Denmark Euroman recorded positive development and maintained its standing as Denmark’s leading magazine for men. In Sweden King strengthened its position as the leading men’s fashion magazine. In Norway, men’s magazine circulation endured a challenging year, with newsstand sales particularly hard hit. Nonetheless, Vi Menn bolstered its position and is still Norway’s preferred magazine for men.

Illustrated weeklies In Denmark and Norway Egmont Magazines continues to lead the market in the segment for lower-priced illustrated weeklies, publishing HER&NU and Her&Nå, respectively. The total weekly circulation is 183,000 copies. The market for illustrated weeklies is under considerable pressure and also represents the segment whose circulation has dropped most significantly. However, both publications are strong contenders in the competition.

Special interest magazines With more than 80 titles, Egmont Magazines commands a solid position in the Nordic market for special interest magazines and leads several country markets in the house-and-home, motor, boating, parenting, leisure, travel, health and hobby segments. In Denmark monthly magazines have fared better than the market in general, raising both their circulation and readership figures. In 2012 Egmont Magazines acquired the remainder of Oxygen A/S, a company with a strong portfolio of publications targeting mothers-to-be and young families.

In Norway the division acquired the country lifestyle magazine Lev Landlig, thus strengthening its position as a leader in the house-and-home segment. The circula-

12

Management’s review

tion figures for Boligdrøm, Rom 123 and Hytteliv grew in a declining market. Foreldre og Barn remains Norway’s largest magazine in the parenting segment, with an ambition to reinforce this position. In Sweden Nära is enjoying success, with sales continuing to rise in 2012.

In addition, Egmont Magazines launched Made By Me in Sweden in close collaboration with Norway, where the magazine was launched in 2011.

Interactive media Egmont Magazines continuously invests in digital media.

In 2012 the focus was both on initiatives that support existing print media and on independent digital services. iPad versions of numerous magazines and weeklies are now available in all countries. In Norway, via its co-ownership of Mediehuset Nettavisen, the division acquired Bootstrap AS, which operates the country’s largest blog portal, blogg.no, and the news site NA24. Another notable acquisition was kvinneguiden.no. The klikk. no portal recorded traffic growth. In Norway traffic via mobile devices has climbed sharply, and in the course of 2012 all brand websites were adapted for use on mobile units. Egmont Magazines has strengthened its position in the motor segment through the acquisition of zatzy. se, which, with over 100,000 weekly unique users, is one of Sweden’s leading communities for car enthusiasts.

Other activities In 2011 Egmont Magazines acquired Vægt­konsulent­ erne A/S (formerly De Danske Vægtkonsulenter). The aim is to create Denmark’s best weight loss and health concept, both on- and offline. In Sweden the division invested in Klintberg Niléhn, which in record time has carved a position in the client publishing market. A significant growth rate has been targeted for the years ahead.

Egmont Kids Media Revenue 2012: EUR 393 million (2011: EUR 395 million) Operating profit 2012: EUR 22 million (2011: EUR 25 million) Employees 2012: 1,245 (2011: 1,237)

Egmont Kids Media is at the global fore of children’s publishing, focusing on reading, playing and learning.

The division creates and sells magazines, books, digital media, games and merchandise for children and young people, and its business units operate activities in over 30 countries. The division also exports to 65 markets worldwide.

In 2012 the division generated revenue of EUR 393 million, on a par with 2011. It realised an operating profit of EUR 22 million, a decline of EUR 3 million on the previous year triggered by smaller magazine circulations and difficult market conditions, especially in Central and Eastern Europe. The profit includes non-recurring costs related to personnel adjustments and office relocations in certain markets.

Egmont Kids Media continues to pursue its strategy of focusing on a healthy, sustainable core business and on its development from print-only publisher to multiplatform publisher.

Nordic region In the Nordic region the division further improved the solid results achieved in 2011. To strengthen the Nordic brand, the companies in Denmark, Norway and Sweden have been renamed Egmont Kids Media Nordic. The aim is to further consolidate the Nordic partnership and give all the companies an identical profile.

In Norway one of the strongest rights, Pondus, was renewed in 2012. The division successfully launched various products to celebrate the 100th birthday of author and composer Thorbjørn Egner, including sales of 150,000 physical units and over three million streaming sales of his songs. Goal Magazine continued its growth,

and in Norway Goal was effectively launched in partnership with TV 2. In Sweden Bamse maintained its huge popularity. In Denmark advertising sales rose by 35 % in a turbulent market.

Central and Eastern Europe Bleak market conditions meant that performance for the region as a whole fell short of expectations. However, all companies improved or maintained their market shares.

Partnerships with key licence holders were strengthened after the announcement of programmes based on new franchise agreements such as Monster High by Mattel, Disney School Skills and Play-Doh by Hasbro. Further adjustments to the publication portfolio and production processes have been initiated to achieve economies of scale. Several cost-saving initiatives have already been launched to improve profitability. The region increased its revenue in two growth areas, fiction books and addon book sales. The region is producing more e-books and audio books and has launched its first local apps for children.

German-speaking countries Egmont Ehapa delivered sound financial results. The core business, comprising the Mickey Mouse and Wendy magazines and the Pocket Book business area, remained solid. The company launched 17 new magazines in 2012, while digital product launches and e-commerce initiatives fuelled healthy growth in the digital entertainment business area. In 2012 Egmont Verlagsgesellschaften experienced an upturn. After establishing Balloon, a new book label for pre-schoolers created in association with Egmont Ehapa, the company now offers a highly attractive portfolio of children’s publications for licensors and authors. Egmont’s romance label LYX developed favourably, ranking as a leading

Management’s review

13

publisher in its field. The business area for e-books continued to record strong results, with an 800 % increase in income over the previous year.

new distribution channels were established, new rights acquired and warehouse and circulation management initiatives implemented.

English-speaking countries The performance of businesses in English-speaking countries was generally acceptable. In the UK children’s fiction and magazines recorded higher income, but the number of publications under licence fell. After extending its fiction publication programme, Egmont USA recorded a 20 % increase over the year before, and Hardie Grant Egmont, the joint venture company in Australia, returned to its growth track. At the end of 2012, Egmont got a foothold in a new continent when it took over Disney’s activities in South Africa, which include an existing portfolio of five magazine titles.

Digital media 2012 was a year of investment as the division transitioned into being a multiplatform publisher. Egmont Kids Media established a new in-house digital organisation as well as a certified network of developers worldwide.

More than 200 new app launches in 2012 reflected the strong digital drive throughout the division. New, key digital rights were secured from Disney, Hasbro, Mattel, Warner Brothers and King Features as well as the digital rights to Moviestar Planet, Angry Birds and an array of strong regional brands. The division is developing a wide variety of new products for publication in all major areas in 2013. Several of these products are targeted at offering the comic book experience in apps. E-commerce received extra attention, as reflected in the introduction of a new e-commerce platform in early 2013.

Asia After the recent record-breaking years, Egmont Kids Media faced challenging market conditions in China.

The absence of bestsellers such as Pleasant Goat plus a switch to online distribution made good results imperative for all titles. Nonetheless, Children’s Fun Publishing managed to retain its position as a market leader in children’s books and magazines. The Egmont Kids Media joint venture with The Nation Group in Thailand performed satisfactorily in 2012, primarily because

14

Management’s review

In 2012 Egmont Kids Media acquired a number of early learning apps called Fusentasterne, launched in 15 countries. The division also bought Krea Medie and thus one of Scandinavia’s strongest edutainment-brands, Pixeline/ Josefine. The product will be further developed for a variety of media platforms.

Egmont Books Revenue 2012: EUR 139 million (2011: EUR 146 million) Operating profit 2012: EUR 7 million (2011: EUR 0 million) Employees 2012: 470 (2011: 503)

Egmont Books develops and produces literary fiction, non-fiction, children’s books, audio books, e-books and educational media that entertain readers and give them insight and knowledge.

Egmont Books comprises Norway’s leading publishing house, Cappelen Damm, and the Danish publisher Lindhardt og Ringhof. Egmont’s non-Scandinavian book publishing activities are part of Egmont Kids Media.

Cappelen Damm Cappelen Damm is Norway’s largest book publisher with activities spanning general literature, education, book clubs, e-commerce, the bookstore chain Tanum, which has 14 book dealers in the Oslo area, and the distribution business Sentraldistribusjon. The publishing house is co-owned equally by Egmont and Bonnier.

Efficiency-enhancing measures and effective operations made 2012 a good year for Cappelen Damm despite zero growth in the market as a whole.

Cappelen Damm further cemented its market position in 2012. The publishing house is a clear leader in the market for general literature – children’s books, literary fiction, non-fiction and documentaries. Cappelen Damm is also a frontrunner in the market for books for upper secondary schools and commands a strong second position in books for primary and lower secondary schools.

In 2012 Cappelen Damm acquired the Høyskoleforlaget AS and Akribe AS publishing companies, significantly

reinforcing its position as a publisher of books and electronic products for universities and the professional market. Akribe operates the electronic service Practical Procedures in Nursing (PPN), used by institutions of higher education and hospitals. In addition to being used by over 80,000 nurses in Norway, the service has been introduced by the local authorities of Aarhus and Lolland in Denmark, where its use is expected to become more widespread in 2013.

On balance Cappelen Damm’s digital activities developed positively in 2012, with revenue increasing by 52 % over 2011.

Lindhardt og Ringhof The division’s Danish activities are concentrated in Denmark’s second-largest publisher, Lindhardt og Ringhof, which also includes the publishing companies Alinea, Akademisk Forlag and Carlsen.

Continuing the extensive organisational adjustments implemented in 2011, the publishing company consolidated its organisation in 2012, redirecting its strategic focus towards editorial concerns.

The company is now operating at a profit after a lengthy period in the red.

For the first time in many years, the literary fiction department introduced a number of debut authors, and high-profile authors moved from other publishing houses to Lindhardt og Ringhof.

Management’s review

15

The non-fiction department maintained its market lead in cookbooks, lifestyle and culture, while several prominent publications helped significantly expand its position in the current affairs and history genres.

In 2012 the children’s publisher Carlsen celebrated its 70th anniversary, an event that stimulated extra interest in the company.

The company published approximately 600 new titles, including the sixth volume of Knausgårds autobiographically inspired fiction work, My Struggle, Ulrik Wilbek’s Gå Forrest, Michael Katz Krefeld’s Sort sne falder, Claus Meyer’s Bagebog and Anthony Beevor’s The Second World War.

The publishing company’s digital activities are booming, audio and e-books in particular. Towards the end of the

16

Management’s review

year the publisher acquired the audio book activities of Denmark’s second-largest audio book publisher, Audioteket, with a view to expanding this submarket.

In 2012 the educational publishers produced a wide range of new digital learning media. Sales took off in earnest towards the end of the year when the Ministry of Children and Education released the first portion of the extensive support funds earmarked for schools to purchase digital learning materials. During the year the company made substantial investments in the new development and consolidation of digital products.

Alinea thus remained Denmark’s largest supplier of both analogue and digital learning media in 2012.

The Charitable Activities Since 1920 the Egmont Foundation has donated approximately EUR 349 million in present value to support social initiatives. In 2012 the Foundation’s financial support amounted to EUR 8 million, almost EUR 0.5 million of which was donated to film-related activities via the Nordisk Film Foundation.

The Egmont Foundation is a commercial foundation that re-invests its profit in the media business and charitable activities. The Foundation’s charitable vision is to help give children and young people a good life by supporting their active and committed participation in society.

The Foundation supports projects that help children and young people handle life crises or that foster schoolchildren’s desire to learn. The Foundation also provides financial support to vulnerable children and families. Lastly, the Nordisk Film Foundation, also part of the Egmont Foundation, grants support to film-related projects every year.

Long-term help for vulnerable families and children Maintaining focus on the most socially vulnerable groups in our society is a consistently high priority for the Egmont Foundation, particularly in times of crisis. The Foundation has provided financial support to families in need for almost a century. However, impoverishment means more than lacking money, because children living in families with few financial and social resources can suffer serious consequences. This is why the support framework was changed to offer families not only money but also long-term help such as advice, therapy or social activities. This support empowers families and helps them to tackle some of the more fundamental problems in their lives.

Children in life crises In 2012 the Egmont Foundation continued to focus on life crises that can threaten the development of children and young people. It supported projects for psychologically vulnerable children, children whose lives are affected by illness or death in the family, and children placed outside the home.

In 2012 the Egmont Foundation spotlighted one particular life crisis: divorce. Almost a third of all children in Denmark experience the divorce of their parents.

However, society often overlooks the critical impact of divorce on a child’s life. If a child fails to get help coping with this life crisis, its wellbeing may be threatened. In 2012 the Egmont Foundation earmarked EUR 5.4 million for projects that support children, better equip parents and activate the children’s networks.

Desire to learn The financial crisis and increasing unemployment leave no doubt about the importance of education. The Egmont Foundation’s schooling initiative focuses on children’s desire to learn, because children need eagerness, motivation and pleasure to be full involved in school and thus truly benefit from the activities it offers.

The Egmont Foundation’s support in the education area primarily targets vulnerable children and young people, including children placed outside the home. These children have been neglected in some way and must cope with numerous problems. Many are highly intelligent but do significantly worse at school than other children.

For this reason, the Egmont Foundation developed a major, new signature project in 2012. Through summer schools, support workers and the development of new knowledge, the Learning for Life project aims to support

Management’s review

17

and strengthen children placed outside the home and ultimately enable them to complete a youth education programme.

Nordisk Film Foundation As Denmark’s largest private media foundation, the Nordisk Film Foundation has granted support to the media industry since 1992. In 2012 the Foundation donated EUR 466,000. Approximately 73 % of the Foundation’s support funds go to developing creative talent and skills, about 16 % to supporting industry development and internationalisation, and about 11 % to upholding film culture throughout Danish society.

The following are examples of notable donations: • In 2012 the Nordisk Film Foundation awarded a total of EUR 106,000 to help about 32 young gifted filmmakers study at international media schools.

18

Management’s review

• Collective education programmes received donations totalling EUR 213,000 EUR. Examples include the Super16 and 18Frames, film schools and graduation films and the European cross-media programme from the National Film School of Denmark.

• In 2012 the Nordisk Film Pris talent award went to film director Omar Shargawi, while Ballings Rejselegat travel grant was awarded to the producer duo Tomas Radoor and René Ezra.

• A number of Danish film festivals and conferences with an international slant received EUR 76,000 during the year. Finally, the Foundation donated EUR 44,000 to the Danish Film Institute (DFI) for a project to digitalise old film reels.

Management’s review Profit for the Egmont Foundation The profit of the Egmont Foundation, the parent entity of the Egmont Group, excluding dividends from equity investments in subsidiaries, was EUR 2.6 million. The Foundation’s Commercial Activities primarily comprise royalty income from the Foundation’s publishing rights and management of the Foundation’s assets.

Corporate Governance Based on the most recent recommendations from the Committee on Corporate Governance, the Board of Trustees and Board of Management have updated the description of the framework for Corporate Governance at Egmont. This framework is described in full on Egmont’s website (www.egmont.com).

Egmont meets the above-mentioned Corporate Governance recommendations, with the exception of recommendations that are irrelevant because the parent entity, the Egmont Foundation, is a commercial foundation.

Corporate social responsibility Egmont is committed to meeting current international standards for human rights, the environment, working conditions, business ethics and consumer matters.

