Press release

Date 1 March 2006

Design sector bounces back

After going through a difficult period, the design sector has now turned the corner. That conclusion can be drawn from the findings of the survey recently carried out by the Association of Dutch Designers (BNO). The survey was conducted among the BNO members. Although the results achieved in 2004 were disappointing, the preliminary figures for 2005 show that the Dutch design industry has now clearly regained momentum. The BNO membership comprises about 2,500 individual designers and 200 design agencies. All in all, the BNO represents at least 6,700 designers who have graduated from universities or schools of higher professional education in the field of design. This periodic research, known as the BNO Industry Monitor, therefore not only provides a representative picture of the BNO members, but also gives a reliable picture of how the whole design industry is now faring. Growth but not yet economic recovery in 2004 The design sector had not yet fully recovered in 2004. Total sales achieved by the sector fell by 11% to 670 million. Even so, the number of design businesses grew slightly, which can be attributed to the increase in the number of small agencies and one-person businesses by 10%. By contrast, the number of larger design agencies (more than 5 employees) fell by 20%. Employment declined almost across the board; there were almost 1,200 fewer jobs in 2004 than in 2002. Price war between supermarkets takes its toll The hardest-hit professionals were packaging designers. In all likelihood, they were affected by the cutthroat competition within the Dutch supermarket sector. To some extent, the packaging design agencies managed to compensate for this loss of sales by attracting more business from small and medium-sized companies in the Netherlands. For new sources of income, industrial designers and spatial designers sought to tap into markets outside the Netherlands. The lowest point of the recession is now behind us for good There are now clear signs indicating the beginning of a recovery. The preliminary figures for 2005, based on the known results for 2005, show that the design sector was performing considerably better in 2005 than in 2004. Prospects for 2006 are even rosier. To be more specific, 40% of those surveyed look back at last year with satisfaction or even great satisfaction. Likewise, 50% have good or even high hopes for 2006. Equally encouraging was the high level of optimism shown by packaging designers. The survey was partly funded by two organizations, namely St. Collectieve Rechten Illustratoren en Ontwerpers and the St. de Visuelen. The survey was carried out by ABF Research in Delft. - END OF MESSAGE The appendix contains a summary of the survey findings. More information about costs, profits, rates, etc. can be obtained from Freek Kroesbergen at freek@bno.nl.

pg 1/4

APPENDIX: A SUMMARY OF THE BNO INDUSTRY MONITOR 2006 Economic recovery was slow in coming In 2004, total sales achieved by BNO members was 670 million down by almost 11 percent on 2002. The major design agencies (more than 5 employees) accounted for 60 percent of sales. Small agencies and one-person business made up the remaining 40 percent. On average, a design agency earned slightly more than 300,000 in sales: the average achieved by the larger agencies was 1.5 million, while the smaller agencies and individual designers were good for 140,000. Tabel: Key figures for 2004
Percentage of companies active Discipline Graphic design Packaging design Multimedia design Industrial design Spatial design in that discipline 62% 4% 8% 15% 11% Sales in millions of euros 340 60 58 117 97 51% 9% 9% 17% 14% Average sales per company (in Number thousands of euros) of FTEs* 250 643 315 362 406 3,440 480 640 1,380 750 51% 7% 10% 21% 11%

Total

2,200

670 100%

305

6,690

100%

* An FTE is the equivalent of one person working full-time

Graphic designers remain biggest segment within design industry The graphic designers and graphic design agencies make up the biggest segment within the design industry both in number and in sales. There are more small agencies and individual designers to be found within the graphic design segment than in other design segments, and in 2004 they performed better than the small businesses in other segments. Despite their small number (6%), the larger graphic design agencies accounted for a substantial part of the sales generated in the entire design sector (24%). Figure: A breakdown of sales in 2004 by design discipline

Graphic designers (small) Graphic designers (large) Packaging designers Multimedia designers Industrial designers Spatial designers

Fewer jobs despite an increase in the number of companies in 2004 Despite the continuing weak economy in 2004, the number of design agencies grew slightly in 2003 and 2004. This growth can be contributed to the companies with 5 or fewer employees; their number increased by 10 percent. By contrast, the number of large agencies which represent 12 percent of the entire number of businesses dropped by over 20 percent. The hardest-hit companies were the large packaging design agencies and the spatial design agencies, whose number fell by about 50 percent. The employment picture in the design industry worsened as well; there were almost 1,200 fewer jobs in 2004 than in 2002.

