Schibsted ASA Listing of B-shares of Schibsted ASA on Oslo Børs

Transcription

1 Schibsted ASA Listing of B-shares of Schibsted ASA on Oslo Børs This Prospectus (the "Prospectus") has been prepared by Schibsted ASA (the "Company" or "Schibsted"), solely for use in connection with the listing (the "Listing") of 108,003,615 B-shares in the Company (the "B-shares") on Oslo Børs (the "Listing"). This Prospectus does not constitute an offer or solicitation to buy, subscribe or sell the securities described herein, and no securities are being offered or sold pursuant to this Prospectus in any jurisdiction. Skandinaviska Enskilda Banken AB (publ.) Oslo Branch ( SEB ) is acting as listing manager of the Listing (the "Manager"). On 8 May 2015, the Annual General Meeting of the Company approved the creation of the B-shares by approving a split of the Company's existing shares, whereby each ordinary share, par value NOK 1.00, will be split into one A-Share, par value NOK 0.50, and one B-Share, par value NOK Following the split, the Company's share capital will be NOK , divided into A-shares and B-shares, each with par value NOK The Company has applied for a Listing of the B-shares on Oslo Børs and it is expected that the B-shares will start trading on 1 June 2015 under the ticker symbol SCHB. All of the shares in the Company are registered in the Norwegian Central Securities Depository (the "VPS") and are in book-entry form. Each A-share carries 10 votes and each B-share carries one vote. In all other respects, all of the shares in the Company rank pari passu with one another. Except where the context otherwise requires, references in this Prospectus to the Shares will be deemed to include both the A-Shares and the B-Shares. Listing Manager The date of this Prospectus is 28 May 2015

2 IMPORTANT INFORMATION This Prospectus has been prepared solely for use in connection with the Listing. Please see Section 16 "Definitions and glossary" for definitions of terms used throughout this Prospectus. The Prospectus has been prepared to comply with the Norwegian Securities Trading Act of 29 June 2007 No. 75 (the "Norwegian Securities Trading Act") and related secondary legislation, including the Commission Regulation (EC) No. 809/2004 implementing Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 regarding information contained in Prospectuses, as amended, and as implemented in Norway (the "Prospectus Directive"). This Prospectus has been prepared solely in the English language. The Financial Supervisory Authority of Norway (the "Norwegian FSA") has reviewed and approved this Prospectus in accordance with sections 7-7 and 7-8 of the Norwegian Securities Trading Act. The Norwegian FSA has not controlled or approved the accuracy or completeness of the information given in this Prospectus. The approval given by the Norwegian FSA only relates to the information included in accordance with pre-defined disclosure requirements. The Norwegian FSA has not made any form of control or approval relating to corporate matters described or referred to in this Prospectus. The Company has engaged Skandinaviska Enskilda Banken AB (publ.) Oslo Branch ( SEB ) as Listing Manager. The Manager is acting for the Company and no one else in relation to the listing of the B-shares on Oslo Børs. The Manager will not be responsible to anyone other than the Company for providing the protections afforded to clients of the Manager or for providing advice in relation to the listing. No person is authorised to give information or to make any representation concerning the Group or in connection with the Listing other than as contained in this Prospectus. If any such information is given or made, it must not be relied upon as having been authorised by the Company or the Manager or by any of its affiliates, advisors or selling agents. The distribution of this Prospectus may be restricted by law. Persons in possession of this Prospectus are required to inform themselves about and to observe any such restrictions. In addition, the Shares are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable securities laws and regulations. Any failure to comply with these restrictions may constitute a violation of applicable securities laws. This communication is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order ) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as relevant persons ). The Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Shares will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. The information contained herein is current as at the date hereof and subject to change, completion and amendment without notice. In accordance with section 7-15 of the Norwegian Securities Trading Act, significant new factors, material mistakes or inaccuracies relating to the information included in this Prospectus, which are capable of affecting the assessment of the Shares between the time of approval of this Prospectus by the Norwegian FSA and the Listing of the B-shares on Oslo Børs, will be included in a supplement to this Prospectus. The publication of this Prospectus shall not under any circumstances create any implication that there has been no change in the Group's affairs or that the information herein is correct as of any date subsequent to the date of this Prospectus. Neither the Company nor the Manager, nor any of its respective affiliates, representatives, advisers or selling agents, is making any representation to any offeree or purchaser of the Shares regarding the legality or suitability of an investment in the Shares. Each investor should consult with his or her own advisors as to the legal, tax, business, financial and related aspects of a purchase of the Shares. Investing in the Shares involves a high degree of risk. See Section 2 "Risk factors". All Sections of the Prospectus should be read in context with the information included in Section 4 "General information". This Prospectus shall be governed by and construed in accordance with Norwegian law. The courts of Norway, with Oslo as legal venue, shall have exclusive jurisdiction to settle any dispute which may arise out of or in connection with this Prospectus.

3 TABLE OF CONTENTS 1. EXECUTIVE SUMMARY RISK FACTORS RESPONSIBILITY FOR THE PROSPECTUS GENERAL INFORMATION THE LISTING INDUSTRY AND MARKET OVERVIEW BUSINESS OF THE GROUP CAPITALISATION AND INDEBTEDNESS SELECTED FINANCIAL INFORMATION OPERATING AND FINANCIAL REVIEW BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE GOVERNANCE CORPORATE INFORMATION SECURITIES TRADING IN NORWAY TAXATION ADDITIONAL INFORMATION DEFINITIONS AND GLOSSARY Appendix A: Articles of Association Appendix B: Annual financial statements 2014 Appendix C: Annual financial statements 2013 Appendix D: Annual financial statements 2012 Appendix E: Interim financial statements for 1Q 2015

4 1. EXECUTIVE SUMMARY Summaries are made up of disclosure requirements known as "Elements". These elements are numbered in Sections A E (A.1 E.7). This summary contains all the Elements required to be included in a summary for this type of securities and issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and Issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of "not applicable". Section A Introduction and warnings A.1 Warnings This summary should be read as an introduction to the Prospectus. Any decision to invest in the shares should be based on consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might, under the national legislation in its Member State, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. A.2 Use of the prospectus in a resale by financial intermediaries Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. Not applicable. The Prospectus will not be used in subsequent resales by financial intermediaries. Section B Issuer B.1 Legal and commercial name B.2 Domicile and legal form, legislation and country of incorporation B.3 Current operations, principal activities and markets The legal name of the Company is Schibsted ASA and the commercial name is Schibsted Media Group The Company is a Norwegian public limited liability company incorporated in Norway in accordance with the Public Limited Liability Companies Act dated 13 June 1997 No. 45, as amended from time to time. The Company is registered with the Norwegian Register of Business Enterprises with registration number Schibsted is mainly involved in two markets; online classifieds and publishing. Publishing consists of both printed and digital products. Within online classifieds Schibsted is a global player with operations in several Western European markets and growing markets in Asia, Eastern Europe, North Africa and Latin America. B.4a Significant recent trends affecting the Company and the industries in Within publishing, Schibsted s main presence is in Norway and Sweden where Schibsted owns national and regional newspapers. In the last few years competition within the online classifieds business has intensified leading to consolidation, both in mature and emerging markets. The trend of consolidation is expected to continue, in particular in emerging markets. The strong increase of mobile usage is shaping the future classifieds 4

5 which it operates B.5 Description of the Group B.6 Interests in the Company and voting rights marketplaces, and has already led to the emergence of new models, including models based on personalization of content, and proximity-based models. The classifieds advertising market is seeing the emergence of a new category of competitors leveraging strong social or messaging platforms to enter the classifieds business (Facebook, Wechat, etc.) The media industry has seen a significant continued migration from print to online, a trend which is expected to continue. As a consequence, advertising revenue sources is increasingly shifting from print to online. The proliferation of mobile devices is leading to a strong shift towards mobile news consumption which is leading to increased spend on mobile platforms. The Company is the parent company of the Group with no material direct operations and its principal assets are the equity interests it owns in its operating subsidiaries. Shareholders with ownership exceeding 5% must comply with disclosure obligations according to the Norwegian Securities Trading Act section 4-3. The following shareholders hold 5% or more of Schibsted's capital and voting rights as of 26 May 2015: Blommenholm Industrier (26.10%) and Folketrydfondet (6.48%). Luxor Capital Group and Baillie Gifford & Co have disclosed large shareholdings in Schibsted through stock exchange announcement and hold more than 5% of the shares each. These shareholders do not have different voting rights compared to the other shareholders, but Blommenholm Industrier has as the holder of more than 25% of the shares the Company the right to appoint a board member. The Company is not aware that the Company is controlled or owned, directly or indirectly, by any Shareholder B.7 Selected historical key financial information (NOK million) 2014 Consolidated balance sheet data: ASSETS As at 31 December 2013 Restated 2013 Reported 2012 Restated Intangible assets 11,906 10,212 10,337 9,113 Investment property Property, plant and equipment 1,220 1,431 1,439 1,777 Investments in joint ventures and associated companies , Non-current financial assets Deferred tax assets Other non-current assets Non-current assets 14,276 12,684 13,215 11,752 Inventories Trade and other receivables 2,797 2,514 2,623 2,447 Current financial assets Cash and cash equivalents 745 1,202 1,240 1,031 Current assets 3,598 3,767 3,944 3,598 Total assets 17,874 16,451 17,159 15,350 EQUITY AND LIABILITIES Share capital Treasury shares (1) (1) (1) (1) Other paid-in equity 1,527 1,490 1,464 1,464 Other equity 4,926 5,728 6,279 4,293 Equity attributable to owners of the parent 6,560 7,325 7,850 5,864 5

6 Non-controlling interests Equity 6,790 7,586 8,111 6,109 Deferred tax liabilities Pension liabilities 1,911 1,114 1, Non-current interest-bearing borrowings 2,132 1,971 1,971 2,124 Other non-current liabilities Non-current liabilities 5,773 4,234 4,284 4,236 Current interest-bearing borrowings Income tax payable Other current liabilities 4,324 3,926 3,976 4,293 Current liabilities 5,311 4,631 4,764 5,005 Total equity and liabilities 17,874 16,451 17,159 15,350 As at 31 March (NOK million) Consolidated balance sheet data: ASSETS (unaudited) Intangible assets 11,493 10,240 Investment property and property, plant and equipment 1,239 1,564 Investments in joint ventures and associated companies 1, Other non-current assets Non-current assets 14,498 12,573 Inventories Trade and other receivables 2,856 2,658 Cash and cash equivalents Current assets 3,196 3,017 Total assets 17,694 15,590 EQUITY AND LIABILITIES Equity attributable to owners of the parent 7,012 7,179 Non-controlling interests Equity 7,253 7,444 Non-current interest-bearing borrowings 1,908 1,941 Other non-current liabilities 2,944 2,109 Non-current liabilities 4,852 4,050 Current interest-bearing borrowings Other current liabilities 4,745 3,959 Current liabilities 5,589 4,096 Total equity and liabilities 17,694 15,590 6

7 (NOK million) Consolidated statement of income: Three Months Ended 31 March 1Q 1Q As at 31 December 2013 Restated 2013 Reported 2012 Restated Operating revenues 3,694 3,710 14,975 14,870 15,232 14,763 Raw materials and finished goods (161) (172) (696) (850) (874) (1,057) Personnel expenses (1,487) (1,427) (5,564) (5,314) (5,474) (5,226) Other operating expenses (1,670) (1,701) (6,774) (6,929) (7,228) (6,471) Share of profit (loss) of associated companies Gross operating profit (loss) ,941 1,777 1,672 2,043 Depreciation and amortisation (118) (114) (467) (476) (490) (479) Share of profit (loss) of joint ventures and associated companies 354 (202) (841) (123) - - Impairment loss (6) (9) (131) (150) (150) (548) Other income and expenses ,169 (287) Operating profit (loss) ,675 2, Financial income Financial expenses (41) (41) (174) (236) (237) (224) Profit (loss) before taxes ,490 2, Taxes (112) (125) (509) (453) (453) (426) Profit (loss) 734 (24) (127) 1,037 1, Profit (loss) attributable to noncontrolling interests Profit (loss) attributable to owners of the parent (35) (180) 1,011 1, Earnings per share (NOK) 6.17 (0.32) (1.67) Diluted earnings per share (NOK) 6.16 (0.32) (1.67) Earnings per share - adjusted (NOK) 4.20 (0.69) (1.46) Diluted earnings per share - adjusted (NOK) 4.20 (0.69) (1.46) Significant changes in financial condition and operating resulting during or subsequent to 30 March 2015 There has been no significant change to financial condition and operating results during the period covered by the historical key financial information or subsequent to 30 March B.8 Selected key pro forma financial information B.9 Profit forecast or estimate B.10 Audit report qualifications Not applicable. The Prospectus does not contain pro forma financial information. Not applicable. Not applicable, there are no qualifications in the audit report. B.11 Working capital In the opinion of the Company, the working capital for the Group is sufficient for 7

8 the Group's present requirements, for the period covering at least 12 months from the date of this Prospectus. Section C Securities C.1 Type and class of securities admitted to trading and identification numbers B-shares being fully-paid ordinary shares carrying equal rights to the A-shares of the Company, except that the B-shares carry 1 vote compared to the A-shares carrying 10 votes. The B-shares have ISIN NO C.2 Currency NOK C.3 Number of shares and par value The Company has a share capital of NOK 108,003,615 divided on 108,003,615 A- shares, each with a nominal value of NOK 0.50 and 108,003,615 B-shares, each with a nominal value of NOK C.4 Right attached to the securities The B-shares are ordinary shares carrying equal rights to the A-shares, except that the B-shares carry 1 vote compared to the A-shares carrying 10 votes. C.5 Restrictions on transferability The A-shares and the B-shares are freely transferable. However, the Articles of Association provide that no shareholder may own or vote at the General Meetings in respect of more than 30% of the shares. The B-shares are expected to be listed on Oslo Børs on or about 1 June C.6 Admission to trading C.7 Dividend policy Schibsted places emphasis on paying a stable to increasing dividend amount over time. In years when there is an economic slowdown, or for other reasons weaker cash flows of the Company, the Company may reduce or decide not to pay dividend. Section D Risks D.1 Key risks specific to the Company or its industry Risks relating to economic development and industry trends: The Group's business, financial condition and results of operations may be adversely affected by economic downturn in both the global and the Group's local markets The Group has made significant investment in and continue to make efforts to build its online classified businesses in new markets and it could have an adverse effect on the Group s business, results of operations, financial condition and prospects if such investments prove to be unsuccessful The success and growth of the Group s business depends on the Group s ability to develop its online businesses and its ability to adapt to technological changes, evolving industry standards and customers changing needs The Group may not be able to maintain or achieve leading positions in the online news and classified markets in which the Group operates and a failure to do so may have a material adverse effect on its advertising revenues Structural changes in media consumption could lead to a decline in print and digital advertising revenues 8

9 Expenditure by advertisers tends to be cyclical and any further decline in such expenditure may have a material adverse effect on the Group's advertising revenues The Group is subject to significant competition, which could adversely affect its ability to generate advertising and circulation revenues or maintain acceptable margins The Group's inability to adapt to technological changes would impair its ability to compete on the Internet and could materially adversely affect its business, financial condition and results of operations Risks relating to online classifieds, online media and other online activities The Group's inability to adapt to technological changes would impair its ability to compete online and could materially adversely affect its business, financial condition and results of operations Risks relating to print newspapers: Changes in readership habits and acceleration in the speed of transition to digital media could adversely affect the Group, and the effect could be material Risks relating to the Group: The Group may pursue acquisitions and reorganisations which may subject it to a number of risks, including i.a. the diversion of Management s attention from their other responsibilities, the incurrence of additional indebtedness, liabilities, expenditures and expenses, the failure to integrate the operations and personnel of the acquired businesses and failure to retain key personnel, readers and customers of the acquired businesses. Risks relating to changes in regulation, intellectual property and litigation: The Group's commercial freedom could be restricted if it is found to be dominant in local markets If the Group fails to adequately protect its intellectual property rights or face a claim of intellectual property infringement by a third-party, it could lose its intellectual property rights or be liable for significant damages, which could materially and adversely affect its future activities and revenues Privacy concerns and rules on data protection could make it difficult for the Group to collect and maintain information on the Group's customer base. D.3 Key risks specific to the securities The price of the Shares may fluctuate significantly There is no existing market for the B-shares, and a trading market that provides adequate liquidity may not develop There can be no assurance as to the prices at which the B-shares will 9

10 trade The Company's ability to pay dividends is dependent on the availability of distributable reserves Any future share issues or sales of the Company's Shares by it or its major shareholders may have an adverse effect on the market price of the Shares The Shares are priced in NOK and certain investors may be exposed to an exchange rate risk The B-shares will have limited influence Section E Offer E.1 Net proceeds and estimated expenses E.2a Reasons for the Offering and use of proceeds E.3 Terms and conditions of the Offering E.4 Material and conflicting interests E.5 Selling Shareholders and lock-up E.6 Dilution resulting from the Offering E.7 Estimated expenses charged to investor Not applicable, no securities are being offered or sold pursuant to the Prospectus. Not applicable, no securities are being offered or sold pursuant to the Prospectus. Not applicable, no securities are being offered or sold pursuant to the Prospectus. Not applicable, no securities are being offered or sold pursuant to the Prospectus. Not applicable, no securities are being offered or sold pursuant to the Prospectus. Not applicable, no securities are being offered or sold pursuant to the Prospectus. Not applicable, no securities are being offered or sold pursuant to the Prospectus. 10

11 2. RISK FACTORS An investment in the Shares involves inherent risk. Before making an investment decision with respect to the Shares, investors should carefully consider the risk factors and all information contained in this Prospectus, including the Financial Statements (as defined below). The risks and uncertainties described in this Section 2 are the known risks and uncertainties faced by the Group as at the date hereof that the Company believes are relevant to an investment in the Shares. An investment in the Shares is suitable only for investors who understand the risks associated with this type of investment and who can afford to lose all or part of their investment. The absence of negative past experience associated with a given risk factor does not mean that the risks and uncertainties described herein should not be considered prior to making an investment decision in respect of the Shares. If any of the following risks were to materialise, individually or together with other circumstances, they could have a material and adverse effect on the Group and/or its business, financial condition, results of operations, cash flows and/or prospects, which may cause a decline in the value and trading price of the Shares, resulting in the loss of all or part of an investment in the same. The order in which the risks are presented does not reflect the likelihood of their occurrence or the magnitude of their potential impact on the Group s business, financial condition, results of operations, cash flows and/or prospects. The risks mentioned herein could materialise individually or cumulatively. 2.1 Risks relating to economic development and industry trends The Group's business, financial condition and results of operations may be adversely affected by economic downturn in both the global and the Group's local markets. General economic and industry conditions significantly affect the Group's business, financial condition and results of operations. The media industry tends to experience significant adverse financial results during general economic downturns. This is true both for display advertising and classifieds advertising, which tend to follow the macroeconomic cycles with amplified results. For example, the recent financial crisis in Spain has reduced the growth and profitability of SCM Spain, in particular that of Infojobs (as recruiting platforms suffer in times of high unemployment) and Fotocasa (the real estate vertical was hit by a sharp drop in the liquidity of the Spanish real estate market, and by a contraction in the number of realtors). Through its presence in emerging markets (Latin America, Asia and Morocco, mostly through joint-ventures), the Company is exposed to the specific macroeconomic risks of these markets. Many of the emerging markets have grown strongly in the last few years, but this growth has subsided lately, and bears the risk of sharper downturns than what is typically seen in more mature economies due to higher dependence on raw materials, low-tech industries and agriculture, and often a less stable social order. In addition to affecting the Group's ongoing business, financial condition and results of operations, the Company may become unable to divest businesses and ownership stakes at the time the Company would and at a value the Company finds attractive, leading to the continuation of businesses the Company would otherwise had divested or to divestments at lower valuation than the Company would otherwise have obtained, each of which could have a material adverse effect on the Group's business, financial condition and results of operations. The Group has made significant investment in and continue to make efforts to build its online classified businesses in new markets and it could have an adverse effect on the Group s business, results of operations, financial condition and prospects if such investments prove to be unsuccessful. The Group has made significant investments in, and continue to make efforts to build, its online classified businesses. Investments in new online classifieds ventures that reduce the EBITDA were in the amount NOK 503 million in 2014 compared to NOK 870 million in In addition there were investments in joint ventures 11

12 and associated companies, not affecting the EBITDA (included in EBIT), of NOK 803 million (130 million). It could have an adverse effect on the Group s business, results of operations, financial condition and prospects if such investments prove to be unsuccessful. The success and growth of the Group s business depends on the Group s ability to develop its online businesses and its ability to adapt to technological changes, evolving industry standards and customers changing needs. If the Group is unsuccessful in the development of its online businesses this could have a material adverse effect on its business, financial condition and results of operations. The Company believes that the success and growth of its overall business depends to a significant degree upon the development of its online businesses and its ability to continue to adapt to technological changes, evolving industry standards and customers changing needs and preferences in a timely manner. In order for its online businesses to continue to grow and succeed over the long-term, the Group must, among other things: respond to competitive developments, industry trends and customer preferences in a timely manner; attract and retain talent for critical positions; maintain and form relationships with strategic partners to attract more consumers and improve website functionality; continue to develop and upgrade its technologies; bring new product features to market in a timely manner; and expand its online formats internationally both in appropriate countries and in a timely manner. There can be no assurances that the Group will be successful in achieving these objectives. A failure to achieve these objectives and develop the Group's online businesses could have a material adverse effect on its business, financial condition and results of operations. The Group may not be able to maintain or achieve leading positions in the online news and classified markets in which the Group operates and a failure to do so may have a material adverse effect on its advertising revenues. In 2014, the Group's online activities represented 54% of its total operating revenues and these activities generated a greater proportion of its operating profit. Distribution of news, entertainment and other information over the Internet, as well as through mobile phones and other devices, continues to increase in popularity. The Company expects advertisers to allocate an even larger portion of their advertising budgets to digital media, which can offer more measureable returns, as compared to traditional print media, through payfor-performance and keyword-targeted advertising. In the online news and classified markets, having a leading market share in terms of users is a key factor for success, as advertisers tend to focus advertising on the market leader. In order to attract advertising revenues, which are material to its financial condition, the Group must maintain or achieve leading positions in the geographic markets and categories in which the Group operates. If the Group loses its position as a leading online provider of editorial content, or otherwise fails to capture a sufficiently large portion of the migration from print to online media, or fails to effectively generate revenue from its online activities, it may have a material adverse effect on the Group's business, financial condition and results of operations. Structural changes in media consumption could lead to a decline in print and digital advertising revenues. 12

13 The Group's revenues from the print newspapers are impacted by structural changes in media consumption, resulting in accelerated migration from print to digital consumption. Moreover, the Group is facing structural changes in the digital advertising market as advertising revenues follow the user consumption patterns from print to digital platforms. The Group's ambition is to proactively address and reduce the impact of these risks, and the key focus areas in the Group's strategy contribute to achieving this. Examples of action taken by the Group are the implementation of user payment systems in all media houses and proactive efforts towards building a position in web-tv. The Group is increasing its efforts in joint development of platforms for media houses and online classifieds as well as advertising technology and analytics is another important measure. If the Group is unable to adapt to structural changes or actions taken are unsuccessful, this could have a material adverse effect on the Group's advertising revenues. Expenditure by advertisers tends to be cyclical and any further decline in such expenditure may have a material adverse effect on the Group's advertising revenues. The Group s advertising revenues are to a certain extent affected by cyclical developments in real economy figures, notably GDP growth, unemployment rates, and consumer confidence. The Group's advertising revenues from the recruitment market and, to a lesser extent, the real estate market and display advertising, are the revenue streams most exposed to cyclicality. In 2014 the Group's advertising revenues amounted to 59% of total revenues. In total, 5% of Schibsted's revenues come from recruitment advertising, of which 81% is digital. Most of these revenues come from the print newspapers in Schibsted Norway, InfoJobs Spain, and Finn. Most of the future growth is expected to come from consumer-oriented classifieds services such as Blocket and Leboncoin. These revenues are considered to have a relatively low degree of cyclicality. A decline in expenditure by advertisers may have a material adverse effect on the Group's advertising revenues. The Group is subject to significant competition, which could adversely affect its ability to generate advertising and circulation revenues or maintain acceptable margins. The Group is subject to, and expect to continue to be subject to, significant competition. A significant proportion of its revenues are generated from advertising. The Group competes for advertising revenues and for circulation volume of paid publications with other national and local paid print newspapers, free print newspapers, online newspapers and other media channels such as television. Competition for advertising revenues is based largely on advertising effectiveness in terms of reaching a target audience and generating sales. Competition for circulation revenues, another important source of revenue for us, is based largely upon the content of the publication. Although the Group holds a significant market share in the Norwegian and Swedish markets in which it operates, particularly in the national online newspaper market, the Group faces strong competition from printed financial newspapers and other online news websites, and may face additional competition from potentially disruptive business models introduced by large, global internet companies, such as Google and Facebook. The Group may not be able to maintain its current competitive position in one or more of the markets in which it operates, and future increased competition in the Norwegian and Swedish media industry may negatively affect its market position in these markets. This could have a material adverse effect on the Group's business, financial condition and results of operations. The Group competes in several markets with other websites offering online classified services. The Group expects this competition to increase given relatively low barriers to entry into the online market in comparison to the print market. In particular, large, global Internet companies, such as Google, Facebook, Yahoo! and Amazon, as well as regional media providers may seek to extend their businesses into online classified advertising. Additionally, ebay s and Naspers own online classifieds properties in a number of countries in which the Group operates and could seek to expand geographically in direct competition. Facebook s recent developments (introduction of a for sale button, focus on groups with a specific group app, introduction of 13

14 payment services) represent a risk in that Facebook might attempt a full entry into the online classifieds market. The fast growth of mobile usage is expected to lead to increased competition from new mobile based classified models. Mobile-only classified players already have presence in many markets, and this is leading to increased competition for the Group s online classified sites. Certain of these new players are venture-funded start-up companies that have used, and are expected to continue to use significant resources in order to take market shares. In addition, certain of the Group's competitors, which are financed notably through advertising in their print businesses, offer free advertising services on the Internet. While the Company believes that the Group's online business model, which is based on remuneration for its online advertising services, puts us in a better position to meet the demands of its customers in terms of quality, the Company cannot guarantee that a leading Internet provider will not appear in the future and establish a business plan based on free online publication of advertisements. Furthermore, the media industry has experienced consolidation in recent years, a trend which the Company believes will continue unless hindered by local media ownership rules. Such consolidation may impair the Group's ability to provide services at favourable rates. The consolidation of Internet advertising networks, web portals, search engines, or other online publishers could eventually lead to a concentration of advertising inventory on a very small number of networks and large websites. Such concentration could increase the bargaining power of these publishers, which in turn could increase the Group's costs. There can be no assurances that the Group will be able to compete successfully against other companies that provide similar services and products or that the Group will be able to maintain acceptable margins in the strong competitive environment in which it operates. In particular, given the growth potential and relatively attractive margins of online classified advertising, competition may increase significantly and thereby lead to price pressure and increased marketing expenditures. If the Group is not able to compete effectively or maintain acceptable margins, it could have a material adverse effect on its business, financial condition and results of operations. Any failure to adequately maintain the strength and integrity of the Group's brands or to develop new brands may reduce demand for its services and harm its business, results of operations and financial condition. The Group provides its print and online media products under a number of different brands in order to cater to the specific needs and preferences of its different customer groups. This multi-brand strategy could lead to lower brand recognition in relation to competitors who focus all of their marketing efforts on one or a few brands. The Group's aggregate marketing expenditure for its brands may also need to be increased in order to maintain or increase brand recognition in relation to competitors. Furthermore, the Group may be unable to maintain the strength and integrity of its existing brands in either the print or online markets. For example, increased competition for online classified advertising in any of its markets could undermine the strength of associated print publications in those local markets. In addition, the Group is susceptible to others damaging the reputation of its brands through the infringement of its intellectual property rights. In addition, any increased use of web sites with so called aggregator functionality, such as Google and MSN, which enable users to search and access classified advertisements or news articles on the Group's and competing websites, would decrease the number of unique visitors to the respective portals of the Group's websites where brand advertisements are usually placed. This in turn could adversely affect the Group's attractiveness to purchasers of brand advertising and thereby result in a decrease of its advertising revenues. 14

15 The attractiveness of the Group's brands could also be adversely affected by any inappropriate content or inaccurate data on any of its websites. As the Group develops its existing brands and enlarge its business, the measures taken to protect its existing brands and enforce its intellectual property rights must keep pace with its projected economic development and the development of new markets. Any failure to protect intellectual property rights could give rise to a number of negative consequences, such as being unable to use the Group's brand names in a number of countries in connection with certain products and services, or register certain domain names. To the extent that these or other events impair the Group's ability to maintain the strength of existing brands or to create new brands, the Group could experience a decline in demand for its products which may have a material adverse effect on its business, financial condition and results of operations. 2.2 Risks relating to online classifieds, online media and other online activities Unanticipated technological problems, deliberate attacks to the Group's computer networks or termination of software in-licensing may result in reduced traffic to its websites, lower circulation for its print publications and harm to its reputation, financial condition and results of operations. The Group's business depends on advanced computer database and telecommunications technology as well as upon its ability to protect its telecommunications and information technology systems against damage or system interruptions from human error, natural disasters, telecommunications failures, sabotage or vandalism and computer viruses. Further, some of the Group's websites involve the storage and transmission of customers information, some of which may be private, and security breaches could expose the Group to a risk of loss of this information, which could result in potential liability and litigation. In order for the Group to compete effectively and to meet its customers needs and protect their interests, the Group must maintain its systems as well as invest in improved technology. A temporary or permanent loss of any of the Group's systems or networks could cause significant disruption to its business operation, or damage to its reputation resulting in a loss of revenue and potentially higher costs in the future, which could have a material adverse effect on the Group's business, financial condition and results of operations. The Group cannot guarantee absolute protection against unauthorised attempts to access its servers, its data and information systems (which may contain bank account information), attempts to cause technical malfunctions or interruptions in its IT services or the loss or corruption, as a result of a virus or otherwise, of databases, software, hardware or any other IT equipment, which are essential assets to the growth of the Group's businesses. Any system failure that interrupts or reduces the responsiveness of any of the Group's websites, or disrupts its ability to publish or distribute any of its print publications in a timely manner, could result in reduced readership and harm to the Group's reputation, brands and relations with both commercial and individual advertisers. In addition, the inadvertent transmission of computer viruses could expose the Group to a material risk of loss or litigation and possible liability. The Group may be required to expend significant capital and other resources to protect its systems against the threat of such viruses and unauthorised access and to rectify any damage to its systems, which may have a material adverse effect on its business, financial condition and results of operations. In addition, the Group licenses some of the software to its business from third parties. In the event the contractual relationships with the owner of any such software is terminated, the Group would be forced to stop using that software, which could generate negative consequences for its operations by forcing the Group to set up alternative solutions at a cost and within a time frame that would be difficult to predict in advance. In certain cases, a technically equivalent solution may not exist, which would force the Group to use less efficient technology, which would be detrimental to the quality of service offered to its customers. The Group could also be affected by possible changes in the marketing or rate policies of its suppliers, which could impact the profitability of its operations. The Group would also be affected by any event affecting the structure or solvency of the suppliers, such as mergers, acquisitions, insolvency or bankruptcy. In the event that these or 15