In 2012 Egmont sustained its focus on ensuring that companies and suppliers comply with Egmont’s Code of Conduct. Formulated in 2005, the Code defines Egmont’s standards concerning human rights, the environment and working conditions. Egmont’s Social Compliance Programme focuses on enforcing these standards, which are verified in practice through inspection visits to suppliers, primarily in Asia. At the end of an inspection visit, the inspector prepares a report and discusses it with the supplier. A plan for rectifying any

conditions not in compliance with the Code of Conduct is drawn up and then signed by the supplier. On subsequent visits, the inspectors check that the deficiencies have been rectified.

Egmont’s business ethics rest on the principle that corruption and bribery have no place in a company’s operations. In 2012 Egmont sealed its commitment in an anti-corruption policy that includes, among other things, a supportive whistle-blower policy. This policy will be implemented in Egmont companies in 2013.

Egmont UK has initiated the establishment of an industry club, the Publishing Industry Product Safety Forum – PIPS, to promote work on the use of chemicals in the printing industry. The forum, which currently numbers 10 publishers, intends to work with printing suppliers to prepare a list of the component materials and ingredients of chemical substances (eg, ink, varnishes and adhesives) used in connection with printing. The aim of the forum is to raise awareness of the issues related to safe chemical use. To this end, high standards for the use of chemicals are being set and regular reports sent to the relevant authorities. Launched in 2010 by Egmont UK, the forum and the database were further developed in 2011 and 2012 through the introduction of printing houses that are either ready to supply data by this means or in the process of obtaining data. The work of developing the forum and database will continue in 2013.

Egmont UK launched a similar initiative for paper in 2005, the Publishers Database for Responsible Environmental Paper Sourcing – PREPS. It has since become an industry standard used in many countries.

Several Egmont companies are also involved. Read more at www.egmont.com.

Management’s review

19

At the end of 2012 Egmont joined the UN business network, Global Compact, the world’s largest social responsibility initiative, which sets up 10 principles covering human rights, workers’ rights, the environment and anti-corruption. In preparing for this commitment, Egmont grouped the 10 principles of the UN Global Compact into three categories – People, Planet and Profit – and reviewed policies and processes relating to each category. Initiatives were subsequently launched in areas where improvement was in order.

In 2013 Egmont will focus more sharply on integrating CSR in its commercial and organisational processes.

More information on the subject will be available in the course of 2013 at www.egmont.com.

Special risks Part of the Group’s business is based on stable, longstanding relations with some of the world’s leading rights holders. Egmont’s strength and geographic breadth underpin its constant efforts to sustain and expand these partnerships.

20

Management’s review

Furthermore, by virtue of its activities the Group is exposed to various financial risks. Please refer to note 25, Financial risks and financial instruments.

Outlook for 2013 Egmont will carry on developing media platforms, continuously adapting its media products to changing consumer needs, profitability programmes and efficiency-enhancing measures. The greatest uncertainty is associated with advertising revenue, which is sensitive to economic fluctuations and accounts for a larger share of revenue since the remaining shares in TV 2 were acquired.

Statement by the Board of Trustees and Management Board The Board of Trustees and Management Board have today discussed and approved the annual report of the Egmont Foundation for the financial year 1 January - 31 December 2012.

The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards, as adopted by the EU, and additional Danish disclosure requirements according to the Danish Financial Statements Act. The financial statements of the Egmont Foundation have been prepared in accordance with the Danish Financial Statements Act and the financial reporting requirements of the Foundation’s Charter.

the Foundation’s financial statements give a true and fair view of the Group’s and the Foundation’s assets, liabilities, and financial position at 31 December 2012, and of the results of the Group’s and the Foundation’s operations and the consolidated cash flows for the financial year 1 January - 31 December 2012.

Furthermore, in our opinion, the Management’s review gives a fair review of the development in the Group’s and the Foundation’s activities and financial matters, the net profit of the year and the Group’s and the Foundation’s financial position.

Copenhagen, 19 March 2013

In our opinion, the consolidated financial statements and

Management Board:

Steffen Kragh Hans J. Carstensen President and CEO

Board of Trustees:

Mikael Olufsen Chairman

Steen Riisgaard Vice Chairman

Ulrik Bülow Peder Høgild Lars-Johan Jarnheimer

Anna von Lowzow

Jeppe Skadhauge

Torben Ballegaard Sørensen

Marianne Oehlenschlæger

Statement by the Board of Trustees and Management Board

21

Independent Auditor’s Report TO THE Board of Trustees OF THE EGMONT FOUNDATION Auditor’s report on the consolidated financial statements and the Foundation’s financial statements We have audited the consolidated financial statements and the Foundation’s financial statements for the financial year 1 January – 31 December 2012. The consolidated financial statements and the Foundation’s financial statements comprise the income statement, balance sheet and notes, including accounting policies for both the Group and the Foundation, as well as the statement of comprehensive income, statement of changes in equity and cash flow statement for the Group.

22

in accordance with the International Financial Reporting Standards, as adopted by the EU, and additional disclosure requirements according to the Danish Financial Statements Act (the consolidated financial statements), as well as the Danish Financial Statements Act and the financial reporting requirements of the Foundation’s Charter (the Foundation’s financial statements).

Moreover, the Management is responsible for the internal control considered necessary by them to prepare consolidated financial statements and financial statements for the Foundation that are free from material misstatement, whether due to fraud or error.

The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards, as adopted by the EU, and additional disclosure requirements according to the Danish Financial Statements Act. The Foundation’s financial statements are prepared in accordance with the Danish Financial Statements Act and the financial reporting requirements of the Foundation’s Charter.

Auditor’s responsibility Our responsibility is to express an opinion on the consolidated financial statements and the Foundation’s financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish Audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements and the Foundation’s financial statements are free from material misstatement.

Management’s responsibility for the consolidate­d financial statements and the Foundation’s financial statements The Management is responsible for the preparation of consolidated financial statements and financial statements for the Foundation that give a true and fair view

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements and the Foundation’s financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated

Independent Auditor’s Report

financial statements and the Foundation’s financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Foundation’s preparation of consolidated financial statements and the Foundation’s financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Foundation’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Management, as well as the overall presentation of the consolidated financial statements and the Foundation’s financial statements We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Danish Financial Statements Act in respect of the consolidated financial statements, and in accordance with the Danish Financial Statements Act and the financial reporting requirements of the Foundation’s Charter in respect of the Foundation’s financial statements.

Statement on the Management’s review Pursuant to the Danish Financial Statements Act, we have read the Management’s review. We have not performed any other procedures in addition to the audit of the consolidated financial statements and the Foundation’s financial statements. On this basis, it is our opinion that the information provided in the Management’s review is consistent with the consolidated financial statements and the Foundation’s financial statements.

Copenhagen, 19 March 2013

Our audit has not resulted in any qualification.

Opinion In our opinion, the consolidated financial statements and the Foundation’s financial statements give a true and fair view of the Group’s and the Foundation’s financial position at 31 December 20112, and of the results of the Group’s and the Foundation’s operations and the consolidated cash flows for the financial year 1 January 31 December 2012 in accordance with the International Financial Reporting Standards, as adopted by the EU, and additional disclosure requirements according to the

KPMG Statsautoriseret Revisionspartnerselskab

Jesper Ridder Olsen State-Authorised Public Accountant

Independent Auditor’s Report

23

Income Statement of the Group (EURk) Note

2012

2011

1,616,880

1,386,320

2 Revenue

Change in inventories of finished goods and work in progress

Other operating income

3

Raw materials and consumables

Other external expenses

Personnel costs

4

5

Depreciation, amortisation and impairment losses; property plant and equipment and intangible assets

Other operating expenses

Operating profit before special items and net financials

(309)

(702)

12,645

10,851

(43,786)

(60,444)

(1,009,092)

(859,641)

(385,182)

(323,151)

(80,759) (62,843) (4,270)

(2,849)

106,127

87,541

67,267

0

2,081

8,263

6

Special items

Profit/(loss) after tax from investments in associates

7

Financial income

11,733

13,226

8

Financial expenses

(18,463)

(15,308)

Profit before tax

168,745

93,722

Tax on profit for the year

(17,561)

(20,082)

Net profit for the year

151,184

73,640

9

24

Attributable to:

The Foundation

Non-controlling interests

Total

Income Statement of the Group

148,386

71,980

2,798

1,660

151,184

73,640

Statement of Comprehensive Income of the Group (EURk) Note

2012

2011

151,184

73,640

Net profit for the year

Foreign exchange adjustments on translation to presentation currency

(2,842)

1,207

Foreign exchange adjustments on translation of foreign entities

15,396

(2,826)

Value adjustment of hedging instruments:

Value adjustments for the year

Value adjustments transferred to financial expenses

(10,953)

(14,083)

5,121

3,877 (14,714)

19

Actuarial gains/(losses) on defined benefit pension plans

38,852

Tax on other comprehensive income

(10,500)

4,360

35,074

(22,179)

186,258

51,461

9

Other comprehensive income after tax

Total comprehensive income

Attributable to:

The Foundation

Non-controlling interests

Total

183,231

49,647

3,027

1,814

186,258

51,461

Statement of Comprehensive Income of the Group

25

Balance Sheet of the Group at 31 december (EURk) Note

Assets

2012

2011

54,119

38,047

Film rights, etc.

In-house produced film rights

5,686

8,232

Goodwill

264,546

90,426

Trademarks

219,846

44,580

Intangible assets in progress and prepayments for film rights

21,822

24,320

566,019

205,605

172,978

173,797

10 Intangible assets

Land and buildings

Plant and machinery

36,555

16,482

Tools and equipment

22,684

17,402

Leasehold improvements

5,877

3,812

Property, plant and equipment under construction

2,876

6,264

240,970

217,757

30,829

30,938

31,397

12,238

4,016

3,841

11 Property, plant and equipment

12 Investment properties

13

Investments in associates

Other investments

Receivables from associates

20

Deferred tax

Other non-current assets

22,349

0

6,889

22,156

64,651

38,235

902,469

492,535

163,772

128,855

254,726

206,773

Total non-current assets

14 Inventories

25

Trade receivables

Receivables from associates

Other receivables

3,698

3,648

84,565

60,811

15

Prepayments

105,576

64,432

Receivables

448,565

335,664

48,084

183,439

41,528

154,259

701,949

802,217

1,604,418

1,294,752

16

Securities

17

Cash and cash equivalents

Total current assets

Total assets

26

Balance Sheet of the Group at 31 december

Balance Sheet of the Group at 31 december (continued)

Note

Equity and liabilities

2012

2011

Capital fund

29,489

29,593

Other reserves

(11,659)

(20,348)

Transferred comprehensive income

655,370

487,793

Foundation’s share of equity

673,200

497,038

Non-controlling interests

3,205

8,848

676,405

505,886

Pensions

47,307

48,642

20

Deferred tax

52,667

7,945

21

Other provisions

4,604

11,056

18 Equity

19

25

Mortgage debt

112,216

112,612

25

Other credit institutions

74,025

38,572

Other financial liabilities

26,487

7,891

Deferred income

1,622

5,002

318,928

231,720

Non-current liabilities

25

Other credit institutions

11,716

71,627

Prepayments from customers

56,510

56,611

241,979

201,749

Trade payables

Payables to associates

81

0

Corporate income tax

6,058

13,637 132,292

Other payables

201,662

21

Other provisions

66,599

58,149

Deferred income

24,480

23,081

Current liabilities

609,085

557,146

928,013

788,866

1,604,418

1,294,752

Total liabilities

Total equity and liabilities

Balance Sheet of the Group at 31 december

27

Cash Flow Statement of the Group (EURk) Note

2012

2011

106,127

87,541

Operating profit before special items and net financials

Adjustment for non-cash operating items, etc.: Depreciation, amortisation and impairment losses

80,759

5

Other non-cash operating items, net

(14,113)

62,843 (1,376)

Provisions and deferred income

22,454

(11,152)

Cash generated from operations before change in working capital

195,227

137,856

Change in inventories

26,524

(925)

(60,184)

11,049

1,852

(40,649)

(31,808)

(30,525)

163,419

107,331

Change in receivables

Change in trade payables and other payables

Change in working capital

Cash generated from operations

Interest received

Interest paid

7,031

10,921

(17,680)

(10,527)

Corporate income tax paid

(25,419)

(20,331)

Cash flows from operating activities

127,351

87,394

Acquisition of intangible assets

(45,131)

(43,550)

Acquisition of property, plant and equipment

(36,982)

(18,798)

Disposal of property, plant and equipment

18,195

2,618

Acquisition of financial assets

(229)

(1,812)

Disposal of financial assets

269

10,226

Acquisition of securities

0

(73,430)

Disposal of securities

137,746

43,150

29

Acquisition of subsidiaries and jointly controlled entities

(288,305)

(296)

Disposal of subsidiaries and jointly controlled entities

Cash flows from investing activities

4,324 (210,113)

805 (81,087)

Borrowing from credit institutions, etc.

Repayments to credit institutions, etc.

Dividends to non-controlling shareholders

Donations

Cash flows from financing activities

0

9,170

(24,774)

(5,912)

(3,185) (8,454)

(447) (7,403)

(36,413)

(4,592)

(119,175)

1,715

145,811

140,429

8,808

3,667

35,444

145,811

Net cash flows from operating, investing and financing activities

Cash and cash equivalents at 1 January

Foreign exchange adjustment of cash and cash equivalents

Cash and cash equivalents at 31 December

28

The cash flow statement cannot be derived directly from the balance sheet and income statement.

Cash Flow Statement of the Group

Statement of Changes in Equity of the Group (EURk) Reserve for hedging trans足actions

Reserve for foreign exchange adjustments

Transferred compre足 Nonhensive controlling足 income interests

Capital fund

Total equity

Equity at 1 January 2012 29,593 (19,485) (863) 487,793

8,848

505,886

Net profit for the year Foreign exchange adjustments on translation to presentation currency F oreign exchange adjustments on translation of foreign entities

0

0

0

148,386

2,798

151,184

(104)

(997)

3

(1,713)

(31)

(2,842)

0

0

15,136

0

260

15,396

alue adjustments of V hedging instruments: Value adjustments for the year

0

(10,953)

0

0

0

(10,953)

alue adjustments transferred to V financial expenses

0

5,121

0

0

0

5,121

ctuarial gains/(losses) on A defined benefit pension plans

0

0

0

38,852

0

38,852

Tax on other comprehensive income

0

379

0

(10,879)

0

(10,500)

Other comprehensive income

(104)

(6,450)

15,139

26,260

229

35,074

Total comprehensive income in 2012

(104)

(6,450)

15,139

174,646

3,027

186,258

sed for charitable purposes U and associated costs

0

0

0

(8,454)

0

(8,454)

Acquisition/disposal, non-controlling interests

0

0

0

0

(5,485)

(5,485)

Dividends, non-controlling interests

0

0

0

0

(3,185)

(3,185)

Other capital items

0

0

0

1,385

0

1,385

quity at 31 December 2012 E 29,489 (25,935) 14,276 655,370

3,205

676,405

Statement of Changes in Equity of the Group

29

Statement of Changes in Equity of the Group (continued)

Capital fund

Reserve for hedging trans足actions

Reserve for foreign exchange adjustments

Transferred compre足 Nonhensive controlling足 income interests

Total equity

Equity at 1 January 2011 29,513 (9,446) 2,089 431,056

7,919

461,131

Net profit for the year Foreign exchange adjustments on translation to presentation currency Foreign exchange adjustments on translation of foreign entities Value adjustments of hedging instruments:

0

0

0

71,980

1,660

73,640

80

(73)

6

1,172

22

1,207

0

0

(2,958)

0

132

(2,826)

Value adjustments for the year

0

(14,083)

0

0

0

(14,083)

Value adjustments transferred to financial expenses

0

3,877

0

0

0

3,877

Actuarial gains/(losses) on defined benefit pension plans

0

0

0

(14,714)

0

(14,714)

Tax on other comprehensive income

0

240

0

4,120

0

4,360

Other comprehensive income

80

(10,039)

(2,952)

(9,422)

154

Total comprehensive income in 2011

80

(10,039)

(2,952)

62,558

1,814

51,461

(22,179)

Used for charitable purposes and associated costs

0

0

0

(7,403)

0

(7,403)

Acquisition/disposal, non-controlling interests

0

0

0

0

(438)

(438)

Dividends, non-controlling interests

0

0

0

0

(447)

(447)

Other capital items

0

0

0

1,582

0

1,582

29,593

(19,485)

(863)

487,793

8,848

505,886

Equity at 31 December 2011

30

Statement of Changes in Equity of the Group

List of Notes to the Consolidated Financial Statements Note

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Accounting policies Revenue Other operating income Personnel costs Depreciation, amortisation and impairment losses Special items Financial income Financial expenses Taxes Intangible assets Property, plant and equipment Investment properties Financial assets Inventories Prepayments Securities Cash and cash equivalents Equity Pensions Deferred tax Other provisions Fees paid to elected auditor Operating leases Contingent liabilities and collateral Financial risks and financial instruments Related parties Standards and interpretations not yet adopted Subsequent events Acquisition of businesses Group entities

List of Notes to the Consolidated Financial Statements

31

1 Accounting policies

The Egmont Foundation is a commercial foundation

of changes in the circumstances forming the basis of

domiciled in Denmark. The annual report of the Egmont

such estimates, or because of subsequent events or the

Foundation for 2012 comprises both the consolidated

emergence of new information.

financial statements of the Egmont Foundation and its subsidiaries (the Group) and the separate financial state-

Information about the most significant accounting

ments of the Egmont Foundation.

estimates is included in the following notes: note 10 Intangible assets, note 14 Inventories, note 19 Pensions,

The consolidated financial statements have been

note 20 Deferred tax, note 21 Other provisions and note

prepared in accordance with the International Financial

29 Acquisition of businesses.

Reporting Standards (IFRS), as adopted by the EU, and additional Danish disclosure requirements for annual

Consolidated financial statements

reports.

