A-Pressen Further Develops Its Strong Position

A-pressen further develops its strong position

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 further develop its strong position in Norway and has ambitions of growing internationally in its core areas.

Overall corporate goals 1999–2000: • A-pressen aspires to strengthen local media by exerting social influence. • A-pressen’s media business shall continue to grow in 1998–2000. • A-pressen shall increase its yield on locked-up capital by upwards of 10 per cent.

At 31 December 1998 the Group comprised 118 companies, of which 97 are majority owned.

A-pressen ASA

Newspaper/Printing TV Electronic media

Other Local TV Storbyavisene Printing plants TV 2 AS newspapers licences 3 21 (33 %) 44 8

TVNorge AS (49 %)

1 The year 1998 Invested less in 1998

February The board of A-pressen votes to apply for a quotation on the Oslo Stock Exchange’s main list. March A-pressen buys 33 per cent of Norsk Familieøkonomi AS. May A-pressen celebrates its 50th anniversary. June A-pressen Eastern Europe AS is formed. The company’s goal is to establish modern newspapers in the largest Russian regions. August A-pressen buys the newspaper Kvinnheringen. September Digital Hverdag AS merges with New Media Science Multimedia ASA. A-pressen owns 23.5 per cent of the shares in the new company. October A-pressen is listed on the stock exchange. A-pressen buys Lofot-Tidende. November A-pressen concludes a new share issue that was fully subscribed to the amount of NOK 144.3 million. A-pressen buys and becomes the majority owner of Bladet Harstad and Hadeland. The newspapers Aust Agder Blad and Tvedestrandsposten co-found a new company, Tvedestrand Risør Holding AS, in which A-pressen owns 51 per cent. December The Finnish media group Sanoma buys 13.5 per cent of A-pressen ASA. (Sanoma increases its shareholding in A-pressen ASA to 20 per cent in February 1999.) Dagsavisen is sold to the foundation Dagsavisen and is as of 31 December 1998 no longer a newspaper owned by A-pressen.

Key Figures (NOK 1000) 1998 1997 1996 1995 1994 Operating revenues 2 269 859 2 188 310 1 951 440 1 793 681 1 511 407 Operating profit 37 054 103 048 102 792 96 434 72 304 Profit before taxes and minority share - 13 442 45 564 91 197 100 830 62 386 Net profit/loss - 20 940 17 378 67 920 91 819 58 681 Operating margin (%) 1.6 4.7 5.3 5.4 4.8 Total assets 2 049 628 2 046 138 1 770 818 1 389 806 809 364 Return on total assets (%) 2.2 5.0 8.4 10.5 10.4 Return on equity (%) - 3.2 3.0 11.7 21.5 24.9 Equity ratio (%) 37.1 31.0 34.5 38.3 29.2 Circulation majority owned newspaper 524 872 525 267 519 536 513 349 512 887 Number of employees in Group 2 875 2 904 2 658 2 473 2 144 Number of full-time equivalents in Group 2 656 2 637 2 374 2 227 1 982

Share related key figures: Earnings (NOK) - 2.9 2.4 9.5 18.8 14.4 Cash flow (NOK) 16.8 20.0 24.6 39.3 31.6 Book equity (NOK) 81.8 83.9 82.6 73.5 52.9 Dividend (NOK) 0 1.0 1.2 1.1 1.0

Definitions see page 15

Financial calendar (with reservations for possible changes) General Meeting 10 May 1999 Presentation of the 1st tertiary 8 June 1999 Presentation of the 2nd tertiary 5 October 1999

2 Year of consolidation

A-pressen’s financial result for 1998, its 50th anniversary, has disappointed its owners as well as us Group employees. The result is unacceptably poor, but does not significantly shake A-pressen’s solid foundation in the Norwegian media market. A-pressen’s two key positions, local newspapers and TV 2, are maintaining their grip on the public and advertisers. Both, however, have a cost development fuelled by a huge demand for qualified staff members and attractive content. Consequently, it is a huge challenge to maintain our hold on customers and keep costs under control.

In the autumn of 1998 the Group management established a project team to facilitate an action plan for good and efficient newspapers in A-pressen. The project team’s documentation and evaluations have told us that there is considerable potential for product improvements within a tighter framework of resources. Reader support shows that A-pressen publishes good local newspapers. The team’s work nevertheless has revealed wide differences in the quality as well as the productivity of the newspapers. But it has also showed that most newspapers have areas in which they are extremely good, and that all have areas that could be improved. By studying the best components of the newspapers and the most productive parts of the organization we get an idea of what is possible when everything works. The main thrust of our organizational development this year will be to transfer as much as possible of this collective competence to the individual firms.

These efforts will prepare A-pressen for economic downturns and tougher competition. After several years of sharp increases in the annual growth of advertising revenues we are now looking at slower growth and possible declines in some markets. A-pressen is well equipped to deal with the competition, but is particularly vulnerable to growth in wage costs because they account for an extremely high proportion of our overall costs. Consequently, we face considerable challenges in the years to come. We are well prepared in terms of investments. The printing plants have been modernized and made more efficient, and in 1998/99 we will overhaul both our accounting and production systems.

Over the past eight years, the owners have invested more than NOK 500 million in developing A-pressen. Most of this capital, together with a reasonable amount of bor- rowed funds, have been invested in TV 2 and flourishing local newspapers. These investments have been sound ventures with a low risk factor.

A-pressen has also helped TV 2 acquire a significant stake in TVNorge. A small proportion has been invested in high-risk areas such as local TV and electronic media. The short-term effect of these investments is a considerable burden on A-pressen’s bottom line. Our goal is to strengthen the Group’s position in the Norwegian media market, and I am convinced that these investments will both strengthen the Group’s earnings and value, and that we will eventually see positive effects of these ventures in the local newspapers.

The poor results of the last two years have without a doubt been a burden on A-pressen’s organization. Although we can see progress by many measures, earnings will natu- rally always be the main criteria for judging the success of our strategy and operations. For this reason, A-pressen will give priority to consolidation rather than continued significant growth. Earnings must and will be improved. We will not, however, abandon the basic idea behind our strategy since 1995: We aim to build value through strategic investments, partly to strengthen existing operations and partly to have more legs to stand on. In the coming months A-pressen will continue to take proactive steps to consolidate its position.

Alf Hildrum CEO 3 Report of the Board of Directors

1998 – steps have been taken to improve the Group’s profitability

998 was for A-pressen a year punctuated by several significant events. The parent company celebrated its 50th anniversary and A-pressen shares were listed 1on the stock exchange in October at the same time as the share capital was increased. Dagsavisen was sold at the close of the year to an independent foundation and the Group is working to reduce its ownership stakes in Bergensavisen, Fremtiden and Rogalands Avis. The Finnish media group Sanoma has traded its way up to become the second biggest shareholder of A-pressen ASA.

The financial results were weak and unsatisfactory and the Board has taken steps which will improve the Group’s profitability in the long term. Further measures will be implemented in the course of 1999.

Results The Group’s pre-tax profits were reduced by NOK 59 million to a loss of NOK 13.4 million. The operating profit for 1998 was NOK 37 million, down NOK 66 million from 1997. The result was negatively impacted by NOK 18 million worth of write-downs in electronic media and TV, a poorer operating result for Storbyavisene, reduced press subsidies, a realized loss of NOK 20 million from the sale of the Dagsavisen shares and implementation of new business management and accounting systems in the core 4 business. Group revenues in 1999 came to NOK 2 269.9 million, 3.7 per cent higher than the year before. Both circulation and advertising revenues showed good progress compared with 1997. Underlying growth from 1997 was 3 per cent and 3.4 per cent respectively. Underlying growth in printing revenues was 0.8 per cent.

Cost of materials amounted to NOK 320 million, with newsprint costs accounting for NOK 154.6 million, compared with NOK 157.7 million in 1997. The reduction in newsprint costs in 1998 thus came to 2 per cent. Adjusted for new and sold companies, the underlying growth in newsprint costs was 5.3 per cent.

In 1998 the Group replaced many of its business systems, inter alia to deal with the Year 2000 Problem. Nearly NOK 45 million has been invested via the subsidiaries in business systems. An estimated NOK 20 million was charged as expenses.

The Group’s share from associated companies in 1998 was a loss of NOK 3.2 million, compared with a loss of NOK 17.2 million in 1997. The figures are not directly comparable because Nyhetskanalen, the defunct all-news channel, was included in 1997, and the Group’s stake in TV 2 was increased throughout 1997.

The Group’s cash flows from operating activities came to NOK 110.5 million, down NOK 16.5 million compared with 1997. A-pressen made net investments of altogether NOK 139 million in 1998.

The Group’s equity ratio rose from 31 per cent at the beginning of the year to 37.1 per cent at year-end. Liquid reserves amounted to NOK 348 million at 31 December 1998. Net interest-bearing debt at the same time was NOK 594 million.

Year 2000 The Group has initiated a number of measures, inter alia to ease the transition to the year 2000. New circulation systems including subscription, distribution, news-stand sales and newspaper carrier management were in place at all A-pressen newspapers by the end of 1998. A-pressen has furthermore replaced its payroll and accounting systems at nearly all Group firms. In 1999 several newspapers will modernize their advertising systems.

The Group has adopted fixed guidelines, with a detailed checklist, of the steps subsidiaries are to take with respect to potential problems. The guidelines also cover computer equipment, telephony and other electronic equipment including management of the press and packing systems.

A-pressen believes it has taken the necessary steps to conquer the Millennium Bug. IT or system-related complications stemming from the changeover to the year 2000 can nevertheless not be ruled out.

The business areas Newspapers and printing A-pressen strengthened its position in the local newspaper market in 1998 by acquiring several local newspapers. The Group now has ownership interests in 47 newspapers, of which 43 are majority owned. The newspapers maintained their strong position in the local markets through the year. A-pressen’s overall daily circulation including minority- owned newspapers totalled 578 815 or 19.5 per cent of Norway’s daily circulation.

The overall circulation of the newspapers in which the Group owns more than 20 per cent was virtually unchanged compared with the year before (comparable companies). Excluding the circulation of Dagsavisen the underlying decline was 0.5 per cent.

Local newspapers In November and December the Group purchased 68.8 per cent of the shares of the newspaper Hadeland. Twenty-five per cent was acquired through a private placement, while the remainder was purchased via an offer sent to all previous shareholders. Since the turn of the year the Group has raised its stake to 93.7 per cent. Hadeland has a daily circulation of 7 607 and is published in Brandbu.

The newspaper Lofot-Tidende in Leknes in Lofoten in Northern Norway was acquired 5 Report of the on 1 November. Lofot-Tidende was founded in 1987 and was previously locally Board of Directors owned. In the autumn of 1997 the weekly newspaper began publishing two times a week. Lofot-Tidende complements A-pressen’s newspapers in the region. Lofot- Tidende has been a supplementary newspaper in the Media Nor advertising pool since 1994.

Effective 1 January 1999, a joint ownership company was established for the newspapers Aust Agder Blad in Risør and Tvedestrandsposten. A-pressen ASA will own 51 per cent of the shares in the new company, Tvedestrand Risør Holding AS. Tvedestrandsposten has a circulation of 3 875, while the circulation of Aust Agder Blad is 3 683. Together the two newspapers will be the market leader in the municipalities east of Arendal: Tvedestrand, Risør, Vegårshei and Gjerstad. Tvedestrands- posten and Aust Agder Blad will continue to operate as independent newspapers.

Effective 1 September, the local newspaper Kvinnheringen in Husnes was purchased. Kvinnheringen publishes three issues per week with a circulation of 4 863 copies, and is currently the leading newspaper in Kvinnherad municipality.

In 1998 the Group increased its ownership stake in Bladet Harstad to 76 per cent and in Nordlys to 69.5 per cent.

Profits Local newspapers increased their operating revenues in 1998 by 9.1 per cent to NOK 1 499 200 000. Growth in advertising revenues waned in the third period and advertising revenues were 8 per cent higher than the year before. Underlying annual growth of directly comparable companies was 4.9 per cent.

Operating profits less goodwill rose by NOK 1.1 million to NOK 110.2 million. The operating profit for directly comparable companies was, however, down NOK 5.5 million from 1997. The profit for the business area is marked by wide variations among the newspapers. The newspapers Romerikes Blad, Østlands-Posten and Oppland Arbeiderblad increased their operating profit by approximately NOK 27 million, to more than NOK 67 million.

The three newspapers in Østfold saw their combined profits drop by more than NOK 16 million, while the newspapers in Northern Norway reported a NOK 8 million decline.

Storbyavisene In 1995, A-pressen organized its No. 2 newspapers in five of Norway’s largest cities (Bergensavisen, Dagsavisen, Fremtiden, Rogalands Avis and Telemarksavisa) into a separate subgroup for major city newspapers, Storbyavisene AS. With the exception of Telemarksavisa, the circulation gap between these newspapers and their competi- tors is so wide that for the foreseeable future it will not be possible to operate them without direct public subsidies.

In 1993–1998 the real value of these direct subsidies was reduced by nearly NOK 50 million. Out of the total subsidy package of NOK 187.2 million, the Storbyavisene received NOK 74 million, equivalent to 40 per cent. The reduction in direct public subsidies is a contributing factor to the significantly worse financial results of these newspapers.

The majority of legislators in the Storting, Norway’s national assembly, want to continue the current policy of maintaining a diversified press in Norway. At various times, however, the authorities and representatives of most of the parties in the Storting have questioned whether newspapers owned by corporations should receive such extensive direct public subsidies as those received by certain A-pressen papers. Consequently, regulations have been issued which prevent reasonable servicing of equity capital in companies entitled to public subsidies. The unintended effect of this has been a poorer access to equity capital.

In light of these circumstances, A-pressen has for some time evaluated ownership solutions more suited to the special situation of these newspapers. The goal is to ensure the publication of these newspapers on the most stable basis possible. In 6 order for these plans to succeed, subsidies must be predictable and restored to at least the level of the early ’90s. The Board has concluded that there is little possibility of this happening unless A-pressen ASA reduces its ownership stakes in the newspapers that receive the most subsidies. Jan Kr. Balstad On 31 December, Dagsavisen was transferred to an independent foundation. With Chair the exception of Telemarksavisa, which will be transferred to A-pressen Avis og Trykk Deputy Secretary General AS (wholly-owned by A-pressen ASA), a process was initiated at the end of the third of the Norwegian tertiary to reduce the Group’s financial interest in the other Storbyavisene (Bergens- Federation of avisen, Fremtiden and Rogalands Avis). The Group’s goal is to complete this process Trade Unions (LO) by the end of the first half of 1999.

In December 1998 the Group reduced its exposure in Bergensavisen to under 80 per cent. This was accomplished via a NOK 10 million private placement in Bergensavisen directed at Frank Mohn AS.

Results The Storbyavisene increased their losses in 1998 by NOK 17.1 million to NOK 26.9 million. Dagsavisen’s loss (excluding the approximately NOK 20 million profit from the sale of buildings) amounted to NOK 13.1 million and is charged in its entirety against Storbyavisene’s operating result. On 31 December 1998, Dagsavisen was hived off as an independent foundation and is therefore not included in the Group’s year-end balance sheet. An accounting loss of approximately NOK 20 million was realized from the sale Terje Moe Gustavsen of the Dagsavisen shares. Deputy Chair Head of LO Stat Printing In printing, operating profits increased by NOK 6.9 million to NOK 14.1 million, even though Media Øst Trykk AS in Lillestrøm had production problems. As partial compensation for increased production-related costs, Media Øst Trykk has received approximately NOK seven million in compensation from an out-of-court settlement with the supplier of the packing equipment. In early March 1999, Media Øst Trykk AS concluded negotiations with the press supplier which resulted in a NOK 15 million compensation agreement. NOK four million of this amount has already been entered as income.

The work of eliminating and reorganizing printing facilities in Eastern Norway has been concluded and all newspaper production has been transferred to Media Øst Trykk. All costs in connection with the restructuring plan were charged in 1998 and amounted to just over NOK six million.

Russia A-pressen has teamed up with the European Bank for Reconstruction and Development (EBRD) to invest in the Russian newspaper and printing market. The investments will be carried out by the company A-pressen Eastern Europe AS (AEE), the ownership of which is split 65/35 between A-pressen ASA and EBRD. Work proceeds on several newspaper and printing projects. The investments will take place in phases. A-pressen’s share of the planned investments amounts to NOK 40 million Åshild M. Bendiktsen and will inter alia take the form of transfers of used printing equipment. No invest- Board member ments had been made by AEE in Russia at 31 December 1998. Implementation of Director of Finance, the first investments are scheduled for first period 1999. Bendiktsen & Aasen AS

TV The channel TV 2 continues its positive trend. Both reported audience numbers and other market surveys show that its popularity with the public increased again in 1998. New programming plans were made in 1998 as part of a long-term strategy to build loyalty to the channel.

The TV 2 Group posted a net profit of NOK 86.3 million, down NOK 12.3 million from 1997. The decline was caused in its entirety by the losses of associated companies and newly started enterprises. The channel reported a significant increase in revenues, but price increases for broadcasting rights and new programme investments have also served to push up costs. TVNorge lowered TV 2’s net profits by NOK 58.2 million.

The TV companies (mostly local TV) in which the Group is the majority shareholder reported an operating loss of NOK 25.4 million, compared with a loss of NOK 22.4 million the year before. The weaker result is due inter alia to NOK 5.5 million in 7 Report of the extraordinary amortization of goodwill. Due to a decline in content production the Board of Directors underlying profit performance was, however, negative towards the end of the year.

Local TV stations are struggling to penetrate the local advertising market, partly because local TV is a new advertising medium, and partly because the stations have not been adept at selling and producing local advertising. Advertising revenues for comparable companies were 16 per cent higher in 1998 than in 1997. The Group’s goal Jorunn Helgesen is for the local TV companies to break even in 1999. Major changes are needed to Board member achieve this objective. Cost-cutting measures alone will not be sufficient to achieve Employee representative the short-term goal of break even. Steps have been taken to improve the sales work Typographer of the local TV companies. Fremover Electronic Media In 1998, Electronic Media posted an operating loss of NOK 11.1 million, including NOK 5.2 million in extraordinary amortization of goodwill. In the third period a merger agreement was signed between the Internet companies New Media Science AS and Digital Hverdag AS. A-pressen owned 51 per cent of the latter company and owns 23.5 per cent of the merged company. In setting the conversion ratio, it was assumed that the merged company would post a result of approximately NOK 5 million. Digital Hverdag achieved a result in accordance with the preconditions, while New Media Svein Haugsvold Science’s performance deteriorated significantly. Compensation for the shortfall will Board member be negotiated with the old owners of New Media Science. Deputy Managing Director VÅR bank og forsikring Share capital and shareholder relations In June 1998 a private placement was directed at Group employees. A total of 338 employees subscribed for 10 478 shares. A private placement in December of 24 135 shares was undertaken as settlement for the take-over of 30 per cent of the shares in Lofoten Kommunikasjon AS.

On 28 October A-pressen ASA shares were listed on the Oslo Stock Exchange. A pre- emptive issue at NOK 90 per share was carried out simultaneously. The subscription rights were quoted on the Oslo Stock Exchange. The issue, the gross of which was NOK 144.3 million, was underwritten mainly by existing shareholders.

The extraordinary general meeting held in conjunction with the stock exchange listing and the new share issue voted to remove the Article of Association limiting ownership of shares to 20 per cent.

The issue brought no major changes among the largest shareholders. In December, Sanoma, Finland’s biggest media corporation, bought 13.2 per cent of A-pressen ASA’s shares through its company Helsinki Media Company AS. In 1999 Sanoma has increased its shareholding to 20 per cent.

Brit Renngård In 1998, the Norwegian Confederation of Trade Unions (LO) formed the investment Deputy board member company Fagbevegelsens Investeringsselskap AS. LO and a few affiliated unions (attends regularly) transferred their shares in A-pressen ASA to this company. Chief cashier of Norwegian Civil Service Union At the close of 1998, A-pressen shares were trading at NOK 105, 36 per cent lower than in 1997. Prices fluctuated widely throughout the year, however, from a high of NOK 170 to a low of NOK 92. At 31 December 1998 A-pressen had 1 642 shareholders, compared with 1 385 the year before.

