Pr Prospectus A-pressen ASA ospectus Public Rights Issue Public issue of 1,602,820 shares with preferential rights for the Company’s shareholders as of 21 October 1998.
A-pr Subscription price: NOK 90,Ð per share.
Subscription period opens on 29 October essen ASA and closes on 12 November.
Introductory prospectus In connection with listing on the Oslo Stock Exchange
Lead manager: Elcon Securities ASA
In cooperation with
October 21 1998 A-PRESSEN PROSPECTUS
Information
This prospectus has been prepared in connection with a public share issue and an application for listing of the shares of A-pressen on the Oslo Stock Exchange.
"Except for "Notice to Investors" and "Distribution and Solicitation Restrictions" this document is a translation of the original Norwegian prospectus for the rights issue of shares of A-pressen ASA, which is also available from the Manager and the Company. In the event of any discrepancy between the English translation and the Norwegian prospectus, the latter should to all intents and purposes be deemed to be the legally binding version.
The right to distribute this prospectus and offer shares is restricted in certain countries. Persons receiving this prospectus must inform themselves regarding such restrictions and are obliged to respect them. For further information please refer to “Notice to Investors” and “Solicitation Restrictions” on the next page.
The prospectus has been submitted to the Oslo Stock Exchange for inspection pursuant to Section 5-1, see also Section 5-7 of the (Norwegian) Securities Trading Act of 19 June 1997 No. 79.
No persons other than those named in the prospectus are authorised to provide information regarding this prospectus or matters described therein. Should anyone nevertheless provide such information, he or she must be deemed to be unauthorised to do so.
This prospectus does not constitute an offer to buy securities over and above the shares that are offered for subscription through this prospectus. Nor is it an offer for share subscription if this is made by anyone who is not authorised to broker such subscription.
Information from A-pressen or the manager regarding the prospectus, the public share issue or the application for stock exchange listing is deemed to have been provided when publicised through press releases or the information system of the Oslo Stock Exchange. All new material circumstances and inaccuracies will be treated pursuant to Section 14-6 of the Stock Exchange Regulations.
Unless otherwise stated, accounts figures are reproduced in accordance with generally accepted Norwegian accounting standards.
Unless otherwise stated, the source is the management or Board of the Company.
Any disputes regarding this prospectus shall be subject to Norwegian law and the exclusive jurisdiction of the Norwegian courts.
1 A-PRESSEN PROSPECTUS
Notice to Investors This Prospectus has been prepared in connection with the rights issue (the "Issue") of the shares (the "Shares") of A-Pressen ASA or the "Company". This Prospectus is being sent to current shareholders also outside Norway. Elcon Securities is acting as manager as described on the cover page hereof (the "Manager").
The Company and each of their respective Directors collectively and individually accept full responsibility for the accuracy of the information contained herein. The Company and each of their respective Directors confirm that this Prospectus, to the best of their knowledge, contains all information with regard to the Company and the Shares that is material in the context of the Issue, that the opinion and intentions expressed herein have been reached after considering all relevant circumstances and are based on reasonable assumptions and that, to the best of their knowledge and belief, there are no other facts the omission of which would make this Prospectus misleading and that all reasonable enquires have been made by the Company to ascertain such facts and verify the accuracy of all such information and statements.
This Prospectus does not constitute an offer of, or an invitation by or on behalf of the Company or the Manager, to purchase any of the Shares. No action has been or will be taken that would permit a public offering of any of the Shares or the circulation or distribution of this Prospectus or any offering material in relation to the Company or the Shares, in any country or jurisdiction where any such action is required. There are restrictions on the distribution of this Prospectus and the making of solicitations pursuant thereto in certain jurisdiction, including, among others, the United States of America and United Kingdom. Further details of which are set out in the section below headed "Distribution and Solicitation Restrictions". Persons into whose possession this Prospectus comes are required by the Company and the Manager to inform themselves about and observe any applicable restrictions.
The Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") and may not be offered or sold within the United States except in transactions exempt from or not subject to the registration requirements of the Securities Act. Accordingly, the Shares are being initially offered and sold, in each case, (i) outside the United States in accordance with Regulation S under the Securities Act, or (ii) to institutional "accredited investors" (as defined in Rule 501 (a) (1), (2), (3) or (7) under the Securities Act, ("Institutional Accredited Investors") within the United States in a private sale exempt from the registration requirements of the Securities Act, or (iii) to "qualified institutional buyers" as defined in, and in an transaction meeting the requirements of, Rule 144 A under the Securities Act , and in accordance with all applicable securities laws of any other jurisdiction.
This Prospectus is being submitted in the United States on a confidential basis only to the current shareholders for informational use only in connection with the consideration of a purchase of the Shares. Its use for any other purpose is not authorised. It may not be copied or reproduced in whole or in part or may not be distributed or any of its contents disclosed to anyone other than the current shareholders to whom it is submitted.
The Shares are offered subject to the terms and conditions applicable to the Issue as set out herein. No person is authorised in connection with the Issue to give any information or to make any representation not contained in this Prospectus. Any information or representation not contained herein must not be relied upon as having been authorised by or on behalf of the Company or any of the Directors or any other party involved in the Issue.
Neither the delivery of this Prospectus or the offer of the Shares shall, under any circumstances, constitute a representation or create any implication that there has been no change in the affairs of the Company or any of its subsidiaries or associated companies since the date if the Prospectus or that any information contained herein is correct at any time subsequent to the date hereof.
THE MANAGER HAS AGREED TO ACT AS MANAGER ON BEHALF OF THE COMPANY IN CONNECTION WITH THE ISSUE OF SHARES. THE MANAGER TAKE NO RESPONSIBILITY FOR THE STATEMENTS MADE HEREIN AND HAS RELIED SOLELY UPON INFORMATION PROVIDED BY THE COMPANY AND THEIR RESPECTIVE DIRECTORS AND OFFICERS. NO SEPARATE VERIFICATION OF THE STATEMENTS MADE AND INFORMATION PROVIDED HAS BEEN MADE BY THE MANAGER. Distribution And Solicitation Restrictions The Distribution of this Prospectus or any offering material and the offering, sale or delivery of the Shares is restricted by law in certain jurisdictions. Therefore, persons who may come into possession of this Prospectus of any offering material are advised to consult with their own legal advisers as to what restrictions may be applicable to them and to observe such restrictions. This Prospectus may not be used for the purpose of an offer or invitation in any circumstances in which such an offer or invitation is not authorised.
United States of America The Shares have not been and will not be registered under the United States Securities Act of 1933, as amended, (the "Securities Act") and may not be offered or sold within the United States except in transactions exempt from or not subject to the registration requirements of the Securities Act. Accordingly, the Shares are being initially offered and sold, in each case, (i) outside the United States in accordance with Regulation S under the Securities Act, or (ii) to institutional "accredited investors" (as defined in Rule 501 (a) (1), (2), (3) or (7) under the Securities Act) ("Institutional Accredited Investors") within the United States in a private sale exempt from the registration requirements of the Securities Act or (iii) to "qualified institutional buyers" as defined in, and in a transaction meeting the requirements of, Rule 144A under the Securities Act, and in accordance with all applicable securities laws of any other jurisdiction. Each applicant for the Shares is required to agree that it will not offer or sell any Shares within the United States. In addition, until 40 days after the commencement of the Issie, an offer or sale of Shares within the United States by any dealer (whether or not participating in the Issue) may violate the registration requirements of the Securities Act.
United Kingdom No action has been or will be taken which would permit a public offering of the Shares in the United Kingdom. In particular, this Prospectus has not been prepared in accordance with the Public Offers of Securities Regulations 1995. Accordingly, the Shares may not be offered or sold in the United Kingdom, and this document may not be passed to, any person in the United Kingdom other than persons whose ordinary activities involved them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purpose of their business or otherwise in circumstances which do not constitute an offer to the public within the meaning of the Public Offers of Securities Regulations 1995.
All applicable provisions of the Financial Services Act 1986 must be complied with in respect of anything done by any person in relation to the Shares in, from or otherwise involving the United Kingdom. Neither this Prospectus or any other investment advertisement, invitation or document relating to the Shares may be distributed in the United Kingdom other than to persons who are of a kind described in Article 3 or Article 11 (3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996, or to persons to whom the document may otherwise lawfully be issued or passed on.
2 A-PRESSEN PROSPECTUS
Contents:
DISTRIBUTION AND SOLICITATION RESTRICTIONS...... 2
DECLARATION REGARDING LIMITED AUDITING OF THE ACCOUNTS AT 31 AUGUST 1998 ...... 7 1. OFFERING TERMS...... 8
2. SUMMARY AND KEY FINANCIAL FIGURES ...... 12
2.1 DESCRIPTION OF THE BUSINESS ...... 12 2.2 KEY FINANCIAL FIGURES FOR A-PRESSEN...... 16 3. HISTORY...... 17
4. BUSINESS CONCEPT, GOALS AND STRATEGY...... 20
4.1 A-PRESSEN GROUP ...... 20 4.2 NEWSPAPERS AND PRINTING...... 20 4.3 TV...... 22 4.4 ELECTRONIC MEDIA ...... 24 4.5 OTHER BUSINESS AREAS...... 24 5. DESCRIPTION OF OPERATIONS...... 25
5.1 THE GROUP...... 25 5.2 NEWSPAPERS AND PRINTING...... 26 5.3 TV...... 35 5.4 ELECTRONIC MEDIA ...... 39 5.5 OTHER BUSINESS AREAS...... 41 6. MARKED CONDITIONS AND COMPETITIVE SITUATION...... 42
6.1 NEWSPAPER AND PRINTING MARKET...... 42 6.2 TV MARKET...... 47 6.3 ELECTRONIC MEDIA MARKET ...... 50 7. FINANCIAL INFORMATION ...... 51
7.1 SUMMARY OF THE MOST IMPORTANT ACCOUNTING POLICIES...... 51 7.2 KEY FINANCIAL FIGURES FOR A-PRESSEN GROUP ...... 53 7.3 BOARD OF DIRECTORS’ REPORT AS PER 2ND TERTIARY 1998 (ISSUED 7 OCTOBER 1998)...... 57 7.4 COMMENTS ON PROFIT AND BALANCE SHEET DEVELOPMENTS FOR THE THREE-YEAR PERIOD 1995-97 ...... 60 8. ORGANISATION, BOARD AND MANAGEMENT ...... 64
8.1 ORGANISATION OF THE GROUP...... 64 8.2 THE COMPANY’S BOARD AND MANAGEMENT ...... 64 9. LEGAL MATTERS...... 68
10. SHARE CAPITAL AND SHAREHOLDER MATTERS ...... 71
10.1 SHARE CAPITAL...... 71 10.2 SHAREHOLDER RELATIONS...... 72 10.3 TAX CONDITIONS FOR THE SHAREHOLDERS ...... 74 11. RISK FACTORS...... 76
APPENDIX 1, ARTICLES OF ASSOCIATION FOR A-PRESSEN ASA...... 80 APPENDIX 2, 1997 ANNUAL REPORT FOR A-PRESSEN ASA...... 81 APPENDIX 3, 1997 ANNUAL REPORT FOR TV 2 ...... 82 APPENDIX 4A, LETTER TO U.S. SHAREHOLDERS...... 83
3 A-PRESSEN PROSPECTUS
APPENDIX 4B, FORM OF SHAREHOLDERS REPRESENTATION LETTER...... 84
Definitions, words and terms
A-pressen A-pressen ASA
DNA The Norwegian Labour Party
Due diligence A financial and legal review of a company's operations
Elcon Securities Elcon Securities ASA
Enskilda Securities Enskilda Securities, Skandinaviska Enskilda Banken AB (publ.)
Household coverage: Circulation in the area divided by the number of households in the area (NAL definition)
LO Norwegian Federation of Trade Unions
MØT Media Øst Trykk AS
NAL Norwegian Newspaper Publishers’ Association
NOK Norwegian kroner
No. 1 newspaper Newspaper that is leading or alone in its community
No. 2 newspaper Newspaper whose circulation is smaller than the local competitor
NRS Norsk Reklame-Statistikk (Norwegian Advertising Statistics)
Printing installation Rotary press, w/wo packing equipment
The Company A-pressen ASA
Storbyavisene Dagsavisen AS, Bergensavisen AS (incl. Bergensavisen Trykk AS), Fremtiden AS, Rogalands Avis AS and Telemarksavisa AS
Manager Elcon Securities ASA
TV 2 TV 2 AS
4 A-PRESSEN PROSPECTUS
Responsibility statements
This prospectus has been prepared in order to provide as complete and correct description as possible of A-pressen ASA and the operations in connection with the public share issue and the application for quotation of the Company’s shares on the Oslo Stock Exchange. The Board
The Board of A-pressen ASA hereby certifies that as far as we know the factual presentation is correct, complete and in accordance with all known circumstances. As far as we know, no information has been omitted that might be expected to alter the significance of the content of the prospectus. Market development and future prospects have been evaluated to the best of our ability and must be viewed in the context of the general level of risk described in the prospectus. Over and above what is described in the prospectus, the Group is not involved in court action or disputes of material significance for the assessment of the Group.
Oslo, 21 October 1998
Jan Kr. Balstad Åshild M. Bendiksen Jorunn Henriksen Svein Haugsvold (Chair)
Terje Moe Gustavsen Brit Renngård Kith Skaalerud Johnny Helgesen
Tore Tønne Eigil Wettre
Manager
Elcon Securities ASA has prepared this prospectus in collaboration with the Board and administration of A-pressen ASA. The preparation has taken place on the basis of available information, including annual reports and accounts, Board minutes, legal documentation, market reports and supplementary information from the Company.
The Manager has endeavoured to provide as consistent and complete a picture as possible of the Company, but does not accept any legal or financial liability for the completeness or accuracy of the content of the prospectus. Elcon Securities ASA owns no shares in A-pressen ASA.
Oslo, 21 October 1998
Elcon Securities ASA
5 A-PRESSEN PROSPECTUS
Legal adviser
Wikborg, Rein & Co. has assisted the Manager, Elcon Securities ASA, and A-pressen ASA in connection with the planned share issue and listing on Oslo Stock Exchange of shares of the A-pressen ASA in October 1998.
We have performed a limited legal due diligence (verification) of A-pressen ASA and its subsidiaries.
We have assisted in the preparation of Chapter 9 of the prospectus, on legal matters.
On the basis of the information we have received and reviewed, and subject of the reservations in this declaration, it is our opinion that the description of legal matters provides a balanced and adequate picture of the legal factors that must be assumed to be of material significance for the evaluation of A-pressen ASA as an investment object.
We hereby confirm that the share capital increase of NOK 32,056,400 has been validly adopted by the competent corporate body of A-pressen ASA.
Our review and statements are confined to matters that are governed by Norwegian law, and do not include financial, accounting, fiscal and pension, technological or commercial matters or assessments.
Oslo, 21 October 1998 WIKBORG, REIN & CO.
6 A-PRESSEN PROSPECTUS
Declaration regarding limited auditing of the accounts at 31 August 1998
This declaration replaces the declaration previously issued on 7 October 1998, as a new circumstance came to our notice on 14 October 1998, and this has been included in this declaration by way of clarification.
We have undertaken a limited audit of the submitted balance sheet for A-pressen ASA and the Group at 31 August 1998 and the associated profit and loss accounts for the period ending on the same date. The Group management is responsible for the accounts; our task is to issue a statement on the accounts in the light of our limited audit.
Our limited audit has been conducted in accordance with generally accepted standards for limited audits of accounts. These standards require that we plan and conduct our limited audit so as to be in a position to certify, with a moderate degree of certainty, that the accounts do not contain materially erroneous information. A limited audit is mainly confined to questioning the staff of the company and analytical inspection procedures directed at the accounts material, and therefore provides a smaller degree of certainty than a full audit.
Our inspection is limited in relation to a full audit, and we cannot, therefore, make an ordinary audit report.
Our limited audit has not brought to our attention any circumstances that give us reason to suppose that the submitted accounts have not been prepared in accordance with law and generally accepted accounting standards.
Without this having any significance for the above conclusion, we would make it clear that we have not undertaken any assessment of the value of the investment of the affiliated company TV 2 AS in TVNorge AS, which is discussed separately in Section 7.2.3 of A-pressen ASA’s prospectus for the public share issue.
Oslo, 16 October 1998
NORAUDIT DA
Jan Fr. Sønsteby
Chartered Public Accountant
7 A-PRESSEN PROSPECTUS
1. Offering terms
Share capital A-pressen has a registered share capital of NOK 144,253,760 divided into 7,212,688 shares of nominal value NOK 20 each. The Company has only one class of shares. After the execution of the public rights issue described in this prospectus and the private placement in connection with the acquisition of 100 per cent of the shares of the newspaper Lofot-Tidende, the Company’s share capital will be NOK 176,792,860 divided into 8,839,643 shares of nominal value NOK 20 each.
Increase in share capital with preferential rights for existing shareholders At the Company’s extraordinary general meeting of 21 October 1998, it was resolved to increase the company’s share capital by NOK 32,056,400 via a public rights issue of 1,602,820 shares at nominal value NOK 20 at a subscription price of NOK 90 per share. The public rights issue will raise NOK 144,253,800 in gross new equity for A-pressen ASA. Shareholders in A- pressen as of the day of the general meeting 21 October 1998, will have preferential rights to subscribe to the new shares pursuant to Section 4-2 of the (Norwegian) Companies Act. The newly-issued shares are granted rights in the Company from the date of registration of the share capital increase in the Register of Business Enterprises, including the right to dividend from and including the 1998 financial year.
Insofar as the Companies Act requires, any excess price (less issue costs) will be added to the Company’s legal reserve and otherwise added to the general reserve.
The purpose of the issue The decision to increase the Company’s share capital is a consequence of A-pressen’s strategy for further development and growth within the Company’s business areas, plus the Board’s target of an equity ratio of at least 35 per cent at the end of the target period in the year 2000. The determination of the gross equity increase is based on an overall assessment of the Company’s capital adequacy, planned investments, and a general wish to enhance the Company’s financial freedom of action.
Resolution concerning private placement in connection with acquisition of Lofot-Tidende In order to facilitate the Board of A-pressen’s initiation, implementation and financing of any future projects and acquisitions in the period up to the next annual general meeting, the general meeting of 26 May 1998 authorised the Board to issue up to 500,000 new shares.
Pursuant to this authorisation, the Board passed a resolution at its meeting of 9 October 1998 regarding partial utilisation of the authorisation in connection with the purchase of 100 per cent of the shares in the company Lofoten Kommunikasjon AS. Of the total purchase price of the newspaper, NOK 9,050,000, 30 per cent will be settled in shares in A-pressen ASA. The Board thus resolved to issue 24,135 new shares at nominal value NOK 20 each at a subscription price of NOK 112.50 per share. The share capital is thus increased by NOK 482,700. Subscription of the new shares and settlement by means of transfer of 30 per cent of the shares in Lofoten Kommunikasjon AS are to take place by 1 November 1998.
See Chapter 10 for further information on the authorisation granted by the general meeting, plus the Board’s resolution concerning a private placement.
Subscription price The subscription price is NOK 90 per share. The price has been determined on the basis of an assessment of the general market conditions in addition to observed prices for the Company’s shares in the unlisted market.
8 A-PRESSEN PROSPECTUS
The subscription price is also based on the fact that the share issue is being implemented with preferential subscription rights for existing shareholders. The shareholders’ interest is thereby safeguarded through subscription for new shares or by sale of subscription rights. The subscription price does not reflect the Board’s opinion of the underlying asset value of the Company.
Tradable subscription rights The Company’s existing shareholders have preferential rights to subscribe for shares in the same ratio as their existing ownership of shares, pursuant to Section 4-2(1) of the Companies Act. One subscription right will be issued for each share owned as of the end of the day of the general meeting, 21 October 1998. Nine (9) subscription rights will be required to subscribe to and be allotted two (2) new shares. The subscription rights are expected to be registered in the shareholders’ securities account (VPS) from and including 28 October 1998, and have security no. ISIN NO 000 5014043.
The Company is planning for the subscription rights to be listed on the Oslo Stock Exchange during the subscription period from 29 October to 12 November. Purchased subscription rights give the same preferential rights as allocated subscription rights. The subscription rights must be used for subscription of shares or sold by the expiry of the subscription period, as they will be worthless after that date. Over-subscription is permitted.
Subscription place and subscription period Subscription of shares will take place in the period that starts on 29 October and end on 12 November 1998. Subscription of shares must be in the form of a complete and correct subscription form, which shall be submitted to Elcon Securities ASA or Enskilda Securities. In order for the subscription to be valid, it must be received by Elcon Securities or Enskilda Securities by 16.00 hours on the last day of the subscription period. Subscription places are:
Elcon Securities ASA, P.O. Box 153 Sentrum, Grev Wedels plass 5, 0102 Oslo Telephone: 23 01 03 00 /Fax: 23 01 03 01
Enskilda Securities, P.O. Box 1843 Vika, Rosenkrantzgate 22, 0123 Oslo. Telephone: 22 82 73 00 / Fax: 22 82 71 11
Guarantee consortium The full subscription of the public rights issue has been underwritten by a syndicate established by Elcon Securities. The underwriting syndicate guarantees the full subscription of all shares in the public rights issue, but not the payment of subscribed and allotted shares. The underwriting commission constitutes one per cent (1,00%) of the amount underwritten and is covered by the Company. The composition of the underwriting syndicate is given in the table below.
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Table 1.1; Participants in underwriting syndicate Underwriter Number of shares Amount (NOK) Fagbevegelsens Investeringsselskap AS 606 709 54 603 810 Møller Investor AS 263 350 23 701 500 Storebrand Livsforsikring 225 000 20 250 000 Industrifinans Fondsforvaltning AS 110 000 9 900 000 Skagen Vekst 80 000 7 200 000 Vår Livsforsikring AS 73 570 6 621 300 Den norske Bank ASA 55 500 4 995 000 Elcon Securities ASA 50 001 4 500 090 Meieribrukets Pensjonskasse 35 000 3 150 000 Vår Skadeforsikring AS 33 284 2 995 560 Aksjefondet Postbanken Aksjespar 30 600 2 754 000 Storebrand Norge 15 000 1 350 000 Aksjefondet Postbanken Aksjevekst 13 250 1 192 500 Alf Hildrum 6 001 540 090 A/S OBOS Forretningsbygg 5 555 499 950 Total 1 602 820 144 253 800
Allotment Allotment of shares will be undertaken by the Company in collaboration with the Manager. Over-subscription is permitted. No fractions of shares will be issued. Normal rounding off will be undertaken.
Allotment of shares will be performed as follows: a) allotment based on (allocated or acquired) subscription rights exercised. If not all shares are allotted, then b) allotment for over- subscription on the part of those who have exercised (allocated or acquired) subscription rights (see a) and in such a manner that allocation is made as far as possible in proportion to the number of subscription rights each of them has exercised. Any rounding off shall be done taking account as far as possible of the principle of equal allotment among subscribers. If there still remain unsubscribed shares, then c) allotment to employees of A-pressen ASA (who have not exercised subscription rights and thereby been allotted shares under a) and/or b)) and in such a way that allotment is as far as possible made in proportion to the number of shares for which the individual has subscribed. If shares still remain, then d) allotment to other subscribers, and as far as possible in proportion to the number of shares for which the individual has subscribed. If shares still remain, then e) allotment to the underwriters pursuant to the underwriting agreement.
In the event of over-subscription, the Company reserves the right to round off, cancel or reduce each and any subscription that is not secured by preferential subscription rights, and after the rules of the Companies Act on allocation have been observed.
Notification of allotment of shares will be circulated around 20 November 1998.
Settlement In connection with the subscription the individual subscriber must give Elcon Securities ASA or Enskilda Securities a non-recurrent authorisation to charge a stated bank account in Norway for the sum that corresponds to the allotted number of shares. Accounts in Postbanken may not be used. The sum must be available for direct debit no later than 24 November 1998. Default interest at the rate of 12% per annum will be charged in the event of late payment.
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If settlement does not take place on time due to problems with payment from the subscribers’s account, the company reserves the right to cancel the subscription or to sell the allotted shares at the subscriber’s expence and risk.
The offered shares cannot be transferred before they have been paid for, the share capital increase has been registered in the Register of Business Enterprises and the shares have been registered in the individual subscriber’s account in the Norwegian Registry of Securities (VPS).
Listing on the Oslo Stock Exchange and the register of shareholders In its meeting of 21 October 1998 the Board of the Oslo Stock Exchange resolved to accept the Company’s application for listing on the Oslo Stock Exchange. A-pressen is targeting to have the Company’s shares listed no later than the first day of the subscription period 29 October 1998.