16 other similar events occur, it may have a material adverse effect on the Group's business, financial condition and results of operations. The Group's inability to adapt to technological changes could impair its ability to compete online and could materially adversely affect its business, financial condition and results of operations. The market for online products and services is characterised by rapid technological developments, evolving industry standards and frequent new products and enhancements. As the number of web pages and users increases, the Group will need to modify its online infrastructure and its websites to accommodate increased traffic. If the Group cannot modify its computer systems or websites, it may not be able to meet the expectations or changing demands of its customers which may result in them switching to competing classified websites. If a sufficient number of users migrate to competing websites and the Group is unable to continually draw new users to its websites, the Group will not be able to compete successfully online. This may lead to the Group losing its current position and as a consequence may diminish its advertising revenues. Furthermore, if the Group is required to incur substantial costs to modify its infrastructure, it may have a material adverse effect on its business, financial condition and results of operations. The increased use of programmatic marketing, which gives advertisers the ability to target display advertising more accurately and efficiently, could, if the Group is unable to adapt to and take advantage of programmatic advertising technology, lead to a loss of advertising revenues, which in turn could have a material adverse effect on its business, financial condition and results of operations Collection and storage of digital identities is subject to legal obligations, and the failure to meet such obligations could have an adverse effect on the Group s business. The Group processes, stores and uses personal information and other data, which subjects it to legal obligations related to privacy and changes in these regulations. The Group strives to comply with all applicable laws, policies, legal obligations and industry codes of conduct relating to privacy and data protection, to the extent possible. Further, the Group is subject to the terms of its privacy policy. However, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or the Group's practices. Any failure or perceived failure by the Group to comply with its privacy policies, its privacy-related obligations to users or other third parties, or its privacy-related legal obligations, or any compromise of security that results in the unauthorised release or transfer of personally identifiable information or other member data, may result in governmental enforcement actions, litigation or public statements against the Group by consumer advocacy groups or others and could cause the Group's customers to lose trust in it, which could have an adverse effect on the Group's business. Additionally, if third parties the Group works with, such as customers, vendors or developers, violate applicable laws or the Group's policies, such violations may also put the Group's customers information at risk and could in turn have an adverse effect on the Group's business The Group depends on third-party service providers for technical back-up and hosting for its Internet servers. The Group regularly works with a number of service providers that play a significant role in its business, particularly the technical back-up of its files and information and hosting its Internet servers. A decline in the service quality provided by these third-party service providers (particularly in the event of interruptions or delays in back-up processes or access to its servers) or any abrupt termination in the relationship with the service providers could cause the Group to make additional investments in order to effectively back up its files and information and repair any damage caused. Such a situation could have an adverse effect on the Group's business, financial condition and results of operations. 16

17 2.3 Risks relating to print newspapers Changes in readership habits and acceleration in the speed of transition to digital media could adversely affect the Group, and the effect could be material. Circulation of the Group's print newspapers has been most affected by consumers migration to online media. The migration to online media is structural and the Group anticipates that it will continue into the future. The Group ability to compensate further decline in print circulation through price increases and cost reductions are affected by: increasing competition from other publications and other forms of media available in its various markets, including network, cable and satellite television, the Internet, radio and direct mail; changes in consumer spending habits on discretionary items like newspapers; competing uses of free time; and changing propensity to remain or become regular newspaper buyers or subscribers. Several of the Group's principal publishing titles have experienced declines in circulation for a number of years. Although the Group has been able to offset declining circulation through, among other things, increases in the price of print newspapers and the introduction of additional content, e.g., magazine supplements, there can be no assurances that the Group will continue to be able to do so. In addition, continued decline in circulation could impair the Group's ability to maintain or increase its advertising prices, cause purchasers of advertising in its publications to reduce or discontinue those purchases or discourage potential new advertising customers. A further decline in the Group's circulation revenues would have an adverse effect on its business, financial condition, and results of operations. Increases in newsprint costs or a reduction in the availability of newsprint could adversely affect the Group's business, results of operation and financial condition. The Group uses newsprint and is therefore exposed to price fluctuations in the paper market. A 1% change in price alters the Group's raw material costs by around NOK 5 million per year. The price of newsprint in Norway, Sweden and Spain is negotiated with suppliers each year. The Group has in the past and may in the future be able to pass a portion of any newsprint price increases on to its customers by raising advertising and subscription prices. However, a decline in the number of suppliers or in the quantity of newsprint on the market, a higher level of demand for newsprint from its competitors, an inability to obtain an adequate supply of newsprint at a favourable price, or insufficient volumes of newsprint supply in the future could have an adverse effect on the Group's ability to produce its publications and its business, financial condition and results of operations. For its Swedish print titles, the Group relies on third-party providers of printing services. The Group relies on third-party printers to print its publications outside of Norway, notably for its principal Swedish print titles. The Group may be unable to maintain printing contracts on economically attractive terms, and it may be uneconomical in such situations to print the affected publications itself. A failure of the Group to obtain such contracts could have a negative impact on its business, financial condition and results of operations. In addition, certain long-term contracts for third-party printing for its principal Swedish print titles contain minimum volume commitments, which, if they are not met, could lead to increased printing costs. An unanticipated or prolonged interruption of the operations at the Group's own or its third-party contractors production facilities could have a material adverse effect on the Group's business. 17

18 The Group's printing facilities in Norway (Oslo, Bergen and Stavanger), which taken together accounted for a significant proportion of its total printing requirements in 2014, are subject to operating risks, including equipment failures, work interruptions through employee actions or otherwise, revocation of permits and licences, and natural disasters. Any interruptions or delays in the printing process due to such circumstances, some of which may be beyond the Group's control, that cause the Group to pay damages exceeding its insurance coverage could have a material adverse effect on its business, financial condition and results of operations. The editors-in-chief of the Group's newspapers are independent and may make editorial decisions that negatively affect its competitive position and in turn its advertising revenues. The popularity of the Group's editorial content affects its advertising revenues. It is important for the Group to continue to maintain a high number of readers of its publications and a large audience for its online media, as this plays a significant role in attracting and retaining advertisers. In the future, the Group may be forced to make investments in order to maintain or increase the competitiveness of its editorial products in the advertising market. The Group does not have control over the editorial content of its news media. Each editor-in-chief has substantial independence to determine the editorial content of the publication of its media house. In respect of its Norwegian newspapers except for VG, if the Group disagrees with the editorial content of any news publication of any such newspaper, it will not be able to direct the appointment of a new editor. Due to the strong independence of the editorial content of the Group's newspapers, its publications may fail to attract the readership upon which its advertising revenues depend. A failure to maintain or increase the competitiveness of these publications could have a material adverse effect on the Group's business, financial condition and results of operations. The Group relies on third parties to distribute subscriptions and individual copies and to sell individual copies of its printed products. The Group relies on third-party distributors for the distribution of its newspapers in Norway and Sweden, as well as internationally. As a result, the Group is unable to exercise direct control over some aspects of these operations. In addition, because these third parties may not be as responsive to the Group's needs as it might be itself, this outsourcing increases the risk of disruption to the Group's subscription operations. In addition, the Group is dependent on its ability to negotiate commercially favourable distribution terms. The Group's business depends on these distributors. A deterioration in its relationship with any of its distributors could affect the distribution of its newspapers which could result in reduced readership and harm to its reputation. If the Group is unable to effectively utilise or maintain good relations with its third-party distributors, or if they experience business difficulties or are unable to provide their services as anticipated, the Group may need to seek alternative distributors, which may have a material adverse effect on its business, financial condition and results of operations. In addition, the Group's print publications are sold at newsstands and kiosks. The Group sells directly to kiosk chains and single-kiosks/newsstands as well as to shops, supermarkets and hotels. Any interruptions in these relationships could inhibit the Group's ability to distribute and market its products, which could have a material adverse effect on its business, financial condition and results of operations. 18

19 2.4 Risks relating to the Group The Group's borrowings could adversely affect its business. The Group's borrowings may have important consequences, including: increasing the exposure to the adverse impact on the Group's business of general adverse economic and industry conditions which can limit its ability to obtain additional debt financing to fund future working capital, capital expenditures, potential acquisitions or other general corporate requirements; requiring the dedication of a substantial portion of the Group's cash flows from operations to the payment of principal of, and interest on, its indebtedness, which means that these cash flows will not be available to fund its operations, capital expenditure or other corporate purposes; as a consequence of the covenants to which the Group is subject under its debt agreements, limiting its flexibility in planning for, or reacting to, changes in its business and industry; restricting the Group's ability to pursue attractive acquisition targets; placing the Group at a competitive disadvantage compared to its competitors with less indebtedness; and potentially limiting the Group's ability to pay dividends. While the Group believes that it has sufficient working capital for its present requirements, there can be no assurances that the Group will have sufficient access to debt financing to pursue its business strategy in the medium to long-term. The Group requires a significant amount of cash to service its debt, and its ability to generate sufficient cash depends on many factors beyond its control. The Group's ability to make payments on, and to refinance, its debt will depend on its future operating performance and ability to generate sufficient cash. This will, to some extent depend on general economic, financial, competitive, market, legislative, and regulatory factors, as well as the other factors discussed herein, many of which are beyond the Group's control. There can be no assurance that the Group's business will generate sufficient cash flows from operations or that future debt and equity financing will be available to the Group in an amount sufficient to enable it to pay its debts as they become due. If the Group's future cash flows from operations and other capital resources are insufficient to pay its obligations as they mature, the Group may be forced to: reduce or delay the Group's business activities and capital expenditures; sell assets to the extent contractually permitted; obtain additional debt or equity capital; and/or restructure or refinance all or a portion of the Group's debt on or before maturity. There can be no assurance that the Group would be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all. Any default of the obligations under, or breach of the financial covenants in the Group's loan agreements could have a material adverse effect on its business, financial condition and results of operations. 19

20 As of 31 March 2015, the Group had long term revolving credit facilities totalling NOK 3.7 billion. None of the facilities were drawn. In addition the Group had bonds/frns bank loans and other interest bearing debt totalling NOK 2.8 billion. The agreements governing the revolving credit facilities and bank loan agreements include certain representations and warranties, covenants, notice provisions and events of default. The Group's revolving credit facilities and bank loans are subject to financial covenants linked to the ratio of net interest-bearing debt to gross operating profit (EBITDA). This ratio was 1.07 at the end of 2014 and is well within the financial covenant. NOK are the Group's base currency, but it is also exposed to changes in other countries exchange rates, mainly the EUR and SEK. As a result, the Group is sensitive to fluctuations in exchange rates. See The Group may be adversely affected by exchange rate fluctuations below. The Group is subject to interest rate risk as all interest-bearing debt including swaps are based on floating interest rates. This could cause its debt service obligations to increase. Virtually all of the Group's debt as at 31 December 2014 was subject to a variable interest rate. Thus, both interest bearing debt and cash balances are affected by changes in interest rates. A general change of one percentage point in the variable interest rate will change Schibsted's net interest expenses by approximately NOK 21 million. The Group's exposure to increases in interest rates could cause its debt service obligations to increase significantly, which could have a material adverse effect on its business, financial condition and results of operations. The Group may pursue acquisitions and reorganisations which may subject it to a number of risks. The Group has historically grown through, and may continue to grow through, acquisitions of daily and weekly newspapers, online classifieds sites as well as through intra-group mergers. The Company evaluates potential mergers and acquisitions on an ongoing basis and from time to time it will actively pursue these opportunities. Acquisitions may subject the Group to numerous risks, including: the diversion of Management s attention from their other responsibilities; the incurrence of additional indebtedness and assumption of additional known and unknown liabilities; the incurrence of significant additional capital expenditures, transaction and operating expenses and non-recurring acquisition-related charges; an adverse impact on the Group's earnings from the amortisation or write-off of acquired goodwill and other intangible assets (including publishing titles); failure to integrate the operations and personnel of the acquired businesses; acquisition of businesses with which the Group is not familiar; entry into new markets with which the Group is not familiar; failure to retain key personnel, readers and customers of the acquired businesses; and the failure to realise the intended benefits of the Group's acquisitions. Intra-group reorganisations expose the Group to some of the same risks, particularly those relating to the diversion of Management s attention, failure to retain key personnel and failure to realise intended benefits. 20

21 An inability to address these risks effectively could require the Group to incur unanticipated expenses or forego additional opportunities for expansion, which could have a material adverse effect on its business, financial condition and results of operations. The Group may not be able to secure additional capital which may become required. The Group may require additional loan and equity in the future in connection with the financing of new capital-intensive projects, acquisitions or other investments, or as a result of unanticipated liabilities or expenses and also in connection with refinancing of its existing borrowings. There can be no assurance that the Group will be able to obtain necessary capital in a timely manner on acceptable terms. If the Group cannot secure additional capital if and when it becomes required, it would have a material adverse effect on its business, financial condition and results of operations. Uninsured losses or losses in excess of the Group's insurance coverage could adversely affect it. Although the Group maintains comprehensive liability cover, certain types of losses may be uninsurable, selfinsured or not economically insurable, such as losses due to earthquakes, other natural disasters, riots, acts of war or terrorism. In addition, even if a loss is insured, the Group may be required to pay a significant deductible on any claim for recovery of such loss prior to the insurer being obliged to reimburse the Group for the loss, or the amount of the loss may exceed its coverage for the loss. Such circumstances could have a material adverse effect on the Group's business, financial condition and results of operations. The Group depends on key personnel and may not be able to operate and grow its business effectively if it loses the services of key personnel or is unable to attract qualified personnel in the future. The Group depends on its key personnel, including its senior management team, and its ability to retain them and hire other qualified employees. Competition for senior management personnel is intense and the Group may not be able to retain key personnel. The loss of any key personnel requires the remaining key personnel to divert immediate and substantial attention to seeking a replacement. The loss of the services of any of the Group's key personnel without adequate replacement could have a material adverse effect on the Group's business, financial condition and results of operations. The Group's various operations require skilled and experienced employees. Competition for qualified and experienced media and IT personnel is high. The cost of retaining or hiring such employees could exceed the Group's expectations. A shortage of such employees, or inability to retain or hire such employees, could have a material adverse effect on the Group's business, financial condition and results of operations. Deterioration in the Group's relationship with its employees may affect operational and financial performance. The Group believes that all of its operations have, in general, good relations with their employees and unions. However, there can be no assurance that the Group's operations will not be affected by problems in the future. Work stoppages or other labour-related developments (including the introduction of new labour regulations in key markets such as Norway and Sweden) could adversely affect the Group's business, results of operations and financial condition. The Group has collective bargaining agreements with unions, representing a significant part of its employees; however, these agreements are subject to renegotiation in the coming years. Like other employers, there can be no assurance that labour disputes with the trade unions will not arise in the course of these renegotiations. Any prolonged strikes or labour action by employees could have a material adverse effect on the Group's business, financial condition and results of operations. 21

22 The Group has defined benefit pensions plans. Schibsted may be required to increase the contributions to cover an increase in the cost of funding future pension benefits or to cover funding shortfalls under the collective pension plans for Schibsted s employees in Norwegian companies. Under International Accounting Standard ( IAS ) 19 and the assumptions applied by the Company in the actuarial calculations of future benefit obligations pursuant to the pension plans and the return on pension plan assets, the pension plans had an aggregate deficit of NOK 1,911 million at 31 December In addition, Schibsted has certain pension plans in Norway and Sweden established in multi-employer plans. These multi-employer plans are defined benefit plans, but due to certain accounting rules, in accordance with IAS 19 the plans have been accounted for as defined contribution plans. The financial position of other participating employers may affect the timing and amount of the future contribution obligations. Any requirement to increase contributions to defined benefit plans could have a material adverse effect on Schibsted s business, financial condition and results of operations. The Group's commercial freedom could be restricted if it is found to be dominant in local markets. There are a number of local markets where the Group's newspaper titles have a high share of local newspaper circulation and its news and online classifieds websites have a high proportion of unique weekly visitors. For example, in Norway the Group owns the most read print and online newspapers. Dominant companies may have a special responsibility not to allow their conduct to impede competition. This may restrict the Group's freedom to act in these local areas, including its ability to price below cost and grant loyalty-inducing discounts or rebates. In fact, the Group is already subject to certain restrictions in the markets for printing services and online classifieds in Norway. Complying with such restrictions could have an adverse effect on the Group's business, financial condition and results of operations The Group may be adversely affected by exchange rate fluctuations. The Group has Norwegian krone (NOK) as its basic currency, and through its operations outside Norway is exposed to fluctuations in the exchange rates of other currencies. The Group has exchange rate risks linked to both balance sheet monetary items and the translation of investments in foreign operations. The Group makes use of loans in foreign currencies and financial derivatives (forward contracts and cross-currency swaps) to reduce its foreign exchange exposure. The loans in foreign currencies and financial derivatives are managed actively in accordance with the Group's financial strategy in order to reduce the currency risk. However, such hedging strategies may not be successful, and any of the Group's unhedged foreign exchange exposures will continue to be subject to market fluctuations. Exchange rate fluctuations may affect the ratio of net interest-bearing debt to gross operating profit (EBITDA). A general 10% depreciation of NOK will increase the Group's net interest-bearing debt by around NOK 205 million as of 31 December 2014 and will cause a change in the ratio of net interest-bearing debt to EBITDA of around 0.1. Risks associated with the Group's properties could have an adverse effect on its business, financial condition or results of operations. A significant part of the property, plant and equipment portfolio used by the Group is held through leasehold interests, including a small number of properties key to the operation of the business. Property leases are generally subject to expiry and periodic rent reviews. As a result, the Group is susceptible to economic conditions related to the property rental market. In addition, the Group may not be able to effectively renew its existing property leases as they expire or may only be able to renew such leases on less favourable terms. These factors may result in, among other things, significant alterations in rental terms (including rental rates), an inability to effect lease renewals and a failure to secure real estate locations adequate to meet annual 22

23 targets. Any of these factors could have a material adverse effect on its business, financial condition and results of operations. The Group depends on its subsidiaries to meet its financial obligations, including its debt service obligations, and for the payment of dividends on its Shares, and that the Group does not own all of the share capital of all of its subsidiaries may restrict it from taking certain courses of action. The Company is a holding company with no material direct operations and its principal assets are the equity interests it owns in its operating subsidiaries. The Company is therefore dependent on loans, dividends and other payments from subsidiaries to generate the funds necessary to meet its financial obligations, including its debt service obligations, and for the payment of dividends on its shares. Its subsidiaries may be subject to additional legal or regulatory requirements limiting their ability to pay dividends, distributions, loans or advances to the Company. Payments to the Company by its subsidiaries will also be contingent upon the subsidiaries cash flows. The ability of the Company's subsidiaries to generate sufficient cash flow from operations to allow them to make sufficient funds available to it to make scheduled payments on its debt service obligations will depend on their future financial performance, which will be affected by a range of economic, competitive and business factors. There can be no assurances that the cash flow and earnings of the Company's operating subsidiaries and the amount that they are able to distribute to the Company as dividends or otherwise will be sufficient for it to satisfy its debt service obligations or for the payment of dividends on its shares. The Group's results of operations and financial condition could be adversely impacted if the value of its goodwill and other intangible assets are not fully realised. Events or changes in circumstances can give rise to significant impairment charges in a particular year. An asset impairment charge may result from the occurrence of unexpected adverse events that impact the Group's estimates of expected cash flows generated from its assets. The Group tests non-financial assets annually for impairment or more frequently if there are indications that they might be impaired, to determine whether the carrying value of these assets may no longer be completely recoverable, in which case impairment is recorded in the income statement. In accordance with IFRS, the Group does not amortise goodwill but rather test it annually for impairment. Goodwill impairments cannot be reversed. The interests of the Company's significant shareholders may conflict with its own interests and with the interests of other shareholders. According to the Company's Articles of Association, any shareholder owning at least 25% of its Shares is entitled to appoint one board member directly. As of the date of this Prospectus, the Tinius Trust controls approximately 26.1% of the Shares through its control over Blommenholm Industrier, which is the Company's largest shareholder. Blommenholm Industrier is currently the only shareholder with the right to directly appoint one board member. As a consequence, Blommenholm Industrier may be able to influence the outcome of board decisions. Further, according to the Articles of Association certain decision require the endorsement of more than (i) 3/4 of the share capital represented in the relevant General Meeting and (ii) 3/4 of the A-shares represented in the relevant General Meeting. Accordingly, Blommenholm Industrier will have negative control and will thereby be able to influence shareholder voting in matters requiring a 3/4 majority, which includes voting on the adoption or amendment of provisions in the Articles of Association and decisions affecting the Company's capital structure. The requirement for 3/4 majority resolutions in these matters in combination with Blommenholm Industrier's share ownership may also have the effect of deterring a takeover, or delaying or preventing changes in control. The Group holds, and may in the future hold, ownership interests in jointly controlled entities and associated entities, exposing it to risks and uncertainties, many of which are outside its control. 23

24 Due to the nature of the shareholding structure of a jointly controlled entity or an entity in which the Group holds a significant minority interest, the Group may not control an overall majority of the votes available for shareholders or otherwise control actions taken by the jointly controlled entities or entity in which the Group holds a significant minority interest. In addition, shareholders agreements governing shareholdings in jointly controlled entities or entities in which the Group holds significant minority interests may contain veto rights with respect to certain resolutions. In the absence of dispute resolution, major conflict with partners could result in the Group being unable to pursue its desired strategy or exit the jointly controlled entity or entity in which the Group has a significant minority interest other than on disadvantageous terms. The bankruptcy, insolvency or severe financial distress of another shareholder in a jointly controlled entity or the failure by a shareholder to honour its obligations guaranteed by other shareholders of the jointly controlled entity could materially and adversely affect the relevant jointly controlled entity, the assets held through that jointly controlled entity or its shareholders. This could result in a significant decline in the value of the jointly controlled entity s assets, the jointly controlled entity s insolvency, or both. Alternatively, a shareholder s interest in the jointly controlled entity or a majority interest in an entity in which the Group has a significant minority interest could be acquired by a party whose interests differ or are in conflict with the Group s, which could require the Group to exit the jointly controlled entity on disadvantageous terms. If any of the above risk were to materialise, this could have a material and adverse effect on the Group s business, financial condition, results of operations and cash flows. The existence of minority interests in certain of the Group's subsidiaries may limit its ability to increase its equity interests in these subsidiaries, to combine similar operations, to utilise synergies that may exist between the operations of different subsidiaries or to reorganise its structure in ways that may be beneficial to it, which could have a material adverse effect on the Group's business, financial condition and results of operations. The Company's joint ventures with Singapore Press Holdings, Telenor ASA and Naspers related to online classified business in growth markets are among the most important joint ventures for the Company (please refer to section 7.2 for additional details). Failure to meet funding requirements of its joint venture operations. Certain of the joint venture companies that Schibsted holds interest in are in a development phase where substantial funds are invested on a continuous basis to seek to create a leading market position. These joint venture companies therefore require regular injections of new capital from their shareholders. The Company's failure to participate in such equity calls may lead to dilution of the Company's ownership interests in these companies and in certain cases a breach of funding obligations under applicable joint venture agreement. 2.5 Risks relating to changes in regulation, intellectual property and litigation The Group is subject to certain legal proceedings that, if determined adversely, could negatively affect its results of operations and financial condition. The content the Group makes available to customers through its print and online properties could give rise to legal claims against it. The Group could be subject to claims based on a variety of causes of action, including but not limited to, defamation, slander, libel, trade mark or copyright infringement, negligence, obscenity, personal injury, invasion of privacy, data protection, false and misleading advertising, laws protecting consumers in general and other laws, based on the nature, publication or distribution of the information the Group supplies, either directly or indirectly, to readers of its publications. The Group could incur significant costs defending any such claims, even if they do not result in liability. Defending such claims could also distract Management s attention from other aspects of the business. The Group may not be able to prevent the unlawful exchange of goods or services through its print or online properties, and the Group may suffer civil or criminal liability for unlawful activities carried out by its customers through either its online or print properties. The Group may have to spend substantial resources to reduce its exposure to liability for unlawful activities of 24

25 its users. In addition, the Group is liable for the content of its publications and advertisements. Despite the fact that the Group has imposed strict policies to regulate the contents of advertisements published by it, it remains potentially subject to such claims. Any such liability could increase the Group's expenses and harm its reputation and relationships with customers. Any costs, including litigation costs, incurred as a result of this type of liability or asserted liability could have a material adverse effect on the Group's business, financial condition and results of operations. Changed regulations could result in additional expenditures that could adversely affect the Group's cash flow and results of operations. The Group is subject to regulation primarily under Norwegian, Swedish and EU legislation and the Group may in the future be subject to proceedings and/or investigation and enquiries from regulatory authorities. The regimes which affect the Group's businesses include broadcasting, telecommunications, competition (antitrust), privacy, personal finance, taxation, environmental and health and safety laws and regulations. Relevant authorities may introduce additional or new regulations applicable to the Group's business. Changes in regulations relating to one or more of the Group's licensing requirements, access requirements, programming transmission and spectrum specifications, consumer protection, taxation, or other aspects of its business, or that of any of its competitors, could have a material adverse effect on the Group's business and results of operations. The Group cannot be certain that in the future it will succeed in obtaining all requisite approvals and licences for its operations without the imposition of restrictions that could have adverse consequences, or that compliance issues will not be raised in respect of its operations, including those conducted prior to the date of this Prospectus. As Internet usage evolves, laws and regulations that regulate communications or commerce on the Internet may be enacted, amended or replaced, and the interpretation and application thereof may develop, on a variety of matters, including privacy, pricing, taxation, content, copyrights, and distribution, antitrust, quality of products and services, libel, property ownership, obscenity and consumer protection. As a large part of the Group's business is advertising, laws and regulations which restrict online advertising could have an adverse effect on its business, results of operations, financial condition and prospects. Tax laws and regulations relating to the provision of goods and services over the Internet are currently being developed. In addition, the EU has approved a programme promoting safer use of the Internet and new online technologies, and there may be further EU legislation in this area that would restrict or otherwise affect the Group's online operations, including but not limited to the proposed EU regulations on data protection and privacy. The rapid growth of electronic commerce may also lead to tougher consumer protection and data protection/privacy laws, which could reduce the rate of growth of electronic commerce and harm the Group's online businesses both directly and indirectly. Due to the global nature of the Internet, the governments of countries in which the Group does not currently operate may: attempt to regulate the content contained on or transmitted using its websites; prosecute it for violations of their laws; require it to qualify to do business in their country; require it to notify governmental authorities of its activities relating to the collection and processing of user data or relating to the provision of financial services information; or require it to retain user or communications data for law enforcement purposes. 25

26 Any such legislation or regulation, the application of laws and regulations from jurisdictions whose laws do not currently apply to the Group's business, or the application of certain existing laws and regulations to the Internet and other online services could make it difficult for the Group to operate its online businesses in their current form and require the Group to make significant additional investments in its online businesses. This could in turn lead to the Group's business, financial condition or results of operations being materially adversely affected. The printing industry is also subject to environmental laws and regulations, for example, the Norwegian Pollution Act which states that it is illegal to have, do or take the initiative to anything that may entail a risk of contamination unless it is accepted according to exceptions listed in the Norwegian Pollution Act. The Group is also subject to laws and regulations regarding the handling of waste, chemicals, detergents and other contaminants and to regulations regarding the health and safety of the Group's employees. Any new laws or regulations or new interpretations of existing laws and regulations related to the Group's operations could potentially impose substantial ongoing compliance costs and operational restrictions on it and have a material adverse effect on the Group's business, financial condition and results of operations. If the Group fails to adequately protect its intellectual property rights or face a claim of intellectual property infringement by a third-party, it could lose its intellectual property rights or be liable for significant damages, which could materially and adversely affect its future activities and revenues. The Group relies primarily on a combination of locally held copyrights, trademarks, licensing and franchising agreements to protect its intellectual property. Despite these precautions, the Group's competitors may infringe its key trademarks or otherwise obtain and use its intellectual property without authorisation. If the Group is unable to protect its proprietary rights against infringement or misappropriation, it could materially harm its future financial results and its ability to develop its business. To prevent infringement in the future, the Group may have to file infringement claims. Such claims can be time consuming and costly to prosecute and there can be no assurance that any such claims will be successful. Policing unauthorised use of the Group's intellectual property is difficult and costly and the Group may not successfully prevent misappropriation of its proprietary rights. Unauthorised use of the Group's intellectual property may damage its reputation, decrease the value of such property and reduce its market share. Also, the Group may not have trade mark protection for all its brands. Parties may initiate litigation against the Group for alleged infringement of their proprietary rights. In the event of a successful claim of infringement and the Group's failure or inability to develop non-infringing technology or content or to licence the infringed or similar technology or content on a timely basis, the Group's future business could suffer. Moreover, even if the Group is able to licence the infringed or similar technology or content, the Group could be required to pay licence fees to the licensor that are substantial or uneconomical. In the event that these or other circumstances damage the Group's intellectual property rights, it could have a material adverse effect on its business, financial condition and results of operations. Privacy concerns and rules on data protection could make it difficult for the Group to collect and maintain information on the Group's customer base. The Group also gathers information about its customers and uses the information that it gathers from its customers across the business to better target its sales and marketing efforts to its current and prospective customer base. The Group saves this information and use it for marketing purposes. Any limitation on the use of consumer data collection could impair the Group's sales and marketing efforts in the future. The EU Data Protection Directive imposes restrictions on the collection, use and other processing of personal data and on the transfer of personal data out of the EEA. The EU Data Protection Directive and national 26

27 implementing legislation could hinder the Group's ability to collect, use and otherwise process persona data, including but not limited to exchanging personal data between businesses, in particular with businesses based in non-eu countries that are not regarded by the relevant regulators as maintaining adequate standards of privacy. The requirements with respect to the collection and processing of data, the rights of users and the obligations imposed on companies collecting data vary to a substantial extent from country to country (even among countries that have implemented the EU Data Protection Directive) and may continue to do so in the future. Breaching these laws could result in criminal liability, the imposition of fines or damage to reputation. Complying with different legislative requirements could have an impact on the Group's ability to collect data and share that data with third parties, such as advertisers. The Group could also be subject to additional costs associated with implementing and maintaining legally compliant, privacy policies. These requirements could deter individuals from providing data that is of commercial value to the Group and its advertisers and could have a material adverse effect on the Group's business, financial condition and results of operations. New EU regulations on data protection and privacy are proposed, to replace the current EU Data Protection Directive. The new EU regulations, if enacted, may likely impose further restrictions on the collection, use and other processing of personal data, may likely increase the level of sanctions (such as fines), and may likely involve changes to how the data protection authorities operate. As a large part of the Group's business is based on the collection, use and other processing of personal data, such new EU regulations could have an adverse effect on its business, results of operations, financial condition and prospects. 2.6 Risks related to the Shares The price of the Shares may fluctuate significantly. The trading price of the Shares could fluctuate significantly in response to a number of factors beyond the Group s control, including, but not limited to, quarterly variations in operating results, adverse business developments, changes in financial estimates and investment recommendations or ratings by securities analysts, sales or purchases of substantial blocks of Shares, or any other risk discussed herein materialising or the anticipation of such risk materialising. In recent years, the global stock markets have experienced extreme price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in the same industry as the Group. Those changes may occur without regard to the operating performance of these companies. The price of the Group s Shares may therefore fluctuate based upon factors that have little or nothing to do with the Group, and these fluctuations may materially affect the price of the Shares. There is no existing market for the B-shares, and a trading market that provides adequate liquidity may not develop. Prior to the Listing, there was no public market for the B-shares, and there can be no assurance that an active trading market will develop, or be sustained. The market value of the B-shares could be substantially affected by the extent to which a secondary market develops for the B-shares following the Listing. There can be no assurance as to the prices at which the B-shares will trade. Shares with limited voting rights will typically trade at a discount to shares with full voting rights. There can be no assurance as to the size of the discount, if any, at which the B-shares will trade as compared to the A- Shares. 27

