ANNUAL REPORT

2012

CARNEGIE 8 FEBRUARY 2013 8 February 2013

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Agenda • Presentation af North Media A/S’ 2012 Annual Report by:

• Lars Nymann Andersen

• A changing media market

Chief Executive Officer

• Expectations and focus for 2013

• Mads Dahl Andersen Chief Executive Officer, FK Distribution

• 2012 financial statements

• Kåre Wigh Chief Financial Officer

• Developments of subsidiaries

• Arne Ullum Media Director

8 February 2013

2

Q4-12 market developments more negative than anticipated, and volatility has intensified DKKm

Group EBIT: Print: Online:

2013 from -15 to +15 15-45 -30

2012 101 140 -40

2011 167 216 -51

• The negative trend in earnings performance is not satisfactory – although, seen in isolation, results for 2012 are satisfactory • Market conditions, more “no ads, please” households and political measures in the printed matter market took a more rapid and adverse turn than expected after Q3 2012 • Volatility in FK Distribution’s market has intensified • Expectations for 2013 are challenging and subject to uncertainty 8 February 2013

3

Crisis in retail, effect of tax and ”no ads, please” reduce printed matter volumes • Effect of tax has an adverse effect on printed matter volumes even before the tax has actually been introduced • Retailers have reduced their costs – also their printed matter volumes. Uncertain whether volumes will go up again if the tax is abolished • More households say no to printed advertising material. Expected to go up by more than 5% in 2013 • Downward trend in market volume causes increased competition and pressure on prices

8 February 2013

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2013: A long haul – no miracle cure Focus on maintaining and developing business 1. FK Distribution to maintain and increase its market share and launch new, planned and supplementary business models – for implementation in H2-2013 2. Søndagsavisen to continue to up sales, market share and earnings 3. Bekey to complete product development and start selling and sales promotion 4. Ofir to succeed in boosting sales and improving results 5. Byggestart.dk and HentTilbud.dk to cement their position as market leaders and to continue to boost sales and contribute with positive results

8 February 2013

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2013 will build on measures taken in 2012: Strengthened market positions and business development • • • •

BEKEY

8 February 2013

Long-term contracts with large customers An ”Ads, yes please” system will not be carried through, instead a tax is imposed 10% decline in sales and a major drop in results due to pressure on volumes and prices Focus on business development – distribution power and integration of platforms enable segmentation

• •

Volume strategy braving market trends and fortifies position Double-digit growth rate in sales of printed ads – 56% growth in large advertisers

•

Focus on conceptualisation and completion of product portfolio – installed in +14,000 stairways in Copenhagen

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2013 will build on measures taken in 2012: Improvement of operations and market position of all companies • • •

• • •

•

8 February 2013

New pro-active strategy causes moderate increase in sales and improved results which are still not satisfactory, however Acquisition of eConscribi strengthens the overall platform Successful initiatives aimed at increasing brand awareness and market share to continue in 2013 – focus on profitability Revenue up by 20% and better financial performance despite development costs and new products Improve development initiatives Establishment of a new interesting market leading position by way of acquisitions, and integration has been completed successfully, but lower activities at year-end 2012 affect earnings negatively Growth and profitability on the agenda for 2013

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A long haul – no dividend distributed • Printed matter market developments lead to expected Group EBIT between DKK -15 million and DKK +15 million for 2013 • Low visibility and high volatility in the distribution market make it difficult to quantify expectations beyond 2013 • There is much to indicate unsatisfactory earnings for 2014 too

• The Board of Directors and the Executive Board want to have sound financial resources in a structurally changing market in order to secure long-term earnings • This is why the Board of Directors recommends to the Annual General Meeting to be held on 8 March 2013 that no dividend be distributed for FY 2012

8 February 2013

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North Media’s business potential is considered substantial in a changing market structure • Strong positions and competencies in both Print and Online are tapped

• Frequent contact to the majority of Danish consumers holds a huge potential • The aim is to provide: - Suppliers of goods and services with direct access to high-spending segmented consumers - Consumers with a basis for decision that reflects their individual needs • The development and expansion of business models is progressing rapidly • In a few years, North Media will rest on more profitable and more equitable feet and also have a more sustainable product portfolio

8 February 2013

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Guidance for 2013: 2013 (estimated) 



2012 (actual) 

Revenue: DKK 990-1050m

Revenue: DKK 1105m (-9%)

― Print: DKK 890-940m (-10%)

― Print: DKK 1018m (-11%)

― Online: DKK 100-110m (+25%)

― Online: DKK 87m (+35%)



EBIT: DKK -15 to +15m

EBIT: DKK 101m

― Print: DKK 15-45m



Print: DKK 140m

― Online: DKK -30m



Online: DKK -40m



Investments: DKK 30m



Investments: DKK 16m



Amortisation/depreciation: DKK 30m



Amortisation/depreciation: DKK 33m

8 February 2013

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Changes in structural market conditions reduce sales by 9% in 2012 Revenue by quarter 2010 to 2012