The consolidated financial statements comprise the Egmont Foundation and subsidiaries in which the

The Egmont Foundation’s separate financial statements

Egmont Foundation has control of financial and operat-

have been prepared in accordance with the Danish

ing policies in order to obtain returns or other benefits

Financial Statements Act.

from its activities. Control is obtained when the Group holds more than 50% of the voting rights, whether

BASIS OF PREPARATION

directly or indirectly, or otherwise has a controlling interest in the relevant entity.

The Egmont Foundation’s functional currency is Danish kroner (DKK). For communication and reporting reasons,

Entities in which the Group has significant influence,

the consolidated financial statements are presented in

but not a controlling interest, are considered associates.

euro (EUR), rounded to the nearest thousand (EURk).

Significant influence is typically obtained when the Group, directly or indirectly, owns or holds more than

The consolidated financial statements have been pre-

20% of the voting rights, but less than 50%.

pared on the historical cost basis except for the following assets and liabilities, which are measured at fair value:

When assessing whether the Egmont Foundation exer-

derivative financial instruments, securities and invest-

cises control or significant influence, the potential voting

ment properties.

rights that are exercisable at the end of the reporting period are taken into account.

The accounting policies set out below have been applied consistently to the financial year and to the comparative

In the consolidated financial statements jointly

figures.

controlled entities are included according to the prorata method. The pro-rata method means that the

Use of estimates and judgements

proportionate share of the entities’ items in the financial

Judgements, estimates and assumptions have to be

statements is included in the corresponding items in the

made about future events when determining the

consolidated financial statements.

carrying amount of certain assets and liabilities. The

32

estimates and assumptions made are based on historical

The consolidated financial statements have been

experience and other factors that the Group deems

prepared by consolidating the Egmont Foundation’s and

appropriate in the circumstances, but which are uncer-

the individual subsidiaries’ financial statements, pre-

tain and unpredictable by nature. Therefore, the actual

pared in accordance with the Group accounting policies.

results may deviate from such estimates. Consequently,

On consolidation, intra-group income and expenses,

previous estimates may have to be changed as a result

shareholdings, intra-group balances and dividends,

Notes to the Consolidated Financial Statements (EURk)

1 Accounting policies (continued)

and realised and unrealised gains and losses on transac-

statement. The additional equity investments acquired

tions between the consolidated entities are eliminated.

are recognised at fair value in the balance sheet.

Unrealised gains on transactions with associates are eliminated in proportion to the Group’s ownership share

Any excess (goodwill) of the consideration transferred,

of the associate. Unrealised losses are eliminated in the

the value of non-controlling interests in the acquired

same way as unrealised gains to the extent that impair-

entity and the fair value of any existing equity interest

ment has not taken place. Transactions with pro-rata

over the fair value of the identifiable assets, liabilities and

consolidated entities are eliminated proportionally.

contingent liabilities acquired is recognised as goodwill under intangible assets. Goodwill is not amortised,

In the consolidated financial statements, the items of

but is tested for impairment at least annually. The first

subsidiaries are recognised in full. The non-controlling

impairment test is performed before the end of the year

interests’ shares of the profit for the year, comprehensive

of acquisition. Upon acquisition, goodwill is allocated

income and of the equity of subsidiaries not wholly

to the cash-generating units, which subsequently form

owned are included in the Group’s net profit for the year,

the basis for the impairment test. Goodwill and fair

comprehensive income and equity, respectively, but are

value adjustments in connection with the acquisition of

disclosed separately.

a foreign entity with another functional currency than the presentation currency of the Egmont Foundation are

Business combinations

treated as assets and liabilities belonging to the foreign

Businesses acquired or formed during the year are

entity and upon initial recognition translated into the

recognized in the consolidated financial statements

foreign entity’s functional currency at the exchange rate

from the date of acquisition or formation. Businesses

at the transaction date. Negative differences (negative

disposed of or wound up are recognised in the consoli-

goodwill) are recognised in profit for the year at the

dated financial statements until the date of disposal or

acquisition date.

winding-up. The comparative figures are not restated for newly acquired businesses. Discontinued operations are

The consideration transferred for an acquired business

disclosed separately; see below.

consists of the fair value of the agreed consideration in the form of assets transferred, liabilities assumed and

The acquisition method is used for acquisitions of new

equity instruments issued. If part of the consideration is

businesses over which the Egmont Foundation obtains

contingent on future events or compliance with agreed

control. The acquired businesses’ identifiable assets,

conditions, this part of the consideration is recognised at

liabilities and contingent liabilities are measured at fair

fair value at the date of acquisition. Costs attributable to

value at the acquisition date. Identifiable intangible

business combinations are expensed as incurred.

assets are recognised if they are separable or arise from a contractual right. Deferred tax related to the revalua-

If uncertainties regarding the identification or meas-

tions made is recognised.

urement of acquired assets, liabilities or contingent liabilities or determination of the consideration exist at

The acquisition date is the date when the Egmont

the acquisition date, initial recognition will take place

Foundation effectively obtains control of the acquired

on the basis of provisional values. If it subsequently

business.

becomes apparent that the identification or measurement of the transferred consideration, acquired assets,

When the business combination is effected in stages,

liabilities or contingent liabilities was incorrect on initial

where either control, joint control or significant influ-

recognition, the determination is adjusted retrospec-

ence is obtained, the existing equity interest is remeas-

tively, including goodwill, until 12 months after the

ured at fair value and the difference between the fair

acquisition, and the comparative figures are restated.

value and carrying amount is recognised in the income

Notes to the Consolidated Financial Statements (EURk)

33

1 Accounting policies (continued)

Subsequently, goodwill is not adjusted. Changes to

On initial recognition, foreign currency transactions are

estimates of contingent considerations are recognised

translated to the functional currency at the exchange

in the income statement.

rates at the transaction date. Foreign exchange differences arising between the exchange rates at the transac-

The acquisition of further non-controlling interests after

tion date and at the date of payment are recognised in

obtaining control is considered an owner’s transaction,

the income statement as financial income or financial

and the difference between acquisition cost and the

expenses.

share of such non-controlling interests acquired is recognised directly in equity.

Receivables, payables and other monetary items denominated in foreign currencies are translated to the

Gains or losses on the disposal or winding-up of sub-

functional currency at the exchange rates at the end

sidiaries, jointly controlled entities and associates are

of the reporting period. The difference between the

stated as the difference between the selling price or the

exchange rates at the end of the reporting period and

disposal consideration and the carrying amount of net

at the date at which the receivable or payable arose

assets, including goodwill, at the date of disposal, less

or was recognised in the latest financial statements is

the cost of disposal. If the disposal of either control, joint

recognised in the income statement as financial income

control or significant influence takes place in stages,

or financial expenses.

the retained equity investment is measured at fair value, and the difference between the fair value and carrying

In the consolidated financial statements, the income

amount is recognised in the income statement.

statements of entities with another functional currency than the presentation currency (EUR) are translated

Non-controlling interests

at the exchange rates at the transaction date, and the

On initial recognition, non-controlling interests are

balance sheet items are translated at the exchange

measured at the fair value of the ownership share or at

rates at the end of the reporting period. An average

the proportionate share of the fair value of the acquired

exchange rate for each month is used as the transaction

business’ identifiable assets, liabilities and contingent

date exchange rate to the extent that this does not

liabilities. In the first scenario, goodwill in relation to

significantly distort the presentation of the underlying

the non-controlling interests’ ownership share of the

transactions. Foreign exchange differences arising on

acquired business is thus recognised, while, in the latter

translation of the opening balance of equity of such

scenario, goodwill in relation to the non-controlling

foreign entities at the exchange rates at the end of the

interests is not recognised. The measurement of non-

reporting period and on translation of the income state-

controlling interests is chosen transaction by transaction

ments from the exchange rates at the transaction date

and stated in the notes in connection with the descrip-

to the exchange rates at the end of the reporting period

tion of acquired businesses.

are recognised directly in other comprehensive income and presented in equity under a separate translation

Foreign currency translation

reserve. The exchange rate adjustment is allocated

A functional currency is determined for each of the

between the equities of the Foundation and the non-

reporting entities in the Group. The functional currency

controlling interests.

is the currency used in the primary economic environ-

34

ment in which the individual reporting entity operates.

Foreign exchange adjustments of intra-group balances

Transactions denominated in currencies other than the

which are considered part of the total net investment in

functional currency are considered foreign currency

foreign entities with another functional currency than

transactions.

the presentation currency (EUR) are recognised in other

Notes to the Consolidated Financial Statements (EURk)

1 Accounting policies (continued)

comprehensive income and presented in equity under a

On partial disposal of associates and jointly controlled

separate translation reserve.

entities, the proportionate share of the accumulated translation reserve recognised in other comprehensive

On recognition in the consolidated financial statements

income is transferred to the income statement for the

of associates with another functional currency than the

year together with any gains or losses from the disposal.

presentation currency (EUR), the share of profit/loss for the year is translated at average exchange rates and

Any repayment of intra-group balances which constitute

the share of equity, including goodwill, is translated at

part of the net investment in the foreign entity is not

the exchange rates at the end of the reporting period.

considered a partial disposal of that subsidiary.

Foreign exchange differences arising on the translation of the share of the opening balance of equity of

Derivative financial instruments

foreign associates at the exchange rates at the end of

Derivative financial instruments are recognised at the

the reporting period, and on translation of the share

date a derivative contract is entered into and measured

of profit/loss for the year from average exchange rates

in the balance sheet at fair value. Positive and nega-

to the exchange rates at the end of the reporting

tive fair values of derivative financial instruments are

period, are recognised in other comprehensive income

included in other receivables and payables, respectively,

and presented­in equity under a separate translation

and a set-off of positive and negative values is only

reserve.

made when the entity has the right and the intention to settle several financial instruments net. Fair values of

On disposal of wholly-owned foreign entities with

derivative financial instruments are computed on the

another functional currency than the presentation cur-

basis of current market data and generally accepted

rency (EUR), the exchange rate adjustments that have

valuation methods.

been recognised in other comprehensive income and are attributable to the entity are reclassified from other com-

Changes in the fair value of derivative financial instru-

prehensive income to the income statement together

ments designated as and qualifying for recognition as a

with any gains or losses from the disposal.

hedge of the fair value of a recognised asset or liability are recognised in the income statement together with

On disposal of partially owned foreign subsidiaries with

changes in the value of the hedged asset or liability as

another functional currency than the presentation cur-

far as the hedged portion is concerned. Hedging of

rency (EUR), the amount of the translation reserve attrib-

future cash flows according to agreement (firm commit-

utable to non-controlling interests is not transferred to

ment), except for foreign currency hedges, is treated as a

the income statement.

fair value hedge. The portion of the value adjustment of a derivative financial instrument that is not included in a

On partial disposal of foreign subsidiaries with another

hedge is recognised under financial items.

functional currency than the presentation currency (EUR) without a loss of control, a proportionate share of the

Changes in the portion of the fair value of derivative

translation reserve is transferred from the Group to the

financial instruments designated as and qualifying as a

non-controlling interests’ share of equity.

cash flow hedge that is an effective hedge of changes in

Notes to the Consolidated Financial Statements (EURk)

35

1 Accounting policies (continued)

future cash flows are recognised in other comprehensive

Magazine subscriptions are accrued and recognised over

income in equity under a separate hedging reserve until

the period in which the items are dispatched (issued).

the hedged cash flows affect the income statement. At that time, any gains or losses resulting from such hedged

If, based on past experience or otherwise, the Group can

transactions are transferred to other comprehensive

make a reliable estimate of the amount of goods that

income and recognised under the same item as the

will be returned, a provision for the goods estimated to

hedged item.

be returned will be recognised. When there is uncertainty about the possibility of return, revenue is not

If the hedging instrument no longer qualifies for hedge

recognised until the goods have been delivered and the

accounting, the hedge will cease to be effective. The

time period for return has elapsed.

accumulated change in value recognised in other comprehensive income is transferred to the income

Advertising income is recognised on the delivery date,

statement when the hedged cash flows affect the

typically when issued or broadcasted.

income statement. If the hedged cash flows are no longer expected to be realised, the accumulated change

Revenue from the sale of film broadcasting rights is

in value will be transferred to the income statement

recognised at the time when the film becomes accessible

immediately. The portion of a derivative financial

to the customer (availability date).

instrument not included in a hedge is recognised under financial items.

Royalties received are accrued and recognised as income in accordance with the concluded agreement.

For derivative financial instruments that do not qualify for treatment as hedging instruments, changes in fair

Rental income is accrued and recognised as income on a

value are recognised on an ongoing basis in the income

straight-line basis over the lease term in accordance with

statement under financial items.

the concluded agreement.

Barter agreements where the services exchanged are

INCOME STATEMENT

dissimilar are recognised at fair value and accrued as the services are performed or over the period specified

Revenue

in the concluded agreement. Fair value is measured at

Revenue from the sale of goods for resale and finished

the value of either the delivered or the received services,

goods is recognised in the income statement when all

depending on which services can be measured reliably.

the following conditions have been satisfied: • the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; • the Group retains neither continuing managerial involvement to the degree usually associated with

Revenue is measured at the fair value of the agreed consideration exclusive of VAT and taxes charged on behalf of third parties. All discounts granted are recognised as a reduction of revenue.

ownership nor effective control over the goods sold; • the amount of revenue can be measured reliably;

Other operating income and costs

• it is probable that the economic benefits associated

Other operating income and costs comprise items sec-

with the transaction will flow to the Group; and

ondary to the principal activities of the entities, including

• the costs incurred or to be incurred in respect of the

gains and losses on the disposal of businesses, which are

transaction can be measured reliably.

