Continued growth in Eniro

Continued growth in Eniro § Eniro's revenues rose by 63 percent during the first nine months compared with the corresponding period in the preceding year to SEK 2, 622 M § Online revenues increased during the nine-month period by 132 percent to SEK 648 M § Eniro Sweden's market share in the Internet advertising market amounts to about 50 percent § Operating income before depreciation (EBITDA) amounted to SEK 509 M during the nine month period, an increase of 47 percent compared with the preceding year § Eniro has signed an agreement to acquire Finnish Elisa Communications' directory-related operations At 2.30 pm local Swedish time on October 30, a teleconference will be held for analysts and the media hosted by Lars Guldstrand, President and CEO, and Lennart Bernard, CFO. Prepared remarks will take about 20 minutes and will be followed by a question-and-answer session. Phone number: +44 208 781 0576 Code: Eniro AB A recording of the teleconference will be available on telephone number: +44 208 288 4459. Replay code: 634 322 or on the Eniro's homepage until November 6. For further information: Lars Guldstrand, President and CEO, +46 8-634 70 00, +46 70 528 81 81 Lennart Bernard, CFO, +46 8-634 70 30, +46 70 825 18 34 Anna-Carin Gripwall, Head of Corporate Communications, +46 8 634 70 04, +46 8 70-349 30 64 www.eniro.com Eniro is the leading directory company in Northern Europe, offline and online. The business has a turnover of SEK 3 billion and an EBITDA of SEK 891 M. Since the listing at the OM Stockholm Stock Exchange October 10, 2000, Eniro has made six acquisitions adding approximately SEK 1,2 billions to Eniro's turnover. Eniro operates in 23 countries and has approximately 4, 000 employees. In total, Eniro has 800 directory titles, of which 35 million copies are distributed. The number of searches at Eniro's Online-services during year 2000 amount to 65 million. Continued growth in Eniro § Eniro's revenues rose by 63 percent during the first nine months compared with the corresponding period in the preceding year to SEK 2,622 M § Online revenues increased during the nine-month period by 132 percent to SEK 648 M § Eniro Sweden's market share in the Internet advertising market amounts to about 50 percent1 § Operating income before depreciation (EBITDA) amounted to SEK 509 M during the nine month period, an increase of 47 percent compared with the preceding year § Eniro has signed an agreement to acquire Finnish Elisa Communications' directory-related operations Market The period was characterized by continued weak economic trends with a decline in GDP and reduced advertising investments as a result. Eniro's most important geographical markets are expected to show continued weak economic development during 2001 compared with 2000. The same applies to the media market in general and the Internet advertis-ing market in particular, which shows a sharp downturn. Directory media are not as severely affected as other forms of media but directory media are also, of course, affected by a general decline. In Sweden, the traditional advertising market continued to decline during the third quarter and by August, investments had fallen by about 13 percent compared with 2000 1) . IRM estimates that the traditional advertising market will decline by 4 percent compared with 2000. The market for Internet advertising has decreased by 20 percent so far this year, and the full-year forecast also indicates a decline of about 20 percent. The Internet advertising market's share of the traditional advertising market including the Internet will thus be reduced from 5.6 percent in 2000 to 4.6 percent in 2001. Nonetheless, this is a significantly higher percentage than the rest of Europe. Operations The German companies, WLW and Windhager were consolidated as of the beginning of this year. Eniro acquired 75 percent of "Svar om Stockholm" in February. This service is marketed under the name 118 767. Eniro has an option to acquire Bonnier's remaining 25 percent within 36 months. Bonniers has a corresponding right to sell its interests. AS Teabeliin, the leading voice portal in Estonia, was acquired in full in April. Since Eniro was previously a part owner of the company, the acquisition did not affect Eniro's consolidated revenues. The Polish competition authorities approved the acquisition of the Polish directory company Panorama Polska Sp.z.o.o in May. Consolidation of the company's accounts began with the second quarter. On June 29, the Svea Court of Appeal issued a preliminary injunction against Tele Danmark's Swedish subsidiaries Gulan AB and Mediaförlaget Företagstele International AB. The court found sufficient evidence that Gulan