Interim report January September 2006 October 26, 2006
2 Q3 2006 Highlights Operating revenues was SEK 1,432 M (969) Q3 2005 pro forma operating revenues incl. Findexa was SEK 1,526 M EBITDA was SEK 464 M (194) Q3 2005 pro forma EBITDA incl. Findexa was SEK 453 M Net income for the period was SEK 187 M (158) Net income from discontinued operations of SEK 84 M included 2005 Market outlook 2006 for Group EBITDA remains unchanged Market outlook 2006 for Swedish offline revenues is revised from organically flat to an organic decline of 2 percent
3 1. Print Sweden Actions 2005 New features: layout, heading structure, guides, search functionality, increased circulation Proving ROI: More statistics, measure individual ad performance Actions 2006 Pocket edition of YP in Stockholm to enhance value for advertisers very well received Ads from YP also on Internet service More flexible payment conditions Continued ROI focus YP sales force divided into print and Internet Decision made to publish pocket editions in Gothenburg and Malmö for 2007 Decision made to close down classified paper Gula Tidningen Development 2006 We expect offline revenues to be organically down 2 percent for the full year compared to 2005 Weaker development than expected on large accounts Local directories showed a weaker performance in Q3 due to bad performance in one geographical are
1. Print Norway Action program for 2007 canvasses Product development Four new guides in Yellow Pages, activity guide in local directory, mobile numbers in White pages Price and offerings Simplification of product offering, new offerings, trigger earlier order intake by Oslo pocket edition, moderate price increase and simplified price list Sales Focus on call measurement and ROI, laptops to field sales and improved sale tools, segmentation programs, centralized telesales, new and simplified incentive system Marketing and distribution Marketing campaign from May, full household distribution and addressed distribution to businesses and public customers, strengthen internal pride Development 2006 Offline revenues in Q3 are organically down 9 percent We are confident with guidance of organic revenues of -10 percent for 2006 4
2. Finland Focus areas 2006 Improve print business by stopping revenue decline in Helsinki and Tampere and grow ETD revenues Grow the online business by leveraging the online opportunity Grow the voice business by gaining market share Implement cost saving program Improve efficiency in sales Development 2006 Organically, offline revenues declined by 14 percent for the nine-months period, while online revenues increased by 36 percent and voice revenues increased by 17 percent Effects of the cost saving program improved EBITDA margin to 12 percent for the first nine months, compared with 3 percent in the same period 2005 5
6 3. Leverage on Internet opportunity Actions 2006 Product search: Continued information gathering, new functionality Sponsored links: Broadened customer offering and more sophisticated price models based on paid search made possible by MIVA platform Statistics package transparent way of demonstrating ROI Surveys and lab sessions to gain better understanding of customers and users needs Click to call: Demonstrate ROI, potential revenue source Restaurant bookings Road cameras User ratings and reviews Aerial photographs (Internet and mobile) Integration with MS Office Shopping service incl. price comparison service in Sweden and Norway (Din Pris) Specialized Internet sales forces (currently in Sweden, Norway & Denmark) New version of Norwegian web search site, Kvasir, launched New versions of eniro.s, eniro.dk and eniro.fi to be launched during Q4 Development 2006 Group online revenues increased organically by 14 percent in the first nine months In Norway, online revenues grew organically by 24 percent In Sweden, online revenues were organically up 11 percent
4. Cost reduction program Cost savings program was implemented in 2004 to reduce Eniro s overall cost level In 2005, cost savings of SEK 100 M was delivered Total cost savings of SEK 300 M, net savings based on cost base (SEK 3.7 bn) extrapolated with inflation 2005 SEK 100 M 2006 SEK 200 M (accumulated) 2007 SEK 300 M (accumulated) The cost saving program is on track 7
5. Findexa integration Actions 2006 Integration of the two Norwegian entities done by July 1 Work to realize cost synergies proceeds according to plan Number of brands reduced - focus on the market leading brands Gule Sider and Kvasir - resulting in continued strong revenue growth The two entities fully integrated and Findexa renamed to Eniro as of October 1 8
9 Market outlook Based on the first nine months results for 2006 and the visibility in revenues for the rest of the year, the Group s total EBITDA is expected to increase in 2006 by 5-7 percent, compared with the 2005 pro forma consolidated accounts. EBITDA in the pro forma accounts for 2005 totaled SEK 2,093 M, excluding non-recurring expenses of SEK 113 M in Findexa. Organic offline development for Sweden 2006 is expected to decrease by 2 percent. This is an adjustment from the previously announced outlook of a flat organic development in Swedish offline revenues. Online revenues for Sweden, are expected to increase by more than 10 percent in 2006. Norwegian offline revenues are expected to decline organically by approximately 10 percent in 2006, compared with 2005. A step-up program for the Norwegian print business is now in place. For 2007, this program is expected to reduce the organic decline in offline revenues to 2-3 percent. In addition, and as earlier communicated, the publishing fee from Telenor of NOK 42 M expires as of 2007. The aim for 2008 is a flat development of offline revenues. Online revenues for Norway are expected to increase by 20-25 percent in 2006.
