3 May 2013
Company announcement no 07-13
• Q1 2013 group results exceeded expectations
• Expected net profit for the year is maintained
• On May 1 FK Distribution has launched No Ads+ at Forum.dk – a small world news item.
Group revenue and performance for Q1 2013 were lower than for the same period last year because structural market developments and regulatory measures continue to be negative with respect to printed matter. The Group’s revenue stands at DKK 263.0 million for Q1 2013, which is 7% down on Q1 2012. The Group’s profit from ordinary operations came to DKK 15.8 million against DKK 35.0 million for the same period last year.
Taken as a whole, market conditions were less difficult in Q1 2013 than first expected. The performance, however, is better than expected. Several of the Group’s activities, however, are still influenced by structural market developments. Consequently, business development remains a high priority, and related activities are on track. The Group continues to focus on the implementation of planned activities, profitability, strengthening of its competitive power as well as the development of business models.
FK Distribution has launched No Ads+ at Forum.dk No Ads+ lets the consumers select the printed advertisements they want to receive in their mailbox. Consumers declining advertisements are increasing substantially. Today, 28% of all households decline advertisements, and this is expected to increase to 50% in 2017. The principal reason for the massive increase is that consumers find they receive too many printed advertisements.
FK Distribution has now developed and launched a new product to address this development: No Ads+ at Forum.dk. Today’s system of door-to-door distributed ads is that you either receive all advertisements or none at all. Accordingly, you cannot choose between the ones you want and do not want.
Probably, as the first in the World, Danish consumers are now given the opportunity to select precisely the printed advertisements you want to receive and deselect the ones you do not use anyway.
A large interview survey recently conducted by Gallup showed that 40% of all decliners and as many as 80% of consumers considering declining ads “definitely or probably would subscribe to No Ads+”.
No Ads+ will open for subscriptions on 21 May, and we anticipate making our first distribution rounds according to this new system by the end of June. We intend to start in a specific minor area and will then expand the feature gradually, meaning that we should be able to offer No Ads+ across all of Denmark during 2013.
No Ads+ is an important part of FK Distribution’s future strategy which aspires to capture of the core of the ad market and develop new solutions that accommodate consumers' wishes and provides retailers with and efficient and super relevant channel for submitting advertisements.
Bekey, the developer and seller of a unique electronic key system, has now completed their development of a number of ground-breaking products. Bekey is a conditional access system that can manage and assign temporary electronic keys. Bekey is in dialogue with many local governments who are presently inviting tenders in which Home Care Services want to install electronic key systems, which will be a major help to home carers when visiting clients in their homes.
However, Søndagsavisen managed to increase its market share in Q1 2013, although sales were a little lower than in Q1 2012. Søndagsavisen is struggling with a difficult market situation. The ad market was weak in Q4 2012, and regretfully developments have worsened in Q1 2013. But the ambition of breaking even at group level on newspaper activities remains intact.
Ofir realised the revenue growth planned for Q1 2013. In addition, the next step in the strategy has been taken, resulting in lower costs. Overall, this will improve the financial performance for 2013 considerably.
The level of revenue growth for Byggestart.dk/HentTilbud.dk was lower than expected. This activity continues to generate a loss. We have launched a number of measures to boost revenue.
Expectations for the Group’s financial performance remain unchanged
Revenue and profit for Q1 2013 were higher than expected. Some of FK Distribution's customers, however, went from weekly distribution to mid-week distribution. This has reduced earnings expectations for the remaining quarters of 2013. Expectations for revenue growth in the Online segment for 2013 are a bit lower than previously announced, but the expectations to the result remain unchanged.
Overall, the Group’s revenue is expected to remain in the range of DKK 990 million to DKK 1,050 million for 2013. Group EBIT for 2013 is expected to remain in the range of a negative DKK 15 million to a positive DKK 15 million.
Please contact CEO Lars Nymann Andersen or CFO Kåre Wigh, at +45 39 57 70 00, for further information.
The Interim Management Statement in its full is attached.
This document is an unofficial translation of the Danish original. In the event of any inconsistencies, the Danish version shall apply.
