Quarterly report fourth quarter 2003

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The Norges Handels og Sjøfartstidende (NHST) Group had a pre-tax profit for the fourth quarter of NOK 4.9 m, which was an improvement of NOK 2.7 m. The improvement was partly due to the fact that dn.no’s profit improved considerably during the quarter. Apart from this, the profit performance varied from one subsidiary to the next.

However, for the first time in three years, the Group had growth in turnover compared with the equivalent period in the preceding year. The growth in turnover was marginal – only 1 per cent – and it was the growth in several of the more recent activities in the Group that contributed to the growth. The market situation for the sale of advertisements continued to be demanding in the quarter, and a weak trend for the USD also weakened NHST’s turnover in NOK. Within advertisements announcing vacant positions (“stilling ledig”) there was a general growth of about 5 per cent during the quarter. This is usually a strong general business indicator in itself and in addition to that comes the fact that the order reserve for advertisements at the beginning of 2004 is definitely higher than for the three previous years. The growth in turnover is therefore expected to increase in Q1 2004.

The pre-tax profit for 2003 was NOK 20.6 m as against the previous year’s loss of NOK 2.5 m (for 2002). The improvement is particularly due to the recent business development activities within the Internet, oil, energy, and fisheries/aqua culture/seafood sectors. Over time, these publications have all developed a leading position in terms of readership within their own segments, and this provides a steadily increasing turnover both for advertisements and subscriptions. These activities are still in the negative, however, and it will take some time before they achieve satisfactory profitability. The more established publications such as Dagens Næringsliv and Trade Winds had a setback both in terms of turnover and operating result. This is primarily due to the market conditions, which were extremely difficult through the first half of the year.

A forward sale of 50 per cent of the expected income in USD has been carried out at a rate of slightly more than NOK 7.00 per USD – for 2003 the equivalent was carried out at a rate of 7.50. Because of NHST’s solid capital adequacy and no interest-bearing debts, the falling interest rates will lead to lower financial income in the coming quarters. The profits for 2003 provide a basis for the payment of dividends.

Publication by publication:

Dagens Næringsliv’s (DN) operating income fell by four per cent to NOK 95.4 m. November and December were particularly poor months for advertisements in the business-to-business segment. However, DN has taken market share both here and in towards consumer-oriented advertisements (particularly for property). Despite continuing cost cuts the operating profit dropped somewhat in the quarter, to NOK 11.6 m, as against NOK 14.6 m last year. For the year as a whole, DN achieved an operating margin of 10 per cent, which was satisfactory under the prevailing circumstances in the market. There is definite growth in the order reserve for advertisements in the coming months. A similar trend is now also being reported from other prominent international business publications.

The circulation for 2003 reached 69.262 as against 69.722 in 2002. The circulation trend was at its weakest in the first quarters of 2003, but improved in the last quarters. The development in individual sales and Saturday sales is growing in particular, and the number of readers per day is growing to upwards of 300,000. There is an extensive subscription campaign going on. It got off to a good start and growth is expected in circulation in the months ahead.

TradeWinds’ operating income grew marginally at 1 per cent to NOK 15.3 m. The growth in turnover was a change of trend from previous quarters in 2003 when there was a definite setback. The improvement is primarily due to clear growth in advertisements, despite the fact that the USD was down about 10 per cent in the quarter. The operating profit improved by NOK 0.3 m to NOK 1.2 m. Trade Winds experienced growth in circulation over the last quarters, and at the end of 2003 had a circulation of 7,058. The improved circulation in particular comes from Greece and China. The good business trends in shipping are expected to produce further improvement in the coming quarters. At the end of February Trade Winds will carry out its first shipping conference, which will be held in Shanghai.

Upstream had a setback both in its turnover and its operating profit in the quarter. Both turnover and operating profit dropped by 8 per cent in the quarter. The 8 per cent drop in turnover to NOK 10.5 m can be explained by the USD having weakened by about 10 per cent, but there was also a small drop in the volume of advertisements. The drop in the volume of advertisements came as a bit of a surprise because there was solid growth in the previous quarters, and there is considerable growth in the order reserve for 2004. The circulation is moderate up to 5,447. For the year as a whole, the operating loss amounted to NOK 2.5 m, which was a NOK 1.5 m improvement on 2002.

DN Nye Medier had a 70 per cent growth in turnover to NOK 5.8 m. This is more than the general growth in the market for internet services, which is between 30 and 40 per cent. At the same time the costs for dn.no were cut by 23 per cent. There was a limited profit in both October and November, but for the quarter there was a small deficit of NOK 0.3 m. The growth in turnover is within all the advertisement areas, and is particularly pronounced within profiles/brand names. There was a 15 per cent growth in traffic. There was an average of 269,300 unique monthly users in the fourth quarter. The growth in turnover is expected to continue because of the large number of orders coming in.

Nautisk Forlag had a 32 per cent growth in turnover, to NOK 11.6 m. The major part of that growth is a result of the acquisition of Navicharts, which was carried out with full effect on the accounts from 1 October 2003. The operating profit dropped, however, which was due to “one-off costs” being put down to expenses as a result of the acquisition. The operations have now been united and are fully integrated, and the acquisition has been well received in the market. Nautisk Forlag is now the third largest distributor of maritime charts in the world.

TDN Finans has had a very stable development in recent years, and that is gratifying in a market that has dropped considerably. With the improved times on the stock market this trend has turned, and some improvement is expected in the periods ahead.

Europower has carried out relatively extensive cost reductions in recent years. By launching the Europower newspaper the falling trend in turnover has been reversed and there was growth in the quarter. There are plans to issue the Europower newspaper as a monthly newspaper in 2004, and the electronics services are also expected to be strengthened through the coming quarters.

Intrafish Media had a 37 per cent improvement in its operating result, to NOK -2.1 m. Turnover grew by 5 per cent to NOK –10.8 m . Both the development in the operating result and in turnover is in line with the development plan for the company. The growth in turnover was primarily generated by the English language publications. Because of the cost cuts carried out in the Norwegian language publications, the improvement in the operating result is just as much due to the Norwegian language publications. Fiskaren is the largest publication, and in 2003 it achieved a turnover of NOK 28.3 m and had a profit of NOK 1.1 m. Both these figures are the best ever. Further progress is expected in the period ahead through reductions in the cost level and some growth in turnover.

Conclusion:

The fourth quarter was the sixth consecutive quarter with moderate growth in the results. Good cost control and further efficiencies continue to be important. The general upswing in business, however, means that consistently greater emphasis is being put on direct income-generating measures. The improvement is therefore expected to continue.

Oslo, 18 February 2004

The Board of Directors and the Group CEO for NHST