Quarterly report third quarter 2005

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General

The Norges Handels og Sjøfartstidende (NHST) Group’s pre-tax result in the third quarter was a deficit of NOK 1.7 million as against a deficit of NOK 1.9 million last year. Operating loss improved from a loss of NOK 2.9 million to a loss of NOK 2.4 million for the quarter. The third quarter is normally the weakest because of the holiday months of July and part of August. The accumulated operating profit for the first nine months was NOK 40.4 million compared with NOK 32.6 million last year (up 24%). The pre-tax profit for the first nine months improved by 20% to NOK 42.5 million. The Group’s profit performance has improved for the fourteenth time in a row, unbroken since the summer of 2002.

NHST Group turnover rose by 10% over the quarter to NOK 169.7 million. The accumulated figure for the year also shows a 10% increase in turnover to NOK 535.3 million. This growth in turnover is considered to be greater than growth in the market. Good market conditions continue to prevail in Norway and throughout the three global sectors of shipping, oil and seafood. Higher advertisement sales are the main reason for the improvement in turnover but there has also been good underlying growth in circulation revenues.

A corporate acquisition was made during the period - the web TV company Smartcom. There will be a report from this company in the fourth quarter. As in previous periods, this report is prepared under Norwegian GAAP.

Publication by publication

Dagens Næringsliv (DN) improved its operating profit by 63% to NOK 3.6 million in the third quarter. The improvement was attributable to greater advertising revenue, and total revenue rose by 10% in the quarter to NOK 98.2 million. So far this year, turnover has expanded by 7% to NOK 314.4 million. After nine months, operating profit stands at NOK 43.5 million, an increase of 3%. The growth in advertisements has come particularly from advertisements aimed at consumers, and situations vacant advertising. Subscriptions and casual sales showed a positive trend during the quarter while bulk sales to airlines were lower than in the equivalent period last year. MBL’s readership survey shows that the number of DN readers is increasing. Average daily readership is 303,000 (up 5,000 on last year) and on Saturdays, there are 350,000 readers a day (up 8,000). On 1 October, DN started printing the paper in Bergen for parts of Western Norway.

DN Nye Medier increased turnover in the quarter by 23% to NOK 6.1 million. Greater turnover growth than this is expected for the year, and traffic growth is over 30%. To date, turnover growth this year is 31% to NOK 19.9 million. Operating results for the quarter show a deficit of NOK 0.7 million as against a loss of NOK 1.3 million last year. On an accumulated basis, dn.no shows a profit of NOK 0.7 million compared with a loss of NOK 3.0 million last year. Higher turnover growth is expected in the coming quarters with further improvement in operating profits.

TradeWinds recorded operating profit improvement of NOK 0.6 million to an operating profit of NOK 0.1 million for the quarter. Turnover rose by 7% in the quarter to NOK 14.8 million. TradeWinds circulation is rising – mainly in Greece and Germany. So far this year, turnover growth has been 11% to NOK 52 million. Operating profit shows an 83% growth to NOK 2.4 million. Continued moderate progress is expected for TradeWinds in the coming quarter but in the fourth quarter, TradeWinds will feel the effects of a successful shipping conference in Mumbai.

Upstream recorded a profit for yet another quarter. Operating profit was NOK 0.4 million as against a deficit of NOK 0.3 million last year. Year-to-date operating profit stands at NOK 1.4 million as against a deficit of NOK 1.8 million last year. The increase in turnover for the quarter and so far this year, is quite similar: 12% - 13%. The largest growth has come from advertising but circulation is also going up and passed the 6,000 full-paying subscribers mark in September. The greatest subscriber growth is in Asia and USA. Further progress for Upstream is expected.

Intrafish Media recorded a marginal reverse in operating result of NOK 0.2 million to a deficit of NOK 1.4 million over the quarter. This was slightly worse than expected and reflects weaker sales than anticipated. So far this year, the deficit has been reduced from NOK 3.7 million to a loss of NOK 2.7 million. Turnover for the quarter fell 2% to NOK 10.7 million. There has been 3% in accumulated turnover growth to NOK 31.9 million. A number of measures are now being implemented to promote greater growth in Intrafish. In the short term, marginal improvement is expected.

Nautisk Forlag recorded a 7% growth in its turnover for the quarter to NOK 21.2 million. Operating profit was NOK 0.7 million, a drop of NOK 1.2 million compared with last year. This decline is attributable to lower operating margins as a result of considerable intensification in competition. Year-to-date turnover rose by 22% to NOK 65.6 million but with a NOK 0.7 million drop in operating profit to NOK 5.9 million. In the coming quarter, lower growth in turnover than hitherto this year is expected but with a better trend in margins than last year.

TDN Nyhetsbyrå recorded a 5% expansion in turnover to NOK 2.6 million and a good improvement in profits to NOK 0.4 million. So far this year, turnover growth has been 1% to NOK 7.5 million while operating profits have nearly doubled to NOK 1.0 million. Improvement is also expected in the coming quarter.

Europower expanded by 143 % in turnover this quarter to NOK 3.8 million as a result of the acquisition of Energi magazine. Operating profit for the quarter however, weakened by NOK 0.3 million to a deficit of NOK 0.9 million. This reversal also caused the accumulated operating deficit to fall back to NOK 1.5 million as against a deficit of NOK 1.3 last year. Accumulated turnover rose by 50% to NOK 7.2 million. It is expected that it will take another quarter before an improvement in operating performance can be achieved.


In conclusion

As mentioned, the third quarter is normally the weakest of the year. It is also a demanding quarter for planning and implementation. Turnover growth in the quarter is considered to be good and it demonstrates that NHST’s consistent strategy is having an impact on the market. Margin trends are expected to improve in the coming quarter but turnover growth will perhaps be somewhat lower. This is based on the continuation of a good economic climate.

18 October 2005

The Board of Directors Norges Handels og Sjøfartstidende