36

Notes to the Consolidated Financial Statements (EURk)

not continuing operations, intangible assets and prop-

1 Accounting policies (continued)

erty, plant and equipment, as well as continuing value

ments which are not designated as hedging instruments

adjustments of investment properties at fair value. Gains

as well as the ineffective portion of the hedges are also

and losses on the disposal of entities, intangible assets

included.

and property, plant and equipment are determined as the selling price less disposal costs and the carrying

Borrowing costs relating to general borrowing or loans

amount at the date of disposal.

directly relating to the acquisition, construction or development of qualifying assets are allocated to the cost of

Government grants

such assets.

Government grants comprise film and ticket subsidies for in-house produced films. Grants are recognised

Tax for the year

when there is reasonable assurance that they will be

Tax for the year, which comprises current tax and

received. Film subsidies for in-house produced films

changes in deferred tax for the year, is recognised in the

recognised in the balance sheet are offset against the

income statement, in other comprehensive income or

cost of in-house produced films. Ticket subsidies are

directly in equity.

recognised in the income statement under other operating income.

BALANCE SHEET Special items Special items include significant income and costs that

Film rights, etc.

are not directly attributable to the ordinary operating

Film rights comprise film, DVD and TV rights. Film rights

activities of the Group, such as restructuring costs

are recognised as an intangible asset at the time when

relating to fundamental structural and procedural reor-

control over the asset is transferred. Prepayments for

ganisations. Special items also includes other significant

film rights are recognised in the balance sheet as prepaid

non-recurring items, including gains and losses on the

intangible assets, and when control is gained over the

disposal of significant activities, revaluation of the share-

assets, the prepayments are reclassified to film rights.

holding in an entity acquired by a step acquisition and impairment of goodwill.

Film rights are measured at cost. For purchases, the cost is allocated proportionally to the cinema, DVD and TV

These items are shown separately in order to give a more

media, as well as to markets.

true and fair view of the Group’s primary activities.

Film rights are amortised according to a revenue-based Share of result from investments in associates

method over the period during which they are expected

The proportionate share of the associates’ results after

to generate income on the respective market and in the

tax and non-controlling interests and after elimination

respective media.

of the proportionate share of intra-group gains/losses is recognised in the consolidated income statement.

Other intellectual property rights with a limited useful life, such as domain names and magazine titles, are

Financial income and expenses

measured at cost on initial recognition and amortised

Financial income and expenses comprise interest

on a straight-line basis over the useful life (typically 5 to

income and expense, gains and losses on securities,

10 years).

payables and transactions denominated in foreign currencies, amortisation of financial assets and liabilities,

In-house produced film rights

including finance lease commitments. Furthermore,

In-house produced film rights are measured at cost,

changes in the fair value of derivative financial instru-

which includes indirect production costs, less grants

Notes to the Consolidated Financial Statements (EURk)

37

1 Accounting policies (continued)

received, accumulated amortisation and impairment, or

The cost of assets held under finance leases is recognised

at the recoverable amount where this is lower.

at the lower of the fair value of the assets and the present value of future minimum lease payments. In the

In-house produced film rights are amortised according

calculation of present value, the interest rate implicit in

to a revenue-based method over the period during

the lease or the Group’s incremental borrowing rate is

which they are expected to generate income.

used as the discount rate.

Goodwill

When individual components of an item of property,

On initial recognition, goodwill is recognised in the

plant and equipment have different useful lives, the cost

balance sheet at cost as described under ‘Business

of such individual components is accounted for and

combinations’. Subsequently, goodwill is measured at

depreciated separately. Depreciation is provided on a

cost less accumulated impairment losses. Goodwill is not

straight-line basis over the expected useful lives, based

amortised.

on the following estimates of the useful lives of the assets:

The carrying amount of goodwill is allocated to the Group’s cash-generating units at the date of acquisition.

Corporate properties (head offices)

The identification of cash-generating units is based

Properties used for operational purposes

on the management structure and internal financial

Installations and conversions (the useful life depends on the nature of conversion)

control.

Trademarks Acquired intellectual property rights, including trademarks acquired in business combinations, are measured at cost on initial recognition. Trademarks with an

Plant and machinery

25, 50 years 25 years

10, 15, 25 years

3 - 15 years

Tools and equipment Leasehold improvements

3 - 5 years 5 - 10 years

Land is not depreciated.

indefinite useful life are not amortised but are tested for impairment at least once annually.

Depreciation is made on the basis of the asset’s residual value less any impairment losses. The residual value and

Property, plant and equipment

useful life of the assets are reassessed every year. If the

Land and buildings, plant and machinery, tools and

residual value exceeds the carrying amount, depreciation

equipment and leasehold improvements are measured

is discontinued.

at cost less accumulated depreciation and impairment.

In case of changes in the useful life or the residual value, Cost comprises the purchase price and any costs directly

the effect on depreciation is recognised prospectively as

attributable to the acquisition until the date when the

a change in accounting estimates.

asset is available for use.

Gains and losses on the disposal of property, plant and Subsequent costs, e.g. in connection with replacing

equipment are determined as the difference between

components of property, plant and equipment, are

the selling price less disposal costs and the carrying

recognised in the carrying amount of the relevant asset if

amount at the date of disposal. Gains or losses are rec-

it is probable that the costs will result in future economic

ognised in the income statement under other operating

benefits for the Group. The replaced components are

income or other operating costs, respectively.

derecognised in the balance sheet, and the carrying

38

amount is transferred to the income statement. All other

Investment properties

costs incurred for ordinary repairs and maintenance are

Properties are classified as investment properties when

recognised in the income statement as incurred.

they are held for the purpose of obtaining rental income

Notes to the Consolidated Financial Statements (EURk)

1 Accounting policies (continued)

and/or capital gains. On initial recognition, investment

before the end of the acquisition year. Likewise, devel-

properties are measured at cost, consisting of the

opment projects in process are subject to an annual

acquisition cost of the property and any costs directly

impairment test.

attributable to the acquisition. Subsequently, investment properties are measured at fair value. Changes in the

The carrying amount of goodwill is tested for impair-

fair value are recognised in the income statement as a

ment together with the other non-current assets of

value adjustment of investment properties under other

the cash-generating unit to which goodwill has been

operating income/costs in the financial year in which the

allocated. If the carrying amount exceeds the recover-

change occurs.

able amount, it is written down to the recoverable amount via the income statement. As a main rule, the

Realised gains and losses on the disposal of investment

recoverable amount is calculated as the present value of

properties are determined as the difference between

expected future net cash flows from the entity or activity­

the carrying amount and the selling price and are also

(cash-generating unit) to which goodwill has been

recognised in the item ‘value adjustment of investment

allocated.

properties’’ under other operating income/costs.

Deferred tax assets are subject to annual impairment Investments in associates

tests and are recognised only to the extent that it is

Investments in associates are recognised in the

probable that the assets will be utilised.

consolidated financial statements according to the equity method, which means that the investments are

The carrying amount of other non-current assets is

measured in the balance sheet at the proportionate

tested annually for impairment indicators. When

share of the associates’ net asset values calculated

there is an indication that assets may be impaired, the

in accordance with the Group’s accounting policies

recoverable amount of the asset is determined. The

minus or plus the proportionate share of unrealised

recoverable amount is the higher of an asset’s fair value

intra-group gains and losses and plus any excess values

less expected disposal costs and its value in use. Value in

on acquisition, including goodwill. Investments in

use is the present value of future cash flows expected to

associates are tested for impairment when impairment

be derived from an asset or the cash-generating unit to

indicators are identified.

which the asset belongs.

Investments in associates with negative equity are

An impairment loss is recognised if the carrying amount

measured at EUR 0 (nil). If the Group has a legal or

of an asset or a cash-generating unit exceeds the

constructive obligation to cover a deficit in the associate,

recoverable amount of the asset or the cash-generating

such deficit is recognised under liabilities.

unit. Impairment losses are recognised in the income statement.

Receivables from associates are measured at amortised cost less any impairment loses.

Impairment of goodwill is not reversed. Impairment of other assets is reversed only to the extent that changes

On the acquisition of investments in associates, the

in the assumptions and estimates underlying the impair-

acquisition method is used; see the description of busi-

ment calculation have occurred. Impairment is only

ness combinations.

reversed to the extent that the asset’s increased carrying amount does not exceed the carrying amount that

Impairment of non-current assets

would have been determined (net of amortisation or

Goodwill and intangible assets with indefinite useful

depreciation) had no impairment loss been recognised

lives are subject to annual impairment tests, initially

for the asset in prior years.

Notes to the Consolidated Financial Statements (EURk)

39

1 Accounting policies (continued)

Inventories

Securities

Inventories are measured at the lower of cost according

Securities consist mainly of listed bonds that are held

to the FIFO method and the net realisable value.

for investment of excess liquidity and managed in accordance with a documented investment strategy.

Goods for resale and raw materials and consumables

Securities are measured initially at the listed price at the

are measured at cost, comprising purchase price plus

trade date and subsequently at the listed price at the

delivery costs.

end of the reporting period using the fair value option.

Value adjustments are recognised directly in the income

The cost of finished goods and work in progress

statement.

comprises the cost of raw materials, consumables, direct wages and salaries and indirect production overheads.

Pension obligations and similar

Indirect production overheads comprise indirect

non-current liabilities

materials, wages and salaries as well as maintenance

The Group has entered into pension plans and similar

and depreciation of production machinery and

arrangements with the majority of the Group’s employ-

equipment as well as administration and management

ees.

costs.

Obligations relating to defined contribution plans where The cost of acquired TV programmes are recognised as

the Group regularly pays fixed pension contributions

inventory at the time when the right to broadcast the

to independent pension funds are recognised in the

TV programme begins. The cost of a TV programme is

income statement in the period during which employees­

amortised proportionally over the period the TV pro-

earn entitlement to them, and any contributions

gramme is broadcast.

outstanding are recognised in the balance sheet under other payables.

The net realisable value of inventories is calculated as the selling price less costs of completion and costs neces-

For defined benefit plans, an actuarial calculation (the

sary to effect the sale and is determined taking into

Projected Unit Credit method) is performed annually of

account marketability, obsolescence and development in

the present value of future benefits payable under the

expected selling price.

defined benefit plan. The present value is determined on the basis of assumptions about the future development

Receivables

in variables such as salary levels, interest rates, inflation

Receivables are measured at fair value on initial recogni-

and life expectancy. The present value is determined only

tion and are subsequently measured at amortised cost

for benefits earned by employees from their employ-

less any impairment. The Group considers evidence of

ment with the Group. The actuarial present value less

impairment both on an individual level and on a group

the fair value of any plan assets is recognised in the bal-

level where considered relevant.

ance sheet under pension obligations.

Prepayments

If a pension plan constitutes a net asset, the asset is only

Prepayments, such as prepaid royalty, prepaid authors’

recognised if it represents future refunds from the plan

fees and prepaid TV programmes and sports broadcast-

or will lead to reduced future payments to the plan.

ing rights, which are recognised under assets, comprise

40

costs incurred concerning subsequent financial years.

Pension costs for the year are recognised in the income

Prepayments are measured at cost.

statement based on actuarial estimates and financial

Notes to the Consolidated Financial Statements (EURk)

1 Accounting policies (continued)

expectations at the beginning of the year. Any difference

Deferred tax assets and liabilities are set off if the entity

between the expected development in pension plan

has a legally enforceable right to set off current tax

assets and liabilities and the realised amounts deter-

liabilities and tax assets or intends either to settle current

mined at year-end is termed an actuarial gain or loss and

tax liabilities and tax assets on a net basis or to realise the

is recognised in other comprehensive income.

assets and settle the liabilities at the same time.

Non-current employee benefits are recognised at the

Deferred tax is adjusted for eliminations of unrealised

best estimate of the expenditure required to settle the

intra-group gains and losses.

present obligation at the end of the reporting period.

Deferred tax is measured according to the tax rules and Current tax payable/receivable and deferred taxes

at the tax rates applicable in the respective countries

Current tax payable and receivable is recognised in the

at the end of the reporting period when the deferred

balance sheet as tax computed on the taxable income

tax is expected to be realised as current tax. Changes in

for the year, adjusted for tax on the taxable income of

deferred tax due to changed tax rates are recognised in

prior years and for tax paid on account.

the comprehensive income for the year.

Deferred tax is measured using the balance sheet

Other provisions

liability method on the basis of all temporary differences

Other provisions primarily consist of provisions for

between the carrying amount and the tax base of assets

goods sold with a right of return, where, based on past

and liabilities. However, deferred tax is not recognised

experience or otherwise, the Group can make a reliable

on temporary differences relating to goodwill that is not

estimate of the amount of goods that will be returned as

deductible for tax purposes and on office premises and

well as expected restructuring costs, etc.

other items where temporary differences, apart from business combinations, arise at the date of acquisition

Provisions are recognised when the Group incurs a

without affecting either result for the year or taxable

legal or constructive obligation due to an event occur-

income. Where different tax rules can be applied to

ring before or at the end of the reporting period, and

determine the tax base, deferred tax is measured based

meeting the obligation is likely to result in an outflow of

on Management’s planned use of the asset or settlement

economic benefits.

of the liability.

Provisions are measured at the best estimate of the Deferred tax assets, including the tax base of tax loss

expenses required to settle the obligation.

carryforwards, are recognised under other non-current assets at the expected value of their utilisation; either

When provisions are measured, the costs required

as a set-off against tax on future earnings or as a set-off

to settle the obligation are discounted provided that

against deferred tax liabilities in the same legal tax entity

such discounting would have a material effect on the

and jurisdiction.

measurement of the liability. A pre-tax discount rate is

Notes to the Consolidated Financial Statements (EURk)

41

1 Accounting policies (continued)

used that reflects the current market interest rate level

defined as a group of assets to be disposed of in a

plus risks specific to the liability. Changes in the discount

single transaction, through sale or otherwise. Liabilities

element during the financial year are recognised in the

associated with assets classified as held for sale are

income statement under financial expenses.

those liabilities directly associated with the assets that will be transferred in the transaction. Assets are

Warranty provisions are recognised as the underlying

classified as held for sale if their carrying amount will be

goods are sold based on historical warranty costs experi-

recovered principally through a sale within 12 months

ence in previous financial years.

in accordance with a formal plan rather than through continuing use.

Restructuring costs are recognised under liabilities when a detailed, formal restructuring plan has been

Assets or disposal groups held for sale are measured at

announced to the employees affected no later than at

the lower of their carrying amount at the date of clas-

the end of the reporting period. On acquisition of busi-

sification as held for sale and their fair value less disposal

nesses, provisions for restructuring in the acquiree are

costs. Assets are not depreciated or amortised from the

only included in goodwill when, at the acquisition date,

date when they are classified as held for sale.

the acquiree had an existing liability for restructuring.

Impairment losses on initial recognition as held for sale A provision for onerous contracts is recognised when the

and gains and losses on subsequent remeasurement at

expected benefits to be obtained by the Group from a

the lower of carrying amount and fair value less disposal

contract are lower than the unavoidable costs of meet-

costs are recognised in the income statement under the

ing its obligations under the contract.

items to which they relate. Gains and losses are disclosed in the notes.

Financial and non-financial liabilities Financial liabilities are recognised as at the date of bor-

Assets and associated liabilities are presented as separate

rowing as the net proceeds received less transaction

line items in the balance sheet, and the principal items

costs paid. In subsequent periods, the financial liabilities

are specified in the notes. Comparative figures in the

are measured at amortised cost, such that the difference

balance sheet are not restated.

between the proceeds and the nominal value is recognised under financial expenses in the income statement

Presentation of discontinued operations

over the term of the loan.