28 The B-shares will have limited influence. The A-shares will carry 10 votes per share while the B-shares will carry 1 vote per share. Consequently, the holders of the A-shares will control a majority of the combined voting power of the two classes of shares. This concentrated control will limit the holders of B-shares ability to influence corporate matters, and, as a result, the market price of the B-shares could be adversely affected. Future share issues in the B-shares may dilute the A-shares. It is possible that the Company may in the future decide to offer additional Shares or other securities in order to finance new acquisitions, in connection with unanticipated liabilities or expenses or for any other purposes. Any such additional offering could reduce the proportionate ownership and voting interests of holders of A- shares and B-shares, as well as the earnings per share and the net asset value per share of the Group, and any offering by the Group could have a material adverse effect on the market price of the Shares. Depending on the structure of any future offering, certain existing shareholders may not be able to purchase additional equity securities. Pre-emptive rights to subscribe for Shares in additional issuances could be unavailable to U.S. or other shareholders. Under Norwegian law, unless otherwise resolved at the General Meeting, existing shareholders have preemptive rights to participate on the basis of their existing ownership of Shares in the issuance of any new Shares for cash consideration. Shareholders in the United States, however, could be unable to exercise any such rights to subscribe for new Shares unless a registration statement under the U.S. Securities Act is in effect in respect of such rights and Shares or an exemption from the registration requirements under the U.S. Securities Act is available. Shareholders in other jurisdictions outside Norway could be similarly affected if the rights and the new Shares being offered have not been registered with, or approved by, the relevant authorities in such jurisdiction. The Company is under no obligation to file a registration statement under the U.S. Securities Act or seek similar approvals under the laws of any other jurisdiction outside Norway in respect of any such rights and Shares, and doing so in the future could be impractical and costly. To the extent that the Company s shareholders are not able to exercise their rights to subscribe for new Shares, their proportional interests in the Company will be diluted. The Company's ability to pay dividends is dependent on the availability of distributable reserves. The declaration and payment of future dividends will be at the discretion of its shareholders. The Company's ability to pay dividends in the future depends on numerous factors including, but not limited to, its business, financial condition, results of operations, distributable reserves, cash flows, prospects, capital requirements, and general economic and statutory restrictions. If for any reason the General Meeting does not declare dividends in accordance with the Dividends Policy, the holders of the Shares will have no claim in respect of such non-payment and Company will have no obligation to pay any dividend in respect of the relevant period. See Section 12.9 Dividends and Dividend Policy for additional details. Certain buyers of the Company's Shares might be subject to an intervention by the Norwegian Media Authority on basis of the Media Ownership Act. The Media Ownership Act empowers the Norwegian Media Authority to intervene against a transaction which would create or strengthen a significant ownership position in national or regional media markets contrary to the purposes of the Act (which are, inter alia, to promote freedom of expression and maintain a plurality in media ownership). An intervention is likely where a transaction leads to an undertaking controlling at least 1/3 of the market in national newspapers, television or radio, at least 60% in a regional newspaper market or where a transaction creates a significant ownership position in several media markets, or leads to crossownership between major players in one media market. The consequences of an intervention by the Media 28

29 Authority could be an outright prohibition against the transaction, or that it is subjected to conditions. Any prohibition against a purchase of Shares might lead to a sale of Shares by or on behalf of the party subject to the prohibition, which could affect the market price of the Shares. Any future share issues or sales of the Company's Shares by it or its major shareholders may have an adverse effect on the market price of the Shares. The Company may decide to offer additional Shares in the future. An additional offering or a significant sale of Shares by the Company or by any of its major shareholders could have an adverse effect on the market price of the Company's outstanding Shares as well as on the proportionate ownership of holders of the Shares and the earnings per share ratio. The Shares are priced in NOK and certain investors may be exposed to an exchange rate risk. The Shares are priced in NOK and are quoted and traded in NOK. In addition, dividends the Company pays, if any, will be declared and paid in NOK. Accordingly, investors required to or preferring to hold investments or cash in other currencies are subject to risks arising from adverse movements in the value of their preferred currency against the NOK, which may reduce the value of the Shares, as well as that of any dividends paid. Investors may not be able to exercise their voting rights for Shares registered in a nominee account. Beneficial owners of the Shares that are registered in a nominee account (such as through brokers, dealers or other third parties) may not be able to vote for such Shares unless their ownership is re-registered in their names with the VPS prior to the Company s general meetings. The Company cannot guarantee that beneficial owners of the Shares will receive the notice of a general meeting in time to instruct their nominees to either effect a re-registration of their Shares or otherwise vote for their Shares in the manner desired by such beneficial owners. Further, beneficial owners of Shares that are registered in a nominee account may not be able to exercise other shareholder rights under the Norwegian Public Limited Liability Companies Act (such as e.g. the entitlement to participate in a rights offering) as readily as shareholders whose Shares are registered in their own names with the VPS. 29

30 3. RESPONSIBILITY FOR THE PROSPECTUS 3.1 The Board of Directors of Schibsted ASA This Prospectus has been prepared in connection with the Listing described herein. The Board of Directors of Schibsted ASA accepts responsibility for the information contained in this Prospectus. The members of the Board of Directors confirm that, having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of their knowledge, in accordance with the facts and contains no omissions likely to affect its import. Oslo, 28 May 2015 Ole Jacob Sunde Chairman Tanya Cordrey Board member Birger Steen Board member Eva Berneke Board member Christian Ringnes Board member Arnaud de Puyfontaine Board member Eugénie van Wiechen Board member Ingunn Saltbones Board member Finn Våga Board member Jonas Fröberg Board member Rolv Erik Ryssdal CEO 30

31 4. GENERAL INFORMATION 4.1 Presentation of financial and other information Financial information The financial information relating to the Group, as set out in the Annual Report 2014, as at and for the years ended 31 December 2012, 2013 and 2014 and as at and for the three months periods ended 31 March 2014 and 2015, were prepared in accordance with IFRS as adopted by the EU. The financial information as at and for the years ended 31 December 2012, 2013 and 2014 have been audited by the Company's auditor Ernst & Young AS, as set forth in their audit reports thereon included herein. The financial information relating to the Group, as set out in 1Q 2015 report, as at and for the three months periods ended 31 March 2014 and 2015 have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting. The Company s auditor has not included any qualifications or disclaimers in the auditor s statement in any of three annual reports in question. NOK refers to Norwegian kroner, SEK refers to Swedish kroner and EUR refer to Euros. When converting amounts in other currencies to NOK as at the time of transactions, the spot market rate has been applied, unless otherwise stated. In this Prospectus, the Company presents certain financial measures including Gross operating profit (EBITDA) and Gross operating margin (EBITDA margin), which are not recognised by IFRS. EBITDA Margin is the quotient obtained by dividing EBITDA by (total) operating revenues. The Company believes that EBITDA and EBITDA Margin are important supplemental measures of its operating performance, and believe they are commonly used by securities analysts, investors and other interested parties in the evaluation of companies in the industry in which the Company operates. EBITDA and EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation, or a substitute for analysis of the Company's operating results as reported under IFRS. EBITDA and EBITDA Margin are measures for operating performance that are not required by, or presented in accordance with, IFRS. EBITDA and EBITDA Margin are not measurements of the Company's operating performance under IFRS and should not be considered as alternatives to profit or any other performance measure derived in accordance with IFRS or as alternatives to cash flow from operating activities or as measures of liquidity. In particular, EBITDA should not be considered as a measure of free cash flow available to the Company to invest in the growth of its business Currency presentation In this Prospectus, all references to NOK are to the lawful currency of Norway, all references to SEK are to the lawful currency of Sweden and all references to EUR are to the lawful common currency of the EU member states who have adopted the Euro as their sole national currency. The consolidated financial statements of the Group are presented in NOK which is the Company's functional and presentation currency. The average exchange rates of the Group s main trading currencies, other than NOK, are shown relative to NOK below. The rates below may differ from the actual rates used in the preparation of the financial statements and other financial information that appear elsewhere in this Prospectus. The inclusion of these exchange rates is for illustrative purposes only and does not mean that the NOK amounts actually represent such SEK or EUR amounts or that such NOK amounts could have been converted into SEK or EUR amounts at any particular rate, if at all. The following table sets out the actual annual average of monthly rates in the Norwegian Krone exchange rate against SEK and EUR over the financial years ended 31 December 2014, 2013 and 2012 and the three months ended 31 March 2015 and

32 Three months ended 31 March Year ended 31 December NOK EUR SEK Industry and market data This Prospectus contains statistics, data, statements and other information relating to markets, market sizes, market shares, market positions and other industry data pertaining to the Group's business and the industries and markets in which it operates. Unless otherwise indicated, such information reflects the Group's estimates based on analysis of multiple sources, including data compiled by professional organisations, consultants and analysts and information otherwise obtained from other third party sources, such as annual and interim financial statements and other presentations published by listed companies operating within the same industry as the Group, as well as the Group's internal data and its own experience, or on a combination of the foregoing. Unless otherwise indicated in the Prospectus, the basis for any statements regarding the Group's competitive position is based on the Company's own assessment and knowledge of the market in which it operates. The Company does not intend, and does not assume any obligations to, update industry or market data set forth in this Prospectus. Industry publications or reports generally state that the information they contain has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. The Company has not independently verified and cannot give any assurances as to the accuracy of market data contained in this Prospectus that was extracted from these industry publications or reports and reproduced herein. Market data and statistics are inherently predictive and subject to uncertainty and not necessarily reflective of actual market conditions. Such statistics are based on market research, which itself is based on sampling and subjective judgments by both the researchers and the respondents, including judgments about what types of products and transactions should be included in the relevant market. As a result, prospective investors should be aware that statistics, data, statements and other information relating to markets, market sizes, market shares, market positions and other industry data in this Prospectus and projections, assumptions and estimates based on such information may not be reliable indicators of the Company's future performance and the future performance of the industry in which it operates. Such indicators are necessarily subject to a high degree of uncertainty and risk due to the limitations described above and to a variety of other factors, including those described in Section 2 "Risk factors" and elsewhere in this Prospectus Rounding Certain figures included in this Prospectus have been subject to rounding adjustments (by rounding to the nearest whole number or decimal or fraction, as the case may be). Accordingly, figures shown for the same category presented in different tables may vary slightly. As a result of rounding adjustments, the figures presented may not add up to the total amount presented. 4.2 Forward-looking statements This Prospectus includes forward-looking statements, including, without limitation, projections and expectations regarding the Group's future financial position, business strategy, plans and objectives. All forward-looking statements included in the Prospectus are based on information available to the Company, and views and assessments of the Company, as at the date of this Prospectus. Except as required by the applicable stock exchange rules or applicable law, the Company does not intend, and expressly disclaims any obligation or undertaking, to publicly update, correct or revise any of the information included in this Prospectus, including forward-looking information and statements, whether to reflect changes in the Company's expectations with regard thereto or as a result of new information, future events, changes in conditions or circumstances or otherwise on which any statement in this Prospectus is based. 32

33 When used in this document, the words "anticipate", "assume", "believe", "can", "could", "estimate", "expect", "intend", "may", "might", "plan", "should", "will", "would" or, in each case, their negative, and similar expressions, as they relate to the Company, its subsidiaries or its management, are intended to identify forward-looking statements. The Company can give no assurance as to the correctness of such forward-looking statements and investors are cautioned that any forward-looking statements are not guarantees of future performance. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company and its subsidiaries, or, as the case may be, the industry, to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Company and its subsidiaries operate. Factors that could cause the Company's actual results, performance or achievements to materially differ from those in the forward-looking statements include but are not limited to, the competitive nature of the markets in which the Company operates, technological developments, government regulations, changes in economic conditions or political events. These forward-looking statements reflect only the Company's views and assessment as at the date of this Prospectus. Factors that could cause the Company's actual results, performance or achievements to materially differ from those in the forward-looking statements include, but are not limited to, those described in Section 2 "Risk factors" and elsewhere in the Prospectus. Given the aforementioned uncertainties, prospective investors are cautioned not to place undue reliance on any of these forward-looking statements. 4.3 Limitations on enforcement of liabilities The Company is a public limited liability company organised under the laws of Norway. All of the members of Schibsted s Board of Directors, save Birger Steen and the Management are residents of countries within the EEA and substantially all of the assets of such persons and of the Group as well as the subsidiaries, are located outside the United States. As a result, it may not be possible for investors to affect service of process within the United States upon the Company or such other persons or to enforce against the Company or such other persons in United States court judgments obtained in United States courts predicated upon civil liability provisions of the federal securities laws of the United States. In addition, there is doubt as to the enforceability in Norway, in original actions or in actions for enforcement of judgments of United States courts, of civil liabilities predicated solely upon the federal securities laws of the United States. The United States and Norway do not currently have a treaty providing for reciprocal recognition and enforcement of judgments rendered in connection with civil and commercial disputes. Therefore, final judgments for the payment of money rendered by a United States court in the United States based on civil liability, whether or not predicated solely upon the federal securities laws of the United States, would not be directly enforceable in Norway. 33

34 5. THE LISTING 5.1 Background Schibsted has a long history of sustainable digital growth through delivering innovative and consumer-driven products across the Group. Schibsted s growth in online marketplaces has been ensured through organic initiatives and active use of M&A and partnerships. Schibsted has established a solid M&A track-record through the many value creating transactions that have been completed during the last decade. Schibsted is well positioned for further growth. For the online marketplaces business, future growth will come from organically developing the current positions combined with consolidating efforts and expansions into additional verticals, either organically or through acquisitions. The Company also wants continue to pursue growth through entering new markets. Schibsted s current financing capacity could, however, be a constraint in the ability to fully execute on its growth strategy. Schibsted s debt capacity is limited and the particular circumstances related to the Company s shareholder structure means that there is also limited ability to raise additional equity financing. To ensure that Schibsted has the necessary financial tools to participate in value accretive growth initiatives going forward, the Company has decided to introduce a low voting B-share. The B-share will allow the Company to raise additional equity financing without conflicting with the interests that the Tinius Trust is established to protect through Blommenholm Industrier, namely to uphold the freedom and independence of Schibsted s media houses. 5.2 Issuance of B-shares At the Annual General Meeting of the Company on 8 May 2015 it was resolved to create a new class of B- shares through a Split of the Company's existing shares. The Split will become effective in connection listing of the B-shares. Prior to the completion of the Split, the Company has a share capital of NOK 108,003,615 shares divided on 108,003,615 shares each with a nominal value of NOK 1. After the completion of the Split the Company will have a share capital of NOK 108,003,615 divided on 108,003,615 A-shares, each with a nominal value of NOK 0.50, and 108,003,615 B-shares, each with a nominal value of NOK The B-shares will accordingly represent 50% of the Company s total share capital upon the completion of the Split. The B-shares will be fully-paid ordinary shares and will carry equal rights to the existing shares of the Company in all respects, except that the B-shares will be low-voting shares with only one vote per share. Section 5-4 (1) of the Public Limited Liability Act provides that if the nominal value of non-voting or low-voting shares will constitute more than half of the share capital of a company, the articles of association must be approved by the Ministry of Trade, Industry and Fisheries in advance. An application for this has been submitted and is currently being processed by the relevant authority. The B-shares will be freely transferable. However, they will be subject to the article 6 of the Company's Articles of Association which provide that no shareholder may own more than 30% of the shares in the Company or vote for more than 30% of the total number of votes. Please see section 12.2 for information on the VPS-registration of the B-shares. 5.3 Admission to trading On 26 May 2015 the administration of Oslo Børs resolved to admit the B-shares to listing on Oslo Børs. The administration of Oslo Børs has the authority to approve the listing of a new share class issued by a Company with shares already listed on Oslo Børs. The A-share is as of the date of this Prospectus trading on Oslo Børs. The B-shares will be created on completion of the Split. The first day of trading of the B-shares on Oslo Børs is expected to be on or about 1 June The B-shares will trade on Oslo Børs under the ticker symbol SCHB. 34

35 5.4 Lock-up agreements The Company, the Tinius Trust and Blommenholm Industrier have entered into Lock-Up Agreements pursuant to which they have undertaken for a period of 90 and from the first day of trading of the B-shares on Oslo Børs not to issue (in the case of the Company) offer, pledge, hypothecate, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, cause the Company to issue (in the case of the Tinius Trust and Blommenholm Industrier), or otherwise transfer or dispose of, directly or indirectly, any B-shares or any securities convertible into or exercisable or exchangeable for B-shares, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of B-shares or any securities convertible into or exercisable or exchangeable for B-shares, whether any such transactions described in clause (i) or (ii) above are to be settled by delivery of B-shares or such other securities, in cash or otherwise, or (iii) submit to the Company s shareholders a proposal, or publicly announce an intention, to effect any of the foregoing. The lock-up undertakings are subject to certain customary exceptions, including, but not limited to, any issuance of B-shares by the Company in relation to any exercise of options over B-shares granted pursuant to an employee stock option programme, stock ownership programme or dividend reinvestment plan that has been publicly disclosed and, subject to certain conditions, any issuance of B-shares or other securities pursuant to an agreement providing for the acquisition by the Company of the ordinary share capital of any other corporate entity (or similar business combination transactions, including joint ventures). The lock-up undertakings of the Tinius Trust and Blommenholm Industrier also include an exemption in relation to the acceptance of a takeover offer or the giving of an irrevocable undertaking to accept a voluntary offer pursuant to section 6-19 of the Norwegian Securities Trading Act or a mandatory offer pursuant to section 6-10 of the Norwegian Securities Trading Act. In addition, the Tinius Trust and Blommenholm Industrier have undertaken an obligation not to acquire, publicly announce an intention to acquire, publicly offer or propose to acquire or enter into any other arrangement that has the economic consequences and/or rights of ownership of acquiring any A-shares or any securities convertible into or exercisable or exchangeable for A-shares for a period of 90 days from the first day of trading of the B-shares on Oslo Børs. 5.5 Dilution The Split will not represent a dilution of the existing shareholders since all shareholders will receive one B- share for every share they hold as of the time of the completion of the Split. However, each existing share's proportionate share of the Company's share capital will be reduced by 50% as a result of the Split. 5.6 Governing law The Split and the creation of the B-shares will take place pursuant to Norwegian law and the Norwegian Public Limited Liability Companies Act. 5.7 Timetable Event Date Last date of trading in the shares including the right to participate in the Split 29 May 2015 Ex-date for the Split and first day of listing of the B-shares 1 June 2015 Record date 2 June

36 6. INDUSTRY AND MARKET OVERVIEW 6.1 Overview Schibsted is mainly involved in two markets; online classifieds and publishing. Publishing consists of both printed and digital products. Within online classifieds Schibsted is a global player with operations in several Western European markets and growing markets in Asia, Eastern Europe, North Africa and Latin America. In general, a classifieds website represents a marketplace which connects buyers and sellers of used goods and services. The more mature generalist marketplaces include larger vertical categories like vehicles, real estate and jobs, in addition to miscellaneous used and new goods. Within the global online classifieds market there are a few large global players including ebay, Naspers and Schibsted, whilst there are a number of local players within different verticals in the various geographies. Within publishing, Schibsted s main presence is in Norway and Sweden where Schibsted owns national and regional newspapers. The industry has been experiencing migration from print to online by both users and advertisers. With the digital transformation, the industry is also seeing the entry of new competitors in the advertising market, most notably Google and Facebook. The Group s revenues can be divided into three categories; i) user payments and subscriptions for print and online newspapers, ii) display advertising, and iii) listing advertising from online classifieds. The overall revenues are largely driven by advertising spend. Online news sites typically make most of the revenues from display advertising and in Western Europe display advertising is expected to grow from USD 11.6bn in 2014 to USD 16.6bn in 2018, at a CAGR of 9.4%. Display ads are expected to account for 35.9% of digital spending in Moreover, mobile devices, including mobile phones and tablets, are expected to account for significant growth in the Western Europe s digital display revenues from 2015 through Mobile display advertising is projected to experience an increase in its share of total advertising spend this year in Norway from 2.8% in 2014 to 4.2% in 2015 a growth of 50% 2. Globally, mobile advertising is expected to grow by an average of 38% per year between 2014 and 2017, driven by the rapid proliferation of mobile devices, innovations in advertising technology and improvements in user experience 3. The Group s advertising revenues are to a certain extent affected by cyclical developments in real economy figures, notably GDP growth, unemployment rates, and consumer confidence. The Group's advertising revenues from the recruitment market and, to a lesser extent, the real estate market and display advertising, are the revenue streams most exposed to cyclicality. In 2014 the Group's advertising revenues amounted to 59% of total revenues. The digital transformation is changing how media is bought. Programmatic marketing campaigns deployed according to parameters set by software and algorithms has given advertisers the ability to reach a global market using automated and targeted trading more efficiently and more effectively than ever. Programmatic marketing is expected to increase significantly going forward. User behaviour is also changing at a faster pace. Media is consumed in new ways and across different platforms. Users expect a seamless experience personalised to their needs and interests. To meet the demands of users and advertisers in the new digital era, Schibsted has increased its efforts and focus on technology and product development through the establishment of a central technology and product developing unit. The unit will develop common technology platforms for both media houses and classifieds, for advertising and login services. The ambitions is to improve the offering to advertiser, increase efficiency in the development and roll out of new products and services and enable data and identity-based products and services. 1 Source: Forrester Research, Western European Online Display Advertising Forecast, 2014 to 2019, October Subscription fee required 2 Source: IRM, Updated Forecast for the Norwegian Media and Advertising Market 2015, March Subscription fee required 3 Source: ZenithOptimedia Advertising Expenditure Forecast, December Subscription fee required 36

37 6.2 Online classifieds Introduction The market for online classifieds has changed rapidly during the past years following the migration from print to online in line with the rest of the traditional media industry. With the launch of Finn.no more than 15 years ago, Schibsted has been one of the pioneers in the industry. The business model of classified marketplaces has traditionally been based on three revenue sources: listing fees from private sellers, subscriptions from professional sellers (especially in real estate, motors and jobs), and display advertising. Historically, search has claimed the largest part of digital advertising spending in Western Europe, however, advertising spend on display is expected to experience the fastest growth over the period with a CAGR of nearly 9.4%, driven by the proliferation of mobile devices and the migration of advertising spend to these devices 4. In addition to these proven revenue sources, numerous players are developing revenue models centred on the transaction (e.g. payment services, safety-enhancing services, guarantees, delivery, etc.), which will further enhance the total addressable market and revenue potential for classifieds businesses General trends Until around 15 years ago, classifieds marketplaces were essentially based on print newspapers or magazines. The development of the internet led to a rapid shift from print to online, which allowed for a much easier and much more effective user experience at lower cost. In contrast to print-based classifieds, online classified advertisements offered a wealth of opportunities, including a variety of channels and advertising space. As a consequence print-based classifieds have seen a significant decline since the emergence of online classifieds. The competitive intensity online was relatively low in the first decade of this century, and early online players had a window of opportunity to build contents and traffic in a context of relatively low competition. In the last few years competition has intensified leading to consolidation, both in mature and emerging markets. The trend of consolidation is expected to continue, in particular in emerging markets. The strong increase of mobile usage is shaping the future classifieds marketplaces, and has already led to the emergence of new models, including models based on personalization of content, and proximity-based models, such as Wallapop and Shpock. The classifieds advertising market is also seeing the emergence of a new category of competitors leveraging strong social or messaging platforms to enter the classifieds business (Facebook, Wechat, etc.) Competitive situation Schibsted has a global presence in markets with very different market dynamics and competitive situations. The markets can be divided broadly into two categories: (i) mature markets in Europe, with high online penetration, high coverage of access devices (desktop computer, smartphone, tablets) and generally wide acceptance of e-commerce and customer-to-customer trading on digital platforms; (ii) emerging markets in Latin America, Asia and North Africa, typically with lower digital penetration, often growing fast in recent years due to wide access to smartphones and 3G-connectivity, predominance of mobile usage vs. desktop, and usually lower acceptance of e-commerce and customer-to-customer trading. The range within these two categories is very wide. Among the markets in Europe, the Northern European markets, and in particular the Scandinavian markets, are more mature than the markets in Southern Europe. Among the emerging markets the differences are even larger, ranging from Chile, where the key indicators are close to some European countries, to Bangladesh, with the lowest degree of maturity Mature markets In mature markets, leading positions are usually well established. Across Europe, the leading generalist player is often affiliated to one of the big global OLC players (e.g. Schibsted, Naspers, Ebay). In the verticals, the situation is mixed, with some leaders affiliated to the same global players or Axel Springer, while some vertical leaders are local champions. This is the case for example in the UK (cars and real-estate), Sweden, Ireland, and Italy. 4 Source emarketer, Western Europe Digital Ad Spending, November Subscription fee required 37

38 Emerging markets In most emerging markets, there is one leading generalist OLC player and often a leader in some of the verticals. Yet these positions are less stable than in mature markets, because the phase of strong growth that will take place on the way to maturity can create a market entry opportunity for new players. Both in mature and emerging markets, the last two or three years have seen the emergence of new players into the classifieds business, driven by the fast growth of mobile usage. These players include a number of venture-funded start-up companies like Wallapop, as well as Facebook, which has recently introduced tools to enable trading. 6.3 Publishing Introduction Schibsted owns several publishing houses in Norway and Sweden. Schibsted is also engaged in news media in France and Spain. Publishing is influenced by the structural migration from print to online, whereas online media consumption is increasing rapidly, which is a trend the publishing houses benefit from. However, the online growth does not fully compensate for the decline in print revenues for the industry. Mobile and web-tv are important growth drivers. At the same time, print newspapers are losing market shares in both the readership and the advertising markets. Rapid adaption of the business model and cost base is required in order to be relevant and profitable in the digital future General trends Since 2000 the media industry has seen a significant continued migration from print to online, a trend which is expected to continue. The average daily circulation of Norway s top 10 newspapers decreased with approximately 45% in the period from 2004 to 2014, from 1,348,656 copies per day in 2004 to 746,383 copies per day in As a result, print newspaper advertising revenues have been declining in recent years. The print newspapers share of total media advertising spend fell by 4% from 28.7% in 2013 to 24.7% in The share of advertising revenues captured by print newspapers in Norway is expected to continue to decrease as a result of the offline-online migration, and a decline of 13.9% is projected for At the same time online advertising is increasing. In Norway, total advertising spend on digital (incl. mobile) is expected to increase by 10.7% in 2015, whilst the growth rate for 2014 was 8.2% 8. The proliferation of mobile devices is leading to a strong shift towards mobile news consumption. This is prompting publishing houses to update their apps or release new ones to take advantage of new features. A prominent example is the possibility to offer widgets and the function Handoff that lets users start an action on one Apple device and finish it on another. The increased mobile news consumption is leading to increased spend on mobile platforms. Globally, mobile advertising is expected to grow by an average of 38% a year between 2014 and , which is largely driven by increased consumption of mobile content. Similar trends can be discerned in the Norwegian and Swedish markets. Technology is a key factor in the publishing industry s growth and there is opportunity for media houses to leverage big data to deliver personal, relevant, targeted news. Automated stories through the use of algorithms that searches for trends and insights within a data set has the potential to create personalised 5 Source: Norwegian Media Businesses Association and the Association of Local Newspapers: Information retrieved 8 May Source: IRM, Updated Forecast for the Norwegian Media-and Advertising Market, 2015, March 2015Subscription fee required 7 Source: IRM, Updated Forecast for the Norwegian Media-and Advertising Market, 2015, March 2015 Subscription fee required 8 Source: IRM, Updated Forecast for the Norwegian Media-and Advertising Market, 2015, March 2015 Subscription fee required 9 Source: ZenithOptimedia, Advertising Expenditure Forecast, December Subscription fee required 38

39 articles for millions of users and as such provide great scale and cost efficiencies for news distribution. There is an ocean of information on the Internet for readers to wade through, and it is expected that more media houses will focus on personalizing their product offerings by listening to consumers and tailoring news and reports Competitive situation The competitive environment in Norway is concentrated, with the three largest media houses (Aftenposten, VG and Dagbladet) representing approximately 53% of the circulation of the top 10 newspapers circulation in With regard to online news sites, in terms of daily visitors, the largest sites are vg.no, nrk.no, dagbladet.no, tv2.no, nettavisen.no, startsiden.no and aftenposten.no 11. VG also has the largest mobile news site in Norway in terms of daily visitors, followed by TV2, NRK and Dagbladet 12. In Sweden, the largest media house in terms of circulation is Bonnier Group (Dagens Nyheter, Expressen, Sydsvenskan, Dagens Industri) followed by Stampen Group, with Schibsted (Aftonbladet, Svenska Dagbladet) in third place 13. The largest online news sites are Aftonbladet, Dagens Nyheter and Expressen 14. As publishing is migrating online in line with advertising spend, the news market is becoming increasingly exposed to international competition with highly competent technologies. Google has introduced a portal for Google News publishers to use to help manage their news sites within Google News. Also, Facebook recently filed a patent suggesting it has considered building an advertising exchange that connects its social data to serve ads with content such as news articles and videos. These two new entrants represent potential disruptive business models that may compete with Schibsted s publishing business. As a response to increased competition in online publishing, five significant international online news publishers are teaming up to form a collaboration for advertising (i.e. The Pangaea Alliance). The alliance will be comprised of The Guardian, CNN International, Reuters, The Financial Times, and The Economist whose aim will be to create an advertising network with the intention of capturing premium rates from brands and capitalize on the rise of programmatic buying, allowing advertisers to access 110 million users 15. Within the global online advertising market, Google remains the undisputed leader. Google offers a number of products that have helped it maintain its leadership. Some of these main products are Google Search (a search engine), Adwords (an auction-based advertising program), DoubleClick (infrastructure for serving ads), YouTube (a video platform), and Android (a mobile operating system). These products have helped Google maintain above 30% share in the worldwide digital advertising market 16. Although Google has maintained its market share, Facebook has shown the strongest growth in the last three years Online media Online media comprises several different formats which can be distributed through different devices such as mobile phones and tablets, and is becoming an increasingly important source of news for consumers. As an illustration, the online news consumption in Norway increased from 10% to 54% from 2001 until 2014 as percentage of total news consumption Source: Norwegian Media Businesses Association and the Association of Local Newspapers, Media Houses and LLA s circulation-and readership data, 2014, Information retrieved on May 8th, Source: TNS Topplisten, averages of week Information retrieved on march 25th, Source: TNS Mobil Topplisten averages of week information retrieved on Source: NORDICOM, The largest newspaper companies 2013 by share of circulation, Information retrieved on 10 May Source: NORDICOM, Top ten daily paid-for newspapers by number of readers Source: The Guardian, World s leading digital publishers launch new programmatic advertising alliance, Pangaea, Information retrieved 8 may Source: emarketer, Worldwide ad spending growth to double this year, driven by digital gains. Subscription fee required 17 Source: SSB, Norsk mediebarometer, mars 2014, available at 39