A-pressen is registered in the Register of Business Enterprises with organisation number 926 914 529. The shares of the Company are registered in the Norwegian Registry of Securities (VPS). The Company’s security number is ISIN NO 000 5014001. The Company’s account manager is Den norske Bank’s Securities Service.
Cost of issue Total costs (including underwriting fee) in connection with the management of the public share issue and the listing of the shares on the Oslo Stock Exchange are expected to constitute 4.75 per cent of the gross proceeds, and will be covered by the Company. In addition, the Company will pay costs of legal advisers and auditors and the printing of the prospectus in connection with the transaction.
Manager The issue and application for listing of the Company’s shares on the Oslo Stock Exchange are managed by Elcon Securities ASA.
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2. Summary and key financial figures
The summary is subordinate to the more detailed information provided in the prospectus and the Appendices.
2.1 Description of the business
History The Company was formed on 27 May 1948 when the Labour Movement’s Press Fund was replaced by Norsk Arbeiderpresse AS. On the basis of NOK 950,000 each from the Norwegian Confederation of Trade Unions (LO) and the Norwegian Labour Party, plus NOK 100,000 from the newspapers, this yielded a share capital of two million kroner. The Company is, however, part of a much older history that began with the foundation of the first newspaper of the labour movement in 1884.
Until well into the 1960s, the newspapers were permeated by a deep sense of loyalty to Labour Party and the LO, and political journalism was an extension of the party line. Several events in the ‘60s ‘70s and ‘80s helped to separate journalism and politics, and today no Norwegian newspaper is bound to any one party. Early in the 1990s the newspapers of the A-pressen Group formally amended their articles of association. The previous formula that the newspapers were the “Organ of the Labour Party” has been replaced by “anchored in the labour movement’s ideas of freedom, democracy and equality”.
In the spring of 1989, financial problems in consequence of a declining market and deficient cost control resulted in a decision to restructure the local newspaper companies into a group with Norsk Arbeiderpresse AS as parent company. This process was completed in 1991. From 1992 the Group has posted profits, and from 1994 has paid dividend to its shareholders. On 2nd May 1994 the Group name Norsk Arbeiderpresse AS was changed to A-pressen. The autumn of 1995 saw major changes in that the Labour Party sold its interests and a share capital increase brought in financial investors, for instance Møller Investor AS. In the last three years the Group has expanded through several newspaper acquisitions, buying into TV 2 and commitments in electronic media.
Strategy A-pressen aspires to be Norway’s most important owner of local and regional newspapers, creating profitability, influencing social development and helping to strengthen democracy, language and culture through local media. A-pressen aims to consolidate its strong position in Norway and has ambitions of growing internationally in its core areas. A-pressen will attain its goals and ambitions by means of:
· growing through investments and acquisitions in Norway and abroad. · continuing and developing its strategic alliances. · restructuring to reduce costs, increase earnings and enhance profitability in its existing enterprises. · focusing on advertising as its most important source of revenue. · strengthening editorial and administrative expertise. · strengthening editorial product development. · establishing and developing property and distribution as separate business areas.
The business A-pressen presently has owner interests in three business areas: 1) newspapers and printing, 2) TV and 3) electronic media. The Group includes a total of 106 companies, with a majority
12 A-PRESSEN PROSPECTUS
shareholding in 88 of them. At 31 October 1998 A-pressen had 2,861 employees, of which the Group administration in Oslo employed 24.
FIGURE 2.1 A-PRESSEN’S THREE BUSINESS AREAS
A-pressen ASA
Newspapers and printing TV Electronic media
City Newspapers Local TV licences (5 papers) (9 licences)
Local Newspapers TV 2 AS (38 papers) (33.17% stake)
Printing installations (21 installations) TVNorge AS (49% owned by TV 2)
Newspapers and printing A-pressen is the country’s second-biggest newspaper owner, with a total of 43 newspapers, of which a majority stake is held in 39. In all, A-pressen represented 18.9 per cent of Norway’s total newspaper circulation in 1997. The newspapers of the A-pressen Group are divided into Local Newspapers and Storbyavisene (City Newspapers). Local papers are mostly subscription papers delivered to the reader’s residence by newscarriers or ordinary post. They have, with two exceptions only, a very solid position among readers in their market. These newspapers have a circulation-weighted household coverage in their municipalities of issue of 73 per cent. Thirty of the papers are alone in their local markets, six are market leaders and two are No. 2 in their local market. The Storbyavisene are so-called No. 2 papers, and from 1 January 1996 were spun off into their own sub-group. These are published in fierce competition with larger papers, have a low household coverage and in consequence of their position less clout in the advertising market. The Storbyavisene are dependent on press subsidies, and in 1997 received NOK 79.6 million, corresponding to 16 per cent of their income. The Board of A-pressen has decided to reduce its ownership stakes in the newspapers that receive the most support, including inter alia separate ownership of Dagsavisen.
At 1 September 1998 A-pressen had 21 printing installations. Of these, seven are organised in six separate printing companies, the remaining 14 are printing installations in the newspaper companies. Since 1996 A-pressen has restructured large portions of its printing activity in order to create increased cost-effectiveness. In the spring of 1997 the subsidiary Media Øst Trykk AS installed the country’s most modern production plant, in order to print both daily papers and advertising supplements. In addition to producing A-pressen’s own newspapers, the printers compete to a greater or lesser extent in various parts of the external print market.
Since 1994 A-pressen has taken a certain interest in Russia, and in 1996 invested in the state- owned printing plant in Murmansk. The project was successful and has yielded valuable experience. The Russian enterprise has now been spun off into a separate company, A-pressen Eastern Europe AS, of which 65 per cent is owned by A-pressen and the rest by the European Bank for Reconstruction and Development (EBRD).
13 A-PRESSEN PROSPECTUS
TV A-pressen has a dominant position as owner of commercial Norwegian television channels, and has invested around NOK 630 million in the business area. The most important investment is the Group’s 33.17 per cent owner interest in TV 2. This channel began regular broadcasts in 1992 and can be received by 95 per cent of the population in Norway. It has a licence for broadcast, commercial nation-wide television in Norway up to and including the year 2002. The Company is working to have this licence extended. TV 2 has a relatively large audience in the under-55 age groups, and is market leader in the under-34 groups.
In addition, the Group has owner interests in nine local television companies, and some minor production companies. It is one of A-pressen’s objectives to have local TV stations and newspapers collaborate on sale of advertising, promotion, and editorial and administrative functions. The biggest single local TV investment has been the Nyhetskanalen (The News Channel) in Oslo, which was discontinued in 1998 due to poor financial results. Other channels now show a positive trend.
Electronic media A-pressen has so far chosen a rather cautious approach to electronic media, and the business area represents a small part of its total turnover. The subsidiaries in the business area are involved in A-pressen’s online newspaper project (17 newspapers have their own Web editions), consultancy for development of Internet solutions and advertising agency services, plus advice in the technical field. In addition, A-pressen has undertaken several strategic investments in affiliated companies.
Market conditions Newspapers and printing Norwegian newspapers have the world’s strongest market position. More than 600 newspapers are sold per 1,000 inhabitants and around 90 per cent of the population read newspapers daily. The newspapers derive most of their income from two markets - the circulation market and the advertising market. Circulation is the foundation of the newspapers’ very existence; a large or growing circulation is an argument for inducing more people to buy the paper, and at the same time crucial to whether the paper will be chosen by advertisers.
The circulation market measured in average daily circulation for Norwegian newspapers has been stable since 1991, at about 3,000,000 papers. In the course of the 1990s the number of media on offer has increased sharply, with several new commercial radio and TV channels and an ever-increasing product range on the Internet. Up to now this has not made much of a dent on newspaper circulation. It is, however, expected that digital technology may create the basis for production and distribution of new media products that can cause significant changes in the media landscape.
The newspaper advertising market, which broadly speaking consists of the classifieds, retail and brand markets, has been estimated at NOK 6 billion in 1997. Following a decline in the early Nineties, this market has grown at an average annual rate of 8 per cent in the last four years. The growth is now slacking.
The market for rotary printing is affected by the fact that the big newspaper players Schibsted, A-pressen and Orkla print their papers in their own printing companies. In addition, the players have different ambitions to compete in the rest of the market. A-pressen’s printing operations consist first and foremost of printing its own newspapers as cost-effectively as possible. Media Øst Trykk AS (MØT) wishes to win shares in the external market.
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TV From and including 1992, Norwegians’ viewing has been recorded via MMI’s TV-meter panel. Viewing increased steadily from 122 minutes per day in 1992 to 150 minutes in 1996. Last year, however, it fell by six minutes to 144 minutes per day. Last year TV 2’s share was 45 minutes. In the competition for viewers TV 2 increased its market share by one percentile point, whereas the state broadcaster NRK fell by half a point.
The market for TV advertising has grown very vigorously since TV 2 went on the air. Net advertising sales are now more than NOK 1.5 billion per annum. This is driven primarily by TV 2, which has increased production of advertising exposure considerably. It is expected that further developments in the coming years will be dependent on the general trends in the Norwegian economy. The local TV stations are so far struggling to break into the local advertising market, in part because this is a new advertising medium, partly because the stations have not been good enough at producing and selling local advertising.
In the future, the TV signals will be distributed in digital rather than in analogue form. This will reduce the costs of establishing new television channels, and it is expected that this will lead to new “narrowcasting” channels.
Electronic media The market for electronic media is immature. Despite rapid growth in the number of users in both the private and the business markets, the players’ great expectations of the advertising market were not fulfilled in 1997. The market for content services has developed more slowly than expected and people’s willingness to pay for content access is limited. Total Norwegian advertising sales on the Internet in 1997 amounted to about NOK 30 million, as opposed to prognoses of NOK 75-100 million. There is a lot of uncertainty regarding 1998, but cautious growth is expected.
Media policy The overarching goal of the authorities’ media policy is to contribute to a differentiated media structure, continued high newspaper consumption and local newspaper competition in as many places as possible. Its main principles are enshrined in Storting Report No. 32 (1992/93). The newspaper industry’s framework conditions are, however, uncertain, because they are politically controversial. Norwegian newspapers now enjoy two kinds of public support, one indirect in the form of VAT exemption on newspapers, the other in the form of direct production subsidies.1 The press subsidies for A-pressen are dependent on total appropriations and A-pressen newspapers' share thereof. The appropriations are considered annually by the Storting and are difficult to predict. The relative share is also dependent on the success of our competitors. In 1997 the newspapers of the A-pressen Group received something over NOK 98 million in press subsidies, of which the City Newspapers accounted for NOK 79.6 million.
TV 2 and the local TV stations have a licence valid until 31 December 2002. Extension of the licence may be regarded as the normal outcome.
Risk An investment in shares in A-pressen ASA is not risk-free. The value of the shares in the Company is affected by a number of factors outside the Company’s control. Further explanation of the major risk factors may be found in Chapter 11.
1 Governed by the Regulations of 7 November 1996 relating to Production Subsidies for Daily Newspapers.
15 A-PRESSEN PROSPECTUS
Share capital A-pressen ASA has as of the date of the prospectus a registered share capital of NOK 144,253,760 divided into 7,212,688 shares of NOK 20 each. The Company has only one class of shares. Its shares are registered in the Norwegian Registry of Securities (VPS) with security no. ISIN NO 000 5014001.
2.2 Key financial figures for A-pressen
Table 2.1 Profit and loss account
1.1 - 1.1 - 1997 1996 1995 31.8.98 31.8.97 Operating revenues 1 459 285 1 399 090 2 188 310 1 951 440 1 793 681 Operating profit 39 336 82 120 103 048 102 792 96 434 Profit before taxes and minority shareholders 15 332 56 790 45 564 91 197 100 830 Taxes (4 194) (19 361) (27 190) (24 141) (8 070) Minority share (850) (852) (996) 864 (941) Net profit for year/period 10 288 36 577 17 378 67 920 91 819
Table 2.2 Balance
1.1 - 1.1 - 1997 1996 1995 31.8.98 31.8.97 Current assets 385 442 441 415 418 561 501 108 429 545 Fixed assets 1 605 673 1 549 225 1 627 577 1 269 710 960 261 Total assets 1 991 115 1 990 640 2 046 138 1 770 818 1 389 806
Current liabilities 454 668 460 572 558 254 482 731 414 038 Long-term liabilities 887 796 864 747 852 894 677 419 442 850 Minority interests 32 312 28 560 30 454 15 978 9 338 Shareholders’ equity 616 339 636 761 604 536 594 690 523 580 Total liabilities and shareholders' equity 1 991 115 1 990 640 2 046 138 1 770 818 1 389 806
Table 2.3 Key figures
1.1 - 1.1 - 1997 1996 1995 31.8.98 31.8.97 Operating margin 2.7% 5.9% 4.7% 5.3% 5.4% Book equity per share (NOK) 85.5 88.4 83.9 82.6 73.5 Cash flow per share 12.4 15.1 20.0 24.6 39.3 Result per share after extraordinary items (NOK) 1.4 5.1 2.4 9.5 21.0 Result per share before extraordinary items (NOK) 1.4 5.1 2.4 9.5 18.8 Dividend per share (NOK) n.a. n.a 1.0 1.2 1.1 Average number of shares 7 203 520 7 202 210 7 202 210 7 164 160 4 362 119 See Chapter 7.2.5 for a definition of the key figures.
See Chapter 7 for more details about the Company’s finances and comments on its performance.
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3. History
A-pressen ASA was 50 years old in 1998. The Group’s development may be divided into two main epochs: the first 40 years and the last 10 years. In 1988 the Board of the then Norsk Arbeiderpresse AS presented a plan for refinancing and Group formation. This was the beginning of a transition from collaborating newspaper community to the present-day media conglomerate. The cause was increased financial pressure from falling markets, deficient cost control and considerably fiercer competition. The ten-year period from 1988 to the present has been highly expansive. The most important events are the following:
1988: Loss of circulation, loss of revenue and a considerable deficit (NOK 70 million) The Board of Norsk Arbeiderpresse AS approves a reorganisation plan. 1989: Consolidated accounts are presented for the first time. The LO Congress approves refinancing of A-pressen by up to NOK 160 million. 1990: A-pressen wins the newspaper war with Dagbladet in Nordmøre: Tidens Krav the sole paper there. Bergensavisen and Romerikes Blad launch a Sunday edition. 1991: LO gives A-pressen NOK 158 million. A-pressen acquires Arbeiderbladet from the Norwegian Labour Party. 1992: Joint financial management established. 1993: Second-hand sale of shares to employees and union shops: NOK 4.9 million Nye Hojem Trykkeri and BA-trykk formed. Norsk Lokal TV AS formed together with Norsk Aller. The Board decides to extend ownership and make the shares tradable. 1994: Share capital increase, placement with employees: NOK 5.5 million Change of name from Norsk Arbeiderpresse AS to A-pressen AS. Amendment of Articles of Association: no one to own more than 20per cent of the Company’s A shares. 1995: First-ever payment of dividend. Purchase of Lofotposten, Østlands-Posten, Firda and 22 per cent of TV 2 . The Norwegian Labour Party sells its stake in A-pressen AS. Articles of Association amended, newspapers are no longer the organ of the Labour Party. Partial owner with 20 per cent of RiksNett Capital increase by private placement: NOK 225 million. 1996: Reorganisation: A-pressen divided into six regions. Buys 4 per cent of TVNorge, participates in nine licences for local TV. Buys company Indre Smaalenenes Avis og Trykkeri, Rakkestad Avis and Indre Akershus Blad. Sells RiksNett to Telia. Avisa Trondheim closes. 1997: Takes over the majority stake in Nordlys, buys Ringerikes Blad. Sells Dagningen to Gudbrandsdølen Lillehammer Tilskuer (GLT). Arbeiderbladet changes its name to Dagsavisen and launched a Sunday edition Exercises option of 16 per cent in TVNorge, and increases to 33 per cent in TV 2. TV 2 buys 49 per cent of TVNorge. Nyhetskanalen (The News Channel) begins broadcasting 18 August. Purchases 51 per cent of Digital Hverdag. Forms A-pressen Nett: launches 12 newspapers on the Internet. Media Øst Trykk opens a new printing plant in Lillestrøm. Sells Sentrum Trykk. 1998: The Board resolves to apply for listing on the Oslo Stock Exchange. Buys Kvinnheringen. Nyhetskanalen is wound up. Forms A-pressen Eastern Europe AS.
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From loyalty to freedom On 27 May 1948 the Company was formed under the name of Norsk Arbeiderpresse AS. This owner company functioned alongside Arbeiderpressens Samvirke AL, as a solid framework around A-pressen’s co-operation and organisation. The consolidation of 1989 united these companies.
However, the fiftieth anniversary is also part of a much longer history that stretches back to the establishment of the first newspaper of the labour movement in 1884. The Norwegian labour movement was becoming a steadily stronger social force throughout the 1880s, and the Labour Party saw its own party press as a crucial factor in the political struggle. The following years saw the establishment of a number of labour newspapers across large parts of the country, operated by zealots under extremely difficult conditions. In 1884 Socialdemokraten (subsequently Arbeider-bladet) was launched in Kristiania, as Oslo was then called. In 1905 there were 14 Labour Party newspapers, and by 1928 the number had reached 45.
Until well into the 1960s the newspapers were dominated by a deep loyalty to the Labour Party and the Norwegian Confederation of Trade Unions (LO). Political journalism was an extension of the party line. The electoral victory of the non-socialist coalition in 1965 and the American war in Vietnam were important causes of the separation of journalism and politics in A-pressen. The Labour Party was divided in its view of the Vietnam War, and younger journalists refused to obey the party leadership. Moreover, with Einar Gerhardsen no longer prime minister, A- pressen had much freer hands in relation to the State.
The 1960s, ‘70s and ‘80s also saw the same liberation in the party newspapers of the Conservatives and Liberals, and in the rest of the political press. Today no Norwegian newspaper is bound to a single party. In A-pressen, Arvid Jacobsen played a major role in this divorce. As editor-in-chief of A-pressen’s Oslo desk (APOR) from 1977 to 1991, he prevented the transmission of internal information from the Labour Party to the editors, and he stopped going to the closed meetings of its national executive and parliamentary party. Two events symbolise A-pressen’s liberation from the Labour Party: in 1975 the first Arbeiderbladet editor not to have been elected by the national conference of the Labour Party, was appointed, and in 1981 APOR released the news of Prime Minister Odvar Nordli’s illness and possible resignation. This provoked strong reactions and has since been the prime symbol of A-pressen’s independence.
Early in the 1990s the A-pressen newspapers also formally amended their Articles of Association. The previous formula that the newspapers were the “Organ of the Labour Party” has been replaced by “anchored in the labour movement’s ideas of freedom, democracy and equality”.
Joint organisation The newspapers launched before and after the year 1900 enjoyed rapid circulation growth but suffered from scant resources and fierce competition. Financial help was necessary, both locally and centrally from the LO and the Labour Party. The co-operative Arbeiderpressens Samvirke (1920) helped the papers with loans, major purchasing and accountancy. Arbeidernes Pressekontor (1912) became their joint editorial office. The 1920s were difficult, with political fission and economic crisis, while the 1930s gave A-pressen’s newspapers increased impact. Arbeiderpressens Annonsekontor (1932) was designed to develop A-pressen as an alternative for advertisers, while Arbeiderbevegelsens Pressefond (1938) was created to administer the LO’s new press support, which the following year ran at around NOK 300,000. The LO also placed 10 per cent of its capital at the fund’s disposal. In 1939 Arbeiderpressens Samvirke was reorganised as an umbrella organisation for the press and the advertising offices, now in the
18 A-PRESSEN PROSPECTUS
form of a co-operative society in which the newspapers took stakes according to their size, in order to help the weakest.
War and Reconstruction The war hit A-pressen hard. Thirty-eight of the 44 newspapers were stopped by the Germans, while more than half the newspapers of the Conservatives and the Agrarian Party was allowed to continue. From his wartime exile in London, Johan Ona drew up the development lines for A-pressen. As general manager of Arbeiderpressens Samvirke, Ona was both the strategist and driving force in the reconstruction years. The national reconstruction plans enhanced the role as the Labour Party’s mouthpiece, and bound the organisations together. In the work of reconstruction Ona worked very closely with Haakon Lie, the powerful Secretary General of the Party, who by dint of great personal effort raised money in the USA to pay for the necessary investments in printing equipment. On Liberation Day, 8 May 1945, seven labour newspapers as well as Arbeidernes Pressekontor, were operating, but by the end of May there were 21 papers on the streets, and all the major towns were covered.
Holding companies and growth On 27 May 1948 the Arbeiderbevegelsens Pressefond was replaced by Norsk Arbeiderpresse AS. NOK 950,000 each from the LO and the Labour Party plus NOK 100,000 from the newspapers made up a share capital of NOK 2 million. The holding company Norsk Arbeiderpresse managed the capital and the subsidies from LO and the Labour Party through a steadily stronger formal ownership of the newspaper companies. Local ownership gradually passed over into a majority shareholding on the part of Norsk Arbeiderpresse, via increases in share capital whenever the newspapers needed money for operations or investments. In parallel to this, Arbeiderpressens Samvirke developed economies of scale and commercial partnerships between the newspapers, via purchasing collaboration, co-ordinated investment, particularly in printing equipment, and concentration on courses, expertise enhancement and co-operation on all levels. Arbeiderpressens Samvirke was financed via membership fees from the newspapers. Operations were closely integrated with Norsk Arbeiderpresse, through a joint general manager and administration. 1955 saw the formation of Arbeiderbevegelsens Tarifforening (ATF) in order to assist with wage settlement questions and problems related to the employer role.
The winds of competition The 1970s and even more the 1980s brought a tougher competitive climate. In the 1980s eight of the original A-pressen newspapers had to close due to traditional newspaper competition. Nevertheless, A-pressen increased its circulation from 424,000 in 1972 to 499,000 in 1987, but this increase was smaller than that in the rest of the industry. As early as 1980 there was discussion of consolidation of Norsk Arbeiderpresse. At least 90 per cent ownership in local newspapers would yield tax advantages. The newspaper-dominated Arbeiderpressens Samvirke was against it, but the slowdown of the Norwegian economy towards the end of the decade forced changes and triggered the decision to adopt the present Group model.
19 A-PRESSEN PROSPECTUS
4. Business concept, goals and strategy
4.1 A-pressen Group
Vision A-pressen aspires to be the most important owner of local and regional newspapers in Norway, creating profitability, influencing social development and assisting in strengthening the democracy, language and culture through local media. A-pressen aims to consolidate its strong position in Norway, and has ambitions of growing internationally within its core areas.
Main goals A-pressen has grown significantly over the past three years and has expanded its operations from traditional newspaper publishing into a complete media conglomerate. The Group will continue to grow in the years to come. A proactive growth policy is necessary to safeguard current operations and to expand in step with the development of the market and the Group’s strategy. A-pressen’s strategy is to make further investments in newspapers, TV and electronic media, and expand the Group internationally. A-pressen will at the same time strengthen its focus on its core activity to improve profitability.
The Group’s overarching goals forward to the year 2000 are as follows:
· A-pressen will strengthen local media as social players · A-pressen’s media operations will continue growing from 1998 to 2000 · A-pressen’s goal is to increase its return on tied-up capital up to about 10 per cent · A-pressen’s goal is to strengthen its financial soundness by having an equity ratio of at least 35 per cent at the end of 2000
Main strategy The Group’s strategic objectives and business area goals presuppose that the enterprises continuously adapt their products and services to new needs and expectations of customers. This is necessary in an accelerating media market. A-pressen will achieve its ambitions and goals by:
· growing through investments and acquisitions in Norway and abroad · continuing and developing strategic alliances · restructuring to reduce costs, improve earnings and increase profits in existing firms · focusing on advertising as the most important source of income · strengthening editorial and administrative skills · strengthening editorial product development · establishing and developing property and distribution as separate business areas.
4.2 Newspapers and printing
Although A-pressen has expanded in step with the development of the information age, newspapers and all that goes with newspaper publishing remain—and will continue to remain— the Group’s single most important activity for the foreseeable future. Norway is one of the world’s biggest newspaper-reading nations, and A-pressen’s local newspapers maintain strong positions in competition with national newspapers, TV and new media. In a fragmented age, people prefer the neighbourliness of a local newspaper. This was confirmed as recently as the 1998 edition of Norway’s official newspaper survey, Consumer & Media, conducted by Norsk
20 A-PRESSEN PROSPECTUS
Gallup Institutt. The publication of local newspapers is the bedrock of A-pressen’s operations, both with respect to the interest of the public and in financial terms.
The Group’s goals are to:
· ensure and strengthen the strategic position of local newspapers · commence international investments and alliance-building in newspapers and printing · significantly increase profitability in existing operations of newspapers, printing and distribution.