Discontinued operations represent a separate major line of business whose activities and cash flows can be clearly

Financial liabilities also include the capitalised residual

distinguished, operationally and for financial reporting

lease commitment under finance leases, which is meas-

purposes, from the other business areas, provided that

ured at amortised cost. Other liabilities are measured at

the unit has been disposed of or that it is held for sale

net realisable value.

and the sale is expected to be carried out within twelve months in accordance with a formal plan. Discontinued

Deferred income

operations also include businesses which are classified as

Deferred income, including the sale of film broadcasting

held for sale in connection with the acquisition.

rights, is measured at amortised cost.

The profit after tax on discontinued operations and value

42

Assets held for sale

adjustments after tax of related assets and liabilities and

Assets held for sale consist of non-current assets and

gains and losses on disposal are presented as a separate

disposal groups held for sale. Disposal groups are

line item in the income statement with a restatement of

Notes to the Consolidated Financial Statements (EURk)

1 Accounting policies (continued)

comparative figures. The notes disclose revenue, costs,

Cash and cash equivalents comprise cash and market-

value adjustments and tax for the discontinued opera-

able securities with a residual term of less than three

tions.

months at the acquisition date which are subject to an insignificant risk of changes in value.

Assets and related liabilities for discontinued operations are presented in separate line items in the balance sheet

Cash flows in other currencies than the functional

without a restatement of comparative figures; see the

currency are translated using average exchange rates

section ‘Assets held for sale’, and the principal items are

unless these deviate significantly from the rates at the

specified in the notes.

transaction date.

Cash flow statement

Cash flows from operating, investing and financing

The cash flow statement shows the cash flows from

activities for discontinued operations are disclosed in a

operating, investing and financing activities for the year,

note.

the year’s changes in cash and cash equivalents as well as the Group’s cash and cash equivalents at the begin-

Segment information

ning and end of the year.

The Egmont Foundation is not officially listed, and in accordance with IFRS, segment information need there-

The cash flow effect of acquisitions and disposals of

fore not be presented.

businesses is shown separately in cash flows from investing activities. Cash flows from acquired businesses are

Financial ratios

recognised in the cash flow statement from the date of

Financial ratios are calculated in accordance with the

acquisition, and cash flows from disposals of businesses

Danish Society of Financial Analysts’ ‘Recommendations

are recognised until the date of disposal.

and Financial Ratios 2010’.

Cash flows from operating activities are calculated

The financial ratios stated under financial highlights have

according to the indirect method as the profit for the

been calculated as follows:

year before net financials, adjusted for non-cash operating items, changes in working capital and corporate

Operating margin

income tax paid.

Operating profit x 100 Revenue

Cash flows from investing activities comprise payments in connection with the acquisition and disposal of businesses and activities and the acquisition and disposal of intangible assets, property, plant and equipment and

Equity ratio Equity, excl. non-controlling interests, x 100 Total assets

other non-current assets, as well as securities.

Acquisitions of assets by means of finance leases are treated as non-cash transactions.

Cash flows from financing activities comprise the rais-

Return on equity Net profit for the year, excl. non-controlling interests, x 100 Average equity, excl. non-controlling interests

ing of loans and repayment of interest-bearing debt, donations made and transactions with non-controlling interests.

Notes to the Consolidated Financial Statements (EURk)

43

2

Revenue

Sale of goods

Royalty

Rental income

Total

2012

2011

1,547,612

1,326,867

63,421

50,817

5,847

8,636

1,616,880

1,386,320

3 Other operating income

2012

2011

Sale of The Student Planner

3,424

0

Sale of TV productions

0

1,148

Government grants

Miscellaneous

Total

187

665

9,034

9,038

12,645

10,851

2012

2011

(307,639)

(266,917)

(17,274)

(16,272)

4 Personnel costs

Wages and salaries

Defined contribution pension plans

Defined benefit pension plans

Other social security costs

Total

(8,297)

(3,852)

(51,972)

(36,110)

(385,182)

(323,151)

Average number of employees, total

4,615

4,161

Compensation paid to the Management Board amounted to 3,211 (2011: 3,088), of which pension contributions amounted to 349 (2011: 346). Compensation paid to the Board of Trustees amounted to 454 (2011: 377).

5 Depreciation, amortisation and impairment

Amortisation, intangible assets

Impairment losses, intangible assets

Depreciation, property, plant and equipment

Impairment losses, property, plant and equipment

Total

2012

2011

(47,335)

(34,920)

(5,167)

(1,952)

(28,257)

(23,746)

0 (80,759)

(2,225) (62,843)

6

Special items

2012

2011

Value adjustment of existing shares in TV 2, Norway

164,977

0

Impairment losses of goodwill TV 2, Norway

(89,667)

0

Cost of closing printing facilities

(8,043)

0

Total

67,267

0

Please refer to note 29 Acquisition of businesses regarding value adjustment of TV 2, Norway and note 10 Intangible

assets regarding impairment of TV 2, Norway.

44

Notes to the Consolidated Financial Statements (EURk)

7

Financial income

2012

2011

Interest income, financial assets, measured at amortised cost

3,559

2,771

Interest income, securities

1,122

5,242

Foreign exchange gains, net

1,189

2,407

Change in fair value, derivative financial instruments

Other financial income

Total

515

800

5,348

2,006

11,733

13,226

8

Financial expenses

2012

2011

Interest expenses, financial liabilities, measured at amortised cost

(7,835)

(7,113)

Interest expenses, derivative financial instruments

(5,121)

(3,877)

Change in fair value, securities, net

Other financial expenses

Total

(571)

(991)

(4,936)

(3,327)

(18,463)

(15,308)

9

Taxes

2012

2011

Current tax

(9,750)

(14,752)

Deferred tax

(7,549)

(5,667)

Adjustments for prior years

(262)

Total

(17,561)

337 (20,082)

Tax on the profit for the year results as follows:

Calculated tax, 25% on profit before tax

Adjustment of calculated tax in foreign entities relative to 25%

Tax effect of:

Non-taxable income

56,796

6,786

Non-deductible expenses

(28,339)

(3,757)

Share of net profit/(loss) in associates

520

2,066

Adjustments for prior years

(262)

Total

(42,186)

(23,431)

(4,090)

(2,083)

(17,561)

337 (20,082)

Effective tax rate

10.4%

21.4%

The effective tax rate in 2012 is materially affected by a non-taxable value adjustment of TV 2, Norway.

When adjustning for this, the effective tax rate is 22.9 % for 2012.

Tax recognised in other comprehensive income:

Tax on value adjustment of hedging instruments

Tax on actuarial gains/(losses) on defined benefit pension plans

Total

379

240

(10,879)

4,120

(10,500)

4,360

Notes to the Consolidated Financial Statements (EURk)

45

10 Intangible assets   Intangible

assets under

Film In-house development

rights, produced Trade- and pre etc. film rights Goodwill marks payments

Cost at 1 January 2012

131,247

73,345

121,262

47,294

24,933

Foreign exchange adjustments

Acquisitions through business combinations

189

479

6,554

2,779

(71)

21,696

0

302,956

191,167

0

Additions

Goverment grants

4,733

16,539

0

0

34,096

0

(10,237)

0

0

0

Transferred

35,276

(291)

0

550

(35,535)

Cost of assets disposed of

(3,802)

(4,589)

(62,797)

(21,298)

(990)

Cost at 31 December 2012

189,339

75,246

367,975

220,492

22,433

Amortisation and impairment losses at 1 January 2012

Foreign exchange adjustments

Amortisation and impairment losses of assets disposed of

Impairment losses

Amortisation

(93,200) (65,113) (30,836) (2,714) (992)

(404)

(3,501)

3,402

2,723

21,739

(257)

(613) 2

2,467 0

(4,003)

0

(90,831)

0

0

(40,427)

(6,766)

0

(142)

0

Amortisation and impairment (135,220) losses at 31 December 2012

(69,560)

(103,429)

(646)

(611)

264,546

219,846

21,822

Carrying amount at 31 December 2012

54,119

5,686

Cost at 1 January 2011

Foreign exchange adjustments

103,716

79,698

130,270

46,773

165

1,229

4,091

1,023

Additions

Goverment grants

Transferred

23,934

(712)

Cost of assets disposed of

(3,530)

(10,973)

Cost at 31 December 2011

131,247

73,345

121,262

16,420 (11)

6,962

13,644

739

0

31,746

0

(9,541)

0

0

0

0

0

(23,222)

(13,838)

(502)

0

47,294

24,933

Amortisation and impairment losses at 1 January 2011

Foreign exchange adjustments

Amortisation and impairment losses of assets disposed of

Amortisation

(68,573) (64,147) (37,233) (2,564)

(611)

494

(1,022)

(3,621)

(652)

(2)

3,374

7,122

11,329

502

0

Transferred

(338)

338

0

0

0

Impairment losses

(641)

0

(1,311)

0

0

(27,516)

(7,404)

0

0

0

(93,200)

(65,113)

(30,836)

(2,714)

(613)

90,426

44,580

24,320

Amortisation and impairment losses at 31 December 2011

Carrying amount at 31 December 2011

38,047

8,232

46

Notes to the Consolidated Financial Statements (EURk)

10 Intangible assets (continued)

Goodwill The carrying amount of goodwill is tested annually for impairment. The impairment test is made for the Group’s cashgenerating units, based on their management structure and management control; see below:

2012 196,106

2011

TV 2, Norway

37,520

Nordisk Film, Cinemas

5,712

4,187

Magazines, Norway

34,355

31,137

Books, Norway

13,985

10,592

Other units

14,388

6,990

Carrying amount

264,546

90,426

In the impairment test of the cash-generating units, the recoverable amount, equivalent to the discounted value of expected future net cash flows, is compared with the carrying amount of the cash-generating units.

The recoverable amount is based on the value in use, determined by using expected net cash flows that are based on management-approved budgets and business plans for 2012, projections for subsequent years up to and including 2017, and average growth during the terminal period. For the primary cash-generating units, the following pre-tax discount rates have been used: TV 2, Norway 8.7 % (2011: 8.3 %), Nordisk Film, Cinemas 8.0 % (2011: 9.6 %), Magazines, Norway 8.9 % (2011: 10.0 %) and Books, Norway 10.0 % (2011: 10.0 %).

The average expected growth during the terminal period is 2.0 % for TV 2, Norway (2011: 2.6 %), -5.0 % for Magazines, Norway (2011: -4.1 %) and 2.0 % for Books, Norway (2011: 2.0 %). Expected growth during the terminal period is not estimated to exceed the long-term average growth rate in the business areas.

In February 2012 Egmont acquired the remaining 50 % of the shares in TV 2, Norway. Please refer to note 29 for further information.

The TV business is cyclical and therefore affected by a generally large uncertainty regarding the development in revenue and expenses. Combined with increasing prices for acquiring TV rights for especially sports events and increasing program cost for Norwegian TV productions, it may result in a challenged EBITDA-margin the coming years. At the end of 2012 assessment and analyses of these uncertainties resulted in an impairment loss of goodwill regarding TV 2, Norway, for the amount of EUR 89.7 million. The impairment loss is recognized in the profit loss account under special items.

The sensitivity for further impairments losses regarding the TV business is highly related to the development in advertising revenue, the revenue-category which is most sensitive to cyclical fluctuations. Advertising revenue amounts to more than 50 % of the total revenue in the TV business and long-term fluctuations is the greatest uncertainty associated to the future earnings. Additionally it is difficult to adjust program cost because they are disposed for a longer period in the future.

Inpairment tests for goodwill for 2012 regarding the other cash-generating units of the Group: Nordisk Film, Cinemas, Magazines, Norway and Books, Norway show that the recoverable amount exceeds the carrying amount.

Notes to the Consolidated Financial Statements (EURk)

47

10 Intangible assets (continued)

Trademarks Trademarks with an indefinite useful life relate to the individual cash-generating units’ primary sales. The Group is testing the carrying amount of trademarks with an indefinite useful life for impairment annually; see below:

2012

2011

190,791

17,772

Magazines, Norway

18,219

17,242

Books, Norway

10,115

9,566

219,125

44,580

TV 2, Norway

Carrying amount

Trademarks for TV 2, Norway, and Magazines, Norway, are tested by using the Relief from Royalty method to assess future cash flows from royalty income for the individual trademarks. The royalty rate, determined on the basis of the cash-generating unit’s products and the reputation of such products, ranged from 5 to 14% for 2012 and 2011.

The trademark of Books, Norway, has been tested together with the goodwill of the cash-generating unit to which it

relates.

The following pre-tax discount rates have been used: 8.7 to 10.0% (2011: 9.9 to 11.0%). The average expected growth during the terminal period is 2.0 % for TV 2, Norway (2011: 2.5 %), -5.0 % for Magazines, Norway (2011: -3.5 %) and 2.0 % for Books, Norway (2011: 2.0 %).

The impairment tests for trademarks for 2012 show that the recoverable amount exceeds the carrying amount.

The Group assesses that probable changes in the assumptions underlying the impairment calculations will result in no need to write down trademarks for impairment in the Group’s primary cash-generating units.

Film rights and in-house produced film rights The Group makes regular estimates of the useful lives of film rights and in-house produced film rights based on its expected sales in the cinema, DVD and TV media and in markets, which are naturally subject to uncertainty as actual sales may differ from estimated sales.

The Group continuously receives sales estimates, and if impairment indicators are identified, film rights and in-house produced film rights are written down for impairment. The useful lives of film rights and in-house produced film rights for 2012 were at the expected level.

48

Notes to the Consolidated Financial Statements (EURk)

11 Property, plant and equipment   Property,

plant and Leasehold equipment Land and Plant and Tools and improve- under

buildings machinery equipment ments construction Â

Cost at 1 January 2012

Foreign exchange adjustments

Acquisitions through business combinations

Additions

Transferred

Cost of assets disposed of

Cost at 31 December 2012

210,948

105,423

82,012

14,468

6,264

100

3,995

2,391

236

(11)

1,269

26,513

529

1,469

0

234

17,723

7,166

1,897

9,962 (12,480)

5,287

325

6,036

832

(900)

(43,864)

(4,219)

(4,709)

(859)

216,938

110,115

93,915

14,193

2,876

Depreciation and impairment losses at 1 January 2012

Foreign exchange adjustments

Depreciation and impairment losses of assets disposed of

Transferred

Depreciation Depreciation and impairment losses at 31 December 2012

(37,151) (88,941) (64,610) (10,656)

0

(543)

(3,009)

(1,848)

(154)

0

34

30,491

3,622

3,955

0

(23)

0

0

23

0

(6,277) (12,101) (8,395) (1,484)

0

(43,960)

(73,560)

(71,231)

(8,316)

0

172,978

36,555

22,684

5,877

2,876

Carrying amount at 31 December 2012

Hereof assets held under finance leases

0

3,142

0

0

0

Cost at 1 January 2011

210,992

104,552

79,343

15,239

Foreign exchange adjustments

613

707

290

96

10

Additions

430

7,557

5,390

542

4,879 (1,918)

Transferred

Cost of assets disposed of

Cost at 31 December 2011

3,319

614

142

412

750

(1,701)

(7,535)

(3,423)

(2,159)

(26)

210,948

105,423

82,012

14,468

6,264

Depreciation and impairment losses at 1 January 2011

Foreign exchange adjustments

Depreciation and impairment losses of assets disposed of

Impairment losses

Depreciation Depreciation and impairment

(32,552) (85,609) (59,599) (10,699)

0

177

(88)

179

5

0

1,330

6,972

2,889

1,636

(28)

0

(2,253)

0

0

28

(6,106) (7,963) (8,079) (1,598)

0

(37,151)

(88,941)

(64,610)

(10,656)

0

173,797

16,482

17,402

3,812

6,264

losses at 31 December 2011

Carrying amount

at 31 December 2011

Hereof assets held under finance leases

0

2,151

336

0

0

Notes to the Consolidated Financial Statements (EURk)

49

12 Investment properties

Fair value at 1 January

Foreign exchange adjustments

Fair value at 31 December

2012

2011

30,938

30,854

(109)

84

30,829

30,938

Investment properties consist of a rental property in Denmark, let under a long-term lease. The fair value is calculated according to the net rental method, and thus the value of the property has been calculated on the basis of its expected operating income (pre-tax return) of about 1,900 and a required rate of return of 6%, determined on the basis of the general market level and specific circumstances relating to the property.