40 The largest online news sites in Norway in terms of daily visitors are vg.no, nrk.no, dagbladet.no, tv2.no, nettavisen.no, startsiden.no and aftenposten.no. VG also has the largest mobile news site in Norway in terms of daily visitors, followed by TV2, NRK and Dagbladet 18. In Sweden, the largest online news sites are Aftonbladet, Dagens Nyheter and Expressen 19. Web-TV is becoming an integral part of the digital media offering, and most of the large online publishing houses now offer news and other content for video streaming. As an illustration, 14.4% of Norwegians stream video daily from NRK, VGTV, TV2 or Dagbladet, an increase from 11.9% in Live broadcasts on the web, is also being accepted by users, with an increasing number of visitors as well as average viewing time per user 20. Online revenues can largely be split into two revenue sources, subscription revenues and advertising revenues, of which advertising revenues is dominant. With regard to subscription revenues, the business models of most online news sites have traditionally been based on free access to content. However, paid subscriptions models are becoming increasingly used, primarily through bundles with print newspapers, rather than as stand-alone products. Although the use of subscription models is increasing, the uptake among users is at a moderate pace. Paid online news content is still a quite recent phenomenon, and only 15% of Norwegians over the age of 18 paid for news online during 1Q Similar trends are observed in Sweden. Digital display advertising (desktop, mobile and tablet) is experiencing high growth as a percentage of total media advertising spend with a growth of 18% in 2014 and 13% estimated in 2015 a growth that is largely due to an increase in advertising spend on mobile platforms 22. Globally, media agencies are swiftly adapting to so-called programmatic buying (i.e. automated systems to buy advertising inventory), which allows media buyers to target display advertising accurately and efficiently. This has led to a sharp boost in traditional digital display advertisements, as well as video and social. Globally, growth in traditional display increased from 14% in 2012 to 18% in 2013, and is estimated to grow 26% in 2014, its fastest rate of growth since Print newspapers The average circulation of Norway s top 10 newspapers decreased from 1,348,656 copies per day in 2004 to 746,383 copies per day in 2014, a decrease of approximately 45% 24. The decline in circulation is expected to continue in 2015 as a result of the continued offline-online migration. Similar trends are expected in Sweden. The print newspaper market is highly specific on a country basis and locally focused as the contents of print newspapers mainly cover local news and national politics, and is commonly written in local language/dialect. Traditional revenue streams for print newspapers are casual sales, subscription and advertising revenues. The largest daily paid print newspaper in Norway in terms of circulation is Aftenposten (subscription based), followed by VG (casual sales based), Dagbladet (casual sales based), Bergens Tidende (subscription based), Dagens Næringsliv (subscription based), Adresseavisen (subscription based) and Stavanger Aftenblad (subscription based) 25. In Sweden, the largest printed newspapers are Aftonbladet (casual sales based), Dagens 18 Source: TNS Gallup, Yearly Report on Internet Use, 2014, available at and TNS Innsikt, Report on mobile media content, Q4 2014, available at on May 8th, Kia-index, information retrieved 10 May 2015, 20 Source: TNS Gallup, Yearly Report on Internet Use, 2014, available at 21 Source: Nordic Media Festival, The Media Survey 2014, available at 22 Source: emarketer, Western Europe Digital Ad Spending, November Subscription fee required 23 Source: ZenithOptimedia, Advertising Expenditure Forecast, December Subscription fee required 24 Source: Norwegian Media Businesses Association and the Association of Local Newspapers, Media Houses and LLA s circulation-and readership data, - information retrieved 8 May Source: Norwegian Media Businesses Association and the Association of Local Newspapers, Media Houses and LLA s circulation-and readership data, 2014, - information retrieved on May 8th,

41 Nyheter (subscription based), Expressen (casual sales based), Göteborgs-Posten and Svenska Dagbladet (subscription based 26. As a result of the decline in circulation of print newspapers, the print newspaper advertising revenues is in a declining trend. In Norway the advertising revenues declined at a CAGR of 13% from 2013 to Similarly, in Sweden, print newspaper advertising spend declined from SEK 6.8bn in 2012 to SEK 5.7bn in Source: NORDICOM, Top ten daily newspapers by number of readers in 2013, information retrieved on 10 May Source: IRM, Updated Forecast for the Norwegian Media-and Advertising Market, 2015, March Subscription fee required 28 Source: IRM, Subscription fee required 41

42 7. BUSINESS OF THE GROUP 7.1 Overview Schibsted is an international media group with a presence in 26 countries. Schibsted s operations can be divided into three strategic areas: Online Classifieds: The online classifieds operations, organised in Schibsted Classified Media (SCM), have been the main growth vehicle for Schibsted in recent years, expanding into numerous markets outside of Scandinavia. SCM s portfolio spans over 24 countries from Latin America to North Africa and Asia, but with its main focus on Europe. SCM s subsidiaries include Finn (Norway), Blocket (Sweden), Leboncoin (France), Milanuncios and Segundamano (Spain), Subito (Italy) among others. SCM also operates sites in Austria, Latin America and South East Asia primarily through joint ventures. Most of these sites are leaders within their respective markets, and ranks among the top 10 digital destinations in the country. Media Houses: The Norwegian and Swedish operations include the media houses VG (Norway), Aftonbladet (Sweden) Aftenposten (Norway), Svenska Dagbladet 29 (Sweden), Bergens Tidende (Norway) Stavanger Aftenblad (Norway) and Fædrelandsvennen (Norway). Through these media houses Schibsted Norway has a combined daily reach of 75% of the population 30, whereas the combined daily reach of the Swedish media houses is 60% 31. Schibsted also owns and operates a free daily newspaper in Spain, 20 Minutos, and has a 49.3% ownership stake in a free daily newspaper in France, 20 Minutes 32. Schibsted Growth: Schibsted has also built up a portfolio of growth businesses in Sweden and Norway in areas adjacent to media and classifieds. The portfolio in Sweden consists of 22 sites, including the online directory service hitta.se, the personal finance portal lendo.se, the price comparison engine prisjakt.se and the daily deal platform letsdeal.se. In Norway the portfolio consists of 8 sites whereof a few are concepts imported from Sweden (lendo.no, prisjakt.no and letsdeal.no). Schibsted is expanding the portfolio of digital growth businesses outside of Norway and Sweden, inter alia with the launch of Schibsted Growth France in History Schibsted s history dates back to 1839 when Christian Michael Schibsted founded the publishing company Schibsted Forlag. In 1860, Mr. Schibsted commenced publishing the print newspaper Christiania Adresseblad, which changed its name in 1885 to Aftenposten. The print newspaper VG was acquired in 1966 and developed into Norway s largest newspaper based on circulation and readership volume by The Norwegian press underwent significant changes in the 1980s, and the expansion of Schibsted s operations created a need for a new organisational model. In 1989, Schibsted was converted from a family enterprise into a corporation and three years later, in 1992, listed on the Oslo Stock Exchange. In 1996 and 1998, Schibsted expanded the print newspaper operations to Sweden by acquiring Aftonbladet and Svenska Dagbladet. In the same period, operations were expanded into Estonia. The Company followed up with the launch of its first growth vehicle outside of the Nordic region, the free daily newspaper 20 Minutes, launched in four countries (Germany, Switzerland, Spain and France) between 1999 and Germany was closed down after less than two years and the Swiss operation was sold to the local media group Tamedia in When the transformational nature of the world wide web became evident, Schibsted focused its attention towards the shift of the businesses from print to digital. Due to changing market trends and new technological developments, there was a need to focus on developing a long-term strategy. The result was a new vision statement; to be the preferred content supplier to consumers and advertisers, irrespective of their choice of 29 Schibsted Sweden Media House Sweden announced on 12 May 2015 that it has entered into a letter of intent with MittMedia regarding a future cooperation in Sweden by forming a new media group for subscription newspapers, including Svenska Dagbladet. For additional information please see section Source: TNS Innsikt, Daily coverage of national media houses, Q4 2014, 31 Source: custom report produced by independent market research firm TNS-SIFO Orvesto 32 On 27 May 2015 Schibsted announced it had received an offer for its ownership stake in 20 Minutes France. A final agreement is expected to be entered into after the date of this Prospectus. For further information see section

43 media. As a result Schibsted transformed itself from a newspaper company to a multimedia business. Thus the development of Schibsted s online news sites and services started in the mid-1990s when, among other brands, VG and Aftonbladet were established as daily online newspapers. The development of our online media business during the first few years was characterised by heavy reliance on our print newspaper brands and organisations. Later Schibsted s focus has shifted to establishing new structures to benefit from synergy effects across our media operations, in areas such as purchasing, administration, advertisement production, sales, IT and production of news and content. In recent years focus has been on the development and testing of new business models and media platforms in order to meet the constantly changing news consumption. Schibsted s digital transformation included not only publishing, but also the classifieds business, which traditionally had been an important revenue source for newspapers. This led to the launch of Finn.no in Norway, which demonstrated the possibility of growing the digital listings business to an even larger volume than print listings. In 2003 Schibsted acquired a majority stake in Blocket, a Swedish start-up company that had achieved a similar success in Sweden. The success of Finn and Blocket, and the competence that Schibsted had accumulated, encouraged Schibsted to look at an international expansion within online classifieds. This was achieved by a combination of organic rollouts (sites based on the Blocket concept were launched in 38 markets between 2004 and 2015, 16 of which are still active and owned by Schibsted) and acquisitions. The acquisition of the Spanish, French, Italian and Latin-American businesses of Trader Media Group in 2006 was a defining moment the largest M&A deal in the history of Schibsted (EUR 580m), and the very foundation for establishment of SCM as separate business unit. Schibsted became one of the very first players worldwide pursuing a multinational online classifieds strategy. Only ebay had followed a similar approach at the time, yet favouring the auction model, which eventually created a segment largely disjoint from online classifieds. Leading up to today, the Group has continued to expand its portfolio systematically, favouring greenfield launches in markets where the competitive situation represented good chances of success for a new entrant, and M&A in markets where one player was either already in a clear leadership position, or well on its way towards establishing such a position. M&A and partnerships have been important in developing the current portfolio of sites. Some of the key sites have been built in partnerships with entrepreneurs or industrial players. Some examples of the latter are Willhaben in Austria and Leboncoin in France. Willhaben is still a 50/50 joint venture with the Austrian media company, Styria. Leboncoin was originally a 50/50 partnership with the French media company, Spir, but Schibsted acquired full ownership in Recently, Schibsted has formed new partnerships in emerging markets. In 2013 Schibsted entered into a joint venture partnership with Telenor covering South America and selected Asian markets. Telenor also came in as an equal 1/3 partner in the joint venture between Schibsted and Singapore Press Holdings covering South East Asia. Last year Schibsted, Telenor and Singapore Press Holdings joined forces with the South African company, Naspers, and established four joint ventures, covering Brazil, Bangladesh, Thailand and Indonesia (Singapore Press Holdings participating only in the two latter). Today Schibsted is the leading news publisher in Norway and one the leading in Sweden with a respective daily reach of 75% and 60% of the population 33. Schibsted has also become a global player in online classifieds and the successful development of the online classified business has transformed Schibsted from a regional Nordic media company into an international media company. Schibsted now operates 33 online classified sites in 24 countries covering Europe, Latin America, North Africa and Asia. In recent years, both the online media market and the online classifieds market have witnessed significant changes in media consumption, driven by the pervasiveness of mobile devices and other technological trends. In order to meet the demands of users and advertisers in the new digital age, Schibsted has launched an extensive program of digital transformation and as part of this established a central product and technology unit, with tech hubs in Oslo, Stockholm, Krakow, Barcelona and London, in order to ensure that Schibsted has the necessary analytical and technological capabilities to meet the demands from users and advertisers. The 33 Source: Norwary: TNS Innsikt, Daily coverage of national media houses, Q4 2014, Sweden: Source: custom report produced by independent market research firm TNS-SIFO Orvesto 43

44 aim of these efforts is to develop common global product platforms and technology infrastructure necessary to enable data- and identity based ecosystems to drive Schibsted s future growth. 7.3 Schibsted s business areas and strategy Schibsted s consists of three business areas; Online Classifieds, Media Houses and Growth. The business areas are further described below Online classifieds Schibsted aims to be a global leader within online classifieds. The Group s current position in online classifieds has been ensured through organic initiatives and active use of M&A and partnerships. Schibsted has established a solid track-record through the many value creating transactions that have been completed during the last decade. Portfolio management: During the past years Schibsted has focused on systematic asset reallocation by divesting non-core assets and deploying capital into online marketplaces through organic initiatives, acquisition of established companies in new markets and of bolt-on verticals in existing markets. Recently, focus has moved towards consolidation, most notably through the recent transactions with Naspers, the acquisition of Milanuncios in Spain and the joint venture with Avito in Morocco. For the online classified business, future growth is expected to come from organically developing the current positions combined with consolidating efforts and expansions into additional verticals, either organically or through acquisitions. The Company also wants to continue to pursue growth through entering new markets SCM s portfolio now contains (i) assets in mature European markets, mostly fully-owned and (ii) assets in emerging markets, mostly in joint ventures: Source: Investor presentation published 17 April 2015 Accelerate leadership and consolidation in mature European markets: Schibsted s primary focus in the European markets is to further develop the current positions by expanding into to new verticals or adjacent business areas, either through organic initiatives or through acquisitions Diversified basket of emerging market assets for future growth: Emerging markets, where maturity is generally still a few years away, are considered to be markets with growth reserves for the future with a wide variety of growth horizons depending on geographies were Schibsted is present. The strategy in these markets is to maintain leadership as the market matures and thereby build a strong position, where users equate the offering with the category. Schibsted aims to develop monetisation in line with market development, and adjust the model to local conditions, for example high prevalence of mobile usage. Given the inherent risk associated with emerging markets, Schibsted has structured the portfolio rather broadly, with positions in 13 countries across Latin America, Asia and North Africa, mostly through joint ventures with Telenor, Naspers, Singapore Press Holdings and Avito. Only in Mexico, Columbia, the Dominican Republic and Tunisia does Schibsted have full 44

45 ownership; in all other emerging markets, Schibsted effective ownership ranges from 12% to 50%. Schibsted believes that this approach is the best way to have exposure to these markets in their midterm growth potential, while mitigating the risk via diversification Media House The overall strategy of the Media Houses is to develop world-class digital businesses based on strong editorial products. This means managing the transition from print to digital by adjusting the cost base but at the same time investing in digital competence and technology such as payment solutions (SPiD), CRM systems, mobile platforms, web-tv, strengthened sales units, and continued development of the consumer finance offering. Schibsted s Media Houses seek to develop leading positions and strong brands by keeping a strategic focus on data-driven product development, leading users through the transformation of print to digital media consumption, expanding the product offerings to new platforms such as web-tv and enabling personalisation and a better product experience through creating a logged-in ecosystem across the group. The strategy seeks to create loyalty to a brand, irrespective of channels Schibsted Growth Schibsted Growth is the Group's vehicle for investing in entrepreneurs and innovative companies with digital products and services. The aim is leverage the high traffic sites in the Schibsted portfolio to build new digital businesses. Focus has been on business models that create unique value for their users, either by disrupting or digitally transforming traditional industries or defining new ones in areas that are adjacent to online classifieds and media houses. Schibsted Growth s primary focus will be on personal finance and other ecosystem-related investments particularly in Norway and Sweden leveraging Schibsted s current portfolio in these countries. In 2013, a small team was established in France to explore such growth venture opportunities in the French market. These concepts could potentially also be introduced in Spain and other markets where the Group also has a strong digital presence. 7.4 Schibsted s competitive strengths Schibsted believes that the following factors contribute positively to Schibsted s competitive position: Strong brands and reach in large geographies: Schibsted s media brands reach 75% of the Norwegian population daily 34 and 60% of the Swedish population 35. Leboncoin, the French classifieds player has 15,669,000 unique visitors per month (excluding traffic from mobile use) 36. Total reach is increasing, driven by web and mobile channels, both in mature and emerging markets Ability to transform and adapt to a fast changing environment: digital businesses in 2014 accounted for 54% of Schibsted s topline. Very few other newspaper publishers worldwide have been able to transform themselves that fast Wide and balanced portfolio of businesses in emerging markets: which gives Schibsted good midand long-term growth perspectives at a relatively low risk level Strong central functions: which allows for realization of synergies across the portfolio of digital businesses Unique experience as an operator of classifieds marketplaces: SCM is a global operator, with excellent talent, systems, and proven execution capability Ability to attract, retain and develop talent: the Group has been able to recruit highly talented engineers and product specialists from some of the leading technology players in digital media. It also 34 Source: TNS Innsikt, Daily coverage of national media houses, Q4 2014, 35 Source: custom report produced by independent market research firm TNS-SIFO Orvesto 36 Source: Comscore (February 2015). Subscription fee required 45

46 regularly ranks in the top positions of employer rankings in Norway and Sweden 7.5 Overview of business within operating segments In terms of operations and financial reporting, Schibsted is organised into four segments based on a combination of business area and geography. The four segments are (i) Online Classifieds, (ii) Schibsted Norway Media House (SNO), Schibsted Sweden Media House (SSE) and Other. Division Operating revenues (NOKm) Restated 2012 Restated Online Classifieds 4,741 4,184 3,647 Schibsted Norway Media House 6,217 6,338 6,485 Schibsted Sweden Media House 3,762 3,720 3,538 Other ,256 Note: please refer to section 9.7 for detailed segmental financial information Below is an overview of the operations within the four segments: Online Classifieds The online classifieds segment spans over 24 countries from Latin America to North Africa and Asia, with a main focus on Europe. Below is an overview of the key OLC sites within Schibsted (sorted by country): Selected brands Country Brief description (traffic data in thousands) 37 Olx Br (25%) Classifieds marketplace Traffic* 14,685 MUV (web) Leboncoin (100%) Classifieds marketplace Traffic* 15,669 MUV (web) Donedeal (90%) Classifieds marketplace Traffic* 878 MUV (web) Subito (100%) Classifieds marketplace in Italy Traffic* 7,911 MUV (web) Finn (90%) Classifieds marketplace in Norway Traffic* 1,633 MUV (web) Milanuncios (90%) Classifieds marketplace in Spain Traffic* 7,172 MUV (web) Segundamano (90%) Classifieds marketplace in Spain Traffic* 3,764 MUV (web) Blocket (100%) Classifieds marketplace in Sweden Traffic* 2,360 MUV (web) *Does not include traffic from mobile use 37 Source: Comscore (February 2015). Subscription fee required 46

47 7.5.2 Schibsted Norway Media House SNO operates in various segments of the media market: (i) print newspapers; (ii) online media, (iii) growth companies and (iv) book publishing. In addition, SNO owns and operates newspaper printing facilities and distribution networks. Below is an overview of the key newspapers and sites within SNO (sorted by circulation): Selected brands Brief description* 38 VG (100%) National media house with single copy sales-based model Traffic 2,620,000 MUV (online), 1,913,691 MUV (mobile) Circulation (weekday edition) >119,760 Aftenposten (100%) Regional media house with subscription-based model Traffic 1,774,000 MUV (online), 1,040,037 MUV (mobile) Circulation (morning edition) >216,998 Bergens tidene (100%) Stavanger Aftenblad (100%) Fædrelandsvennen (100%) Let s deal (51% SNO, 49% SSE) Regional media house with subscription-based model Traffic 909,000 MUV (online), 477,598 MUV (mobile) Circulation (weekday edition) >70,450 Regional media house with subscription-based model No.1 position in the Stavanger area - on the west coast of Norway Traffic 528,000 MUV (online), 268,487 MUV (mobile) Circulation (weekday edition) >56,323 Regional media house with subscription-based model Traffic 299,000 MUV (online), 174,520 MUV (mobile) Circulation >33,610 Digital service that offers deal-based bargains to its users within a wide range of categories Traffic 198,599 MUV (online), 190,811 MUV (mobile) Prisjakt Norway (100% SSE) Price comparison site Traffic 627,739 MUV (online), 706,228 MUV (mobile) *Circulation includes single copy sales, print and digital subscription. Traffic numbers from March Schibsted Sweden Media House SSE is a news media publisher in Sweden with a daily reach of 60% of the Swedish population. In addition to its media houses Aftonbladet and Svenska Dagbladet (SvD), SSE has a portfolio of growth businesses comprising 22 companies, including the online directory service hitta.se; a personal finance portal lendo.se, the price comparison engine prisjakt.se and the deal platform letsdeal.se. SSE currently has over 25 brands. Below is an overview of the key newspapers and sites within SSE (sorted by traffic): Selected brands Brief description 39 Aftonbladet (100%) Daily newspaper in Sweden across all platforms Circulation (weekday addition) >123,223 Traffic* 2,678,000 (web) Hitta (100%) Online directory, search and listings Traffic* 1,788,000 (web) SvD (100%) Nationwide newspaper with high quality journalism Circulation (weekday addition) >147,500 Traffic* 817,000 (web) 38 Sources: Media houses; NIP (Norsk Internettpanel. Subscription required, Media houses circulation: Internal data, Prisjakt and Let s deal: Google Analytics 39 Source: Comscore (February 2015) (Subscription fee required) 47

48 TV.nu (100%) Online TV guide Traffic* 680,000 (web) Prisjakt (100%) Price comparison site Traffic* 579,000 (web) Omni (100%) Awarded best mobile news service in Europe 2014 at WAN-IFRA, the European Digital Media Awards. and selected as the best overall news site in Sweden 2015 by Internetworld Klart (100%) Online weather site Traffic* 252,000 (web) Compricer (100%) Price comparison site Traffic* 317,000 (web) Let s Deal (51% SNO, 49% SSE) Digital service that offers deal-based bargains to its users within a wide range of categories Traffic* 105,000 (web) Lendo (100%) Online consumer loan site Traffic* 30,000 (web) *Does not include traffic from mobile use Other: Free newspapers, Spain and France Schibsted also owns and operates the free daily newspaper in Spain, 20 Minutos, and has a 49.3% shareholding in the equivalent publication in France, 20 Minutes 40. The free newspaper concept 20 Minutes was launched in Spain and France in Minutos Spain is an important player in the Spanish newspaper market with a total of one million daily readers of the printed version and fourteen million online readers on a monthly basis. 20 Minutes France is a free daily newspaper in France with 4m daily readers and the most read multichannel news brand with 19m monthly readers (Source: AudiPresse One V1, 2015). 40 On 27 May 2015 Schibsted announced it had received an offer for its ownership stake in 20 Minutes France. A final agreement is expected to be entered into after the date of this Prospectus. For further information see section

49 8. CAPITALISATION AND INDEBTEDNESS The information presented below should be read in conjunction with the other parts of this Prospectus, in particular Section 9 Selected Financial Information and Section 10 Operating and Financial Review, and the Financial Statements and the notes related thereto, included in Appendix B, C, D and E of this Prospectus. During the first quarter of 2015 the carrying amount of the Group's assets decreased by NOK 180 million to NOK 17,694 million. The Group's net interest bearing borrowings increased by NOK 384 million to NOK 2,467 million. The Group's equity ratio was 41 percent at the end of first quarter 2015 and 38 percent at the end of There were no changes in the long term funding of Schibsted during the first quarter. Schibsted has two long term revolving credit facilities of totally EUR 425 million. None of the facilities were drawn. Including cash and cash equivalents, the liquidity reserve at the end of 1Q 2015 was NOK 4.0 billion. Other than as set forth as above, there has been no material change to the Group s unaudited consolidated capitalisation and net financial indebtedness since 31 March Capitalisation As of 31 March 2015 In NOK millions (unaudited) Indebtedness Total current debt: Guaranteed and secured... - Guaranteed but unsecured Secured but unguaranteed... - Unguaranteed and unsecured... 5,371 Total non-current debt: Guaranteed and secured... - Guaranteed but unsecured... - Secured but unguaranteed... - Unguaranteed and unsecured... 4,852 Total indebtedness... 10,441 Shareholders equity Share capital Additional paid-in capital... 1,540 Other reserves... 5,365 Non-controlling interests Total shareholders equity... 7,253 Total capitalisation... 17,694 All of Schibsted s facilities are unguaranteed and unsecured, except the EUR 25m loan from Eksportfinans which is guaranteed by Danske Bank. 49

50 8.2 Net financial indebtedness As of 31 March 2015 In NOK millions (unaudited) (A) Cash (B) Cash equivalents... - (C) Trading securities... - (D) Liquidity (A)+(B)+(C) (E) Current financial receivables... 2,423 (F) Current bank debt (G) Current portion of non-current debt (H) Other current financial debt... 3,783 (I) Current financial debt (F)+(G)+(H)... 4,569 (J) Net current financial indebtedness (I)-(E)-(D)... 1,861 (K) Non-current bank loans (L) Bonds issued... 1,800 (M) Other non-current loans (N) Non-current financial indebtedness (K)+(L)+(M)... 2,114 (O) Net financial indebtedness (J)+(N)... 3, Working capital statement The Company is of the opinion that the working capital available to the Group is sufficient for the Group s present requirements, for the period covering at least 12 months from the date of this Prospectus. 8.4 Contingent and indirect indebtedness As at 31 March 2015 and as at the date of the Prospectus, the Group did not have any contingent or indirect indebtedness. 50

51 9. SELECTED FINANCIAL INFORMATION The full audited financial statements for the years 2012, 2013 and 2014 are included in Appendix B, C and D, in addition to the unaudited first quarter 2015 report in Appendix E. 9.1 Introduction and basis for preparation The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The consolidated financial statements have been prepared based on a historical cost basis, with the exception of financial instruments in the categories Financial assets and Financial liabilities at fair value through profit or loss and Financial assets available for sale which are measured at fair value and Loans and receivables and Other financial liabilities which are measured at amortised cost. In the consolidated income statement, expenses are presented using a classification based on the nature of the expenses. Determining the carrying amounts of some assets and liabilities requires management to estimate the effects of uncertain future effects on those assets and liabilities at the balance sheet date. Key sources of estimation uncertainty at the balance sheet date having a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed in note 3 of the 2014 Annual Report, please refer to Appendix B for additional details. 9.2 Summary of accounting policies and principles Change in accounting policies The accounting principles presented below are, with the exception of accounting for joint ventures in 2012, applied for all periods presented. In 2012, joint ventures are accounted for using proportionate consolidation. In 2013 and 2014, joint ventures are accounted for using the equity method following the implementation of IFRS 11 Joint Arrangements with effect from 1 January The financial statements for 2013 were restated in 2014 to reflect retroactive application of IFRS 11 Joint Arrangements. The effects of the restatement are disclosed in note 2 to the 2014 Annual Report, please refer to Appendix B. The financial statements for 2012 were restated in 2013 to reflect the retroactive application of amendments to IAS 19 Employee Benefits implemented with effect from 1 January The effects of the restatement are disclosed in note 2 to the 2013 Annual Report, please refer to Appendix C. IFRS 11 Joint Arrangements has replaced IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities Non-monetary contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities using proportionate consolidation. Instead, entities meeting the definition of a joint venture must be accounted for using the equity method. This affects the presentation of joint ventures in profit or loss and in the balance sheet, but has generally no effect on net profit or equity. The implementation of IFRS 11 has affected the presentation of all investments previously accounted for as joint ventures using proportionate consolidation. The investments classified as joint ventures are disclosed in note 13 Investments in joint ventures and associated companies of the 2014 Anural Report. The use of the equity method in accounting for joint ventures also implies that an investment retained in a former joint venture becoming an associated company shall not be remeasured at fair value. The implementation of IFRS 11 has consequently reduced the gain recognised in profit or loss in 2013 related to reduced ownership interest in 701 Search Pte. by NOK 525 million with a corresponding effect on equity Consolidation principles The consolidated financial statements include the parent the Company and all subsidiaries, presented as the financial statements of a single economic entity. Intragroup balances, transactions, income and expenses are eliminated. 51

52 Subsidiaries are all entities controlled, directly or indirectly, by the Company. The Group controls an entity when it is exposed to, or has rights to, variable returns from the involvement with the entity and has the ability to affect those returns through power over the entity. Power over an entity exists when the Group has existing rights that give it the current ability to direct the activities that significantly affect the entity's returns. Generally, there is a presumption that a majority of voting rights result in control. The Group considers all relevant facts and circumstances in assessing whether control exist, including contractual arrangements and potential voting rights to the extent that those are substantive. Subsidiaries are included in the consolidated financial statements from the date the Company effectively obtains control of the subsidiary (acquisition date) and until the date the Company ceases to control the subsidiary. Non-controlling interests is the equity in a subsidiary not attributable, directly or indirectly, to the parent the Company. Non-controlling interests are presented in the consolidated balance sheet within equity, separately from the equity of the owners of the parent. Profit or loss and comprehensive income attributable to noncontrolling interests are disclosed as allocations for the period of profit or loss and comprehensive income attributable to non-controlling interests and owners of the parent, respectively. All business combinations in which the Company or a subsidiary is the acquirer, i.e. the entity that obtains control of another entity or business, are accounted for by applying the acquisition method. The identifiable assets acquired and the liabilities including contingent liabilities assumed are measured at their acquisition-date fair values. Any non-controlling interest in the acquiree is measured either at fair value or at the proportionate share of the acquiree's identifiable net assets. The consideration transferred is measured at fair value. Any excess of the aggregate of the consideration transferred, the amount recognised for non-controlling interests and the fair value of any previously held equity interest in the acquiree over the net of identifiable assets acquired and liabilities assumed, is recognised as goodwill. Acquisition-related costs incurred, except those related to debt or equity, are expensed. The acquisition-date fair value of contingent consideration is recognised as part of the consideration transferred in exchange for the acquiree. Subsequent changes in the fair value of contingent consideration deemed to be a liability is recognised in profit or loss. In business combinations achieved in stages, the previously held equity interest is remeasured at its acquisition-date fair value with the resulting gain or loss recognised in profit or loss. Changes in ownership interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of non-controlling interests is adjusted to reflect the change in their relative share in the subsidiary. Any difference between the amount by which the non-controlling interests is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the parent. When control of a subsidiary is lost, the assets and liabilities of the subsidiary and the carrying amount of any non-controlling interests are derecognised. Any consideration received and any investment retained in the former subsidiary is recognised at their fair values. The difference between amounts recognised and derecognised is recognised as gain or loss in profit or loss. Amounts recognised in other comprehensive income related to the subsidiary are reclassified to profit or loss or transferred to equity similarly as if the parent had disposed of the assets and liabilities directly. Amounts reclassified to profit or loss (including accumulated translation differences and accumulated fair value adjustments to Financial assets available for sale) are included in gain or loss on loss of control of subsidiary in profit or loss Investments in joint arrangements and associates A joint arrangement is an arrangement of which two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement and exists when decisions about the relevant activities require the unanimous consent of the parties sharing control. Investments in joint arrangements are classified as joint ventures if they are structured through separate vehicles and the parties have rights to the net assets of the arrangements. 52

53 An associate is an entity over which the Company, directly or indirectly through subsidiaries, has significant influence. Significant influence is normally presumed to exist when Schibsted controls 20% or more of the voting power of the investee. Investments in joint ventures and associates are accounted for using the equity method. On initial recognition, the investment is recognised at cost. The Group's share of the investee's profit or loss is recognised in profit or loss and the share of changes in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. Distributions received reduce the carrying amount of the investment. When the Group's share of losses of a joint venture or an associate equals or exceeds the interest in the joint venture or associate, the Group does not recognise further losses unless it has incurred legal or constructive obligations. The interest in a joint venture or an associate includes any long-term unsecured receivables. The use of the equity method is discontinued from the date an investment ceases to be a joint venture or an associate. The difference between the total of the fair value of any retained interest and any proceeds from disposing of a part interest in a joint venture or an associate, and the carrying amount of the investment, is recognised as gain or loss in profit or loss. If the Group's ownership interest in a joint venture or an associate is reduced, but the equity method is still applied, a gain or loss from the partial disposal is recognised in profit or loss. The retained interest is not remeasured. Gains or losses resulting from upstream or downstream transactions between the Group and a joint venture or an associate, including any sale or contribution of subsidiaries to a joint venture or an associate, are recognised only to the extent of unrelated investors' ownership interests in the joint venture or associate. Whenever there is objective evidence that an investment may be impaired, that investment is tested for impairment and an impairment loss is recognised if its recoverable amount (higher of value in use and fair value less costs to sell) is less than its carrying amount. Impairment losses are reversed if the loss no longer exists Accrual, classification and valuation principles Cash and cash equivalents, assets included in the normal operating cycle and other financial assets expected to be realised within twelve months after the reporting period are classified as current assets. Liabilities included in the normal operating cycle and liabilities due to be settled within twelve months after the reporting period are classified as current liabilities. Other assets and liabilities are classified as non-current Operating segments The division into operating segments is based on the organisation of the Group and corresponds to the internal management reporting to the chief operating decision maker, defined as the CEO Revenue recognition Revenue from sale of goods is recognised when delivery has occurred and the significant risks and rewards of ownership have been transferred to the buyer. Revenue from the rendering of services is recognised by reference to the stage of completion of the transaction (the percentage of completion method) provided that the outcome of the transaction can be estimated reliably. Discounts are recognised as a revenue reduction. Advertising revenue in printed media is recognised when inserted. Subscription revenues for printed media are invoiced in advance and recognised upon delivery over the subscription period. Revenue from other sales of goods, including casual sales, are recognised upon delivery, taking into account estimated future returns. Online advertising revenue is recognised when displayed. Other revenues from the internet, including subscription based revenues, are recognised in the periods in which the service is rendered. Commissions related to sales of ads and casual sales are recognised as operating expenses. 53