is an imitation of Eniro's copyright-protected product Gula Sidorna. There is probable cause that an infringement of copyright had taken place, and Gulan AB has been forbidden, under penalty of a fine from continuing this infringement. On April 23 2001, SEAT Pagine Gialle S.P.A. submitted a public offer to the shareholders and holders of warrants in Eniro AB. SEAT withdrew its offer in July, after failing to obtain the requisite 50.1 percent of the share capital. In July, the Eniro share was added to the Stockholm Stock Exchange's OMX index. Eniro is the only media company on the index, where companies are weighed according to each company's market value. Eniro is weighed at 0.87 percent. Telia sold half of its shareholdings in Eniro in the beginning of July thereby reducing its ownership in Eniro to 25.5 percent. In June, Eniro signed a Letter of Intent to acquire Direktia Oy, the directory business of Finnish telecom company Elisa Communications. In September, a Purchase Agreement was signed by the two parties. The purchase price amounted to a net of about SEK 850 M 2) . It is expected that the acquisition will be completed before the end of the year, at which time the purchase price will be paid. As previously communicated, Eniro has the right to choose whether the purchase price shall be paid in cash or with new shares issued to the seller Elisa Communications. Direktia is Finland's second largest directory company and the publisher of, among others, Yellow Pages (Keltaiset Sivut) in the Helsinki metropolitan area, as well as the leader in directory assistance. The acquisition depends on a number of conditions, one was the approval by the Finnish competition authority, which was granted on October 26. Organization As a result of the implemented acquisitions, a new region-based division of the Eniro Group has been effected as of this year: Sweden Region Nordic Region excl. Sweden (Denmark, Finland) Central Europe Region (Windhager, WLW, Panorama Polska) Eastern Europe Region (Baltic countries, Russia, Ukraine, Belarus) Sales and earnings Eniro shows a continued good development for the first nine months of the year compared with the preceding year. Revenues increased by 63 percent and amounted to SEK 2,622 M (1,612). Excluding the acquired units, growth amounted to 14 percent, with the greatest relative growth of 16 percent occurring in the Nordic Region excluding Sweden. For the third quarter, revenues amounted to SEK 619 M (361) an increase of 71 percent, while growth excluding the acquired units was 20 percent for the quarter. Online operations continued their very solid growth rate in a weak market. Revenues for these operations amounted to SEK 648 M (279) during the nine-month period, corresponding to a growth of 132 percent. Organic growth for the nine-month period was 43 percent, with growth noted in all regions. The Swedish market for Internet advertising showed a decrease of about 22 percent during the nine-month period, resulting in continued growth in Eniro's market share to about 50 percent. According to current market statistics, Eniro also holds a leading position in Internet advertising in both the German and Polish markets. Operating income before depreciation (EBITDA) improved by SEK 163 M or 47 percent, to SEK 509 M (346). Excluding the acquired units, operating income before depreciation amounted to SEK 398 M (346), an increase of 15 percent. Region Sweden accounted for the major share of the nine-month results, or SEK 478 M (436). The largest relative growth in earnings, SEK 58 M, occurred in the Nordic Region excluding Sweden, which reported a loss of SEK 17 M compared with a loss of SEK 75 M for the corresponding period in the preceding year. In the Central Europe Region, WLW in particular showed strong earnings growth. For Windhager, the third quarter was characterized by substantial and costly investments, primarily in marketing and sales intended to establish a new brand and an improved product portfolio, and at the same time open new geographical local markets. As previously communicated, Windhager as a result of these activities will report a significant increase in costs starting with the third quarter of this year and at the same time show declining revenue. Increased revenues as a result of these marketing activities are expected to be attained starting in 2003. Eniro's Polish operation, Panorama showed a weak revenues and earnings trend during the current year. This decline is primarily attributable to the weak Polish economy and the fact that the Polish PTT TPSA established itself as a new competitor in the market. Activities that are intended to strengthen the sales organization and to maintain and enhance