Personnel and organization At the close of 1998 the Group had 2 875 employees (2 656 full-time equivalents), excluding newspaper carriers. In 1997 the Group had 2 904 employees accounting for 2 636 full-time equivalents. The number of full-time equivalents for comparable companies was reduced by 28 from 1997 to 1998.

Considerable resources are spent on training and developing managers and employees in A-pressen’s companies. The Group’s joint management and personnel policy is followed up locally and centrally through a number of measures and programmes.

The group union representative system functions well and the Board would like to 8 thank all employees for their fine efforts over the past year. A-pressen ASA The Board proposes that no dividend be paid for the 1998 financial year. The Board approves the parent company’s and Group’s annual accounts for 1998, and proposes that A-pressen ASA’s loss for the year of NOK 55.4 million be settled as follows: Kith Skaalerud Received Group contribution NOK 68.7 million) Board member Transferred to distributable reserve NOK (13.3 million) Employee representative Total NOK 55.4 million) Advertising consultant Romerikes Blad AS A-pressen ASA owns 43 newspapers, six printing companies, 33.2 per cent of the shares of TV 2 AS, 23.5 per cent of the shares in New Media Science ASA, and a few smaller project-related companies. In addition, the parent company has stakes in four other papers. The Group comprises 118 companies including 21 associated companies.

The parent company provides a number of joint services for Group companies, including training, purchasing, marketing, and capital management. The Group’s head office is in Oslo and had 29 employees at year-end. In 1997, the Board decided to enlarge the corporate administration somewhat in order to handle the sharp growth in Group investments. This was done in 1998. Operations and activities of the parent company Johnny Helgesen are financed through an administrative fee paid by the subsidiaries and Group con- Board member tributions from the subsidiaries that do not receive press subsidies. In addition to its Employee representative own expertise, the parent company uses the special competencies possessed by the Photographer subsidiaries and associated companies. The working environment is good, and the Østfoldpressen AS company does not pollute the external environment.

Total remuneration of the Board, Corporate Assembly, CEO and auditor is covered in Note 2 of the parent company’s annual accounts. The same note shows how many shares are owned by each member of the Board, Corporate Assembly, auditor and CEO.

Future outlook The financial results of Norwegian media will to a large extent be determined by the state of the economy. Last autumn’s interest hikes created uncertainties about the economic situation of consumers and corporations, and have had the direct effect of reducing the growth of advertising investments. Growth in private consumption is predicted to be weaker than in previous years.

Consequently, there is more uncertainty than usual about the direction of advertising markets, which will be of great significance to the Group’s opportunities for improving earnings in 1999. Advertising growth towards the end of 1998 plummeted and was negative in some areas. In light of this, we cannot rule out the possibility of a reduction in the newspapers’ advertising revenues in 1999, but expect to see modest growth in TV advertising. Tore Tønne Sustained uncertainty about consumer spending could also reduce the demand for Board member newspaper subscriptions, precipitating higher marketing costs to maintain sales. CEO Norway Seafoods ASA The Group faces major challenges in strengthening the Group’s competitiveness through improved profitability. Future revenues will probably not allow for the attain- ment of satisfactory profitability without significant productivity gains. By the year 2000 the Group must bring personnel costs of continued operations down to the same nominal level as 1998. The Group’s newspaper and printing companies will therefore have to reduce the number of employees by at least 10 per cent, calculated from the beginning of 1998. Some of these cuts were carried out in 1998 and in the approved budgets for 1999. Various means will be employed in implementing the downsizing so that direct dismissals can be avoided as far as possible. The costs will be charged to the 1999 accounts.

The Board places considerable emphasis on bolstering competitiveness through improving the product quality of the newspapers. A high priority is therefore placed on product development. Considerable emphasis is placed on using the newspapers’ collective competencies in improving and creating new editorial content and advertising products. 9 Report of the The extensive replacement of computer equipment is expected to be essentially fin- Board of Directors ished in 1999. Operations-related investments are expected to be considerably lower in the years to come.

Media policy is marked by great uncertainty because there is a considerable gap between the approved political goals and the means employed to attain them. The reduction in press subsidies has continued into 1999, increasing the chances of a political majority in favour of imposing a tax (VAT) on newspaper sales. This could reduce the number of newspapers considerably in Norway and newspapers with the Eigil Wettre strongest market position will pass the cost on to readers. The probable effect of this Board member will be to reduce newspaper sales considerably. CEO Møller-gruppen AS Earnings of the printing plants are expected to remain stable. Media Øst Trykk has now decided to complement its facility to ensure stability in deliveries and to meet demand. Capacity utilization is expected to improve at this facility in 1999, but will not reach its target level before the beginning of 2000.

The TV 2 Group’s profits will be affected primarily by the development of the advertising market and by TVNorge’s earnings. Big question marks still hang over TVNorge’s performance, although we expect to see a reduction in its losses in 1999. Local TV costs continue to fall, and the cost programme will be concluded in the first half of 1999. Revenue trends will determine whether profits will be achieved in the course Alf Hildrum of the second half. CEO A-pressen ASA The development of electronic media will continue to be marked by great uncertainty. In 1999, efforts will be concentrated mainly on developing the investments made in recent years. Internet operations of local papers will continue in line with a cautious investment programme.

The investment programme in Russia is proceeding according to plan. Because of the devaluation of the rouble, short-term yield estimates must be reduced although the investments will still yield acceptable earnings. The approved investment programme is to be carried out in the course of the year 2000.

Over the next two years, the Group will invest the majority of its management resources in bolstering the Group’s competitiveness through improved earnings. The Group’s short-term growth ambitions will have to be curtailed but its overall growth strategy remains, however, in place.

Oslo, 9 March 1999

Jan Kr. Balstad Åshild M. Bendiktsen Svein Haugsvold Johnny Helgesen

Jorunn Henriksen Terje Moe Gustavsen Brit Renngård Kith Skaalerud

Tore Tønne Eigil Wettre Alf Hildrum

Shareholder relations

Open shareholder policy

-pressen ASA will endeavour to maintain an open shareholder policy and provide information so that underlying values and future growth opportuni- Aties in the company are reflected in the share price as well as possible. This will be accomplished via regular annual and interim reports, stock market bulletins and press releases, and by maintaining regular contact with stock market players. Major corporate events are reported as they take place.

Healthy share liquidity is a high priority at A-pressen and is the main reason why the company decided to be listed on the Oslo Stock Exchange in October 1998. Securities issued by A-pressen shall represent a liquid investment alternative for investors.

A pre-emptive issue by which 1.6 million new shares were issued coincided with the stock market listing. The issue was fully subscribed and was guaranteed in advance at NOK 90 per share by a consortium consisting mainly of existing shareholders. The gross proceeds of the issue amounted to approximately NOK 144 million. The issue was arranged by Elcon Securities ASA in cooperation with Enskilda Securities.

The company endeavours to keep the most prominent financial players in the media regularly updated on A-pressen so that their knowledge about the company and the 12 industry is at a high level. The main focus has been and will continue to be on the Norwegian financial market, although the management of A-pressen has also given Performance of A-pressen share presentations in London following the publication of interim figures. 200

Share capital A-pressen ASA’s share capital at 31 December 1998 was NOK 176.8 million divided 200 into 8 839 643 shares with a nominal value of NOK 20. In addition to the pre-emptive issue in November 1998, there was a private placement in December 1998 of 24 135 150 shares (share price NOK 112.50) and an employee issue in June 1998 of 10 478 shares (share price NOK 127.50). 125

Development of share capital 100 Year Type of changes Change in Sharecapital Nom. value No. of shares sharecapital after change (NOK) after changes 1989 Issue 20 000 000 22 000 000 100 220 000 75 1991 Issue 59 105 000 81 105 000 100 811 050

1994 Issue directed at employees 4 858 200 85 963 200 100 859 632 50 1995 Private placement 309 000 86 272 200 100 862 722 March 95 March 96 March 97 March 98 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 7 212 668 1998 Pre-emptive issue 32 416 400 176 310 160 20 8 815 508 1998 Private placement 482 700 176 792 860 20 8 839 643

Tradability of shares Under the old Article 5 of the Articles of Association, no new shareholders could own more than 20.0 per cent of the company’s shares. The article has now been removed from the company’s Articles of Association as it was incompatible with the principle of free trading of the share via the Oslo Stock Exchange.

Company shares were traded in the “unlisted” market until its introduction to the stock exchange on 28 October 1998. According to the Norwegian Registry of Securities, a total of 11.4 million shares were traded in 1998. Of these, 2.53 million shares are related to the transfer of all of the Norwegian Federation of Trade Union’s (LOs) A-pressen shares to a newly established investment company, Fagbevegelsens Investeringsselskap AS, in the autumn of 1998.

In December 1998, Helsinki Media Group, a wholly-owned Norwegian subsidiary of the Finnish Sanoma group, purchased 1.16 million shares in A-pressen, equivalent to 13.2 per cent of the share capital. In February 1999 the company’s shareholding was raised to 20.0 per cent. Sanoma is a strategic investor in A-pressen and will be given a seat on the board in 1999. The management is 100 per cent supportive of having Sanoma as an owner.

The subscription rate in the pre-emptive issue was set at NOK 90 and the subscription rights were traded between 29 October 1998 and 12 November 1998. The first quotation day for the A-pressen share was 28 October 1998. Approximately 1.44 million shares were traded via the Oslo Stock Exchange from the stock-exchange introduction until the end of the year.

The final quoted price in 1998 was NOK 105. Highest price in 1998 was NOK 170 while the lowest was NOK 92. The share has performed well since its stock-exchange introduction at NOK 90, and was traded at a price of NOK 127 in February. It closed at NOK 110 on 28 February.

Share price performance 1998 1997 1996 Highest price (NOK) 170 195 155 Lowest price (NOK) 92 158 94 Closing price at year end (NOK) 105 165 155 Total volume (source: VPS) 11 493 875 2 245 246 12 398 224 13 Shareholder Shareholders relations Fagbevegelsens Investeringsselskap AS owned 28.5 per cent of the shares at the end of the year, and was consequently the largest shareholder.

At 31 December 1998, Sanoma via Helsinki Media Company AS owned 13.2 per cent of A-pressen, making it the second largest shareholder at the close of the year. In February 1999 the company increased its shareholding to 20.0 per cent.

The Møller Gruppen via Møller Investor AS and Møller Skipsinvest AS had a 13.7 per cent stake at the end of the year.

The number of shareholders at 31 December 1998 was 1 642.

The 20 largest shareholders owned 85.7 per cent of the total number of shares at year-end.

Table of 20 largest shareholders at 31.12.98 Name Number of shares Shareholding in % Fagbevegelsens Investeringsselskap AS 2 523 662 28.55 Helsinki Media Company AS 1 163 200 13.16 Møller Investor AS 974 500 11.02 Fidelity Funds 457 966 5.18 Clydesdale Bank s/a Fidelity Investment 391 844 4.43 Storebrand Livsforsikring 246 722 2.79 Møller Skipsinvest AS 238 778 2.70 VÅR Livsforsikring 236 400 2.67 Norwegian Union of Municipal Employees 235 889 2.67 Verdipapirfondet Skagen Vekst 230 000 2.60 Aksjespar Postbanken 150 000 1.70 Brown Brothers 122 222 1.38 VÅR Skadeforsikring 107 000 1.21 Sparebanken NOR 97 778 1.11 Clydesdale Bank S/A Fidelity European 95 577 1.08 Gjensidige Livsforsikring 87 300 0.99 Norwegian Civil Service Union 61 630 0.70 Vital Forsikring 60 300 0.68 Postbanken Aksjevekst 51 920 0.59 Gjensidige Skadeforsikring 43 600 0.49 Total 20 largest shareholders 7 576 288 85.71 Other shareholders 1 263 355 14.29 Total 8 839 643 100.00

Foreign-owned share:

Percentage of foreing shareholders Sanoma owns its shares through a Norwegian company (Helsinki Media Company AS) and is therefore not included in the foreign ownership share. 26.17% 1996

26.70% 1997 13.90% 1998 Norwegian ownership: 86.10 per cent Foreign ownership: 13.90 per cent

RISK/Dividend: The general RISK amount (regulation of the cost price of a share by a sum equivalent to the retained profit per share) for the Group was first computed in 1995.

(NOK) 1998 1997 1996 1995 RISK at start of year 5.90 5.15 - 2.83 - 4.24 Dividend 0 1.00 1.20 1.10

The Board recommended that no dividend be paid for 1998. In the longer term, A-pressen’s goal is to pay a dividend in relation to the liquidity situation and future investment need. The company will nevertheless endeavour to pay a dividend in line with what is normal in the industry.

14 Key figures Definition of key figures From the profit and loss account 1Operating margin (NOK 1 000) 1998 1997 1996 1995 1994 Operating profit/Operating revenues Operating revenues 2 269 859 2 188 310 1 951 440 1 793 681 1 511 407 2Return on total assets Operating profit 37 054 103 048 102 792 96 434 72 304 (Result before extraordinary items + financial Profit before taxes and minority share - 13 442 45 564 91 197 100 830 62 386 expenses) / Average total assets Net profit - 20 940 17 378 67 920 91 819 58 681 3Return on equity (Net profit + minority share – extraordinary From the balance sheet items) / Average shareholders’equity including Total current assets 443 525 418 561 501 108 429 545 379 631 minority interests Total fixed assets 1 606 103 1 627 577 1 269 710 960 261 429 733 4Equity ratio Total assets 2 049 628 2 046 138 1 770 818 1 389 806 809 364 Shareholders’ equity including minority interests / Total assets Total current liabilities 519 758 558 254 482 731 414 038 366 770 5Earnings per share Total current long-term liabilities 769 044 852 894 677 419 442 850 206 334 (Net profit – extraordinary items) / Average num- Minoritetsinteresser 37 392 30 454 15 978 9 338 8 974 ber of shares Minority interests 723 434 604 536 594 690 523 580 227 286 6Cash flow per share Shareholders’ equity 2 049 628 2 046 138 1 770 818 1 389 806 809 364 (Net profit + ordinary depreciation – extraordinary items + taxes – taxes payable) / Average number Profitability/capital of shares Operating margin (%)1 1.6 4.7 5.3 5.4 4.8 7Book equity per share Return on total assets (%)2 2.2 5.0 8.4 10.5 10.4 Book equity / Number of shares as per 31.12. Return on equity (%)3 - 3.2 3.0 11.7 21.5 24.9 8Market capitalisation Equity ratio (%)4 37.1 31.0 34.5 38.3 29.2 Last traded share price x number of shares as per 31.12. Share related key figures Quoted price/share price as per 31.12. (NOK) 105 165 155 92 n/a Number of shares as per 31.12. 8 839 643 7 202 210 7 202 210 7 126 110 4 298 160 Average number of shares 7 342 155 7 202 210 7 164 160 4 362 119 4 068 560

Earnings per share (NOK)5 - 2.9 2.4 9.5 18.8 14.4 Cash flow per share (NOK)6 16.8 20.0 24.6 39.3 31.6 Book equity per share (NOK)7 81.8 83.9 82.6 73.5 52.9 Market capitalisation (NOK million)8 928 1 188 1 116 656 n/a RISK per share (NOK) 5.9 5.15 - 2.83 - 4.24 - Dividend per share (NOK) 0 1 1.2 1.1 1.0

1998 Local Storby- Printing- TV El. HC/undis./ (NOK million) newspapers avisene companies media elim. Operating revenues 1 499.2 492.2 366.0 55.0 8.1 - 150.6 Operating profit/loss before goodwill 118.7 - 26.9 14.4 - 16.9 - 6.0 - 23.5 Goodwill - 8.5 - - 0.3 - 8.5 - 5.2 - 0.3 Operating profit/loss 110.2 - 26.9 14.1 - 25.4 - 11.1 - 23.8 Associated companies 0.7 - - 5.2 - 9.8 0.7 Business area profit/loss 110.9 - 26.9 14.1 - 20.2 - 21.0 - 23.1

Operating margin (%) 7.4 3.9

1997 (NOK million) Operating revenues 1 374.0 486.8 336.2 38.5 13.8 - 61.0 Operating profit/loss before goodwill 118.4 - 9.8 7.5 - 19.9 - 1.7 21.9 Goodwill - 9.3 - - 0.3 - 2.6 - 0.9 - 0.3 Operating profit/loss 109.1 - 9.8 7.2 - 22.4 - 2.7 21.6 Associated companies 4.7 - - - 21.0 - 1.0 0.1 Business area profit/loss 113.8 - 9.8 7.2 - 43.4 - 3.7 21.7

Operating margin (%) 7.9 2.1

Business area profit/loss is the total of the company accounts. 15 Business Areas

The business areas of A-pressen

-pressen’s operations are divided into the following business areas: News- papers, Printing, TV and Electronic Media. Management of the newspaper Aand printing area is placed under two units, A-pressen Avis og Trykk AS and A-pressen Media Øst AS, both located in Lillestrøm. The newspapers and printing plants in Østfold, Akershus, Hedmark and Oppland counties are run by the latter unit, while operations in the rest of the country are handled by A-pressen Avis og Trykk AS. The two operating units have direct or indirect majority interests in 43 newspapers and seven printing companies.

Another major business area for A-pressen is TV. The Group owns 33.2 per cent of the shares of TV 2 and has ownership stakes in eight local TV stations as well as a few small production companies.

The electronic media area comprises a limited number of Internet and multimedia companies.

Business Area A-pressen: Norway’s most newspaper important owner of local newspapers

Newspapers affiliated to the Norwegian Newspaper Publishers’ Association have increased their circulation for the second year in a row. Although the increase is not more than 3 019 copies (+0.1 per cent), the result is impressive in relation to the position of Norwegian daily newspapers. Norway is one of the top countries in the world in terms of newspaper consumption and while other comparable countries struggle Share of turnover to keep circulations up, Norwegian consumption is very stable. The general trends can be summed up as follows: Local newspapers are maintaining their strong position, news-stand sales show high overall stability and special interest newspapers are Local newspaper 66.0 % rapidly gaining. A-pressen’s net overall circulation in 1998 was 578 815, a gain of 98 copies. Excluding Avisa Sogndal, its circulation is down 1 610 copies, or 0.3 per cent.

Storbyavisene 21.7% There are major regional differences in circulation. With few exceptions, the circulations of newspapers in Northern Norway and Østfold are declining, but are more stable in the rest of the country. Oppland Arbeiderblad shows a new solid increase in circulation, of 552 copies.

A-pressen’s advertising revenues increased by 7.7 per cent in 1998. Adjusted for purchased and sold newspapers the increase is 3.4 per cent. There is no change in the volume compared to last year. There are huge regional differences in advertising revenues. The biggest growth is in the populous Eastern Norway region, while newspapers in Northern Norway are experiencing stagnation and decline.

Advertising pools are an important source of income for many A-pressen newspapers. Through the pools, advertisers can place a single order and have the same advertisement run in several newspapers. In a steadily more regionalized advertising market, this translates into a stronger competitive position. Orkla Dagspresse newspapers have cancelled their advertising pool agreement with several of A-pressen’s newspapers. This could have a negative impact on revenues, but A-pressen is working on advertising products that will compensate for their loss.

Strategy Although A-pressen has expanded in step with media developments, newspapers and all that is associated with newspaper publishing are still the main business of the Group and will remain so for the foreseeable future. Norway is one of the top newspaper-reading countries in the world, and A-pressen’s local newspapers are standing strong despite competition from national newspapers, TV and new media. In an age of fragmented media choices, people prefer the intimacy of a local newspaper. This was recently confirmed in the 1998 edition of Norway’s official newspaper reader survey, Forbruker og Media, conducted by the Norsk Gallup Institutt. In terms of both public attention and finances, publishing local newspapers is the very backbone of A-pressen’s business. Consequently, this area will continue to be our main focus in the years to come.