pg 2/4

Figure: A breakdown of companies in 2004 by design discipline

Graphic designers (small) Graphic designers (large) Packaging designers Multimedia designers Industrial designers Spatial designers

Price war waged in supermarket sector hurts sales and profits It is self-evident that the cutthroat competition within the Dutch supermarket sector in particular strongly pushed down sales and profits among packaging designers. On average, sales achieved by these agencies dropped by more than 40%. Nevertheless, a packaging design business still managed to generate, on average, sales of almost 650,000, which is by far the best result achieved in the design business. Packaging design businesses, particularly the large ones, share top honours with the major spatial design agencies. On average, the large packaging design companies brought in sales that were a third higher than the average for the entire packaging design segment. Likewise, the large spatial design companies performed a third better than the average for the whole spatial design segment. Noticeably, the small industrial design businesses did rather poorly, having attained average sales of 80,000. This group experienced a sharp drop in sales two years earlier than the other small design agencies. The large industrial design companies did perform normally. They managed to turn the decline in sales, which for them began as early as 2000, into an average increase of sales of almost 50%. The total sales achieved by industrial designers also rose by 50%. This growth may be indicative of a greater emphasis on innovation by the Dutch manufacturing industry. Looking for new markets Orders for the design industry mainly come from business-to-business services (43% of sales) and the manufacturing industry (21%). Assignments are also given by the government (14% of sales), the arts and culture (7%) and private persons(2%). Relatively speaking, large design agencies often bring in a lot of business from the manufacturing industry. By contrast, they do not receive that many assignments from the arts and cultural sector. The biggest part of the sales generated by large and smaller design companies and individual designers comes from business-to-business services. In terms of sales, design companies receive 42% of their orders from Dutch small and mediumsized companies. The small design businesses attract a large share of that business, namely 53%. The design companies other customers in the Netherlands who account for 46% of sales are bigger companies, government, non-profit organizations and private persons. The remaining 12% of sales is earned abroad. It appears that the packaging designers are trying to make up for lost sales by targeting the Dutch small and medium-sized companies in particular. There seems to be less focus on other customers. In 2002, a quarter of sales came from small and medium-sized companies. In 2004, this had risen to a third. Interestingly, the spatial and industrial designers are increasingly shifting their attention to customers outside the Netherlands. In 2004, they generated 11% of their sales abroad up from 8% in 2002. The industrial and spatial design agencies earned 45 million in sales outside the Netherlands. In other words, both segments generated over a quarter of their sales abroad.

pg 3/4

Figure: Average sales earned per company in various design disciplines in 2000, 2002 and 2004
2004 Ruimtelijk ontw erp Spatial design Industrieel ontw erp Industrial design Multimedia Multimedia design Verpakkings ontw erp Packaging design Grafisch ontw erp Graphic design TOTAAL TOTAL 0 200 400 600 800 2002 2000

1,000 1.000

1,200 1.200

1,400 1.400

In thousands duizenden euro's of euros

High hopes for 2005 and 2006 When the respondents were surveyed for the BNO Industry Monitor, most of them already had a complete overview of the results achieved in 2005. These preliminary figures now available show a strong improvement in performance, compared with 2004. The design sector is of the opinion that it performed better across the board in 2005, with 40% of respondents being positive or very positive. In fact, the design industry has even higher hopes for 2006, with almost 50% of respondents being positive or very positive. Figure: Company confidence regarding 2002, 2004, 2005 and 2006 Very negative Negative Neutral Positive Very positive

Very negative Negative Neutral Positive Very positive

The resilience shown by the packaging design agencies is striking. Albeit the worst performing segment, the packaging design agencies are feeling quite positive. Almost 55% of them have a good or even very good feeling about 2005. And over three-quarters of the packaging design agencies expect 2006 to turn out even better. Of the larger agencies, whose number shrank by about 20% in 2004, three-quarters see good or very good prospects for 2006.

pg 4/4