Rental income amounted to 2,359 (2011: 2,285) and operating costs to 502 (2011: 567).

13

Financial assets

Investment in jointly controlled entities Note 30 includes an outline of the Group’s investments in jointly controlled entities. The Group’s investments in jointly controlled entities are consolidated on a pro-rata basis. The Group’s shares of jointly controlled entities’ revenue, costs, assets and liabilities are as follows:

Revenue

Costs Profit/(loss) before tax

2012

2011

151,436

345,716

(145,115)

(311,786)

6,321

33,930

Non-current assets

Current assets

Total assets

38,696

48,743

74,427

199,261

113,123

248,004

Non-current liabilities

24,875

109,629

Current liabilities

39,084

135,871

Total liabilities

63,959

245,500

The Group’s operating lease commitments, contingent liabilities and collateral provided in jointly controlled entities appear from notes 23 and 24.

50

Notes to the Consolidated Financial Statements (EURk)

13

Financial assets (continued)

Investments in associates

Cost at 1 January

Foreign exchange adjustments

Acquisitions through business combinations

Additions

2012

2011

27,439

26,320

916

172

20,689

0

233

7,214

Disposals

(15,345)

(6,267)

33,932

27,439

Cost at 31 December

Adjustments at 1 January

Foreign exchange adjustments

(15,201) (1,132)

(336)

Share of profit/(loss) for the year

2,081

8,263

Other capital items

(1,037)

Dividends

(16,985)

128

(688)

(846)

Disposals

22,048

(6,196)

Transferred for set-off against receivables

(8,685)

771

Transferred to provisions

79

Adjustments at 31 December

(2,535)

0 (15,201)

Carrying amount at 31 December

31,397

12,238

Note 30 includes an outline of the Group’s investments in associates. The revenue, profit/loss for the year, assets and liabilities of the primary associates are as follows:

Revenue

Net profit/(loss) for the year Assets Liabilities

2012 205,139

14,447

98,532

169,662

2011 194,676

6,613

80,594

161,514

14 Inventories

Raw materials and consumables

Work in progress

Manufactured goods and goods for resale

TV programmes

Total

2012

2011

39

2,487

2,983

3,447

99,748

101,530

61,002

21,391

163,772

128,855

At the end of the reporting period, the Group estimates the writedown to realisable value for manufactured goods and goods for resale, which primarily relates to books and game consoles. The estimate is based on expected sales and therefore subject to some uncertainty.

The inventories and impairment of inventories expensed for the year amounted to 370,227 (2011: 229,494) and 10,232 (2011: 13,356), respectively. Reversed impairment of inventories in the income statement amounted to 1,331 (2011: 3,760). Inventories included capitalised payroll costs in the amount of 9,306 (2011: 8,437).

15 Prepayments In the amount prepayed sports broadcasting rights are included with 16,747 (2011: 0), which are terminated more than 12 months from balance sheet day.

Notes to the Consolidated Financial Statements (EURk)

51

16

Securities

Listed bonds

2012

2011

40,532

181,205

Other

7,552

2,234

Total

48,084

183,439

The average duration of the bonds is 6 months.

17

Cash and cash equivalents

2012

2011

Cash and bank account deposits

41,528

154,259

Total

41,528

154,259

Of which deposited in fixed-term deposit 1,265 (2011: 31,405) and cash and equivalents pledged as collateral 6,084 (2011: 8,448).

18 Equity The Egmont Foundation is a commercial foundation and thus subject to special conditions relating to its capital, as set out in the Foundation’s Charter. The Foundation’s assets are used for donations in connection with the Foundation’s Charitable Activities. The balance of the Foundation’s assets is transferred to a reserve to ensure that the Foundation are provided with the necessary capital for consolidating and expanding in accordance with sound principles. The Foundation’s equity ratio stood at 42.0 % (2011: 38.4 %).

52

Notes to the Consolidated Financial Statements (EURk)

19 Pensions The Group mainly has defined contribution pension plans, as the Group’s defined benefit pension plans in both its wholly-owned and its jointly controlled Norwegian entities were closed to new members in 2004 and 2008,

respectively.

In addition, the Group has pension plans in Sweden that have been established together with other enterprises as part of collective agreements (multi-employer plans). Such plans are defined benefit plans, but are treated as defined contribution plans because the pension funds are unable to provide the information necessary to calculate the individual enterprise’s share of the obligation.

For defined benefit pension plans, the obligation is calculated at the actuarial present value at the end of the reporting period. These pension plans are funded in whole or in part through pension funds for the employees. The present value of the defined benefit pension obligations depends on the assumptions used as a basis for the actuarial calculation. The calculation is based on assumptions relating to discount rate, expected return on assets, future wage or salary increases, life expectancy and future development of the pension obligation.

The primary assumptions lie within the framework determined by the public authorities in Norway and are reviewed as at the reporting date. Defined benefit pension obligations is affected by a higher discount rate in 2012. In accordance with updated guidelines the Group have chosen to use a special Norwegian bond interest rate (OMF rate), because the marked have become sufficient enough to comply with the market demands in IAS 19. This result in a reduction of the pension obligation as per 31 December 2012 and a corresponding effect in the statement of other comprehensive income for the year.

Pensions

2012

Defined benefit pension obligations

(37,003)

Other pension obligations

(10,304)

Total

(47,307)

2011 (39,269) (9,373) (48,642)

Defined benefit pension obligations are specified below:

Present value of defined benefit pension obligations

(96,663)

(84,576)

Fair value of pension plan assets

64,187

50,142

Payroll tax

(4,527)

(4,835)

(37,003)

(39,269)

Net liability at 31 December

Movement in the present value of defined benefit pension obligations:

Liability at 1 January

Adjustments relating to previous year(s)

(1,380)

0

Foreign exchange adjustments

(5,986)

(575)

Acquisitions through business combinations

Pension costs for the financial year

Pension costs for the previous financial year

(21)

(909)

Calculated interest relating to liability

(3,338)

(2,678)

Actuarial gains/(losses)

32,909

(11,686)

Curtailments and repayments

12,743

0

Pensions paid, etc.

4,331

2,960

Liability at 31 December

(84,576)

(68,401)

(43,048)

0

(8,297)

(3,287)

(96,663)

(84,576)

Notes to the Consolidated Financial Statements (EURk)

53

9 Pensions (continued) 1

2012

Movement in the fair value of pension assets:

Pension assets at 1 January

Adjustments relating to previous year(s)

Foreign exchange adjustments

Acquisitions through business combinations

Expected return on pension plan assets

Actuarial gains/(losses)

Payments made to the pension plans

Curtailments and repayments

Pensions paid, etc.

Pension assets at 31 December

2011

50,142

47,842

770

529

2,905

401

16,534

0

2,851

2,668

(948)

(1,278)

6,114

2,156

(11,780)

28

(2,401)

(2,204)

64,187

50,142

Return on pension assets:

Actual return on pension plan assets

1,903

1,390

Expected return on pension plan assets

(2,851)

(2,668)

(948)

(1,278)

Actuarial losses on pension plan assets

Average composition of pension plan assets:

Bonds

56.1 %

48.7 %

Shares

7.1 %

11.9 %

Money market and the like

16.6 %

21.4 %

Property

20.2 %

18.0 %

Average assumptions used for the actuarial calculations at the end of the reporting period in the individual pension plans:

Discount rate

3.9 %

2.6 %

Inflation rate

3.3 %

3.3 %

Adjustment of wages and salaries

3.5 %

3.5 %

Expected return on pension funds

4.0 %

4.1 %

Amount of defined benefit pension obligations for current and previous years:

Defined benefit pension obligations

(96,663)

(84,576)

Pension assets

64,187

50,142

Payroll tax

(4,527)

(4,835)

(37,003)

(39,269)

Net liability at 31 December

Pension costs in the income statement:

Pension costs for the year

(7,708)

(3,342)

Calculated interest relating to liability

(3,338)

(2,721)

Curtailments and repayments

1,255

0

Expected return on pension plan assets

2,851

2,656

Payroll tax

Pension costs

(1,357)

(445)

(8,297)

(3,852)

38,852

(14,714)

Actuarial gains/(losses) recognised in other comprehensive income

54

Notes to the Consolidated Financial Statements (EURk)

20 Deferred tax

2012

2011

Deferred tax at 1 January

14,211

15,523

Adjustments relating to previous year(s)

(2,934)

0

Foreign exchange adjustments

2,127

(5)

Acquisitions through business combinations

Deferred tax for the year recognised in the income statement

Deferred tax for the year recognised in other comprehensive income

Deferred tax at 31 December

(41,133)

0

(7,549)

(5,667)

(10,500)

4,360

(45,778)

14,211

Deferred tax has been recognised in the balance sheet as follows:

Deferred tax, asset

Deferred tax (liability)

Deferred tax, net

6,889 (52,667) (45,778)

22,156 (7,945) 14,211

Deferred tax assets are recognised for all unutilised tax losses to the extent it is considered probable that taxable profits will be realised in the foreseeable future against which the losses can be offset. The amount to be recognised in respect of deferred tax assets is based on an estimate of the probable time of realising future taxable profits and the amount of such profits.

The Group has assessed that deferred tax assets totalling 6,889 (2011: 22,156), primarily attributable to Germany can be realised in the foreseeable future. This is based on the forecast earnings base of the enterprises in which the tax assets can be utilised.

2012

2011

The deferred tax relates to:

Intangible assets

(72,069)

(8,534)

Property, plant and equipment

2,430

(3,276)

Receivables

4,921

(46)

Inventories

1,962

3,620

Other current assets

728

836

Provisions

15,777

14,431

Other liabilities

(6,851)

(1,032)

Tax losses allowed for carryforward, etc.

7,324

Total

(45,778)

8,212 14,211

Unrecognised deferred tax assets relate to:

Tax losses

Temporary differences

2,260

1,837

265

977

Notes to the Consolidated Financial Statements (EURk)

55

Goods sold with 21 Other provisions a right of return Other Other provisions at 1 January 2012

Foreign exchange adjustments

59,507

9,698

1,636

162

Provisions made

49,262

6,978

Provisions used

(48,788)

(2,111)

Reversed

(2,062)

Other provisions at 31 December 2012

59,555

(3,079) 11,648

Goods sold with a right of return include magazines and books that the shops can return according to agreement. At the date of sale, the Group estimates how many goods are expected to be returned or exchanged based on historical experience of selling such goods. This estimate is naturally subject to uncertainty, as the quantity actually returned may deviate from the estimated quantity. However, the uncertainty concerning the return of magazines is limited due to the short period allowed for returning them.

Other provisions include warranty provisions, in respect of which expected partial compensation from the supplier is recognised in other receivables.

22

Fees to elected auditor

Statutory audit

Tax consultancy

Other assurance statements

Other services

Total fees to KPMG

2012

2011

(1,748)

(1,510)

(96)

(87)

(105)

(71)

(492)

(778)

(2,441)

(2,446)

Statutory audit

(125)

(215)

Tax consultancy

(30)

(50)

Other assurance statements

Other services

Total fees to other auditors

(6)

0

(12)

(98)

(173)

(363)

Total

(2,614)

(2,809)

23 Operating leases Operating leases comprise leases for properties of 150,309 (2011: 138,082) and other leases of 10,017 (2011: 8,696).

These figures include leases for properties entered into by jointly controlled entities of 38,250 (2011: 65,258).

2012

Non-cancellable operating lease payments amount to:

Up to 1 year

Between 1 to 5 years

More than 5 years

Total

42,387

2011

32,167

100,488

88,132

17,452

26,480

160,327

146,779

During 2012, 43,815 (2011: 32,273) was recognised as expense in the income statement in respect of operating

leases.

56

Notes to the Consolidated Financial Statements (EURk)

24

Contingent liabilities and collateral The Group has provided security to mortgage credit institutions of 112,216 (2011: 112,612) over corporate and investment properties, for which the carrying amount constitutes 162,505 (2011: 166,192 ). The Group’s jointly controlled entities have provided security of 278 (2011: 2,414) to other credit institutions over miscellaneous assets (a floating charge). The carrying amount of such assets amounted to 278 (2011: 161,436).

Contractual investment commitments relating to intangible film rights amount to 21,098 (2011: 29,893).

Entities in the Group have furnished miscellaneous guarantees, etc., for 19,104 (2011: 16,526). These figures include guarantees furnished by jointly controlled entities for 1,904 (2011: 10,429).

25

Financial risks and financial instruments As a result of its operations, investments and financing, the Egmont Group is exposed to a number of financial risks, including market risks.

Corporate Treasury is responsible for centralised management of liquidity and financial risks in the Group’s wholly owned entities. Corporate Treasury operates as a counterparty to the Group’s entities, thus undertaking centralised management of liquidity and financial risks. Liquidity and financial risks arising at jointly controlled entities are reported to Corporate Treasury and thus managed on a decentralised basis. Management monitors the Group’s financial risk concentration and financial resources on an ongoing basis.

The overall framework for financial risk management is laid down in the Group’s Treasury Policy. The Treasury Policy comprises the Group’s currency and interest rate policy, financing policy and policy regarding credit risks in relation to financial counterparties and includes a description of approved financial instruments and risk framework. The overall framework is assessed on an ongoing basis.

The Group’s policy is to refrain from engaging in speculative transactions. Thus, the Group’s financial management focuses exclusively on managing and reducing financial risks that are a direct consequence of the Group’s operations, investments and financing.

In 2012 the Group began to hedge currency risk related to purchase of film rights and sports broadcasting rights.

Apart from that there are no major changes in the Group’s risk management policy relative to 2011.

Currency risks The Group is exposed to exchange rate fluctuations as a result of the individual consolidated enterprises entering into purchase and sales transactions and having receivables and payables denominated in currencies other than their functional currency. Forward exchange contracts are used to secure that the actual exposure do not exceed the currency exposure limit of the Group. Hedge accounting is used regarding currency risk related to purchase of rights.

In 2012 value adjustments after tax on equity amounts to EUR 2.5 million (2011: EUR 0.0 million).

The Group’s major currency risk related to financial instruments is used in hedge accounting. As per 31 December 2012 a 5 % drop in the exchange rates of DKK/NOK, EUR/NOK and DKK/USD will affect the equity with EUR 10.0 million (2011: EUR 0.0 million). The sensitivity analysis is based on financial instruments recognized as per 31 December and an effectiveness of 100 % in the use of hedge accounting.

Notes to the Consolidated Financial Statements (EURk)

57

25

Financial risks and financial instruments (continued) Translation risks The Group’s primary currency exposure is denominated in NOK and EUR and relates to the Group’s investments in wholly owned and jointly controlled entities, including long-term intra-group loans. As a main rule, these currency risks are not hedged, as ongoing hedging of such long-term investments is not considered to be the best strategy based on overall risk and cost considerations.