10 Market outlook cont. The merger of the two Norwegian units is expected to generate SEK 50 M in cost savings from Norwegian operations in 2006 and SEK 100 M in 2007. Continued strong competition is expected in the Finnish market in 2006, with continued price pressure in the print market. A cost savings plan has been implemented in Finland and the Finnish EBITDA margin is expected to exceed 10 percent. In 2004, a cost-savings program was implemented to reduce Eniro s overall cost level, calculated in terms of fixed monetary value and stated as net savings. Total savings to be achieved were SEK 300 M, out of which SEK 100 M were achieved in 2005 and an additional SEK 100 M will be received in 2006 and another SEK 100 M in 2007. As announced in the second quarter report, Eniro has the flexibility to return to its stated dividend policy one year earlier than expected after adjustments to the loan agreement.
11 Eniro Group Q3 2006 Oct/Sep Jan-Dec SEK M 2006 2005 % 2006 2005 % 2005/2006 2005 % Results compared with proforma 2005 incl. Findexa Offline revenues 720 859-16 2 568 2 736-6 3 883 4 051-4 Online revenues 479 432 11 1 421 1 227 16 1 887 1 693 11 Voice revenues 233 235-1 668 658 2 894 884 1 Operating revenues 1 432 1 526-6 4 657 4 621 1 6 664 6 628 1 EBITDA 464 453 2 1 538 1 425 8 2 086 1 980 5 EBITDA margin 32 30-33 31-33 30 - Results compared with actual 2005 Jul-Sep Jan-Sep Earnings before tax 225 142 58 833 556 50 1 294 1 017 27 Net income from continuing operations 187 74 153 657 375 75 1 118 836 34 Net income 187 158 18 700 438 60 1 179 917 29 Cash flow from operating activities 255 187 36 891 650 37 1 248 1 007 24 The organic development of operating revenues was flat Offline revenues decreased by 6 percent organically Online revenues improved in all markets except Germany, the organic increase is 12 percent Improved EBITDA from last year due to lower costs in Sweden, Finland and Poland Earnings before tax up 58 percent, net income from continuing operations up 153 percent and net income per share from continuing operations up 115 percent Cash flow from operating activities is up 36 percent from last year
12 Sweden excl. Voice 34 % * *Share of total revenues Oct-Sep 2005/06 Jul-Sep Jan-Sep Oct-Sep Jan-Dec SEK M 2006 2005 % 2006 2005 % 2005/2006 2005 Offline revenues 230 245-6 863 890-3 1 571 1 598 Online revenues 160 146 10 466 420 11 627 581 Total Revenue 390 391 0 1 329 1 310 1 2 198 2 179 EBITDA 147 119 24 537 568-5 963 994 EBITDA Margin, % 38 30-40 43-44 46 Offline revenues declined by 4 percent organically Online revenues increased organically by 10 percent EBITDA increased to SEK 147 M (119), due to lower costs and lower bad debts
13 Sweden Voice 9 % * Jul-Sep Jan-Sep Oct-Sep Jan-Dec SEK M 2006 2005 % 2006 2005 % 2005/2006 2005 * Share of total revenues Oct-Sep 2005/06 Voice revenues 153 156-2 439 452-3 587 600 Total Revenue 153 156-2 439 452-3 587 600 EBITDA 51 41 24 109 78 40 153 122 EBITDA Margin % 33 26-25 17-26 20 Revenues down 2 percent Decline in volumes partly offset by new service concept EBITDA increased to SEK 51 M (41) partly explained by positive timing effects on costs