The main principle and strongest suit of local newspapers’ is their closeness to readers and advertisers. A-pressen is Norway’s pre-eminent publisher of local newspapers. Thirty five of the Group’s newspaper 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 that A-pressen strengthen the position of local newspapers in the minds of readers, and consolidate the Group’s dominating grip on the local market through development, acquisitions and alliances.

One goal is to reduce costs, particularly personnel costs. A programme has been prepared to reduce the number of full-time equivalents by 10 per cent by the end of the 18 year 2000. One objective in particular is to strengthen earnings by increasing advertising market A-PRESSEN NEWSPAPER competencies at the corporate as well as regional and local level. Sole newspapers No. 1-Newspapers Akershus Amtstidende Aura Avis The future outlook for local newspapers has been assessed as very good. No media, Arbeidets Rett Fremover new or old, have managed to topple the position of local newspapers as a repository Aust Agder Blad Hamar Arbeiderblad* and expression of local identity for the majority of Norwegians. Avisa Sogndal Nordlands Framtid Bygdeposten Nordlys The Group intends to: Finnmark Dagblad No. 2-Newspapers • ensure and strengthen the strategic position of local newspapers. Finnmarken Bladet Harstad • initiate investments and alliance-building internationally in newspapers and printing. Firda Demokraten • increase the profitability of existing newspapers, printing and distribution opera- Firdaposten Moss Dagblad tions by a significant amount. Glåmdalen Telemarksavisa

Hadeland Storbyaviser Storbyavisene AS Halden Arbeiderblad* Bergensavisen The Storbyavisene (major city newspapers) group comprises Bergensavisen, Rogalands Hardanger Folkeblad Fremtiden Avis, Telemarksavisa and Fremtiden. The newspapers are so-called No. 2 newspapers Helgeland Arbeiderblad Rogalands Avis of readers and advertisers in their regions, and are subjected to strong competition Indre Akershus Blad from dominant regional newspapers and national newspapers. These newspapers Indre Smaalenenes Avis* receive approximately 80 per cent of the press subsidies allocated to the Group’s Kvinnheringen newspapers. Lofotposten Lofot-Tidende The board of A-pressen decided in the autumn of 1998 to reduce the Group’s stakes Malvik Bladet in these newspapers, with the exception of Telemarksavisa, which was transferred on Namdals-Avisa 1 January 1999 to A-pressen Avis og Trykk AS, a company wholly owned by A-pressen Opdalingen

ASA. Dagsavisen was transferred to separate foundation on the same date. Oppland Arbeiderblad Rakkestad Avis The ambition is to reduce the ownership stakes to under 50 per cent in the three Rana Blad other newspapers over the course of the first half of 1999. Ringerikes Blad Rjukan Arbeiderblad The performance of the Storbyavisene group, a loss of NOK 26.9 million including pub- Romerikes Blad lic subsidies of NOK 74 million, was worse than the year before. Sarpsborg Arbeiderblad Stjørdalens Blad One of the main reasons was the sale of Dagsavisen, which by itself weakened the Tidens Krav result by cirka NOK 20 million. Fremtiden and Rogalands Avis reported reported profits Tvedestrandsposten in 1998. Østlands-Posten Øvre Smaalenene* Dagsavisen increased its circulation by 3 021 last year to 43 792 copies. Telemarks- Årdal & Lærdal Avis avisa and Bergensavisen increased their circulation, while Fremtiden and Rogalands * Minority companies Avis saw a sharp decline in circulation. Telemarksavisa (+82) made further headway Source: NAL Aviskatalogen against its competitor Varden (-548), and now has 68.6 per cent of the No. 1 newspaper’s circulation. This is the second strongest market position for a No. 2 newspaper in Norway.

The future outlook for the major city newspapers is filled with uncertainty. In general, the newspapers are struggling with poor profitability, have stiff competition and are dependent on public subsidies at about the present level.

A-pressen’s Oslo editorial office A-pressen’s Oslo editorial office (APOR) is the press group’s news service, owned by the newspapers through a shareholding agreement signed in 1990.

APOR’s objective is to conduct free and independent journalism and, in close cooperation with other A-pressen editorial staffs, help increase the circulation of its owners, strengthen their competitiveness and underscore their distinctiveness as newspapers with a social democratic viewpoint.

The company posted revenues of NOK 26 million in 1998. Membership fees of the newspapers make up more than half of its revenues while the remainder comes from the sale of additional services – mainly to newspapers in the press group. Apor has 35 employees (30 full-time equivalents).

During this decade APOR has rapidly transformed itself into a complete news agency offering feature stories, daily leaders and a complete photo service. The agency manages the intranewspaper copy exchange system and extensive sports reporting 19 Business Area service and produces finished pages – particularly the radio and TV listings – for sale newspaper to the newspapers.

In the course of 1998 the APOR Ekstra news service was launched as an alternative to the news service offered by the Norwegian News Agency (NTB), and was made available to most A-pressen newspapers. The service has been well received by the news- A-pressen circulation papers and established as a permanent service starting January 1999. Fifteen news-

512 887 1994 papers have cancelled their subscription to NTB in favour of APOR’s service, which is 513 349 1995 considerably cheaper and is furthermore only available to A-pressen newspapers.

519 536 1996 525 267 1997 Local newspaper 524 872 1998 (NOK million) 1998 1997 Circulations revenues 519.7 479.9 Advertising revenues 806.3 725.0 Printing revenues 58.3 67.0 Total circulation Norway Government subsidies 13.3 17.4 Other operating revenues 101.6 84.8 Total operating revenues 1 499.2 1 374.0 A-pressen 19.5% Schibsted 32.9%

Cost of materials 245.6 230.8 Salaries, wages and other personnel expenses 662.7 599.5 Other operating and administration costs 412.5 369.5 Andre 21.2% Orkla-Schibsted 7.3% Ordinary operating revenues 64.3 60.1 Dagbladet 7.0% Orkla 12.1% Bad debts and guarantees 3.9 5.0 Total operating expenses 1 389.0 1 264.9

Operating profit/loss 110.2 109.1 Result from associated companies 0.7 4.7 Business areas profit/loss 110.9 113.8

Circulation development of Norwegian newspapers (mill. copies) Operating margin (%) 7.4 7.9

3.00

Storbyavisene 2.75 (NOK million) 1998 1997 Circulations revenues 213.3 212.3 2.50 Advertising revenues 182.0 176.8 Printing revenues 0.0 0.0 2.25 Government subsidies 74.0 79.6 Other operating revenues 22.8 18.1 2.00 Total operating revenues 492.2 486.8 ’98 ’96 ’94 ’92 ’90 ’88 ’86 ’84 ’82 ’80

Cost of materials 104.7 99.0 Salaries, wages and other personnel expenses 220.9 212.9 Other operating and administration costs 176.6 166.9 Ordinary operating revenues 14.3 14.9 Bad debts and guarantees 2.6 2.9 Total operating expenses 519.1 496.6

Operating profit/loss - 26.9 - 9.8 Result from associated companies 0.0 0.0 Business areas profit/loss - 26.9 - 9.8

Operating margin (%) - 5.5 - 2.0

Circulation development (47 newspapers) 1998 1997 1996 1995 1994 Storbyavisene 126 210 125 190 126 117 126 266 125 573 Other majority newspapers 398 662 400 077 393 419 387 083 387 314 Total majority newspapers 524 872 525 267 519 536 513 349 512 887 Minority newspapers 53 943 53 450 54 927 54 670 54 745 Total circulation 578 815 578 717 574 463 568 019 567 632 20 Figures for comparable newspapers. 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 biggest regions. One of its goals is to establish operations at an early phase of the development of a private media market. The venture is underpinned by simple and modern rotary presses that can be flexibly expanded in pace with the development of the market.

The operation in Russia is part of A-pressen’s added valued development, and is an expression of a desire to capitalize on the Group’s expertise and organization. Market potential is substantial and will probably climb in step with the growing purchasing power of Russian consumers.

The business has been set up as a separate company, A-pressen Eastern Europe AS (AEE). Ownership is split between A-pressen, with 65 per cent, with the remaining 35 per cent owned by 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 a partnership with the media group Komsomolskaya Pravda-Group To-day (KP-GS) and regional investors. A fundamental principle in the projects is that the Russian partners do the basic investments (premises etc.) and pay up their share of the capital before AEE and EBRD inject capital. A-pressen’s expertise will be actively used to develop the projects.

A number of projects are in progress, the first three of which are to come on stream in the first half of 1999.

21 Business Area Major changes in printing the area of printing

Share of turnover A-pressen’s printing business is partly organized in separate printing companies and partly as divisions of newspaper companies. The business area accounts for 9.0 per cent of the Group’s external revenues. A-pressen has 21 press installations. Of these, Trykk 9.0 % eight are organized in seven separate printing companies, the remaining 13 are press installations in the newspaper companies. A-pressen’s printing business consists first and foremost of printing the Group’s own newspapers as cost-effectively as possible. Media Øst Trykk AS (MØT) has large shares in the external market, but has ambitions of increasing its market share substantially.

A-pressen has been involved in the Russian market since 1994, and in 1996 it invested in the state-owned printing plant in Murmansk. The project has been successful and provided valuable experience. The operations in Russia have now been spun off into a separate company, A-pressen Eastern Europe AS, of which A-pressen owns 65 per cent, with the remainder owned by the European Bank for Reconstruction and Development (EBRD).

A-pressen has restructured most of its printing business since 1996. In Eastern Norway, the number of printing plants has been reduced from six to two over the course of 1997 and 1998. During this period all production of the printing plants in Kongsvinger, Sarpsborg, Drammen and Skøyen was transferred to Media Øst Trykk AS in Lillestrøm and Mysen. In Sogn og Fjordane the printing plants of Firdaposten and Sogn Dagblad have been closed and operations have been transferred to Firda. In Stavanger, Rogalands Avis’ printing plant was sold, and the printing of the newspaper was transferred to the competitor, Stavanger Aftenblad. When Telemarksavisa’s own printing plant was closed, Larvik Rotasjonstrykkeri AS took over printing the newspaper. A-pressen also sold Sentrum Trykk in Trondheim and Larvik-based Østlands-Postens Boktrykkeri in 1998.

The basis for further structural changes will probably be limited. This is primarily because geography and long distances make distribution difficult, in combination with the fact that the present solution of small press installations in the newspaper companies is cost-effective.

After the closure of the printing works in Sarpsborg, Drammen, Skøyen and Kongsvinger in 1998, the production facilities of Media Øst Trykk AS (MØT) are in Lillestrøm and Mysen. The facility in Lillestrøm prints altogether 15 daily newspapers, while two newspapers are printed in Mysen. Printing revenue (NOK million)

125 1993 In the spring of 1997, MØT installed the country’s most modern production facility 149 1994 based on a so-called semi-commercial concept. The equipment and equipment con-

223 1995 figurations are set up to print both daily newspapers and advertising supplements. 227 1996 179 1997 The old rotary press has been upgraded and renovated, and currently performs well 206 1997 with respect to colour options and the printing quality of daily newspapers. The facil- 181 1998 ity in Lillestrøm can produce three newspapers simultaneously. 204 1998

The Group’s external printing revenue The rotary press in Mysen was upgraded in the autumn of 1998. The packing facility Revenue adjusted for bought and sold companies has been automated and the press was expanded to 32 pages with four colours throughout. This means that Media Øst Trykk has plenty of capacity to print shoppers. The Mysen site also has its own sheet press and has recently invested in a modern four-colour machine.

The printing plant in Lillestrøm experienced, however, considerable operating problems in its first year of business, mainly due to the failure of the press and packing equipment suppliers to fulfil their contracts. The problems have caused substantial losses in the form of additional costs and low productivity, and, not least, a loss of competitive power and lost opportunities in the civilian printing market.

22 Media Øst Trykk has received NOK 15 million in compensation from the printing press supplier, of which NOK 4 million was posted to income in 1997/98. The company will A-PRESSEN PRINTING do some upgrading of the printing plant to ensure stable output. Production stability Printing companies Printing plants in has improved considerably in the last few months, but it will still take some time newspapers companies before the facility’s capacity can be fully used and all productivity targets are Aura Avis Drift Arbeidets Rett achieved. Media Øst Trykk Finnmarken avd. Mysen Finnmark Dagblad

Together with the 15 press installations in the newspaper companies, Aura Avis Drift Nor-Trykk Narvik Firda AS, Nor-Trykk Narvik AS, Nye Hojem Trykkeri AS (sheet printing works), Nye Hojem Trykkeri Hardanger Folkeblad Bergensavisens Trykk AS and Samtrykk ANS make up the rest of A-pressen’s printing Bergensavisen Trykk Helgeland Arbeiderblad business. Sam-Trykk Lofotposten Larvik Rotasjonstrykkeri Namdals-Avisa

In addition to printing A-pressen’s own newspapers, these printing plants compete to Nordlands Framtid a greater or lesser extent in various segments of the external printing market. The Nordlys Narvik-based company Nor-Trykk has printed Norsk Lysingsblad (Norwegian Gazette) Oppland Arbeiderblad for many years and been working since 1996 with the Murmansk-based state-owned Rana Blad printing plant Sever on jobs in the Russian market. The contract with Norwegian Rjukan Arbeiderblad Gazette was extended by 10 years on 1 January 1998.

Quality, price, volume and delivery speed standards have increased noticeably in the newspaper and civilian printing markets. Newspapers are seeing greater demand for colour advertisements from their customers. This requires greater capacity to print colour advertisements in the printing plants and higher standards on the printing quality of the advertisements. Efficient packing facilities are another competitive factor. The capacity to do inserts, segmentation and selective addressing provides greater competitiveness.

In the civilian printing market there is also a tendency to demand steadily better paper quality (glazed paper) and bleed printing. In Eastern Norway, stiff competition between shopping centres and chain stores has led to ever larger print runs and increasing demands for shorter turnaround times. MØT is equipped to meet customers’ new requirements. Media Øst Trykk’s strategy is to industrialize production, improve quality and utilize investments better. Its goal is to win external jobs in competition with other rotary printers.

Continued growth is expected in the rotary printing market, but competition will hard- en as several large printing factories come on stream over the next few years. Prices are under pressure already now.

Markets outside Norway could prove interesting over time, the same applies to Norwegian printing jobs given to foreign printers. Norwegian customers annually place an estimated NOK 600 million worth of printing jobs outside Norway.

Printing companies (million NOK) 1998 1997 Printing revenues 336.3 302.3 Other operating revenues 29.7 33.9 Operating revenues 366.0 336.2

Cost of materials 139.5 131.6 Salaries, wages and other personnel expenses 114.1 105.8 Other operating and administration costs 61.4 63.1 Ordinary depreciation 35.0 28.7 Bad debts and guarantees 1.9 - 0.1 Total operating expenses 351.9 329.1

Operating profit/loss 14.1 7.2 Associated companies 0.0 0.0 Business area profit/loss 14.1 7.2

Operating margin 3.9 % 2.1 %

The business area profit/loss in the area of printing includes only those printing companies which are organized in separate shareholders companies. 23

Strong position A-PRESSEN TV Production Broadcasting in television TMM Produksjon (70 %*) TV 2 (33 %)

TV-Huset (44 %*) TV Norge (49 %**)

Advertising Local TV A-pressen enjoys a dominant position as the owner of Norwegian commercial TV Small Film (50 %) TV Østfold (90 %) channels. The biggest investment is the Group’s 33.2 per cent stake in TV 2, account- Film Companiet (20 %) TV Romerike (99 %) ing for approximately 90 per cent of the Group’s NOK 630 million investment in this TV Innlandet (62 %) business area. TV Nord-Trøndelag (70 %) TV Helgeland (39 %*) The market TV Tromsø (36 %) The television viewing of Norwegians has been tracked via MMI’s TV meter panel TV Telemark (67 %) since 1992. Viewing has increased steadily from 122 minutes per day in 1992 to 150 TV Finnmark (11 %) minutes in 1996. In 1997 TV watching dropped six minutes to 144 minutes per day. In 1998, viewing increased again, ending on an average day at 151 minutes per person *The Group’s ownership stake **TV 2’s ownership stake over 12 years of age. This is the highest viewing time recorded since TV meter mea- surements began in 1992.

Norway’s TV advertising market exploded after TV 2 came on the air in 1992. The advertising market including agency commissions totalled more than NOK 1.8 billion in 1998, and has grown rapidly in recent years. This development has been driven primarily by TV 2, which has significantly increased its production of gross rating points (GRP). Not only has the volume increased, but the price per GRP has also increased considerably as the result of demand exceeding supply for most of the year. Further development in the years to come will depend on the general state of the Norwegian economy.

TV 2 has become a central figure in the advertising market because of a tendency by advertisers to choose the leading channel for airing their commercials. TVNorge’s performance in this area was poor until 1996, but is now showing improvement thanks to greater distribution and cooperation with TV 2. The only real competitor for the moment is TV 3. This channel operates out of Britain under British advertising rules, which gives it certain advantages compared with TV 2 and TVNorge. Under British rules, the channel can have commercial breaks during programmes and telecast advertising aimed at children.

The local TV advertising market is still underdeveloped for several reasons. Local advertisers have to get used to the new medium, very few have air ready material at their disposal, capacity to produce sufficiently inexpensive commercial spots has been limited and introductory sales to local advertisers have not been good.

In the future, TV signals will be distributed digitally instead of by analog means. This will reduce the cost of establishing new TV channels, and is expected to lead to the founding of more niche channels.

Channels TV 2 TV 2 is Norway’s largest and most important commercial TV channel. TV 2 has a 64 per cent share of the TV advertising market in Norway, and has a solid number two position behind NRK 1 in the audience market. TV 2 is clearly the most popular channel in Norway among young viewers aged 12 to 34.

A-pressen owns 33.2 per cent of TV 2 and wants to contribute to TV 2’s further development. Under TV 2’s licence terms, the maximum stake a single shareholder may

Key figures for TV 2 (NOK million) 1998 1997 1996 1995 1994 Operating revenues 1 336 1 070 898 784 554 Operating profit 154 155 124 114 43 Profit before taxes 161 162 133 113 36 Profit after taxes 84 95 94 107 36 A-pressen’s ownership (%) 33,2 33,2 23,3 24,5 - A-pressen’s share of the result after goodwill depreciations 6,0 4,7 8,8 2,1 - 25 Business Area own is one-third of the shares. This stipulation is virtually fully utilized as A-pressen, TV Egmont and Schibsted are close to owning a third each of TV 2.

It is natural to capitalize on TV 2’s considerable knowledge and organization within a Scandinavian framework.

In the coming millennium TV 2 will continue to embrace the profile which has created its success: a general interest broadcaster with the entire population as its target Viewership – population over the age 12 group. TV 2’s ambition is to be an independent, credible, informative, engaging, enter- taining and, not least, innovative TV channel. 60 % 55 % 50 % TV 2 faces three major challenges. Three factors are prominent in the short term: 45 % a) the competitive situation in Norway, 40 % b) higher cost of programmes and sports rights, 35 % c) competition from international players. 30 % 25 % In the longer term TV 2 will have to deal with the globalization of the TV market and 20 % 15 % the transition to digital TV. 10 % 5 % TV 2 and TVNorge signed an extensive partnership agreement in 1997 in connection 0 % with TV 2’s acquisition of 49 per cent of TVNorge. TV 2 is committed to increasing 92 94 95 96 97 98 93 ’ ’ ’ ’ ’ ’ ’ viewership of TVNorge. It is believed the partnership will strengthen both channels in the competition with NRK, TV 3 and other TV channels. In 1998, TVNorge increased 4. Q. 4. Q. 4. Q. 4. Q. 4. Q. 4. Q. 4. Q. its market share from 8.0 to 8.6 per cent. TVNorge thus increased its market share for the second year in a row after three previous years of reduced market shares. The NRK 8.6 per cent share is the highest market share claimed by TVNorge since measure- TV 2 ments were established in 1992. TVN TV 3 NRK TO TV 2’s advertising revenues (including agency commissions) grew in 1998 by more than 11 per cent to nearly NOK 1.2 billion. The company also sees considerable potential in the development of advertising media such as the Internet and text-TV through subsidiaries. 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 steadily spiralling cost of sports broadcasting rights is alarm- ing. TV 2 believes forging strategic alliances is extremely important in the competition for rights to international sporting events.