Newspapers In terms of content, A-pressen newspapers reflect their geographical areas with respect to content selection and editorial priorities. For business purposes, the newspapers are, however, organised into two groups—Local Newspapers and Storbyavisene (City Newspapers)—based on their highly diverse market positions.
Local Newspapers The primary advantage and guiding concept of the local newspapers is their closeness to readers and advertisers. A-pressen is Norway’s largest publisher of local newspapers. Thirty-six of the Group’s 38 local newspapers are the leaders in their districts. This means that they either are the sole newspaper in their place of publication or have the highest circulation and are the preferred newspaper of readers and local advertisers.
It is crucial for A-pressen to strengthen the position of local newspapers in people’s consciousness, and consolidate the Group’s dominant grip on the local market through development, acquisitions and alliances.
Our goal is to reduce costs by utilising the co-operation and synergies inherent in A-pressen’s regional structure.
One objective in particular is to strengthen earnings by increasing expertise in advertising at the Group level as well as regionally and locally.
The future prospects for local newspapers are viewed as good. No media, new or old, have managed to budge local newspapers from their position as an anchorage and expression of local identity for the broad majority of Norwegians.
Storbyavisene AS The Storbyavisene (City Newspapers) group is comprised of Dagsavisen, Bergensavisen, Rogalands Avis, Telemarksavisa and Fremtiden. The newspapers are so-called No. 2 newspapers for readers and advertisers in their markets, and have stiff competition from dominant regional and national newspapers.
The Board of A-pressen has decided that the Group will reduce its ownership stakes in these newspapers. Dagsavisen is in the process of being transferred to a separate foundation and Telemarksavisa is being sold to A-pressen Avis og Trykk AS (wholly owned by A-pressen ASA). For the other three newspapers the changes may take longer, but are expected to be clarified by the end of the first half of 1999.
Storbyavisene’s business concept is to establish a commercial alternative to its competitors. Short-term earnings must continuously be balanced against the need for resource-intensive marketing and editorial development.
21 A-PRESSEN PROSPECTUS
The future prospects of Storbyavisene are uncertain. In general, the newspapers struggle with poor profitability, and they have stiff competition and are dependent on public subsidies at least at the present level. On the other hand, all of the Storbyavisene, with the exception of Fremtiden and Rogalands Avis, are in the midst of a period of increasing circulation. Much effort is also being invested in reducing costs and developing the products.
Printing The printing industry is characterised by major restructuring. A-pressen has restructured most of its printing operations since 1996. In Eastern Norway, the number of printing plants has been reduced from six to two in the course of 1997/98. During this period all production in the printing plants in Kongsvinger, Sarpsborg and Skøyen was transferred to Media Øst Trykk AS in Lillestrøm. In Sogn og Fjordane, the printing plants of Firdaposten and Sogn Dagblad were closed, and the operations transferred to Firda. In Stavanger, Rogalands Avis’ printing works were sold, and the printing of the newspaper was transferred to the competitor, Stavanger Aftenblad. When Telemarksavisa’s own printing works was closed, the printing of the newspaper was taken over by Østlands-Posten in Larvik. A-pressen also sold Sentrum Trykk in Trondheim and the Larvik book printing plant Østlands-Postens Boktrykkeri in 1997.
Media Øst Trykk AS In the course of few years all the leading newspaper players have invested in the next generation of printing presses. A-pressen was the first to do so with the start-up of Media Øst Trykk’s new printing factory in Lillestrøm in the summer of 1997. The facility offers greater choice with respect to volume and colours and produces products of much higher quality. After a period of start-up problems the earnings of the new facility have improved.
The strategy of Media Øst Trykk is to industrialise production, improve quality and increase the utilisation of investments. Its goal is to win external jobs in competition with other rotary printing plants.
The rotary printing market is expected to continue to grow, but the competition will be harder when several large printing factories come on stream over the next few years.
Other printing works A-pressen’s other printing operations are organised partly as separate printing companies and partly as divisions of newspaper companies. The primary function of the printing plants of the newspaper companies is to print each company’s newspaper as rationally and efficiently as possible, and to take external jobs to improve capacity utilisation and increase profitability.
The strategy of the other printing plants is also to improve the quality of the products and increase utilisation of investments.
4.3 TV
TV has been A-pressen’s biggest growth area since 1995. Today, A-pressen enjoys a dominant position as the owner of commercial Norwegian TV channels. Norwegians’ television viewership has increased all through the ‘90s, with last year being the sole exception. The market for TV commercials has also seen sharp growth. Further growth of the commercial TV market in Scandinavia is probable, and A-pressen is prepared to expand in step with the market.
TV 2 TV 2 is Norway’s largest and most important commercial TV channel. TV 2 has a 67 per cent share of the TV commercial market and has a solid position as No. 2 after NRK 1 in the viewer market. TV 2 is clearly the most popular channel in Norway amongst younger viewers aged
22 A-PRESSEN PROSPECTUS
12-34.
A-pressen has a 33.17 per cent stake in TV 2 and is committed to TV 2’s further development. It is natural to capitalise on TV 2’s substantial know-how and organisation within a Scandinavian framework.
In the next millennium TV 2 will continue to embrace the formula that has led to its success: general interest broadcasting aimed at the entire population. TV 2’s ambition is to be an independent, credible, informative, engaging, entertaining, and, not least, innovative TV channel.
TV 2 faces great challenges. Three factors are prominent in the short-term: a) the competitive situation in Norway, b) higher costs for programmes and sports rights, and c) competition from international players. In the longer term TV 2 will have to deal with the globalisation of the TV market and the transition to digital TV.
TV 2 and TVNorge signed a comprehensive co-operative agreement in 1997 in connection with TV 2’s take-over of 49 per cent of TVNorge’s shares. TV 2 is committed to increasing TVNorge’s rating. It is expected that the co-operation will strengthen both channels in competition with the Norwegian Broadcasting Corporation (NRK), TV 3 and other TV channels.
The total market for TV commercials increased from NOK 1.28 billion in 1996 to NOK 1.58 billion in 1997. TV 2’s advertising revenues grew to NOK 1.06 billion last year, and are expected to continue growing. The Company also sees considerable potential in the development through subsidiaries of advertising media such as the Internet and Text TV. The convergence and synergy of PC technology, telecommunications and the TV industry offer TV 2 exciting opportunities in the future.
On the other hand, the spiralling prices for sports broadcasting rights are alarming. TV 2 believes it is imperative to forge strategic alliances in the race to secure rights to international sports events.
TV 2 wants to be an open channel with open technology, and is collaborating with other Nordic general interest broadcasters on a joint digital platform. In the longer term TV 2 sees substantial potential in developing new services made possible by digital technology. From the autumn of 1998, TV 2 will distribute TV signals digitally via satellite in parallel with analogue broadcasts.
Over the past few years TV 2 has evolved from purely a TV channel into an organisation involved in a number of other TV-related business areas. For instance, TV 2 has founded the companies Autograph Broadcast Systems, Storm Weather Center AS, Nyhetssentralen Byrå 2 AS and Net 2 Interaktiv AS, all of which possess sound business ideas and products in expanding markets. TV 2 has merged the satellite card company Norgeskanalen with the Telenor/Canal Pluss company Canal Digital Norge AS and has a post-merger stake of 16 per cent in Canal Digital Norge. Companies like these will give TV 2 several legs to stand on, and in the next millennium it is probable that they will represent a substantial share of TV 2’s revenues. TV 2’s licence expires 31 December 2002. The Company is working to extend the licence.
Local TV A-pressen became involved in local TV in 1996, when the authorities provided better framework conditions for the industry. Its motivation was both defensive and proactive. Local TV operates in the same markets as local newspapers. A-pressen wanted to be in position should local TV come to win significant market shares from local newspapers. In places where A- pressen is involved in both newspapers and TV, the strategy is to cooperate to give the advertising market more options.
23 A-PRESSEN PROSPECTUS
Local TV is a relatively small part of A-pressen’s TV business. Its goal, nonetheless, is to be a leading owner of profitable local TV companies. A-pressen currently owns stakes in nine companies.
The prospects for local TV are uncertain, but results are clearly improving. Several stations have achieved healthy audience numbers, but as a whole the industry is struggling with advertising revenues. The Group is following the situation closely, and its goal is for all companies to at least break even in the course of 1999.
Other TV operations A-pressen currently has small ownership interests in programme and commercial production companies. The Group’s goal is to establish profitable operations in several parts of the value chain, either alone or together with partners.
4.4 Electronic media
The business concept of electronic media is partly to position A-pressen for the digital age, and partly to participate in the emergence of new media. There are many uncertainties associated with the development of electronic media. At the same time we are witnessing the growth of an entire industry which already today has interesting business opportunities.
A-pressen’s strategy for its involvement is three-fold: Firstly, a number of newspapers publish basic online editions as an extension of their core operation. Secondly, several A-pressen companies supply consultant services to today’s professional market. Thirdly, it is proceeding cautiously with respect to its involvement in content media for niche markets.
The future prospect for this area is uncertain. The scope of further investment in this area will be continuously evaluated, and cautious expansion is planned.
4.5 Other business areas
A-pressen Eastern Europe AS A-pressen aims to establish a strategic position in the Russian regional newspaper market by establishing modern newspapers in Russia’s largest regions. Its goal is to establish operations in an early phase of the development of a private media market. The venture is supported by simple, modern and flexible newspaper presses that can be expanded in step with the development of the market.
The venture in Russia is part of A-pressen’s creation of value, and an expression of a desire to capitalise on the Group’s expertise and organisation. The market potential is substantial and will probably rise in line with greater purchasing power among consumers.
The operation has been spun off as a separate company, A-pressen Eastern Europe (AEE). Ownership is split 65/35 between A-pressen and the European Bank for Reconstruction and Development (EBRD) and EBRD’s regional fund Nordic Russian Management Company Ltd (NORUM). AEE has signed a framework agreement on collaboration with the media group Komsomolskaya Pravda-Group To-day (KP-GS) and regional investors. The first three of a number of projects are scheduled to begin operations in early 1999.
Property A-pressen is committed to achieving market returns on the company’s properties, which are to be managed so as to maintain and increase their value.
24 A-PRESSEN PROSPECTUS
The strategy is to spin off parts of the property stocks and place them under central management. Purchases relating to operation, management and maintenance of properties are to be centralised wherever it is profitable to do so. A-pressen will prepare maintenance and development plans for all properties, and market rents will be charged internally for all buildings.
25 A-PRESSEN PROSPECTUS
5. Description of operations
5.1 The Group
A-pressen owns substantial interests in newspapers, printing plants and television, along with emerging operations in electronic media. All told, the Group consists of 106 companies, of which 88 are majority owned2. At 31 December 1997 the Group had 2,904 employees totalling 2,636 man-years. Forty-three per cent of A-pressen’s employees are women. The Group’s head office in Oslo had 24 employees at 31 December 1997.
Figure 5.1 A-pressen’s three business areas
A-pressen ASA
Newspapers/printing TV Electronic Media
Local newspapers Storbyavisene Printing Local-tv TV 2 AS 38 (City newspapers) installations (21) licences (9) (33 %) 5
TVNorge (49 %)
Newspapers/printing A-pressen has ownership interests in newspapers representing 18.9 per cent of the total newspaper circulation in Norway. A-pressen is the majority owner of 39 local and regional newspapers, which had a combined circulation of 510,321 copies in 1997. In addition, the Group owns less than 50 per cent of four other newspapers. Thirty-six of the newspapers are the leaders in their local markets. A-pressen owns a total of 21 printing installations. Seven of these are organised in six separate printing companies. The other 14 are spread among the newspapers.
TV A-pressen has a strong position as the owner of commercial Norwegian TV channels. A-pressen owns 33.17 per cent of TV 2, which in turn owns 49 per cent of TVNorge. In addition, the Group owns stakes through subsidiaries in nine local TV stations in Norway. A-pressen has ownership interests in three small production companies in other parts of the television value chain.
Electronic media A-pressen is the majority owner of the Internet companies Digital Hverdag, Lokalnett, Funn Narvik and A-pressen Nett. In addition, the Group has stakes in several small development
2 For a complete overview of the companies at 31 December 1997 see Note 10 in the 1997 Annual Report for A-pressen ASA, which is included in Appendix 2 to the prospectus. Keep in mind that the sale and purchase of businesses in the business areas is a natural part of the Company's operations and that changes commented on in the prospectus have not necessarily taken or had at 31 December 1997, legal corporate effect and will thus not be included in Note 10 of the accounts at 31 December 1997.
26 A-PRESSEN PROSPECTUS
companies. The entire Group’s ownership stakes are in companies operating in niche markets and within the content or consultant segment.
5.2 Newspapers and printing
Newspapers, printing and distribution make up well over 90 per cent of A-pressen’s turnover. A-pressen is Norway’s second-largest newspaper owner, with 43 newspapers, of which 39 are majority owned. Most of the newspapers are either the leaders in their markets or alone in their place of publication. The newspapers are divided into two areas: Local Newspapers and Storbyavisene (City Newspapers). The Local Newspapers group is made up of 38 newspapers with a combined average daily circulation of 438,641 in 1997. This accounts for 14.8 per cent of the total newspaper circulation in Norway. The Storbyavisene group is made up of five newspapers with a combined average daily circulation of 125,190 in 1997, which is equivalent to 4.2 per cent of the total newspaper circulation in Norway. Overall, A-pressen has 18.9 per cent of the newspaper circulation in Norway. The content of all of the newspapers is clearly local, with the exception of Dagsavisen, which features national news and commentary.
Newspapers In 1997, A-pressen newspapers had an overall operating margin of 5.7 per cent. Seven of the newspapers, including all papers in the Storbyavisene business area, are so-called No. 2 newspapers, and are published in strong competition with the market leaders. Current profitability is poor. Most of the newspapers that are so-called No. 1 or monopoly newspapers are reasonably profitable.
A-pressen newspapers participate in a number of local, regional and national advertising pools, i.e. co-ordinated arrangements by several newspapers to achieve higher advertising sales.
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5.2.1 Local newspapers A-pressen is the sole or majority owner of 34 local newspapers. In addition, A-pressen has stakes in four local newspapers. Thirty of the newspapers are alone in their local market, six are market leaders in their local markets, and two are No. 2 in their local markets.
Newspaper Place Circ. Position Stake Household Turnover Op. result total source: NAL coverage NOK 1 000 NOK 1 000
Romerikes Blad Lillestrøm 42 123 alone 97,85 % 60 % 174 294 24 171 Nordlys Tromsø 32 874 1 59,00 % 66 % 130 166 15 213 Oppland Arbeiderblad Gjøvik 28 605 1 99,47 % 79 % 111 420 14 789 Hamar Arbeiderblad ** Hamar 28 252 1 16,31 % 76 % 122 792 12 471 Glåmdalen Kongsvinger 22 017 alone 91,80 % 81 % 83 960 5 333 Nordlands Framtid Bodø 20 828 1 95,65 % 59 % 74 694 936 Sarpsborg Arbeiderblad Sarpsborg 17 605 alone 97,56 % 76 % 97 130 16 370 Tidens Krav Kristiansund 16 091 alone 99,71 % 80 % 50 069 6 714 Firda Førde 15 007 alone 100,00 % 82 % 53 753 5 388 Smaalenene* ** Askim 14 721 alone 82 % 57 049 8 107 Østlands-Posten Larvik 14 372 alone 100,00 % 87 % 82 816 1 263 Namdals-Avisa Namsos 13 401 alone 95,63 % 78 % 41 967 4 604 Ringerikes Blad Hønefoss 13 276 alone 100,00 % 71 % 64 861 10 354 Rana Blad Mo i Rana 11 034 alone 99,49 % 76 % 51 249 5 221 Finnmark Dagblad Hammerfest 10 679 alone 91,16 % 68 % 39 229 3 313 Halden Arbeiderblad** Halden 10 477 alone 41,50 % 79 % 58 175 2 742 Demokraten Fredrikstad 10 462 2 94,86 % 33 % 43 567 -132 Lofotposten Svolvær 10 418 alone 100,00 % 74 % 34 844 1 237 Fremover Narvik 10 410 1 96,61 % 75 % 34 115 2 116 Helgeland Arbeiderblad Mosjøen 9 950 alone 95,84 % 84 % 37 307 2 882 Akershus Amtstidende Drøbak 8 303 alone 97,85 % 69 % 27 122 3 646 Finnmarken Vadsø 7 955 alone 94,77 % 75 % 27 001 2 330 Stjørdalens Blad Stjørdal 7 277 alone 100,00 % 84 % 18 228 996 Arbeidets rett Røros 7 158 alone 97,21 % 89 % 18 527 2 767 Indre Akershus Blad Bjørkelangen 6 540 alone 97,85 % 77 % 11 144 583 Moss Dagblad Moss 6 370 2 90,83 % 42 % 25 743 -2 340 Firdaposten Florø 5 870 alone 98,30 % 74 % 14 743 878 Hardanger Folkeblad Odda 5 861 alone 99,06 % 85 % 16 090 3 494 Bygdeposten Vikersund 5 782 alone 100,00 % 59 % 9 662 526 Kvinnheringen *** Husnes 4 804 alone 100,00 % 73 % 11 300 1 337 Aust Agder Blad Risør 3 712 alone 98,51 % 76 % 6 567 632 Aura Avis Sunndalsøra 3 578 1 97,03 % 82 % 8 500 248 Opdalingen Oppdal 3 201 alone 97,03 % 85 % 7 812 1 215 Malvik Bladet Hommelvik 2 751 alone 100,00 % 58 % 3 278 144 Rjukan Arbeiderblad Rjukan 2 580 alone 100,00 % 70 % 6 484 541 Rakkestad Avis Rakkestad 2 366 alone 97,56 % 80 % 5 882 -678 Årdal & Lærdal avis Øvre Årdal 1 931 alone 99,90 % 55 % 10 534 -191 Total 438 641 73 % 1 672 074 159 220 * Indre Smaalenenes Avis / Øvre Smaalenene ** Associated company, not included in the accounts for the business area *** Purchase effective of 1 September 1998
Source: A-pressen
For more detailed information please see the Company’s annual report for 1997, which is included as Appendix 2 to the prospectus.
Twenty-eight of the newspapers have a household coverage rate of 70 per cent or higher in their area. Only two newspapers have less than 50 per cent household coverage. Overall circulation- weighted household coverage in the municipalities where the newspapers are published is 73 per cent.
Household coverage is an indicator of the newspapers’ profitability and potential. The newspapers that are most dominant in their local market, tend to be the most profitable or have the greatest economic potential.
28 A-PRESSEN PROSPECTUS
Due to strong competition and the need for marketing and product improvement, the No. 2 newspapers in A-pressen’s Local Newspapers group, Moss Dagblad and Demokraten in Fredrikstad, posted operating losses in 1997. The newspapers are important to A-pressen’s overall market revenues in Østfold because of their contributions to the Østfoldsamkjøringen advertising pool. As group, the Group’s leading newspapers and the two No. 2 newspapers are the leaders in the regional advertising market in Østfold.
The combined turnover of the local newspapers was NOK 1,672 million and the operating profit was NOK 159 million in 1997, yielding an operating margin of 9.5 per cent. The consolidated turnover of the local newspapers was NOK 1,354 million and consolidated operating profit was NOK 114 million in 1997. The difference is due to four of the newspapers not being majority- owned, and therefore not consolidated, and also because Nordlys was an associated company for part of 1997. The table also includes Ringerikes Blad, which was purchased towards the end of 1997 and Kvinnheringen, which was acquired in 1998.
The Group’s portfolio of local newspapers has been further strengthened as a result of a number of activities in 1997 and 1998:
· Ringerikes Blad, the sole newspaper in Hønefoss, was purchased. · The stake in Nordlys, Northern Norway’s largest newspaper, was increased from minority to majority. · The operations of Dagningen were sold and merged with the competitor, Gudbrandsdølen Lillehammer Tilskuer, to become inland Norway’s largest newspaper: Gudbrandsdølen Dagningen. A-pressen owns no shares in the new newspaper, but will benefit from its participation in A-pressen’s advertising pool. · Ownership of Østfold-based newspapers Indre Smaalenenes Avis and Øvre Smaalenene was consolidated into one company. · Ownership of Østfold-based newspapers Indre Smaalenenes Avis and Øvre Smaalenene was consolidated into one company. · Sogn Dagblad ceased publication, while two newspapers, Årdal & Lærdal Avis and Avisa Sogndal (weekly newspaper) were launched. · Kvinnheringen, sole newspaper in Husnes, was purchased 1 September 1998. · Agreement to purchase the local newspaper Lofot-Tidende (not completed as of the date of prospectus) · Agreement with the Board of A/S Hadeland allowing A-pressen to increase its holdings in the company. In addition to a purchase offer to all shareholders, the agreement contains a proposal for a private placement directed at A-pressen which will give the Company 25 per cent of the shares (not completed as of the prospectus date).
Distribution and reading Local newspapers are mainly subscription newspapers delivered to the home of the subscriber by newspaper carriers or by ordinary post. A-pressen newspapers, with two exceptions, enjoy an extremely solid position among the readers in their markets.
In journalism, newspapers are usually divided into four categories: national newspapers, city newspapers (regional newspapers), local daily newspapers and local non-daily papers. Weekday newspaper selection surveys (Norwegian Media Barometer 1996) show that the reader clearly prefers the leading local daily newspaper or the leading local city newspaper. When two newspapers are purchased, the second paper is a non-subscription newspaper or another local or city newspaper.
29 A-PRESSEN PROSPECTUS
Market positions and advertising pools Local newspapers are the most important advertising channel for local business and industry, and a good channel for local classifieds. The local paper is the most cost-effective communications channel for these advertisers. Each advertiser is relatively small.
With respect to regional and national advertisers, the lion’s share of local newspapers, each on its own, have too few readers and cover geographical areas that are too small. To win regional and national customers, A-pressen has established several advertising pools. The effect of this is that by placing a single order, advertisers can have their advertisement run in several newspapers. The biggest pools are Østfold, Media Nor (which covers Northern Norway) and the Hedmark and Oppland pools.
The revenues of the Østfoldsamkjøringen pool are significantly boosted by the participation of Moss Dagblad and Demokraten in the pool. As a result the overall contribution of the newspapers to the Group’s profitability is better than what is reflected in the operating results of the two newspapers.
Table 5.2 POOLS (1997)
Pool Place A-pressen newsp. Other newsp. no. no. Media Riks Hamar 33 2 Media Nor Bodø 8 3 Østfoldsamkjøringen Sarpsborg 7 0 Nordlyssamkjøringen Bodø 4 3 Nye Indre Samkjøringen Askim 4 0 Trøndersamkjøringen Trondheim 4 0 Media Vest Sogn og Fjordane Førde 3 1 midtØSTEN annonsesamkjøring Hamar 3 0 Finnmarkssamkjøringen Hammerfest 2 0 Helgelandssamkjøringen Mo 2 0 Møre og Romsdalsamkjøringen Molde 2 3 Norlandssamkjøringen Narvik 2 0 StorOslo Samkjøringen m/Dagsavisen Oslo 2 3 Buskerudsamkjøringen Drammen 1 3 Media Link Vestfold Tønsberg 1 3 Telemark/Agdersamkjøringen Skien 1 3 Telemarksamkjøringen Skien 1 2 Avisenes reklamedistribusjon Billingstad 12 18
Source: Norwegian Newspaper Publishers’ Association (NAL)
A-pressen has pool agreements with newspapers owned by Orkla Dagspresse in Oslo and Akershus, Buskerud, Vestfold, Telemark and Møre og Romsdal. The Orkla newspapers have cancelled their participation effective 1 January 1999 and advertising sales could drop as a result. From 1 January 1999 the newspaper Gudbrandsdølen Dagningen in Lillehammer will join A-pressen’s midtØSTEN advertising pool. This will bolster the pool’s income base.
Principal revenue and cost factors Advertising is the local newspapers’ biggest source of revenues. In 1997 advertising revenues accounted for 53 per cent of all revenues. Important components of advertising revenues are local retail trade and classified ads, and regional advertising through the pools.
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The second-largest source of revenue is circulation revenues, which in 1997 accounted for 35 per cent of all revenues. The lion’s share, 86 per cent, is subscription revenue while the remaining 14 per cent are newsstand sales.
The local newspapers are also involved in printing operations outside the printing of their own newspapers.
In 1997 the local newspapers received altogether NOK 17.4 million in press subsidies. The vast majority, c. 68 per cent, of the subsidies allocated to the local newspapers in 1997 went to Demokraten, Moss Dagblad and Dagningen (which has now been sold). Beyond this 12 other newspapers received smaller amount of subsidies. Newspapers receiving press subsidies are not permitted to give a group contribution, and the press subsidy lapses if the newspaper has a profit of more than NOK 2 million before taking the subsidy into account. The future of press subsidies is dependent on political decisions, and A-pressen will regularly evaluate its options in the event of changes in the subsidies.