• Q4 2012 proved challenging for several subsidiaries – diminished spending reduced sales by 14% YoY

DKKm

400 350 300 250 200

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010

2011

2012

Revenue, development from 2011 to 2012

• Revenue down by DKK 107m to DKK 1,105m in 2012

DKKm

1.212

• Online activities up by 35%, but Print revenue down by 11%

Group 2011

8 February 2013

11

-129

+22

1.105

Print

Online

Group 2012

Decline in group results as anticipated • Quarter -

70

Q4 2012 profit margin of 8.1% against 17.0% in 2011 due to lower sales

14% 50

12%

40

10%

30

8% 6%

20

EBIT of DKK 101m against DKK 167m in 2011

4% 10

2%

0

-

0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

ΔPrint: DKK -76m.

2010

-

2011

2012

ΔOnline: DKK +11m EBIT (Group DKKm)

(DKK +24m excl acquired activities)

8 February 2013

18% 16%

60

• FY -

EBIT and profit margin by quarter 2010 to 2012

12

EBIT % (RHS)

Massive investments in recent years in business development within Print and Online • Market developments in 2012 affirm recent years’ focus on business development • Competition on volumes and prices + more “No ads, please” households affect FK Distribution’s 2012 performance considerably • Pick-up in all online activities in 2012, but Ofir’s results still not satisfactory

1.400 1.200 1.000 800 600 400 200 0 -200

Printsegment 1067

957

20%

7,4%

15% 10%

216

170

71

140,1

5% 0%

-19 -1,8%

-5% 2009

2010

Revenue DKKm

100

1018 13,8%

2008

150

25%

1147 18,8%

1070 15,9%

2011

EBIT DKKm

2012 EBIT % (RHS)

Onlinesegment 94

71

69

87

65

50

• By comparison (excl acquisition of HentTilbud.dk and Byggestart.dk), the Online segment’s results went up by DKK 24m from 2011 to 2012

8 February 2013

13

0 -50

-28,8

-41,6

-49,7

-50,6

-100 2008

2009

2010

Revenue DKKm

2011 EBIT DKKm

-39,6 2012

Lower operating profit breaks the upward-sloping curve (DKKm)

2012

2011

Δ

EBIT

100.5

166.5

-40%

Associates

-1.6

-0.5

Financial income

15.9

7.0

Financial expenses

-10.8

-10.7

Profit before tax

104.0

162.3

Tax

-22.7

-41.1

Profit from contin. operations

81.3

121.2

Profit from sale of companies

0.0

182.0

Profit for the year, discont. operations

-5.2

-1.6

Profit for the year

76.1

301.6

8 February 2013

-36%

-33%

• Profit margin 9.1% (13.7%) • Financial - income; primarily capital gains from shares and bonds - expenses; primarily interest on long-term mortgage loans • Profit from sale of GISAB in 2011 • ROIC: 22.8% (38.9%)

-75%

14

Sustainedly strong capital structure provides latitude (DKKm)

2012

2011

Non-current, total

482

439

Current, total

383

430

99

92

188

208

47

72

Equity

512

524

Non-current liabilities

190

171

Current liablities

163

174

Net working capital

-35

-50

59.2%

60.3%

Assets

Trade receivables Securities

Cash

• Goodwill and other intangible assets increased as a result of the acquisition of HentTilbud.dk and Byggestart.dk

• Investments for the year total DKK 27.7m. Primarily FK Distribution, packing terminals

Equity/liabilities

Equity interest

8 February 2013

• Amortisation and depreciation for the year amount to DKK 33.3m • Net working capital down from DKK -50m at year-end 2011 to DKK -35m at 31 Dec 2012

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Sound financial resources ensure financial latitude in 2013 200

• Cash flows from operating activities of DKK 91.1m • Net interest-bearing cash position of DKK 66.3m (DKK 107m) • Dividend payment of DKK 59m in 2012 and buyback of treasury shares for DKK 23m to fund the share option programme

DKKm

150

Cash flows from operating activities 148

156 91

100 50 0 2010

2011

Dividend and returns to shareholders 275

300

61%

250

• Suspension of dividend payment for 2012. Financial resources to be strengthened to provide a scope for making the right decisions that will optimise future earnings capacity

8 February 2013

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2012

200 150 100 50

129 18%

59

18%

0 2010

2011

Dividend DKKm

2012

Yield (%)

70% 60% 50% 40% 30% 20% 10% 0%

FK Distribution in 2012

 Market conditions toughened  Focus on execution and business development  Retention of market share and new contracts signed

8 February 2013

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The market for door-to-door distributed advertisements is changing number of households (%)

