North Media A/S : Aviser A/S restructures Søndagsavisen to restore profitability and to be in a stronger position in the new media market

28 June 2016

Company announcement no 07-16

North Media Aviser is giving notice of the cutting of 25-30 jobs that are related primarily to the main product, Søndagsavisen. The restructuring will reduce costs by approx DKK 20 million. At the same time, Chief Executive Officer of North Media Aviser A/S, Arne Ullum, resign and will be replaced by Gorm Wesing Flyvholm, who is the former Executive Officer of Berlingske Media's local newspaper business, among others.

In May 2016, North Media Aviser divested six local editions of Søndagsavisen and its equity interest in A/S Vestsjællandske Distriktsblade to Sjællandske Medier. This way, North Media Aviser actively assisted in the consolidation that is intended to increase scale economies, synergies and profitability of the newspaper industry.

To further improve the basis for value creation at North Media Aviser, the activities of Søndagsavisen will be restructured. The key steps in the restructuring process are to intensify focus on sales activities and reduce the newspaper's cost base. The other newspaper activities, including the eight local Copenhagen newspapers and Ugeavisen Nordsjælland and Helsingør Dagblad, will not be directly affected by the changes.

Reduction in costs

As part of the restructuring of Søndagsavisen, expectations are that 25-30 jobs will be cut. The jobs are widely spread over most functions of Søndagsavisen, in staff functions and to a great extent in management. Overall, this restructuring will result in special cost items of approx DKK 8 million in 2016 and a reduction in annual capacity costs by approx DKK 20 million.

New Chief Executive Officer of North Media Aviser

As part of the restructuring process, Arne Ullum will resign as Chief Executive Officer of North Media Aviser A/S and as member of the Executive Board of North Media A/S and be replaced by Gorm Wesing Flyvholm. Gorm Wesing Flyvholm will take up his position on 1 September 2016. Also, Sales and Marketing Executive Michael Garver Burgaard will be appointed Chief Executive Officer of Søndagsavisen A/S. Until Gorm Wesing Flyvholm takes up his position, Michael Garver Burgaard will serve as acting Chief Executive Officer of North Media Aviser A/S.

"We have to acknowledge that our current strategy of focussing on growth in readership and resulting advertisement sales no longer works - the past two years' decline seen in the print market has led to a dramatic change in the conditions for free newspapers. In future, the strategy needs to be of a more directly commercial nature, and in that context I have recommended to the Board of Directors to appoint an executive officer whose focus is more commercial than mine," says Arne Ullum.

Arne Ullum will resign as Chief Executive Officer of North Media Aviser A/S and as member of the Executive Board of North Media A/S effective from 1 July 2016, and he will for some time after that perform strategic tasks for North Media's Board of Directors.

"Arne has since 2009 been a valued member of the Group's Executive Board and a valued Chief Executive Officer of the newspaper business. He has headed the efforts of establishing the new structure for Søndagsavisen that we present today. Of course, we are sorry that Arne has informed us that he thinks new people should be called in to take the next step, but we respect his decision. At the same time, we are pleased that Gorm Wesing Flyvholm will join us as new Chief Executive Officer of North Media Aviser. With his strong management and sales competencies, we have the management team to restore Søndagsavisen's earnings capacity determinedly and efficiently," says Richard Bunck, Chairman of the Board of Directors.

Intensified focus on sales

Besides cost savings, Søndagsavisen will launch a string of commercial activities to boost sales. The intention is to capitalise on the unique market position in Northern Zealand, among other areas, and offers to that area's large local retailers, chains and shopping centres are to be tailored more to customer needs. One of the means to do this is by thinking all of the newspaper business' media platforms into one package. This will create the basis for Søndagsavisen once more beating the market.

"I believe there is an under-penetrated local and regional market that the Group's newspapers may tap into. This requires innovation, but also going back to the cornerstones that Søndagsavisen has being relying on for many years. I firmly believe that, with a serious and targeted effort based more on the advertisers' need to attract customers, there is a good chance of providing fresh impetus and generating profitable operations in spite of difficult markets," says Gorm Wesing Flyvholm.

Søndagsavisen will still have 23 regional editions, eight of which are published by Sjællandske Medier.

"This puts Søndagsavisen in a unique position with regional advertisers who, with our newspaper, will be able to reach all of their customers better and cheaper," says Gorm Wesing Flyvholm, who also intends to strengthen the commercial cooperation between Søndagsavisen and the Group's local newspapers which cover, for example, the Greater Copenhagen area, including Frederiksberg and Northern Zealand.

Unchanged earnings expectations for the financial year 2016

Revenue of North Media Aviser is expected to continue to range from DKK 185 million to DKK 195 million. Expectations are that North Media Aviser's EBIT before special items will remain unchanged at a loss between DKK 30 million and DKK 35 million. The restructuring of Søndagsavisen will also result in special cost items in the region of DKK 8 million in 2016.

The original expectations of group revenue between DKK 865 million and DKK 915 million and EBIT before special items between a negative DKK 25 million and a negative DKK 55 million are maintained as well.

For further information, please contact Chief Executive Officer of North Media Aviser A/S Arne Ullum at +45 21 63 22 27, Group Executive Director & CFO Kåre Wigh at +45 25 65 21 45 or Gorm Wesing Flyvholm at +45 25 45 67 74.

Yours faithfully

North Media A/S

Kåre Wigh

Group Executive Director & CFO

This Company announcement no 07/16 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.