Financial situation
Schibsted's operating revenues for the 4th quarter 2002 amounted to NOK 2,055 million, a decrease of NOK 22 million compared to the same period in 2001. This decrease is due to a continued weak advertising market and weaker SEK. The Group's operating profit before goodwill and other revenues and expenses increased from NOK 17 million for the 4th quarter 2001 to NOK 136 million for the same period in 2002. This increase is mainly due to the lower cost level that has been established at Aftenposten and Svenska Dagbladet and reduced multimedia activities. The Group's operating revenues for 2002 amounted to NOK 7,872 million compared to NOK 7,972 million for 2001, and the Group's operating profit improved from NOK 56 million to NOK 494 million. Profit before tax for 2002 amounted to NOK 329 million and net income amounted to NOK 198 million, compared to losses of NOK 387 million and NOK 423 million respectively in 2001. Earnings per share for 2002 amounted to NOK 2.87, compared to NOK -6.28 for 2001.
Other revenues and expenses amounted to NOK 8 million for 2002, divided between a gain of NOK 87 million from sale of fixed assets, restructuring costs of NOK 73 million and NOK 14 million in Norway and Sweden respectively, and a gain of NOK 8 million on the sale of subsidiaries etc. The Group sold its properties in Akersgaten 32-34-36 and 51 to Entra Eiendom for a total price of NOK 370 million in December 2002. These property transactions have given the Group a net gain of approximately NOK 80 million.
Net financial items for 2002 showed a loss of NOK 98 million, compared to a loss of NOK 105 million in 2001, due to increased gains on foreign exchange and reduced net interest costs. This improvement is counteracted by increased write-downs in the share portfolio.
Income from associated companies in 2002 amounted to NOK -67 million, an improvement of NOK 271 million compared to 2001. This improvement is primarily attributable to the fact that Scandinavia Online AB is no longer a burden on the Group's profits following the sale of shares in the 4th quarter of 2001, as well as good TV 2 results. The improvement is counteracted by the start-up of 20 Minutes in Paris in 2002.
Tax expenses for 2002 amounted to NOK 131 million (40%), compared to NOK 36 million in 2001. Tax expenses for the Group may vary considerably from the nominal tax rate in Norway (28%) as a result of differences between the Group's accounting results and the tax base. These differences are primarily related to the amortisation of goodwill, income from associated companies and losses in foreign subsidiaries for which no deferred tax is entered in the balance sheet. These differences were significantly reduced in 2002 compared to 2001 due to reduced losses contributed by associated companies and reduced losses in foreign subsidiaries.
In 2002, Schibsted invested NOK 297 million in tangible and intangible fixed assets and NOK 159 million in shares, of which NOK 101 million is an equity contribution to 20 Minutes France SAS. In the 4th quarter of 2002, the Group established a company, FinnTech, in collaboration with the UK's Daily Mail General Trust. Through its subsidiaries FINN.no and Aftonbladet, the Group acquired 60% of the shares in Swedish BytBil in November 2002.
Cash flow from operating activities amounted to NOK 589 million, compared to NOK 298 million in 2001. This improvement was primarily due to the improvement in operating profits compared to 2001. Cash flow from investing activities amounted to NOK -50 million in 2002, compared to NOK -335 million in 2001. This change is mainly due to the settlement of the NOK 370 million property sale. The Group's net interest-bearing debt was reduced by NOK 675 million to NOK 1 billion between 30 September 2002 and 31 December 2002.
The improvement in liquidity is due to a positive contribution from the operating profit for the quarter, the settlement of the NOK 370 million property sale and seasonal fluctuations in the Group's working capital. Total liquidity reserves amounted to approx. NOK 1.3 billion as at 31 December 2002.
In accordance with authorisation from the AGM, Schibsted ASA has repurchased 1,133,000 shares, 183,000 of which were repurchased during the first half-year 2002. In 2002 the shares were repurchased at an average price of NOK 88.
The Group's equity ratio was 34.2% at the end of 2002, compared to 32% at the end of 2001. Dividend payments of NOK 2 per share will be proposed, i.e. the same level as the dividends for 2001.
Future prospects
The Group's future strategy will be to continue to focus on improving its core operations. At the same time, the Group will position itself for possible structural changes in the industry. Lately, the Group has considerably improved its financial flexibility, which will facilitate this. New areas of focus will be assessed continuously, but the financial risk involved will be carefully considered in each individual case.
Stable improvements in the Group's newspaper circulation are envisaged. VG and Aftonbladet are expected to continue to maintain their clear leadership positions in the Norwegian and Swedish single copy market. Svenska Dagbladet is increasing its circulation and its future circulation is forecast to rise even further. Aftenposten assumes that its circulation will improve slightly in 2003.
The advertising markets continue to be weak and there are few signs of improvement. The Group's outlook and plans are therefore based on the advertising markets continuing to be weak in 2003. The market for online advertising is assumed to expand considerably.
Schibsted's TV/Film companies are expected to maintain their market positions in 2003. The outlook for the TV/Film market in general is also slightly better than it was in 2002.
In Estonia, continued growth as a result of generally good market developments and improved results for the TV channel "Kanal 2" are forecast. The increased probability that Estonia will become a member of the EU is also expected to contribute positively to future developments.
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