Over the past few years TV 2 has evolved from being purely a TV channel to becoming involved in a number of other TV-related business areas. For example, TV 2 has established Autograph Broadcast Systems, Storm Weather Center AS, Nyhetssentralen Byrå 2 AS and Net 2 Interaktiv AS, all of which possess good business ideas and products in expanding markets. TV 2 has merged the satellite card company Norgeskanalen with the Telenor/Canal Plus company Canal Digital Norge AS and has a post-merger stake of 16 per cent in Canal Digital Norge. Companies like this will provide TV 2 with more legs to stand on, and in the coming millennium it is probable that they will account for a considerable portion of TV 2’s income.

TV 2’s licence expires 31 December 2002. The company is working to extend the licence.

Local TV The Group also owns stakes in eight local TV companies and a few small production companies. Cooperation between A-pressen’s local TV stations and newspapers on advertising, promotion, editorial activities and administrative functions is a Group goal.

Nord- Local TV (NOK 1 000) Helgeland Innlandet Finnmark Trøndelag Romerike Telemark Tromsø Østfold No. of persons over the age 13 in the licensing area 64 289 61 87 163 99 95 205 Channel’s coverage as per 2nd Q. 1998 (%) 70 55 56 63 77 72 52 80 Weekly viewership as per 2nd Q. 1998 (%) 40 32 37 29 35 49 33 41 Number of weekly viewers as per 2nd Q. 1998 26 92 23 25 57 49 31 84 When the channel started its regular broadcasts 1989 jan. 97 des. 96 1988 jan. 97 aug. 97 aug. 96 nov. 96

26 Several stations have achieved healthy audience numbers, while the industry in gen- The Norwegian TV advertising market eral is struggling to bring in sufficient advertising revenues. The Group is following the 1995 175 situation closely, and its goal is for all companies to break even in 1999. 222 803 A-pressen entered the local TV market in 1996 when the authorities improved the 1996 191 187 operating conditions for the industry. Its motivation for getting involved was of both a 896 defensive and proactive nature. Local TV operates in the same markets as local news- 1997 242 papers. A-pressen wanted to be in position in case local TV won substantial shares 201 from local newspapers. In places where A-pressen is involved in both newspapers 1 061 1998 303 and TV the strategy is to work together in order to give the advertising market a better 283 offer. Local TV is a relatively small part of A-pressen’s TV operations. Its goal is never- 1 180 theless to be a leading owner of profitable local TV companies. TV3 TVN The local TV companies have extensive dealings with TVNorge because they dis- TV 2 tribute TVNorge’s programmes, via their own transmission systems, for much of the broadcasting day. TVNorge pays according to distribution. In addition, the stations have agreements on the sale of programmes to TVNorge and they also broadcast their own local programmes with local advertising during part of the time the channel is on the air. The combination of these activities forms the financial basis of the local stations, some of which also have revenues from games and text-TV.

The most important advertising base is large regional advertisers. Until now, they have for the most part used printed media – getting used to moving pictures will take time. These advertisers are also not used to paying for advertising production, which traditionally has been done by the production departments of newspapers. Consequently, it will take time to sell local TV as an advertising medium to advertisers. Interest, however, is picking up.

Other TV operations A-pressen currently has small stakes in programme production and production of advertising. The Group’s goal is to establish profitable operations in several parts of the value chain, either alone or together with partners.

As of today the Group has ownership stakes in two companies that produce programmes: TMM Produksjon and TV Huset, and two advertising production companies: Small Film AS and Film Companiet AS. These two companies are in a start-up phase.

TV (NOK million) 1998 1997 Total operating revenue 55.0 38.5

Cost of materials 7.9 5.7 Saleries, wages and other personnel expenses 33.0 24.8 Other operating and administration costs 23.7 18.1 Ordinary depreciation* 14.8 8.0 Bad debts and guarantees 0.9 4.3 Total operating expenses 80.3 60.9

Operating profit/loss - 25.4 - 22.4 Result from associated companies 5.2 - 21.0 Business areas profit/loss - 20.2 - 43.4 *Extraordinary goodwill depreciations 5.5 -

27 Business Area Uncertain future Electronic media in electronic media

Share of turnover The business area is under development and saw considerable consolidation and restructuring in 1998. New formations so far have been far ahead of the market curve. Several of A-pressen’s activities experienced major changes in 1998. 1999 will also be Electronic media 0.4 % a turbulent period.

The business area currently comprises four subsidiaries and four associated companies. A-pressen’s largest venture so far in the business area – Digital Hverdag AS – is merging with New Media Science Multimedia ASA, and will be an associated company from 1999, though with accounting effect for 1998.

Subsidiaries – A-pressen Nett AS is the operating company for the on-line newspaper products of 14 newspapers. The company provides technical, editorial and market services to participating newspapers, and is connected with Bergensavisen. – Lokalnett AS supplies Internet solutions and consultant services to municipalities and the public sector. The company is located in Lillehammer and had a difficult year in 1998 due to the sluggishness of the municipal market and operating problems associated with the demerger of the company. A-pressen is continually evaluating its position in this market. – Bilkanalen AS is a motor trade-related niche service on the Internet. In 1998 the company experienced a setback in the market after the precondition of joint ownership with the car industry no longer proved possible. Bilkanalen’s operations will be restructured in 1999. – Funn Narvik AS supplies IT consultant services.

Digital Hverdag/New Media Science Digital Hverdag has been a rapidly growing winner in the professional Internet solutions market. In the summer of 1998, the company saw that the market needed larger and stronger players. A process for finding a suitable partner ended with a merger agreement with the market leader, New Media Science. The new company is clearly the largest in the Norwegian market, but is also encountering increasing competition from other companies that have merged in the past few months. In 1999 New Media Science will have nearly 100 employees and post revenues of more than NOK 60 million. The company is also in position to do business in the Nordic market through the Nordic Net Partners alliance.

Associated companies – Intrafish AS is a niche Internet news venture for the fish farming industry. – Norsk Familieøkonomi AS supplies editorial products and personal finance-related services for members. – Cyberbook AS supplies CD-ROM products specially aimed at the school and “play and learn” market. – Medical Media AS has merged with Transmit Medical AS, and is a niche venture in the health/medical sector. Transmit Medical will offer editorial services, courses and consultant services.

The Market The Internet market was saw sharp growth in access and use in 1998, but the advertising market did not live up to the expectations of players. Advertising revenues in 1998 amounted to approximately NOK 70 million. For 1999, the prognoses vary from NOK 70 to 150 million. Last year saw a number of projects that ran into capital problems, triggering considerable restructuring. The largest media players nevertheless continue to make considerable investments, with the goal of turning a profit in 2000.

Strategy Although there are an unusually high number of uncertainties connected with electronic media, a substantial industry is evolving which already has interesting business opportunities. The risk, however, is high, and many players have already suffered con- 28 siderable losses. A-pressen’s strategy is threefold. Firstly, a number of newspapers publish basic on-line A-PRESSEN ELECTRONIC MEDIA editions to consolidate the position of their core operation. Secondly, several A-pressen Subsidiares Associated companies companies supply consultant services to the professional market. Thirdly, A-pressen A-pressen Nett (100 %) New Media Science (23 %) is carefully building up niche markets in content media. Bilkanalen (86 %) Cyberbook (22 %) Lokalnett (87 %) IntraFish (38 %) A-pressen’s goal is to be a leading player in the business area, and the market leader FUNN (76 %) Norsk Familieøkonomi (33 %) in electronic local media. In two years it is looking to make acceptable profits on combined revenues of between NOK 75 and 100 million.

Electronic media (NOK million) 1998 1997 Total operating revenues 8.1 13.8

Cost of materials 1.4 2.7 Salaries, wages and other personell expenses 5.5 6.4 Other operating and administration costs 6.3 5.2 Ordinary depreciation* 6.1 2.0 Bad depts and guarantees 0.0 0.2 Total operating expenses 19.2 16.4

Operating profit/loss - 11.1 - 2.7 Result form associated companies - 9.8 - 1.0 Business areas profit/loss - 21.0 - 3.7 * Extraordinary goodwill depreciations 5.2 -

29 Newspapers and printing companies

A-pressen’s newspapers and printing companies

lthough A-pressen has expanded in step with media developments, newspapers and all that is associated with newspaper publishing are Astill the main business of the Group and will remain so for the foreseeable future. Norway is one of the top newspaper-reading countries in the world, and A-pressen's local newspapers enjoy a strong position despite competition from national newspapers, TV and new media. In an age of fragmented media choices, people prefer the intimacy of a local newspaper. This was recently confirmed in the Norwegian Newspaper Publishers' Association's circulation report for 1998. In terms of public interest and finances, publishing local newspapers is the very backbone of A-pressen's business. Consequently, this area will continue to be our main focus in the years to come.

The Group's goals in this area are to: • ensure and strengthen the strategic position of local newspapers • significantly increase profits of existing newspaper, printing and distribution operations

enues enues v Newspapers v Operating re Operating profit/loss Circulation Operating re Operating profit/loss Circulation

Akershus Amtstidende Arbeidets Rett 1998 • 8 431 30 655 3 380 1998 • 7 170 18 682 2 961 1997 • 8 303 27 122 3 646 1997 • 7 158 18 527 2 761 1996 • 8 170 27 625 4 818 1996 • 7 196 18 448 2 076 1995 • 7 77 4 20 623 969 1995 • 7 274 18 793 2 781

[email protected] [email protected] P. O. Box 12, 1441 Drøbak P. O. Box 24, 7361 Røros Tel. 64 90 54 00 Tel. 72 40 64 00 www.fjellnett.no/retten

Aura Avis1 Aust Agder Blad 1998 • 3 715 9 014 207 1998 • 3 683 6 832 472 1997 • 3 578 8 500 248 1997 • 3 712 6 567 632 1996 • 3 590 15 474 851 1996 • 3 701 6 057 325 1995 • 3 651 19 068 1 333 1995 • 3 677 6 086 221

[email protected] [email protected] P. O. Box 43, 6601 Sunndalsøra P. O. Box 40, 4951 Risør Tel. 71 69 24 44 Tel. 37 15 04 11

Avisa Sogndal2 Bergensavisen 1998 • 1 708 1 207 - 1 091 1998 • 31 022 135 686 - 9 638 1997 • 30 735 136 504 - 5 079 1996 • 29 384 132 809 - 1 625 1995 • 28 903 121 806 - 1 133 [email protected] P. O. Box 43, 6851 Sogndal [email protected] Tel. 57 67 33 37 P. O. Box 824, 5087 Bergen Tel. 55 23 50 00 www.ba.no

Bladet Harstad3 Bygdeposten 1998 • 2 553 5 007 1 308 1998 • 5 784 9 906 - 290 1997 • 5 782 9 662 526 1996 • 5 414 8 462 189 1995 • 5 268 7 968 592

[email protected] [email protected] P. O. Box 806, 9488 Harstad P. O. Box 53, 3371 Vikersund Tel. 77 05 94 00 Tel. 32 78 71 11

Demokraten Finnmark Dagblad 1998 • 9 866 43 050 - 6 316 1998 • 10 362 39 820 1 463 1997 • 10 462 43 567 - 132 1997 • 10 679 39 229 3 313 1996 • 10 763 40 007 - 1 497 1996 • 10 893 39 280 1 927 1995 • 10 507 37 214 - 1174 1995 • 11 027 38 670 1 801

[email protected] [email protected] P. O. Box 83, 1601 Fredrikstad P. O. Box 360, 9615 Hammerfest Tel. 69 31 99 99 Tel. 78 42 86 00 www.demokraten.of.no

32 enues enues v v Operating re Operating profit/loss Circulation Operating re Operating profit/loss Circulation

Finnmarken Firda4 7 818 27 176 1 423 • 1998 15 011 56 041 5 570 • 1998 7 955 27 001 2 330 • 1997 15 007 53 753 5 388 • 1997 8 117 26 485 2 291 • 1996 13 675 44 685 5 910 • 1996 8 148 26 674 3 260 • 1995 13 282 38 670 4 500 • 1995 [email protected] [email protected] P. O. Box 616, 9811 Vadsø P. O. Box 160, 6801 Førde Tel. 78 95 55 00 Tel. 57 83 33 00

Firdaposten Fremover 5 965 15 316 563 • 1998 10 193 34 644 426 • 1998 5 870 14 743 878 • 1997 10 410 34 115 2 116 • 1997 5 830 15 151 - 62 • 1996 10 453 33 632 2 510 • 1996 6 050 15 710 - 823 • 1995 10 335 33 312 2 099 • 1995 [email protected] [email protected] P. O. Box 38, 6901 Florø P. O. Box 324, 8504 Narvik Tel. 57 74 00 00 Tel. 76 95 00 00 www.fremover.no

Fremtiden Glåmdalen 12 619 43 578 272 • 1998 21 391 84 352 3 619 • 1998 14 001 45 971 362 • 1997 22 017 83 960 5 333 • 1997 14 786 45 369 - 2 095 • 1996 22 250 82 870 6 620 • 1996 15 700 45 853 529 • 1995 22 490 80 358 4 694 • 1995 [email protected] [email protected] P. O. Box 9, 3001 Drammen 2226 Kongsvinger Tel. 32 26 70 00 Tel. 62 81 52 22

Hadeland5 Halden Arbeiderblad6 7 607 22 641 764 • 1998 10 540 62 356 485 • 1998 10 477 58 175 2 742 • 1997 10 474 55 002 2 752 • 1996 10 470 54 319 2 790 • 1995 [email protected] [email protected] P. O. Box 85, 2712 Brandbu P. O. Box 113, 1751 Halden Tel. 61 33 41 20 Tel. 69 21 56 00 www.ha.halden.no

Hamar Arbeiderblad7 Hardanger Folkeblad 28 693 122 252 10 873 • 1998 5 879 16 239 2 220 • 1998 28 252 122 792 12 471 • 1997 5 861 16 090 3 494 • 1997 28 169 119 819 9 760 • 1996 5 847 14 836 2 298 • 1996 28 034 112 641 9 284 • 1995 5 835 13 962 2 356 • 1995 [email protected] [email protected] P. O. Box 262, 2302 Hamar P. O. Box 374, 5751 Odda Tel. 62 51 96 00 Tel. 53 65 06 00 torget.ha-nett.no

33 enues enues v Newspapers v Operating re Operating profit/loss Circulation Operating re Operating profit/loss Circulation

Helgeland Arbeiderblad Indre Akershus Blad9 1998 • 10 200 38 468 3 117 1998 • 6 541 12 102 226 1997 • 9 950 37 307 2 882 1997 • 6 540 11 144 583 1996 • 9 779 34 752 2 170 1996 • 6 425 9 800 -486 1995 • 9 845 32 297 1 990

[email protected] [email protected] P. O. Box 564, 8651 Mosjøen P. O. Box 68, 1941 Bjørkelangen Tel. 75 11 36 00 Tel. 63 85 48 00 www.helgeland.arbeiderblad.no

Indre/Øvre Smaalenenes avis8 Kvinnheringen10 1998 • 14 710 56 825 5 182 1998 • 4 863 4 398 389 1997 • 14 721 57 049 8 107

[email protected] [email protected] P. O. Box B, 1801 Askim 5460 Husnes Tel. 69 81 61 00 Tel. 53 48 21 30 www.kvinnheringen.no

Lofotposten Lofot-Tidende11 1998 • 10 060 35 428 1 904 1998 • 4 707 1 612 320 1997 • 10 418 34 844 1 237 1996 • 10 414 35 017 2 561 1995 • 10 740 32 745 1 179

[email protected] [email protected] P. O. Box 85, 8305 Svolvær P. O. Box 4, 8376 Leknes Tel. 76 06 78 00 Tel. 76 05 40 00 www.lofotposten.no

Malvik Bladet Moss Dagblad 1998 • 2 818 3 569 156 1998 • 6 371 26 560 - 7 061 1997 • 2 751 3 278 144 1997 • 6 370 25 743 - 2 340 1996 • 2 570 3 344 176 1996 • 6 737 23 599 - 4 856 1995 • 2 311 2 697 172 1995 • 6 714 21 887 - 3 800

[email protected] [email protected] P. O. Box 130, 7551 Hommelvik P. O. Box 190, 1501 Moss Tel. 73 97 13 11 Tel. 69 24 02 40 www.moss-dagblad.no

Namdals-Avisa Nordlands Framtid 1998 • 13 591 43 615 3 363 1998 • 20 257 77 267 - 114 1997 • 13 401 41 967 4 604 1997 • 20 828 74 694 936 1996 • 13 239 39 127 3 416 1996 • 21 041 72 624 - 179 1995 • 13 064 37 049 2 691 1995 • 21 268 71 277 1 376

[email protected] redaksjonen@nordlands- P. O. Box 158, 7801 Namsos framtid.no Tel. 74 21 21 00 Storg. 9, 8002 Bodø namdalsavisa.namdalsnett.no Tel. 75 50 50 00 www.nordlands-framtid.no

34 enues enues v v Operating re Operating profit/loss Circulation Operating re Operating profit/loss Circulation

Nordlys12 Opdalingen 30 924 124 356 9 563 • 1998 3 239 7 914 1 081 • 1998 32 874 130 166 15 213 • 1997 3 201 7 812 1 215 • 1997 32 646 121 920 12 571 • 1996 3 210 7 139 434 • 1996 33 078 108 651 8 954 • 1995 3 198 6 877 120 • 1995 [email protected] [email protected] P. O. Box 2515, 9272 Tromsø P. O. Box 33, 7341 Oppdal Tel. 77 62 35 00 Tel. 72 42 11 88 www.nordlys.no

Oppland Arbeiderblad Rakkestad Avis13 29 157 119 892 18 390 • 1998 2 467 7 200 13 • 1998 28 605 111 420 14 789 • 1997 2 366 5 882 - 678 • 1997 28 521 109 611 14 117 • 1996 2 425 4 746 64 • 1996 28 509 101 377 9 666 • 1995 [email protected] [email protected] P. O. Box 24, 2801 Gjøvik P. O. Box 404, 1891 Rakkestad Tel. 61 18 93 00 Tel. 69 22 25 55 www.oa-nett.no

Rana Blad Ringerikes Blad14 11 199 52 305 3 625 • 1998 13 228 67 519 10 734 • 1998 11 034 51 249 5 221 • 1997 13 276 64 861 10 354 • 1997 11 078 50 150 4 773 • 1996 11 010 48 698 4 673 • 1995 [email protected] [email protected] P. O. Box 55, 8601 Mo P. O. Box 68, 3502 Hønefoss Tel. 75 12 55 00 Tel. 32 17 95 00 www.ranablad.no

Rjukan Arbeiderblad Rogalands Avis 2 471 6 779 - 491 • 1998 16 521 63 813 123 • 1998 2 464 6 484 541 • 1997 17 509 62 778 1 047 • 1997 2 520 6 354 389 • 1996 17 895 57 643 253 • 1996 2 525 6 372 153 • 1995 16 825 59 950 - 2 061 • 1995 [email protected] [email protected] Svaddev. 149, 3660 Rjukan P. O. Box 233, 4001 Stavanger Tel. 35 08 00 50 Tel. 51 82 20 00 www.rogavis.no

Romerikes Blad15 Sarpsborg Arbeiderblad 41 906 188 374 34 892 • 1998 17 397 98 455 6 921 • 1998 42 123 174 294 24 171 • 1997 17 605 97 130 16 370 • 1997 41 517 209 182 30 387 • 1996 17 652 73 264 10 152 • 1996 40 468 198 640 25 730 • 1995 17 600 84 297 13 018 • 1995 [email protected] [email protected] P. O. Box 235, 2001 Lillestrøm P. O. Box 87, 1701 Sarpsborg Tel. 63 80 50 50 Tel. 69 11 11 11 www.sarpsborg-arbeiderblad.of.no

35 enues enues v Newspapers v Operating re Operating profit/loss Circulation Operating re Operating profit/loss Circulation

Stjørdalens Blad Telemarkavisa 1998 • 7 101 17 734 - 890 1998 • 22 256 93 868 3 502 1997 • 7 277 18 228 996 1997 • 22 174 80 189 - 4 497 1996 • 7 421 18 283 1 653 1996 • 21 913 79 779 - 1 815 1995 • 7 405 17 991 1 792 1995 • 21 968 81 584 -4 950

[email protected] [email protected] P. O. Box 163, 7501 Stjørdal P. O. Box 2833 Kjørbekk Tel. 74 82 72 11 3702 Skien Tel. 35 58 55 00 www.telemarksavisa.no

Tidens Krav Tvedestrandsposten16 1998 • 16 099 51 119 4 675 1998 • 3 875 1997 • 16 091 50 069 6 714 1997 • 3 914 1996 • 16 106 48 263 5 256 1995 • 16 148 46 372 5 719

[email protected] [email protected] P. O. Box 8, 6501 Kristiansund P. O. Box 100, 4901 Tvedestrand Tel. 71 67 00 00 Tel. 37 16 20 66

Østlands-Posten17 Årdal & Lærdal avis18 1998 • 14 501 81 987 14 477 1998 • 2 419 5 063 - 1 162 1997 • 14 372 82 816 1 263 1997 • 1 931 10 534 - 191 1996 • 13 720 85 024 359 1995 • 13 714 78 626 12 653 [email protected] [email protected] P. O. Box 284, 6882 Øvre Årdal P. O. Box 2000, 3251 Larvik Tel. 57 64 86 50 Tel. 33 16 30 00 www.ostlands-posten.no

1 Aura Avis: The company was demerged in 1996. Printing and admi- 10 Kvinnheringen: Kvinnheringen was transferred to a new established nistration have been transferred to Aura Avis Drift AS. company on 1 September 1998. The figures apply only to the period of 1 September–31 December 1998. Circulation figures are for the 2 Avisa Sogndal: Started publishing on 1 July 1997. full year.

