2003 Preliminary Annual Result

Please note that the annual results and the presentation will be available on:

 

Schibsted’s web site:     http://www.schibsted.no/english/investor_relations/

HUGIN Online:     http://www.huginonline.no/SCH

 

Schibsted’s operating revenues in the 4th quarter 2003 came to NOK 2,326 million, an increase of NOK 271 million compared to the same period in 2002. The operating profit (EBITA) increased to NOK 196 million (NOK 136 million). The improvement during the quarter can to a large extent be attributed to good results posted by Aftonbladet and Metronome Film & Television.

 

Other revenues and costs of NOK -17 million (NOK 8 million) relate to restructuring costs in Norway and Sweden.

 

Income from associated companies for the 4th quarter 2003 amounted to NOK 29 million (NOK 27 million). 20 Minutes and the regional newspapers posted better results than in 2002, while TV 2 ended the year with poorer results.

 

Net financial items for the 4th quarter 2003 came to NOK -27 million (NOK -57 million). The lower interest level, together with a decrease in interest-bearing debt, reduced interest costs in the 4th quarter by NOK 5 million. The Group’s share portfolio was written down by NOK 9 million (NOK 32 million) in the 4th quarter. Effective from the 2nd quarter 2003, all foreign exchange gains (losses) relating to liabilities used for hedging investments in foreign units are recognised directly in equity. Figures for previous periods have been restated.

 

During October 2003, the Group issued bonds in the Norwegian bond market for a total of NOK 900 million in order to compensate for the reduction in the borrowing limits on the current credit facility. At the end of December 2003, this credit facility was USD 180 million and is due for repayment in October 2004. This facility will be replaced by a new one in the spring of 2004. The interest-bearing debt at the end of 2003 was NOK 1.6 billion (NOK 1.7 billion). The repayment of long-term debt has led to decreased interest costs which, together with the lower interest-rate level, have reduced the net interest expenses by NOK 45 million in 2003. The net interest-bearing debt has fallen to NOK 734 million (NOK 1,002 million), despite the repurchase of shares, the distribution of dividend in May and the purchase of shares in Blocket. The Group’s total liquidity reserves were approximately NOK 2.0 billion at the year-end 2003.

 

The Group’s operating revenues in 2003 increased to NOK 8,555 million (NOK 7,872 million), of which approximately NOK 200 million is due to a weaker Norwegian krone compared with the Swedish krona. The operating profit (EBITA) improved from NOK 549 million to NOK 779 million. The weakened Norwegian krone improved the operating profit by approximately NOK 10 million. The profit before tax amounted to NOK 681 million (NOK 271 million), while taxes in 2003 came to NOK 197 million (NOK 115 million). As a result of differences between the accounting results and tax base, the Group’s tax expenses may deviate from the nominal tax rate in Norway (28%). These differences are primarily related to amortisation of goodwill, income from associated companies and losses in foreign subsidiaries, for which no deferred tax benefit is recognised in the balance sheet. As a result of improved profit, reduced losses in foreign subsidiaries and positive contributions from associated companies, the Group’s tax rate was reduced to 29% for the 2nd half of 2003. The earnings per share and diluted earnings per share were both NOK 6.92 (NOK 2.26).

 

In 2003, the Group invested NOK 263 million in fixed and intangible assets and NOK 209 million in shares, of which Blocket AB comprises NOK 170 million (SEK 183 million). The agreement entered into with Express Zeitung AG in the first quarter 2003 relating to the sale of 20 Minuten (Schweiz) AG was executed in the 4th quarter 2003. This agreement involves a sale in three stages:  49.5% in the first stage, and 25.25% in each of the second and third stages.  The prices of stages two and three will depend on 20 Minuten (Schweiz) AG’s results in 2005 and 2006 respectively.

 

In accordance with authorisation from the Annual General Meeting, Schibsted ASA has repurchased 1,490,518 shares, 405,000 of these in the 1st quarter of 2003. In connection with employees being given the opportunity to purchase shares at a discounted price, 47,482 shares were sold to the Schibsted Employees’ Share Purchase Fund in the 3rd quarter of 2003 at a price of NOK 100 per share.

 

The Group’s equity ratio was 36.6% at the year-end 2003 (34.1%) – the Group’s own shares comprise around 2%. The equity has been reduced since the 3rd quarter (40.6%). This is due to provisions for dividend for 2003. The Board will propose that the Annual General Meeting approves a dividend of NOK 3.0 per share in 2003 (NOK 2.0).

 

There is a positive trend for brand advertising in Norway. Recruitment advertising is showing signs of a slight upswing, while real-estate advertising is expected to decline slightly from its high level in 2003.

 

Continued drop in revenues in Aftenposten means that there is a need for extensive new measures on the cost and revenue sides in addition to the existing programme.  Parallel to this, efforts will be made to achieve a considerable improvement in the profit margin over the next 2-3 years. These measures will be determined by the product and readership strategy that is chosen to strengthen the newspaper’s position in the readership market.  The measures will be communicated in the 1st quarter 2004 accounts, and may lead to restructuring provisions in 2004.

 

In 2004, the casual sales newspapers are expected to maintain their strong positions, with high, stable circulation figures.

 

The advertising market in Sweden is showing signs of slight improvement, with the exception of recruitment advertising, where an upswing is expected towards the end of 2004 or beginning of 2005.

 

The strong growth in Internet advertising is expected to continue in 2004. The company has high expectations regarding its acquisition of the classified advertisement service www.blocket.se. FINN has renewed its contract with Eiendomsmeglergruppen, which has approximately 40% of the housing market in Norway, to advertise the entire group’s property on www.finn.no for the next three years.

 

The outlook for Metronome Film & Television is considered to be favourable. The TV production order situation is good for the 1st half-year 2004 and the strong growth in the DVD market is expected to continue in 2004.

 

In 2004, 20 Minutes will continue to focus on consolidation of existing operations. There are plans to launch 20 Minutes in Lille, Lyon and Marseille during the first quarter 2004. For Spain and Switzerland, good readership surveys have given rise to expectations regarding larger market shares and higher advertisement prices. The advertising market is also expected to improve slightly during 2004.

 

The Group has further improved its financial flexibility in 2003 and is in a good position for further growth. Following a review of the Group’s strategy, the growth is expected to take place both organically and through acquisitions. The Group’s strong position and competitive advantages will be the starting point for such growth and acquisitions will complement and strengthen its current positions. The growth strategy and new projects will be assessed in relation to the Group’s financial goals.

 

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