Local newspapers are labour-intensive. Wage and personnel costs accounted for 48 per cent of costs in 1997, but the percentage will probably increase as the result of significant pay increases in 1998. Wages rose between five and six per cent from the summer of 1998. The Group is working on measures to reduce personnel costs. Despite these efforts, it must be reckoned that wage costs will be the largest cost component in the years to come.
Material costs for newsprint, ink, and etc. account for 18 per cent of costs. These costs fluctuate with market prices for factor inputs, and according to the number of pages. Purchasing agreements have been made this year which mean that newsprint costs have increased by three per cent compared to 1997. Depreciation accounts for four per cent of costs, most of which is depreciation of fixed assets. Other operating expenses make up 30 per cent.
Table 5.3 Key financial figures for local newspapers
(NOK mill) 1.1-31.8.98 1.1-31.8.97 1997 1996 Circulation revenues 479.9 430.3 Advertising revenues 723.1 642.1 Printing revenues 67.0 73.0 Press subsidies 17.4 19.0 Other revenues 66.6 44.9 Total operating revenues 946.5 848.0 1 353.9 1 209.3 Cost of materials -219.3 -209.4 Personnel costs -595.9 -534.5 Other operating expenses -367.6 -329.9 Depreciation -51.8 -45.8 Bad debts -4.9 -3.4 Total operating expenses -869.9 -782.9 -1 239.5 -1 123.0 Operating profit 76.6 65.1 114.4 86.3 Source: A-pressen. Part year breakdowns of revenue and cost components are not available.
5.2.2 Storbyavisene (City Newspapers) The Group’s newspapers in Oslo, Bergen, Stavanger, Skien and Drammen are organised in a separate sub-group, Storbyavisene AS. These newspapers are smaller than their competition in the place of publication and thus have less clout in the advertising market than the Group’s other newspapers. There are, however, major differences among the five.
31 A-PRESSEN PROSPECTUS
Bergensavisen The newspaper is closely identified with Bergen and has doubled its circulation in 15 years to become Norway’s twelfth most read paper.
Dagsavisen In addition to national and foreign affairs, the newspaper provides coverage of the most important news in the Oslo region. With the exception of a few years its has lost circulation since 1970, but is now on the upswing after it changed its name and launched a Sunday edition.
Fremtiden The newspaper has a county profile and is No. 2 in all sub-markets. Its circulation has dropped substantially in recent years.
Rogalands Avis The newspaper saw its circulation decline some in the early ‘90s. Since then it has given greater priority to its core area, and its circulation has now stabilised.
Telemarksavisa The newspaper has strengthened its position significantly in recent years, and is the No. 1 newspaper of most of its subscribers. This is also reflected in its relatively strong position in the advertising market.
Bergensavisen sells 40 per cent of its circulation from newsstands. The other newspapers are all mainly subscription newspapers. The low household coverage in the place of publication is the main reason for No. 2 newspapers’ poor earnings and dependence on press subsidies.
The decision to reduce the financial interests in Storbyavisene With the exception of Telemarksavisa (TA), the lag in circulation behind the competitors is so great that it is impossible to operate these newspapers without significant direct subsidies. In recent years, direct subsidies to these newspapers have been considerably reduced, at the same time the unpredictable cost picture creates major management difficulties.
This being so, the Board of A-pressen has decided to reduce the Group’s financial ownership interests in these newspapers, with the exception of TA, which is to be sold to A-pressen Avis og Trykk AS (a wholly-owned subsidiary of A-pressen ASA). The Board has also resolved a separation of ownership between Dagsavisen and A-pressen ASA. This will be done with accounting effect no later than 1 January 1999, and work is in progress to transfer ownership to a separate foundation. For the other three newspapers Bergensavisen, Rogalands Avis and Fremtiden, the changes may take longer, but it is expected that this will be clarified by the end of the first half of 1999.
32 A-PRESSEN PROSPECTUS
Table 5.4 Storbyavisene (city newspapers) 1997 Source: A-pressen Newspaper Place Ownership Household Circ. Turnover Press subsidies Op. profit/loss stake coverage total NOK 1 000 NOK 1 000 NOK 1 000
Bergensavisen Bergen 98 % 20 % 30 735 136 504 23 574 -4 899 Dagsavisen Oslo 100 % 11 % 40 771 159 078 30 053 -2 013 Fremtiden Drammen 80 % 16 % 14 001 45 971 7 838 362 Rogalands Avis Stavanger 96 % 19 % 17 509 61 928 12 202 1 047 Telemarksavisa Skien 100 % 29 % 22 174 80 189 5 939 -4 497 Total 125 190 483 670 79 606 -10 000 Market position With the exception of Fremtiden and Rogalands Avis, the other newspapers have seen their circulation rise in 1998. After eight months, Dagsavisen has increased its circulation by just over 3,800 copies since last year, a gain of almost nine per cent. The newspaper’s growth strategy has been to establish a serious image backed by balanced and objective reporting, launch a Sunday edition, change its name and reduce the news-stand price from NOK 8 to NOK 5, including Sunday.
The weak position of the Storbyavisene (City Newspapers) in their place of publication is the main explanation for their relatively small advertising revenues. This is a market situation seen in every newspaper market in the country. The market leader wins a larger share of the advertising revenues than its percentage of readers would indicate. As a result, both earnings and the opportunity to compete on editorial quality are diminished. The trend in the Storbyavisene’s advertising revenues in recent years has been uneven. Dagsavisen in particular has lost market share during the period, while Telemarksavisa and Bergensavisen have significantly increased their revenues.
Principal revenue and cost factors Circulation and advertising revenues accounted for 44 and 37 per cent respectively of total revenues in 1997.
In 1997 the Storbyavisene received NOK 79.6 million in press subsidies, accounting for 16 per cent of total revenues. This represents 39 per cent of all press subsidies given to Norwegian newspapers and c. 81 per cent of the total amount received by A-pressen.
The Storbyavisene are also labour intensive. Salary, wage and personnel costs accounted for 43 per cent of costs in 1997. Several of the enterprises are working to reduce manning to compensate for anticipated wage trends and the need for improved profitability. Regardless of these steps, it must be reckoned that wage costs will continue to be the largest cost component in the years to come.
Material costs for newsprint, ink, etc. make up 20 per cent of expenses. These costs fluctuate with the market prices of factor inputs and the physical scope of the newspapers. Purchasing agreements have been signed for this year, which will increase the price of newsprint by three per cent in relation to 1997. Depreciation accounts for three per cent of costs, most of which is depreciation of fixed assets. Other operating costs account for 34 per cent.
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Table 5.5 Key financial figures for storbyavisene (city newspapers)
(NOK mill) 1.1-31.8.98 1.1-31.8.97 1997 1996 Circulation revenues 212.3 207.6 Advertising revenues 176.8 166.0 Press subsidies 79.6 79.1 Other revenues 15.5 15.0 Total operating revenues 319.1 311.8 484.3 467.7 Cost of materials -96.4 -97.9 Personnel costs -212.9 -203.7 Other operating expenses -166.8 -153.2 Depreciation -14.9 -13.7 Bad debts -2.9 -2.7 Total operating expenses -334.4 -313.6 -493.9 -471.2 Operating profit -15.3 -1.8 -9.6 -3.4
Source: A-press. Part year breakdowns of revenue and cost components are not available.
5.2.3 Printing Printing operations are partly organised in separate printing companies and partly as divisions of the newspaper companies. The business area accounts for 9.5 per cent of the Group’s external turnover.
A-pressen’s printing operations have been and are marked by restructuring and the elimination of over capacity. The new printing facility in Media Øst (Lillestrøm) facilitates the industrialisation of production. Opening the plant has made it possible to close four smaller printing plants in the region, and increased its chances of competing in the steadily expanding civilian market. In the other regions, A-pressen has closed or sold a further six printing plants since 1996.
The foundation for further structural changes will probably be limited, primarily because geography and long distances hamper distribution, combined with the fact that today’s systems (small printing installations in the newspaper companies) are cost-effective.
34 A-PRESSEN PROSPECTUS
Figure 5.2 company overview for the printing business area
A-pressen printing
Printing- companies Printing plants in newspaper co.
Aura Avis Drift AS 97% Arbeidets Rett
MediaØst Trykk AS 98% Dagbladet Finnmarken
Mysen. Firda
Nor-Trykk Narvik AS 100% Finnmark Dagblad
Nye Hojem Trykkeri AS 77% Hardanger Folkeblad
Bergensavisen TrykkAS 98% Helgeland Arbeiderblad
Samtrykk ANS 67% Lofotposten
Namdals- Avisa
Nordlands Framtid
Nordlys
Oppland Arbeiderblad
Rana Blad
Rjukan Arbeiderblad Østlands-Posten
Source: A-pressen, the percentages are the Group’s stake in the companies
Media Øst Trykk AS Following the closure of printing plants in Sarpsborg, Drammen, Skøyen and Kongsvinger in 1998, Media Øst Trykk AS (MØT) has production facilities in Lillestrøm and Mysen. In all, the plant in Lillestrøm prints 14 daily newspapers, while two newspapers are printed in Mysen.
In the spring of 1997 MØT installed the country’s most modern production plant based on a semi-commercial concept. The equipment and their configurations are set up to print daily newspapers and advertising supplements.
The old rotary press has been upgraded and renovated, providing satisfactory performance with respect to colour choices and printing quality of daily newspapers. The plant in Lillestrøm can print three newspapers at the same time.
The rotary printing plant in Mysen will be upgraded in the autumn of 1998. Packing will be automated, and the press will be expanded to accommodate 32 pages with four colours throughout. Overall, this means that Media Øst Trykk has good capacity for printing shopping newspapers. The Mysen facility also has its own sheet-fed printing press and has recently invested in a modern four-colour machine.
35 A-PRESSEN PROSPECTUS
Operating problems at the new plant The new printing plant in Lillestrøm had significant operating problems during its first year, caused, for the most part, by delivery failures by the press and packing machinery suppliers. The problems have caused considerable losses in the form of additional costs, low productivity, and, not least, lost competitive power and lost opportunities in the civilian printing market.
Production stability has improved considerably over the past two to three months. It will still take some time before the plant can run at full capacity and all productivity targets can be achieved.
Other printing plants Together with 14 printing installations in the newspaper companies, A-pressen’s other printing operations consist of the companies Aura Avis Drift AS, Nor-Trykk Narvik AS, Nye Hojem Trykkeri AS (sheet printing works), Bergensavisens Trykk AS and Samtrykk ANS.
In addition to producing A-pressen’s own newspapers, these printing works compete to a greater or lesser extent with various segments of the external printing market. For many years the company Nor-Trykk in Narvik has produced the Norwegian Gazette and since 1996 it has been working with Sever, the state-owned printing plant in Murmansk, on jobs for the Russian market. The contract with the Norwegian Gazette was extended for 10 years on 1 January 1998.
Table 5.6 Key financial figures for printing companies
(NOK mill) 1.1-31.8.98 1.1-31.8.97 1997 1996
Printing revenues 301.1 327.6 Other revenues 33.8 31.6 Total operating revenues 231.8 222.6 334.9 359.2
Cost of materials -131.4 -155.8 Personnel costs -99.9 -98.2 Other operating expenses -62.4 -55.4 Depreciation -28.0 -25.3 Bad debts 0.2 -3.3 Total operating expenses -223.6 -211.9 -321.4 -337.9
Operating profit 8.2 10.7 13.5 21.3
Source: A-pressen. Part year breakdowns of revenue and cost components are not available.
5.3 TV
A-pressen has a strong position as the owner of commercial Norwegian TV channels, after having invested NOK 630 million in the business area in recent years. The biggest investment is the Group’s 33.17 per cent stake in TV 2. In addition, the Group has ownership interests in nine local TV companies and in smaller production companies. The main figures for the Group’s TV business area do not include TV 2. A-pressen’s share of the TV 2’s profits, less goodwill write- offs on its shareholding, is in the consolidated account item for associated companies and Note 4 in the annual report.
36 A-PRESSEN PROSPECTUS
Figure 5.3 Overview of companies in TV business area
A-pressenTV
Production Channels
Programmes TV 2 33,17%)
TMM Produksjo (70%) TVNorge (49%) n TV Huset Telemark (32%) Local TV - Advertising TV Finnmark (11%)
Small FilmAS (50%) TV Innlande (61%) t AdExchang Norden AS (51%) TV Nordland (46%) e Film Companiet AS (20%) TV Nord-Trøndelag (70%)
TV Helgeland (56%)
TV Romerike (98%)
TV Telemark (60%)
TV Tromsø (31%)
TV Østfold (88%)
Source: A-pressen, percentages are the Group’s ownership stake in the companies.
5.3.1 TV 2 A-pressen increased its stake in TV 2 AS to 33.17 per cent in 1997 through several transactions. Under TV 2’s licence terms and conditions, the maximum ownership stake a single shareholder may have is one-third of the shares. This condition has been almost fully utilised in that A-pressen, Egmont and Schibsted each own almost one-third of TV 2.
TV 2 received its national TV licence in 1991 and began regular broadcasts in September 1992. The channel quickly achieved 20 per cent viewership, which gradually has increased to the present 30 per cent. The building of the transmission network is now complete, and 95 per cent of the population are now able to receive the channel via traditional TV antennas, cable networks and private satellite dishes. TV 2 has 29.2 per cent viewership in the under-55 age group, and is thus within range of catching up with NRK, which has dropped to 43.1 per cent. TV 2 is the market leader in the under-34 age group, with 29.4 per cent of viewers.
TV 2’s licence expires at the end of 2002, and is expected to be extended beyond that point. The content of TV 2’s programming has been criticised in recent months by the General Broadcasting Council, and questions have been raised as to whether the channel is complying with all the licence terms and conditions. TV 2 has rebutted the accusations.
Principal revenue and cost factors Because it can be seen by almost the entire population, TV 2 is an attractive channel for advertisers of brand-name goods. This is reflected in advertising revenues, which have soared from NOK 314 million in 1993 to more than NOK 1 billion in 1997. Advertising revenues account for more than 98 per cent of TV 2’s total revenues.
TV 2’s biggest cost component is programme costs, which make up 32 per cent of total costs. The most expensive programmes are news programmes, Norwegian-produced dramas and sports. Personnel expenses make up 24 per cent.
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For more detailed accounting information see TV 2’s annual report for 1997, which makes up Appendix 3 of the prospectus.
Table 5.7 financial figures for TV 2 AS
(NOK mill) 1.1-30.6.98 1.1-30.6.97 1997 1996 1995
Advertising revenues - - 1 052.8 877.5 751.0 Other revenues - - 17.1 20.9 33.4 Operating revenues 696.3 529.6 1 069.9 898.4 784.4
Broadcasting costs - - -137.3 -133.0 -122.2 Programme costs -205.0 -126.7 -293.1 -278.8 -240.5 Wages, salaries and other personnel costs -121.6 -94.9 -215.1 -175.6 -143.1 Other operating expenses -184.1 -140.7 -165.4 -143.4 -133.1 Associated companies -36.9 -11.1 -54.1 -0.2 0.0 Bad debts - - -5.0 -3.3 -1.2 Depreciation -24.7 -22.7 -44.1 -40.3 -30.1 Operating expenses after depreciation -572.2 -396.1 -914.1 -774.7 -670.2
Operating profit 124.1 133.5 155.8 123.7 114.2 Source: TV 2 AS
Structural development of TV 2 In the spring of 1997 TV 2 purchased altogether 49.33 per cent of the shares of TVNorge. The remaining shares of TVNorge are owned by SBS, a company listed in the US. TV 2 and TVNorge subsequently signed a co-operative agreement by which TV 2 took over responsibility for TVNorge’s programming. The agreement enables TV 2 and TVNorge to achieve lower programme costs and take advantage of cross programming to offer viewers a complementary range of programmes.
Because it realises that the TV channel will be subjected to steadily increasing competition, TV 2 has invested in other operations in which the TV channel’s expertise can be commercialised. The biggest ventures are Nyhetssentral byrå 2, a supplier of news bulletins to radio, airport monitors and text TV; Autograph Broadcast Systems, which was founded to develop and sell broadcasting systems and graphics presentations in news and sports broadcasts; and Net 2 Interaktiv, operator of the text TV service on TV 2. Furthermore, the company is responsible for operating and commercialising Aftenposten’s Web pages on the Internet. Another venture is Storm Weather Center, which produces weather services primarily for media enterprises, but also has new commercial products under development for weather-intensive industries, particularly in the energy sector.
5.3.2 Local TV A-pressen has ownership stakes in 11 local TV licence areas, of which nine are in operation. Five of the stations are majority owned. The stations in operation have a viewing public of more than one million, making A-pressen the largest owner in local TV. The licences run until the end of 2002.
38 A-PRESSEN PROSPECTUS
Table 5.8 Key figures for local TV companies Company Audience Weekly reach Weekly Weekly minutes of viewership broadcasting TV Finnmark 61 420 24 per cent 14 741 290 TV Nordland 58 063 48 per cent 27 870 250 TV Tromsø 46 335 46 per cent 21 314 275 TV Helgeland 64 474 27 per cent 17 408 250 TV Nord-Trøndelag 87 746 38 per cent 33 343 400 TV Innlandet 287 087 28 per cent 80 384 250 TV Romerike 161 610 36 per cent 61 412 375 TV Telemark 99 125 44 per cent 43 615 265 TV Østfold 203 056 42 per cent 85 284 445
Total 1 068 916 36 per cent 385 371 2600
Source: A-pressen
The local TV companies work closely with TVNorge. For much of the broadcasting day, they relay TVNorge’s programmes via their own transmission systems. TVNorge pays depending on the distribution. In addition, the stations have agreements covering the sale of programmes to TVNorge and they also broadcast their own local programmes for part of the time, with local commercials. The combination forms the financial platform for operations. Some stations have other income from inter alia games and text TV.
The most important advertising basis is major regional advertisers. As of now, most have used printed media almost exclusively and it will take time to restructure their operations to include TV commercials. These advertisers are also not used to paying for advertising production, which has traditionally been done by the newspapers’ production departments. Consequently, it will take time to market the use of local TV. Interest, however, is on the rise.
Part of A-pressen’s local TV strategy is to work with the newspapers in the region. This applies to advertising sales, promotion, editorial co-operation, and joint administrative departments. There has been little utilisation of this potential thus far.
Table 5.9 Key financial figures for local tv
(NOK mill) 1.1-31.8.98 1.1-31.8.97 1997 1996
Advertising revenues 13.2 0.1 Other revenues 25.3 1.5 Total operating revenues 33.8 23.0 38.5 1.6
Cost of materials -5.5 -0.2 Personnel costs -24.8 -6.0 Other operating expenses -17.7 -4.1 Depreciation -6.1 -0.9 Bad debts -0.3 0.0 Total operating expenses -42.5 -34.4 -54.4 -11.3
Operating profit -8.7 -11.4 -16.0 -9.6
Source: A-pressen. Part year breakdowns of revenues and cost components are not available.
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Nyhetskanalen The Group’s biggest single venture in local TV was the all-news channel Nyhetskanalen in Oslo, which was wound up in February. A-pressen was the initiator of the project, the idea of which was to provide the Oslo area with updated news and supply TVNorge with daily news broadcasts. A-pressen invested altogether NOK 24 million in the channel. A new programme image and substantial injections of fresh capital would have been necessary for it to continue operating. The Company’s board decided that there was no basis for further operation, and petitioned for winding-up in February 1998.
The NOK 24 million investment was charged as a loss in the 1997 accounts.
During the liquidation proceedings, the administrator negotiated a composition agreement with the creditors at the same time as new owners provided fresh capital. The channel thus avoided liquidation. Nyhetskanalen has since changed its name to NYTV ASA, and the majority owner is TV Huset AS. A-pressen has not provided fresh capital for the refinancing, and its stake is thus reduced to 20 per cent.
A-pressen has decided not to become involved in the further recapitalisation of NYTV and will consequently not have any prominent role in the further development of the company.
5.3.3 Other TV operations Besides TV channels, A-pressen has modest positions in other parts of the TV operations value chain. The Group will continue to pursue a cautious strategy in this area.
The Group currently has ownership stakes in two programme production companies: TMM Produksjon and TV Huset Telemark, and three companies involved in the production of commercials: AdExchange Norden AS, Small Film AS and Film Companiet AS. All three are in the start-up phase.
5.4 Electronic media
The business area is under development, and consists at this time of four subsidiaries in addition to several associated companies.
Figure 5.4 Companies in the electronic media business area
A-pressen electronic media
Subsidiaries Associated companies A-pressen Nett AS (100%) Bilkanalen AS (50%)
Digital Hverdag AS (51%) Cyberbook (22%)
Lokalnett AS (87%) IntraFish AS (38%)
Funn Narvik AS (77%) On Line Publishing AS (29%)
Norsk Familieøkonomi (33%)
Source: A-pressen, the percentages are the Group’s ownership stakes in the companies
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The subsidiaries are:
A-pressen Nett AS Co-ordinating company for A-pressen’s on-line newspaper projects. Twelve newspapers with Web editions are currently part of the project.
Digital Hverdag AS A consultancy that develops Internet solutions for the professional market.
Lokalnett AS A consultancy that supplies Internet solutions to the public sector.
FUNN Narvik AS Supplier of consultant services in the technical field.
Merger agreement between Digital Hverdag and New Media Science A letter of intent has been signed by Digital Hverdag and New Media Science Multimedia ASA (NMS). NMS was the first company to achieve prominence on the Norwegian multimedia market, and has since been the trendsetter and the biggest company.
The final merger agreement is expected to be ready after the performance of due diligence at the end of October, and the merger itself is expected to be completed with effect on the accounts from 1 November 1998. The merged company will have an expected turnover for 1988 of about NOK 55 million, with a profit of about NOK 5 million. It will have about 80 employees. As yet, no new name for the company has been found. A-pressen’s owner interest in the merged company is expected to be between 20.4 per cent and 23.6 per cent, depending on the details of the final merger agreement.
Table 5.10 Key financial figures for electronic media
(NOK mill) 1.1-31.8.98 1.1-31.8.97 1997 1996
Total operating revenues 13.8 10.4 13.8 1.4
Cost of materials -2.7 -0.2 Personnel costs -6.4 -1.3 Other operating expenses -5.2 -1.0 Depreciation -1.1 -0.1 Bad debts -0.2 0.0 Total operating expenses -17.8 -10.6 -15.5 -2.5
Operating profit -4.0 -0.2 -1.7 -1.1
Source: A-pressen. Part year breakdowns for revenue and cost components are not available.
The financial results are marked by investments in market positions, and research and development. Over time, the same rate of return required for the Group’s other operations will be required of electronic media. Further evidence of profitable operations and the probability of a return are therefore needed before investments in the area can be stepped up.
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5.5 Other business areas
5.5.1 A-pressen Eastern Europe AS A-pressen Eastern Europe AS (AEE) is run by Reidar K. Karlsen, who has been in charge of profit performance for parts of the Group’s newspaper operations since 1992. The company is 65 per cent owned by A-pressen ASA. The rest is owned by the European Bank for Reconstruction and Development (EBRD) and EBRD’s regional fund, Nordic Russian Management Company Ltd (NORUM). NORUM is backed by Nordic financial institutions including the Norwegian Industrial and Regional Development fund and DnB.
AEE will be the largest shareholder in the Russian companies. The other suppliers of capital are EBRD/NORUM and the Russian partners.
A-pressen has been looking into investment opportunities in Russia since 1994. In 1996 A-pressen invested in the state-owned printing plant in Murmansk. The project has proved successful and has provided valuable experience and good contacts with Russian media players.
A framework agreement on broad co-operation with the Media Corporation Komsomolskaya Pravda-Group To-day (KP-GS) was signed in May 1998. The corporation publishes Russia’s leading newspaper, the liberal Komsomolskaya Pravda (weekday circulation c. NOK 1.5 million), and since its privatisation the newspaper has built up a diversified media operation and large regional organisations to some extent.
These have grown rapidly in step with the development of the Russian economy and the growth of the advertising market, and are dynamic, market-oriented and staffed by highly qualified professionals.
The framework agreement is based on mutual obligations and risk and assumes a relatively short repayment period for the printing projects. The newspaper projects must be viewed in a strategic and more long-term return context.
The unstable political and economic situation is Russia is affecting the Russian partners’ ability to provide capital, and A-pressen’s investment security and control requirements. Developments must therefore be closely monitored, and the investments will be released in stages, adapted, however, to the need for early positioning and the competitive situation in the individual sub- markets. As of the date of the prospectus, AEE has not undertaken any major investments in Russia.
5.5.2 A-pressen Eiendom AS A-pressen Eiendom AS was founded on 1 September 1998. While it owns no properties on start-up, the company provides expertise and resources to manage the Group’s properties through the local owners.