54 When goods are sold or services rendered in exchange for dissimilar goods or services, revenue is recognised in accordance with the recognition policy related to relevant goods or services. Revenue is measured at the fair value of the goods or services delivered or received, depending on which item that can be measured reliably. Interest income is recognised using the effective interest method and dividends are recognised when the right to receive payment is established Government grants Government grants are recognised when there is reasonable assurance that the conditions attaching to them will be complied with, and that the grants will be received. Government grants, including press subsidies, are recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate Financial instruments The Group initially recognises loans, receivables and deposits on the date that they are originated. All other financial assets and financial liabilities (including financial assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. The Group classifies at initial recognition its financial instruments in one of the following categories: Financial assets or financial liabilities at fair value through profit or loss, Loans and receivables, Financial assets available for sale and Other financial liabilities. The classification depends on the purpose for which the financial instruments were acquired. Financial assets or financial liabilities at fair value through profit or loss are financial assets held for trading and acquired primarily with a view of selling in the near term. The category consists of financial derivatives unless they are designated and effective hedging instruments. Financial derivatives are included in the balance sheet items Trade and other receivables and Other current liabilities. These financial assets and liabilities are measured at fair value when recognised initially, and transaction costs are charged to expense as incurred. Subsequently, the instruments are measured at fair value, with changes in fair value, including interest income, recognised in profit or loss as financial income or financial expenses. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The category is included in the balance sheet items Other non-current assets, Trade and other receivables and Cash and cash equivalents. Loans and receivables are recognised initially at fair value plus directly attributable transaction costs. Subsequently, loans and receivables are measured at amortised cost using the effective interest method, reduced by any impairment loss. Short-term loans and receivables are for practical reasons not amortised. Effective interest related to loans and receivables is recognised in profit or loss as financial income. Financial assets available for sale are non-derivative financial assets that are designated as available for sale or which are not classified in any other category. Carrying amount of financial assets available for sale is included in the balance sheet items Non-current financial assets and Current financial assets. These financial assets are measured initially at fair value plus directly attributable transaction costs. Changes in fair value are recognised in other comprehensive income, except for impairment losses that are recognised in profit or loss. When an investment is derecognised, the cumulative gain or loss is transferred to profit or loss under financial income or expenses. Dividends are recognised when the right to receive payment is established. Financial liabilities not included in any of the above categories are classified as other financial liabilities. The category other financial liabilities is included in the balance sheet items Non-current interest-bearing borrowings, Other non-current liabilities, Current interest-bearing borrowings and Other current liabilities. Other financial liabilities are recognised initially at fair value. Subsequently, other financial liabilities are 54

55 measured at amortised cost using the effective interest method. Effective interest is recognised in income as financial expenses. Short-term financial liabilities are for practical reasons not amortised. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire and the Group has transferred substantially all the risks and rewards of ownership. Financial liabilities are derecognised when the obligation is discharged, cancelled or expires. Any rights and obligations created or retained in such a transfer are recognised separately as assets or liabilities. Financial assets and liabilities are offset and the net amount presented in the balance sheet when the Group has a legal right to offset the amounts and intends to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the securities are impaired. Indications of impairment is evaluated separately for each investment, but normally decline in value of more than 20% compared to cost will be considered to be significant, and normally a decline in value below cost lasting for more than 12 months will be considered to be prolonged. For Trade and other receivables, default in payments, significant financial difficulties of the debtor or probability that the debtor will enter bankruptcy or debt settlement negotiations are considered to be indicators that the Group will not be able to collect all amounts due according to the original terms of the receivables. The carrying amount of the trade receivables is reduced through the use of an allowance account, and the loss is recognised as other operating expenses in the income statement, while impairment of other financial assets are recognised as financial expenses. Fair value of financial instruments is based on quoted prices in an active market if such markets exist. If an active market does not exist, fair value is established by using valuation techniques that are expected to provide a reliable estimate of the fair value. The fair value of listed securities is based on current bid prices. The fair value of unlisted securities is based on cash flows discounted using an applicable risk-free market interest rate and a risk premium specific to the unlisted securities. Fair value of forward contracts is estimated based on the difference between the spot forward price of the contracts and the closing rate at the date of the balance sheet. The forward rate addition and deduction is recognised as interest income or interest expense. Fair value of interest and currency swaps are estimated based on discounted cash flows, where future interest rates are derived from market-based future rates Treasury shares and transaction costs of equity transactions Own equity instruments which are reacquired (treasury shares) are deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. Consideration paid or received is recognised directly in equity. The transaction costs of issuing or acquiring own equity instruments are accounted for as a deduction from equity, net of any related income tax benefit Foreign currency translation Each individual entity included in the consolidated financial statements measures its results and financial position using the currency of the primary economic environment in which it operates (the functional currency). The consolidated financial statements are presented in NOK which is the Company s functional and presentation currency. Foreign currency transactions are translated into the entity's functional currency on initial recognition by using the spot exchange rate at the date of the transaction. At the balance sheet date, assets and liabilities are translated from foreign currency to the entity s functional currency by: translating monetary items using the exchange rate at the balance sheet date; translating non-monetary items that are measured in terms of historical cost in a foreign currency using the exchange rate at the transaction date; and 55

56 translating non-monetary items that are measured at fair value in a foreign currency using the exchange rate at the date when the fair value was determined. Exchange differences arising on the settlement of, or on translating monetary items not designated as hedging instruments, are recognised in profit or loss in the period in which they arise. When a gain or loss on a nonmonetary item is recognised in other comprehensive income, any exchange component of that gain or loss is also recognised in other comprehensive income. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is also recognised in profit or loss. On initial designation of a hedge, the Group formally documents the relationship between the hedging instrument(s) and the hedged item(s), including risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be highly effective in offsetting the changes in the fair value or cash flows for the respective hedged items during the period for which the hedge is designated. Gains or losses related to loans or currency derivatives in foreign currencies, designated as hedging instruments in a hedge of a net investment in a foreign operation, are recognised in other comprehensive income until disposal of the operation. Upon incorporation of a foreign operation into the consolidated financial statements by consolidation, proportionate consolidation or the equity method, the results and financial position is translated from the functional currency of the foreign operation into NOK (the presentation currency) by using the step-by-step method of consolidation. Assets and liabilities are translated at the closing rate at the balance sheet date and income and expenses are translated at average rates for the period. Resulting exchange differences are recognised in other comprehensive income until the disposal of the foreign operation. Goodwill and fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation, is treated as assets and liabilities of that foreign operation. They are therefore expressed in the functional currency of the foreign operation and translated at the closing rate at the balance sheet date Property, plant and equipment Property, plant and equipment are measured at its cost less accumulated depreciation and accumulated impairment losses. The depreciable amount (cost less residual value) of property, plant and equipment is allocated on a systematic basis over its useful life. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item, is depreciated separately. Costs of repairs and maintenance are recognised in profit or loss as incurred. Cost of replacements and improvements are recognised in the carrying amount of the asset. The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no economic benefits are expected from its use or disposal. Gain or loss arising from derecognition is included in profit or loss when the item is derecognised Investment property Property that is not owner-occupied, but held to earn rentals or for capital appreciation, is classified as investment property. Investment property is measured at cost less accumulated depreciation and accumulated impairment losses Intangible assets Intangible assets are measured at its cost less accumulated amortisations and accumulated impairment losses. Amortisation of intangible assets with a finite useful life is allocated on a systematic basis over its useful life. Intangible assets with an indefinite useful life are not amortised. 56

57 Costs of developing software and other intangible assets are recognised as an expense until all requirements for recognition as an asset is met. The requirements for recognition as an asset include, among other requirements, the requirement to demonstrate probable future economic benefits and the requirement that the cost of the asset can be measured reliably. Costs incurred after the time that all the requirements for recognition as an asset are met are recognised as an asset. The cost of an internally generated intangible asset is the sum of expenditure incurred from the time all requirements for recognition as an asset are met and until the time the asset is capable of operating in the manner intended by management. Expenditure related to development of technology-based intangible assets to be used in new markets will normally be charged to expense as the requirement to demonstrate probable future economic benefits will normally not be met. Subsequent expenditure incurred in the operating stage to enhance or maintain an intangible asset are normally recognised as an expense as the requirement to demonstrate probable increased economic benefits will normally not be met Impairment of non-financial assets Property, plant, equipment, intangible assets and goodwill are reviewed for impairment whenever an indication that the carrying amount may not be recoverable is identified. Goodwill and other intangible assets that have an indefinite useful life are tested annually for impairment. Impairment indicators will typically be changes in market developments, the competitive situation or technological developments. An impairment loss is recognised in the Income statement if the carrying amount of an asset (cash generating unit) exceeds its recoverable amount. The recoverable amount is the higher of value in use and fair value less cost to sell. Value in use is assessed by discounting estimated future cash flows. Estimated cash flows are based on management s experience and market knowledge for the given period, normally five years. For subsequent periods growth factors are used that do not exceed the long-term average rate of growth for the relevant market. Expected cash flows are discounted using an after tax discount rate that takes into account the expected long-term interest rate with the addition of a risk margin appropriate for the assets being tested. For the purpose of impairment testing, assets, except goodwill, are grouped together into the smallest group of assets that generates independent cash flows (cash-generating units). Goodwill acquired in a business combination is, from the acquisition date, allocated to the cash-generating units, or groups of cash-generating units, that is expected to benefit from the synergies of the combination. Testing for impairment of goodwill is done by comparing recoverable amount and carrying amount of the same groups of cash-generating units as to which goodwill is allocated. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill. Any remaining amount is then allocated to reduce the carrying amounts of the other assets in the unit on a pro rata basis. Impairment losses are reversed if the loss no longer exists for all property, plant and equipment and intangible assets with the exception of goodwill where impairment losses are not reversed Leases Leases are classified as either finance leases or as operating leases. Leases that transfer substantially all the risks and rewards incidental to the asset are classified as finance leases. Other leases are classified as operating leases. When Schibsted is lessee in a finance lease, the leased asset and the liability related to the lease is recognised in the balance sheet. Depreciable leased assets are depreciated systematically over the useful life of the asset. Lease payments are apportioned between interest expense and reduction of the liability. Lease payments related to operating leases are recognised as an expense over the lease term Borrowing costs Borrowing costs are generally recognised as an expense in the period in which they are incurred. Borrowing costs that are directly attributable to the acquisition, construction or production of an asset, that necessarily 57

58 takes a substantial period of time to get ready for its intended use or sale ( qualifying asset ), are capitalised as part of the cost of that asset Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories are assigned by using the first-in, first-out (FIFO) cost formula and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale Post-employment benefits Pension plans, including multi-employer plans, are classified as defined contribution plans or defined benefit plans depending on the economic substance of the plan. Pension plans in which Schibsted's obligation is limited to the payment of agreed contributions and in which the actuarial risk and the investment risk fall on the employee, are classified as defined contribution plans. Other plans are classified as defined benefit plans. As net defined benefit liability is recognised the present value of the benefit obligation at the balance sheet date, less fair value of plan assets. Net pension expense related to defined benefit plans include service cost and net interest on the net defined benefit liability recognised in profit or loss and remeasurements of the net defined benefit liability recognised in other comprehensive income. The present value of defined benefit obligations, current service cost and past service cost is determined using the Projected Unit Credit Method and actuarial assumptions regarding demographic variables and financial variables. Past service cost is the change in the present value of the defined benefit obligation resulting from a plan amendment or curtailment. Past service cost is recognised at the earlier date of when the plan amendment or curtailment occurs and when related restructuring costs or termination benefits are recognised. The contribution payable to a defined contribution plan attributable to the reporting period is recognised in profit or loss. Multi-employer plans classified as defined benefit plans, but for which sufficient information is not available to enable recognition as a defined benefit plan, are accounted for as if they were defined contribution plans. Social security taxes are included in the determination of defined benefit obligations and net pension expense Share-based payment In equity settled share-based payment transactions with employees, the employee services and the corresponding equity increase is measured by reference to the fair value of the equity instruments granted. The fair value of the equity instruments are measured at grant date, and is recognised as personnel expenses and equity increase immediately or over the vesting period when performance vesting conditions require an employee to serve over a specified time period. At each reporting date the companies remeasure the estimated number of equity instruments that is expected to vest. The amount recognised as an expense is adjusted to reflect the number of equity instruments which is expected to be, or actually become vested. In cash settled share-based payment transactions with employees, the employee services and the incurred liability is measured at the fair value of the liability. The employee services and the liability are recognised immediately or over the vesting period when performance vesting conditions require an employee to serve over a specified time period. Until the liability is settled, the fair value of the liability is revised at each balance sheet date and at settlement date, with changes in fair value recognised in profit or loss. 58

59 Income taxes Current tax, which is the amount of income taxes payable in respect of taxable profit for a period, is, to the extent unpaid, recognised as a liability. If the amount paid exceeds the amount due, the excess is recognised as an asset. A deferred tax liability is recognised for all taxable temporary differences, except for liabilities arising from the initial recognition of goodwill. A deferred tax asset is recognised for deductible temporary differences, the carryforward of unused tax losses and the carryforward of unused tax credits to the extent that it is probable that future taxable profit will be available against which these benefits can be utilised. No deferred tax liability is recognised for taxable temporary differences associated with investments in subsidiaries and interests in joint ventures when Schibsted is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The Group records provisions relating to uncertain or disputed tax provisions at the amount expected to be paid. The provision is reversed if the disputed tax position is settled in favour of the Group and can no longer be appealed. Tax expense (tax income) comprises current tax expense (current tax income) and deferred tax expense (deferred tax income). Any amount recognised as current tax assets or liabilities and deferred tax assets or liabilities are recognised in profit or loss, except to the extent that the tax arises from a transaction or event recognised in other comprehensive income or directly in equity or arises from a business combination Provisions, contingent liabilities and contingent assets A provision is recognised when an obligation exists (legal or constructive) as a result of a past event, it is probable that an economic settlement will be required as a consequence of the obligation, and a reliable estimate can be made of the amount of the obligation. The best estimate of the expenditure required to settle the obligation is recognised as a provision. When the effect is material, the provision is discounted using a market based pre-tax discount rate. A provision for restructuring costs is recognised when a constructive obligation arises. Such an obligation is assumed to have arisen when the restructuring plan is approved and the implementation of the plan has begun or its main features are announced to those affected by it. Contingent liabilities and contingent assets are not recognised. Contingent liabilities are disclosed unless the possibility of an economic settlement as a consequence of the obligation is remote. Contingent assets are disclosed where an economic settlement as a consequence of the asset is probable Other income and expenses Income and expenses included in operating profit, but being of a non-recurring nature and material in relation to operating segments, are reported on a separate line in the income statement. Other income and expenses will normally include restructuring costs, material gains and losses on sale of property, plant and equipment or intangible assets, as well as gains or losses relating to sale of subsidiaries, joint ventures and associated companies Non-current assets held for sale A non-current asset (or disposal group) is classified as held for sale if its carrying amount will be recovered principally through a sales transaction rather than through continuing use. A disposal group includes assets to be disposed of, by sale or otherwise, together in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction. 59

60 A non-current asset or a disposal group classified as held for sale is measured at the lower of carrying amount and fair value less costs to sell. Non-current assets classified as held for sale and non-current assets that are part of a disposal group classified as held for sale, are not depreciated. Non-current assets and assets of a disposal group classified as held for sale are presented separately from other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet Discontinued operations The results of discontinued operations are presented separately in the income statement. A component of the Group that either has been disposed of or is classified as held for sale, and represents a separate major line of business, is classified as discontinued operations. The results of discontinued operations are presented separately from the period the operation is disposed of or classified as held for sale. Previous periods are reclassified so that all items related to discontinued operations are presented separately from continuing operations for all periods presented Statement of cash flows The statement of cash flows is prepared under the indirect method. Cash and cash equivalents include cash, bank deposits and other monetary instruments with a maturity of less than three months at the date of purchase Earnings per share Earnings per share and diluted earnings per share are presented for ordinary shares. Earnings per share are calculated by dividing profit (loss) attributable to owners of the parent by the weighted average number of shares outstanding. Diluted earnings per share is calculated by dividing net income attributable to owners of the parent by the weighted average number of shares outstanding, adjusted for all dilutive potential shares Dividends Dividends are recognised as a liability at the date such dividends are appropriately approved by the company s shareholders meeting Notice on IFRA and IFRIC interpretations not yet effective IASB has published certain new standards and interpretations and amendments to existing standards and interpretations that are not effective for the annual period ending and that are not applied when preparing these financial statements. New and amended standards and interpretations expected to be relevant the Group's financial position, performance or disclosures are disclosed below. None of the changes disclosed are EU-approved. IFRS 9 Financial Instruments was finalised in 2014 and involves changes related to classification and measurement, hedge accounting and impairment of financial instruments. The standard will replace IAS 39 Financial Instruments: Recognition and Measurement. No mandatory date of implementation is set, but will be at the earliest. Schibsted will evaluate the potential impact of the standard in the period until implementation. IFRS 15 Revenues from Contracts with Customers will replace all existing standards and interpretations related to revenue recognition. The core principle of IFRS 15 is that revenue is recognised to depict the transfer of agreed goods or services to customers by an amount that reflects the consideration to which the entity expects to be entitled. The standard applies to all revenue contracts and also provides a model for the recognition and measurement of sales of certain non-financial assets. Mandatory date of implementation is Schibsted will evaluate the potential impact of the standard in the period until implementation. IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures are amended to eliminate an inconsistency between those standards regarding the sale or contribution of assets between an investor and its associate or joint venture. The main change is that a full gain or loss is to be 60

61 recognised when a transaction involves a business. Under current accounting policies, gain or loss is recognised only to the extent of unrelated investors' ownership interests in the joint venture or associate. No mandatory date of implementation is set, but will be at the earliest. The amendments will be implemented prospectively to transactions occurring in annual periods beginning on or after the date of implementation. 9.3 Consolidated statement of comprehensive income The table below sets out selected data from the Group s consolidated interim statement of comprehensive income for the three month periods ended 31 March 2015 and 2014 and from the Group s consolidated statement of comprehensive income for the years ended 31 December 2014, 2013 and The interim statements are unaudited. Please note that in 2012 the line Share of profit (loss) of associated companies was reported above gross operating profit, whilst the comparable lines in 2013 and 2014 following the implementation of the new accounting policies in 2014 are reported as Share of profit (loss) of joint ventures and associated companies below gross operating profit. Three Months Ended 31 March (NOK million) Year Ended 31 December Restated Reported 2012 Restated (unaudited) Operating revenues 3,694 3,710 14,975 14,870 15,232 14,763 Raw materials and finished goods (161) (172) (696) (850) (874) (1,057) Personnel expenses (1,487) (1,427) (5,564) (5,314) (5,474) (5,226) Other operating expenses (1,670) (1,701) (6,774) (6,929) (7,228) (6,471) Share of profit (loss) of associated companies Gross operating profit (loss) ,941 1,777 1,672 2,043 Depreciation and amortisation (118) (114) (467) (476) (490) (479) Share of profit (loss) of joint ventures and associated companies 354 (202) (841) (123) - - Impairment loss (6) (9) (131) (150) (150) (548) Other income and expenses ,169 (287) Operating profit (loss) ,675 2, Financial income Financial expenses (41) (41) (174) (236) (237) (224) Profit (loss) before taxes ,490 2, Taxes (112) (125) (509) (453) (453) (426) Profit (loss) 734 (24) (127) 1,037 1, Profit (loss) attributable to non-controlling interests Profit (loss) attributable to owners of the parent (35) (180) 1,011 1, Earnings per share (NOK) 6.17 (0.32) (1.67) Diluted earnings per share (NOK) 6.16 (0.32) (1.67) Earnings per share - adjusted (NOK) 4.20 (0.69) (1.46) Diluted earnings per share - adjusted (NOK) 4.20 (0.69) (1.46)

62 Comprehensive income (NOK million) 1Q Q Restated 2013 Reported 2012 Restated (unaudited) Profit (loss) 734 (24) (127) 1,037 1, Other comprehensive income: Items that will not be reclassified to profit or loss: Remeasurements of defined benefit pension liabilities 49 - (804) (300) (300) 812 Income tax relating to remeasurements of defined benefit pension liabilities (13) (227) Share of other comprehensive income of joint ventures and associated companies (2) (6) (42) Items that will be reclassified subsequently to profit or loss: Change in cumulative unrealised gains financial assets available for sale (80) Exchange differences on translating foreign operations (292) (124) (328) Hedges of net investments in foreign operations 18 6 (24) (132) (132) 26 Income tax relating to hedges of net investments in foreign operations (5) (2) (7) Share of other comprehensive income of joint ventures and associated companies Other comprehensive income (245) (123) (211) Comprehensive income 489 (147) (338) 1,659 2, Comprehensive income attributable to noncontrolling interests Comprehensive income attributable to owners of the parent (154) (391) 1,624 2, Selected statement of financial position 41 The tables below set out selected data from the Group s consolidated interim statement of financial position as at 31 March 2015 and 2014 and from the Group s consolidated statement of financial position as at 31 December 2014, 2013 and The interim statements are unaudited. Annual figures for 2012, 2013 and 2014 As at 31 December (NOK million) Restated 2013 Reported 2012 Restated Consolidated balance sheet data: ASSETS Intangible assets 11,906 10,212 10,337 9,113 Investment property Property, plant and equipment 1,220 1,431 1,439 1,777 Investments in joint ventures and associated companies , Non-current financial assets Deferred tax assets Other non-current assets Non-current assets 14,276 12,684 13,215 11,752 Inventories Trade and other receivables 2,797 2,514 2,623 2,447 Current financial assets Cash and cash equivalents 745 1,202 1,240 1,031 Current assets 3,598 3,767 3,944 3,598 Total assets 17,874 16,451 17,159 15, The commentary included in section 9.4 is based on the restated figures for 2012, 2013 and reported

63 (continued) As at 31 December (NOK million) Restated 2013 Reported 2012 Restated EQUITY AND LIABILITIES Share capital Treasury shares (1) (1) (1) (1) Other paid-in equity 1,527 1,490 1,464 1,464 Other equity 4,926 5,728 6,279 4,293 Equity attributable to owners of the parent 6,560 7,325 7,850 5,864 Non-controlling interests Equity 6,790 7,586 8,111 6,109 Deferred tax liabilities Pension liabilities 1,911 1,114 1, Non-current interest-bearing borrowings 2,132 1,971 1,971 2,124 Other non-current liabilities Non-current liabilities 5,773 4,234 4,284 4,236 Current interest-bearing borrowings Income tax payable Other current liabilities 4,324 3,926 3,976 4,293 Current liabilities 5,311 4,631 4,764 5,005 Total equity and liabilities 17,874 16,451 17,159 15, Description of balance in 2014 and comparison to 2013 At year-end 2014, the Group had total balance sheet assets of NOK 17.9 billion (NOK 16.5 billion in 2013). Noncurrent assets constitute the largest component at NOK 14.3 billion (NOK 12.7 billion in 2013). The carrying amount of the Group s goodwill and other intangible assets was NOK 11.9 billion (NOK 10.2 billion in 2013). The carrying amount of the goodwill and intangible assets with indefinite life is tested annually for impairment. No significant impairment charges were made in 2014 or 2013 regarding goodwill or other intangible assets with indefinite life. Schibsted s holding of treasury shares, acquired under the authorisation from the Annual General Meeting to increase the number of treasury shares to maximum 10,800,361 during a period of 12 months, was reduced from 655,075 shares to 582,218 shares during The decrease was a result of shares sold and transferred to employees in connection with various incentive programs. From 2013 to 2014, non-current assets increased by NOK 1,592 million, predominantly driven by a NOK 1,694 million increase in intangible assets and a NOK 296 million increase in deferred tax assets. The largest drivers to the increase in intangibles were translation differences contributing NOK 601 million and the acquisition of Milanuncios contributing NOK 892 million. Investments in intangible assets are described in more detail in Section These increases were partly offset by a decrease of NOK 211 million in property, plant and equipment which includes a decrease of NOK 284 million from the sale of assets, mainly an office building in Stavanger. Property, plant and equipment is described in more detail in Section Investments in joint ventures and associated companies decreased by NOK 107 million. Current assets decreased by NOK 169m from 2013 to This was from a NOK 283 million increase in trade and other receivables (predominantly issues related to value added taxes in Sweden as described in the notes of the annual reports), offset by a decrease in cash and cash equivalents of NOK 457 million. The changes to the cash elements are described in more detail in Section 9.5. The decrease in total equity of the Company was NOK 796 million over the period, of which NOK 765 million was related to equity attributable to owners of the parent. This is largely due to negative comprehensive income and dividend payments. The changes in equity are described in more detail in Section 9.6. Non-current liabilities of the Company increased by NOK 1,539 million over the period, predominantly driven by a net increase of NOK 797 million in pension liabilities. Pension liabilities increased by NOK 936 million from changes in financial assumptions, but were reduced by other changes. Increase in other non-current liabilities of NOK 557 million, mainly from increase in non-controlling interests put options, also contributed substantially to 63

64 this increase. Current liabilities increased by NOK 680 million over the period. This was due to a NOK 398 million increase in other current liabilities which should be seen in connection with the increase in trade and other receivables, and an increase of NOK 350 million in current interest-bearing borrowings (predominantly because one of the bonds was reclassified to current from non-current due to its maturity being less than one year) Description of balance in 2013 and comparison to 2012 At year-end 2013, the Group had total balance sheet assets of NOK 16.5 billion (NOK 15.4 billion in 2012). Noncurrent assets constitute the largest component at NOK 12.7 billion (NOK 11.8 billion in 2012). The carrying amount of the Group s goodwill and other intangible assets was NOK 10.2 billion (NOK 9.1 billion in 2012). The carrying amount of the goodwill and intangible assets with indefinite life is tested annually for impairment. No significant impairment charges were made in In 2012 impairment losses of NOK 350 million related to goodwill was recognised. Schibsted s holding of treasury shares, acquired under the authorisation from the Annual General Meeting to increase the number of treasury shares to 10,800,361 during a period of 12 months, was reduced from 899,155 shares to 655,075 shares during The decrease is a result of shares sold and transferred to employees in connection with various incentive programs. From 2012 to 2013, non-current assets increased by NOK 932 million, predominantly driven by a NOK 1,099 million increase in intangible assets and a NOK 166 million increase in investments in joint ventures and associated companies. The largest driver to the increase in intangibles was translation differences. Investments in intangible assets are described in more detail in Section These increases were partly offset by a decrease of NOK 346m in property, plant and equipment which includes a decrease of NOK 380 million from the sale of assets and businesses, mainly an office building in Bergen and operations in the Baltic countries. Property, plant and equipment is described in more detail in Section Current assets increased by NOK 169 million from 2012 to This was from a NOK 67 million increase in trade and other receivables and an increase in cash and cash equivalents of NOK 171 million. The changes to the cash elements are described in more detail in Section 9.5. The increase in total equity of the Company was NOK 1,477 million over the period, of which NOK 1,461 million was related to equity attributable to owners of the parent. This is largely due to positive comprehensive income partly offset by dividend payments. The changes in equity are described in more detail in Section 9.6. Non-current liabilities of the Company decreased by NOK 2 million over the period, predominantly driven by an increase of NOK 205 million in pension liabilities and an increase of NOK 117 million in other non-current liabilities, offset by a decrease in deferred tax liabilities of NOK 171 million and a decrease in non-current interest bearing borrowings of 153 million. Pension liabilities increased by NOK 452 million from changes in financial and demographic assumptions. Current liabilities decreased by NOK 374 million over the period, mainly from decrease in non-controlling interests put options Description of balance in 2012 At year-end 2012, the Group had total balance sheet assets of NOK 15.4 billion (NOK 16.3 billion in 2011). Noncurrent assets constitute the largest component at NOK 11.8 billion (NOK 12.5 billion in 2011). The carrying amount of the Group s goodwill and other intangible assets was NOK 9.1 billion (NOK 9.6 billion in 2011). The carrying amount of the goodwill and intangible assets with indefinite lives was tested as at 31 December In 2012 goodwill was impaired by NOK 350 million (NOK 120 million in 2011) and intangible assets by NOK 7 million (NOK 65 million in 2011). Schibsted s holding of treasury shares, acquired under the authorisation from the Annual General Meeting to increase the number of treasury shares to 10,800,361 during a period of 12 months, was reduced from 1,061,958 shares to 899,155 shares during The decrease is a result of shares sold and transferred to employees in connection with various incentive programs. 64

65 9.4.4 Unaudited quarterly figures for 1Q 2014 and 2015 Condensed quarterly reporting for 1Q 2014 and 2015 As at 31 March (NOK million) Consolidated balance sheet data: (unaudited) ASSETS Intangible assets 11,493 10,240 Investment property and property, plant and equipment 1,239 1,564 Investments in joint ventures and associated companies 1, Other non-current assets Non-current assets 14,498 12,573 Inventories Trade and other receivables 2,856 2,658 Cash and cash equivalents Current assets 3,196 3,017 Total assets 17,694 15,590 EQUITY AND LIABILITIES Equity attributable to owners of the parent 7,012 7,179 Non-controlling interests Equity 7,253 7,444 Non-current interest-bearing borrowings 1,908 1,941 Other non-current liabilities 2,944 2,109 Non-current liabilities 4,852 4,050 Current interest-bearing borrowings Other current liabilities 4,745 3,959 Current liabilities 5,589 4,096 Total equity and liabilities 17,694 15,590 From 1Q 2014 to 1Q 2015 changes in non-current assets amounted to NOK 1,925 million, were predominantly driven by a NOK 1,253 million increase in intangible assets and a NOK 694m increase in investments in joint ventures and associated companies. The largest driver to the increase in intangibles was translation differences and business combinations, including the acquisition of Milanuncios contributing NOK 892 million. The predominant driver of the increase in investments in joint ventures and associated companies was the establishing of partnerships with Naspers for the development of online classified platforms in Brazil, Indonesia, Thailand and Bangladesh. Current assets increased NOK 179 million from 1Q 2014 to 1Q This was from a NOK 198 million increase in trade and other receivables, slightly offset by a decrease in the cash and cash equivalents. The changes to the cash elements are described in more detail in Section 9.5. The decrease in total equity of the Company was NOK 191 million over the period, of which NOK 167 million was related to equity attributable to owners of the parent. This is largely due to positive comprehensive income offset by dividend payments. Non-current liabilities of the Company increased by NOK 802m over the period, predominantly driven by an increase of NOK 835 million of other non-current liabilities. This increase was mainly the result of increase in pension liabilities from changes in financial assumptions. Current liabilities increased by NOK 1,493 million over the period. This was due to an increase of NOK 707 million in current interest-bearing borrowings and a NOK 786 million increase in other current liabilities. The increase in other current liabilities was largely related to increases in non-controlling interests put options and the increase in interest-bearing borrowings was a result of financing of operations and investments made over the period. 65