3 Bladet Harstad: Acquired with effect from 1 January 1998. 11 Lofot-Tidende: Acquired with effect from 1 November 1998.

4 Firda: Acquired with effect from 1 January 1996. 12 Nordlys: A-pressen acquired majority on 1 May 1997.

5 Hadeland: Acquired with effect from 31 December 1998. 13 Rakkestad Avis: Acquired with effect from 1 July 1996.

6 Halden Arbeiderblad: Associated company. 14 Ringerikes Blad: Acquired with effect from 1 November 1997.

7 Hamar Arbeiderblad: The company was reorganized in 1998. The 15 Romerikes Blad: The company was demerged in 1997. The figures figures are therefore not comparable. Minority company. are therefore not comparable.

8 Indre Smaalenenes Avis: Indre Smaalenenes Avis was acquired 16 Tvedestrandsposten: Acquired with effect from 1 January 1999. with effect from 1 July 1996. Indre Smaalenenes Avis and Øvre Smaalenene have since 1 January 1997 been published by 17 Østlands-Posten: Acquired with effect from 1 January 1995. Smaalenene Medier AS. Associated company. 18 Årdal & Lærdal avis: Started publishing on May 1997. 9 Indre Akershus Blad: Acquired with effect from 1 September 1996.

Explanation to key figures: Circulation: Weekday circulation, source: NAL Operating revenues: The company’s operating revenues in NOK 1 000. 36 Operating profit/loss: The company’s operating profit/loss in NOK 1 000. Printing companies

Bergensavisen Trykk AS Media Øst Trykk AS Operating revenues 55 482 Operating revenues 234 527 Operating profit 4 121 Operating profit 4 835

P. O. Box 6012, 5892 Bergen P. O. Box 235, 2001 Lillestrøm Tel. 55 23 51 81 Tel. 63 80 50 80

Aura Avis Drift AS ANS Sam-Trykk Operating revenues 17 056 Operating revenues 10 690 Operating profit 1 722 Operating profit 863

P. O. Box 68, 3501 Hønefoss P. O. Box 43, 6601 Sunndalsøra Tel. 32 12 82 80 Tel. 71 69 24 44

Nye Hojem Trykkeri AS Nor-Trykk Narvik AS Operating revenues 17 108 Operating revenues 34 453 Operating profit 1 089 Operating profit 2 497

P. O. Box 364, 7801 Namsos P. O. Box 177, 8501 Narvik Tel. 74 21 21 50 Tel. 76 95 05 00

Larvik Rotasjonstrykkeri AS Operating revenues 7 377 Operating profit -172

P. O. Box 2000, 3251 Larvik Tel. 33 16 30 00

Divided from Østlands-Posten as a separate company with effect from 1 October 1998.

37 A ccount

Contents

40 Profit and loss account A-pressen Group 41 Balanse sheet A-pressen Group 42 Cash flow statement A-pressen Group 43 Accoutning policies A-pressen Group 45 Sale and purcase of subsidiaries A-pressen Group 46 Notes A-pressen Group 55 Value added statement A-pressen Group 56 Profit and loss account A-pressen ASA 57 Balanse sheet A-pressen ASA 58 Cash flow statement A-pressen ASA 59 Notes A-pressen ASA 64 Auditor’s report for 1998 and Statement by the Corporate Assembly

Annual Accounts Profit and loss account A-pressen

(NOK 1 000) Notes 1998 1997 1996 Operating revenues Circulation revenue 733 072 692 173 638 668 Advertising revenue 1 054 656 979 130 862 196 Printing revenue 204 233 206 110 226 645 Government grants 87 331 98 428 99 354 Other operating revenues 190 567 212 469 124 577 Total operating revenues 2 269 859 2 188 310 1 951 440

Operating expenses Cost of materials 320 081 336 221 323 617 Salaries, wages and other personnel expenses 1,2 1 100 548 1 014 586 905 766 Other operating and administrative expenses 640 156 604 361 504 253 Ordinary depreciation 3 146 228 123 133 103 913 Bad debts and guarantees 4 5 440 6 961 11 099 Loss on sales of shares 5 20 352 - - Total operating expenses 2 232 805 2 085 262 1 848 648

Operating profit 37 054 103 048 102 792

Result from associated companies 13 - 3 210 - 17 169 13 413

Financial items Financial income 11 067 9 388 17 027 Financial expenses - 58 353 - 49 703 - 42 035 Net financial items - 47 286 - 40 315 - 25 008

Profit/ loss before tax and minority shareholders - 13 442 45 564 91 197

Taxes 6 - 8 726 - 27 190 - 24 141 Minority shareholders’ stake 1 228 -996 864

Net profit/ loss - 20 940 17 378 67 920

Earnings per share (in NOK) 7 - 2.9 2.4 9.5 Average number of shares 7 342 155 7 202 210 7 164 160 Number of shares at end of year 8 839 643 7 202 210 7 202 210

40 Annual Accounts Balance sheet A-pressen

(NOK 1 000) Notes 31 Dec. 98 31 Dec. 97 31 Dec. 96 ASSETS Current assets Cash and bank deposits 8 170 875 148 695 253 576 Trade receivables 4 201 830 204 834 184 135 Other short-term receivables 49 377 47 880 45 039 Stock-in-trade 9 21 443 17 152 18 358 Total current assets 443 525 418 561 501 108

Fixed assets Shares in associated companies 11,13 585 072 594 836 396 698 Other shares 12 17 973 16 484 35 907 Long-term receivables 18 494 22 075 35 881 Goodwill and other immaterial rights 3 212 213 203 121 139 306 Machinery and fixtures 3 431 716 440 078 305 526 Buildings, sites and dwellings 3 340 635 350 983 356 392 Total fixed assets 1 606 103 1 627 577 1 269 710

Total assets 2 049 628 2 046 138 1 770 818

LIABILITY AND SHAREHOLDERS’ EQUITY Current liabilities Trade creditors 75 069 92 522 87 078 Bank overdraft 3 777 3 658 5 447 Payable VAT, social security, tax withholdings, etc. 188 546 185 530 157 968 Taxes payable 6 10 721 23 851 19 755 Provisions for dividend 14 683 7 693 9 436 Other short-term debt 15 240 962 245 000 203 047 Total current liabilities 16 519 758 558 254 482 731

Long-term liabilities Long-term debt 17 760 949 825 036 635 319 Subordinated loans 1 943 1 142 1 492 Net pension obligations 2 6 152 26 716 40 608 Total long-term liabilities 16 769 044 852 894 677 419

Minority interests 37 392 30 454 15 978

Shareholders’ equity Share capital (8 839 643 shares á NOK 20) 176 793 144 044 144 044 Other equity capital 546 641 460 492 450 646 Total shareholders’ equity 18 723 434 604 536 594 690

Total liabilities and shareholders’ equity 2 049 628 2 046 138 1 770 818

Guarantees 7 935 8 809 35 576 Secured debts 19 78 488 122 547 620 824

41 Annual Accounts Cash flow statement A-pressen Group

(NOK 1 000) 1998 1997 1996 Cash flows from operating activities Profit/ loss before taxes and minority shareholders - 13 442 45 564 91 197 Taxes paid for the period - 23 355 - 21 848 - 7 626 Ordinary depreciation 146 228 123 133 103 913 Profit/ loss on and writedown of fixed assets and 863 - 19 908 - 10 496 Profit/ loss on associated companies 3 210 17 169 - 13 413 Change in stocks, debtors and creditors - 18 740 1 996 11 860 Change in other accrual items - 15 139 - 33 208 24 820 Items classified as investing and financing activities 30 827 14 023 5 970 Net cash flow from operating activities (a) 110 452 126 921 206 225

Cash flows from investing activities Incoming payment from sale of fixed assets 57 532 45 922 12 165 Outgoing payment for purchase of fixed assets and goodwill - 172 709 - 280 478 - 301 656 Incoming payment from sale of shares and units 1 879 110 451 13 408 Outgoing payment for purchase of shares and units - 24 259 - 335 824 - 46 789 Incoming payment from sale of other investments 0 340 130 Outgoing payment for purchase of other investments - 1 232 - 584 - 34 118 Net cash flow from investing activities (b) - 138 789 - 460 173 - 356 860

Cash flows from financing activities Incoming payment when taking up new long-term debt 121 058 687 163 258 754 Incoming payment when taking up new short-term debt 0 333 269 Outgoing repayment of long-term debt - 185 145 - 388 967 - 38 170 Outgoing repayment of short-term debt -108 - 1 490 - 1 167 Net change in bank overdraft 119 - 35 796 4 401 Outgoing payment of interest - 52 384 - 44 771 - 29 263 Incoming payment of equity capital 153 050 589 5 746 Dividends received from associated companies 21 557 20 746 0 Dividends paid - 7 630 - 9 436 - 8 298 Net cash flow from financing activities (c) 50 517 228 371 192 272

Net change in cash flows through the year (a+b+c) 22 180 - 104 881 41 637

Cash balances at beginning of year 148 695 253 576 211 939

Cash balances at end of year 170 875 148 695 253 576

The Group uses the indirect method 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 against net cash flow from operating activities.

42 Annual Accounts Accounting policies A-pressen

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.

Consolidation policies Consolidation of subsidiaries The consolidated accounts include A-pressen ASA and subsidiaries in which A-pressen ASA has a controlling interest. Normally, this will involve companies in which A-pressen ASA 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 intercompany 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 amortized using the straight-line method 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 in the balance sheet as minority interests. The minority shareholders' stake of the net profit/ loss is shown on a separate line in the profit and loss account.

Associated companies Stakes in companies in which the Group has considerable influence are treated according to the equity method. Normally, this will involve companies in which the Group owns between 20 and 50 per cent. This means that the Group’s share of the profit/ loss 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.

Sale/purchase of subsidiaries and associated companies Sales and purchases of subsidiaries and associated companies are included in the consolidated accounts for the part of the year they have been a subsidiary of or associated with the Group.

Valuation and classification policies Income from advertising, non-subscription sales and subscription sales Advertising income 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 operating 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 and 22 January 1998. The purpose is to promote and maintain a differentiated press in Norway. The main criteria for receiving press subsidies is 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 largest in 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 subsidies are paid quarterly, and are taken to income in their entirety the year they are received.

Principles for charging to profits A cost is charged to profits at the time it has accrued. Received legal actions are charged to profits if the loss can be quantified and is more likely to be incurred than not.

43 Annual Accounts Accounting policies A-pressen Group

cont. valuation and classification policies Assessment of assets and liabilities Goods circulation-related claims and debts 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 31 December 1998 less provision for future foreseeable loss.

Stock-in-trade Stock-in-trade consists mainly of newsprint with a very fast turnover rate. The stocks are valued at cost price or actual value, whichever is lower. Deduction is made for dead stock.

Shares Shares intended for permanent ownership are posted in the balance sheet as fixed assets and are valued at cost price. Depreciation at anticipated permanent decline in value is undertaken following individual evaluation of the particular investment.

Fixed assets Fixes 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 Moveable operating assets are depreciated over 3–15 years Buildings and plant are depreciated over 3–50 years Publishing rights 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 expenses."

Change in accounting policy In this year's accounts, goodwill at acquisition is divided between publishing rights as an intangible asset and goodwill as a residual item. The amortization period for these two items is different, although no regulation of amortization for earlier years was done in connection with the division.

Taxes The deferred tax asset is counterbalanced by the deferred tax.

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 actuary 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 actuary calculations.

Subsidiaries amortize deviations and estimate/ plan changes according to the Standard's equalization 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.

44 Annual Accounts Sales and purchases of subsidiaries A-pressen Group

The following sales and purchases of businesses were carried out after 1 January 1998:

Acquisitions in 1998 Harstad Avisproduksjon AS, subsidiary. Owned by Bladet Nordlys AS, Lofoten Kommunikasjon AS, Fremover AS and Nor-Trykk AS. Kvinnheringen AS, subsidiary of A-pressen ASA. Lofoten Kommunikasjon AS, subsidiary of A-pressen Avis og Trykk AS.

Founded in 1998 A-pressen Avis og Trykk AS, subsidiary of A-pressen ASA. A-pressen Eastern Europe AS, subsidiary of A-pressen ASA. A-pressen Eiendom AS, subsidiary of A-pressen ASA. Bergensavisen Konsern AS, subsidiary of Storbyavisene AS. Bergensavisen Transport AS, subsidiary of Bergensavisen Konsern AS. Gardermoen Pluss AS, subsidiary of Media Øst AS. Larvik Rotasjonstrykkeri AS, subsidiary of Østlands-Posten AS. Møre og Romsdal Annonsesamkjøring AS, subsidiary of Aura Avis AS. Reklametjeneste Hedmark AS, subsidiary of Glåmdalen AS. Trippel Reklame AS, subsidiary of Bergensavisen AS.

Sales in 1998 Arbeiderbladet AS (Dagsavisen), subsidiary of Storbyavisene AS. Nord Mail AS, subsidiary of Østlands-Posten AS. Telemarksavisa Reklame AS, subsidiary of Telemarksavisa AS.

Closed in 1998 A-direkte AS, subsidiary of A-pressen ASA. Dagningen Reklame AS, subsidiary of Lillehammer Medieinvestering AS. Østlands-Posten Boktrykkeri AS, subsidiary of Østlands-Posten AS.

Other changes in 1998 Bilkanalen AS, subsidiary of A-pressen ASA. Formerly an associated company. Digital Hverdag AS, merged with New Media Science ASA. The merged company is an associated company in A-pressen ASA. A/S Hadeland, subsidiary of Media Øst AS. Previous stake under 20 per cent. Norsk Lokal TV AS, subsidiary of A-pressen ASA. Merged into Norsk Medieutvikling AS. Telemark TV Holding AS, subsidiary of Telemarksavisa AS. Formerly an associated company. Total Grafisk AS, subsidiary of Nor-Trykk AS. Merged into Nor-Trykk AS. TV Tromsø AS, subsidiary of Bladet Nordlys AS. Previous stake under 20 per cent.

45 Annual Accounts Notes A-pressen

NOTE 1 SALARIES, WAGES AND OTHER PERSONNEL EXPENSES

(NOK 1 000) 1998 1997 1996 Salaries, wages and holiday pay 837 227 770 274 693 934 Employer’s contribution 111 096 103 721 91 194 Net pension costs 16 116 10 224 11 631 Other personnel expenses 136 109 130 367 109 007 Total salaries, wages and other personnel expenses 1 100 548 1 014 586 905 766

Average number of employees 1998 1997 1996 Average number of employees in A-pressen Group 2 890 2 781 2 566

NOTE 2 PENSION COSTS AND OBLIGATIONS

The A-pressen Group has pension schemes covering altogether 1 814 insured, of which 1 449 are active. Of the 1 814 persons, 1 544 are included in pension schemes financed through insurance companies/funds, and 270 are included in pension schemes financed by operations. In addition to the above-mentioned schemes, net pension obligations at 31 Dec. 1998 also included the estimated obligation connected with Collective Agreement Pension (AFP) for Group employees. AFP obligations totalling NOK 2.8 million were charged as an expense in 1998. The employer contribution rate for the home municipality of the individual companies is used. No changes have been made in the economic assumptions from 1996 to 1998. The net pension cost for the year is included under the items salaries, wages and other personnel expenses.

Obligations and costs are calculated on the basis of the following factors: Discount rate: 6 % Expected return on pension funds 7 % Annual wage adjustment: 3 % Regulation of the basic pension: 2 % Annual adjustment of pension: 2 %

Pension obligations and funds at end of year

(NOK 1 000) 31 Dec. 98 31 Dec. 97 31 Dec. 96 Not secured, covered by operations Estimated accrued pension obligation 35 461 28 501 32 107 Non-amortized obligation at change of estimate - 13 815 1 209 248 Net pension obligation 21 646 29 710 32 355

Financed through insurance companies/ funds Estimated accrued pension obligation 229 866 210 925 132 595 Market value of pension funds - 240 920 - 212 199 - 119 065 Non-amortized obligation at change of estimate/ plan - 4 440 - 1 720 - 5 277 Net pension obligation -15 494 - 2 994 8 253

Total net pension obligation 6 152 26 716 40 608

46 Annual Accounts Notes A-pressen

cont. NOTE 2 PENSION COSTS AND OBLIGATIONS Pension costs for the year is as follows:

(NOK 1 000) 1998 1997 1996 Current value of the year’s pension withholdings and contributions 17 956 15 155 13 012 Interest cost of accrued pension withholdings and contributions 14 873 12 815 8 531 Expected return on pension funds - 15 332 - 13 301 - 7 357 Amortization of deferred obligation at estimate/ plan change 903 - 1 924 3 734 Change in overfinancing 1 239 0 - 4 416 Employees’ share of premium payment - 3 523 - 2 521 - 1 873 Net pension cost 16 116 10 224 11 631

NOTE 3 FIXED ASSETS

Publishing Machinery/ Buildings/ Sites/ (NOK 1 000) Goodwill rights fixtures plants dwellings Total Acquisition cost at 1 Jan. 98 113 378 127 522 1 035 853 503 267 16 097 1 796 117 Additions 1998 19 573 17 502 191 178 72 102 3 224 303 579 Disposals 1998 5 513 0 231 896 83 429 9 774 330 612 Acquisition cost at 31 Dec. 98 127 438 145 024 995 135 491 940 9 547 1 769 084 Accumulated depreciation at 31 Dec. 98 49 182 11 067 563 419 159 822 1 030 784 520 Book value at 31 Dec. 98 78 256 133 957 431 716 332 118 8 517 984 564 Ordinary depreciation for the year 20 179 2 628 106 682 16 652 87 146 228 Depreciation period (years) 5–20 50 3–15 3–50 0–30

Goodwill The amortization period for goodwill in connection with acquisitions varies from 5 to 20 years. The principal rule according to the Companies Act is 5 years. An amortization period of more than 5 years has been set for some acquired companies because of their good market positions and the positive synergy effects they have on the Group as a whole.