A 5% and 1% drop in the exchange rates of NOK and EUR, respectively, would have impacted the 2012 profits by EUR -9.0 million (2011: EUR -8.4 million) and EUR 0.5 million (2011: EUR 0.6 million), respectively, and the equity at 31 December 2012 in terms of NOK by EUR -24.1 million (2011: EUR -6.8 million), and in terms of EUR by EUR 5.1 million (2011: EUR 5.0 million). A positive change in foreign exchange rates would have had a reverse impact on profits and equity based on the financial instruments recognised at end-2012 and end-2011, and unchanged figures for production/sales and unchanged price and interest rate levels.

Interest rate risks As a result of its investment and financing activities, the Group has an exposure related to fluctuations in interest levels.

The Group’s policy is to hedge interest rate risks relating to loans when it is assessed that interest payments may be secured at a satisfactory level. The Group’s interest rate risks are managed by entering into interest swap contracts, with floating rate loans being converted into fixed interest loans. The principal amount of interest swap contracts concluded by the Group for hedging purposes was EUR 95 million at 31 December 2012 and EUR 90 million at 31 December 2011. The fair value in the balance sheet amounted to EUR 23.8 million at 31 December 2012 and EUR 20.1 million in 2011, and the value adjustment of the equity for 2012 was negative by EUR 3.0 million after tax (2011: EUR -10.0 million).

As a result of the Group’s use of derivative instruments to hedge its interest rate exposure relative to instruments of debt, changes in the fair value of the hedging instruments will impact the Group’s reserve for hedging transactions under equity. A one percentage point drop in interest rates would reduce equity by about EUR 11 million. In addition, such an interest rate drop will not affect the income statement in any material way, because the effect by way of loss of interest income from net deposits and market value changes to derivative financiel instruments equals out and in addition will be insignificant.

Liquidity risks The Group’s liquidity reserve comprises cash and cash equivalents, securities and unutilised credit facilities. To ensure optimum utilisation of cash and cash equivalents, the Group operates with cash pools. The Group has a net interestbearing debt of EUR 119.0 million (2011: net deposits of EUR 104.7 million).

The Group’s financinually consists primarily of Danish floating rate mortgage loans expiring in 2028 and floating rate loans denominated in NOK maturing in 2015. In the debt repayment schedule shown below, it is assumed that the loan facility will be continually extended.

Egmont is governed by a financial covenant in the form of net interest-bearing debt in the ratio to EBITDA in a loan

agreement.

58

Notes to the Consolidated Financial Statements (EURk)

25

Financial risks and financial instruments (continued) The Group’s liabilities other than provisions fall due as shown below. The debt repayment schedule is based on undiscounted cash flows incl. estimated interest payments based on current market conditions:

Carrying

amount

Contractual cash flows

Within 1 year

1 to 5 After years 5 years

Mortgage debt

112,216

141,197

4,075

16,192

120,930

Other credit institutions

85,741

107,162

13,074

7,574

86,514

Other financial liabilities

24,505

26,682

1,215

25,467

0

Finance lease liabilities

3,142

3,605

1,305

2,300

0

Trade payables

Non-derivative financial instruments

Derivative financial instruments

31 December 2012

241,979

241,979

241,979

0

0

467,583

520,625

261,648

51,533

207,444

34,716

50,258

4,963

18,742

26,553

502,299

570,883

266,611

70,275

233,997

125,970

Mortgage debt

112,612

144,356

2,611

15,775

Other credit institutions

110,199

110,281

71,622

38,659

0

Other financial liabilities

91,724

95,130

87,239

7,891

0

Finance lease liabilities

2,151

2,151

687

1,464

0

Trade payables

Non-derivative financial instruments

Derivative financial instruments

31 December 2011

201,749

201,749

201,749

0

0

518,435

553,667

363,908

63,789

125,970

23,410

36,815

4,897

12,126

19,792

541,845

590,482

368,805

75,915

145,762

The Group has in 2013 remortgaged loan with a principal amount of EUR 21.7 million. The new loan is an adjustablerate loan and it is instalment-free until 31 December 2022.

Credit risks The Group’s credit risks relate primarily to trade receivables, securities and cash and cash equivalents. The Group is not exposed to any significant risks associated with a particular customer or business partner. According to the Group’s policy for accepting credit risk, all major customers are regularly credit rated.

Trade receivables: The Group has received collateral relating to sales. This occurs typically in connection with the distribution of magazines where deposits are received. In addition, some of the Group’s entities take out credit insurance against losses on trade receivables to the extent deemed relevant. Collateral provided is included in an assessment of the need to make impairments. Trade receivables backed by collateral, with a consequent reduction in overall credit risk, amount to 33,686 (2011: 32,322).

Notes to the Consolidated Financial Statements (EURk)

59

25

Financial risks and financial instruments (continued) Trade receivables, including trade receivables backed by collateral, that have not yet fallen due and have not been impaired, can be broken down by geographical area as follows:

Denmark

Other Nordic countries

Other European countries

Other countries

Total

2012

2011

40,319

36,391

101,890

85,834

40,788

38,131

7,069

3,430

190,066

163,786

In addition, the aging of trade receivables past due and not impaired is as follows:

2012

2011

32,035

24,088

8,674

13,650

Up to 30 days

Between 30 and 90 days

Over 90 days

24,023

5,249

Total

64,732

42,987

10,401

12,345

Impairment at 1 January

Foreign exchange adjustments

476

(52)

Impairment for the year

3,034

4,010

Realised losses

(2,363)

(3,193)

Reversed impairment

(1,329)

(2,709)

Impairment at 31 December

10,219

10,401

Securities, cash and cash equivalents: The Group is exposed to counterparty risk through its cooperation with financial counterparties via funds deposited, but also via credit commitments. The Group manages this risk by cooperating with banks with a sound credit rating.

60

Notes to the Consolidated Financial Statements (EURk)

25

Financial risks and financial instruments (continued) Categories of financial instruments Financial instruments are broken down into categories of financial assets and liabilities below:

2012

2011

Securities (fair value option)

48,084

183,439

Financial assets measured at fair value via the income statement

48,084

183,439

254,726

206,773

Trade receivables Receivables from associates Other receivables Cash and cash equivalents Receivables

3,698

3,648

84,565

60,811

41,528

154,259

384,517

425,491

Derivative financial instruments

8,781

3,925

Financial liabilities measured at fair value via the income statement

8,781

3,925

Derivative financial instruments

25,935

19,485

Financial liabilities used as hedging instruments

25,935

19,485

Mortgage debt

112,216

112,612

Other credit institutions (non-current)

74,025

38,572

Other credit institutions (current)

11,716

71,627

Other financial liabilities

24,505

91,724

Finance lease commitments

3,142

2,151

Trade payables

241,979

201,749

Financial liabilities measured at amortised cost

467,583

518,435

The carrying amount of receivables and other financial liabilities (current) is equal to the fair value.

Mortgage debt and debt to other credit institutions (non-current) are floating rate cash loans, and thus the fair value is equal to the carrying amount.

Securities are measured at listed prices (level 1). Derivative financial instruments are valued at fair value on the basis of inputs other than listed prices that are observable for the liability, either directly or indirectly (level 2).

Hedge accounting The Group utilise forward contracts to hedge currency risks related to purchase of film rights and sports broadcasting rights. Value adjustments on equity amounts to EUR 2.5 million (2011: EUR 0.0 million), which will be recognised in the income statement during 2013 - 2015.

Interest swaps has been used to hedge the Group’s interest rate risks related to floating interest rate loans. Value adjustments on equity amounts to EUR 23.4 million (2011: EUR 20.1 million), which will be recognised in the income statement during 1 - 16 years (2011: 1 - 17 years).

Notes to the Consolidated Financial Statements (EURk)

61

26

Related parties The Egmont Foundation is a commercial foundation and has no related parties with control.

T he Egmont Group’s related parties with significant influence comprise the Foundation’s Board of Trustees, Management Board and their close relatives, as well as enterprises in which this group of persons has material interests. The compensation paid to the Board of Trustees and Management Board appears from note 4.

Related parties with significant influence also comprise associates; see notes 13 and 30. Transactions with associates consisted of loans to associates of 26,203 (2011: 12,489) and interest income of 1.089 (2011: 907).

27

Standards and interpretations not yet adopted The IASB has issued a number of new standards and interpretations that have not yet become mandatory for the Egmont Foundation’s consolidated financial statements for 2012. None of these new standards or interpretations are expected to have a significant effect on the consolidated financial statements, except for: IFRS 11, Joint arrangements, will become effective from the 2014 financial year. According to the standard, it will no longer be possible to consolidate jointly controlled entities on a pro-rata basis. Jointly controlled entities are subsequently to be recognised according to the equity method, which means that the share of net profit or loss must be recognised under financial items. This will primarily result in a reduction of the Group’s revenue and operating profit (EBIT) in respect of the Norwegian part of Egmont Books, while the net profit or loss will remain unchanged.

Comparative figures will have to be restated.

28

Subsequent events Apart from the events recognised or disclosed in the consolidated financial statements, no events have accurred after the reporting period.

29 Acquisition of businesses In 2012 the Group has bought 50 % of the shares in AE-TV Holding AS (hereafter: TV 2, Norway) as well as 100 % of Venue Point Holding ApS and additional 30 % of Filmweb AS, Norway. Please refer to separat sections below for a further elaboration of the aquisitions. Furthermore the Group has acquired other businesses for a total of EUR 6 million.

Fair value at acquisition date Intangible assets

TV 2, Norway Other 8,853

Property, plant and equipment

29,287

493

29,780

Other non-current assets

42,176

10

42,186

162,411

8,698

171,109

(2,961)

(965)

(3,926)

(240,772)

(1,393)

(242,165)

(1,449)

(1,804)

(3,253)

(90,339)

(12,310)

(102,649)

Current assets Non-current financial liabilities Other non-current liabilities Current financial liabilities Other current liabilities

212,863

Identifiable net assets

102,363

1,582

103,945

Goodwill

287,414

15,542

302,956

Fair value of 50 % shareholding

(108,731)

0

(108,731)

Purchase consideration

281,046

17,124

298,170

(71)

(7,393)

(7,464)

0

(2,401)

(2,401)

280,975

7,330

288,305

Cash and cash equivalents, acquired Contingent consideration Total cash consideration paid

62

Total

204,010

Notes to the Consolidated Financial Statements (EURk)

29 Acquisition of businesses (continued) Transaction costs attributable to the acquisitions are recognised in Other external expenses when incurred.

Acquisitions in 2012

TV 2, Norway On 8 January 2012, the Group entered into an agreement regarding the acquisition of the remaining 50 % shareholding in TV 2, Norway, with effect from 1 February 2012.

The purchase consideration totalled EUR 281.0 million after fair value adjustment of the existing 50 % shareholding.

Goodwill, which is not deductible for tax puposes, represnets the value of personnel, know-how, a platform for future income from advertising, distribution and user-paid services, as well as full ownership of the shares.

In accordance with the IFRS rules regarding business combinations achieved in stages, an amount of EUR 165.0 million is recognised as a fair value adjustment of the existing shares in connection with the acquisition of the remaining 50 % in 2012. The amount is recognised in Special items, see note 6.

Transaction costs regarding advisers fees attributable to the acquisition amount to EUR 0.9 million, and are recognised in Other external expenses i the income statement.

Venuepoint

On 9 March 2012, the Group acquired all shares in Venuepoint Holding ApS (Billetlugen). The purchase consideration amount to EUR 8.6 million, of which EUR 2.4 million concerns a contingent consideration. The contingent consideration is based on expectations for future earnings.

Transaction costs regarding advisers fees attributable to the acquisition amount to EUR 0.4 million, and are recognised in Other external expenses i the income statement.

Filmweb

On 3 February 2012, the Group has acuired additional shares in Filmweb AS, whereby Egmont’s ownership increases to 64 %. Filmweb.no is the leading web portal i Norway for movies and cinema. Since 2008 Egmont has owned 34 % of the shares. The purchase consideration amount to EUR 2.3 million.

Others In 2012 the book publisher Cappelen Damm has acquired the two publishing companies Akribe AS and Høyskoleforlaget AS in order to reinforcing its position as a publisher for universities and the professional market.

In 2012 the Kids Media division has acquired the activities of Krea Media, who is behind the well known children characters Pixeline and Magnus og Myggen and thereby strengthening its leading position in the Nordic region in both physical and digital edutainment for children.

Notes to the Consolidated Financial Statements (EURk)

63

30 Group entities Unless otherwise stated, the entities are wholly owned. Insignificant – including primarily dormant – entities are not included in the outline.

The entities marked with * are owned directly by the Egmont Foundation.

Subsidiaries Ownership share Country Entity Registered office 2012 2011

Denmark

Egmont International Holding A/S *

Copenhagen

Egmont Holding A/S

Copenhagen

Egmont Magasiner A/S

Gentofte

Egmont Specialblade A/S

Gentofte

Vægtkonsulenterne A/S

Gentofte

Egmont Magazine Services A/S

Oxygen Magasiner A/S

Copenhagen

Egmont Kids Media Nordic A/S

Copenhagen

Egmont Creative Center A/S

Copenhagen

Egmont Kids Media, Digital A/S

Copenhagen

Lindhardt og Ringhof Forlag A/S

Copenhagen

Nordisk Film A/S

Copenhagen

Nordisk Film Distribution A/S

Copenhagen

Nordisk Film Shortcut A/S

Copenhagen

Nordisk Film Production A/S

Copenhagen

Nordisk Film Biografer A/S

Copenhagen

Scala Bio Center Aalborg ApS

NF Live A/S

Copenhagen

Kino.dk A/S

Copenhagen

Billetlugen A/S

Copenhagen

-

Next2Live A/S

Copenhagen

-

Nordisk Film Bridge Finance A/S

Copenhagen

Dansk Reklame Film A/S

Copenhagen

Nordisk Trading Company A/S Kolding - (Merged with Nordisk Film Distribution A/S)

Gentofte

Aalborg

96 %

80 % 74 %

Egmont Administration A/S

Copenhagen

Egmont Finansiering A/S

Copenhagen

Ejendomsselskabet Vognmagergade 11 ApS *

Copenhagen

Ejendomsselskabet Gothersgade 55 ApS*

Copenhagen

Ejendomsaktieselskabet Lygten 47-49

Copenhagen

Norway

Egmont AS

Oslo

Egmont Holding AS

Oslo

Egmont Kids Media Nordic AS

Oslo

Nordisk Film AS

Oslo

Nordisk Film Post Production AS Oslo - (Merged with Nordisk Film Production AS)

Nordisk Film Distribusjon AS

Oslo

Nordisk Film Production AS

Oslo

Nordisk Film ShortCut AS

Oslo

66 %

64

Notes to the Consolidated Financial Statements (EURk)

40 %

80 % 74 %

-

66 %

30 Group entities (continued)

Subsidiaries Ownership share Country Entity Registered office 2012 2011

Norway

Drammen Kino AS

Venuepoint AS

Drammen

Oslo

66.7 %

Neofilm AS

Oslo

66.7 %

66,7 %

Filmweb AS

Oslo

64.3 %

34 %

Sportskort AS

Oslo

96.82 %

Egmont Hjemmet Mortensen AS

Oslo

Hjemmet Mortensen Trykkeri AS

Oslo

Hjemmet Mortensen Fagmedia AS

Oslo

Frysjaveien 42 AS

Oslo

AE-TV Holding AS Bergen - (Merged with Egmont Holding AS)

50 %

TV 2 Gruppen AS

Bergen

50 %

TV 2 AS

Bergen

50 %

Nydalen Studios AS

Oslo

50 %

OB-Team AS

Oslo

50 %

Broom.no AS

Oslo

-

Outside Broadcast Team AS

Bergen

50 %

Eventyrkanalen AS

Bergen

50 %

TV 2 Torget AS

Bergen

50 %

Vimond Media Solutions AS

Bergen

50 %

Kanal 24 Norge AS

Fredrikstad

50 %

TV 2 Zebra AS Bergen - (Merged with TV 2 AS)

27.5 %

Mosart Medialab AS

Bergen

Sweden

Egmont Holding AB

Malmø

Egmont Tidskrifter AB

Malmø

Auto, Motor och Sport Sverige AB Stockholm - (Merged with Egmont Tidskrifter AB)

Egmont Tidskrifter BM AB

Egmont Kids Media Nordic AB

Egmont Editions AB

Sudd AB

Sören och Anders Interessenter AB

Änglatroll AB

Skandinaviske Skoledagböcker AB

Stockholm

Nordisk Film Sverige AB

Stockholm

Nordisk Film Produktion Sverige AB

Stockholm

Nordisk Film Post Produktion AB Stockholm - (Merged with Egmont Holding AB )

Nordisk Film Distribution AB

Stockholm

Spiderbox Entertainment AB

Stockholm

Nordisk Film ShortCut AB

Stockholm

66 %

Venuepoint AB

Gøteborg

-

84.5 %

66.7 % -

-

42.25 %

Stockholm Malmø Malmø Stockholm

60 %

Malmø Malmø

Notes to the Consolidated Financial Statements (EURk)

65

30 Group entities (continued)

Subsidiaries Ownership share Country Entity Registered office 2012 2011

Finland

Egmont Holding Oy/Egmont Holding Ab

Helsinki

Oy Nordisk Film Ab

Helsinki

Dominova Oy/AB

Helsinki

BK Pro Fitness Oy

Vasa

Germany

Egmont Holding GmbH

Egmont Ehapa Verlag GmbH

Egmont Verlagsgesellschaften mbH

Mitte-Editionen GmbH

Berlin

Egmont Ehapa Rights Management GmbH

Berlin

Egmont Ehapa Comic Collection GmbH

Berlin

Berlin Berlin Cologne

United Kingdom Egmont Holding Ltd.