The purpose of the company is to help ensure that property stocks are always suited and adapted to operations, and are well maintained at all times. Buildings not used for company operations will be sold.
A-pressen owns 38 buildings with a combined area of c. 90,000 m2. Space rented to tenants other than subsidiaries amount to 22,000 m2. The buildings are scattered throughout the country but are mainly concentrated in Eastern Norway.
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6. Marked conditions and competitive situation
6.1 Newspaper and printing market
Newspaper reading market Norwegians are the premier newspaper readers of the world. On average, every adult reads 1.7 newspapers per day. On a randomly selected day only 10 per cent of the adult population will not have read a newspaper. Thirty-six per cent will have read one newspaper, 34 per cent two and 19 per cent will have read more than three, according to fresh figures from Norwegian Media Barometer.
The great interest in newspapers has remained stable in recent years. Put somewhat simply, one could say that practically everyone in Norway reads newspapers regardless of age, place of residence, or social and economic status. Overall circulation of Norwegian newspapers increased in 1997, and overall readership grew by 300,000 readers (+2.1 per cent).
Figure 6.1 Average daily circulation of newspapers in norway
3100000 3000000 2900000 2800000 2700000 2600000 2500000 2400000 2300000 2200000 1985 1988 1991 1993 1994 1995 1996 1997
Source: NAL
Because of the country’s scattered population and good framework conditions, a large number of newspapers are published in Norway. In 1972, 199 newspapers were published in Norway while by 1997 the number increased to 220. Freesheets are not included in these figures.
Overall consumption of media products has increased somewhat in recent years, but the distribution among the various media has been relatively constant.
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Figure 6.2 Daily use of time in minutes
400 350 Other 300 Books 250 Stereo 200 Home PC 150 TV 100 Radio 50 Newsp. 0 1991 1992 1994 1995 1996 1997
Source: Norwegian Media Barometer
Competitive situation in reader market The local newspaper is the preferred newspaper in competition with other types of newspapers. Weekday newspaper selection surveys (Norwegian Media Barometer 1996) show that the reader clearly prefers the leading local daily newspaper or the leading local city paper. When two newspapers are purchased the second paper is a non-subscription newspaper or another local newspaper/city newspaper.
A-pressen’s 36 leading local newspapers are not without competition in their markets, but the competitive picture varies from newspaper to newspaper. In several places, A-pressen’s leading newspaper is challenged by a small local competitor in all or part of their market. In other places, the leading regional newspaper is an aggressive competitor, while the tabloid newspapers Verdens Gang and Dagbladet increasingly compete in local reader markets. Both newspapers now print part of their circulation outside Oslo, which means that Verdens Gang and Dagbladet are in the news-stands around the country far earlier than before. In this way they are a real choice for people who buy newspapers on the way to work, and thus have the potential of cutting into newsstands of local newspapers.
The local newspapers’ strongest card in the competition with tabloid newspapers and regional newspapers is their proximity to their market. By their content, language and form, local newspapers live and breathe for and with the readers in their area. If the football team wins the newspaper rejoices with the town, and when the community is touched by catastrophe or tragedy the newspaper mourns with its readers. Newspapers covering a larger market, a region or entire country, have to take readers outside the city or community into account in covering the same events. “We are born and die in the local paper,” is another way of expressing the local paper’s marriage to its market and its readers.
The growth of local freesheets can give local newspapers greater competition in both the reader and advertising market. The two newspapers Demokraten in Fredrikstad and Moss Dagblad occupy a special position. They are No. 2 newspapers facing tough competition from their competitors. Fredrikstad Blad and Moss Avis are both leading local newspapers in their markets.
44 A-PRESSEN PROSPECTUS
The Storbyavisene also face extremely stiff competition, first and foremost from their leading local competitors Stavanger Aftenblad, Bergens Tidende, Drammens Tidende and Aftenposten. Too few consumers have Rogalands Avis, Bergensavisen, Fremtiden and Dagsavisen as their first choice. These newspapers are thus at risk of being outcompeted by tabloid newspapers, regional newspapers or other media.
Competition from substitute media Media choices have increased substantially in the 1990s. In addition to the large number of commercial radio channels and new TV channels at our disposal, the past few years have witnessed the rapid growth of the Internet as a content provider. Consequently, the quantity of news has exploded and the consumer has both the freedom to choose and many choices from which to choose. This has created a battle for people’s time and attention. For the time being the media explosion has not had any noticeable effect on the consumption of newspapers. Because of their established position, simple user interface, voluminous content and manageable and portable format, people still read newspapers. We are now seeing signs that Internet use is stealing time away from the TV, while the TV channels’ increasing focus on live coverage of breaking news may be putting a slight damper on the demand for national tabloids. The new media do not seem to have displaced local newspapers, which, because of their local focus, cannot be replaced by either TV or the Internet. Use of the various media shows that readership of local newspapers has not dropped, despite the fact that the population is also choosing other media channels.
Figure 6.3 Daily use in norway
100 % Newspaper 90 % 80 % Radio 70 % 60 % 50 % TV 40 % 30 %
20 % Text TV
10 % Internet 0 % 61 65 69 71 73 77 80 83 85 87 88 89 91 93 94 95 96 97
Source: Norsk Gallup
Advertising market for newspapers The advertising market for newspapers can roughly be divided into brand-name promotions, promotional and sales-generating retailer ads, and sales-generating classified ads. The total size of the market was estimated at NOK 6 billion in 1997. On average the market has grown eight
45 A-PRESSEN PROSPECTUS
per cent annually over the past four years, after declining in the early ‘90s. The volume of advertising fluctuates with the general development of the Norwegian economy. If the Norwegian economy cools off in the near future, the growth in advertising could slow down or even shift into reverse.
Advertising revenues are A-pressen’s most important source of income and account for almost 44 per cent of operating revenues. A-pressen’s subsidiaries sold NOK 979 million worth of advertising in 1997, which makes up almost 16 per cent of the total market. A-pressen’s development since 1994 has been identical to that of the rest of the press.
Competitive situation in the advertising market Competition from other newspapers A newspaper’s competitive situation in the advertising market is controlled by its position in the reader market, which for A-pressen papers varies widely. Advertisers prefer to advertise in the leading newspaper in the catchment area for the advertising campaign. The newspaper that is the market leader in its reader market will have an even stronger position in the advertising market. A-pressen’s leading local newspapers, with their high readership, therefore have an extremely strong position, particularly for retail advertisements. The Storbyavisene have a weaker position, and are often used as a supplementary channel to reach consumers who do not see the main ad in the No. 1 newspapers. The Storbyavisene are also seeing that a number of advertisers are choosing to run their ads only in the leading newspapers in the local market.
In recent years the non-subscription papers Verdens Gang and Dagbladet have intensified their efforts in the advertising market. Both newspapers have grown in terms of advertising volume and sales, particularly with regard to brand-name goods. The same is true of the niche newspapers Dagens Næringsliv and Finansavisen.
Competition from substitute advertising media Brand-name goods advertising have obvious substitutes in the form of TV, radio, billboards and cinema commercials. These media often have the best coverage, and brand building can take advantage of the media’s suggestive characteristics. Retail advertising has fewer substitutes. Because this type of advertiser often runs a limited offer for a specific store, the newspapers’ dense coverage in geographic areas is needed. DM is the only real substitute, with the exception of the large chains that run national campaigns. They also use TV and radio to a greater extent. The classified market is under attack from numerous Net products. This is particularly true of the following areas: Positions Vacant, Property and Cars.
No authoritative overview exists of the Norwegian advertising market. The following figures must therefore be used as an indication of the size of the various advertising media.
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Figure 6.4 Total advertising market in norway
9 000
8 000
7 000 Special interest mags. 6 000 Internet Billboards 5 000 Cinema Radio 4 000 TV Weekly magazines 3 000 Freesheets Newspapers 2 000
1 000
0 19 19 19 19 19 19 19 19 19 90 91 92 93 94 95 96 97 98
Sources: Carat Media, Norwegian School of Management (BI), Norsk Reklame-Statistikk, annual reports
Press subsidies The main objectives of the press policy are to:
· contribute to the continued high consumption of newspapers · contribute to the publication of newspapers in as many places as possible wherever there is a basis for it · contribute to the publication of nationally distributed opinion-forming newspapers · contribute to local newspaper competition in as many places as possible
These are the most important policy tools: VAT exemption for newspapers, press subsidies for newspapers particularly exposed to competition, low postage rates, and dispersed government advertising so that readers are not forced to choose certain newspapers.
Exemption from VAT is an indirect form of support benefiting newspapers in general, and amounts to almost NOK 1 billion in lost state revenues based on the current VAT rate.
Press subsidies are a direct form of support that takes into account the market situation for each newspaper. This support will total NOK 188 million in 1998, against NOK 202 million in 1997. A-pressen newspapers received more than NOK 98 million in press subsidies in 1997 and government advertising in Norwegian papers amounted to NOK 35 million.
Newspapers eligible for press subsidies are small monopoly or No. 1 newspapers with a circulation between 1,000 and 6,000, highly competitively exposed No. 2 newspapers and nationally distributed opinion-forming newspapers. No. 1 or monopoly newspapers receive fixed rates, which increase in steps according to frequency of publication. No. 2 newspapers receive a subsidy calculated on the basis of circulation and the number of editions per year. No.
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2 newspapers in major cities (Oslo, Bergen, Trondheim and Stavanger) receive a higher rate (rate I) than other No. 2 newspapers. The nationally distributed opinion-forming newspaper receives rate I, plus a supplement.
Norway’s total press subsidies are set in the state budget. The distribution of press subsidies is determined by the realised circulation figures by the newspapers entitled to subsidy. Thus for A-pressen there are uncertainties relating to political decisions and the performance of other newspapers.
Printing market The main feature of the rotary printing market in Norway is that the large newspaper players Schibsted, A-pressen and Orkla produce their own newspapers in their own printing companies. In addition, the players have differing ambitions of competing in the external market which includes printing other daily newspapers and civilian printing. No authorised description of the total printing market in Norway exists. The civilian printing market is believed to total almost NOK 1.2 billion per year. Civilian printing is dominated by newspapers and printed materials for shopping centres and chain stores, as well as newspapers and printed materials and publications for organisations, associations and clubs.
Quality, price, volume and speed standards have risen noticeably in both the newspaper and civilian printing markets. Newspapers are seeing increased demand for colour advertisements from their customers. This requires greater capacity to print colour advertisements in the printing plants and higher printing quality standards for the advertisements. Effective packing facilities are another competitive factor. Inserts, segmentation and selective addressing options provide enhanced competitive power.
In the civilian printing market there is moreover a tendency to demand increasingly better paper grades (glazed paper) and bleed printing. In Eastern Norway the stiff competition between shopping centres and chain stores requires ever-higher print runs and ever-shorter delivery times. MØT is equipped to deal with customers’ new demands.
The market outside Norway could prove interesting over time, and the same applies to “Norwegian” printing jobs placed with overseas printing plants. Norwegian customers annually place NOK 600 million worth of printing jobs overseas.
The vast majority of A-pressen’s printing operations consists of printing its own newspapers as cost-effectively as possible. In addition, most of the companies operate in their civilian printing markets. Media Øst Trykk wants to win significant market share in this market.
6.2 TV market
Viewer market The national market Until 1981 the viewer market was extremely simple. Norway had only one TV channel, NRK. Those who lived close enough to Sweden could receive the two Swedish channels, but this amounted to a small percentage of TV consumption. After the 1981 general elections Kåre Willoch formed a Conservative Party government with Lars Roar Langslet as Minister of Cultural Affairs. Almost immediately, Langslet opened up the airwaves in the sense that the government allowed experimentation with local TV and radio and TV broadcasts distributed via satellite. The number of channels available gradually increased throughout the ‘80s with the advent of Sky and Super channels from abroad, the first Norwegian local TV channels, and the start-up of TVNorge. TV 3 appeared on Norwegian screens in 1987 and TV 2 arrived in 1992.
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Figure 6.5 Daily viewing minutes
160
140
120 Other 100 TV3 80 TVNorge TV2 60 NRK 40
20
0 1992 1993 1994 1995 1996 1997
Source: NRK
The most important trends in the viewer market in recent years is that people watch more TV, and that TV 2 is winning viewers from NRK. TVNorge and TV 3 have also taken viewer shares from NRK.
The bulk of TV viewing is concentrated on the channels with national coverage. These can be divided into four groups.
The two majors NRK 1 and TV 2 are both full-service channels with a broad range of programming, solid positions and substantial viewership. The channels are distributed primarily via the terrestrial network (also via satellite) and can be received by 99.5 and 95 per cent respectively of the population.
The two TVNorge and TV 3 broadcast mostly light entertainment including sitcoms, intermediates chat shows, etc. and have moderate viewership. TVNorge is distributed via satellite and the local stations’ terrestrial network, and reaches 81 per cent of the population. TV 3 operates out of London and is distributed via satellite and the terrestrial network. Its reach is 60 per cent.
The special NRK 2 broadcasts programmes for sophisticated TV viewers. The channel interest broadcasts via satellite and cable and can only be received by 60 per cent of NRK 2 the population.
Others This group includes international channels and pay-TV. These channels, which include CNN, Eurosport, Discovery, TCC, etc. broadcast niche programmes. The pay-TV channels are mainly advertising-free film channels such as Filmnet and TV 1000. These channels can only be received via satellite or cable and reach up to 60 per cent of the population, depending on whether the cable companies include them in their packages.
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The local market Local TV programmes have been broadcast in Norway since 1980, but it was not until the 1995 round of concessions that the market was perceived as interesting by professional players. The industry was given better operating conditions inter alia through larger licence areas. Local TV is still under development, but on the whole its popularity is growing. Local TV has achieved extremely good viewership in some areas.
Four hundred thousand Norwegians watched local TV once a week or more in the spring of 1998, figures from Norsk Gallup show. This is a pronounced increased from earlier measurements. TVØstfold has the most viewers. An average of around 77,000 persons watched TVØstfold at least once a week in the period April to June this year. This is equivalent to 38 per cent of the population in the area.
TVHordaland has the second-highest viewership with 74,175 viewers, followed by TVTrøndelag with 60,026 viewers.
Advertising market The TV advertising market in Norway exploded after TV 2 came on the air in 1992. The TV commercial market, after discounts, totals more than NOK 1.5 billion per year. Growth has been extremely strong in recent years, primarily because TV 2 has significantly increased its production of gross rating points (GRP). Not only has the volume increased, but the prices per GRP have also increased significantly as a result of demand exceeding supply for most of the year.
Figure 6.6 Distribution of TV commercials
1800 1600 1400 1200 TV3 1000 TVNorge 800 TV2 600 400 200 0 1992 1993 1994 1995 1996 1997
Source: Annual reports
TV 2 has become the major player in the advertising market. Once again, the reason is found in the advertisers’ tendency to choose the leading channel to air their commercials. Until 1996, TVNorge’s revenues grew slowly, but are now on the rise as the result of greater distribution and co-operation with TV 2. Its only real competitor for the moment is TV 3. This channel broadcasts from the UK under British advertising rules, which gives it certain advantages compared to TV 2 and TVNorge. Under British rules, the channel can broadcast commercials in the middle of programmes, and commercials aimed at children.
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The local TV commercial market is still underdeveloped for several reasons. Local advertisers have to get used to the new medium, very few have materials ready to put on the air, the capacity to produce sufficiently inexpensive advertising spots has been limited, and marketing to local advertisers has not been aggressive enough.
6.3 Electronic media market
The market for building infrastructure The use of electronic media has exploded in recent years. Heavy investments are a feature of the market despite the fact that very few have made money on their Internet ventures. Media companies, financial institutions, public agencies and many other operations are in the process of establishing their own Internet products. Times have been good for solution builders in a seller’s market with little competition.
The consumer market The market for content services has grown more slowly than expected. There is little willingness to pay for access to content and advertising volumes are still small. 1998 and 1999 will have much to say about whether the Internet and electronic media will break into the mass market. This will be crucial for the development of the advertising market. It is still an open question if it will be profitable in broad mass market services. On the other hand, it looks as if niche services with the capability to dominate a well-defined niche will turn a profit.
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7. Financial information
7.1 Summary of the most important accounting policies
General The consolidated accounts for A-pressen ASA and subsidiaries are rendered in accordance with Norwegian accounting laws and generally accepted accounting practice, and are based on the fundamental principles of historical cost, comparisons, continued operations, congruence and prudence. No changes have been made in the Group’s accounting policies or in the classification of accounting items at 31 August 1998 with relation to previous years. Acquisition and sale of subsidiaries and associated companies are posted in the profit and loss account in the consolidated accounts for the part of the year they were part of or associated with the Group, respectively.
Consolidation of subsidiaries The consolidated accounts include A-pressen ASA and subsidiaries in which A-pressen ASA has a controlling interest. Normally, these are companies in which A-pressen either directly or indirectly via subsidiaries owns more than 50 per cent of the voting shares. The consolidated accounts are prepared according to the acquisition method and show the Group as a unit. In the consolidated accounts, all outstanding accounts and inter company transactions are eliminated.
The cost price of shares in subsidiaries is eliminated against the equity capital at the time of acquisition. Added value beyond the underlying equity in subsidiaries is distributed to the assets to which the value added is connected. The part of the cost price which cannot be ascribed to specific assets represents goodwill. Goodwill is included in the consolidated accounts as an intangible asset and is subject to linear depreciation over its estimated economic lifetime, though by at least 5 per cent per year. The book value of goodwill is written down if the actual value is lower and the decline in value is not assumed to be of a temporary nature. For subsidiaries in which A-pressen ASA does not own 100 per cent of the shares, the other shareholders’ stakes are shown as minority interests. The minority share of the profit after taxes is shown on a separate line in the profit and loss account.
Associated companies Ownership interests in companies where the Group has significant influence are treated according to the equity method. These are normally companies in which the Group owns between 20 and 50 per cent. This means that the Group’s share of the result for the year after tax and depreciation of any value added are posted on a separate line in the profit and loss account. Value added in the associated companies is treated according to the same principles as those for consolidating subsidiaries. In the consolidated balance sheet shares in associated companies are entered as fixed assets at the original cost price to which accumulated profit shares less dividend are added.
Revenues from advertising, non-subscription sales and subscription sales Advertising revenue is reduced for given discounts. Newspaper subscriptions are invoiced in advance. The sale of goods is taken to income at the time of delivery. Prepaid subscriptions are accrued in the balance sheet as current liabilities. Non-subscription sales are reduced by the cost of returned newspapers. Commissions on sales are treated as other costs.
Press subsidies Press subsidies are distributed according to criteria in the Regulations of 7 November 1996 relating to production subsidies for daily newspapers, with later amendments of 17 February 1997. The purpose is to promote and maintain a differentiated press in Norway. The main
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criteria for receiving press subsidies are that the newspaper must have an editor-in-chief and contain general news and current affairs coverage. Press subsidies are granted to all newspapers with a circulation of between 1,000 and 6,000 copies, and to newspapers that are not the biggest at their place of publication providing they fulfil the criteria in the Regulations. The press- subsidy programme is managed by the Ministry of Cultural Affairs via the National Media Authority. Newspapers apply for press subsidies each year and the funds are distributed on the basis of the Storting’s appropriations based on the previous year’s circulation of the newspapers that are entitled to subsidies. Press subsidy is paid quarterly, and is taken to income in its entirety the year it is received.
Principles for charging to profits A cost is charged to profits at the time it accrues. Received legal actions are charged to profits if the loss can be quantified and is more likely to be incurred than not.
Assessment of assets and liabilities Claims and debts connected with goods circulation are classified as current assets and current liabilities, respectively. Assets and liabilities not connected with goods circulation are classified as current assets and current liabilities if they fall due for payment within one year after the date of closing of accounts. Other assets and liabilities are classified as fixed assets and long-term debts, respectively. The first year’s repayment of long-term debt is classified as long-term debt.
Trade receivables Trade receivables are valued at nominal value at balance-sheet date less allocation to future foreseeable loss.
Stock-in-trade The stock-in-trade consists mainly of newsprint with a very fast turnover rate. This stock-in- trade is valued at cost price or actual value, whichever is lower. Deduction is made for dead stock.
Shares Shares intended for permanent ownership are entered in the balance sheet as fixed assets and valued at cost price. Depreciation for assumed permanent decreases in value is undertaken according to individual evaluation of the investment.
Fixed assets Fixed assets are valued at historical cost after deductions for business depreciation. Business depreciation is linear and is set according to an assessment of the technical and economic lifetime of each asset.
The following depreciation periods are used: Goodwill is depreciated over 5-20 years Movable operating assets are depreciated over 3-15 years Buildings and plants are depreciated over 3-50 years
Direct maintenance of operating assets is posted to operating costs, while expenses for upgrading/improving are added to the cost price of the operating assets and depreciated accordingly.
Profit or loss on the sale of fixed assets is calculated as the difference between the sales amount and book value. Said profits are posted to “Other operating revenues” and losses under “Other operating and administrative costs.”
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Taxes Taxes consist of payable taxes and charging of acquired deferred tax credits as an expense. Deferred tax and tax credits are assessed.
Pensions Pension costs and net pension obligations are included in the profit and loss account and balance sheet according to the Preliminary Norwegian Accounting Standard for Pension Costs. The pension commitments are calculated systematically over the average remaining earning time based on the employee’s age, period of service, salary and future adjustment of salary, discount rate, future return on pension funds and actuarial assumptions of mortality and voluntary retirement. Pension funds are valued at actual value.
Pension funds and the accrued obligation are valued using estimates from the closing of accounts which are corrected each year in accordance with actuarial calculations.
Subsidiaries amortise deviations and estimate/plan changes according to the Standard’s equalisation method. Accordingly, an accumulated effect exceeding 10 per cent of the greatest value of the pension obligations and pension funds is posted systematically over the average remaining earning period.
7.2 Key financial figures for A-pressen Group
7.2.1 Profit and loss account
NOK 1 000 1.1-31.8.98 1.1-31.8.97 1997 1996 1995 Operating revenues Circulation revenue 485 801 453 301 692 173 638 668 598 957 Advertising revenue 671 635 607 857 979 130 862 196 776 552 Printing revenue 127 369 130 666 206 110 226 645 222 744 Government subsidies 59 634 62 737 98 428 99 354 96 402 Other operating revenues 114 846 144 529 212 469 124 577 99 026 Total operating revenues 1 459 285 1 399 090 2 188 310 1 951 440 1 793 681
Operating expenses Cost of materials 215 377 213 090 336 221 323 617 298 177 Salaries, wages and other personnel costs 697 829 637 725 1 014 586 905 766 824 263 Other operating and administrative costs 411 335 375 806 604 361 504 253 472 951 Ordinary depreciation 92 814 85 647 123 133 103 913 89 480 Bad debts and guarantees 2 594 4 702 6 961 11 099 12 376 Total operating expenses 1 419 949 1 316 970 2 085 262 1 848 648 1 697 247
Operating profit 39 336 82 120 103 048 102 792 96 434
Share of earnings from associated companies 2 766 1 343 - 17 169 13 413 4 052
Financial items Financial income 5 459 5 597 9 388 17 027 14 553 Financial expenses - 32 229 - 32 270 - 49 703 - 42 035 - 24 209 Net financial items - 26 770 - 26 673 - 40 315 - 25 008 - 9 656
Profit before extraordinary income 15 332 56 790 45 564 91 197 90 830
Extraordinary income 0 0 0 0 10 000
Profit before tax and minority shareholders 15 332 56 790 45 564 91 197 100 830 Taxes -4 194 -19 361 - 27 190 - 24 141 - 8 070 Minority shareholders’ stake -850 -852 -996 864 - 941
Net profit 10 288 36 577 17 378 67 920 91 819
54 A-PRESSEN PROSPECTUS
7.2.2 Balance Sheet
(Beløp i 1 000 kroner) 31.08.98 31.08.97 31.12.97 31.12.96 31.12.95 Assets Current assets Cash and bank deposits 128 805 160 880 148 695 253 576 211 939 Trade recievables 179 231 180 914 204 834 184 135 173 950 Other short term recievables 65 221 82 352 47 880 45 039 25 309 Stock-in-trade 12 185 17 269 17 152 18 358 18 347 Total current assets 385 442 441 415 418 561 501 108 429 545
Fixed assets Shares in associated companies 578 529 602 098 594 836 396 698 369 630 Other shares 18 073 20 287 16 484 35 907 11 177 Long-term recievables 22 381 51 797 22 075 35 881 23 336 Goodwill 194 657 149 110 203 121 139 306 80 406 Machinery and fixtures 435 536 319 660 440 078 305 526 248 188 Buildings, sites and dwellings 356 497 406 273 350 983 356 392 227 524 Total fixed assets 1 605 673 1 549 225 1 627 577 1 269 710 960 261 Total assets 1 991 115 1 990 640 2 046 138 1 770 818 1 389 806
Liabilities and shareholdes' equity Current liabilities Trade creditors 69 230 73 620 92 522 87 078 77 152 Bank overdraft 4 510 9 247 3 658 5 447 1 046 Payable VAT, social security, tax deducions, etc. 156 886 150 169 185 530 157 968 138 830 Taxes payable 18 331 32 885 23 851 19 755 8 070 Provisions for dividend 525 304 7 693 9 436 8 467 Other short-term debt 205 186 194 347 245 000 203 047 180 473 Total current liabilities 454 668 460 572 558 254 482 731 414 038
Long-term liabilities Long-term debt 864 105 819 432 825 036 635 319 395 518 Subordinated loans 901 2 072 1 142 1 492 800 Net pension obligations 22 790 43 243 26 716 40 608 46 532 Total long-term liabilities 887 796 864 747 852 894 677 419 442 850
Minority interests 32 312 28 560 30 454 15 978 9 338
Shareholders' equity Share capital 144 254 144 044 144 044 144 044 142 522 Other equity capital 472 085 492 717 460 492 450 646 381 058 Total shareholders' equity 616 339 636 761 604 536 594 690 523 580 Total liabilities and shareholders' equity 1 991 115 1 990 640 2 046 138 1 770 818 1 389 806
Guarantees n.a. n.a. 8 809 35 576 56 393 Secured debts n.a. n.a. 122 547 620 824 365 719
7.2.3 Comments on the profit and loss account and the balance sheet at 31 August 1998
Regarding the value of TVNorge in TV 2’s balance sheet In connection with TV 2’s purchase of shares in TVNorge, a goodwill item was capitalised in TV 2’s books, which at 31 August 1998 stood at NOK 275 million. The goodwill was valued on the basis of a long-term strategic assessment of the company and its position, and will be depreciated over 20 years.