50

'No ads, please' development 2003-2011

40 30 20 10 0

• Market conditions toughened more than anticipated. - Number of “no ads, please” households on the rise - Retailers have reduced their volumes of printed matter - Further reduction in volumes by 10% expected for 2013

2003 2004 2005 2006 2007 2008 2009 2010 2011

Switzerland Denmark

Norway Netherlands

Sweden

Media selection at grocery stores (percentage of ad budget) 3%

5%

Printed Matters 14%

Daily papers

Local papers

3%

• Printed ads still crucial for the retail trade - Primary traffic-creating element for retailers - Tax on printed matter leads to higher prices for consumers - Uncertain when and how the tax will be introduced

TV

5%

Internet 70%

8 February 2013

Advertisements in shop

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Poorer financial performance at FK Distribution, focus on new strategy • FK Distribution maintained its market position despite sales being down by 10% in 2012 -

New long-term distribution contracts with key customers, including Dansk Supermarked

-

Extended mid-week coverage and contract signed with Berlingske Media

-

Operating profit reduced, but the profit margin remains at a reasonable level in 2012

• Demand for further segmentation drives business development -

Experiment with addressed covers completed

-

Extension of documentation of effects and customer satisfaction analyses

-

MinReklame.dk transferred to FK to add digital competencies and products

-

Unsatisfactory earnings development – enlargement and development of business models in 2013

8 February 2013

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BEKEY in 2012

 An immature growth market bears witness to an attractive potential Market leader offering a full product portfolio  Increased sales and expansion of installed base in 2013

8 February 2013

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Newspapers in 2012

 Strong momentum harnessed to gain market shares  Considerable efficiency improvement has boosted sales  Focus on performance and value drivers

8 February 2013

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Intensive sales effort secures growth and strengthens the market position in challenging markets •

Share of printed ads market increased heavily Indexed development in readership (Danish dailies and free newspapers)

•

Focus on segmentation makes sales efforts more efficient 100

•

95

Volume of ads up 100% since 2009

93,2

90

86,8

•

Søndagsavisen benefits from the decline in competitors’ readership – fully outweighs the newspaper’s own moderate decline

H1-2009 = index 100

85 80

77,9 75

72,7 70

65,9

65

•

•

60

Focus on improving performance and market shares through optimisation of editorial content in 2013 Profit at group level from Q1 2013

8 February 2013

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1h 2009

1h2010

Søndagsavisen 1-24 B.T. (H) Ekstra Bladet (H) Jyllands-Posten (H)

1h2011

1h2012

Berlingske Tidende (H) Politiken (H) MetroXpress Dagbladet Børsen

Ofir in 2012

fortified market position  Higher brand awareness through a massive promotional campaign  Limited growth leads to unsatisfactory earnings development  Consolidation of the market has resulted in a

8 February 2013

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Higher brand awareness and improved platform support the strategy • Increasing market share makes Ofir.dk one of Denmark’s leading online job portals

Unsolicited awareness Ofir.dk (B2B) 30%

25%

• New strategy and massive sales promotion have upped KPIs such as brand awareness and number of unique users

20% 15% 10% 5% 0% 2009

2010

2011

2012

Number of unique users per month (monthly average for the year) 250.000 200.000 150.000

• Acquisition of eConscribi improves overall platform • Volume of ads up, but too few buy the extra ad options –flow of the extra services model has been optimised and user-friendliness improved

100.000 50.000 0 2009

8 February 2013

2010

2011

2012

• Development and promotional initiatives to secure heavy growth in 2013 and improved results 24

Other Online activities in 2012

 Boligportal.dk upholds strong growth  Byggestart.dk/HentTilbud.dk making headway after successful integration

8 February 2013

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BoligPortal.dk is Denmark’s largest and most effective housing platform • The rented housing market develops favourably

• Better mobile services products and more exposure in social media • BostadPortal.se has consolidated its position successfully and upped the number of ads • Focus on maintaining a high growth rate and securing market shares by enlarging platforms

8 February 2013

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140.000 Number of Rental properties per year

• Sales up by 20% and improved results despite increased development costs

Rental property advertised at BoligPortal.dk

120.000 100.000 80.000 60.000 40.000 20.000 2010

2011

2012

Acquisition of Byggestart.dk and HentTilbud.dk; A market leader with perspectives • The market for builders’ ads is estimated at DKK 1bn. The RFQ market is new and immature • In 2012, focus was on integrating platforms and increasing the number of signed-up builders • Increased level of activities and strengthened market position, but the small number of building projects affect results in the last few months of 2012

• Growth and improved profitability on the 2013 agenda – profitability to be achieved through increased sales and reduced costs

8 February 2013

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WWW.NORTHMEDIA.DK Financial calendar for 2013    

8 March 2013 3 May 2013 7 August 2013 6 November 2013

8 February 2013

Annual General Meeting Interim Management Statement for Q1 2013 Interim Report for 2013 Interim Management Statement for Q3 2013

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