Below is a specification of goodwill broken down by business area. Amortization Net book value (NOK 1 000) for the year at 31 Dec. 98 Newspapers 5 910 73 314 Printing plants 268 2 008 TV 8 529 2 241 Electronic media 5 172 0 Other 300 693 Total goodwill 20 179 78 256

Publishing rights Publishing rights are amortized over 50 years as it is assumed that the value of such rights diminishes over a very long period of time.

A specification of publishing rights is given below. Amortization Net book value (NOK 1 000) for the year at 31 Dec. 98 Newspaper 2 628 133 957 Total publishing rights 2 628 133 957

47 Annual Accounts Notes A-pressen

cont. NOTE 3 FIXED ASSETS Investments over the past five years

1998 1997 1996 1995 1994 (NOK 1 000) Purch. Sale Purch. Sale Purch. Sale Purch. Sale Purch. Sale Goodwill 19 573 0 85 031 0 70 403 0 81 519 0 100 0 Publishing rights 17 502 0 0 0 0 0 0 0 0 0 Machinery/ fixture 191 178 15 606 318 976 38 614 152 298 14 295 162 593 13 224 87 483 4 177 Buildings/ plant 72 102 54 034 132 018 7 185 149 040 1 457 61 582 3 300 4 449 6 100 Sites/ dwellings 3 224 0 6 121 123 3 408 0 6 411 219 1 570 0 Total 303 579 69 640 542 146 45 922 375 149 15 752 312 105 16 743 93 602 10 277

NOTE 4 BAD DEBTS NOK 5.4 million was charged as an expense in 1998. Total provisions for forseeable future bad debts at 31 Dec. 98 amounted to NOK 13.8 million.

NOTE 5 LOSS ON SALE OF SHARES Arbeiderbladet AS (Dagsavisen) was sold at 31 Dec. 98. Dagsavisen’s result is therefore included in the consolidated accounts until this date. The Group’s loss on the sale of the shares was NOK 20.4 million.

NOTE 6 TAXES Below is a specification of the Group’s taxes.

(NOK 1 000) 1998 1997 1996 Taxes payable 10 721 23 851 19 755 Deferred taxes - 1 499 0 0 Acquired deferred tax assets 0 5 413 4 386 Reconciliation of taxes before acquisition 0 - 2 074 0 Too much/ little allocated previous year - 496 0 0 Taxes 8 726 27 190 24 141

48 Annual Accounts Notes A-pressen

cont. NOTE 6 TAXES Below is a specification of short-term and long-term differences between accounting and tax-related assets and loss carryforwards. Calculation of deferred tax assets is based on nominal tax rates at the end of the last three financial years.

Temporary differences that can be offset:

(NOK 1 000) 31 Dec. 98 31 Dec. 97 31 Dec. 96 Current assets - 14 176 - 19 599 - 18 672 Current liabilities - 15 050 - 22 515 - 8 381 Fixed assets 101 832 32 104 45 058 Long-term shareholdings - 46 814 - 30 497 - 10 204 Other long-term items 12 808 46 027 8 576 Total 38 600 5 520 16 377

Unused loss carryforwards - 54 080 - 65 729 - 73 508 Basis for deferred tax assets - 15 480 - 60 209 - 57 131

Deferred tax assets of differences that can be offset 4 334 16 859 15 997

Temporary differences that cannot be offset:

(NOK 1 000) 31 Dec. 98 31 Dec. 97 31 Dec. 96 Net pension obligations - 6 152 - 26 716 - 40 608 Total - 6 152 - 26 716 - 40 608

Deferred tax assets of differences that cannot be offset 1 723 7 480 11 370

Deferred tax assets in the balance sheet 0 0 0

The NOK 6.1 million in net deferred tax assets at 31 Dec. 98 is not entered in the balance sheet because the Group does not have deferred tax obligations which are the upper limit for entering the deferred tax assets in the balance sheet. The Group had negative differences of NOK 36.1 million in unused dividend payments at 31 Dec. 98. Other long-term items consist mainly of positive temporary differences concerning profit and loss accounts. At 31 Dec. 98 the Group had NOK 54 million in loss carryforwards, of which NOK 41 million is related to companies which do not receive press subsidies. Based on an evaluation of the Group’s profit performance and remaining period for carrying forward loss carryforwards, the accounts are arranged so that the negative temporary differences connected with loss carryforwards can be offset in their entirety against positive temporary differences.

NOTE 7 EARNINGS PER SHARE Earnings per share are calculated according to the Norwegian Accounting Standard Discussion Document. Earnings per share are calculated as the net profit/ loss divided by a time-weighted number of ordinary shares. The time-weighted number of ordinary shares takes into consideration the subscription of share capital in 1996 and the 1998 equity issue.

NOTE 8 CASH AND BANK DEPOSITS At 31 Dec. 98, cash in hand and bank deposits totalled NOK 170.9 million, of which locked-up tax withholdings amounted to NOK 43.1 million.

NOTE 9 STOCK-IN-TRADE Stock-in trade consists mainly of newsprint with a very fast turnover rate. The stocks are valued at cost price or actual value, whichever is lower. Deduction is made for dead stock. 49 Annual Accounts Notes A-pressen

NOTE 10 SHARES IN SUBSIDIARES

SUBSIDIARES A-PRESSEN ASA A-PRESSEN GROUP Company’s No. of shares Nom. value of shares Shares of Book Shares of Stake at share capital A-shares B-shares A-shares B-shares nom. value value nom. value 31 Dec. 98 A-pressen Avis og Trykk AS 1 000 000 10 000 - 100 - 1 000 000 1 000 000 1 000 000 100.00% Lofoten Kommunikasjon AS 100 000 100 - 1 000 - - - 100 000 100.00% A-pressen Eastern Europe AS 7 468 300 74 683 - 100 - 4 876 500 9 626 857 4 876 500 65.30% A-pressen Eiendom AS 100 000 1 000 - 100 - 100 000 100 000 100 000 100,00% A-pressen Nett AS 900 000 900 - 1 000 - 900 000 900 000 900 000 100.00% A-pressen TV AS 10 000 000 100 000 - 100 - 10 000 000 10 476 220 10 000 000 100.00% A-pressen Elektroniske Medier AS 50 000 5 000 - 10 - - - 50 000 100.00% AdExchange Norden AS 50 000 100 - 500 - - - 25 500 51.00% TV Nord-Trøndelag AS 1 450 000 950 500 1 000 1 000 - - 1 015 000 70.00% Trøndersk Multimedia A/S 1 844 700 2 838 - 650 - - - 1 329 250 50.44% TMM Produksjon A/S 50 000 50 - 1 000 - - - 50 000 70.00% TV Helgeland A/S 500 000 500 - 1 000 - - - 278 000 38.92% A-pressens Oslo-redaksjon AS 775 000 775 - 1 000 - 39 000 541 000 664 000 81.05% Annonsetorget AS 250 000 250 - 1 000 - 250 000 0 250 000 100.00% Arbeidets Rett AS 446 050 2 500 6 421 50 50 433 600 5 240 128 433 600 97.21% Aura Avis AS 542 600 54 260 - 10 - 526 470 491 747 526 470 97.03% Møre og Romsdal Annonsesamkjøring AS 50 000 50 000 - 1 - - - 50 000 97.03% Aura Avis Drift AS 1 544 600 154 460 - 10 - 1 498 540 1 399 703 1 498 540 97.02% Aust Agder Blad AS 630 000 12 600 - 50 - 620 600 671 040 620 600 98.51% Avisa Sogndal AS 600 000 600 - 1 000 - 600 000 600 000 600 000 100.00% Avishuset Firda AS 2 880 000 576 - 5 000 - 2 880 000 42 782 815 2 880 000 100.00% TV Sogn og Fjordane AS 50 000 50 - 1 000 - - - 50 000 100.00% Bilkanalen AS 700 000 700 - 1 000 - 600 000 600 115 600 000 85.71% Bladet Nordlys AS 61 950 1 239 - 50 - 43 050 9 272 245 43 050 69.49% TV Tromsø AS 1 638 950 32 779 - 50 - - - 855 000 36.25% Bygdeposten AS 1 100 000 220 - 5 000 - 1 100 000 1 100 000 1 100 000 100.00% Dagbladet Finnmarken AS 1 052 300 21 046 - 50 - 997 300 3 154 286 997 300 94.77% Finnmark Dagblad AS 704 400 12 500 1 588 50 50 642 150 1 476 616 642 150 91.16% Finnmarksposten AS 50 000 50 - 1 000 - - - 50 000 91.16% Firdaposten AS 888 800 8 888 - 100 - 873 700 873 700 873 700 98.30% Fremover AS 419 050 6 391 1 990 50 50 404 850 5 415 118 404 850 96.61% FUNN AS 462 000 462 - 1 000 - - - 360 000 76.47% Hardanger Folkeblad AS 1 458 100 2 800 26 362 50 50 1 444 350 7 088 021 1 444 350 99.06% Harstad Avisproduksjon AS 1 650 000 1 650 - 1 000 - - - 1 386 000 76.05% Bladet Harstad AS 100 000 100 - 1 000 - - - 100 000 76.05% Helgeland Arbeiderblad AS 601 150 5 094 6 929 50 50 576 150 5 559 916 576 150 95.84% Kvinnheringen AS 100 000 100 000 - 1 - 100 000 100 000 100 000 100.00% Lillehammer Medieinvestering AS 5 250 000 774 000 276 000 5 5 5 071 835 14 064 585 5 071 835 96.61% Lofotposten AS 1 000 000 1 000 - 1 000 - 1 000 000 16 200 000 1 000 000 100.00% LokalNett AS 600 000 60 000 - 10 - 524 010 0 524 010 87.34% Lopo Eiendom AS 200 000 400 - 500 - 200 000 340 000 200 000 100.00% Media Nor AS 450 000 90 - 5 000 - - - 400 000 88.89% Media-Riks AS 312 000 312 - 1 000 - 312 000 94 218 312 000 100.00% Media Øst AS 112 225 100 15 405 2 229 097 50 50 112 017 820 187 907 406 112 017 820 99.82% Akershus Amtstidende AS 60 000 60 - 1 000 - - - 60 000 99.82% Buskerud Trykk AS 50 000 50 - 1 000 - - - 50 000 99.82% Ski Avis AS 250 000 25 - 10 000 - - - 250 000 99.82% Gardermoen Pluss AS 400 000 4 000 - 100 - - - 360 510 89.96% Glåmdalen AS 8 839 700 88 397 - 100 - - - 8 292 800 93.64% Reklametjeneste Hedmark AS 500 000 500 - 1 000 - - - 300 000 56.18% A/S Hadeland 416 900 4 169 - 100 - - - 287 300 68.79% Media Øst Eiendom AS 50 000 50 - 1 000 - - - 50 000 99.82% Media Øst Trykk AS 1 000 000 10 000 - 100 - - - 1 000 000 99.82% Romerikes Blad AS 1 000 000 1 000 - 1 000 - - - 1 000 000 99.82% Indre Akershus Blad AS 180 000 4 - 45 000 - - - 180 000 99.82% Romeriksposten AS 400 000 40 000 - 10 - - - 400 000 99.82% TV Romerike AS 5 756 200 57 562 - 100 - - - 5 740 700 99.55% Østfoldpressen AS 17 025 300 1 702 530 - 10 - - - 16 973 800 99.51% Demokraten AS 2 162 600 23 252 20 000 50 50 - - 2 102 696 96.76% Indre Smaalenene Avis AS 50 000 50 - 1 000 - - - 46 000 91.55% Indre Smaalenene Avis og Trykkeri AS 100 000 100 - 1 000 - - - 100 000 99.51% Marker Avisbyrå AS 50 000 50 - 1 000 - - - 50 000 99.51% Moss Dagblad AS 1 659 400 16 594 - 100 - - - 1 544 900 92.65% Rakkestad Avis AS 50 000 50 - 1 000 - - - 50 000 99.51% TV Østfold AS 6 200 000 62 000 - 100 - - - 5 597 000 89.83% Østfoldsamkjøringen AS 302 500 605 - 500 - - - 300 500 98.86% Mjøs Media AS 50 000 50 - 1 000 - 50 000 55 345 50 000 100.00% 50 Annual Accounts Notes A-pressen Group

cont. NOTE 10 SHARES IN SUBSIDIARES

SUBSIDIARES A-PRESSEN ASA A-PRESSEN GROUP Company’s No. of shares Nom. value of shares Shares of Book Shares of Stake at share capital A-shares B-shares A-shares B-shares nom. value value nom. value 31 Dec. 98 Namdals-Avisa AS 6 542 000 6 542 - 1 000 - 6 256 000 10 176 977 6 256 000 95.63% Nordlands Framtid AS 4 309 800 86 196 - 50 - 4 122 200 6 350 845 4 122 200 95.65% Nor-Trykk AS Narvik 5 030 000 100 906 5 000 5 000 4 530 000 12 382 845 5 030 000 99.66% Nye Hojem Trykkeri AS 3 828 000 7 656 - 500 - 1 497 500 1 497 500 3 000 000 76.65% Namdal Reklame & Informasjon AS 200 000 200 - 1 000 - - - 200 000 81.40% Oppland Arbeiderblad AS 3 866 350 4 200 73 127 50 50 3 845 700 36 152 561 3 845 700 99.47% Gjøvik Distribusjon AS 50 000 10 - 5 000 - - - 50 000 99.47% Rana Blad AS 1 557 700 2 000 29 154 50 50 1 549 750 12 386 189 1 549 750 99.49% Ringerikes Blad AS 700 800 584 - 1 200 - 700 800 86 140 806 700 800 100.00% Sam-distribusjon A/S 250 000 100 - 2 500 - - - 167 500 67.00% Rjukan Arbeiderblad AS 653 000 653 - 1 000 - 653 000 1 413 696 653 000 100.00% Sogn Dagblad AS 1 268 706 634 353 - 2 - 1 267 412 1 267 413 1 267 412 99.90% Stjørdalens Blad AS 645 000 645 - 1 000 - 645 000 1 956 011 645 000 100.00% Malvik Bladet AS 150 000 150 - 1 000 - - - 150 000 100.00% Storbyavisene AS 8 050 000 1 610 - 5 000 - 8 050 000 13 050 000 8 050 000 100.00% Bergensavisen Konsern AS 6 990 000 2 231 320 - 3.133 - - - 5 565 101 79.62% Bergensavisen AS 9 922 000 1 338 800 - 7.411 - - - 9 856 808 79.09% Bergensavisen Transport AS 400 000 400 - 1 000 - - - 400 000 79.62% Bergensavisen Trykk AS 6 000 000 6 000 - 1 000 - - - 6 000 000 79.62% Tårnhjørnet AS 50 000 20 - 2 500 - - - 50 000 79.62% Trippel Reklame AS 200 000 200 - 1 000 - - - 200 000 79.62% Fremtiden AS 7 690 000 7 690 - 1 000 - - - 6 177 000 80.33% Rogalands Avis AS 3 626 250 29 010 - 125 - - - 3 471 875 95.74% Nytt om bil Sør-Rogaland AS 50 000 500 - 100 - - - 25 000 47.87% Telemarksavisa AS 5 219 000 5 219 - 1 000 - - - 5 219 000 100.00% Telemark TV Holding AS 100 000 100 - 1 000 - - - 67 000 67.00% TV-Huset AS 2 454 000 2 454 - 1 000 - - - 1 620 000 44.23% TV Telemark AS 5 170 000 10 340 - 500 - - - 4 225 500 60.37% Tidens Krav AS 4 211 900 84 238 - 50 - 4 199 600 4 199 600 4 199 600 99.71% Tidens Krav Transport AS 50 000 50 - 1 000 - - - 50 000 99.71% TV Innlandet AS 8 700 000 8 700 - 1 000 - - - 5 515 000 61.52% Østlands-Posten AS 5 490 200 109 804 - 50 - 5 490 200 101 831 418 5 490 200 100.00% Larvik Rotasjonstrykkeri AS 3 000 000 3 000 - 1 000 - - - 3 000 000 100.00% Total shares in subsidiaries 192 489 087 615 936 942

NOTE 11 SHARES IN ASSOCIATED COMPANIES

ASSOCIATED COMPANIES A-PRESSEN GROUP Company’s No. of shares Nom. value of shares Shares of Book Stake at share capital A-shares B-shares A-shares B-shares nom. value value 31 Dec. 98 AS Avisdrift 107 500 215 - 500 - 32 500 133 786 29.39% Cyberbook AS 715 000 715 - 1 000 - 158 000 804 991 22.10% Film Companiet AS 500 000 500 - 1 000 - 100 000 0 20.00% Gjøvik Media AS 800 000 1 600 - 500 - 385 000 0 47.87% Halden Arbeiderblad AS 100 000 2 000 - 50 - 41 500 3 859 805 41.50% Hedmark Oppland Media AS 800 000 4 - 200 000 - 200 000 200 000 23.41% IntraFish AS 102 000 102 - 1 000 - 39 000 0 38.24% New Media Science ASA 2 219 405 2 219 405 - 1 - 521 174 10 517 711 23.48% Norsk Familieøkonomi AS 8 307 000 8 307 - 1 000 - 2 769 000 2 194 445 33.33% On Line Publishing AS 750 000 75 000 - 10 - 262 490 0 35.00% Small Film AS 1) 800 000 8 000 - 100 - 400 000 563 832 50.00% Smaalenene Medier AS 1) 3 500 000 100 3 400 1 000 1 000 1 830 600 4 854 130 52.05% Telemark/ Agder Samkjøringen AS 200 000 200 - 1 000 - 67 000 192 275 33.50% Telemark Distribusjon AS 1) 50 000 5 000 - 10 - 25 000 1 153 948 50.00% TV 2 AS 260 000 000 2 600 000 - 100 - 86 321 300 557 275 599 33.20% TV Måløy Multimedia AS 300 000 1 200 - 250 - 119 000 0 39.67% TV Nordland AS 1 400 000 2 800 - 500 - 666 000 0 45.50% Øvre Smaalenene AS 500 100 5 001 - 100 - 130 000 3 321 747 25.87% Total shares in associated companies 94 067 564 585 072 269 1) The A-pressen Group has considerable but not decisive influence in the companies Small Film AS, Smaalenene Medier AS and Telemark Distribusjon AS. 51 Annual Accounts Notes A-pressen Group

NOTE 12 OTHER SHARES

OTHER COMPANIES A-PRESSEN GROUP Company’s No. of shares Nom. value of shares Shares of Book Stake at share capital A-shares B-shares A-shares B-shares nom. value value 31 Dec. 98 Hamar Media AS 26 000 000 1 300 - 20 000 - 4 810 600 570 600 18,50% Markedsprofilen AS 1) 50 000 50 - 1 000 - 50 000 50 000 96,76% Medical Media AS 4 396 844 4 396 844 - 1 - 862 200 7 404 200 19,61% Norsk Telegrambyrå AS 12 761 000 25 522 - 500 - 1 844 500 1 860 260 13,60% NYTV ASA 8 688 775 1 737 755 - 5 - 1 680 375 0 19,34% TV Pluss AS 3 500 100 35 001 - 100 - 630 100 0 18,00% Other shares and units 2) ------8 087 940 - Total other shares 9 877 775 17 973 000

1) Markedsprofilen AS is valued according to the cost method. Markedsprofilen AS, which is wholly owned by Demokraten AS, is without activity and is irrelevant to the consolidated accounts. 2) Shares completely or partly owned by subsidiaries