14 Norway Nordic 28 % * *Share of total revenues Oct-Sep 2005/06 Jul-Sep Jan-Sep proforma % vs proforma % vs SEK M 2006 2005 2005 proforma 2006 2005 2005 proforma Offline revenues 325-446 -27 1 128-1262 -11 Online revenues 167 61 143 17 502 174 392 28 Voice revenues 26-29 -10 75-75 0 Total Revenue 518 61 618-16 1 705 174 1 729 1 EBITDA 236 8 267-12 817 9 748 9 EBITDA Margin, % 46 13 43-48 5 43 - Total revenues decreased organically by 1 percent Offline revenues decreased organically by 9 percent Online revenues increased organically by 20 percent EBITDA affected negatively by moved publication and currency, while realized cost synergies had a positive effect
15 Finland Nordic 10% * *Share of total revenues Oct-Sep 2005/06 Jul-Sep Jan-Sep Oct-Sep Jan-Dec SEK M 2006 2005 % 2006 2005 % 2005/2006 2005 Offline revenues 25 29-12 234 271-14 326 363 Online revenues 31 24 24 93 67 38 122 96 Voice revenues 54 50 8 154 131 18 201 178 Total Revenue 110 103 7 481 469 3 649 637 EBITDA 3-12 - 58 15 287 77 34 EBITDA Margin, % 3-12 - 12 3-12 5 Total revenues increased organically by 5 percent Offline revenues decreased organically by 17 percent Online revenues increased organically by 27 percent and Voice increased organically by 8 percent Improved EBITDA, besides higher revenues, also driven by lower costs
16 Denmark 7 % * *Share of total revenues Oct-Sep 2005/06 Jul-Sep Jan-Sep Oct-Sep Jan-Dec SEK M 2006 2005 % 2006 2005 % 2005/2006 2005 Offline revenues 76 79-4 235 219 7 336 320 Online revenues 24 19 26 69 55 25 90 76 Total Revenue 100 98 2 304 274 11 426 396 EBITDA 5 16-69 23 29-21 31 37 EBITDA Margin, % 5 16-8 11-7 9 Organic revenues increased by 8 percent Offline revenues increased organically by 2 percent and online revenues increased organically by 30 percent EBITDA negatively affected by costs for new sales personnel and costs related to change of premises
17 Poland Central Europe 6% * *Share of total revenues Oct-Sep 2005/06 Jul-Sep Jan-Sep Oct-Sep Jan-Dec SEK M 2006 2005 % 2006 2005 % 2005/2006 2005 % Offline revenues 64 60 7 108 94 15 341 327 4 Online revenues 16 13 23 48 34 41 62 48 29 Total Revenue 80 73 10 156 128 22 403 375 7 EBITDA 25 12 108-20 -41 N/a 104 83 25 EBITDA Margin, % 31 16 - -13-32 - 26 22 - A small quarter since most of the directories are published in Q4 Organic total revenues up 6 percent EBITDA more than doubled higher revenues as well as lower production and administration costs
18 Germany Central Europe Wer Liefert Was? 5 % * *Share of total revenues Oct-Sep 2005/06 Jul-Sep Jan-Sep Oct/Sep Jan-Dec SEK M 2006 2005 % 2006 2005 % 2005/2006 2005 % Online revenues 81 87-7 243 259-6 331 347-5 Total Revenue 81 87-7 243 259-6 331 347-5 EBITDA 16 20-20 65 63 3 74 72 3 EBITDA Margin, % 20 23-27 24-22 21 - Revenues decreased organically by 5 percent Telesales center installed EBITDA amounted to SEK 16 M (20)
19 Balance sheet Balance sheet Eniro Group SEK M Sept 30, 2006 Sept 30, 2005 Total assets whereof total goodwill whereof goodwill Findexa whereof cash Equity Net debt Net debt/ebitda, times Net debt/ebitda pro forma, times Return on equity, % 18 254 12 509 7 557 421 4 781 9 719 4.7 4.4 27 7 084 4 967-391 1 867 2 758 2.2-42 Balance sheet Parent Company SEK M Sept 30, 2006 Sept 30, 2005 Equity whereof unrestricted 4 250 1 919 1 785 1 591