The development of profits in TVNorge has been weaker than expected in 1998. The statement regarding limited auditing of TV 2 at 30 June 1998 from Arthur Andersen & Co. notes that the audit did not include the company’s investment in TVNorge AS. It cannot, therefore, be ruled out that this item may be reconsidered in connection with the adoption of TV2’s annual reports and accounts for 1998.
Publishing rights and goodwill
55 A-PRESSEN PROSPECTUS
There is agreement between the Oslo Stock Exchange and A-pressen regarding reclassification of the term that the newspaper industry calls publishing rights. The proposal means that the part of the acquired added-value/goodwill that can be referred to publishing rights is to be classified as a brand name. This is also the legal definition.
A-pressen will implement this in the annual reports and accounts for 1998. This means that the Group’s balance sheet will provide a more correct picture of the operations and thereby be more informative. Each acquisition will be considered individually. Depending on how large a portion of A-pressen’s present goodwill is to be classified as publishing rights, the effect on the Group’s annual profits will be an improvement in the order of NOK 3.5 to 7.0 million in reduced depreciation.
Contractual pension (AFP) Contractual pension is an early-retirement scheme that was established in connection with the pay negotiations between the Norwegian Federation of Trade Unions (LO) and the Confederation of Norwegian Business and Industry (NHO). In 1997 the scheme was improved for all employees covered by the pay and conditions agreement.
The AFP scheme represents an accounting obligation, and the accounting must be treated in accordance with the Provisional Norwegian Accounting Standard on pension costs. A-pressen has undertaken calculations that show that the profit effect of AFP is an annual increased pension cost of between NOK 3 and 6 million. Its effect for 1998 will be taken to the accounts at 31 December. This is justified in terms of the fact that the calculations so far are afflicted with uncertainty and are therefore not sufficiently precise to be included in the accounts at 31 August 1998.
The accounting of the AFP scheme will follow the provisional accounting standard and statements by the Oslo Stock Exchange.
56 A-PRESSEN PROSPECTUS
7.2.4 Cash flow The Group uses the indirect model for presenting its cash flow statement in accordance with the Preliminary Norwegian Accounting Standard for Cash Flow Statements. The indirect model shows gross cash flows from investing and financing activities, while the accounting result is reconciled with net cash flow from operating activities.
A-pressen Group, Cash flow statement (NOK 1 000) 1997 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxes and minority shareholders 45 564 91 197 100 830 Taxes paid for the period -21 848 -7 626 -5 757 Ordinary depreciation 123 133 103 913 89 480 Profit/loss of sale of fixed assets -19 908 -10 496 -4 106 Profit/loss on associated companies 17 169 -13 413 -4 052 Change in stocks, debtors and creditors 1 996 11 860 -6 974 Change in accrual items -33 208 24 820 2 604 Items classified as investing or financing activities 14 023 5 970 -6 128 Net cash flow from operating activities (a) 126 921 206 225 165 897
CASH FLOWS FROM INVESTING ACTIVITIES Incoming payment from sale of fixed assets 45 922 12 165 9 233 Outgoing payment for purchase of fixed assets and goodwill -280 478 -301 656 -194 728 Incoming payment from sale of shares and units 110 451 13 408 0 Outgoing payment for purchase of shares and units -335 824 -46 789 -364 616 Incoming payment from sale of other investments 340 130 13 734 Outgoing payment for purchase of other investments -584 -34 118 -2 988 Net cash flow from investing activities (b) -460 173 -356 860 -539 365
CASH FLOWS FROM FINANCING ACTIVITIES Incoming payment when taking up new long-term debt 1) 687 163 258 754 474 717 Incoming payment when taking up new short-term debt 333 269 1 900 Outgoing repayment of long-term debt 1) -388 967 -38 170 -278 008 Outgoing repayment of short-term debt -1 490 -1 167 0 Net change in bank overdraft -35 796 4 401 372 Outgoing payment of interest -44 771 -29 263 -29 249 Incoming payment of equity capital 589 5 746 221 216 Dividends received from associated companies 20 746 0 0 Dividends paid -9 436 -8 298 -5 416 Net cash flow from financing activities (c) 228 371 192 272 385 532
Net change in cash flows through the year (a+b+c) -104 881 41 637 12 064
Cash balances at beginning of year 253 576 211 939 199 875 Cash balances at end of year 148 695 253 576 211 939
1) In 1997 the Group changed bankers and signed a long-term syndicated drawing facility totalling NOK 750 million, of which NOK 670 million had been drawn at 31 December 1997. In addition, NOK 389 million was repaid to former lenders.
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7.2.5 Key Group figures 1.1- 1.1- 1997 1996 1995 31.8.98 31.8.97
Operating margin 2.7 % 5.9 % 4.7 % 5.3 % 5.4 % Return on total assets n.a. n.a. 5.0 % 8.4 % 10.5 % Return on equity n.a. n.a. 3.0 % 11.7 % 21.5 % Equity ratio 32.6 % 33.4 % 31 % 34.5 % 38.3 % Book equity per share (NOK) 85.5 88.4 83.9 82.6 73.5 Profit per share after extraordinary 1.4 5.1 2.4 9.5 21.0 items (NOK) Profit per share before extraordinary 1.4 5.1 2.4 9.5 18.8 items (NOK) Dividend per share (NOK) n.a. n.a. 1.0 1.2 1.1 Cash flow per share (NOK) 12.4 15.1 20.0 24.6 39.3 Total shares at end of period/year 7 212 688 7 202 210 7 202 210 7 202 210 7 126 110 Average number of shares 7 203 520 7 202 210 7 202 210 7 164 160 4 362 119
Operating margin: Operating profit / operating revenues Return on total assets: (Result before extraordinary items + financial expenses) / Average total assets Return on equity: (Net profit + minority share – extraordinary items) / Average shareholders’ equity including minority interests Equity ratio: Shareholders’ equity including minority interests / Total assets Book equity per share: Book equity /number of shares at end of year Profit per share: Net profit for the year – extraordinary items / Time-weighted average number of shares Cash flow per share: (Net profit for the year + ordinary depreciation – extraordinary items + taxes – taxes payable) / Average number of shares
7.3 Board of Directors’ report as per 2nd tertiary 1998 (issued 7 October 1998)
The Group posted pre-tax earnings of NOK 20.2 million for the second four-month period, as opposed to NOK 38.3 million in 1997. The operating profit for the second period amounted to NOK 39 million as opposed to NOK 67.7 million in 1997. Pre-tax earnings for the first eight months of 1998 amounted to NOK 15.3 million as opposed to NOK 56.8 million in 1997. Earnings include a NOK 7.5 million write-down on electronic media. The changes are due inter alia to gains on asset sales being included in last year’s accounts, and that the negative trend for the Storbyavisene (City Newspapers) continues in the second period. The Group is in the process of reducing its involvement in several of these newspapers.
Events The newspaper Kvinnheringen at Husnes was purchased on 1 September, and will be included in the accounts for last period. The newspaper is published three times a week and has a daily circulation of 4,804 copies. Kvinnheringen covers 73 per cent of the households in the municipality of Kvinnheringen.
The Board of Directors has approved an agreement with the newspaper Hadeland which secures a directed issue of shares valued at NOK 5 million which will give the Group a 25 per cent ownership in the newspaper company. Existing shareholders will at the same time receive an offer to sell their shares. Hadeland has a daily circulation of 7,553 copies and is published in the town of Brandbu.
A-pressen has approved a letter of intent to merge the two Internet companies New Media Science AS and Digital Hverdag AS. A-pressen owns 51 per cent of the latter company and will
58 A-PRESSEN PROSPECTUS
have approximately 20 per cent ownership in the merged company. The new company will be a strong market leader within the Norwegian Internet sector.
A-pressen has decided to invest in the Russian newspaper and printing market together with The European Bank for Reconstruction and Development (EBRD). Investments in Russia will take place in the name of A-pressen Eastern Europe AS (AEE), which is 65 per cent owned by A-pressen ASA and 35 per cent by EBRD. Progress has been made on several projects and the first ones are set to start early 1999. Investments will take place in steps. A-pressen’s NOK 40 million share of the planned investments, will mainly be the transfer of printing equipment. A framework agreement for wide-ranging co-operation between A-pressen ASA, the media group Komsomolskaya Pravda-Group To-day (KP-GS) and regional Russian investors, which will also contribute capital to the planned projects.
Finances The Group’s turnover at 31 August was NOK 1,459 million, 4.3 per cent higher than last year. The turnover for the second period is in line with last year’s, which is explained by gains on asset sales being included in 1997. The underlying growth rate (for companies that are directly comparable) for the turnover at 31 August is calculated at 1.5 per cent.
The Group’s total operating cost, at 31 August was NOK 1 420 million, 7.8 per cent higher than same time last year. The underlying growth rate (for companies that are directly comparable) for costs at 31 August is calculated at 4.3 per cent. The increase in the second period, in isolation, is 4.3 per cent compared to last year.
The Group’s share of earnings from associated companies was for the second period negative with NOK 3.9 million, compared to a negative NOK 11 million in 1997. The numbers cannot be compared directly due to the facts that Nyhetskanalen was included in the second period of 1997, and the Group’s ownership in TV2 was increased in the second period last year. The Group result is after eight months weaker than expected, and the Board of Directors finds this disappointing.
The Group's equity ratio increased from the end of the first period by 2.1 per cent to 32.6 per cent. The Group’s liquidity reserves totalled NOK 190 million at 31 August, while net interest- bearing debts amounted to NOK 740 million.
Newspapers In the business area Newspapers, Local Newspapers have seen a total increase in earnings, while it is still slow going for the City Newspapers. The operating result for the newspaper business area was NOK 46.0 million, which is NOK 1.2 million less than for same period last year. The total circulation for the newspapers increased by 0.9 per cent, which in its entirety is due to the fact that the circulation of Dagsavisen increased with approximately 3 800 copies, compared with last year. The increase for Dagsavisen is almost 10 per cent. There are only minor changes for the other newspapers.
LOCAL NEWSPAPERS Local newspapers increased their operating revenues by 8.4 per cent to NOK 473.5 million and the operating profit increased by 9.9 per cent to NOK 50.1 million, compared with the second period last year. The growth in the advertising income is still good, even though it is probably declining. There are great regional differences as well. The advertising income for Local Newspapers was 9.3 per cent higher for the second period, compared with second period last year. The underlying growth rate (for companies that are directly comparable) is at 6.1 per cent.
59 A-PRESSEN PROSPECTUS
STORBYAVISENE (CITY NEWSPAPERS) Compared to last year, the second period decline in the operating result for the City Newspapers is NOK 5.7 million. The accumulated loss for the City Newspapers is after eight months NOK 15.3 million. It is mainly the investment in the Dagsavisen, with i.a. the introduction of Sunday editions, that contributed to the negative development.
The turnover for the City Newspapers increased from the second period last year by 2.9 per cent to NOK 158.2 million. Advertising income increased for the City Newspapers by 3.5 per cent. Costs increased by 6.6 per cent in the second period, compared with last year.
In 1996, Bergensavisen, Dagsavisen, Fremtiden, Rogalands Avis and Telemarksavisa were separated into a subsidiary group, Storbyavisene AS (City Newspapers). The difference in circulation compared to the competitors is so substantial, with the exception of Telemarksavisa, that it is not possible to operate these newspapers without considerable government support. The direct financial support has in recent years been considerably reduced. The competitive situation for these companies creates serious management difficulties, mainly because cost forecasts are so unpredictable. In the light of these circumstances the Board has decided to reduce its financial interests in these newspapers, with the exception of Telemarksavisa, which is being sold to A- pressen Avis og Trykk AS (wholly owned by A-pressen ASA).
Furthermore, the Board of Directors has adopted an ownership split between Dagsavisen and A-pressen ASA. This will be done with accounting effect no later than 1 January 1999. Work is being done to transfer the company to a separate foundation. For the remaining three newspapers, Bergensavisen, Rogalands Avis and Fremtiden, the process of changes will take longer time, but will be clear by mid-1999.
Printing Within the Printing business area, the process of reorganising the printing plants of Eastern Norway has been concluded, and all newspaper production has been transferred to Media Øst Trykk AS in the City of Lillestrøm. The operating result for this business area was for the second period NOK 7.8 million, compared with NOK 7.0 million in 1997. Approximately NOK 3.5 million has been charged as an expense in the second period through the realisation of a printing installation.
Media Øst Trykk has reached a settlement with the supplier of the packing machinery. The lump sum constitutes NOK 4 million, and has been taken to income for second period. The supplier will also pay a weekly compensation of NOK 150 000 until the packing machinery is considered fully delivered.
Problems with the new printing plant are increasing the operating costs and are still reducing the earnings compared to expectations. This forms the basis for the compensation claim against the supplier of the equipment.
TV and electronic media The TV2 Group posted a profit of NOK 55.7 million after tax, which is NOK 21.8 million less than for the same period in 1997. The decline of the result is due to losses in associated companies and newly started activities. The main channel is still progressing positively, even though costs, especially connected to copyrights, are under severe pressure. The process of developing a programme format for TVNorge has been successful, and will contribute to the increased access to commercial viewers in Norway. It will increase the total advertising capacity, and contribute to a positive result development for TVNorge.
60 A-PRESSEN PROSPECTUS
Several of the local TV companies are still showing result development compared to last year, even though the contribution from the companies still are negative. The Group’s objective is still to have these companies in a financial balance by the end of next year. The Group has in this period seized control over the majority of shares in TV Telemark.
The business area Electronic Media has so far in 1998 had a negative operating result of NOK 4.0 million. The cautious involvement in this area continues, but continuous corrections and changes to the strategy will take place as the market changes. The merger between Digital Hverdag and New Media Science will make this company into the leading Norwegian player in its business area, and could form the basis for international involvement.
Future prospects Newspaper circulation is still stable, even though the picture varies from newspaper to newspaper. There are still no market signals of expected reduced number of newspaper readers.
The growth rate in advertising for the newspapers is decreasing, and the increase in the interest rate as well as the turbulent financial markets are expected to have a negative effect on the demand in the third period, and probably well into 1999. A decrease in the advertising turnover can no longer be excluded.
Television has seen a strong growth in the advertising turnover, and this is expected to continue through this year. TV2’s group results are, however, affected in the short term by the loss in TVNorge and in some newly started activities. It is therefore expected that the result of the TV2 Group will be slightly weaker than in 1997.
The Board of Directors has in the strategy plan of the Group set the objective of bringing the profitability of A-pressen up to the level of comparable companies. The future development of income will probably not be inducive for reaching this objective without considerable improvements in productivity. Some resources have therefore been put into surveying the usage of resources within the newspapers in order to identify means to increase the efficiency and implement structural changes. The objective in the short term and including year 2000 is that personnel costs should not increase for the Group’s newspapers as a whole. Personnel costs amount to almost half the total operating costs. This will result in a reduction of the number of employees.
The Board of Directors is not pleased with the development of the result in 1998, and the year will be considerably weaker than expected and used as basis for the economical plans for the year.
7.3.1 Events since the publishing of the Board of Directors’ report for the 2nd tertiary 1998 A-pressen has signed an agreement to purchase 100 per cent of the shares of the company Lofoten Kommunikasjon AS, owner of the newspaper Lofot-Tidende, which is published in Leknes. Lofot-Tidende is published two days a week, has a weekday circulation of 5,225 and complements A-pressen’s strong marketing co-operation in Northern Norway.
7.4 Comments on profit and balance sheet developments for the three- year period 1995-97
The Group’s operating margin during this period dropped from 5.4 per cent in 1995 to 4.7 per cent in 1997. One of the reasons is the poor performance of the Storbyavisene (City Newspapers), and that start-up costs for local TV operations are charged to the accounts on a continuous basis.
61 A-PRESSEN PROSPECTUS
The Group’s acquisition of operations during the period caused the total balance sheet to increase from NOK 1.4 billion to just over NOK 2.0 billion. This has also caused higher financial expenses during the period in question.
1997 financial year Main results. The Group’s profit before extraordinary items and taxes was reduced from NOK 91.2 million to NOK 45.6 million, primarily due to losses on associated companies, including Nyhetskanalen Oslo ASA. The operating profit for 1997 was NOK 103 million, unchanged from 1996. The Group’s share of TV 2 AS’ profits totalled NOK 4.7 million, after deducting NOK 19 million for goodwill.
Revenue factors. Both circulation and advertising revenues showed good progress compared to 1996. The underlying growth from 1996 is 3.5 and 7.3 per cent respectively. Revenues from this area fell by 9 per cent in the wake of the elimination of unprofitable printing operations. The underlying growth was, however, positive, at 5.5 per cent.
Cost factors. Of the NOK 336.2 million in material costs, newsprint accounted for NOK 157.7 million, against NOK 178.5 million in 1996. The reduction in newsprint costs for 1997 thus came to 11.6 per cent.
Approximately NOK 15 million was charged to the accounts in connection with the structural changes in Media Øst printing operations. This includes both the restructuring costs stemming from the closure of the printing plants at Skøyen, Kongsvinger and Sarpsborg, and start-up costs connected to the new printing works in Lillestrøm.
Dagsavisen Arbeiderbladet and Demokraten launched Sunday editions in 1997. C. NOK 7 million was charged to the accounts for their start-up.
The total loss on Nyhetskanalen Oslo ASA (associated company) was NOK 24 million. This also includes losses that occurred in 1998 until its closure. In addition, the accounts show a charge of NOK 18 million related to other activities in local TV, of which consolidated companies account for NOK 16 million.
Capital situation.The Group’s cash flow from operating activities came to NOK 127 million, down NOK 79 million compared to 1996. The reduction in 1997 was mainly due to changes in accrual items and higher taxes. A-pressen made net investments totalling NOK 460 million in 1997.
The Group’s liquid reserves, consisting of liquid assets, short-term placements and unutilised drawing rights, amounted at 31 December to NOK 265 million, while net interest-bearing debt was NOK 680 million.
1996 financial year Main results. The Group’s 1996 profit before extraordinary items and taxes came to NOK 91 million, unchanged from 1995. The profit after tax was, however, down from the previous year because the Group had moved into a tax liable position and because the 1995 accounts contained NOK 10 million in extraordinary income. The Group’s share of the return from its investment in TV 2 amounted to NOK 8.8 million after deducting for goodwill.
Revenue factors. Both circulation and advertising revenues showed healthy progress compared to 1995. Printing revenues increased only marginally in 1996, despite acquisitions. The poor performance in this area was partly the result of the elimination of unprofitable operations plus a substantial decline in the turnover of the book printing plant Østlands-Postens Boktrykkeri. Other operating revenues rose by 25.8 per cent from 1995 to 1996. The growth in revenues was
62 A-PRESSEN PROSPECTUS
because of higher distribution revenues, new smaller operations and the realisation of capital assets.
Cost factors. Of materials costs amounting to NOK 323 million, newsprint purchases accounted for NOK 178 million, compared to NOK 156 million for 1995. The increase in newsprint costs for 1996 was thus 14.2 per cent. A one per cent change in the price of newsprint changes the Group’s net newsprint costs by c. NOK 1 million. The price of newsprint went down five per cent from 1 September 1996. In 1997 it dropped a further two times, by altogether 14.9 per cent. Operations took a charge of NOK 8.4 million for the start-up of local TV.
Capital situation. The Group’s cash flow from operations came to NOK 206 million, an increase of NOK 40 million from 1995. The increase was mainly due to contributions from new operations. A-pressen invested NOK 375 million in fixed assets in 1996.
At 31 December 1996 the Group’s equity ratio was 34.5 per cent, down from the end of 1995, but higher than before the share issue the same year. The Group’s disposable liquidity, consisting of liquid assets, short-term placements and unutilised drawing rights amounted at 31 December to NOK 479 million, while net interest-bearing debt was NOK 390 million.
1995 financial year Main results. A-pressen’s profits improved considerably from 1994. The Group’s pre-tax profits increased by 61.6 per cent to NOK 100.8 million. The net profit after taxes and minority interests came to NOK 91.8 million, up 56.5 per cent from 1994. The main reason for the improved profits was higher advertising and printing revenues, which are partly conditioned by the state of the economy.
Revenue factors. The Group’s operating revenues increased by 18.7 per cent to NOK 1,793.7 million. Operating revenues in businesses acquired in 1995 (Lofotposten and Østlands-Posten) amounted to c. NOK 149 million.
Circulation revenues increased by NOK 57 million, or 10.5 per cent (4.4 per cent adjusted for acquisitions), which showed that A-pressen’s newspapers obtained slightly more from the subscription market than the general price increase. Advertising revenues came to NOK 776.6 million, equivalent to a growth rate of 17.8 per cent compared to 1994. Underlying growth was 9.9 per cent.
The Group’s external operating revenues from printing operations rose to NOK 222.7 million, an increase of 49.9 per cent. Printing revenues amounted to 12.4 per cent of the Group’s total operating revenues. The increase was due to the increase in newsprint prices, and that the market for shopping newspapers is still growing.
A-pressen had NOK 10 million in extraordinary revenues in 1995 owing to a NOK 10 million conditional claim on the Norwegian Labour Party and NOK 3.2 million in interest. The claim stems from A-pressen’s 1991 refinancing of Arbeiderbladet, of which DNA was the sole shareholder. After the refinancing A-pressen became the sole shareholder. An agreement was signed at the same time that the payment of the claim should be tied to any sale of the Labour Party’s shares in A-pressen AS.
Cost factors. Newsprint prices surged in 1995. At the end of the year prices were nearly 40 per cent higher compared to one earlier. Prices rose an average of 27 per cent through the year. On 1 January 1996 prices increased a further 5.8 per cent through an annual agreement. On average the prices for 1996 will be c. 16.5 per cent higher than in 1995.
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The Group’s newsprint costs rose 6.12 per cent to NOK 158.9 million. The increase was mainly due to a combination of higher prices and acquisitions of businesses. Part of the increase is compensated by external printing customers through higher printing revenues.
Personnel costs increased by NOK 107.8 million from 1994 to 1995. The acquisition of businesses accounted for NOK 54.3 million of this increase. The Group’s personnel costs in 1995 amounted to 48.6 per cent of operating expenses, compared to 49.8 per cent the year before.
Capital situation. The Group’s cash flow from operations came to NOK 165.9 million, an increase of NOK 41.8 million from 1994. The increase was mainly because of improved profits and contributions from new operations. A-pressen invested NOK 312.1 million in fixed assets in 1995.
The Group has a disposable liquidity consisting of liquid assets, short-term placements and unutilised committed drawing rights totalling NOK 465 million at 31 December 1995, against NOK 309 million at 31 December 1994.