the already strong online position are currently in progress within Panorama. A deficit of SEK 35 M (surplus: 1) is reported under "Others" in "Operating revenues and EBITDA per region". An important explanation for the increase in costs between the years is that the Group's head office was not established until the end of the second quarter of 2000. In addition, costs of some SEK 30 M related to SEAT's public offer for all Eniro shares and acquisitions that were not completed are also reported under "Other", where the major part of these costs are charged against earnings for the third quarter of this year. The third quarter is normally the weakest of the year. This applies to both Eniro's older operations and to the acquired units. A loss before depreciation (EBITDA) of SEK 32 M (loss: 18) was reported for the third quarter. All of the former Eniro regions reported a strengthening of revenues during the third quarter, while the Central Europe Region now reported a loss before depreciation of SEK 44 M. Operating profit before goodwill (EBITA) improved by SEK 119 M or 37 percent from SEK 326 M for the first nine months of last year to SEK 445 M for the corresponding period this year. The net income for the first nine months of the year amounted to SEK 79 M (136). Operating cash flow Cash flow from current operations during the first nine months of the year amounted to SEK 610 M. Cash flow during the period was negative in the amount of SEK 231 M, with the acquisitions completed during the period resulting in a negative impact of SEK 1,030 M on cash flow. Financial position On September 30, 2001, the equity/assets ratio was 55 percent, a slight improvement compared with year-end. The debt/equity ratio rose slightly during the first nine months of 2001 to a multiple of 0.51. The ratio between interest-bearing net debt and operating profit before depreciation, on a 12-month rolling basis, was to a multiple of 1.8. The return on equity during the most recent 12-month period was 14 percent. The Group's interest-bearing net debt rose by SEK 916 M during the first nine months of the year, from SEK 969 M at year-end to SEK 1,885 M on September 30, 2001. Personnel On September 30, 2001, the number of full-time employees was 3,807, an increase of 1,426 compared with year-end. The number of employees was distributed by region as follows: Region Sweden 647 Region Nordic region excl. Sweden 625 Region Central Europe 1,279 Region Eastern Europe 1,256 Outlook The demand in Eniro's most important geographic markets declined further during the fall. Our assessment is that a continued weak market demand, in combination with actions primarily in Region Central Europe, will have a restraining effect on the rate of improvement concerning the Eniro Group's operating income before depreciation (EBITDA) this current year. Pro forma information In this report, consolidated financial information for 2000 has been prepared pro forma, based essentially on the Group structure that was finalized during the first half of 2001. Detailed information about the assumptions underlying the pro forma accounts is available in the prospectus issued to the market in connection with the Company's initial listing on the Stockholm Exchange's O-List. The prospectus can be ordered from Eniro. The accounting principles applied in the interim report on September 30, 2001 are identical to those applied in the Annual Report for 2000. Stockholm, October 30, 2001 Lars Guldstrand lars.guldstrand@eniro.com Auditor's review report We have reviewed this interim report in accordance with recommendations issued by the Swedish Institute of Authorized Public Accountants. A review is substantially limited in scope in comparison with an audit. Nothing has come to our attention that indicates that this interim report fails to comply with the requirements of the Swedish Securities Exchange Act or the Swedish Annual Accounts Act. Stockholm, October 30, 2001 Ernst & Young AB Financial information Year-end report, Jan - Dec 2001 February 19, 2002 Interim report, Jan - March 2002 May 14, 2002 Annual General Meeting May 14, 2002 Interim report, Jan - June 2002 August 14, 2002 Interim report, Jan - Sept 2002 October 29, 2002 For further information, please contact: Lars Guldstrand, President and Chief Executive Officer, Eniro AB. Tel: +46 8 634 70 01, +46 70-528 81 81 Lennart Bernard, Chief Financial Officer, Eniro AB Tel: +46 8 634 70 30, +46 70 825 18 34 IRM, Institutet för reklam och mediastatistik, 2001 SEK 1 = FIM 1.55, Aug. 2001 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/30/20011030BIT00880/bit0002.doc http://www.waymaker.net/bitonline/2001/10/30/20011030BIT00880/bit0002.pdf The full report