66 9.5 Selected statement of cash flows 42 The table below sets out selected data from the Group s consolidated interim statement of cash flows for the three month periods ended 31 March 2015 and 2014 and from the Group s consolidated statement of cash flows for the years ended 31 December 2014, 2013 and The interim statements are unaudited. Annual figures for 2012, 2013 and 2014 (NOK million) Restated Year Ended 31 December Reported Restated CASH FLOW FROM OPERATING ACTIVITIES Profit (loss) before taxes 382 1,490 2, Gain from re-measurement of previously held equity interest in business combination achieved in stages and re-measurement of contingent (91) (2) (2) (57) consideration Share of profit of joint ventures and associated companies (13) (34) Dividends received from joint ventures and associated companies Taxes paid (635) (636) (636) (628) Sales losses / (gains) non-current assets (121) (943) (1,468) (65) Amortisation and impairment losses intangible assets Depreciation and impairment losses property, plant and equipment Impairment loss associated companies Write-down of inventories Impairment losses financial instruments Change in working capital 220 (4) Net cash flow from operating activities 1, ,275 CASH FLOW FROM INVESTING ACTIVITIES Purchase of intangible assets and property, plant and equipment (630) (520) (531) (366) Acquisition of subsidiaries, net of cash acquired (532) (258) (257) (94) Proceeds from sale of intangible assets and property, plant and equipment Proceeds from sale of subsidiaries, net of cash sold ,014 9 Investments in / sale of other shares (786) (66) (66) 2 Other investments / sales (16) 64 (27) 23 Net cash flow from investing activities (1,580) (400) Net cash flow before financing activities (350) 1,187 1, CASH FLOW FROM FINANCING ACTIVITIES New interest-bearing loans and borrowings ,220 Repayment of interest-bearing loans and borrowings (359) (1,164) (1,164) (1,403) Payment due to increase in ownership interests in subsidiaries (150) (478) (478) (39) Capital increase Purchase / sale of treasury shares Dividends paid to owners of the parent (376) (375) (375) (375) Dividends paid to non-controlling interests (133) (58) (58) (54) Net cash flow from financing activities (116) (1,116) (1,059) (591) Effects of exchange rate changes on cash and cash equivalents (31) Net increase / (decrease) in cash and cash equivalents (457) Cash and cash equivalents as at 1.1 1, , Cash and cash equivalents as at ,202 1,240 1,031 Net cash flow from operating activities amounted to NOK 1,230 million for the year 2014, compared to NOK 716 million in The increase in net cash flow was mainly related to improved change in working capital and increase in gross operating profit. 42 The commentary included in section 9.5 is based on the as reported figures and as a consequence the figures are not comparable to the restated figures. 66

67 Net cash flow from investing activities was NOK -1,580 million for the year 2014, compared to NOK 471 million in The Group invested NOK 630 million (NOK 520 million) in fixed and intangible assets. The increase was mainly related to renovation of office premises in connection with co-location of VG and Aftenposten in Oslo. Proceeds from sales of fixed and intangible assets, mainly related sales of office buildings, amount to NOK 375 million (NOK 343 million). Net payments related to business combinations were NOK 532 million (NOK 258 million). Payments related to investments in other shares came to NOK 835 million (NOK 116 million). The majority of the investments in other shares were related to capital contributions to lossmaking joint ventures and associates. Net cash flow from financing activities was NOK -116 million for the year 2014, compared to NOK -1,116 million in Dividends paid to shareholders of the Company and non-controlling interests amount to NOK 509 million (NOK 433 million). Net change of interest bearing debt totalled NOK 512 million (NOK -230 million) and net cash payments from changes in ownership interests amount to NOK -150 million (NOK -478 million). Net cash flows from operating activities in 2013 were NOK 635 million compared to NOK 1,275 million in Reduced profit before taxes, adjusted for other revenues and expenses, and a less positive development in working capital are the main reasons for the reduction from The net cash flows from investing activities amounted to NOK 477 million (NOK -400 million in 2012). The Group invested NOK 531 million (NOK 366 million in 2012) in fixed and intangible assets. Net payments related to business combinations came to NOK 257 million (NOK 94 million in 2012). Net proceeds from sales of subsidiaries, joint ventures and tangible and intangible fixed assets came to NOK 1,358 million (NOK 33 million in 2012). The net cash flows from financing activities were NOK -1,059 million in 2013 (NOK -591 million in 2012). Dividends paid to shareholders of the Company and non-controlling interests amount to NOK 433 million (NOK 429 million in 2012). Net repayment of interest bearing debt totalled NOK 173 million (NOK 183 million in 2012) and net cash payments from changes in ownership interests of subsidiaries amount to NOK 478 million (NOK 39 million in 2012). Net cash flows from operating activities in 2012 were NOK 1,275 million compared to NOK 1,616 million in Reduced EBITDA and an increase in payment of income tax were the main reasons for the reduction from the previous period. The net cash flows from investing activities amounted to NOK -400 million (NOK -330 million in 2011). The Group invested NOK 366 million (NOK 354 million in 2011) in fixed and intangible assets. The net cash flows from financing activities were NOK -591 million in 2012 (NOK -1,158 million in 2011). Dividends paid to shareholders of the Company and non-controlling interests amount to NOK 429 million (NOK 385 million in 2011). Net repayment of interest bearing debt totalled NOK 183 million (NOK 39 million in 2011) and net cash payments from changes in ownership interests amount to NOK 39 million (NOK 596 million in 2011). Condensed quarterly reporting for 1Q 2014 and 2015 Three Months Ended 31 March (NOK million) (unaudited) CASH FLOW FROM OPERATING ACTIVITIES Profit (loss) before taxes Gain from re-measurement of previously held equity interest in business combination achieved in stages and re-measurement of contingent consideration - (37) Depreciation, amortisation and impairment losses Share of profit of joint ventures and associated companies, net of dividends received (354) 202 Taxes paid (213) (301) Sales losses / (gains) non-current assets (291) (10) Change in working capital (130) (139) Net cash flow from operating activities (18) (61) CASH FLOW FROM INVESTING ACTIVITIES Net cash flow from investing activities (289) (446) Net cash flow before financing activities (307) (507) 67

68 CASH FLOW FROM FINANCING ACTIVITIES Net cash flow from financing activities (117) (365) Effects of exchange rate changes on cash and cash equivalents (36) (23) Net increase / (decrease) in cash and cash equivalents (460) (895) Cash and cash equivalents as at ,202 Cash and cash equivalents as at Net cash flow from operating activities was NOK -18 million for the first quarter of 2015, compared to NOK -61 million for the first quarter of The increase in net cash flow was mainly related to reduction in taxes paid and decrease in gross operating profit. Net cash flow from investing activities was NOK -289 million for the first quarter of 2015, compared to NOK million for the first quarter of The Group invested NOK 129 million (NOK 171 million in 1Q 2014) in fixed and intangible assets. Net payments related to business combinations were NOK 113 million (NOK 91 million in 1Q 2014). Proceeds from the sale of subsidiaries and businesses were NOK 371 million (NOK 9 million in 1Q 2014). Payments related to investments in other shares came to NOK 445 million (NOK 185 million in 1Q 2014). The majority of the investments in other shares were related to capital contributions to lossmaking joint ventures and associates. Net cash flow from financing activities was NOK -117 million for the first quarter of 2015, compared to NOK million in Dividends paid to non-controlling interests were NOK 45 million (NOK 8 million in 1Q 2014). Net change in interest bearing debt totalled NOK -70 million (NOK -213 million in 1Q 2014) and net cash payments from changes in ownership interests amount to NOK -10 million (NOK -142 million in 1Q 2014). 9.6 Selected statement of changes in equity The table below sets out selected data from the consolidated interim statement of changes in equity for three month periods ended 31 March 2015 and 2014 and from the Group s consolidated statement of changes in equity for the years ended 31 December 2014, 2013 and The interim statements are unaudited. (NOK million) Share capital Treasury shares Other paidin equity Retained earnings Foreign currency transl. reserve Net unrealised gains reserve Total Noncontrolling interests Total As at (1) 1,440 5,239 (509) 225 6, ,659 Changes in accounting policies (178) - - (178) (1) (179) As at (restated) 108 (1) 1,440 5,061 (509) 225 6, ,480 Profit (loss) Remeasurements of defined benefit pension liabilities Income tax relating to remeasurements of defined (227) - - (227) - (227) benefit pension liabilities Share of other comprehensive income of associated companies Change in fair value of investments available for sale (80) (80) - (80) Translation differences (323) - (323) (5) (328) Hedging of net investment in foreign operations Tax effect hedging of net investment in foreign operations (7) - (7) - (7) Comprehensive income (304) (80) Capital increase Share-based payment Dividends paid to owners of the parent (375) - - (375) - (375) 68

69 Dividends to non-controlling interests (54) (54) Change in treasury shares Business combinations Loss of control of subsidiaries (3) (3) Changes in ownership of subsidiaries that do not result in (331) - - (331) 43 (288) a loss of control Other changes in the composition of the Group (145) (145) - (145) Total transactions with the owners (690) - (145) (811) 41 (770) As at (1) 1,464 5,106 (813) - 5, ,109 Profit (loss) , , ,037 Remeasurements of defined benefit pension liabilities (300) - - (300) - (300) Income tax relating to remeasurements of defined benefit pension liabilities Translation differences Hedging of net investment in foreign operations (132) - (132) - (132) Tax effect hedging of net investment in foreign operations Comprehensive income , ,659 Capital increase Share-based payment Dividends paid to owners of the parent (375) - - (375) - (375) Dividends to non-controlling interests (58) (50) Change in treasury shares Business combinations Loss of control of subsidiaries (1) (1) Changes in ownership of subsidiaries that do not result in a loss of control Total transactions with the owners (189) - - (163) (19) (182) As at restated 108 (1) 1,490 5, , ,586 Profit (loss) (180) - - (180) 53 (127) Remeasurements of defined benefit pension liabilities (804) - - (804) - (804) Income tax relating to remeasurements of defined benefit pension liabilities Share of other comprehensive income of joint ventures and (42) - - (42) - (42) associated companies Translation differences Hedging of net investment in foreign operations (24) - (24) - (24) Tax effect hedging of net investment in foreign operations Comprehensive income (809) (391) 53 (338) Capital increase Share-based payment Dividends paid to owners of the parent (376) - - (376) - (376) Dividends to non-controlling interests (133) (107) Change in treasury shares Business combinations

70 Changes in ownership of subsidiaries that do not result in a loss of control Total transactions with the owners (69) - - (69) 21 (48) (411) - - (374) (84) (458) As at (1) 1,527 4, , ,790 As reported changes in equity for 2013 for comparison: (NOK million) Share capital Treasury shares Other paidin equity Retained earnings Foreign currency transl. reserve Net unrealised gains reserve Total Noncontrolling interests Total As at (1) 1,464 5,106 (813) - 5, ,109 Profit (loss) , , ,562 Remeasurements of defined benefit pension liabilities (300) - - (300) - (300) Income tax relating to remeasurements of defined benefit pension liabilities Translation differences Hedging of net investment in foreign operations (132) - (132) - (132) Tax effect hedging of net investment in foreign operations Comprehensive income , , ,184 Capital increase Share-based payment Dividends paid to owners of the parent (375) - - (375) - (375) Dividends to non-controlling interests (58) (50) Change in treasury shares Business combinations Loss of control of subsidiaries (1) (1) Changes in ownership of subsidiaries that do not result in a loss of control Total transactions with the owners (189) - - (163) (19) (182) As at Reported 108 (1) 1,490 6, , ,111 1Q 2014 (NOK million) (unaudited) Equity attributable to owners of the parents Non-controlling interests Equity Equity at start of period 7, ,586 Comprehensive income (154) 7 (147) Transactions with the owners 8 (3) 5 Of which: Share-based payment Dividends to non-controlling interests (8) (8) Changes in ownership of subsidiaries that do not result in a loss of control (8) 5 (3) Equity at end of period 7, ,444 70

71 1Q 2015 (NOK million) (unaudited) Equity attributable to owners of the parents Non-controlling interests Equity at start of period 6, ,790 Comprehensive income Transactions with the owners 17 (45) (26) Of which: Share-based payment Dividends to non-controlling interests - (45) (45) Change in treasure shares 5-5 Changes in ownership of subsidiaries that do not result in a loss of control (6) 2 (4) Share of transaction with the owners of joint ventures and associated companies 7-7 Equity at end of period 7, ,253 Equity 9.7 Segment information Schibsted reports four operating segments; Online classifieds, Schibsted Norway Media House, Schibsted Sweden Media House and Other (previously Media Houses International and Other). The interim data for 1Q 2014 and 1Q 2015 are unaudited. The Media Houses International and Other segments were merged into the current Other segment from the 1Q 2015 report. Historical figures are adjusted to reflect this. The annual reports found in Appendix B, C and D have the two former segments reported separately. Information about operating revenues and profit (loss) by operating segments is as follows: Schibsted Schibsted 2014 (NOK million) Online Norway Sweden classifieds Media Media Other Headquarters Eliminations Total House House Subscription revenues - 1, ,864 Casual sales revenues - 1, ,221 Advertising revenues 4,434 2,568 1, ,790 Other revenues ,100 Operating revenues from external customers Operating revenues from other segments 4,637 6,155 3, , (611) - Operating revenues 4,741 6,217 3, (611) 14,975 Operating expenses (3,339) (5,680) (3,377) (593) (656) 611 (13,034) Gross operating profit (loss) 1, (100) (283) - 1,941 Depreciation and amortisation (135) (192) (73) (10) (57) - (467) Share of profit (loss) of joint ventures and associated companies (871) 2 (4) (2) 34 - (841) Impairment loss (22) (105) (4) (131) Other income and expenses (19) (68) 8 Operating profit (loss) (111) (325) (68)

72 2013 Restated (NOK million) Online classifieds Schibsted Norway Media House Schibsted Sweden Media House Other Headquarters Eliminations Total Subscription revenues - 1, ,770 Casual sales revenues 9 1,256 1, ,328 Advertising revenues 3,945 2,810 1, ,721 Other revenues ,051 Operating revenues from external customers Operating revenues from other segments 4,082 6,288 3, , (561) - Operating revenues 4,184 6,338 3, (561) 14,870 Operating expenses (3,192) (5,615) (3,366) (881) (600) 561 (13,093) Gross operating profit (loss) (47) (245) - 1,777 Depreciation and amortisation (139) (209) (50) (37) (41) - (476) Share of profit (loss) of joint ventures and associated companies (141) 1 10 (9) 16 - (123) Impairment loss (2) (1) (147) (150) Other income and expenses (90) (233) (3) Operating profit (loss) 1, (326) (273) - 1, Restated (NOK million) Online classifieds Schibsted Norway media house Schibsted Sweden media house Other Headquarters Eliminations Subscription revenues - 1, ,744 Casual sales revenues 12 1,350 1, ,478 Advertising revenues 3,478 2,974 1, ,654 Other revenues ,887 Operating revenues from external customers Operating revenues from other segments Total 3,535 6,475 3,495 1, , (510) - Operating revenues 3,647 6,485 3,538 1, (510) 14,763 Operating expenses (2,547) (5,716) (3,139) (1,298) (564) 510 (12,754) Share of profit (loss) of associated companies Gross operating profit (loss) 1, (42) (216) - 2,043 Depreciation and amortisation (144) (207) (45) (47) (36) - (479) Gross operating profit (loss) after depreciation and amortisation (89) (252) - 1,564 72

73 Gross operating profit (loss) (26) (74) Operating profit (loss) (108) s 873 1Q 2014 (NOK million) (unaudited) Online classifieds Schibsted Norway media house Schibsted Sweden media house Other Schibsted has historically only provided segmental quarterly information on operating revenue, gross operating profit (loss) and operating profit (loss): Schibsted Schibsted 1Q 2015 Online Norway Sweden Headquarters Other (NOK million) (unaudited) classifieds media media Eliminations Total house house Operating revenue 1,299 1, (150) 3,694 Headquarters Eliminations Operating revenue 1,151 1, (151) 3,710 Gross operating profit (loss) (23) (67) Operating profit (loss) (36) (79) Information about operating revenues by products and services are as follows: Total Operating revenues (NOK million) Restated 2012 Restated Classified 4,695 4,188 3,661 Printed newspapers 6,985 7,992 8,415 Online newspapers 3,439 2,858 2,255 Live pictures Others Eliminations (922) (784) (566) Total 14,975 14,870 14,763 In presenting geographical information, attribution of operating revenues is based on the location of Group companies. There are no significant differences between the attribution of operating revenues based on the location of Group companies and an attribution based on the customers' location. Non-current assets are attributed based on the geographical location of the assets. Information about operating revenues and non-current assets by geographical areas: Operating revenues (NOK million) Restated 2012 Restated Norway 7,801 7,699 7,842 Sweden 4,636 4,725 4,206 France 1, Spain Baltics Other Europe Other countries Total 14,975 14,870 14,763 Non-current assets Restated 2012 Restated Norway 3,077 3,292 3,608 Sweden 2,005 1,948 1,412 France 3,874 3,593 3,100 Spain 3,829 2,695 2,372 Baltics Other Europe Other countries Total 13,746 12,370 11,459 73

74 Non-current assets comprise assets excluding deferred tax assets and financial instruments, expected to be recovered more than twelve months after the reporting period. 9.8 Auditor The Company s auditor is Ernst & Young AS, with registration number and business address at Dronning Eufemias gate 6, N-0191 Oslo, Norway. Ernst & Young AS is a member of Den Norske Revisorforeningen (The Norwegian Institute of Public Accountants). Ernst & Young AS has been the Group s auditor throughout the period covered by financial information included in the Prospectus. Ernst & Young AS audit reports on the Audited Financial Statements are included together with the Audited Financial Statements in Appendix B, C & D. Ernst & Young AS has not audited, reviewed or produced any report on any other information provided in this Prospectus. 9.9 Events after the reporting period Conditional offer for Hemnet Schibsted placed a conditional offer to acquire the Swedish online real estate vertical Hemnet on 8 May The offer is for the entire company, which is owned by Swedbank Fastighetsbyrå (34%), Mäklarsamfundet (25%), Fastighetsmäklarförbundet FMF (25%) and Svensk Fastighetsförmedling (16%). The offer is part of Schibsted's long term strategy to modernise the market for online real estate advertisements in close cooperation with Swedish realtors. Swedbank Fastighetsbyrå and Svensk Fastighetsförmedling have accepted the offer, which gives Schibsted 50% of shares in Hemnet. The offer has been communicated to the other owners. The offer is conditional on Schibsted acquiring 100% of shares in the company and approval of the acquisition by the Swedish Competition Authority. The offer values Hemnet at SEK 1,500 million (EV) on a 100% basis. If completed, Schibsted will finance the acquisition through existing debt facilities. There are currently no plans to issue new equity Letter of intent for a new media group in Sweden Schibsted Media House Sweden and MittMedia announced on 12 May 2015 that the parties have agreed to sign a letter of intent for future cooperation in Sweden by forming a new media group for subscription newspapers. The new media group will consist of Svenska Dagbladet and Mittmedia's 18 local subscription newspapers in Northern Sweden, as well as a majority share of MittMedia's subsidiary Promedia, which owns ten local subscription newspapers in Mid Sweden. Schibsted is expected to have a 30% ownership stake in the new media group. In addition to Svenska Dagbladet, Schibsted is expected to make a cash contribution to the new media group. The size of this contribution has not been determined at this stage. Final approval of the terms of the letter of intent, including Schibsted s contribution, is due after the date of this Prospectus. If completed, Schibsted will finance its share of the new media group through existing debt facilities. There are currently no plans to issue new equity Minutes France On 27 May 2015 Schibsted announced it had received an offer for its ownership stake in 20 Minutes France. Based on indicative terms Schibsted will record a small accounting gain. A final agreement is expected to be entered into after the date of this Prospectus. 74

75 10. OPERATING AND FINANCIAL REVIEW This operating and financial review should be read together with Section 4 General Information, Section 7 Business of the Group, Section 9 Selected Financial Information and the Audited Financial Statements and related notes included in Appendix B, C & D of this Prospectus. The Audited Financial Statements as of, and for the years ended, 31 December 2014, 2013 and 2012 have been prepared in accordance with IFRS as adopted by the EU, as well as Norwegian disclosure requirements pursuant to the Norwegian Accounting Act as of 31 December The Audited Financial Statements have been audited by Ernst & Young AS, as set forth in their auditor s reports included herein. This operating and financial review contains forward-looking statements. These forward-looking statements are not historical facts, but are rather based on the Group s current expectations, estimates, assumptions and projections about the Group s industry, business, strategy and future financial results. Actual results could differ materially from the results contemplated by these forward-looking statements because of a number of factors, including those discussed in Section 2 Risk Factors and Section 4.2 Forward-looking statements of this Prospectus, as well as other Sections of this Prospectus Overview and presentation Online classifieds is currently the best performer in Schibsted s portfolio, and focus going forward is on further improving the positions in Europe. Publishing is meeting tough market conditions. The migration from print to digital platforms is old news. So is the rapid decline of advertising revenues. Expenditure is shifting away from traditional mass marketing to targeted, personalised messages. This is part of a larger trend whereby web users move from being anonymous to being identified and logged in Principal factors affecting the group's results of operations and financial performance Schibsted's advertising revenues are to a certain extent affected by cyclical developments in real economy figures, notably GDP growth, unemployment rates, and consumer confidence. The Group's advertising revenues from the recruitment market and, to a lesser extent, the real estate market and display advertising, are the revenue streams most exposed to cyclicality. In 2014 the Group's advertising revenues amounted to 59% of total revenues. In total, 5% of Schibsted's revenues come from recruitment advertising, of which 81% is digital. Most of these revenues come from the print newspapers in Schibsted Norway, InfoJobs Spain, and Finn.no. Most of the future growth is expected to come from consumer-oriented classifieds services such as Blocket and Leboncoin. These revenues are considered to have a relatively low degree of cyclicality Recent developments and trends The Group's revenues from the print newspapers are impacted by structural changes in media consumption, resulting in accelerated migration from print to digital consumption. Moreover, the Group is facing structural changes in the digital advertising market as advertising revenues follow the user consumption patterns from print to digital platforms. The Group's ambition is to proactively address and reduce the impact of these risks, and the key focus areas in the Group's strategy contribute to achieving this. Examples of action taken by the Group are the implementation of user payment systems in all media houses and proactive efforts towards building a position in web-tv. The Group is increasing its efforts in joint development of platforms for media houses and online classifieds as well as advertising technology and analytics. There has been no significant change in the financial or trading position of the Group which has occurred since the end of the three months period ended 31 March Results of operations for the group Results of operations for the three-month period ended 31 March 2015 compared to the three-month period ended 31 March 2014 Online classifieds revenues grew by 13% from NOK 1,151m to NOK 1,299m from 1Q 2014 to 1Q Schibsted Norway Media House revenues declined by 5% from NOK 1,542m to NOK 1,465m and Schibsted Sweden Media House revenues declined by 7% from NOK 952m to NOK 886m in 1Q 2015 compared to 1Q

76 The Group's gross operating profit in 1Q 2015 (EBITDA) was NOK 376 million (NOK 410 million in 1Q 2014). EBITDA ex. investments in New ventures in the Online classifieds segment was in 1Q 2015 NOK 502 million (NOK 551 million in 1Q 2014). The EBITDA margin was 10% in 1Q and 11% in the corresponding quarter last year. EBITDA margin ex. New ventures was 14% in 1Q 2015 (15% in 1Q 2014). The growth in the Group's online activities made a positive contribution, while slightly declining circulation revenue and declining print advertising revenues contributed negatively. In 1Q 2015 Other income and expenses were NOK 267 million (NOK 45 million in 1Q 2014). In January 2015 Project Panther Bidco Ltd launched an offer for Aspiro (which main asset was the streaming site Wimp). The independent bid committee within the Board of Aspiro unanimously recommended to the shareholders of Aspiro to accept the offer. The sale of Aspiro to Project Panther Bidco Ltd took place in March and resulted in a sales gain of NOK 238 million. In 1Q 2014 the NOK 45 million was mainly a gain from remeasurement of the previously held investment in Hasznaltauto related to the increase in ownership interest from 50 to 100%. Share of profit from joint ventures and associated companies was NOK 354 million in 1Q 2015 (NOK -202 million in 1Q 2014). The figure for 1Q 2015 includes a gain on sale of NOK 450 million related to Schibsted Media Group s agreement with Naspers, Telenor and Singapore Press Holdings Results of operations for the year ended 31 December 2014 compared to the year ended 31 December 2013 Operating revenues reported for the Group increased by 1% from 2013 to 2014, to NOK 14,975 million from NOK 14,870 million. The increase in revenues stems from significant growth within the Group s online classifieds as well as from digital media within the media houses. The online classifieds segment had a growth in operating revenues from 2013 to 2014 of 13%, from NOK 4,184 million to NOK 4,741 million. The most important growth driver was Leboncoin.fr. The top line is hampered by a weak Spanish economy and a reduced monetisation to build traffic. The growth in operating revenues for SCM, the operations outside Norway, was 19%. The Norwegian market-leading online classifieds site Finn.no reported a reduced growth rate due to the decision to turn the private miscellaneous market place into a freemium model and to the market-driven slowdown in recruitment ads. Advertising revenues (including online classifieds) increased by 1% from 2013 to The structural migration from print to online caused advertising revenues from print to decrease by 20%. Online newspaper advertising had a growth of 8%, while advertising revenues from online classifieds increased by 10%. Changes in readership habits and acceleration in the speed of transition to digital media have, as in previous years, led to a considerable decline in circulation volumes of the single-copy newspapers VG and Aftonbladet. This decline was to a large extent compensated by price increases, and total single-copy circulation revenues fell by 5%. The subscription newspapers were able to slow down the subscription volume decline through the launch of attractive online and print/online bundled subscriptions. Underlying circulation revenues from newspaper subscriptions increased by 5% Results of operations for the year ended 31 December 2013 compared to the year ended 31 December 2012 The discussion in this section is based on reported numbers at year end 2012 and 2013, not the restated numbers as presented in the 2014 annual report. Operating revenues reported for the Group increased by 3% from 2012 to 2013, from NOK 14,763 million to NOK 15,232 million. The underlying growth (adjusted for acquisitions and disposals of enterprises and currency fluctuations) was 2%. The increase in revenues stems from good growth within the Group s online classifieds as well as from digital media within the media houses. The online classifieds segment had an underlying growth in operating revenues from 2012 to 2013 of 14%. This growth was mainly driven by Leboncoin, Finn and Blocket. The topline is hampered by a weak Spanish economy. The underlying growth in operating revenues, excluding the Spanish operations, was 18%. 76

77 Underlying growth in advertising revenues from 2012 to 2013 was 2% (including online classifieds). The structural migration from print to online caused advertising revenues from print to decrease by an underlying 14%. Online newspaper advertising had underlying growth of 14%, while advertising revenues from online classifieds increased by 12%. In September 2013, Schibsted announced the sale of Eesti Media to a group formed by the management of Eesti Meedia. The agreement valued Eesti Meedia to approximately EUR 20m. Scihbsted recognised a loss of approximately EUR 26m in 3Q 2013 as a result. The closing of the establishment of SnT (and the implicit sale of subsidiaries in Brazil and Chile) in 3Q 2013 included a net cash inflow of NOK 687m for Schibsted, the majority of the NOK 908m 2013 (restated) cash flow from sale of subsidiaries Liquidity and capital resources As of 31 December 2014, Schibsted's net interest-bearing debt was NOK 2.1 billion, compared to NOK 1.1 billion as of 31 December One of the loans from Eksportfinans (EUR 25 million) was repaid at maturity in January In April 2014, Schibsted successfully completed issuance of NOK 600 million in the Norwegian bond market. The loan was received 6 May 2014 and maturity is in May The floating rate note is priced at 3 months NIBOR basis points. In June 2014, one of the NIB loans was repaid at maturity. The EUR 325 million revolving credit facility, with maturity in August 2015, was refinanced in July 2014 and replaced by a new long-term loan facility of EUR 300 million. The new facility has a term of 5 years with two extension options of one year each. In addition to this facility, Schibsted has a further EUR 125 million credit facility maturing in March At year-end 2014, none of the facilities were drawn. The Group's liquidity reserve consists of long-term unutilised revolving credit facilities and cash reserves, and amounted to NOK 4.6 billion at year-end. This gives a liquidity reserve of 31% of annual revenues. The Group holds liquidity reserves predominantly in NOK, SEK and EUR accounts, but has currency accounts in most of the currencies relevant to the Group s international operations. As of 31 March 2015, Schibsted's net interest-bearing debt was NOK 2.5 billion There have been no changes to the long term loan portfolio during the first quarter of The total interestbearing debt is NOK 2.8 billion, unchanged from year end As of 31 March 2015, none of the facilities were drawn. Schibsted's revolving credit facilities and bank loans are subject to financial covenants linked to the ratio of net interest-bearing debt to gross operating profit (EBITDA). This ratio was 1.20 at the end of first quarter 2015 and is well within the financial covenant. This ratio is expected to increase if the conditional offer for Hemnet, as described in Section 9.9.1, is successful, but still within the financial covenants. The Group's liquidity reserve consists of long-term unutilised revolving credit facilities and cash reserves, and amounted to NOK 4.0 billion at the end of first quarter This gives a liquidity reserve of around 27 % of annual revenues. For information about the financial strategy, interest rate strategy, liquidity policy and financial covenants please see Section Development of equity ratio and net interest bearing debt to EBITDA for the periods covered by the financial statements: All ratios are unaudited 1Q Q 2014 Reported 2014 Restated 2013 Restated 2012 Equity ratio 41 % 48 % 38 % 46 % 40 % Net interest bearing debt / EBITDA.1.20* 0.81 * 1.1x 0.6x 0.7x *EBITDA on a rolling twelve month basis, adjusted for business or assets sold, discontinued or purchased during the period, used to calculating net interest bearing debt / EBITDA for 1Q 2015 and

78 10.6 Investments Except for the conditional offer for Hemnet described in Section and the letter of intent for a new media group in Sweden described in Section 9.9.2, Schibsted does not have any material investment commitments, and does not expect to conduct any material investments in the near term. The letter of intent, described in Section 9.9.2, is non-binding and does therefore not constitute a firm investment commitment. Certain contractual obligations are described in Section 10.9, but these are not regarded as investments with respect to this section. Expenses related to the development of online classified sites and technology and product development, are described in Section Investments in property, plant and equipment Below is a specification of investments in property, plant and equipment for as presented in the notes of the annual reports: Buildings Investment Construction Plant and Equipment, furniture NOK million Total and land properties in progress machinery and similar assets Restated Net carrying amount ,992 Additions Additions on purchase of businesses Disposals (13) (4) (17) Reclassification (28) 5 (27) - 33 (17) Depreciation (32) - - (112) (139) (283) Impairment loss (12) (12) Translation differences (5) - - (6) (7) (18) Net carrying amount Restated , Reported Net carrying amount Reported ,845 Additions Additions on purchase of businesses Disposals (204) (9) (213) Disposals on sale of businesses (71) - - (90) (8) (169) Reclassification (23) (23) Depreciation (31) - - (107) (133) (271) Impairment loss (3) (3) Translation differences Net carrying amount Reported , Restated Net carrying amount ,839 Additions Additions on purchase of businesses Disposals (204) - - (9) (213) Disposals on sale of businesses (71) - (90) (6) (167) Reclassification (23) (23) Depreciation (31) - (107) (130) (268) Impairment loss (3) (3) Translation differences Net carrying amount ,499 78

79 Reported Net carrying amount ,499 Additions Additions on purchase of businesses Disposals (274) - - (10) (284) Disposals on sale of businesses (15) (2) Reclassification - - (4) 6 2 Depreciation (21) - (88) (153) (262) Impairment loss - (1) (104) - (105) Translation differences Net carrying amount ,287 The table above presents investments in property, plant and equipment on an aggregate basis. No single investment in property, plant and equipment is considered material in its own right. The majority of the additions fall under the category equipment, furniture and similar assets which includes a large degree of ordinary maintenance. In 2014, a substantial part of the additions was directly related to the refurbishment of Akersgaten 55 to facilitate the new offices of VG and Aftenposten Investments in intangible assets Below is a specification of investments in intangible assets for as presented in the notes of the annual reports: NOK million Goodwill Other intangible assets Total Restated Net carrying amount ,878 2,733 9,611 Additions Additions on purchase of businesses Disposals on sale of businesses (12) (1) (13) Reclassification Amortisation - (196) (196) Impairment loss (350) (7) (357) Translation differences (280) (109) (389) Net carrying amount Restated 6,452 2,661 9, Reported Net carrying amount Reported 6,452 2,661 9,113 Additions Additions on purchase of businesses Disposals on sale of businesses (183) (14) (197) Reclassification Amortisation - (219) (219) Impairment loss - (17) (17) Translation differences Net carrying amount Reported 7,320 3,017 10, Restated Net carrying amount ,384 2,643 9,027 Additions Additions on purchase of businesses

