2 May 2016
Company announcement no 04-16
Today, North Media A/S (“North Media”) has signed an agreement with Sjællandske Medier A/S (“Sjællandske Medier”) for the latter’s acquisition of Søndagsavisen’s editions covering Næstved, Vordingborg, Falster, Ringsted, Holbæk as well as Taastrup, Køge Bugt and Vestegnen. These six editions of Søndagsavisen represent a weekly circulation of just below 300,000 households out of Søndagsavisen's total circulation of 1.22 million households.
In addition, an agreement has been signed today for Sjællandske Medier A/S’ acquisition of North Media’s 50% stake in A/S Vestsjællandske Distriktsblade (“Vestsjællandske Distriktsblade”), which publishes Uge-Nyt, Skælskør Avis and Korsør Posten in addition to Søndagsavisen in Slagelse. With this acquisition Sjællandske Medier achieves 100% ownership of Vestsjællandske Distriktsblade.
Søndagsavisen maintains its position as Denmark’s largest advertising medium
”As a result of the divestment and the intensified collaboration with Sjællandske Medier, Søndagsavisen as a brand will now be able to offer the major advertisers an even more powerful product as many parts of Zealand Søndagsavisen’s readership will have Søndagsavisen’s consumer and family-oriented material supplemented with the very strong local coverage that Sjællandske Medier’s weeklies are known for,” says Arne Ullum, CEO of North Media Aviser. ”Being able at the same time to strengthen the capital base of our other newspapers is only positive," Arne Ullum proceeds and states that Søndagsavisen is in the process of entering into agreements with local partners to deliver local material to the editions of Søndagsavisen still published by North Media Aviser.
North Media Aviser A/S (“North Media Aviser”) will continue to issue the Søndagsavisen editions in Roskilde, North Zealand, including Herlev and Frederikssund, in Copenhagen, Amager, Funen and the Triangle Region in Jutland. Also, the publication of eight local newspapers in Copenhagen and Frederiksberg, Helsingør Dagblad and Lokalavisen Nordsjælland will continue. These represent a total circulation of 1.25 million copies a week. This will maintain Søndagsavisen's position as Denmark's by far largest advertising medium and the only one where the largest advertisers may reach more than one million households.
As part of the acquisition of the mentioned editions of Søndagsavisen, North Media Aviser and Sjællandske Medier sign a collaboration agreement on editorial content and key account sales and sales of job advertisements to the acquired Søndagsavisen editions. Sjællandske Medier will also take over a small group of staff primarily occupied with regional sales.
Consolidation strengthens focus and financial resources
”The printed newspapers market is changing, which is why it is natural to consolidate the market. A few years ago, we acquired eight local newspapers in Copenhagen because we could realise some economies of scale and synergies. In turn, we now sell some editions of Søndagsavisen to a long-time business partner, Sjællandske Medier, who may equally realise economies of scale and synergies because Sjællandske Medier is already publishing newspapers in the areas included in the agreement. As a newspaper publisher, offhand you would prefer to up your circulation, but if the Danish newspaper market is to be consolidated, this also calls for being ready to sell newspapers. It is obvious in this context that the six editions of Søndagsavisen and the newspapers published by Vestsjællandske Distriktsblade are now in the hands of an owner who, because of their strong position in a geographical area, has the best qualifications for strengthening and developing the newspapers for the benefit of readers and advertisers,” Arne Ullum closes.
The equity interest in Vestsjællandske Distriktsblade is acquired effective from 1 May 2016, and acquisition of the editions of Søndagsavisen will take place regularly from 15 May 2016 to 15 June 2016.
The Søndagsavisen editions sold represented annual revenue of about DKK 27.9 million in 2015. In 2015, the Group's share of profit from the associate Vestsjællandske Distriktsblade was DKK 1.2 million.
The selling price of the newspaper activities sold and the equity interest in Veststjællandske Distriktsblade totals DKK 41.75 million. The editions of Søndagsavisen are sold as activities, and the equity interest in Vestsjællandske Distriktsblade is sold on a debt-free basis. The selling prices are settled in cash.
Adjustment of expectations for 2016
North Media expects a total net profit from the sale of approx DKK 40 million, which will be presented partly as profit from associates, partly as special item.
North Media’s provisional results for Q 1 2016 shows, that the Group in the period had a revenue in the range of DKK 215 million and a loss (EBIT) before special items in the range of a negative DKK 10 million.
As a result of the divestment of the above mentioned editions and the development in Q 1 the 2016 revenue expectations for North Media Aviser are revised to now range from DKK 185 million to DKK 195 million compared to previously between DKK 200 million and DKK 210 million. North Media Aviser EBIT before special items for 2016 is now expected to range between a negative DKK 35 million and a negative DKK 30 million compared to previously between a negative DKK 30 million and a negative DKK 25 million.
The Group’s revenue expectations now range between DKK 865 million and DKK 915 million, and Group EBIT before special items is expected to range between a negative DKK 55 million and a negative DKK 25 million.
The Group’s Interim Management Statement for Q 1 will be published on 4 May 2016.
The strategy of North Media Aviser remains unchanged
The continued publication of newspapers means that the synergy effects with FK Distribution remain unchanged. It is also estimated that current market developments will open up new opportunities for North Media Aviser activities. This is why the strategy of North Media Aviser remains unchanged, and focus is on boosting sales to large national chains which have had difficulties in reaching a sufficiently wide community due to the development in the increasing number of No Ads, Please households. Also, the efforts of increasing sales at new digital platforms, including sondagsavisen.dk and testuniverset.dk, will continue.
For further information about the Group's newspaper operations, please refer to North Media’s Annual Report 2015, including the business description on pages 26-29.
For further details, please contact Group Executive Director & CFO Kåre Wigh at +45 25 65 21 45 or CEO of North Media Aviser Arne Ullum at +45 21 63 22 27.
Yours faithfully
North Media A/S
Kåre Wigh
Group Executive Director & CFO
This Company announcement no 04-16 has been prepared in Danish and English. The Danish text shall be the governing text for all purposes and in case of any discrepancy the Danish wording shall be applicable.