20 Financing position as of September 30, 2006 Loan agreement in 2005 corresponding to SEK 12,000 M in new credit facilities with the purpose to: finance the cash payment in the acquisition of Findexa refinance Eniro s and Findexa s former debt working capital and operational requirements As of September 30, 2006 NOK 7,062 M - whereof NOK 6,262 M hedged until maturity (Sept 2010) and NOK 800 M with floating interest rates EUR 100 M - hedged until maturity (Sept 2010) SEK 1,126 M - floating interest rates SEK 873 M - unutilized Repayment of loans SEK 900 M 2006 SEK 850 M for each of the years 2007-2008 SEK 600 M for each of the years 2009-2010 Flexibility to return to dividend policy, 75 percent of net income, earlier than expected
21 Background financial information Consolidated financials Revenues EBITDA Revenues by quarter EBITDA by quarter Balance sheet Cash flow Shareholders
22 Consolidated financials Income statement Jul-Sep Jan-Sep Oct-Sep Jan-Dec (SEK M) 2006 2005 2006 2005 2005/2006 2005 Continuing operations Operating Revenue 1 432 969 4 657 3 066 growth % 48-26 52-2 Where of Offline 720 413 2 568 1 474 growth % 74-48 74 26 6 418 4 827 37 2 3 715 2 621 43-3 Where of Online 479 350 1 421 1 009 growth % 37 na 41 na Where of Voice 233 206 668 583 growth % 13 na 15 na Offline Share % 50 43 55 48 Online Share % 33 36 31 33 Voice Share % 16 21 14 19 EBITDA 464 194 1 538 686 margin % 32 20 33 22 Net income from continuing operations 187 74 657 375 Discontinued operations Net income from discontinued operations 0 84 43 63 NET INCOME 187 158 700 438 Net Income per Share SEK 1.03 1.02 3.87 2.82 1 834 1 422 na na 869 784 na na 58 54 29 29 14 16 2 086 1 234 33 26 1 118 836 61 81 1 179 917 6.68 5.83 Key ratios 30-sep June 30 March 31 2006 2006 2006 Equity / Asset Ratio % 26 25 26 Interest bearing net debt, SEK M 9 719 10 187 10 340 Interest bearing net debt / EBITDA, times 4,7 5,6 6,8
23 Revenues Revenues Jul-Sep Jan-Sep Oct-Sep Jan-Dec (SEK M) 2006 2005 % 2006 2005 % 2005/2006 2005 Continuing operations Sweden 543 547-1 1 768 1 762 0 2 785 2 779 excl Voice 390 391 0 1 329 1 310 1 2 198 2 179 Voice 153 156-2 439 452-3 587 600 Nordic 728 262 178 2 490 917 172 2 899 1 326 Norway 518 61 749 1 705 174 880 1 824 293 Finland 110 103 7 481 469 3 649 637 Denmark 100 98 2 304 274 11 426 396 Central Europe 161 160 1 399 387 3 734 722 Wer Liefert Was? 81 87-7 243 259-6 331 347 Poland 80 73 10 156 128 22 403 375 Total operating revenues 1 432 969 48 4 657 3 066 52 6 418 4 827
EBITDA EBITDA Jul-Sep Jan-Sep Oct-Sep Jan-Dec (SEK M) 2006 2005 % 2006 2005 % 2005/2006 2005 Continuing operations Sweden 198 160 24 646 646 0 1 116 1 116 excl Voice 147 119 24 537 568-5 963 994 Voice 51 41 24 109 78 40 153 122 Nordic 244 12 1 933 898 53 1 594 877 32 Norway 236 8 2 850 817 9 8 978 769-39 Finland 3-12 N/a 58 15 287 77 34 Denmark 5 16-69 23 29-21 31 37 Central Europe 41 32 28 45 22 105 178 155 Wer liefert was? 16 20-20 65 63 3 74 72 Poland 25 12 108-20 -41 N/a 104 83 Other -19-10 N/a -51-35 N/a -85-69 Head office & group-wide projects -19-10 N/a -51-35 N/a -85-69 EBITDA Total 464 194 139 1 538 686 124 2 086 1 234 24