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8. Organisation, board and management
8.1 Organisation of the Group
Corporate Assembly
Board
A-pressen ASA Alf Hildrum CEO
Newspapers and Printing A-pressen TV AS Other Corporate Management/Staff Alf Hildrum A-pressen Avis og Trykk AS CEO Mai Torill Hoel John Kvadsheim Corporate Director Corporate Director Organization, Management, Personnel A-pressen Elektroniske Medier AS and Corporate Communications Bjørn Larsen A-pressen Media Øst AS Corporate Direcotr Bjørn Larsen Øivind Taugbøl Corporate Director Corporate Director Business Development
Storbyavisene AS John Kvadsheim Even Nordstrøm Corporate Director Corporate Director Finance and Property
A-pressen Eastern Europe AS Reidar Karlsen John Ravnaas General Manager Director A-pressen's Employers Association
Marie Jore Ritterberg Corporate Director Accounting and administration
A-pressen’s newspapers and printing business area is based on a regional structure and management is divided into two approximately equally large units:
A-pressen Media Øst AS: Includes A-pressen’s companies and operations in Østfold, Akershus/Romerike, Hedmark and Oppland. Legally speaking, Media Øst AS is a sub-group of A-pressen ASA. Headquartered in Lillestrøm, the sub-group is run by Øivind Taugbøl.
A-pressen Avis og Trykk AS: Includes A-pressen’s newspapers and printing operations in the other parts of the country, i.e. A-pressen Nord Norge, A-pressen Midt Norge, A-pressen Vestlandet and A-pressen Sør. A-pressen Avis og Trykk AS is under formation and will be located in the same offices as A-pressen Media Øst in Lillestrøm. John Kvadsheim will head the company. A-pressen Avis og Trykk AS is not a legal sub-group because the individual subsidiaries are directly owned by A-pressen ASA.
Storbyavisene AS, consisting of Dagsavisen, Bergensavisen, Telemarksavisa, Rogalands Avis and Fremtiden is administratively connected to the regions.
The TV business area is headed by C.E.O. Alf Hildrum. In terms of management, the Group’s stake in TV 2 is followed up by representation on the board of the company, on which Hildrum serves. The local TV companies are followed up through the Group’s newspaper companies in the respective areas.
The Group’s involvement in the electronic media business area is managed by the TV business area.
8.2 The company’s board and management
The board and management of A-pressen have the composition shown below. The number of shares in parentheses indicates at 21 October 1998 the number of shares owned by the person
65 A-PRESSEN PROSPECTUS
and the number of shares owned by the spouse, minor children and companies in which the person exercises influence as stated in Section 1-2 of the Companies Act.
Composition of board: Jan Kr. Balstad (b. 1937), chair, Nesoddtangen (0 shares) Balstad is Deputy General Secretary of the Norwegian Federation of Trade Unions (LO). He has been the chair of A-pressen since 16 June 1997. Other major board positions include: VÅR bank and insurance; the Norwegian Industrial and Regional Development Fund, Institute for Applied Social Science (FAFO), Research Council of Norway, European Trade Union Institute and Council of Nordic Trade Unions.
Terje Moe Gustavsen (b. 1954), deputy chair, Vestby (0 shares) Trained by Norway Post, Gustavsen is the head of LO Stat and has been a member of A-pressen’s board since 11 October 1994, and deputy chair since March 1995. Other major board positions include Telenor, Research Council of Norway and the Norwegian Public Service Pension Fund.
Åshild M. Bendiktsen (b. 1945), board member, Sjøvegan (0 shares) Bendiktsen has a business degree from Nordland Regional College. She is director of finance for Bendiktsen & Aasen A/S and has been on the board of A-pressen since 16 June 1997. Other main board positions include the Norwegian Industrial and Regional Development Fund, Telenor AS (corporate board), Kredittkassen (supervisory board) and chair of the supervisory board of Bladet Nordlys AS.
Svein Haugsvold (b. 1948), board member, Oslo (0 shares) Haugsvold is a graduate of the Norwegian School of Economics and Business Administration and has a degree in law. He is deputy managing director of VÅR bank and insurance. He has been a member of the board of A-pressen since 30 January 1990.
Tore Tønne (b. 1948), board member, Drammen (0 shares) Tønne is a graduate of the Norwegian School of Economics and Business Administration and has a degree in law. He is C.E.O. of Norway Seafoods and has been a member of the board of A-pressen since 16 June 1997. Other major board positions include ADB-systemer ASA, Falken Norge AS, MIROS AS, the National Theatre and Stavanger Regional College.
Eigil Wettre (b. 1944), board member, Vettre (1,300 shares) Wettre is C.E.O. of Møller-gruppen AS and has been a member of the board of A-pressen since 15 January 1996.
Johnny Helgesen (b. 1961), board member, Sarpsborg (31 shares) Helgesen is a trained press photographer. He represents the employees and has been a member of the board of A-pressen since 25 August 1998. He is a photographer for Østfoldpressen AS.
Jorunn Henriksen (b. 1949), board member, Narvik (31 shares) Henriksen is a trained typographer and studied education at the University of Tromsø. She represents the employees and has been a member of the board of A-pressen since 25 August 1998. She is a typographer for Fremover.
Kith Skaalerud (b. 1953), board member, Blaker (31 shares) Skaalerud studied sales and marketing at Oslo School of Marketing. Skaalerud represents the employees and has been a member of the board of A-pressen since 16 June 1997. She is an advertising consultant for Romerikes Blad.
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Brit Renngård (b. 1947), deputy member (meets regularly), Oslo (0 shares) Renngård has degrees in computer science and business management from the Norwegian School of Management. She became a member of the board of A-pressen on 31 October 1995 and became a deputy board member from 15 January 1996, and meets regularly. Renngård is the chief cashier of the Norwegian Civil Service Union. Other major board positions include Norwegian Labour Movement Employers’ Association, LO Stat, Workers’ Educational Association in Norway, Media Forum Foundation, and the executive committee and national executive committee of the Norwegian Civil Service Union.
Executive management: Alf Hildrum (b. 1948), C.E.O. (26,031 shares) Hildrum is a graduate of the Norwegian School of Economics and Business Administration and has been employed by A-pressen since 1979. Before becoming C.E.O. in 1988, he was a journalist for A-pressen’s Oslo desk (APOR), editor and manager of Bergens Arbeiderblad and managing editor of APOR.
Mai Torill Hoel (b. 1956), Corporate Director, Organisation, Management, Personnel and Corporate Communications (1,031 shares) Hoel taught business economics, administration and organization and marketing in secondary school and has a degree in marketing and consumer behaviour from SLHK. Before 1 August 1997, she was director of Mercuri International Norge A/S.
Reidar Karlsen (b. 1946), General Manager, A-pressen Eastern Europe AS (4,031 shares) Karlsen received his education in the military, attending the Norwegian Military Academy and National Defence College. He has been employed by A-pressen since 1992. He was previously director of organization for the Norwegian Energy Corporation and airport manager of Fornebu Airport.
John Kvadsheim (b. 1961), Corporate Director, Newspapers and Printing (0 shares) Kvadsheim is a graduate of the Norwegian School of Economics and Business Administration. Before joining A-pressen in April 1996 he was editor-in-chief and general manager of Nationen AS.
Bjørn Larsen (b. 1954), Corporate Director, Business Development (431 shares) Larsen has a degree in business administration and has been employed by A-pressen since 1989. Prior to that he was a systems consultant and support manager for Norsk Data Comtec for four years and sports editor of Dagningen in Lillehammer.
Even Nordstrøm (b. 1957), Corporate Director, Finance (1,640 shares) Nordstrøm has a degree in business administration and has been at A-pressen since 1996. Before that he was a senior consultant for 10 years with the consultancy firm Nexia DA.
John Ravnaas (b. 1938), Director, A-pressen Employers’ Association (ATF)(71 shares) A former Army officer, Ravnaas was subscription manager for two A-pressen newspapers before working as a negotiator for the Norwegian Union of Commercial and Office Employees for 20 years. He has been the general manager of A-pressen’s Employers’ Association (AFT) since 1 February 1987 and is responsible for all employer questions in the press group.
Marie Jore Ritterberg (b. 1960), Corporate Director, Accounting and Administration (500 shares) Ritterberg has an MBA and was a chartered accountant for Arthur Andersen Revisjonsbyrå AB, before joining A-pressen in 1995.
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Øivind Taugbøl (b. 1948), Corporate Director, A-pressen Media Øst AS (3,216 shares) Taugbøl received his education in the Army, including the Norwegian Military Academy, and has been employed by A-pressen since 1984. Before becoming Corporate Director he was the manager of Glåmdalen and general manager of Romerikes Blad.
Corporate Assembly members: The Corporate Assembly is elected for two years at a time. Its chair, Bente Halvorsen, owns no shares in the Company.
Representatives of shareholders Representatives of employees Bente Halvorsen (chair), Norwegian Federation of Line Mette Finnøy, Stjørdalens Blad AS Trade Unions Kjetil Lisland (deputy chair), Møller Investor AS Oddny Johnsen, Bladet Nordlys AS Jan Davidsen, Norwegian Union of Municipal Edvard Boye, Dagsavisen Arbeiderbladet AS Employees Svend O. Eriksen, Hardanger Folkeblad AS Borgny Grini, Telemarksavisa AS Arild Fredriksen, Den Norske Bank ASA Ingunn Sandåker, Bergensavisen AS Erik Garaas, Gjensidige Forsikring Trine Bergstedt, Lofotposten AS Martin Mæland, OBOS Arnfinn Nilsen, Norwegian Union of General Workers Bente Fredheim Nygård, A-pressen Media Øst AS Olav Støylen, Norwegian Union of Chemistry Industry Workers Berit Tolg, LO Stat Arvid Øygård, Helgeland Arbeiderblad AS
Remuneration of Board, Corporate Assembly and C.E.O. The following fees for board work performed for A-pressen ASA were fixed by the Corporate Assembly on 30 March 1998: board chair NOK 48,700 per year, board members NOK 32,500 per year, deputy members NOK 2,700 per meeting (maximum fee of board members).
Remuneration of the Corporate Assembly chair is NOK 8,000 per year, and NOK 800 per meeting for Corporate Assembly members.
Salary and benefits of the C.E.O. of A-pressen totalled NOK 1,035,653 in 1997.
Auditor A-pressen’s auditor for the past three years has been chartered accounted Jan Fr. Sønsteby. Remuneration of the auditor for work performed in 1997 totalled NOK 304,240, of which NOK 49,240 was for consultancy.
Development in the number of employees At 31 August 1998 the Group had 2,861 employees (equal to 2,630 man-years). The table shows the development in the average number of employees in the A-pressen Group in 1995- 1998.
A-pressen Group 31.12.95 31.12.96 31.12.97 31.08.98 Employees 2 309 2 566 2 781 2 883 Change 2 105 2 301 2 505 2 633
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9. Legal matters
9.1 Legal disputes During ordinary newspapers operations, it sometimes happens that various parties bring lawsuits against the Group’s newspapers. A newspaper can typically be sued for damages and nullification after printing information that someone perceives as incorrect or defamatory. We might mention that Arbeiderbladet AS (Dagsavisen) is defendant in some such suits, of which the two biggest are for damages of around NOK 5 million each. In one of these cases the city court found for Arbeiderbladet but the plaintiff appealed to the high court.
From time to time the Group is involved in other kinds of legal disputes in connection with other aspects of its commercial operations.
Apart from this, the Group and A-pressen’s newspapers are not presently involved in any lawsuits that with regard to scope or type, are of an extraordinary nature or are considered to be of material significance for the evaluation of A-pressen as an investment object.
Insofar as the Group is exposed to losses or costs in connection with legal disputes, the necessary appropriations have been made in accordance with generally accepted accounting standards.
9.2 Loan finance and payment transfers (the Group account and Group loan scheme) Den norske Bank ASA (DnB) is the A-pressen Group’s main banker. This means that the Group’s total operations to a large extent are financially integrated on the basis of agreements with DnB for short-term and long-term (syndicated) loan finance and payment transfer services. Such an integration of the company’s financial resources is based on the wish to realise the rationalisation potential in the Group’s capital management and to strengthen the Group’s capital adequacy.
DnB and A-pressen have signed an agreement on a Group account system inter alia handling payment transfer for a considerable number of the Group’s companies. This agreement forms the basis for special participant agreements for the Group account system made between DnB, A-pressen and the individual subsidiaries. Participation in the Group account system means that the individual participant is allocated credit frameworks in its own account that can be used directly, according to whatever is from time to time agreed between DnB and A-pressen. Allocation of credit facilities is based on the Group’s total financial resources and needs within the framework consequent on agreements with DnB on long-term and short-term loan finance.
A-pressen ASA has the general responsibility for adherence to the financial terms and conditions of the agreements with DnB regarding loan finance and payment transfer services. With the exception of the Storbyavisene (City Newspapers), the other participants in the group account system are jointly and severally liable for correct fulfilment of all obligations that may arise pursuant to the agreements. The liability of the Storbyavisene is limited to the maximum amount these can draw down under their specially allocated credit facility. Subject to these restrictions, DnB can offset all amounts owing in all participant accounts. Major obligations for the A-pressen Group under the agreement are restrictions on the power to pledge assets, other legal dispositions of assets, incurring of debt and major changes in operations, plus requirements as to equity ratio, cash-flow and liquid reserves.
9.3 Press subsidies The Regulations on Production Subsidies for Daily Newspapers of 7 November 1996 No. 1015 lays down the rules for the production subsidy scheme for daily newspapers (press subsidies). The subsidy scheme is managed by the Mass Media Authority (Statens medieforvaltning). The subsidies are to be used for publication of the newspaper for which the subsidy is sought; it is
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designed to benefit financially struggling and small-circulation newspapers. No subsidy is granted if the newspaper’s annual profit within the meaning of the Companies Act and excluding the press subsidy exceeds NOK 2 million in the last financial year, or more than NOK 6 million in the course of the last three financial years. Another criterion for the press subsidy is that the newspaper must not have paid dividend to shareholders in the year of the subsidy. In this context Group contribution is considered equivalent to dividend. Newspapers in Group relationships may pay their share of the parent company’s operating costs, limited upwardly to one per cent of the newspaper’s operating revenues excluding press subsidy. It is also a criterion that other transactions between the recipient of the subsidy and Group companies do not deviate from market conditions to the detriment of the recipient.
From time to time questions are raised in various quarters whether A-pressen is observing these conditions for press subsidy, or whether it is operating “concealed” money flows via overpricing of internal goods or services between group companies.
A-pressen follows strict routines to ensure that the criteria for press subsidies are adhered to. This applies both to Group operations and to the auditing of the individual companies. On commission from A-pressen, independent auditors have examined the relationship between companies in A-pressen that receive press subsidies and those that do not. A-pressen has also been the object of investigations by the Mass Media Authority, which enforces the Regulations. None of the investigations have uncovered anything untoward.
9.4 TV 2, TVNorge and local television TV 2 has claimed to the authorities that it has sole rights to operate commercial television in Norway. The question is not directly regulated in TV 2’s licence terms, which run until the end of the year 2002. Nor has it been settled by court or an administrative decision. There is much in the legal documentation for TV 2’s licence to support TV 2’s views. This being so, there is some uncertainty whether TV 2 has sole rights to operate commercial television in Norway. It is clear that A-pressen’s participation in local TV licences gives it an exclusive right and a corresponding duty to broadcast within the licensing area in question.
The Ministry of Culture’s consultative document of 24 August 1998 reviews the ownership rules laid down pursuant to the Broadcasting Act, including the licence conditions. The review has been carried out consequent to the Storting’s passing of the Act on Supervision of Acquisitions in the Daily Press and Broadcasting (The Media Ownership Act), c.f. Odelsting Proposition No. 30 (1996-97). The document discusses whether the special rules on ownership applicable to broadcasting companies should be rescinded in consequence of the Media Ownership Act. Under that Act, the Media Ownership Supervisory Authority can monitor the acquisition of ownership interests in media enterprises. The Authority can intervene against acquisitions if they would cause someone to have such a significant ownership position as to endanger the purpose of the Act - which is to promote freedom of speech, real opportunities for expression and a diverse media spectrum. The jurisdiction of the Authority applies to acquisition of stakes in national, regional and local media. The document concluded that the balance of argument was for the specific ownership rules laid down pursuant to the Broadcasting Act to be rescinded.
If the proposed amendments are passed, this will mean that the ownership limit of 1/3 of the shares of TV 2 will, formally speaking, no longer apply. The same applies to the coverage degree of local television, up to 1/3 of the total national broadcasting markets. In the Committee’s opinion, control of media ownership can be satisfactorily exercised by the Authority via its enforcement of the Media Ownership Act.
When TV 2 shares are transferred, the Articles of Association give the other shareholders rights of pre-emptive purchase.
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By agreement with TVNorge, TV 2 has taken over the responsibility for TVNorge’s programming.
9.5 The newsprint agreement The newspaper companies of A-pressen are members of NAL. NAL owns the subsidiary Papirkjøp AS whose object is to negotiate contracts for joint purchase of newsprint for its members, thus obtaining improved terms.
Papirkjøp AS has signed a contract for purchase of newsprint partly with Norske Skog ASA (“the Newsprint Agreement”) and partly with individual foreign suppliers. The Board of Papirkjøp negotiates the newsprint purchasing conditions annually, and NAL functions as secretariat to Papirkjøp AS. The members of NAL are bound by the terms negotiated by Papirkjøp AS with the suppliers.
Pursuant to the Articles of Association of Papirkjøp AS, 12 months’ notice of withdrawal from the company is required, reckoned from 31 December in the year in which notice is given.
9.6 Real property A-pressen operates partly from premises leased from others, partly in its own premises. About 75 per cent of A-pressen’s property are used to house its own operations, while the rest is leased out to external companies.
A-pressen has the following prime objectives for its property portfolio:
- To achieve a market return. - To manage the property so as to maintain and enhance asset value.
As strategy for achieving the above goals, it is planned to spin off parts of the property portfolio and subject them to central management via a separate property company. The property company was formed as of 1 September 1998, making property a separate profit centre. To begin with, only parts of the group’s property portfolio will be transferred to the new property company.
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10. Share capital and shareholder matters
10.1 Share capital
The Company’s current share capital is NOK 144,253,760, divided into 7,212,688 shares of nomianl value NOK 20 each. The Company has a single class of shares, and each share carries a single vote. Table 10.1 and 10.2 show the historic and planned development in the Company’s share capital.
Table 10.1 Development of the company’s share capital
Year Type of change Change in Share capital Nominal No. of share capital after change value shares (NOK) after change 1989 Share issue 20,000,000 22,000,000 100 220,000 1991 Share issue 59,105,000 81,105,000 100 811,050 1994 Share issue directed at employees 4,858,200 85,963,200 100 859,632 1995 Private placement 309,000 86,272,200 100 862,722 1995 Share split (5:1) 0 86,272,200 20 4,313,610 1995 Private placement 56,250,000 142,522,200 20 7,126,110 1996 Private placement 240,000 142,762,200 20 7,138,110 1996 Private placement 500,000 143,262,200 20 7,163,110 1996 Private placement 782,000 144,044,200 20 7,202,210 1998 Private placement directed at employees 209,560 144,253,760 20 7,212,688
Table 10.2 Resolved capital increases not yet carried out Date Type of change Change in Share capital Nominal No. of share capital after change value shares (NOK) after change 09.10.98 Private placement 482,700 144,736,460 20 7.236.823 as per Board decision 21.10.98 Preferential rights issue 32,056,400 176,792,860 20 8.839.643
Authorisation of capital increase In order to allow the Board of A-pressen more easily to implement, complete and finance any projects and acquisitions, the general meeting of 26 May 1998 passed the following resolution:
”The Board of A-pressen ASA is hereby authorised to issue up to 500,000 new shares of nominal value NOK 20 per share, up to a total of NOK 10,000,000. As contributions, the Board can accept cash payment, conversion of debt, shares in other companies or other enterprises, including as take-over of or merger with enterprises against settlement in shares.
The Board may waive the shareholders’ preferential rights to subscribe for shares. The other subscription terms shall be determined by the Board. The Board is empowered to amend the Articles of Association of the Company in accordance with the capital increase(s). This authorisation shall remain in force until the annual general meeting of 1999.”
Resolution on private placement In connection with the purchase of 100 per cent of the shares in Lofot-Tidende, at its meeting of 9 October 1998 the Board passed a resolution concerning partial utilisation of the authorisation granted by the general meeting of 26 May 1998. The Board’s resolution on the capital increase is worded as follows:
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“Pursuant to the authorisation granted by the Company’s general meeting on 26 May 1998, the Board resolved to issue 24,135 new shares at NOK 20 each at a subscription price of NOK 112.50 per share. The share capital is thus increased by NOK 482,700. The total issue amount is NOK 2,715,188, of which the surplus after deduction of costs shall be added to the legal reserve and the general reserve in accordance with the Companies Act.”
The private placement directed toward Sverre Christoffersen, Kenneth Grav and Grafo AS, as sellers of 30 per cent of the shares in Lofoten Kommunikasjon AS pursuant to the agreement of 1 October 1998 concerning purchase of all the shares in said company, under which agreement the purchase price for Lofoten Kommunikasjon AS over and above the subscription price for shares in A-pressen ASA is to be settled in cash. The shares shall be subscribed for by 1 November 1998 and settlement shall be by the transfer of 30 shares in Lofoten Kommunikasjon AS by 1 November 1998.
The new shares give rights in the company from registration of the share capital increase in the Register of Business Enterprises, and will be entitled to dividend from and including the 1998 financial year. It is not permitted to transfer the shares until they are fully paid-up and the capital increase is registered in the Register of Business Enterprises.
The share capital increase is conditional on the purchase of the remaining shares in Lofoten Kommunikasjon AS being completed in accordance with the agreement of 1 October 1998,has not been utilised.
Apart from this the authorisation granted by the general meeting of 26 May 1998, has not been utilised.
Resolution on public rights issue At the Company’s extraordinary general meeting on 21 October 1998 it was resolved to increase the Company’s share capital by NOK 32,056,400 via a public rights issue in the form of the issue of 1,602,820 shares at nomial value NOK 20 at a subscription price of NOK 90 per share. The public rights issue will raise NOK 144,253,800 in gross new equity for A-pressen ASA. Shareholders in A-pressen as of the day of the general meeting 21 October 1998, will have preferential rights to subscribe to the new shares pursuant to Section 4-2 of the (Norwegian) Companies Act. The newly-issued shares are granted rights in the Company from the date of registration of the share capital increase in the Register of Business Enterprises, including the right to dividend from and including the 1998 financial year.
10.2 Shareholder relations
Transferability Section 5 of the Articles of Association states that acquisition of shares by transfer is conditional on the consent of the Board of the Company. Such consent may only be withheld for fair reason.
It follows from Section 2-3 of the Stock Exchange Regulations that listed shares shall in principle be freely transferable, and that the Board’s power (as enshrined in the Articles of Association) to refuse consent to a share acquisition may only be used if there are proper grounds for refusal and the application of the provision does not cause disturbances in the market. The Company notes that the existing power to refuse consent to transfer of shares has never been used by the Company. For the record, we would nevertheless point out that under the new Public companies Act that comes into force on 1 January 1999, any refusal of consent to transfer of shares will mean that the acquirer can cancel his agreement with the vendor, unless otherwise laid down in the agreement between them.
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Amendment of the Articles Under Article 10 of the Articles of Association, a decision to amend Article 2, “Objects of the Company”, requires at least three-quarters of both the votes cast and of the share capital represented at the general meeting. For other amendments, the general provisions of the Companies Act apply.
Shareholder and dividend policy A-pressen will endeavour to ensure that the market price of the shares optimally reflects the Company’s earnings and underlying assets. It is our objective that the Company’s shareholders achieve a competitive return on their investments. This return may take the form of both an appreciation of the share and the payment of dividend. The Company is intended to be a liquid investment alternative.
Share price history The Company’s shares have been traded on the “unlisted” market. The figure below shows the trading prices for the Company’s shares in the period from 9 October 1995 to 20 October 1998. The latest observed trade was recorded on 9 September 1998. Volumes of A-pressen shares traded in the period in question have not been recorded.
FIGURE 10.1 Historical trading prices for the A-pressen shares
220,00 200,00 180,00 160,00 140,00 120,00 100,00 80,00 60,00
okt-95 jan-96 apr-96 jul-96 okt-96 jan-97 apr-97 jul-97 okt-97 jan-98 apr-98 jul-98 okt-98
Source: OBI and Finansavisen
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Shareholder structure As at 20 October 1998 the Company has 1,639 shareholders, of whom 15 are foreign. 848 of the shareholders own 100 or more shares. The 20 biggest account for 80.6 per cent of the Company’s share capital. The table shows the Company’s 20 largest shareholders at 20 October.