80 Disposals on sale of businesses (181) (18) (199) Reclassification Amortisation - (208) (208) Impairment loss - (17) (17) Translation differences Net carrying amount ,235 2,977 10, Reported Net carrying amount ,235 2,977 10,212 Additions Additions on purchase of businesses ,128 Disposals - (1) (1) Disposals on sale of businesses - (1) (1) Reclassification - (2) (2) Amortisation - (205) (205) Impairment loss (4) (22) (26) Translation differences Net carrying amount ,234 3,672 11,906 The table above presents investments in intangible assets on an aggregate basis. No single investment in intangible assets is considered material in its own right The majority of the additions fall under the category other intangible assets which predominantly covers cost activation of various software solutions across multiple companies in the Group and business combinations as described in Sections Business combinations in 1Q 2015 In the first quarter of 2015, Schibsted invested NOK 88 million related to acquisition of subsidiaries and businesses (business combinations). In addition, Schibsted paid NOK 25 million of contingent consideration related to prior year's business combinations (Compricer AB). In February 2015, Schibsted acquired Naspers' OLX operation in Hungary. Below is a specification of investments in business combinations during the first quarter of 2015: NOK million Consideration Goodwill Naspers OLX operations in Hungary 88 Not yet allocated Compricer AB payment of contingent consideration 25 N/A Business combinations in 2014 In 2014, Schibsted invested NOK 532 million related to acquisition of new subsidiaries (business combinations). The amount comprised cash consideration transferred reduced by cash and cash equivalents of the acquiree. In March 2014, Schibsted increased its ownership interest in Használtautó Informatikai Kft from 50% to 100% through acquisition of shares. The company operates a Hungarian online market place for cars (hasznaltauto.hu). The previously held equity interest was accounted for as a joint venture and the business combination is accounted for as a step acquisition. In November 2014, Schibsted acquired Milanuncios.com, a Spanish generalist online classified business through purchase of assets. The business was acquired in exchange for a cash component of EUR 50 million and a 10% participation in the combined Schibsted Classified Media Spain, comprised all of the Group's online classified businesses in Spain. The purchase price allocation related to Milanuncios is preliminary pending final assessment of identifiable assets. Schibsted has also been involved in some other minor business combinations, including business combinations accounted for as step acquisitions. In step acquisitions, the previously held equity interest is measured at fair 80

81 value at the acquisition date, and a total gain from re-measurement of NOK 40 million is recognised in profit or loss in the line item Other income and expenses. Acquisition-related costs of NOK 10 million are recognised in profit or loss in the line item Other income and expenses. The table below summarises the consideration transferred and the amounts recognised for assets acquired and liabilities assumed after the business combinations: NOK million Milanuncios Other Total business combinations Consideration: Cash Contingent consideration Non-controlling ownership interest in subsidiary Consideration transferred ,020 Fair value of previously held equity interest Total ,140 Amounts for assets and liabilities recognised: Trademarks (indefinite useful life) Customer relations Data systems and licenses Property, plant and equipment Trade receivables and other receivables Cash and cash equivalents Deferred tax liabilities - (7) (7) Current liabilities - (7) (7) Total identifiable net assets Non-controlling interests - (5) (5) Goodwill Total ,140 The goodwill of NOK 591 million recognised is attributable to inseparable non-contractual customer relationships, the assembled workforce of the companies and synergies. NOK 417 million of the goodwill recognised is expected to be deductible for income tax purposes. The business combinations are carried out as part of Schibsted's growth strategy, and the businesses acquired are good strategic fits with existing operations within the Schibsted Media Group. The fair value of acquired receivables is NOK 5 million, of which NOK 4 million are trade receivables. There is no material difference between the gross contractual amounts receivable and the fair value of the receivables. The companies acquired in the business combinations have since the acquisition dates contributed NOK 30 million to operating revenues and contributed positively NOK 3 million to consolidated profit (loss). If the acquisition date of all business combinations, except for the acquisition of Milanuncios.com, was as of , the operating revenues of the Group would have increased by NOK 13 million and profit (loss) would have increased by NOK 1 million. No separate financial statements exist for the business Milanuncios.com for the period before the acquisition. Below is a specification of investments in business combinations during 2014: NOK million Consideration Goodwill Hasznaltauto Informatikai Kft Milanuncios Other

82 Consideration is reconcilable to amounts presented above. Note that Consideration only includes cash consideration transferred reduced by cash and cash equivalents of the acquiree Business combinations in 2013 Schibsted has in 2013 invested NOK 179 million related to acquisition of new subsidiaries (business combinations). The amount comprises consideration transferred reduced by cash and cash equivalents of the acquiree. Schibsted has in addition paid NOK 79 million of contingent consideration related to prior year's business combinations (leboncoin.fr). In July 2013, Schibsted increased its ownership interest in Sentinel Software AS from 33% to 87% through acquisition of shares. The company has developed and operates the industry system for handling used cars in Norway. The previously held equity interest was accounted for as an associated company and the business combination is accounted for as a step acquisition. The previously held equity interest is measured at fair value at the acquisition date, and a gain from re-measurement of NOK 2 million is recognised in profit or loss in the line item other income and expenses. In September 2013, Schibsted acquired 100% of the shares of Compricer AB. The company operates an online personal finance market place (compricer.se) and is a good strategic fit with the existing portfolio of fast growing personal finance services in Schibsted. Schibsted has also been involved in some other minor business combinations. The table below summarises the consideration transferred and the amounts recognised for assets acquired and liabilities assumed after the business combinations: Consideration (NOK million): Total business combinations Cash 216 Contingent consideration 166 Consideration transferred 382 Fair value of previously held equity interest 22 Total 404 Amounts for assets and liabilities recognised: Trademarks (indefinite useful life) 48 Trademarks (definite useful life) 4 Customer relations 6 Data systems and licenses 29 Property, plant and equipment 3 Trade receivables and other receivables 35 Cash and cash equivalents 37 Deferred tax liabilities (13) Non-current interest-bearing borrowings (5) Other non-current liabilities (2) Current liabilities (49) Total identifiable net assets 93 Non-controlling interests (3) Goodwill 314 Total 404 The goodwill of NOK 314 million recognised is attributable to inseparable non-contractual customer relationships, the assembled workforce of the companies and synergies. NOK 14 million of the goodwill recognised is expected to be deductible for income tax purposes. The business combinations are carried out as part of Schibsted's growth strategy, and the businesses acquired are good strategic fits with existing operations within the Schibsted Media Group. The fair value of acquired receivables is NOK 35 million, of which NOK 16 million are trade receivables. There is no material difference between the gross contractual amounts receivable and the fair value of the receivables. 82

83 The companies acquired in the business combinations have since the acquisition dates contributed NOK 71 million to operating revenues and contributed negatively NOK 9 million to consolidated profit (loss). If the acquisition date of all business combinations was as of , the operating revenues of the Group would have increased by NOK 94 million and profit (loss) would have decreased by NOK 12 million. Below is a specification of investments in business combinations during 2013: NOK million Consideration Goodwill Sentinel Software AS Compricer AB Other Consideration is reconcilable to amounts presented above. Note that Consideration only includes cash consideration transferred reduced by cash and cash equivalents of the acquiree Business combinations in 2012 Schibsted has in 2012 invested NOK 35 million related to acquisition of new subsidiaries (business combinations). The amount comprises consideration transferred reduced by cash and cash equivalents of the acquiree. In February, Schibsted increased its ownership interest in Aspiro AB to 64.4% through acquisition of shares based on an offer to acquire all the shares in the company. Aspiro AB is a provider of music and TV streaming services. Before the business combination, Schibsted held 18.3% of the shares in Aspiro AB and had the financial interest in 21.3% of the shares through a TRS agreement. These equity interests were accounted for as available-for-sale financial assets. The business combination is accounted for as a step acquisition. The previously held equity interest is measured at fair value at the acquisition date, and a gain from remeasurement of NOK 48 million is recognised in profit or loss in the line item Other income and expenses. Acquisition-related costs of NOK 7 million is recognised in profit or loss in the line item Other income and expenses. In April, Schibsted increased its ownership interest in Economy OK AB from 37.9% to 51.5% through acquisition of shares. Economy OK AB operates the online coupon service Let's deal in Sweden. The previously held equity interest was accounted for as an associated company and the business combination is accounted for as a step acquisition. The previously held equity interest is measured at fair value at the acquisition date, and a gain from remeasurement of NOK 9 million is recognised in profit or loss in the line item Other income and expenses. Schibsted has also been involved in some other minor business combinations. The acquisition of Economy OK AB is a result of the strategy to develop web-based growth companies benefiting from strong traffic positions and brands of established operations in Norway and Sweden. The acquisition of Aspiro AB was based on Schibsted's existing financial exposure and Schibsted's ability to develop web-based operations. The table below summarises the consideration transferred and the amounts recognised for assets acquired and liabilities assumed after the business combinations: Consideration (NOK million): Total business combinations Cash 87 Consideration transferred 87 Fair value of previously held equity interest 134 Total 221 Amounts for assets and liabilities recognised: Trademarks (indefinite useful life) 5 Customer relations 5 83

84 Data systems and licenses 36 Property, plant and equipment 11 Other non-current assets 5 Trade receivables and other receivables 90 Cash and cash equivalents 52 Deferred tax liabilities (10) Current liabilities (96) Total identifiable net assets 98 Non-controlling interests (35) Goodwill 158 Total 221 The business combinations have resulted in recognition of goodwill of NOK 158 million attributable to inseparable non-contractual customer relationships, the assembled workforce of the companies and synergies. None of the goodwill recognised is expected to be deductible for income tax purposes. The fair value of acquired receivables is NOK 90 million, of which NOK 45 million are trade receivables. There is no material difference between the gross contractual amounts receivable and the fair value of the receivables. Non-controlling interests are measured at the proportionate share of the acquiree's identifiable net assets. The companies acquired in the business combinations have since the acquisition dates contributed NOK 235 million to operating revenues and contributed negatively NOK 79 million to consolidated profit (loss). If the acquisition date of all business combinations was as of , the operating revenues of the Group would have increased by NOK 75 million and profit (loss) would have decreased by NOK 13 million. Below is a specification of investments in business combinations during 2012: NOK million Consideration Goodwill Aspiro Other 2 23 Consideration is reconcilable to amounts presented above. Note that Consideration only includes cash consideration transferred reduced by cash and cash equivalents of the acquiree Investments in joint ventures and associated companies All investments held by Schibsted in joint arrangements are classified as joint ventures. All joint ventures and associated companies are accounted for using the equity method. The development in carrying amount of investments in joint ventures and associated companies are as follows: NOK million Restated Joint ventures Associated companies Total Joint ventures Associated companies Total Carrying amount 1.1 (4) Additions Diluted capital increase Disposals (1) - (1) (10) (9) (19) Transition to / from subsidiary (4) (10) (14) (75) (22) (97) Transition to / from joint venture / associated companies (1) 1 - (165) Share of profit or loss (649) (192) (841) (136) 13 (123) Share of other comprehensive income - (42) (42) Gain (loss) (6) (6) Impairment loss (130) (130) Dividends received - (36) (36) (3) (56) (59) 84

85 Translation differences (16) 6 (10) Other changes (9) 10 1 Carrying amount (17) (4) Of which presented in Investments in joint ventures and associated companies Of which presented in Other current liabilities (90) - (90) (99) - (99) Of which presented as a reduction of Other non-current assets Additions comprise mainly share of capital increases in joint ventures with losses. (19) - (19) (10) - (10) Losses recognised in excess of the investment in ordinary shares are applied to other long-term interests such as long term receivables that, in substance, form part of the net investment in that joint venture or associated company. After the net interest is reduced to zero, additional losses are provided for, and a provision recognised, to the extent that legal or constructive obligations are incurred on behalf of the joint venture or associated company. The carrying amount of investments in joint ventures and associated companies comprise the following investments: NOK million Restated Interest held Joint ventures Associated companies Interest held Joint ventures Associated companies SnT Classifieds 50 % (90) - 50 % (99) - 20 Minutes France 50 % % 32 - SCM Austria 50 % (4) - 50 % (2) - Hasznaltauto % 67 - SCM Switzerland 50 % (15) - 50 % (8) - SCM Morocco 50 % Polaris Media ASA 29 % % Search Pte. Ltd % % Pret d'union % % - 40 TT Nyhetsbyrån 30 % % - 40 Finderly GmbH % % - 19 Metro Nordic Sweden AB 35 % % - 20 Other investments Carrying amount (17) 455 (4) 549 Schibsted operates its investments in online classifieds marketplaces through subsidiaries, joint ventures and associates. SnT is a joint venture with operating marketplaces in Brazil, Chile, Bangladesh, Pakistan and Thailand. SnT's operations in Argentina were sold in August Minutes France is a joint venture that operates mediahouse with free newspaper in France. Polaris is a Norwegian media group that operates local and regional media houses. 701 is an associated company operating marketplaces in Malaysia, the Philippines, Indonesia and Vietnam. Pret d'union is an associated company operating "peer to peer" lending market in Continental Europe. TT Nyhetsbyrån is an associated company operating within news and pictures in Sweden. Finderly GmbH (Shpock) is an associated company operating mobile marketplaces in Germany and UK. Metro Nordic Sweden AB is an associated company operating free daily newspaper in Sweden. The above presented data for 2013 and 2014 is available as a consequence of the implementation of IFRS 11 and 12 with effect from 1 January 2014 for which comparable information for 2013 was restated. For 2014 and 2013, the equity method of accounting is applied. For 2012, the investments were accounted for using proportionate consolidation; please refer to Section Change in accounting policies for additional information. Comparable information for 2012 to 2013 and 2014 is therefore not available. 85

86 10.7 Expenses related to online classified sites, technology and product development Expenses related to online classified sites Schibsted has a goal of laying the foundations for future growth by establishing online classified sites in new markets. Such businesses are mainly launched on the basis of the successful Swedish Blocket concept. Experiences from successful establishments in core markets form the basis for expenditure in online classifieds in new markets. In most markets the return on such expenditure is positive in terms of improved reach for the sites and strengthened positions compared with competitors. These operations include activities in a total of 35 countries. The online concept was launched in 18 of these countries without local organisation. Expenses related to new online classifieds ventures that reduce the EBITDA were in the amount NOK 503 million in 2014 compared to NOK 870 million in Expenses in the online classifieds businesses are expected to be reduced in 2015 as a result of joint venture agreements entered into by the Company Expenses related to technology and product development The last few years Schibsted has incurred significant costs related to digital competence and technology and the build-up of central technology and product development resources. These efforts will continue in 2015 as central teams will be established to develop common tech platforms for both media houses, online classifieds, for advertising and login services. These development efforts are expected to represent expense of around NOK million in Material indebtedness The Group has the following composition and maturity structure on its interest-bearing borrowings: NOK million Current Non-current Restated 2012 Restated Restated 2012 Restated Bond issues ,800 1,600 1,600 Bank loans Financial lease agreements Other loans Total ,132 1,971 2,124 Maturity within 3 months Maturity between 3 months and 1 year Maturity between 1 and 2 years Maturity between 2 and 5 years ,168 Maturity beyond 5 years , Total ,143 1,975 2,131 Schibsted has issued two bonds with fixed interests, but due to interest rate swap agreements almost all of the Group s non-current interest-bearing borrowings are at floating interest rates in practice. For information on interest rate risk, see note 9 Financial risk management of the 2014 annual report. The interest rate periods relating to the Group's borrowings are between one and six months. Schibsted has a loan portfolio with a diversified maturity profile. For the portfolio of bonds and floating rate notes, there is a difference of NOK (142) million between the book value and the market value (based on tax value as at ). This is partly compensated by existing interest rate swap agreements, see note 9 Financial risk management of the 2014 annual report. The current terms of the Group's other interest-bearing borrowings as at have been reviewed and compared to the market pricing at year-end, and the carrying amount is considered to represent a reasonable approximation to fair value. 86

87 Carrying amount in NOK millions of interest-bearing borrowings breaks down as follows by currency: NOK million Restated 2012 Restated NOK 2,330 1,785 2,076 EUR Other Total 2,828 2,317 2,471 The total amount of bonds and floating rate notes issued are NOK 2,200 million as at : Loan Amount (NOK million) Interest rate ISIN NO ( ) 400 FRN: Nibor 3 months bps ISIN NO ( ) 500 FRN: Nibor 3 months bps ISIN NO ( ) % ISIN NO ( ) % ISIN NO ( ) 150 FRN: Nibor 3 months bps ISIN NO ( ) 600 FRN: Nibor 3 months bps The bonds with fixed interest rate, and the floating rate note maturing in 2022 have been swapped to floating interest rate, Nibor 6 months with addition of a margin. In addition, cross currency swap agreements have been entered into to match the payments of some of the bonds and floating rate notes, see note 9 Financial risk management. The Group has a bank loan of EUR 25 million. This loan was entered into in January 2011 and expires in January There are no instalments before maturity date. The interest terms on the loan are based on Euribor with the addition of a margin. The Group has a bank loan of NOK 121 million. The loan has a term of 12 years from 2007 and the interest terms are six month Nibor with the addition of a margin. The loan has a repayment schedule with installments twice a year. There are no changes in the long term loan portfolio from to The Group has a short-term bank loan with maturity in January The loan amounted to EUR 30 million as at This short term loan has been replaced by other short term loans during the first quarter and as of the Group has a short term-term bank loan of SEK 150 million. A new long-term revolving credit facility of EUR 300 million was signed in July The facility has a term of five year plus two extension options each of one year. Final maturity will therefore be in 2019, 2020 or The new facility replaced a facility of EUR 325 million and at the end of 2014 Schibsted has two long-term revolving credit facilities of in total EUR 425 million. None of the facilities were drawn as of year-end 2014 or as of 31 March For both facilities the lenders consists of seven Nordic and international banks. The facilities have interest terms based on Euribor with the addition of a margin. Schibsted must pay a commitment fee to maintain the facilities availability. The commitment fee is calculated as a percentage of the loan margin, on the undrawn part of the facilities. As at , Schibsted has available long-term revolving credit facilities totalling NOK 3,841 million through the unutilised drawing right on the loan facilities of in total EUR 425 million. This amounts to NOK 3.7 billion as of 31 March due to a change in the EURNOK FXrate. Schibsted s loan agreements contain financial covenants regarding the ratio of net interest-bearing debt (NIBD) to gross operating profit (EBITDA). The reported ratio was well within the financial covenants as at See note 9 Financial risk management Liquidity risk in the 2014 annual report. All loan agreements include a cross default clause. As a consequence, a default on one loan agreement could constitute a default on the other loan agreements. The Group has provided guarantees of NOK 7 million. The Group has no mortgage debt. 87

88 Lenders/agent Original facility currency and amount Payments due by period, as at 31 March 2015 (NOK million) Maturity Total outstanding and later A. Nordic Investment Bank... NOK 135m April 2019 NOK 121m NOK 27m NOK 27m NOK 54m B. Eksportfinans... EUR 25m January 2016 NOK 218m* - NOK 218m* - C. FRN 1... NOK 400m December 2015 NOK 400m NOK 400m n/a n/a D. FRN 2... NOK 500m March 2017 NOK 500m - - NOK 500m E. FRN 3... NOK 600m May 2021 NOK 600m - - NOK 600m F. FRN 4... NOK 150m December 2022 NOK 150m - - NOK 150m G. Bond 1... NOK 300m March 2019 NOK 300m - - NOK 300m H Bond 2... NOK 250m December 2022 NOK 250m - - NOK 250m I. Short-term loan... SEK 150m During 2015 NOK 141m* NOK 141* - - J. Other debt**... n/a n/a NOK 72m* n/a n/a n/a Total... NOK 2.752m NOK 568m NOK 245m NOK 1,854m *NOK equivalent values **not included in Total row The loan from Nordic Investment Bank can be called on the interest payment due days at 100.2% ( ) and 100.1% ( ) of nominal value Contractual commitments Schibsted has entered into certain agreements, pursuant to which third parties have put options related to shares in companies where Schibsted has an ownership interest, which, if exercised would oblige Schibsted to acquire such shares. In addition Schibsted has liabilities resulting from contingent consideration arrangements in business combinations. The most significant liabilities related to put options as at are related to shareholdings in Schibsted Classified Media Spain S.L (Online classifieds) and Lets Deal AB (Schibsted Sweden Media House). The maturity profile of the financial liabilities was as of 31 December 2014, 2013 and 2012: NOK million Third party put options Contingent considerations Maturity within 1 year Maturity between 1 and 2 years Maturity between 2 and 5 years The above obligations are expected to be funded, if realised, through cash flows from ordinary operations and/or new debt facilities. For further information, see note 25 Financial liabilities in business combinations and increases in ownership interests in the 2014 Annual Report. The amounts in the table reflect estimated consideration in NOK million. For third party put options, the amounts reflect estimated future consideration payable to acquire all shares held by non-controlling interest, i.e. obtain a 100% ownership interest. In addition Schibsted has funding obligations related to the Group s share of investments in SnT Classifieds and 701 Search Pte Ltd. Pursuant to the joint venture agreements with Telenor regarding these investments, Schibsted has an estimated funding commitment of approximately NOK 550 million over the next few years. This obligation is expected to be funded through cash flows from ordinary operations and/or new debt facilities Off-balance sheet arrangements Schibsted has limited off-balance sheet arrangements. Other than lease obligations from office buildings Schibsted does not have any material off-balance sheet arrangements Rental agreements Schibsted has lease obligations related to off-balance sheet operating assets, mainly office buildings. Rental expenses were NOK 474 million in 2014 and NOK 401 million in 2013 (restated). Certain additional information on the material rental agreements can be found in section

89 Future minimum payments under non-cancellable operational leases where Schibsted is the lessee are as follows: NOK million Restated 2012 Restated Within one year Between one and five years 1,637 1,455 1,214 More than five years 1,061 1,146 1, Financial risk management Funding and capital management Schibsted is a listed company that aims to provide a competitive rate of return based on healthy finances. Schibsted aims to maximise the shareholders return through long-term growth in the share price and dividend. The Group's strategy and vision imply a high rate of change and development of the Group s operations. Schibsted s capital structure must be sufficiently robust in order to maintain the desired freedom of action and utilise growth opportunities based on strict assessments relating to allocation of capital. The Group's capital consists of net interest-bearing debt and equity: NOK million Restated 2012 Restated Non-current interest-bearing borrowings 2,132 1,971 2,124 Current interest-bearing borrowings Cash and cash equivalents 745 1,202 1,031 Net interest-bearing debt 2,083 1,115 1,437 Group equity 6,790 7,586 6,109 Net gearing (net interest-bearing debt/equity) Undrawn long-term bank facilities 3,841 3,772 2,386 Schibsted will place emphasis on paying a stable to increasing dividend amount over time. In years when there is an economic slowdown, or for other reasons weaker cash flows of the company, the company may reduce or decide not to pay dividend. Funding and control of refinancing risk is handled by Group treasury on the parent company level. Schibsted has a diversified loan portfolio both in terms of loan sources and maturity profile. The most important funding sources are the Norwegian bond market and banks. Schibsted does not have an official credit rating, but is rated by lenders and was classified BBB by most of them. Schibsted's objective is to be considered as an investment grade rated company over time (BBB- or better) and for the time being official rating is not considered necessary. The financial flexibility is considered as good and the Group's ratio of net interest-bearing debt to gross operating profit was 1.1 according to the definition of the loan agreements at the end of The target level is 1-2. Refinancing risk is considered as low. Available liquidity should at all times be equal to at least 10% of expected annual revenues. Available liquidity refers to the Group's cash and cash equivalents and available long-term bank facilities Financial risk Schibsted is exposed to financial risks, such as currency risk, interest rate risk, liquidity risk and credit risk. Group treasury is responsible for keeping the Group's exposure in financial risks in accordance with the financial strategy over time Currency risk Schibsted has Norwegian kroner (NOK) as its reporting currency, but is through its operations outside Norway also exposed to fluctuations in the exchange rates of other currencies, mainly Euro (EUR) and Swedish kronor (SEK). Schibsted has currency risks linked to both balance sheet monetary items and the translation of investments in foreign operations. The Group makes use of loans in foreign currencies and financial derivatives (forward contracts and cross currency swaps) to reduce its currency exposure. The loans in foreign currencies 89

90 and the financial derivatives are managed actively in accordance with the Group s financial strategy. The Group's monetary items exposure appears in note 22 Interest-bearing borrowings and in note 18 Cash and cash equivalents of the 2014 annual report. As at the Group had entered into several forward contracts involving the purchase and sale of currencies and several interest rate and currency swap agreements for this purpose. Currency gains and losses relating to borrowings and forward contracts which hedge net investments in foreign operations are recognised in other comprehensive income until the foreign operation is disposed of. Other currency gains and losses are recognised in the income statement on an ongoing basis as other financial income or expenses. As at Schibsted has the following forward contracts, which all mature in 2015: Currency Amount (m) NOKm Forward contracts, sale CHF 6 45 Forward contracts, sale EUR Forward contracts, sale SEK As at forward contracts for the sale of SEK 150 million are related to hedging of net investments in foreign operations. Fair value of the contracts accounted for as hedges was NOK (6) million as at Fair value of other forward contracts was NOK 1 million as at Cash flows in foreign currencies relating to considerable investments or significant individual transactions are hedged by using financial instruments. At year-end the Group had no such contracts. The Group s foreign exchange exposure relating to operations is low, since most of the cash flows take place in the individual businesses' local currency. As at Schibsted has the following cross currency swaps, which mature in : Currency Currency Payment NOK m Receive Cross currency swap EUR 35 Euribor 6 months + margin 300 Nibor 6 months + margin Cross currency swap EUR 38 Euribor 3 months + margin 315 Nibor 3 months + margin Cross currency swap EUR 50 Euribor 3 months + margin 405 Nibor 3 months + margin Cross currency swap SEK 450 Stibor 3 months + margin 400 Nibor 3 months + margin Cross currency swap SEK 200 Stibor 3 months + margin 185 Nibor 3 months + margin The cross currency swap agreements are linked to bonds and floating rate notes and match the payments completely during the contract period. The agreements are accounted for as hedges. The fair value of the agreements was NOK (136) million as at Schibsted follows a currency hedging strategy where parts of net investments in foreign operations are hedged. As at % of the Group's net interest-bearing debt and derivatives was in EUR. Similarly, 31% of the Group's net interest-bearing debt and derivatives was in SEK. The sensitivity of exchange rate fluctuations is as follows: if NOK changes by 10% compared to the actual rate as at for SEK and EUR, the carrying amount of the Group's net interest-bearing debt and currency derivatives in total will change by approximately NOK 205 million. Currency effects will have a limited effect on Group profits since changes in value will be tied to instruments hedging the net foreign investments or matching interest-bearing loans to non-norwegian subsidiaries. A change in exchange rates also affects the translation of net foreign assets to NOK. The equity effect of these changes is to some extent reduced by the Group's currency hedging, where changes in the value of net foreign assets are mitigated by changes in the value of the Group's foreign-denominated interest-bearing borrowings and currency derivatives Interest rate risk Schibsted has floating interest rates on most of its interest-bearing borrowings according to the financial strategy, see note 22 Interest-bearing borrowings, and is thereby influenced by changes in the interest market. 90

91 A change of 1 percentage point in the floating interest rate means a change in Schibsted's interest expenses of approximately NOK 28 million. This will partly be compensated by a change in interest income of approximately NOK 7 million. Interest rate swap agreements have been entered into to swap the bonds issued in 2012 from fixed interest rates to floating interest rates based on Nibor 6 months with addition of a margin. An interest rate swap has also been entered into converting the floating rate note issued in December 2012 from Nibor 3 months with addition of a margin to Nibor 6 months with addition of a margin. As at Schibsted has the following interest rate swap agreements in NOK: Amount (NOKm) Pay Receive Interest rate swap 150 Nibor 6 months + margin 5.9% Interest rate swap 150 Nibor 6 months + margin 5.9% Interest rate swap 250 Nibor 6 months + margin 5.4% Interest rate swap 150 Nibor 6 months + margin Nibor 3 months + margin The fair value of the interest rate swap agreements was NOK 56 million as at Raw materials risk Schibsted is a consumer of newsprint and is therefore exposed to price changes. A change in the price of 1% has an impact on raw materials expenses for the Group of approximately NOK 5 million per year. Newsprint prices in Norway, Sweden and Spain are negotiated annually with suppliers and have already been settled for Credit and counterparty risk The Group has recorded a low level of losses relating to trade receivables, see Note 17 Trade and other receivables. Account receivables are diversified through a high number of customers, customer categories and markets. Account receivables consist of a combination of prepaid subscription or advertisements and sales invoiced after delivery of the product. For some receivables there are no or very little credit risk (prepaid subscription and payments made by credit card at purchase date) and for other receivables the credit risk is higher. Credit risk will also vary among countries in which Schibsted operates. To some extent credit insurance is also used. In total the credit risk is considered as low. Net carrying amount of the Group's financial assets, except for equity instruments, represents maximum credit exposure, and the exposure as at is disclosed in note 10 Financial instruments by category of the 2014 annual report. Exposure related to the Group's trade receivables is disclosed in note 17 Trade and other receivables of the 2014 annual report. Schibsted has a conservative placement policy where excess liquidity is used for loan repayments. Until due date the excess liquidity is temporarily placed in the Group's cash pool, and at times in the short-term money market with the relationship banks. Schibsted requires all relationship banks to have a certain rating Liquidity risk At year-end the Group's portfolio of loans and loan facilities are well diversified both regarding maturity profile and lenders. At the end of 2014 Schibsted has a long-term liquidity reserve of NOK 4.6 billion and net interest-bearing debt is NOK 2,083 million. The liquidity reserve corresponds to 31% of the Group s turnover. The Group has target that the aggregate liquidity reserve should be at least 10% of the next 12 months expected turnover. Schibsted s loan agreements contain financial covenants regarding the ratio of net interest-bearing debt to gross operating profit. The ratio shall normally not exceed 3, but can be reported at higher levels up to three quarters during the loan period, as long as the ratio stays below 4. According to the definition of the loan agreements, the ratio was 1.1 as at