Revenues by quarter Revenues by quarter 2006 2006 2006 2005 2005 2005 (SEK M) Q3 Q2 Q1 Q4 Q3 Q2 Continuing operations Total 1432 1819 1406 1761 969 1292 % of annual revenues 22 31 26 36 20 27 Sweden 543 723 502 1017 547 749 excl Voice 390 571 368 869 391 591 Voice 153 152 134 148 156 158 Nordic excl. Sweden 728 967 795 409 262 422 Norway 518 581 606 119 61 57 Finland 110 257 114 168 103 258 Denmark 100 129 75 122 98 107 Central Europe 161 129 109 335 160 121 Wer liefert was? 81 80 82 88 87 85 Poland 80 49 27 247 73 36 25
EBITDA by quarter EBITDA by quarter 2006 2006 2006 2005 2005 2005 (SEK M) Q3 Q2 Q1 Q4 Q3 Q2 Continuing operations Total 464 683 391 548 194 380 % of annual EBITDA 22 38 26 44 16 31 Sweden 198 301 147 470 160 325 excl Voice 147 269 121 426 119 305 Voice 51 32 26 44 41 20 Nordic excl. Sweden 244 392 262-21 12 78 Norway 236 301 280-48 8 5 Finland 3 62-7 19-12 50 Denmark 5 29-11 8 16-12 Central Europe 41 4 0 133 32-12 Wer liefert was? 16 20 29 9 20 14 Poland 25-16 -29 124 12-26 Other -19-14 -18-34 -10-11 26
27 Balance sheet Balance sheet Eniro Group (SEK M) September 30, 2006 June 30, 2006 Assets Intangible assets 15 844 16 249 Other non-current assets 583 583 Total non-current assets 16 427 16 832 Total current assets 1 827 1 848 Total assets 18 254 18 680 Equity 4 781 4 715 Total non-current liabilities 10 651 11 056 Total current liabilities 2 822 2 909 Total shareholders equity and liabilities 18 254 18 680 Interest-bearing net debt 9 719 10 187
28 Cash flow Cash flow Jul-Sep Jan-Sep Oct-Sep Jan-Dec (SEK M) 2006 2005 2006 2005 2005/2006 2005 Operating income before interest and taxes 359 164 1 224 603 1 694 1 073 Depreciations and amortizations 105 30 314 83 392 161 Other non-cash items -4 21-57 -45-59 -47 Interest paid -110-19 -365-64 -416-115 Income taxes paid -80 46-204 -129-254 -179 Cash flow from operating activities before changes in working capital 270 242 912 448 1 357 893 Changes in net working capital -15-55 -21 202-109 114 Cash flow from operating activities 255 187 891 650 1 248 1 007 Cash flow from discontinued operations 37 75 45 83 40 78 Acquisition of subsidiaries, net of cash acquired -1-5 -122-5 -5 177-5 060 Purchases and sales of non-current assets, net -36-9 -34-61 -54-81 Cash flow from investing activites -37-14 -156-66 -5 231-5 141 New loans raised - -101 - - 11 201 11 201 Loans paid back -245-78 -683-78 -6 800-6 195 Buy back of shares - - - -193 - -193 Dividend - - -398-345 -398-345 Cash flow from financing activities -245-179 -1 081-616 4 003 4 468 Cash flow 10 69-301 51 60 412
29 Shareholders 30 September 2006 Ownership by country Others 11% USA 36% Luxemburg 5% Italy 8% UK 18% Sweden 22% Largest shareholders % Fidelity funds 9.8 Hermes Focus Asset Management 7.7 Kairos funds 4.9 Richmond Capital 4.9 Parvus Asset Management 4.9 SHB/SPP funds 3.4 Robur funds 3.2 SEB funds 2.4 Vanguard funds 1.6 DWS-Scudder funds 1.1 Others 56.1 Total 100.0