NOTE 13 INVESTMENT IN ASSOCIATED COMPANIES

Book Additions/ Profit/ loss Adjusted Book Ownership value disposals share after directly Received value (NOK 1 000) stake 31 Dec. 97 in period taxes 1998 against Eq. dividend 31 Dec. 98 AS Avisdrift 29.39 % - 106 28 0 0 134 Bilkanalen AS 1) 50.00 % 88 0 - 88 0 0 0 Cyberbook AS 22.10 % 942 0 - 137 0 0 805 Film Compagniet AS 1) 20.00 % 15 0 - 15 0 0 0 Gjøvik Media AS 47.87 % - 385 - 114 - 271 0 0 Grenlandsnettet AS 35.00 % 79 61 - 140 0 0 0 Grenlandsradioen AS 35.00 % 38 - 4 - 34 0 0 0 Halden Arbeiderblad AS 41.50 % 3 845 0 15 0 0 3 860 Hedmark Oppland Media AS 23.41 % - 200 0 0 0 200 IntraFish AS 38.24 % 1 079 0 - 1 079 0 0 0 New Media Science ASA 23.48 % - 13 022 - 2 505 0 0 10 517 Norsk Familieøkonomi AS 33.33 % - 4 800 - 2 606 0 0 2 194 On Line Publishing AS 35.00 % 3 200 225 - 3 425 0 0 0 Small Film AS 50.00 % 502 0 62 0 0 564 Smaalenene Medier AS 52.05 % 4 361 0 493 0 0 4 854 Telemark/ Agder Samkjøringen AS 33.50 % 48 0 144 0 0 192 Telemark Distribusjon AS 50.00 % 293 0 861 0 0 1 154 Telemark TV Holding AS 1) 49.00 % 4 271 - 3 221 - 1 050 0 0 0 TV 2 AS 33.20 % 571 490 1 353 5 991 0 - 21 557 557 277 TV Nordland AS 45.50 % 0 441 - 441 0 0 0 TV-Måløy Multimedia AS 39.67 % - 190 - 190 0 0 0 Øvre Smaalenene AS 25.87 % 4 585 - 1 412 148 0 0 3 321 Total associated companies 594 836 16 146 - 4 082 -271 - 21 557 585 072

Deferred revenues2) 872 Total result from associated companies - 3 210 1) Bilkanalen AS was an associated company until 30 June 98. The company’s share of the result as an associated company is therefore included until this date. On 1 July 98 the company became a subsidiary and is therefore consolidated as a subsidiary from this date. Telemark TV Holding AS was an associated company until 30 April 98. The company’s share of the result as an associated company is therefore included up to this date. The company became a subsidiary on 1 May 98 and is therefore consolidated as a subsidiary from this date. Telemark TV Holding AS and Film Compagniet AS changed their names in 1998 from Per Simon Mustvedt AS and TV Fabrikken AS respectively. 2) A profit was made in connection with the sale of shares in TV Norge AS in 1997 from A-pressen ASA to TV 2 AS, and is according to the Norwegian Accounting Standard for Associated 52 Companies, a deferred revenue. Annual Accounts Notes A-pressen

cont. NOTE 13 INVESTMENTS IN ASSOCIATED COMPANIES Profit/ loss shares in associated companies are the amounts remaining after depreciating NOK 27.7 million in goodwill. Net book value of goodwill in associated companies amounted to NOK 411.3 million at 31 Dec. 97. The depreciation period for goodwill relating to the investment in TV 2 AS is 20 years. As a business asset, this goodwill is estimated to be of significant value within the depreciation period based on a overall assessment of TV 2 AS’ earnings and market position. TV 2 AS’ licence period expires in 2002. It is assumed operations will continue after this time. Other goodwill has a depreciation period of 5 years.

NOTE 14 PROVISIONS FOR DIVIDEND

(NOK 1 000) 31 Dec. 98 31 Dec. 97 31 Dec. 96 Dividends to A-pressen ASA shareholders 0 7 202 8 643 Dividends to minority shareholders of subsidiaries 683 491 793 Total provisions for dividend 683 7 693 9 436

NOTE 15 OTHER CURRENT LIABILITIES

(NOK 1 000) 31 Dec. 98 31 Dec. 97 31 Dec. 96 Prepaid subscriptions 157 258 176 200 140 500 Accrued costs 46 171 37 094 24 254 Other current liabilities 37 533 31 706 38 293 Total other current liabilities 240 962 245 000 203 047

NOTE 16 LIABILITIES

(NOK 1 000) 31 Dec. 98 31 Dec. 97 31 Dec. 96 Total liabilities 1 288 802 1 411 148 1 160 150

Non-interest-bearing short-term debt 515 981 554 596 477 284 Non-interest-bearing long-term debt 7 694 27 829 42 381 Total non-interest-bearing liabilities 523 675 582 425 519 665

Interest-bearing short-term debt 3 777 3 658 5 447 Interest-bearing long-term debt 761 350 825 065 635 038 Total interest-bearing liabilities 765 127 828 723 640 485

Cash and bank deposits 170 875 148 695 253 576

Net interest-bearing liabilities 594 252 680 028 386 909

53 Annual Accounts Notes A-pressen

NOTE 17 LONG-TERM DEBT

(NOK 1 000) 31 Dec. 98 31 Dec. 97 31 Dec. 96 Bank loan - syndicate, A-pressen ASA 575 000 670 000 0 Other long-term debt 185 949 155 036 635 319 Total long-term debt 760 949 825 036 635 319

Repayment schedule for long-term bank loan – syndicate, A-pressen ASA

Amount drawn Repayment schedule for long-term bank loan – syndicate (NOK 1 000) Facility at 31 Dec. 98 1999 2000 2001 2002 2003 Long-term bank loan – syndicate 750 000 575 000 0 50 000 100 000 100 000 500 000

In April 1997 A-pressen ASA signed a NOK 750 million syndicated loan agreement. The loan agreement is a drawing facility managed by DnB ASA and has duration of 6 years. NOK 575 million had been drawn on the facility at 31 Dec. 98. In addition, A-pressen ASA has a NOK 100 million bank overdraft agreement with DnB ASA, of which NOK 54 million had been drawn at 31 Dec. 98.

In June 1998, A-pressen ASA secured NOK 200 million on five-year contracts, and has prudent exposure to changes in Norwegian interest rates.

(NOK 1 000) Nominal amount Receives Pays Contract period Interest rate swap 100 000 6 month NIBOR 5.72 % June 1998 – June 2003

(NOK 1 000) Nominal amount Ceiling Contract period CAP – 6 month revolving 100 000 6.50 % June 1998 – June 2003

NOTE 18 SHAREHOLDERS’ EQUITY

Other Total share- (NOK 1 000) Share capital equity capital holders’ equity Shareholders’ equity at 31 Dec. 95 142 522 381 058 523 580

Equity issue 1 522 8 316 9 838 Net profit/ loss (majority) 67 920 67 920 Allocated to dividend - 9 436 - 9 436 Deferred taxes from acquisition of new companies 2 788 2 788 Shareholders’ equity at 31 Dec. 96 144 044 450 646 594 690

Net profit/ loss (majority) 17 378 17 378 Allocated to dividend - 7 693 - 7 693 Other changes 161 161 Shareholders’ equity at 31 Dec. 97 144 044 460 492 604 536

Equity issue 32 749 107 006 139 755 Net profit/ loss (majority) - 20 940 -20 940 Allocated to dividend - 683 - 683 Other changes 766 766 Shareholders’ equity at 31 Dec. 98 176 793 546 641 723 434

NOTE 19 SECURED DEBTS

(NOK 1 000) 31 Dec. 98 31 Dec. 97 31 Dec. 96 Debts secured by mortgage 78 488 122 547 620 824 Book value of mortgaged assets 177 682 240 268 875 842

54 Annual Accounts Value added statement A-pressen

(NOK 1 000) 1998 1997 1996 VALUE ADDED Operating revenues (excluding government subsidies) 2 182 529 2 089 882 1 852 086 Consumption of purchased materials and services 986 029 947 543 838 969 Gross value added from operations 1 196 500 1 142 339 1 013 117 Capital wear (ordinary depreciation) 146 228 123 133 103 913 Net value added from operations 1 050 272 1 019 206 909 204 Financial income 11 067 9 388 17 027 Share of profit/ loss from associated companies - 3 210 - 17 169 13 413 Value available for distribution from own activities 1 058 129 1 011 425 939 644 Government subsidies 87 331 98 428 99 354 Total values available for distribution 1 145 460 1 109 853 1 038 998

VALUE DISTRIBUTION Employees Gross salaries, wages and social benefits 989 453 910 865 814 572 (of which tax withholding) (270 028) (271 979) (235 297) Owners Dividends 683 7 693 9 436 Capital investors Interest etc. to lenders 58 353 49 703 42 035 Central and local government Taxes on income 8 726 27 190 24 141 Government taxes 111 096 103 721 91 194 The companies Retained for future value added and ensuring of financial soundness - 22 851 10 681 57 620 Total values distributed 1 145 460 1 109 853 1 038 998

The Group’s value added is a result of the input factors labour, capital and technology. The value added statement shows how the values are distributed to various interest groups in society. The gross value added is shown as the Group’s total operating revenues less the value of consumed goods and services. Depreciation (capital wear) represents a reduction of the value of the production equipment throughout the year, and is deducted on a par with purchases and consumed goods and services. The difference between gross value added and capital wear is equal to the net value added. Financial income, share of profit of associated companies and net extraordinary items represent an addition to the net value added. The Group has received government subsidies which are included in the total values for distribution.

55 Annual Accounts Profit and loss account A-pressen ASA

(NOK 1 000) Notes 1998 1997 1996 Operating revenues Profit from sale of shares 0 93 566 0 Other operating revenues 25 614 40 948 30 558 Total operating revenues 25 614 134 514 30 558

Operating expenses Salaries, wages and other personnel expenses 2,9 20 345 15 678 12 179 Other operating and administrative expenses 1,2 27 721 23 979 12 020 Ordinary depreciation 3 3 771 1 741 1 866 Bad debts and guarantees 4 - 2 985 4 582 622 Total operating expenses 48 852 45 980 26 687

Operating profit - 23 238 88 534 3 871

Financial items Financial income 5 23 356 28 473 10 596 Financial expenses 5 - 50 579 - 34 460 - 25 417 Write-down of shares - 4 987 - 4 261 0 Net financial items - 32 210 - 10 248 - 14 821

Net profit/ loss - 55 448 78 286 - 10 950

Application of annual profit/ settlement of annual loss Received Group contribution 68 719 34 738 13 595 To legal reserve 0 - 7 830 0 To/ from distributable reserve - 13 271 - 97 992 5 998 Allocated to dividends 0 - 7 202 - 8 643 Total 55 448 - 78 286 10 950

56 Annual Accounts Balance sheet A-pressen ASA

(NOK 1 000) Notes 31 Dec. 98 31 Dec. 97 31 Dec. 96 ASSETS Current assets Cash and bank deposits 7 1 180 5 139 12 615 Short-term receivables 4,5 118 176 57 072 103 611 Total current assets 119 356 62 211 116 226

Fixed assets Shares in subsidiaries 8 615 937 501 119 434 931 Shares in other companies 8 391 873 374 703 386 746 Long-term receivables 5 475 896 600 271 29 077 Goodwill 3 0 925 1 850 Machinery and fixtures 3 22 659 2 259 1 961 Total fixed assets 1 506 365 1 479 277 854 565

Total assets 1 625 721 1 541 488 970 791

LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Payable VAT, social security, tax withholdings, etc. 4 120 4 064 1 565 Dividends 0 7 202 8 643 Other short-term debt 5 335 476 236 824 31 497 Total current liabilities 339 596 248 090 41 705

Long-term liabilities Long-term debt 5 582 081 741 785 482 836 Net pension obligations 9 4 274 4 869 5 328 Total long-term liabilities 586 355 746 654 488 164

Shareholders’ equity Share capital (8 839 643 shares á NOK 20) 176 793 144 044 144 044 Legal reserve 287 812 180 806 172 976 Distributable reserve 235 165 221 894 123 902 Total shareholders’ equity 10 699 770 546 744 440 922

Total liabilities and shareholders’ equity 1 625 721 1 541 488 970 791

Guarantees 13 962 14 203 62 461 Secured debt 11 0 0 471 108

57 Annual Accounts Cash flow statement A-pressen

(NOK 1 000) 1998 1997 1996 Cash flows from operating activities Profit/ loss before taxes - 55 448 78 286 - 10 950 Ordinary depreciation 3 771 1 741 1 866 Write-down and loss on shares 10 229 6 169 0 Profit/ loss on sale of fixed assets -30 134 -22 Profit on sale of shares 0 - 98 767 - 7 164 Change in stock, debtors and creditors - 14 105 - 5 999 - 5 082 Change in other accrual items 42 025 - 209 376 - 70 049 Items classified as investing and financing activities 30 346 18 128 14 729 Net cash flow from operating activities (a) 16 788 - 209 684 - 76 672

Cash flows from investing activities Incoming payment from sale of fixed assets 449 6 275 Outgoing payment for purchase of fixed assets - 27 205 - 1 293 - 1 362 Incoming payment from sale of subsidiares 456 2 809 11 283 Outgoing payment for purchase of subsidiaries - 16 831 - 97 529 - 54 868 Incoming payment from sale of other shares 0 105 097 0 Outgoing payment for purchase of other shares - 16 846 - 92 887 - 23 458 Outgoing payment for placement in other investments 0 605 - 20 409 Net cash flow from investing activities (b) - 59 977 - 83 192 - 88 539

Cash flows from financing activities Incoming payment when taking up new long-term debt 50 000 670 000 147 421 Outgoing repayment of long-term debt - 145 000 - 371 423 0 Outgoing payment of interest - 45 313 - 31 828 - 14 729 Incoming payment of shareholders’ funds 137 040 0 0 Dividends received 14 967 13 700 31 Outgoing payment of dividends - 7 202 - 8 643 - 7 839 Incoming payment of Group contribution 34 738 13 594 37 184 Net cash flow from financing activities (c) 39 230 285 400 162 068

Net change in cash balances through the year (a+b+c) - 3 959 - 7 476 - 3 143

Cash balances at beginning of year 5 139 12 615 15 758

Cash balances at end of year 1 180 5 139 12 615

A-pressen ASA 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 against net cash flow from operating activities.

58 Annual Accounts Notes A-pressen ASA

The accounts for A-pressen ASA cover all the activities of the Group management.

A-pressen ASA’s accounting policies are described under the Group accounting polices. The notes to the consolidated accounts will in some cases also include A-pressen ASA.

The A-pressen Group has established a group account system with joint and several liability. In accounting terms, the subsidiaries’ net deposits are classified as short-term debt to subsidiaries, while the subsidiaries’ long-term withdrawals are classified as long-term receivables from subsidiaries in A-pressen ASA’s accounts.

NOTE 1 OPERATING REVENUES The write-down of shares in subsidiaries is included in other operating and administrative expenses. The shares in LokalNett AS were written down by NOK 5.3 million in 1998.

NOTE 2 REMUNERATION TO THE BOARD OF DIRECTORS, CEO AND AUDITOR Total remuneration in 1998 to the Board of Directors and Corporate Assembly of A-pressen ASA amounted to NOK 414 750. The CEO’s salary in 1998 came to NOK 850 608, while other reportable benefits amounted to NOK 113 609. A-pressen ASA has no option arrangement for employee representatives or employees. No severance pay agreements beyond the normal period of notice have been made with any A-pressen ASA executives. Remuneration to the auditor of of A-pressen ASA totalled NOK 300 000, of which NOK 87 200 was for consultant services.

Shares owned by members of the Group Board of Directors: Eigil Wettre 2 590 shares Johnny Helgesen 71 shares Jorunn Henriksen 71 shares Kith Skaalerud 31 shares

Shares owned by members of the Corporate Assembly of the Group: Borgny Grini 37 shares Trine Bergstedt 31 shares

Shares owned by the auditor: State-authorized public accountant Jan Fr. Sønsteby 0 shares

Shares owned by CEO: Alf Hildrum 33 100 shares

NOTE 3 FIXED ASSETS

(NOK 1 000) Goodwill Machinery/ fixtures Total Acquisition cost at 1 Jan. 98 9 250 4 529 13 779 Additions 1998 0 23 665 23 665 Disposals 1998 0 1 371 1 371 Acquisition cost at 31 Dec. 98 9 250 26 823 36 073 Accumulated depreciation at 31 Dec. 98 9 250 4 164 13 414 Book value at 31 Dec. 98 0 22 659 22 659 Ordinary depreciation for the year 925 2 846 3 771 Depreciation period (years) 10 3–10

59 Annual Accounts Notes A-pressen

cont. NOTE 3 FIXED ASSETS Investments over the past five years

1998 1997 1996 1995 1994 (NOK 1 000) Purch. Sale Purch. Sale Purch. Sale Purch. Sale Purch. Sale Machinery/ fixture 23 665 449 1 254 6 1 362 275 175 227 1 022 1 081

NOTE 4 BAD DEBTS NOK three million was credited to the profit and loss account in 1998. Total provisions for forseeable future bad debts at 31 December 1998 amounted to NOK 7.1 million.

NOTE 5 RECEIVABLES AND LIABILITIES

(NOK 1 000) 31 Dec. 98 31 Dec. 97 31 Dec. 96 Receivables Group trade receivables 19 110 5 178 864 Other trade receivables 7 709 2 467 1 357 Accounts receivable from Group companies 76 909 36 919 85 381 Other short-term receivables 14 448 12 508 16 009 Total short-term receivables 118 176 57 072 103 611

Subordinated loans to Group companies 3 500 2 000 853 Other subordinated loans 1 300 1 300 0 Long-term receivables from Group companies 357 654 472 414 28 006 Long-term Group account system receivables 104 313 114 673 0 Other long-term receivables 9 129 9 884 218 Total long-term receivables 475 896 600 271 29 077

(NOK 1 000) 31 Dec. 98 31 Dec. 97 31 Dec. 96 Liabilities Group accounts payable 766 984 193 Other accounts payable 6 049 761 2 127 Other short-term debt to Group companies 358 134 8 939 Short-term Group account system payables 306 062 219 018 0 Other current liabilities 22 241 15 927 20 238 Total current liabilities 335 476 236 824 31 497

Long-term debt to Group companies 6 500 47 219 177 720 Other long-term liabilities 575 581 694 566 305 116 Total long-term liabilities 582 081 741 785 482 836

A-pressen ASA has NOK 1.2 million in interest income from Group companies and NOK 0.4 million in interest costs to Group companies.

Further specification of other long-term liabilities is shown in Note 17 in the consolidated accounts.

60 Annual Accounts Notes A-pressen

NOTE 6 TAXES Below is a specification of the difference between the accounting result before taxes and the tax basis for the year for A-pressen ASA.

(NOK 1 000) 1998 1997 1996 Profit/ loss before taxes - 55 448 78 286 - 10 950 Permanent differences/ other differences 2 441 4 910 - 2 599 Change in temporary differences - 12 585 1 - 8 926 Group items 0 - 94 518 - 4 666 Received Group contribution 68 719 34 738 13 595 Applied loss carryforward - 3 127 - 23 417 0 Tax basis for the year 0 0 - 13 546

Taxes

(NOK 1 000) 1998 1997 1996 Taxes payable 0 0 0

Below is a specification of short-term and long-term differences between accounting and tax-related assets and loss carryforwards.

Temporary differences that can be offset:

(NOK 1 000) 31 Dec. 98 31 Dec. 97 31 Dec. 96 Current assets - 3 035 - 4 593 - 5 898 Current liabilities - 4 414 - 9 724 - 7 176 Fixed assets 969 - 4 152 - 4 937 Long-term shareholdings - 14 690 - 10 461 - 7 178 Total - 21 170 - 28 930 - 25 189

Unused loss carryforward - 10 888 - 13 595 - 37 012 Basis for deferred tax assets - 32 058 - 42 525 - 62 201

Deferred tax assets of differences that can be offset 8 976 11 907 17 416

Temporary differences that cannot be offset:

(NOK 1 000) 31 Dec. 98 31 Dec. 97 31 Dec. 96 Net pension obligations - 4 274 - 4 869 - 5 328 Total - 4 274 - 4 869 - 5 328

Deferred tax assets of differences that cannot be offset 1 197 1 363 1 492

Deferred tax assets in the balance sheet 0 0 0

The deferred tax assets are calculated on the basis of the temporary differences between accounting and fiscal assets existing at the end of the financial year. The deferred tax assets are not entered in the balance sheet because the deferred tax assets cannot exceed the deferred taxes in the balance sheet. In addition, A-pressen ASA has a negative difference of NOK 28.8 million concerning unused dividend payments.