TABLE 10.2 A-PRESSEN’S 20 LARGEST SHAREHOLDERS
Name No. of shares Ownership (%) 1 Landsorganisasjonen 1 787 490 24,78 % 2 Møller Investor AS 974 500 13,51 % 3 Bank of New York, BR S/A MSF-Mutual Disco 590 000 8,18 % 4 Fidelity Funds - EUR Brown Brothers 374 700 5,20 % 5 Clydesdale Bank PLC S/A Fidelity INVMNT 320 600 4,44 % 6 Chase Manhattan Bank The Clients Traty Acc. 320 000 4,44 % 7 Vår Livsforsikring v/ Investeringsseks 193 400 2,68 % 8 Norsk Kommuneforbund 193 000 2,68 % 9 Verdipapirfondet Skagen 175 000 2,43 % 10 Aksjespar Postbanken 136 000 1,89 % 11 Brown Brothers Harri S/A Fidelity Low-pri 100 000 1,39 % 12 Norsk Kjemisk Industriarbeiderforbund 92 060 1,28 % 13 Vår Skadeforsikring v/ Investeringsseksj. 87 500 1,21 % 14 Sparebanken NOR, Kap. Konsernregnskap 80 000 1,11 % 15 Clydesdale Bank PLC S/A Fidelity Europea. 78 200 1,08 % 16 Gjensidige Livsforsikring Investeringsavdeling 71 300 0,99 % 17 Bank of New York, BR S/A MSF-Mutual Europ. 62 000 0,86 % 18 Norsk Tjenestemannslag 61 630 0,85 % 19 Nordås Invest AS 61 000 0,85 % 20 Vital Forsikring ASA v/Vital kapitalforvaltning 60 300 0,84 % Totalt de 20 største eiere 5 818 680 80,67 %
10.3 Tax conditions for the shareholders
General on the tax question The following presentation is a summary based on current Norwegian tax rules. It is thus of a general nature, and the shareholders themselves must check whether there are specific factors in their own situations that dictate solutions other than the ones outlined below.
Taxation of dividend In practice, dividend can be distributed tax-free by the Company to shareholders resident in Norway. Dividend is in principle considered as taxable income, but as a main rule, through the compensation rules the tax obligation on dividend for such shareholders will be eliminated.
For shareholders resident abroad, withholding tax will be imposed on dividend at source at the rate of 25 per cent unless otherwise laid down by tax treaty with the country in question. Norway has made tax treaties with a number of countries, and its right to collect tax at source is generally limited to 15 per cent.
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Shareholders resident abroad who are subject to tax at source higher than consequent on the relevant tax treaty can apply to Norwegian tax authorities for a repayment of the excessive tax withheld at source. This application should be sent to the Tax Directorate.
Taxation of capital gains (deduction for loss) on sale of shares or subscription rights:
For shareholders resident in Norway, capital gains on sale of the Company’s shares are included in ordinary income and thus taxed at 28 per cent. Loss on sale of the Company’s shares is deductible from ordinary income. Gains or losses are fixed at the sales consideration less the shares’ fiscal entry value.
Fiscal entry value is calculated on the basis of original cost, adjusted for changes in the Company’s taxed capital in the period the individual shareholder has been the owner of the shares (the so-called RISK adjustment). Expenses for brokers etc. in connection with buying and selling of shares are deductible from ordinary income in the year of the sale.
Gains on sale of subscription rights are also taxable income and losses are deductible from ordinary income. Gains (or losses) are calculated as the difference between the sales consideration and any original cost for the subscription rights.
Gains generated by sale of shares (subscription rights) owned by shareholders resident abroad would not normally be taxable on Norway. The exception is when the shares (subscription rights) have been owned in association with business activity carried out in Norway, or if the shares (subscription rights) are sold within five years of the end of the year in which the tax obligation consequent on Norwegian residence ceased. The tax obligation consequent on ordinary Norwegian rules may be limited by treaties made between Norway and the shareholder’s countries of domicile.
Wealth tax For shareholders who are liable to Norwegian wealth tax, the shares are part of their taxable assets. Physical persons resident in Norway are liable to wealth tax, while limited companies are not.
Shares that are not stock exchange listed are valued at 65 per cent of the shares’ proportion of the Company’s total taxable asset value on 1 January of the year prior to the tax assessment year (that is, 1 January of the income year). When the shares are quoted (on the main list), the value is fixed at the listing at 1 January of the tax assessment year. The current marginal rate of wealth tax is 1.1 per cent.
Shareholders resident abroad are not liable to Norwegian wealth tax, unless the shares are particularly connected to the business activity the shareholder is conducting in Norway.
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11. Risk factors
General risks All share investments are subject to risk. The following sections present some risk factors that are considered relevant to the A-pressen share. The description is not necessarily exhaustive, factors not mentioned may also affect the evaluation of the risk attached to the shares of A- pressen. Investors should give careful consideration to all factors described in this chapter and in the prospectus generally, and make their own assessment of the risk factors.
Newspaper circulation trends The Company’s earning power is closely connected with the trends in overall newspaper circulation. Vital factors affecting this trend are:
The vigour of the organisation’s sales-force is crucial. All newspapers lose readers, and so a good recruitment of new readers is essential to maintain circulation, and a better-than-good recruitment to increase it.
Freesheets may displace traditional newspapers. This problem is particularly acute for Storbyavisene, but probably not an immediate problem for local papers.
The reduction of total newspaper consumption, for example through substitution to new media and less newspaper-reading among the up-and-coming generations may hit A-pressen too, particularly the No. 2 papers.
Mobility changes patterns of demand for local papers. For some newspapers in Northern Norway, this is a noticeable problem, but for other papers in Eastern Norway mobility is positive.
Newspaper advertising trends The following circumstances among others may affect the volume of advertising in the Group’s newspapers.
Cyclical fluctuations in the Norwegian economy affect volume and price of advertising, particularly the classifieds. For example, we must expect that permanently high interest rates, or other long-term cooling of the Norwegian economy, will affect the need for the three most important segments of classifieds: Positions Vacant, Property and Cars.
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Brand-name advertisers, plus nation-wide retail chains, are increasingly preferring TV as their advertising channel. In TV 2’s start-up phase, this probably led to substitution of TV for newspapers. Such effects may still be encountered, for example through further chain formation in hitherto fragmented retail branches. This substitution is countered by the fact that the TV channels have full slots and are raising their prices, so that newspaper advertising is becoming steadily more cost-effective.
Local business development, density of shopping centres and the amalgamation of local retailers into national chains will affect the volume of text page advertisements. The purpose of the advertising pools is intended among other things to counteract the negative consequences of such trends. Furthermore, the pressure in the local job and housing markets will have a great impact on classifieds, a pressure that appears to be correlated with demographic trends. A negative trend has been noted in Northern Norway, but the direction in Eastern Norway is clearly positive.
Freesheets may both attract advertising volume and exert a generally downward pressure on prices where they establish themselves.
Classifieds are now experiencing a breakthrough on the Internet and Text-TV. They offer a range of advantages relative to printed classifieds, such as: good searchability, long duration, quantity of content and attention statistics. In addition, the advertisements are often very cheap in comparison with traditional classifieds. Their drawback is that non-Internet-users are still a majority of the population. To achieve full coverage in a given geographical area, therefore, newspapers are still an advertiser’s only choice. If the new players that are based exclusively on the Internet succeed, however, it may reduce the volume and prices of newspaper classifieds.
TV advertising trends If the Norwegian state broadcaster NRK ever introduces advertising, this will seriously aggravate TV 2’s competitive situation. There are no signals that this is imminent, but NRK is already involved in sponsorship and production support. If this activity is stepped up, it may be at the expense of TV 2’s revenues.
Substitution from TV to radio is a visible effect of the substantial price difference between these two media, good potential for complementary advertising campaigns using both TV and radio, plus spare advertising capacity in the radio channels. The extent of this substitution is so far moderate.
TVNorge’s lead over its competitors is to a great extent due to distribution via local TV channels. If the latter do not succeed in achieving profitable operations, but are wound up, TVNorge can be hit by reduced distribution, reduced audiences and reduced advertising revenue.
The market for local TV advertising is dependent on the development of capacity for cost- effective production of commercials. If no such capacity is established, production of commercials can become so expensive that the local advertisers abstain from using the medium.
Continued restructuring and chain formation in the Norwegian retail trade will probably increase demand for TV advertising. Retailers who cannot afford TV advertising individually will be able to if they get together and create a larger catchment area.
New “narrowcasting” channels or other new competing channels may be created by technological innovation, particularly in digital transmission. If these channels succeed in attracting a considerable audience, they will probably attract advertising too. However, it is expected that the asymmetrical preference for the market leader will persist, so that the loss of
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advertisers will be smaller than the loss of viewership, unless the audience changes its habits on a large scale.
Newspaper costs Newspapers’ personnel costs are substantial. The consequences of generous pay settlements will thereby be noticeable. A-pressen intends to prevent an increase in the pay component. This means that any rise in pay must be compensated for by downsizing.
Newsprint costs are determined primarily by world market prices. At the moment access to production capacity relative to expected demand is looking good, and no immediate rises on paper prices are expected.
Distribution costs are affected by the labour market in general, and by postage rates. At the moment the Norwegian labour market is tight, which means that in certain areas newscarriers are becoming steadily more expensive.
TV costs When TV 2’s licence is renewed, a charge may be introduced. TV 2 will claim that it pays for its licence indirectly, in that it must meet licence conditions that mean increased costs.
Programme costs may rise, due to both general price rises for the rights to sporting events and other good TV productions, but also competition-driven upgrading to ever more expensive programming.
Printing operations The business area’s profitability may be affected by several factors.
Changes in industry capacity will affect the competition situation in the coming years. Several of the regional newspapers, plus the national conglomerates Schibsted and Orkla, have either recently built, or are the process of building, new printing plants. This will supply the market with a lot of spare capacity, and it is not unthinkable that this will be felt in the form of pressure on both volume and prices.
Foreign competition may be increased by the process of harmonisation within the EEA. There are examples of major print jobs that have been contracted abroad.
Changes in total demand may come in the wake of substitution from traditional printed matter to digital and paperless information media. There is as yet no sign that this is cutting into the market for printed matter.
Framework conditions for newspapers The press subsidies for A-pressen are dependent on total appropriations and A-pressen’s share thereof. Long-range predictions of the appropriations are difficult, and relative share is also dependent on the success of our competitors.
Indirect subsidies in the form of VAT exemption, favourable postage rates and public advertising are managed by a number of different ministries. There is therefore a risk that these framework conditions are altered independently of each other, producing an overall effect that is unintended.
Electronic media There is uncertainty as regards future advertising revenues from the content services, and to what extent it is possible to obtain payment for the content itself. It is therefore uncertain whether total revenues will be great enough to allow content services to be run at a profit.
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Investment needs Investment needs are often driven by the local competitive situation. This may mean that unforeseen investments may prove necessary, if competitors increase their own investments.
Licensing provisions TV 2 AS has a licence for broadcast commercial national television until the end of 2002. Its competitors have questioned whether TV 2 AS has exclusive rights to this, see Chapter 9.4 above.
In its two reports for 1996 and 1997 the General Broadcasting Council criticised TV 2 on several points, among other things for not following up its own promises in its licence application. If this criticism leads to changes in the licensing conditions, it may have serious consequences for the company’s future operations. A worst-case scenario is that TV 2 is operated without a licence at all, in which case alternative distribution methods and a different costing will have to be studied.
In general, all operations on the basis of licences will be dependent on and can be affected by any changes in current licences and the authorities’ issuance of licences for new periods.
Acquisitions A-pressen intends to grow also through acquisitions. Here there is always the risk of paying too much. The seller may know the real value of the purchaser object better than the buyer. A-pressen will counter this risk by concentrating its acquisitions in industries where A-pressen has a good chance of being able to calculate the real value, and the expertise to increase that value through improvement of the business bought.
The Group has ownership interests in 106 companies, of which 88 are majority owned. Any changes in the financial development of these companies, and/or their subsidiaries, may directly or indirectly affect A-pressen’s financial reporting and status.
The Millennium Bug The Group has initiated several measures intended to facilitate the transition to the year 2000. New circulation systems that include subscription, distribution, news-stand sales and newspaper carrier administration will all be up and running in A-pressen’s 43 newspapers by the end of 1998. One of the reasons for this is the coming millennium. In addition., all payroll and accounting systems in the Group’s companies will be undertaken in the same time-frame. In 1999 several newspapers will modernise their advertising systems.
A-pressen considers that the necessary measures to master the Millennium Bug have been taken. Nevertheless, it cannot be ruled out that the transition to the year 2000 may cause IT or system complications.
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Appendix 1, Articles of Association for A-pressen ASA
Articles of Association for A-pressen ASA (which is a direct continuation of Norsk Arbeiderpresse AS) as last amended by the extraordinary general meeting of 21 October 1998
Article 1 Company name Article 8 Corporate Assembly The name of the company shall be A- The Company’s corporate assembly shall consist of pressen ASA. 18 members with deputies. The corporate assembly shall elect its own chairman and deputy chairman. Article 2 Object The object of the company shall be Article 9 General meeting information activities, similar activities and The Company’s annual general meeting shall participation in other companies engaged consider: in information or similar activities. The Company shall promote the core values of a) Adoption of the profit and loss account and the Labour Movement. As shareholder in balance sheet, including application of profit or subsidiaries engaged in publishing, the coverage of loss. Company shall respect and protect editorial b) Adoption of consolidated profit and loss freedom and integrity. account and consolidated balance sheet. c)Election of members of the corporate assembly Article 3 Business municipality and their deputies. The registered office of the company shall d) Election of the Company’s auditor and fixing be in Oslo. of his fee. e) Election of up to five members of an electoral Article 4 Share capital and shares committee and its chairman. The Company's share capital shall be NOK f)Other matters that by statute or these Articles 144,253,760, divided into 7,212,688 pertain to the general meeting. shares of NOK 20 each, fully paid-up and For shares that have been transferred, voting registered. The Company’s shares shall be rights cannot be exercised until at least one week registered in the Norwegian Register of after the shares have been registered in the Securities. Norwegian Register of Securities.
Article 5 Restriction of tradability of Article 10 Amendment of the Articles of shares Association - voting rules Acquisition of shares by transfer shall Any decision to amend the Articles of Association require the consent of the Board, which can shall be made by the general meeting. A decision to only be refused for good reason. amend
Article 6 The Board Article 2 (Object) requires the concurrence of at least The Board of the Company shall have nine three-quarters of both the votes cast and of the share members plus deputies. The Board’s capital represented at the general meeting. For members, chairman and deputy chairman decisions to amend the other Articles, the provisions shall be elected by the Corporate of the Companies Act shall be applicable. Assembly.
Article 7 Signature and registered power of attorney The right to sign for the company is vested in two of the following - the chairman of the board, the deputy chairman and the chief executive officer - acting in concert. The Board can grant registered power of attorney.
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Appendix 2, 1997 Annual Report for A-pressen ASA
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Appendix 3, 1997 Annual Report for TV 2
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Appendix 4a, Letter to U.S. shareholders
A-pressen ASA
P.O. Box 1168 Sentrum
N-0107 Oslo
Norway October, 1998
To A-pressen ASA's U.S. Shareholders
Re: A-pressen ASA; Sale or Exercise of Subscription Rights
Dear Shareholder:
A-pressen ASA has commenced an offering of additional shares of its stock with preferential rights to subscribe to its current shareholders. In the offering, A-pressen will initially distributed to its current shareholders as of 21 October, 1998, without charge, one subscription right for each share of stock currently owned by the shareholder. Holders of subscription rights are permitted to purchase 2 (two) shares each of nominal value NOK 20 for every 9 (nine) subscription rights, on the terms set out in the Prospectus and Subscription Form. The subscription rights are expected to be distributed approximately one day in advance of the subscription period of 29 October to 12 November, 1998. If not exercised, the subscription rights will expire at the end of the subscription period on 12 November, 1998. The subscription rights themselves will be listed on the Oslo Stock Exchange, and may be sold on the Oslo Stock Exchange by the shareholders receiving them, before the end of the subscription period.
Enclosed herewith is a copy of (1) an English translation of the Prospectus for the offering in Norway, (2) a "Subscription Form", and (3) a "Form of Shareholder Representation Letter" to be used if you desire to exercise the subscription rights that have been distributed to you.
NEITHER THE SUBSCRIPTION RIGHTS NOR THE SHARES WILL BE REGISTERED FOR SALE IN THE UNITED STATES UNDER FEDERAL OR STATE LAW AND THERE IS NO MARKET IN THE UNITED STATES FOR EITHER THE SUBSCRIPTION RIGHTS OR THE SHARES. YOU MAY ONLY EXERCISE THE SUBSCRIPTION RIGHTS AND THE SHARES WILL ONLY BE DELIVERED TO YOU PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES LAWS. A- PRESSEN IS NOT MAKING A PUBLIC OFFERING IN THE UNITED STATES, AND YOU MAY NOT COPY, TRANSFER OR OTHERWISE DISTRIBUTE THE PROSPECTUS IN THE UNITED STATES.
You may only exercise the subscription rights if you are an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933. To exercise the subscription rights, you must execute and deliver both the enclosed "Subscription Form" and the "Form of Shareholder Representation Letter."
If you are not an accredited investor or do not return the enclosed forms, properly completed and executed, to one of the Managers named below, on behalf of A-pressen, you will not be entitled to exercise the subscription rights distributed to you.
If you have any questions regarding the procedure for exercising the subscription rights, please contact:
Elcon Securities ASA Enskilda Securities Grev Wedels plass 5 Rosenkrantzgate 22 P.O. Box 153 Sentrum P.O. Box 1843 Vika N-0102 Oslo N-0123 Oslo Norway Norway Telefax: + 47 23 01 03 01 Telefax: + 47 82 71 11 Phone: + 47 23 01 03 00 Phone: + 47 22 82 70 00
Very truly yours, A-pressen as
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Appendix 4b, Form of shareholders representation letter
A-pressen ASA
P.O. Box 1168 Sentrum
N-0107 Oslo
Norway October,1998
Re: Exercise of Subscription Rights and Purchase of Shares
Dear Ladies and Gentlemen:
This letter is to confirm the undersigned's exercise of the subscription rights to shares (the "Subscription Rights") that A-pressen ASA ("A-pressen") distributed to the undersigned in connection with a distribution to all of its stockholders. The Subscription Rights are rights, distributed without charge, 9 (nine) of which entitle the holder to purchase 2 (two) shares of A-pressen each of nominal value NOK 20 at a subscription price of NOK 90 per share on the terms set out in the Prospectus dated October 21, 1998 for the sale of 1,602,820 shares (the "Shares") of A- pressen. The undersigned understands that the Shares will not be publicly offered or registered for sale in the United States.
The execution and return of this letter to A-pressen is required in connection with the undersigned's exercise of the Subscription Rights and purchase of the Shares. The undersigned makes the following representations and warranties and agrees that A-pressen may rely on the same in connection with the sale of the Shares to the undersigned.
In consideration of the sale of the Shares to the undersigned, the undersigned hereby represents and warrants to A- pressen as follows:
(i) The undersigned is acquiring the Shares for its own account, for investment and not with a view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended (the "Act") and applicable state securities laws.
(ii) The undersigned understands that (A) the Shares (1) have not been registered under the Act or any state securities laws, (2) will be issued in reliance upon an exemption from the registration and prospectus delivery requirements of the Act pursuant to Section 4(2) and/or Regulation D thereof, (3) will be issued in reliance upon exemptions from the registration and prospectus delivery requirements of state securities laws which relate to private offerings and (B) the Shares may not be sold within the United States, and the undersigned must therefore bear the economic risk of an investment in the Shares indefinitely, unless a subsequent disposition thereof is registered under the Act and applicable state securities laws or is exempt therefrom. The undersigned further understands that such exemptions depend upon, among other things, the bona fide nature of the investment intent of the undersigned expressed herein. Pursuant to the foregoing, the undersigned acknowledges that if any certificate representing any of the Shares is issued to the undersigned, the certificate shall bear a restrictive legend substantially as follows:
"The Shares represented by this certificate are subject to restrictions on transfer under the Securities Act of 1933 (the "Act"), as amended, and state securities laws, and may not be offered for sale, sold, assigned, transferred, pledged or otherwise disposed of unless (i) registered under the applicable securities laws or (ii) an opinion of counsel, which opinion and counsel are both reasonably satisfactory to A-pressen, has been delivered to A-pressen and such opinion states that the Shares may be transferred without such registration."
(iii) The undersigned has knowledge, skill and experience in financial, business and investment matters relating to an investment of this type and is capable of evaluating the merits and risks of such investment and protecting the undersigned's interest in connection with the acquisition of the Shares. The undersigned understands that the acquisition of the Shares is a speculative investment and involves substantial risks and that the undersigned could lose the undersigned's entire investment in the Shares. To the extent deemed necessary by the undersigned, the undersigned has retained, at its own expense, and relied upon, appropriate professional advice regarding the investment, tax and legal merits and consequences of purchasing and owning the Shares. The undersigned has the ability to bear the economic risks of the undersigned's investment in A-pressen, including a complete loss of the investment, and the undersigned has no need for liquidity in such investment.
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(iv) The undersigned further represents and warrants that the undersigned is an "Accredited Investor" within the meaning of Regulation D, as promulgated by the United States Securities and Exchange Commission. The undersigned understands that for a natural person to qualify as an accredited investor he or she must have (i) an individual net worth, or joint net worth with that person's spouse, at the time of his or her purchase, in excess of US$ 1,000,000, or (ii) an individual income in excess of US$ 200,000 in each of the two most recent years or joint income with that person's spouse in excess of US$ 300,000 in each of those years and have a reasonable expectation of reaching the same income level in the current year. Corporations, trusts and other entities have different requirements to meet to qualify as "Accredited Investors."
(v) The undersigned has received the Prospectus and, prior to exercising its Subscription Rights, will carefully read and review the Prospectus. The undersigned agrees that the Prospectus contains all information regarding the business and financial condition of A-pressen, its expected plans for future business activities, the attributes of the Shares and the merits and risks of an investment in the Shares which the undersigned needs to evaluate the investment in the Shares.
(vi) In making the proposed investment decision, the undersigned is relying solely on the Prospectus and investigations made by the undersigned and the undersigned's representatives. The offer to sell the Shares was communicated personally to the undersigned and at no time was the undersigned presented with or solicited by or through any leaflet, public promotional meeting, television advertisement or any other form of general or public advertising or solicitation.
(vii) The undersigned acknowledges that A-pressen is not under an obligation to register the Shares under the Act or the securities laws of any state. In addition, the undersigned acknowledges that the undersigned has been advised that:
THE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF ANY REPRESENTATIONS BY THE COMPANY. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
IN MAKING AN INVESTMENT DECISION THE UNDERSIGNED MUST RELY SOLELY ON THE PROSPECTUS, ON HIS OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SHARES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITEIS COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF ANY REPRESENTATION. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RELEASE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE UNDERSIGNED IS AWARE THAT THE UNDERSIGNED MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
(viii) The undersigned acknowledges and is aware that there has never been any representation, guarantee or warranty made by A-pressen or any officer, director, employee or agent or representative of A-pressen, expressly or by implication, as to (a) the approximate or exact length of time that the undersigned will be required to remain an owner of the Shares; (b) the percentage of profit and/or amount of or type of consideration, profit or loss to be realized, if any, as a result of this investment; or (c) that the limited past performance (if any) or experience on the part of A-pressen, or any future expectations will in any way indicate the predictable results of the ownership of the Shares or of the overall financial performance of A-pressen.
(ix) The undersigned agrees to furnish A-pressen such other information as A-pressen may reasonably request in order to verify the accuracy of the information contained herein and agrees to notify A-pressen immediately of any material change in the information provided herein that occurs prior to A-pressen's acceptance of this Subscription Agreement.
The foregoing representations and warranties and undertakings are made by the undersigned and on behalf of the undersigned with the intent that they be relied upon in determining its suitability as an investor and the undersigned hereby agrees that such representations and warranties shall survive its purchase of the Shares.
We understand that this letter, and the representation and warranties herein, are required in order to permit A-pressen to comply with the laws of the United States and the individual States in the United States. A-pressen is entitled to rely on this letter and the undersigned irrevocably authorizes A-pressen to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered thereby.
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Very truly yours,
Name of Stockholder: ______
Signature: ______
Print Signatory's Name: ______
Title: ______
Date: ______
87 A-pressen ASA Stortingsgaten 2 P.O. Box 1168 Sentrum 0107 Oslo Norway Tel:22 00 90 00 Fax: 22 33 40 37
Elcon Securities ASA Grev Wedels plass 5 P.O. Box 153 Sentrum 0102 Oslo Norway Tel:23 01 03 00 Fax: 23 01 03 01
Enskilda Securities Skandinaviska Enskilda Banken Rosenkrantz gate 22 P.O. Box 1843 Vika 0123 Oslo Norway Tel:22 82 70 00 Fax: 22 82 71 11