London

Egmont UK Ltd.

London

Poland

Egmont Polska sp. z o.o.

Warsaw

Czech Republic

Egmont CR s.r.o.

Hungary

Egmont Hungary Kft.

Russia

ZAO Egmont Russia Ltd.

Estonia

Egmont Estonia AS

Tallinn

Latvia

Egmont Latvija SIA

Riga

Lithuania

UAB Egmont Lietuva

Vilnius

Ukraine

Egmont Ukraine LLC

Kiev

Romania

Egmont Romania S.R.L.

Bulgaria

Egmont Bulgaria EAD

Croatia

Egmont d.o.o.

USA

Egmont US Inc.

Sverre LLC

China

Egmont Hong Kong Ltd.

Hong Kong

Egmont Sourcing (HK) Ltd.

Hong Kong

South Africa

Egmont Africa Pty, LTD

Cape Town

Prague Budapest Moscow

Bukarest Sofia Zagreb New York Denver

50.5 %

50.5 %

66

Notes to the Consolidated Financial Statements (EURk)

-

30 Group entities (continued)

Jointly controlled entities Ownership share

Country

Entity

Registered office

2012

2011

Denmark

Pumpehuset af 2011 A/S

Copenhagen

50 %

50 %

Norway

Mediehuset Nettavisen AS

Oslo

50 %

50 %

Næringslivsavisen Na24 AS

Oslo

50 %

-

Bootstrap AS

Oslo

50 %

-

Nordic World AS

Oslo

50 %

25 %

Cappelen Damm Holding AS

Oslo

50 %

50 %

Cappelen Damm AS

Oslo

50 %

50 %

Cappelen Damm Salg AS

Oslo

50 %

50 %

Tanum AS

Oslo

50 %

50 %

Sentraldistribusjon ANS

Oslo

50 %

50 %

Larsforlaget AS

Oslo

Cappelen Damm Holding AS owns

Flamme Forlag AS

66 %

66 %

Oslo

Cappelen Damm Holding AS owns

80 %

80 %

Barnemagasinet AS

Oslo

50 %

50 %

Maipo Film AS

Oslo

55.1 %

55.1 %

Sweden

Fladen Film AB

Stockholm

Finland

Solar Films Oy

Helsinki

50.1 %

50.1 %

Egmont Kustannus Oy Ab

Helsinki

50 %

50 %

Turkey

Dogan ve Egmont Yayincilik A.S.

Istanbul

50 %

50 %

Australia

Hardie Grant Egmont Pty Ltd

Melbourne

50 %

50 %

China

Children’s Fun Publishing Company Ltd.

Beijing

49 %

49 %

Thailand

Nation Egmont Edutainment Company Ltd.

Bangkok

50 %

50 %

-

50 %

Notes to the Consolidated Financial Statements (EURk)

67

30 Group entities (continued)

Associates Ownership share Country Entity Registered office 2012 2011

Denmark

Zentropa Folket ApS

Ugebladenes Fælles Opkrævningskontor I/S

Hvidovre

49.69%

49.69%

Albertslund

50 %

Publizon A/S

50 %

Aarhus

36 %

ABCiTY A/S

36 %

Copenhagen

24.42 %

24.42 %

I/S Ugebladsdistributionen *

Albertslund

50 %

50 %

Norway

Motor ANS

Oslo

50 %

50 %

Biip.no AS

Oslo

Egmont Serieforlaget AS owns

-

45 %

TV 2 AS owns

-

45 %

40 %

-

Wolftech Broadcast Solutions AS

Norges Televisjon AS

Bergen

Oslo

TV 2 Gruppen AS owns

RiksTV AS

TV 2 Gruppen AS owns

Norges Mobil TV AS

33.3 %

33.3 %

Oslo 33.3 %

33.3 %

Oslo

TV 2 Gruppen AS owns

33.3 %

33.3 %

Sweden

Golfresan AB

Stockholm

35 %

35 %

Klintberg Nihlén Media AB

Stockholm

49 %

-

Finland

Matila Röhr-Nordisk Oy

Helsinki

43.54 %

HD-Post Oy

Helsinki

43.54 %

Solar Films Oy owns

40 %

40 %

United Kingdom Wendy Promotion Ltd.

50 %

50 %

London

* Danish partnerships forming part of associates do not prepare official annual reports.

68

Notes to the Consolidated Financial Statements (EURk)

Income Statement of the Egmont Foundation (EURk) Note

2012

2011

3,950

3,940

Personnel costs

(197)

(161)

Other external expenses

(836)

(868)

2,917

2,911

Royalty income, etc.

2

Operating profit

Dividends from investments in subsidiaries

4,225

4,842

Financial income

119

853

Financial expenses

(289)

(40)

Profit before tax

6,972

8,566

Tax on profit for the year

(190)

(382)

Net profit for the year

3

6,782

8,184

Distribution of net profit

Transfer to reserve fund

1,356

1,637

Transfer to charitable fund

4,070

4,910

Transfer to liquid reserve fund

1,356

1,637

Total

6,782

8,184

Income Statement of the Egmont Foundation

69

Balance Sheet of the Egmont Foundation at 31 December (EURk) Note

Assets

4

Investments in subsidiaries

2012

2011

181,061

181,699

5

Investments in associates

251

252

Financial assets

181,312

181,951

181,312

181,951 105,535

Total non-current assets

Receivables from group enterprises

101,369

Other receivables

3,397

292

Receivables

104,766

105,827

Securities

577

565

Cash and cash equivalents

0

469

105,343

106,861

286,655

288,812

Total current assets

Total assets

Equity and liabilities

2012

2011

Capital fund 29,489

29,593

6

7

Reserve fund 228,218

230,678

8

Charitable fund 12,431

11,628

9

Liquid reserve fund 3,690 Total equity

273,828

4,588 276,487

Pensions

Non-current liabilities

388

397

388

397

Payables to group enterprises

120

170

Donations committed but not yet paid 9,782

8,424

Other payables 2,537

Current liabilities

12,439

3,334 11,928

Total liabilities

12,827

12,325

70

Total equity and liabilities

Balance Sheet of the Egmont Foundation at 31 December

286,655

288,812

1 Accounting policies The financial statements of the Egmont Foundation have been prepared in accordance with the provisions of the Danish Financial Statements Act applying to class C enterprises (large) and the financial reporting requirements of the Foundation’s Charter.

The accounting policies applied in the presentation of the financial statements are consistent with those of the previous year.

No cash flow statement has been included for the Egmont Foundation, as reference is made to the consolidated cash flow statement.

Royalty income, etc.

Royalties received are accrued and recognised as income in accordance with the concluded agreement.

Investments in subsidiaries and associates Investments in subsidiaries and associates are measured at cost. Where cost is lower than the recoverable amount, impairments are made to this lower value.

Dividends Dividends from investments in subsidiaries and associates are recognised in the financial year in which the dividend is declared, typically at the time when the general meeting approves the distribution of dividend by the relevant company.

To the extent that the dividend distributed exceeds accumulated earnings after the acquisition date, dividend is recognised as a reduction of the cost of the investment.

Equity Profit is distributed according to the Foundation’s Charter. The Charitable Activities’ donations and associated expenses are charged directly to the liquid reserve fund under equity.

The Foundation’s equity consists of a capital fund and a reserve fund intended for the Commercial Activities. The capital fund is an undistributable reserve, while the reserve fund comprises distributable reserves. The charitable fund serves to ensure the existence of funds required for the Egmont Foundation’s Charitable Activities. The liquid reserve fund is the amount which is to be used for charitable purposes under the Foundation’s Charter within the scope of the Charitable Activities.

In the calculation of tax, due allowance is made for the deductibility of charitable donations made according to the Egmont Foundation’s Charter. These are charged to equity. Tax provisions for future donations are also taken into account. Provision for deferred tax is made in case the Egmont Foundation does not expect to use liquid funds for charitable purposes equal to the tax provisions.

Notes of the Egmont Foundation (EURk)

71

2 Personnel costs

2012

2011

(166)

(107)

Wages and salaries

Pensions

Adjustment of pension obligation

Total

(40)

(37)

9

(17)

(197)

(161)

Compensation paid to the Board of Trustees amounted to 155 in 2012 (2011: 124), of which 75 (2011: 60) was included in the costs of the Charitable Activities.

The Management Board of the Foundation is also employed by Egmont International Holding A/S, which pays all salaries to the Management Board. The Foundation pays an overall fee to Egmont International Holding A/S for this administration.

3

Tax on profit for the year

2012

Calculated royalty tax for the year

(190)

(382)

(190)

(382)

Total

2011

Tax on profit for the year consists of royalty tax.

4 Investments in subsidiaries

2012

2011

181,699

181,214

Cost at 1 January

Foreign exchange adjustments

(638)

485

Cost at 31 December

181,061

181,699

5 Investments in associates

2012

2011

Cost at 1 January

252

252

Foreign exchange adjustments

(1)

0

Cost at 31 December

251

252

Investments in associates consist of 50% of the equity in I/S Ugebladsdistributionen, Albertslund.

6

Capital fund

2012

2011

Balance at 1 January

29,593

29,513

Foreign exchange adjustments

(104)

80

Balance at 31 December

29,489

29,593

7

Reserve fund

2012

2011

Balance at 1 January

230,678

230,701

Foreign exchange adjustments

(813)

627

Transfer from distribution of net profit

1,356

1,637

Transfer to liquid reserve fund

(3,003)

(2,287)

Balance at 31 December

228,218

230,678

72

Notes of the Egmont Foundation (EURk)

8

Charitable fund

2012

2011

Balance at 1 January

11,628

10,630

Foreign exchange adjustments

(50)

29

Transfer from distribution of net profit

4,070

4,910

Transfer to liquid reserve fund

(3,217)

(3,941)

Balance at 31 December

12,431

11,628

9 Liquid reserve fund Balance at 1 January 2011

Use according to articles 6-10

Use according to article 11

Total

3,876

238

4,114

Foreign exchange adjustments

Used for charitable purposes

11

1

12

(5,939)

(466)

(6,405)

Costs

(998)

0

(998)

Transfer from reserve fund

2,058

229

2,287

Transfer from charitable fund

3,941

0

3,941

Transfer from distribution of net profit

1,473

164

1,637

Balance at 31 December 2011

4,422

166

4,588

Foreign exchange adjustments

Used for charitable purposes

(19)

(1)

(20)

(7,024)

(466)

(7,490)

Costs

(964)

0

(964)

Transfer from reserve fund

2,703

300

3,003

Transfer from charitable fund

3,217

0

3,217

Transfer from distribution of net profit

1,220

136

1,356

Balance at 31 December 2012

3,555

135

3,690

The liquid reserve fund is the amount which is to be used for charitable purposes under the Foundation’s Charter within the scope of the Charitable Activities.

Notes of the Egmont Foundation (EURk)

73

Board of Trustees and Management Board of the Egmont Foundation Board of Trustees Mikael Olufsen (Chairman) Director, born 1943, took office 1993 Member of the Boards of TryghedsGruppen smba (CM), Tryg A/S (CM), Tryg Forsikring A/S (CM), Malaplast Ltd., Thailand (CM), Gigtforeningen (CM), WWF Verdensnaturfonden, Danmark-Amerika Fondet Steen Riisgaard (Vice Chairman) CEO, Novozymes A/S, born 1951, took office 2002 Member of the Boards of ALK-Abello A/S (CM), WWF Verdensnaturfonden (CM), Rockwool International A/S (VC), CAT Science A/S, Novo A/S, Novo Nordisk Fonden, Villum Fonden, Aarhus University Ulrik Bülow CEO, Otto Mønsted A/S; CEO, House of Business Partners A/S, born 1954, took office 2003 Member of the Boards of Arator A/S (CM), GateHouse A/S (CM), Intersport Danmark A/S (CM), Plougmann & Vingtoft A/S (CM), FDM Travel A/S, Oreco A/S, Plaza Ure & Smykker A/S, Royal Unibrew A/S, Toms Gruppen A/S, Gigtforeningen Torben Ballegaard Sørensen Director, born 1951, took office 2006 Member of the Boards of AS3-Companies A/S (CM), CAT Forsknings- og Teknologipark A/S (CM), PowerBrands A/S (CM), Tajco Group A/S (CM), Realfiction ApS (CM), Systematic A/S (VC), Pandora Holding A/S, AB Electrolux, Sweden

Lars-Johan Jarnheimer Director, born 1960, took office 2011 Member of the Boards of BRIS (Children’s Rights in Society) (CM), Sweden, CDON-Group AB (CM), Sweden, Eniro AB (CM), Sweden, Arvid Nordquist HAB, Sweden, SAS Group, Sweden, INGKA Holding BV, the Netherlands Anna von Lowzow Journalist and film director, born 1961, took office 1996 Peder Høgild Operator supervisor, born 1958, took office 2009 Marianne Oehlenschlæger HR consultant, born 1958, took office 2011

Management Board Steffen Kragh President and CEO, born 1964 Member of the Boards of Nykredit Realkredit A/S (VC), Nykredit Holding A/S (VC), Foreningen Nykredit, Cappelen Damm Holding AS (CM), Norway Hans J. Carstensen Chief Financial Officer, born 1965 Member of the board of DI ITEK

All information as of 19 March 2013.

Jeppe Skadhauge Attorney and partner, Bruun & Hjejle, born 1954, took office 2009 Member of the Boards of Blindes Støttefond (CM), Tømmerhandler Johannes Fogs Fond (VC), Designmuseum Danmark (VC), the Council of the Danish Bar and Law Society, the Danish Institute of Arbitration

74

CM: VC:

Chairman Vice Chairman

Board of Trustees and Management Board of the Egmont Foundation