NOTE 7 CASH AND BANK DEPOSITS A-pressen ASA’s cash and bank deposits totalled NOK 1.2 million at 31 December 1998. Of this amount there is NOK 1.1 million in tax withholdings in a locked-up account.

61 Annual Accounts Notes A-pressen ASA

NOTE 8 SHARES A specified summary of shares in subsidiaries is shown in Note 10 of the consolidated accounts.

Company’s No. of Value of Shares of Book (NOK) share capital shares nominal shares nominal value value Shares in associated companies Halden Arbeiderblad AS 100 000 2 000 50 41 500 41 500 New Media Science ASA 2 219 405 2 219 405 1 521 174 13 022 580 Cyberbook AS 715 000 715 1 000 158 000 1 455 779 On Line Publishing AS 750 000 75 000 10 262 490 0 IntraFish AS 102 000 102 1 000 39 000 0 Norsk Familieøkonomi AS 8 307 000 8 307 1 000 2 769 000 4 800 000 TV 2 AS 260 000 000 2 600 000 100 57 715 800 360 452 480 Total shares in associated companies 379 772 339

Company’s No. of Value Shares of Book (NOK) share capital shares nominal shares nominal value value Shares in other companies Hamar Media AS 26 000 000 1 300 20 000 4 810 600 570 600 Trønder-Avisa AS 2 250 000 2 250 1 000 210 000 4 125 000 Medical Media AS 4 396 844 4 396 844 1 862 200 7 404 200 TV Pluss AS 3 500 100 35 001 100 630 100 0 Total shares in other companies 12 099 800

Total shares in associated and other companies 391 872 139

NOTE 9 PENSION COSTS AND OBLIGATIONS A-pressen ASA employees are covered by group pension schemes, which are treated as benefit plans in the accounts. In addition, the company has pension obligations that are not covered by insurance. This applies to one former employee and five former employees of subsidiaries. The net pension cost for the year is included under the item salaries, wages and other personnel expenses. No changes were made in economic assumptions from 1996 to 1998.

Obligations and costs are calculated on the basis of the following factors: Discount rate: 6% Expected return on pension funds: 7% Annual wage adjustment: 3% Adjustment of basic pension: 2% Annual pension adjustment: 2%

Pension obligations and funds at end of year:

(NOK 1 000) 31 Dec. 98 31 Dec. 97 31 Dec. 96 Not secured, covered by operations Estimated accrued pension obligation 3 529 3 429 3 947 Non-amortized obligation at change of estimate - 444 - 50 - 236 Net pension obligation 3 085 3 379 3 711

Financed through insurance company/ funds Estimated accrued pension obligation 6 102 5 089 3 729 Market value of pension funds - 4 330 - 3 443 - 2 386 Non-amortized obligation at change of estimate - 583 - 156 274 Net pension obligation 1 189 1 490 1 617

Total net pension obligation 4 274 4 869 5 328

62 Annual Accounts Notes A-pressen

cont. NOTE 9 PENSION COSTS AND OBLIGATIONS Pension cost for the year:

(NOK 1000) 1998 1997 1996 Current value of the year’s pension withholdings and contributions 980 821 634 Interest cost of accrued pension withholdings and contributions 509 453 400 Expected return on pension funds - 247 - 198 - 135 Amortization of deferred obligation at change of estimate 17 - 1 38 Employees’ share of premium payment - 230 - 153 - 136 Net pension cost 1 029 922 801

NOTE 10 SHAREHOLDERS’ EQUITY

(NOK 1 000) Share Legal Distributale Total sharecapital reserve reserve holders’ equity Shareholders’equity at 31 Dec. 95 142 522 164 660 129 900 437 082

Equity issue 1 522 8 316 0 9 838 Net profit/ loss - 10 950 - 10 950 Received Group contribution 13 595 13 595 Allocated to dividends - 8 643 - 8 643 Shareholders’ equity at 31 Dec. 96 144 044 172 976 123 902 440 922

Net profit/ loss 7 830 70 456 78 286 Received Group contribution 34 738 34 738 Allocated to dividends - 7 202 - 7 202 Shareholders’ equity at 31 Dec. 97 144 044 180 806 221 894 546 744

Equity issue 32 749 107 006 0 139 755 Net profit/ loss - 55 448 - 55 448 Received Group contribution 68 719 68 719 Shareholders’ equity at 31 Dec. 98 176 793 287 812 235 165 699 770

NOTE 11 SECURED DEBTS

(NOK 1 000) 31 Dec. 98 31 Dec. 97 31 Dec. 96 Debts secured by mortgage 0 0 471 108 Book value of mortgaged assets 0 0 642 322

63 Annual Accounts A-pressen ASA

Auditor’s report for 1998 TO THE GENERAL MEETING OF A-PRESSEN ASA We have audited the annual report and accounts for A-pressen ASA for 1998, showing a loss for the year of NOK 55 448 000 for the parent company and a consolidated loss for the year of NOK 20 940 000. The annual report and accounts, which comprise the annual report proper, profit and loss account, balance sheet, cash flow statement, notes to the accounts as well as consolidated accounts, are presented by the company's Board of Directors and its Chief Executive Officer.

Our responsibility is to examine the company's annual report and accounts, its accounting records and other related matters.

We have conducted our audit in accordance with relevant laws, regulations and generally accepted auditing standards. We have performed those audit procedures which we have considered necessary to confirm that the annual report and accounts are free of material misstatements. We have examined selected parts of the evidence supporting the accounts and assessed the accounting principles applied, the estimates made by the management, and the content and presentation of the annual report and accounts. To the extent required by generally accepted auditing standards we have reviewed the company's internal control and the management of its financial affairs. The Board of Directors' proposal for the settlement of the loss for the year is in accordance with the requirements of the Norwegian Companies Act.

In our opinion, the annual report and accounts have been prepared in accordance with the requirements of the Norwegian Companies Act and present fairly the financial position of the company and of the group as at 31 December 1998 and the result of its operations for the financial year, in accordance with generally accepted accounting principles.

Oslo, 9 March 1999 NORAUDIT DA

Jan Fr. Sønsteby State Authorized Public Accountant

Statement by the Corporate Assembly TO THE GENERAL MEETING OF A-PRESSEN ASA The Board of Directors' report, profit and loss account and balance sheet for 1998 for A-pressen ASA and the Group, as well as the auditor's report, have today been presented to the Corporate Assembly.

The Corporate Assembly recommends that the General Meeting approve the Board's proposal that the parent's company's net loss of NOK 55.4 million be covered as follows:

Received Group contribution NOK 68.7) million Transferred to distributable reserve NOK (13.3) million Total NOK 55.4) million

Oslo, 15 March 1999

Bente N. Halvorsen Chair of the Corporate Assembly

64 Finnmark Dagblad Finnmarken

Nordlys

Bladet Harstad Nor-Trykk Narvik AS Fremover Lofot-Tidende

Lofotposten

Nordlands Framtid

Rana Blad

Helgeland Arbeiderblad

Namdals-Avisa Nye Hojem Trykkeri AS

Stjørdalens Blad

Malvik Bladet Tidens Krav Aura Avis Opdalingen Aura Avis Drift AS Arbeidets Rett

Firdaposten Firda Avisa Sogndal Hamar Arbeiderblad Årdal & Lærdal Avis Kvinnheringen Oppland Arbeiderblad Hadeland Bergensavisen Glåmdalen Hardanger Folkeblad Romerikes Blad Ringerikes Blad Akershus Amtstidende Rjukan Arbeiderblad Indre Akershus Blad Bygdeposten Øvre Smaalenene Fremtiden Rakkestad Avis ANS Sam-Trykk Demokraten Sarpsborg Arbeiderblad Rogalands Avis Indre Smaalenenes Avis Aust Agder Blad Halden Arbeiderblad 199 Tvedestrandsposten Moss Dagblad Telemarksavisa Østlands-Posten Media Øst Trykk AS Bergensavisen Trykk AS Media Øst Trykk (avd Mysen) Larvik Rotasjonstrykkeri AS a a aa a a a aaa a aa eport 1998 Annual R

Petersburg Express Local newspapers maintain strong position Future generation local newspapers Value of TV 2 increases Unique digital merger The 10-year period from 1988 to today has been extremely expansive. Here are the main highlights:

1988: Loss of circulation and revenues, considerable losses (NOK 70 million) The board of Norsk Arbeiderpresse AS approves reorganization plan

1989: Continued circulation, revenue and financial losses Costs are reduced by NOK 115 million The Federation of Norwegian Trade Unions (LO) congress agrees to refi- nance A-pressen by up to NOK 160 million

1990: Reorganization, new costcutting, continued financial and circulation losses A-pressen wins the newspaper war in Nordmøre against Dagbladet: Tidens Krav becomes the sole newspaper Bergensavisen and Romerikes Blad launch Sunday editions

1991: Further costcutting, smaller losses (NOK 15 million), continued loss of circulation LO injects NOK 158 million in A-pressen A-pressen takes over Arbeiderbladet from the Labour Party

1992: Profit (NOK 31 million) and reduced circulation losses (down 3,002 copies)

1993: Profit (NOK 61 million) and modest increase in circulation (283 copies) Second-hand sale of shares to employees and union branches: NOK 4.9 million Nye Hojem Trykkeri and BA-trykk established Norsk Lokal TV AS is founded with Norsk Aller The board decides to expand ownership and make the shares tradable

1994: Profit (NOK 58 million) and circulation growth ( 2,682 copies) Increase of share capital towards employees: NOK 5.5 million Name changed from Norsk Arbeiderpresse AS to A-pressen AS

1995: Profit (NOK 100 million) and stable circulation The general meeting approves payment of dividend A-pressen buys Lofotposten, Østlands-posten and Firda A-pressen buys 22 per cent of TV 2 The Labour Party sells its A-pressen AS shareholding A-pressen buys 20 per cent of RiksNett Private increase of share capital: NOK 225 million, share split, new articles of association

1996: Profit (NOK 91 million) and circulation growth A-pressen buys 4 per cent of TVNorge with an option on a further 16 per cent A-pressen participates in nine companies awarded local TV licences A-pressen buys Indre Smaalenenes Avis og Trykkeri, Rakkestad Avis and Indre Akershus Blad Avisa Trondheim is closed

1997: Profit (NOK 45 million) and circulation growth A-pressen becomes majority shareholder of Nordlys, buys Ringerikes Blad A-pressen sells Dagningen to Gudbrandsdølen Lillehammer Tilskuer (GLT) A-pressen increases shareholding in TV 2 to 33 per cent and TV 2 buys 49 per cent of TVNorge 19 A-pressen buys 51 per cent of Digital Hverdag A-pressen founds A-pressen Nett and launches 12 newspapers on the Internet Media Øst Trykk opens new printing plant in Lillestrøm

1998: A-pressen is listed on the Oslo Stock Exchange A-pressen buys Kvinnheringen, Lofot-Tidende and Hadeland A-pressen establishes A-pressen Eastern Europe AS Contents

CHAPTER 1: THIS IS A-PRESSEN 1

EVENTS 2

THE CEO’S VIEW POINT 3

CHAPTER 2: REPOR T OF THE BOARD OF DIRECT ORS 4

CHAPTER 3: SHAREHOLDER RELATIONS AND POLICY 12

CHAPTER 4: BUSINESS AREAS 16

NEWSPAPER 18

PRINTING 22

TELEVISION 25

ELECTRONIC MEDIA 28

CHAPTER 5: COMPANY OVERVIEW 30

NEWSPAPERS 32

PRINTING COMPANIES 37

CHAPTER 6: ACCOUNTS 38

THE GROUP A-PRESSEN 40

NOTES THE GROUP A-PRESSEN 46

A-PRESSEN ASA 56

NOTES A-PRESSEN ASA 59

AUDITOR’S REPOR T, STATEMENT BY THE CORPORATE ASSEMBLY 64 Founded on local devotion

The roots of A-pressen’s humble beginnings can be found in the establishment of the first workers' newspaper – Vort Arbeid – in 1884. Towards the end of the 1800s the trade union movement gathered strength as a social force against the exploitation of workers and for equitable distribution of wealth. Strong forces were to be challenged. The movement had to have its own newspapers in order to get its message out and agitate and mobilize workers. This is how the labour press was born in Oslo, Røros, Hammerfest and throughout Norway.

“First came the newspaper, then the party”, wrote Bjørn Bjørnsen about the founding of Vort Arbeid, which was followed by Social-Demokraten, Arbeiderbladet and Dagsavisen. That is the way it was: the movement and newspaper were one. Agitation on behalf of the trade union movement was the newspapers' mission and goal. In 1905 there were 14 Labour Party newspapers and by 1928 the number had reached 45.

Society began to change, not abruptly and brutally, and Norway’s modern democracy gradually evolved and took shape over the years. Newspapers also changed: “The newspaper reflects and makes its mark on the present, becoming part of history in the process,” is how Øyvind Hirsti summed it up in the book “Rana Blad – Folkets røst i 90 år” (Rana Blad – the People’s Voice for 90 Years).

Labour Party newspapers grew strong in the 1930s, but were hard hit by the second world war when 38 out of 44 newspapers were shut down by the Germans, while more than half of the newspapers of the Conservatives and Agrarian Party were allowed to continue. After the war the newspapers – the world's strongest labour press – were reconstructed at an impressive tempo, against heavy odds. How did they succeed?

Haakon Lie, the powerful former secretary general of the Labour Party, gave this answer when A-pressen celebrated its 50th anniversary in 1998: “They succee- ded because a pressure group of locally anchored newspapers was built up in combination with centralization to solve financial and other problems that could not be solved locally.”

So simple – and so difficult. Devotion to community in combination with sound central solutions is the red thread of A-pressen’s history – even during the at times painful severance from its role as a mouthpiece for the Labour Party and movement in the ’60s, ’70s and ’80s – all the way up to today's modern media corporation, securely founded on a philosophical platform and an unshakeable belief in local newspapers, but also equipped for meeting the needs of tomor- row’s media society.

From a financial point of view, A-pressen's development can be divided into two main epochs: the first 40 years and the last 10. In 1998 the board of the then Norsk Arbeiderpresse AS presented a plan for refinancing and reorganizing the group, marking the beginning of a transition from a newspaper cooperative to today’s media corporation. The reason for this action was increasing financial pressure caused by a declining market, a lack of cost control and considerably greater competition.

The company was formed on 27 May 1948 under the name Norsk 99 Arbeiderpresse AS. Alongside the cooperative Arbeiderpressens Samvirke AL, the holding company provided a sound framework around A-pressen's organization and cooperative approach. The formation of the Group in 1989 united these companies. A-pressen ASA

Stortingsgaten 2 P.O. Box 1168 Sentrum 0107 OSLO Telephone +47 22 00 90 00 Telefax +47 22 33 40 37 www.apressen.no [email protected] Organization No. 926 914 529

Design: Gazette Layout and production: Gazette Print: Larvik Rotasjonstrykkeri

Published April 1999 Circulation 1 000 99English translation Group Board of Directors Shareholders representatives Jan Kr. Balstad, Chair Bente Halvorsen (Chair), Balstad is Deputy Secretary General of Norwegian Confederation of Trade Unions the Norwegian Confederation of Trade Kjetil Lisland (Deputy Chair), Møller Investor AS Unions. He has served as the chair of Jan Davidsen, Norwegian Union of Municipal Employees A-pressen's board since 16 June 1997 Svend O. Eriksen, Hardanger Folkeblad AS . Arild Fredriksen, Den norske Bank ASA Terje Moe Gustavsen, Deputy Chair Erik Garaas, Gjensidige Forsikring Moe is the President of LO State. Martin Mæland, OBOS He has served on A-pressen's board Arnfinn Nilsen, Norwegian Union of General Workers since 11 October 1994. Bente Fredheim Nygård, A-pressen Media Øst AS Olav Støylen, Norwegian Union of Chemical Industry Åshild M. Bendiktsen, Board Member Workers Bendiktsen is Director of Finance, Berit Tolg, LO State Bendiktsen & Aasen A/S. She has served Arvid Øygård, Helgeland Arbeiderblad AS on A-pressen's board since 16 June 1997 . Employee representatives Svein Haugsvold, Board Member Line Mette Finnøy, Stjørdalens Blad AS Haugsvold is Deputy Managing Oddny Johnsen, Bladet Nordlys AS Director, VÅR bank og forsikring. Edvard Boye, Dagsavisen Arbeiderbladet AS He has served on A-pressen's board Borgny Grini,Telemarksavisa AS since 30 January 1990. Ingunn Sandåker, Bergensavisen AS Trine Bergstedt, Lofotposten AS Tore Tønne, Board Member Tønne is CEO of Norway Seafoods ASA. Corporate management He has served on A-pressen's board Alf Hildrum, CEO, has headed the Group since 16 June 1997. since its formation in 1988.

Eigil Wettre, Board Member Other senior executives are: Wettre is CEO of Møller-gruppen AS. Bjørn Larsen, Corporate Director, Business He has served on A-pressen's board Development and the business area Electronic Media since 15 January 1996. Mai Torill Hoel, Corporate Director, Organization, Management, Personnel Development and Corporate Johnny Helgesen, Board Member, Communications Employee Representative Even Nordstrøm, Corporate Director, Helgesen is a photographer and Finance and Property Management employed by Østfoldpressen AS. Marie J. Ritterberg, Corporate Director, Accounting and He has served on A-pressen's board Administration (Ritterberg will be leaving since 25 August 1998. A-pressen ASA on 1 July 1999) Reidar K. Karlsen, Managing Director, Jorunn Henriksen, Board Member, A-pressen Eastern Europe AS. Employee Representative Henriksen is a typographer and Following the Group's reorganization in 1997/1998, employed by Fremover. She has served Corporate Directors John Kvadsheim and Øivind on A-pressen's board since 25 August Taugbøl each head a division of the newspaper 1998. and printing business area (A-pressen Avis og Trykk AS and A-pressen Media Øst AS). Both are located in Kith Skaalerud, Board Member, Lillestrøm. Employee Representative Skaalerud is an advertising consultant A-pressen Avis og Trykk has three regional directors: at Romerikes Blad. She has served on Anne Setsaas, A-pressen Midt-Norge A-pressen's board since 16 June 1997. Jorulf Husbyn, A-pressen Media Sør and A-pressen Vestlandet Brit Renngård, Deputy Board Member Gunn Paulsen, A-pressen Nord-Norge (attends regularly) Renngård is chief Jon Espen Lohne is finance director. cashier of the Norwegian Civil Service Union. She has served on A-pressen's The Group's employer's association 19board since 31 October 1995 and Group companies are members of the Confederation of became a deputy board member on Norwegian Business and Industry (NHO) through the 15 January 1996. Norwegian Newspaper Publishers' Association. The companies are not members of NHO's collective bargaining com- Group employee representatives munity. Employer functions are performed by A-pressen's in A-pressen are Tariff Association (ATF), which is the Group's employer's organization. ATF is headed by director John Ravnaas. Ove Nikolaisen, Hardanger Folkeblad

Bjørn Mietinen, Dagbladet Finnmarken The auditor for A-pressen ASA is Jan Fr. Sønsteby, state authorized public accountant, Noraudit DA. A-pressen

• Table of Contents a a aa a a a aaa a aa • Overview

eport 1998 • Summary 1998 Annual R • Key ﬁgures

Petersburg Express • Report of the Board of Directors • Income Statement Local newspapers maintain strong position Future generation local newspapers • Balance Sheet Value of TV 2 increases Unique digital merger • Cash Flow Analysis • Notes • Shareholders Policy