Quarterly report second quarter 2004

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The Norges Handels og Sjøfartstidende (NHST) Group’s profit/loss before tax in the second quarter amounted to NOK 29.5 million as against NOK 21 million in the corresponding period last year. The turnover shows a growth of 13 per cent to NOK 168,3 million in the quarter. The improvement is due to the fact that the Group’s publications have strengthened its competitive power and thereby has captured market share, and the improved financial circumstances of the business press. The growth in operating income is greatest in advertisements, but circulation revenues also show a clear growth. The 56 per cent improvement in operating profits, to NOK 28.3 million, is the ninth quarter in a row showing improvement since summer 2002.

The accumulated group turnover so far this year is up 15 per cent to NOK 330.1 million , and the operating profit is up 123 per cent to NOK 35.5 million. This is a trend in line with the Group’s own expectations. Financial items show a clear decline from NOK 6.5 million to NOK 1.8 million, which is primarily due to the ever lower interest rates on NHST’s bank deposits. NHST has no interest-bearing debts.

Among the subsidiaries, developments in Dagens Næringsliv and Nautisk Forlag have been particularly satisfying during the period concerned. The NHST Group has carried out an extensive business development scheme over a number of years, and now for the first time, the sum of the other companies shows a positive accumulated operating profit after six months. This is despite the fact that TradeWinds, Upstream and Intrafish are hit by an approximately 10 per cent weakening of the US dollar (USD) compared with last year. A large part of the turnover for these companies is in USD.

Publication by publication

Dagens Næringsliv (DN) is returning a growth in the operating income during the quarter of NOK 10.7 million, or 11 per cent, to NOK 104.4. It is the income from advertisements in particular that is showing strong growth, i.e. approximately 17 per cent. The circulation is rising also, and there is growth both in subscription and casual sales income. Dagens Næringsliv was the victim of a strike from 12 May until 22 May, as a result of the dispute between the Norwegian Journalists Organisation and MBL [??]. Dagens Næringsliv came out during the strike, the reason given as being its relationship with its readers, advertisers and the competition situation in relation to other newspapers and media. A number of advertisers withdrew or reduced their advertising campaigns during the period of strike. Dagens Næringsliv retrieved part of the setback after the strike and during the strike casual sales were higher. The strike’s net loss for the quarter is therefore calculated at approximately NOK 1 million. By comparison, the loss following the strike two years ago amounted to between NOK 6 and 8 million. The improved situation for Dagens Næringsliv is expected to continue in the coming quarters.

TradeWinds’s turnover grew from NOK 14.9 million to NOK 16.0 million, or approximately 7 per cent (in fixed rates of exchange the growth is approximately 17 per cent). The growth is mainly due to a very successful shipping conference at Pireus (Pasedonia), which resulted in a number of advertisements. TradeWinds’ circulation is also experiencing growth and reached a peak since 2002, i.e. 7,200. The growth is in Europe in particular, and as a result of the shipowning companies buying more and more newspaper for their ships. The operating income improved somewhat to NOK 1 million, as against NOK .5 million last year. The operating profit is considered to be too low, and the relatively prosperous times in shipping and its leading market position is expected to produce an upswing in the coming quarters.

Upstream has a flat turnover trend of NOK 12.6 million per quarter (up approximately 6 per cent in fixed exchange rates). This is weaker than expected, and it is primarily the income from advertisements that was weaker than expected in May and June. However, there is a bigger advertisment order reserve than ever, so that further growth is expected in the coming quarters. The circulation is rising and is now at an all-time high, with 5,600 subscribers. Europe and the US have seen the highest growth. The 11 per cent cost increase is due among other things to the effects of the high exchange rate for GBP, and to Upstream having the major part of its cost base in London (personnel and premises). The operating profit showed a decline, from a surplus of NOK .8 million last year to a deficit of NOK .4 million this year. This year’s target for Upstream is to have a positive operating result.

Intrafish Media has a flat turnover trend of approximately NOK 1.1 million per quarter. There is still a decline in turnover in the Norwegian language publications as a result of the past crisis in the Norwegian fisheries industry. There is still good growth in the international publications, and particularly in the US. There was an operating loss of NOK .6 million for the quarter and of NOK 2.5 million for the six-month period. Both are somewhat better than last year and this is due to cost cuts. The primary focus for Intrafish.Media is still to improve its operating profit, and as a result of better times, ever greater emphasis will be put on growth in turnover.

Nautisk Forlag has a growth of 64 per cent in turnover, to NOK 17.0 million, and is now the Group’s second largest company. The growth is due both to organic growth and the effect of a company acquisition in 2003. The operating profit was more than doubled to NOK 2.8 million. Nautisk Forlag is now one of the three largest maritime chart distributors in the world. A lower growth is expected in the coming quarters, and continued good results.

DN Nye Medier has a growth in turnover of 10 per cent per quarter to NOK 5.1 million. This was a lower growth than expected, and is attributed partly to the effect of the newspaper strike, which also hit the corporate campaigns over the Internet. The growth in traffic on dn.no is good and up 45 per ce nt, to 317,000 unique monthly users as at the end of June. The receipt of orders for the third quarter is good, which means that a higher growth in turnover is expected in the coming quarters. The operating profit both for the quarter in question and for the six months in question shows a clear improvement, and this trend is expected to continue.

TDN Finans’ development is quite stable, but there is some growth underlying. Some improvement is expected in the two coming quarters.

Europower has some growth in its turnover, 19 per cent to NOK 1.6 million. The growth is a result of the launching of the monthly newspaper, which is distributed together with Dagens Næringsliv. As a result of increased costs for the newspaper, the costs in general have increased so that the operating profit has only improved marginally. The increase in turnover is expected to increase somewhat as the monthly newspaper is establishing itself in the market, and that this will mean that one gets an improvement in the operating profit in the quarters ahead

In conclusion:

The second quarter was good as expected, and so far this year, the operating margin is 11 per cent. However, some of the companies were weaker than expected and for reasons that may be put right. There is a satisfactory receipt of orders in the coming quarter. After that there is more uncertainty, and primarily on the advertisements side. If the improved business cycle continues, the strong competitive power combined with good cost management should contribute to further improvements in terms of profit.

Oslo 27 August 2004

The Board of Directors

AS Norges Handels og Sjøfartstidende