92 10.12 Key accounting policies and estimates Schibsted s significant accounting policies are summarised in Section 9.2 In many areas the consolidated financial statements are affected by estimates. Important areas in which the use of estimates has significant effect on carrying amounts, and thus involves a risk of changes that could affect results in future periods, are described below. The valuation of intangible assets in connection with business combinations and the testing of property, plant and equipment and intangible assets for impairment (see note 11 Intangible assets and note 12 Property, plant and equipment and investment property) will to a large extent be based on estimated future cash flows. Correspondingly, the expected useful lives and residual values included in the calculation of depreciation and amortisation will be based on estimates. The Group has activities within established media, but is also active in establishing positions at an early point in time in new media channels both through business combinations and its own start-ups. Estimates related to future cash flows and the determination of discount rates to calculate present values are based on management s expectations on market developments, the competitive situation, technological development, the ability to realise synergies, interest rate levels and other relevant factors. Such estimates involve uncertainty, and management s view on, and the actual development in the matters referred to, may change over time. Changes in management s opinion and actual development may lead to impairment losses in future periods. Tangible and intangible assets are tested for impairment if there are indications that an asset may be impaired. Intangible assets that are not amortised are, as a minimum, tested annually for impairment. Indications of impairment will typically be changes in market development, the competitive situation and technological development. In the same way, depreciation and amortisation schedules and any residual values are reviewed periodically. The risk of changes in expected cash flows that affect the financial statements will naturally be higher in markets in an early phase and be more limited in established markets. Further, the risk of changes will be significantly higher in periods with uncertain macroeconomic prognosis. Uncertainty related to the macroeconomic situation in Spain has resulted in impairment losses of totally NOK 1,636 million being recognised in the years 2008 and The integration with Milanuncios, positive traffic development and positive macroeconomic development has reduced the risk of further impairment losses having to be recognised. Value in use for SCM Spain is calculated using a pre-tax discount rate (WACC) of 10.5% and a sustained growth of 1.5%. The expected net cash flows related to SCM Spain may decrease by approximately 30% compared to the estimates actually used, before any impairment loss will have to be recognised. The structural changes in media consumption, with accelerated migration from print to digital results in pressure on profits and cash flows for the media houses in Norway and Sweden. Rapid adaption of the business model and cost base is required to be relevant and profitable in the digital future. Inability to convert print cash flows to digital cash flows can consequently lead to a negative adjustment to the cash flows. Value in use of the Norwegian subscription based newspapers and related operations is calculated using a pretax discount rate (WACC) of 12.2% and a sustained growth of 0%. Changes in significant assumptions would have increased (decreased) recoverable amount (NOK million) at of these operations as follows: WACC +1 % (123) (1 %) 144 Sustained growth year 6 and forward +1 % 149 (1 %) (121) An increase in WACC and a decrease in sustained growth of 1 percentage point would have resulted in an impairment loss of NOK 23 million and NOK 21 million, respectively. The estimates of future cash flows are uncertain. The expected future net cash flows related to the Norwegian subscription based newspapers may 92

93 decrease by approximately 6.6% compared to the estimates actually used, before any impairment loss will have to be recognised. Impairment losses of NOK 131 million is recognised in NOK 105 million of those impairment losses were related to plant and equipment of Norwegian printing operations. Accounting for pension obligations requires that financial assumptions relating among others to the discount rate, expected salary increases and expected increases in pensions and National Insurance basic amount are determined. The effect on the defined benefit liabilities from changes i financial actuarial assumptions is disclosed in note 21 Pension plans of the 2014 annual report Certain financial instruments are measured at fair value. When no quoted market price is available, fair value is estimated using different valuation techniques. The Group's financial instruments and valuation techniques are presented in note 10 Financial instruments by category of the 2014 annual report. Contingent consideration in business combinations and the present value of future consideration to be paid related to non-controlling interests' put options over shares in subsidiaries are recognised as financial liabilities, see note 25 Financial liabilities business combinations and increases in ownership interests of the 2014 annual report. The liabilities are recognised using estimated value, and the estimate can be changed in future periods as the consideration to be paid is dependent upon future fair value and / or future results. Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with tax planning strategies. Schibsted could potentially at any time be involved in litigations as a result of the Group's ordinary operations. The financial implications of litigations are constantly monitored and a liability is recognised when it is probable that the litigation will result in a future payment and a reliable estimate of the liability can be made Subsidiaries of Schibsted Media Group An overview of significant subsidiaries in the Schibsted Media Group can be found in chapter The full list of subsidiaries and associated companies of the Group can be found in the 2014 Annual Report, included in Appendix B 93

94 11. BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE GOVERNANCE 11.1 Introduction The General Meeting is the highest authority of the Company. All shareholders in the Company are entitled to attend and vote at General Meetings of the Company and to table draft resolutions for items to be included on the agenda for a General Meeting. The overall management of the Group is vested in the Board of Directors and the Management. In accordance with Norwegian law, the Board of Directors is responsible for, among other things, supervising the general and day-to-day management of the Group s business ensuring proper organisation, preparing plans and budgets for its activities ensuring that the Group s activities, accounts and assets management are subject to adequate controls and undertaking investigations necessary to perform its duties. The Management is responsible for the day-to-day management of the Group s operations in accordance with Norwegian law and instructions set out by the Board of Directors. Among other responsibilities, the Group s chief executive officer, or CEO, is responsible for keeping the Group s accounts in accordance with applicable law and for managing the Group s assets in a responsible manner. In addition, the CEO must according to Norwegian law brief the Board of Directors about the Group s activities, financial position and operating results at a minimum of one time per month Board of Directors Overview The Articles of Association provide that the Board of Directors shall consist of a minimum of six and a maximum of 11 members. As at the date of this Prospectus, the Company's Board of Directors consists of the following: Name of director Director since Current term expires Ole Jacob Sunde (b. 1954) Chairman Tanya Cordrey (b. 1966) Birger Steen (b. 1966) Eva Berneke (b. 1969) Christian Ringnes (b. 1954) Arnaud de Puyfontaine (b. 1964) Eugénie van Wiechen (b. 1969) Ingunn Saltbones (b. 1971) Finn Våga (b. 1960) Jonas Fröberg (b. 1972) The Board of Directors is in compliance with the independence requirements of the Norwegian Code of Practice for Corporate Governance dated 30 October 2014 (the "Corporate Governance Code"), meaning that (i) the majority of the shareholder-elected members of the Board of Directors is independent of the Company s executive management and material business contacts, (ii) at least two of the shareholder-elected members of the Board of Directors are independent of the Company s main shareholders, and (iii) no members of the Company s executive management are on the Board of Directors. Ole Jacob Sunde is the only member of the Board of Directors who is not independent due to his directorships in Blommenholm Industrier and the Tinius Trust, which holds 26.1% of the shares of the Company. However, the other six shareholder-elected members are considered independent of the Company s executive management and material business contacts and of the Company's main shareholder. The Company's registered office, Apotekergata 10, N-0107 Oslo, Norway, serves as the business address for the members of the Board of Directors in relation to their directorships of the Company Brief biographies of the members of the Board of Directors Set out below are brief biographies of the Board members, including their relevant management expertise and experience, including names of companies and partnerships of which a Board member is or has been a member of the administrative management or supervisory bodies or partner in the previous five years (not including directorships and executive management positions in subsidiaries of the Group). 94

95 Ole Jacob Sunde: Board member since May Chairman of the Board since May Chairman of the Compensation Committee since it was established in The founder and chairman of the board of Formuesforvaltning ASA (2000). Established Industrifinans Forvaltning ASA in 1983 and was managing director until Former consultant in McKinsey & Co. ( ). Various other directorships, including chairman of the board of the Tinius Trust and member of the board of Blommenholm Industrier AS. MBA (Université de Fribourg, Switzerland) 1976 and Kellogg School of Management, Northwestern University (USA) (with distinction) Current directorships and senior management positions: Fjeldvang AS, chairman of the board of directors Friendly Film AS, chairman of the board of directors Formuesforvaltning AS, chairman of the board of directors Ringgården AS, chairman of the board of directors The Tinius Trust, chairman of the board of directors HKH Prinsesse Märtha Louises fond, board member Ferner Jacobsen Aktieselskap, board member Blommenholm Industrier AS, board member Museum of Cultural History, board member Previous directorships and senior management positions last five years: none Tanya Cordey: Board member since Tanya Cordrey is Chief Digital Officer at Guardian News & Media since April She is on the senior executive team at Guardian News & Media. She was previously Digital Development Director at Guardian News & Media, General Manger, Environment at Guardian News and Media, General Manger UK and Chief marketing Officer, marketing, Product and Sales at Zopa, Product Director UK at ebay AG, General Manger at BabyCentre.co.uk and Manager, Strategy & Marketing at BBC News & Current Affairs. Tanya holds a MBA from London Business School (1997), MA Management Studies & Politics, Westminster University (1994), BA Liberal Arts, East Anglia University (1987) and BA (Hons) European History, East Anglia University. Current directorships and senior management positions: Guardian News & Media Limited, Director Previous directorships and senior management positions last five years: Global Giving UK, Trustee Birger Steen: Board member since Birger Steen is CEO of Parallels, a world leader in the virtualisation and cloud services platform market, and is based in Seattle, WA. He previously served as Vice President of WW SMB & Distribution at Microsoft Corp. in Redmond and as General Manager of Microsoft Russia and Microsoft Norway. Prior to joining Microsoft in 2002, Birger was CEO of Scandinavia Online and Vice President of Business Development with Schibsted ASA. His first engagement with the Schibsted group took place while he worked for McKinsey & Company as a consultant and engagement manager from 1993 to Before joining McKinsey, Birger was as an Oil trader with Norwegian Oil Trading in Lithuania. Birger holds a Master of Science degree in Computer Science and Industrial Engineering from the Norwegian Institute of Technology in Trondheim. He also holds a degree in Russian Language from the Defense School of Intelligence and Security and received his MBA from INSEAD in France. Current directorships and senior management positions: Retten Invest AS, deputy board member Nordea Bank AB, board member 95

96 Previous directorships and senior management positions last five years: none Eva Berneke: Board member since May CEO of KMD from March MSc in Mechanical Engineering Technical University of Denmark, 1992, and MBA, INSEAD (Executive Management Training Program) Deputy chairman of Board of Directors of Copenhagen Business School. Member of Board of Directors of Lego. Member of the Danish Council for Technology and Innovation under the Danish Ministry of Science, Technology & Innovation. Member of the Board of Directors of the Industrialization Fund for Development and Eastern Countries (IFU,IØ). Current directorships and senior management positions: KMD A/S, CEO Lego A/S, board member CBS, deputy board member Udenrigsøkonomisk forum (UØF), deputy member Nationalbanken, member of the board of directors Previous directorships and senior management positions last five years: TDC Wholesale, SEVP Højhastighedskommiteen, member TDC Business, SEVP Industrialiseringsfonden for Udviklingslandene Company mobile, board member (IFU), member Fullrate Holding Aps, board member Tele & teknik Holding APS, board member Investeringsfonden for Østlandene (IFØ), member Rådet for Teknologi og Innovation, member Yousee A/S, board member Christian Ringnes: Deputy board member in Schibsted from May 2002 to Elected as ordinary board member in May Managing director and major owner in Eiendomsspar AS/Victoria Eiendom AS (1984- ). McKinsey & Company, consultant (1981/82) and project manager (1983/84), Manufactures Hanover Trust Company, Assistant to Area Manager, Nordic Countries (1978/79). Chairman of the board in NSV-Invest AS, Sundt AS, Dermanor AS, Oslo Flaggfabrikk and Mini Bottle Gallery AS. Board member in Thor Corporation AS and Oslo s Council for City Architecture. Harvard Business School, Boston, USA ( ), Master of Business Administration. Ecole des Hautes Estudes Commerciales, Universite de Lausanne ( ), MBA. Current directorships and senior management positions: Eiendomsspar AS, CEO Victoria Eiendom AS, CEO Sundt Eiendom II AS, CEO Sommerrogaten Tomt AS, chairman of the board Mandalsgadens Eiendomsselskab AS, chairman of the board Karl Johans Gate 12 J ANS, chairman of the board Dermanor AS, chairman of the board Heches Holding II AS, chairman of the board Holmenkollen Restaurant AS, chairman of the board Grand Hotel AS, chairman of the board Verkseier Furulundsvei 9 Oslo AS, chairman of the board Drammensveien 200 AS, chairman of the board Hegdehaugsveien 27 AS, chairman of the board Jernbanetorget 4 AS, chairman of the board Karl Johans Gate 6 AS, chairman of the board Kongsveien 15 AS, chairman of the board Parkveien 60 AS, chairman of the board Øvre Slottsgate 11 AS, chairman of the board Bygdøy Allé 1 AS, chairman of the board Drammensveien 88b AS, chairman of the board Drammensveien 159 AS, chairman of the board Turbo Diesel AS, chairman of the board Storgaten 8 Oslo AS, chairman of the board Mack Øst AS, chairman of the board Ekeberg Taubanedrift AS, chairman of the board Admiralen AS, chairman of the board Bilbygg AS, chairman of the board Villa Lyse AS, chairman of the board Øvre Slottsgate 12 AS, chairman of the board Parkveien 64 AS, chairman of the board Rådhuseiendommene AS, chairman of the board AS Forretningsgården, chairman of the board Vollabygget AS, chairman of the board Hoffsveien Eiendom AS, chairman of the board 96

97 Økernveien 115 AS, chairman of the board AS Magnusgården, chairman of the board Timms Reperbane AS, chairman of the board AS Storgaten 6, chairman of the board Vollaveien 20 AS, chairman of the board Helsfyr Utbygging AS, chairman of the board AS Renref, chairman of the board Brødrene Johansen Eskefabrikk A, chairman of the board S AS Rådhusgaten 23, chairman of the board AS Bogstadveien 34, chairman of the board A/S Eiendomsutvikling, chairman of the board AS Eiendomspart Drammensveien 10, chairman of the board AS Gabelshus, chairman of the board ANS Eiendomspart Tordenskiolds Gate 8/10, chairman of the board Oslo Flaggfabrikk AS, chairman of the board Nsv Invest AS, chairman of the board Eiendomsspar Energi AS, chairman of the board Skræddergaarden ANS, chairman of the board ANS Eiendomspart Karl Johans Gate 16 B, chairman of the board Alna Park AS, chairman of the board AS Rosenkrantzg 13, chairman of the board Ringnes Holding AS, chairman of the board KS Eiendomspart Drammensveien 10, chairman of the board ANS Sagahuset, chairman of the board Holmenkollen Park Hotel ANS, chairman of the board ANS Rådhuspassasjen, chairman of the board Folketeaterbygningen AS, chairman of the board Urtegaten 9 AS, chairman of the board AS Holmsborg, chairman of the board Ks Holmsborg, chairman of the board Karl Johans Gate 21 ANS, chairman of the board Konowsgate 1-3 AS, chairman of the board Bellonahuset AS, chairman of the board Arena Eiendom AS, chairman of the board Dieselgården AS, chairman of the board Rosenkrantzg 13 DA, chairman of the board Bogstadveien 49 AS, chairman of the board Sundt AS, chairman of the board Sundt Eiendom i AS, chairman of the board Sundt Eiendom II AS, chairman of the board The Mini Bottle Gallery AS, chairman of the board Klingenberggaten 4 AS, chairman of the board Parkveien 35 AS, chairman of the board Værftsgaten 7 AS, chairman of the board Dronningensgate 40 AS, chairman of the board Skippergaten 21 AS, chairman of the board Ve Invest AS, chairman of the board Tyns-Ring AS, chairman of the board Kongensgate 31 AS, chairman of the board Holbergsplass Holding AS, chairman of the board Mesterhoff Eiendom AS, chairman of the board Vestnorsk Hotel DA, chairman of the board Alnabru Næringspark AS, chairman of the board Bjørnegårdsvingen AS, chairman of the board Rosenkrantzgate 13 II AS, chairman of the board Helgesensgate AS, chairman of the board Strømsveien 230 AS, chairman of the board Holbergsgate 21 AS, chairman of the board Fr4 Bolig AS, chairman of the board Eiendomsspar Økern Torgvei AS, chairman of the board Sepa Holding AS, chairman of the board Holmenkollen Invest Eiendom AS, chairman of the board T6 Holding AS, chairman of the board Thorleif Haugs Vei 15 AS, chairman of the board Karihaugveien 89 Utbygging AS, chairman of the board Tjuvholmen Allè 1-5 AS, chairman of the board Fr4 (næring) AS, chairman of the board Fr4 (utbygging) AS, chairman of the board Bogstadveien 30 Eiendom AS, chairman of the board Bogstadveien 58 AS, chairman of the board Dermagruppen AS, chairman of the board Konowsgate Finans AS, chairman of the board Hegdehaugsveien 23 AS, chairman of the board Nygårdsgaten 48 AS, chairman of the board Mack Kvartalet AS, chairman of the board Hoffsveien 4 AS, chairman of the board Mack Stranda AS, chairman of the board Eco Adventure AS, chairman of the board Fornebuveien 50 AS, chairman of the board Parkveien 64 Holding AS, chairman of the board Nordre Gate 2 Holding AS, chairman of the board Flagg Eiendom AS, chairman of the board Cr Invest 2 AS, chairman of the board Sepa Holding II AS, chairman of the board Rosenkrantzgt 11 Hjemmel AS, chairman of the board Scandic Hotel Gardermoen AS, board member 40 Rue Notre Dame Des Victoires AS, board member Helene Sundt AS, board member Cgs Holding AS, board member Thor Corporation AS, board member Folketeateret Oslo AS, board member Thor Energy AS, board member Project S AS, deputy board member Stiftelsen European Green Table, board member, Olaus Hansens Legat for Veldedig Øiemed, board member Lille C Ludens Ringnes Stiftelse, chairman of the board of directors Familien Chr Ringnes Stiftelse, chairman of the board of directors 97

98 Previous directorships and senior management positions last five years: Foreningen Byfolk Oslo Sentrum, chairman of the board of directors Jerikoveien 28 AS, chairman of the board of directors, Rica Hotel Gardermoen AS, board member, Thrane-Steen Eiendomsspar AS, chairman of the board of directors, Victorius Invest AS, chairman of the board of directors Nasjonaltheateret AS, deputy chairman of the board of directors Arnaud de Puyfontaine: Board member since May Chairman of the Management Board of Vivendi Group, Vice-Chairman and member of the Supervisory Board in the Canal+ Group, Director in GVT Participações SA (Brazil). Arnaud de Puyfontaine started as a consultant at Arthur Andersen and later on, in 1989, as project manager at Rhône-Poulenc. In 1990, he joined Le Figaro as Executive Director. In 1995, as a member of the founding team of the Emap Group in France, he headed Télé Poche and Studio Magazine, managed the acquisition of Télé Star and Télé Star Jeux, and started up the Emap Star Division before becoming Chief Executive Officer of Emap France in Chairman and Chief Executive Officer of Emap France in 1999, he served from 2000 to 2005 as Chairman of EMW, the Emap/Wanadoo digital subsidiary. In 2006, he was appointed Chairman and Chief Executive Officer of Editions Mondadori France and headed all digital business for the Mondadori Group in In 2009, he became Chief Executive Officer of Hearst UK. In 2011, on behalf of the Hearst Group, he led the acquisition of the 102 magazines of the Lagardère Group published abroad. He was later on appointed Executive Vice President of Hearst Magazines International before being appointed Managing Director Western Europe in Arnaud de Puyfontaine is a graduate of the ESCP, the Multimedia Institute and the Harvard Business School program. He was Chairman of ESCP Europe Alumni from 2011 to Educated at the Paris European School of Management, France in MBA, ESCP, ESCP (1988), Harvard Business School (2000). Current directorships and senior management positions: Kepler, independent director Innit, member of the advisory board Groupe Canal+, vice-chairman of the supervisory board Studio Canal, member of the board of directors Melty Group, member of the board of directors Previous directorships and senior management positions last five years: The National Magazine Company Limited Hearst-Rodale UK Limited Handbag.com Limited Hearst Magazines UK F.E.P. (U.K.) Limited COMAG (Condé Nast Magazine Distributors Limited) PPA (Professional Publishers Association) Compagnie Internationale de Presse et de Publicité (Monaco) Hearst Magazines, S.L. (Spain) Hearst Magazines Italia S.p.A (Italy) ESCP Europe Alumni, chairman Eugénie van Wiechen: Board member since May CEO of FD Mediagroep, The Netherlands. Previously Managing Director in LinkedIn.com, The Netherlands; Managing Director in ebay.nl, Marktplaats.nl, The Netherlands; Publisher Young Women's Magazines and Director Consumer Marketing in Sanoma Uitgevers, The Netherlands; Management Consultant and Engagement Manager in McKinsey& Company, The Netherlands. Educated at the University of Amsterdam in Chemical Engineering (MSc, 1994) and INSEAD, Fontainebleau, France (MBA, 1997). 98

99 Current directorships and senior management positions: FD Mediagroep, CEO McKinsey Netherlands Alumni Board, board member Max Geldens Foundation, board member Dutch Insead Council NDP Nieuwsmedia Previous directorships and senior management positions last five years: FD Mediagroep, publishing director LinkedIn Netherlands, MD Ingunn Saltbotnes: Board member since Board member of Schibsted Media Group from May 2001 to May Journalist in VG since 1997, covering current affair news, health and royalty, and more recently sex and relationship. She was VG s Paris correspondent from 2001 to Senior health and safety representative in VG from 2010 to date. Leader of the Editorial Union (Nw.: Redaksjonsklubben) from 1999 to TV and radio reporter for NRK Buskerud from 1996 to 1997, freelancer for NRK news from 1995 to Has also worked for TV2 news, NRK Dagsnytt and the newspaper Vårt Land. Holds a degree in journalism from Oslo University College of Applied Sciences ( ) and French from the University of Oslo ( ). Current directorships and senior management positions: none outside of Schibsted Previous directorships and senior management positions last five years: Smedsrud Grendelag SA, Vice-chairman on the board Finn Vagå: Substitute Board member of Schibsted since May 2013, and board member of Schibsted since May Joined Stavanger Aftenblad in Illustrations editor at Stavanger Aftenblad, and previously travel and feature journalist. Elected leader of the board of the local journalist union in Stavanger Aftenblad ( , ), leader of the Works Council at Schibsted Norway ( ), Board member of NJ Schibsted ( ), member of Schibsted s European Works Council (2008-), deputy Board member of Norwegian Union of Journalists (NJ) (2003-) and member of Works Council in NJ (2007-). Finn Vagå is educated as a photographer. Current directorships and senior management positions: The Norwegian Federation of Journalists, board member and member of working committee Previous directorships and senior management positions last five years: none Jonas Fröberg: Board member of Schibsted Media Group since May With Svenska Dagbladet since 2006 as trade and industry reporter, chronicler and automotive editor. Reporter and web editor at the financial desk Dagens Nyheter ( ). Deputy Regional Director at Svensk Näringsliv ( ). MSc in Political Science Umeå University 1997, BBA Handelshögskolan, Umeå University (1998), Bachelor of Arts in Business Administration, University of Derby England (1998). Studied cultural journalism, Umeå University (2005) Member of the board at Schibsted Sweden ( ). Member of the board at Svenska Dagbladet (2009-). Elected member at Journalistklubben Svenska Dagbladet (2008-). Current directorships and senior management positions: none Previous directorships and senior management positions last five years: none Remuneration The remuneration paid to the members of the Board of Directors in 2014 was NOK 9.524m. This figure includes compensation for traveling hours to board members who do not live in Oslo and the salaries and benefits of 99

100 the employee representatives in their ordinary positions. Other benefits includes benefits such as insurance, company car and free telephone/internet. NOK thousands Name Board remuneration Committee remuneration Board remuneration from other group companies Salary incl. holiday pay Other benefits Pension cost Total remuneration Ole Jacob Sunde Eva Berneke Tanya Cordrey Arnaud de Puyfontaine Christian Ringnes Birger Steen Eugénie van Wiechen Karl-Christian Agerup Marie Ehrling Anne-Lise Mørch von der Fehr Jonas Fröberg Gunnar Kagge Torbjörn Harald Ek * Finn Våga * *deputy employee representatives Shares held by members of the Board of Directors As at 26 May 2015, the members of the Board of Directors have the following shareholdings in the Company: Name Position Number of Shares before Number of A-shares (after Number of B-shares (after split Split) Split) Ole Jacob Sunde Chairman 10,000 10,000 10,000 Tanya Cordrey Board member Birger Steen Board member Eva Berneke Board member 4,020 4,020 4,020 Christian Ringnes Board member 40,000 40,000 40,000 Arnaud de Puyfontaine Board member Eugénie van Wiechen Board member Ingunn Saltbones Board member Finn Våga Board member Jonas Fröberg Board member As at the date of this Prospectus, none of the members of the Board of Directors holds any options for Shares in the Company 11.3 Management Overview The Management of the Company consists of 9 individuals. The names of the members of the Management as at the date of this Prospectus, and their respective positions, are presented in the table below: Name Position Served since Rolv Erik Ryssdal (b. 1962) Chief Executive Officer 2009 Trond Berger (b. 1957) Chief Financial Officer, Executive Vice President 1999 Terje Seljeseth (b. 1960) CEO Schibsted Classified Media (SCM) 2009 Lena K. Samuelsson (b. 1964) Executive Vice President Communications & CSR 2013 Frode Eilertsen (b. 1972) EVP Digital and Group Chief Product Officer 2014 Camilla Jarlsby (b. 1962) EVP Organisational Development 2009 Didrik Munch (b. 1956) CEO Schibsted Norway 2013 Raoul Grünthal (b. 1966) CEO Schibsted Sverige AB 2009 Christian Printzell Halvorsen (b. 1974) Chief Product Officer, Schibsted Classified Media

101 All members of the Management are employed by Schibsted ASA or its subsidiaries. The Company's registered office, Apotekergaten 10, Oslo, Norway, serves as the business address for the members of management in relation to their positions in the Company Brief biographies of the members of the Management Set out below are brief biographies of the members of the Management, including their relevant management expertise and experience, an indication of any significant principal activities performed by them outside the Company and names of companies and partnerships of which a member of the Management is or has been a member of the administrative, management or supervisory bodies or partner the previous five years (not including directorships and management positions in subsidiaries of the Company). Rolv Erik Ryssdal, Chief Executive Officer: Rolv Erik Ryssdal became CEO of Schibsted on 1 June He joined the Schibsted Group in 1991 and has held several management positions including CEO of Aftonbladet ( ), CEO of VG ( ) and CEO of Schibsted Classified Media, the holding company for Schibsted s international online classifieds operations ( ). Rolv Erik Ryssdal holds an MA in Business and Economics from the BI Norwegian School of Management and an MBA in Business and Administration from INSEAD, France. Current directorships and senior management positions: J.E. Pedersen & Co AS, board member Danske Bank, board member Previous directorships and senior management positions last five years: none Trond Berger, Chief Financial Officer, Executive Vice President: Trond Berger was appointed Executive Vice President of Schibsted ASA in 1999 and is in charge of the following business areas: Finance, Treasury, Investor Relations, Mergers and Acquisitions. Previous positions include: Investment Director with Stormbull (1998), Executive Vice President (CFO) of Nycomed ASA and Executive Vice President, Strategy and Business Development at Nycomed Amersham ( ), and partner at Arthur Andersen ( ). Berger is a board member of several Schibsted subsidiaries. Berger is a State- Authorised Public Accountant (1984), holds an MA in Economics from the BI Norwegian School of Management and is a graduate of the Norwegian Armed Forces Officer Candidate School (1977). Current directorships and senior management positions: Trobe Invest AS, chairman of the board of directors Storebrand ASA, shareholder representative Polaris ASA, board member Previous directorships and senior management positions last five years: none Terje Seljeseth, Chief Executive Officer Schibsted Classified Media: In October 2009, Terje Seljeseth took up the position as CEO of Schibsted Classified Media (SCM), the holding company for Schibsted s international online classifieds operations. At the same time, he became a member of Schibsted s Group Management Team. Seljeseth was hired as IT Director of Aftenposten in 1998 and was assigned the task of starting Finn.no AS, where he was CEO until Terje Seljeseth has a background in IT and studied at Datahøgskolen and the University of Oslo. Current directorships and senior management positions: none Previous directorships and senior management positions last five years: none Lena K. Samuelsson, Executive Vice President Communications & CSR: Lena K. Samuelsson joined the group management team of Schibsted Media Group in September Samuelsson is a journalist and was during the 12 years prior to joining the group management team the editorin-chief of Svenska Dagbladet in Stockholm, a leading quality and business daily. She also worked at Aftonbladet for many years. She serves on several boards such as Schibsted Norway, Hitta.se and 20 Minutos in Spain. 101

102 Current directorships and senior management positions: Swedish News Agency TT, board member Previous directorships and senior management positions last five years: Swedish News Paper Association, board member Frode Eilertsen, Executive Vice President Digital and Group Chief Product Officer: Frode Eilertsen is in charge of Schibsted Media Group's strategy development and digital transformation, including group technology, platforms and products, advanced data science, analytics and policy, and group pricing, sales, and payments. Frode has spent the majority of his career in the USA as an innovator, entrepreneur, founder and CEO of high tech companies, and as a venture capitalist at Flagship Ventures focused on Internet and media. Frode has also been a part of McKinsey's core global Leadership within Advanced Data & Analytics (MADA), Digital Enterprise and the Innovation practice. Frode is on many Schibsted boards, including Schibsted Sweden, Schibsted Classified Media and Finn.no, and he is the Chairman of Schibsted UK, SPiD, and Schibsted epayment. Frode received his MBA from Harvard Business School (2001) and studied Computer Engineering at Dartmouth College (1998) and Law at University of Oslo (1995). Current directorships and senior management positions: none Previous directorships and senior management positions last five years: none Camilla Jarlsby, Executive Vice President Organisational Development: Camilla Jarlsby has been EVP Organisational Development since September 2014 at Schibsted ASA. She joined the Group Management Team in 2009 as the Head of Legal Affairs. Jarlsby previously worked as a lawyer in Schibsted s former Film and Television division, in Norsk Film AS, Rubicon TV AS and in the law firm BAHR in Oslo. Jarlsby received her law degree from the University of Oslo in She specialises in intellectual property rights and IT law and studied media and EU law at the University of Stockholm. Current directorships and senior management positions: Trobe Invest AS, deputy board member Acdn Works AS Natur Videregående Skole, deputy to the board Previous directorships and senior management positions last five years: none Didrik Munch, Chief Executive Officer Schibsted Norway: Didrik Munch is CEO of Schibsted Norway ASA. Munch was CEO of Bergens Tidende from 1997 to Munch is Board Chair of Bergens Tidende AS, Aftenposten AS, VG, Schibsted Vekst and FINN.no AS. Previous positions include Division Director of the business market at DnB and a police lawyer. Munch is a Cand. Jur in Law from the University of Bergen and a graduate of the Norwegian Police University College in Oslo. Current directorships and senior management positions: Grieg International II AS, board member Grieg Shipowning AS, board member Grieg Star Bulk AS, board member Grieg Shipping II AS, board member Grieg Star Group AS, board member Lerøy Seafood Group ASA, board member Nya Wermlands- Tidningens AB, board member Previous directorships and senior management positions last five years: 102

103 GC Rieber AS, chair of the board Mowinckel Managment AS, chair of the board Raoul Grünthal, Chief Executive Officer Schibsted Sverige AB: Raoul Grünthal has been the CEO of Schibsted Sverige AB since the company was established in He is also chairman of the Board of Directors of Aftonbladet and Svenska Dagbladet. Raoul Grünthal was CEO of Svenska Dagbladet between 2006 and 2009, and in the period he was CEO of the news agency TT. He also has experience from the financial industry and as founder of the financial daily newspaper Finanstidningen. Current directorships and senior management positions: TU Service AB, chairman of the board of directors Föreningen för Carlssons skola, chairman of the board of directors Rydsviken AB, deputy board member Hundudden Invest AB, deputy board member Previous directorships and senior management positions last five years: Metro Nordic Sweden AB, board member TT Nyhetsbyrån AB, chairman of the board of directors Christian Printzell Halvorsen, Chief Product Officer, Schibsted Classified Media: Christian Printzell Halvorsen joined the Group Management Team in January 2015 when he became globally responsible for the development of all of Schibsted's marketplace products. He is a board member of several Schibsted companies, including Blocket, Le Bon Coin and Schibsted Payment. He was previously CEO of FINN.no ( ) and led the company through a period of strong growth and massive changes in consumer behavior, essentially going from a desktop-centric to mobile-centric company. During this period he was also a member of Group Management in Schibsted Norway. Christian's background includes a technology education from NTNU, being an entrepreneur, previous work experience from McKinsey & Company and a position as Vice President of Strategy and Product Development in FINN.no. He is passionately interested in innovation. Current directorships and senior management positions: none outside of Schibsted Previous directorships and senior management positions last five years: none Remuneration and benefits The remuneration paid to the members of the Management in 2014 is set out on an individual basis below. Other benefits includes benefits such as insurance, company car and free telephone/internet. Details of salary, variable pay and other benefits provided to group management in 2014 (in NOK 1,000): LTI Salary incl. Pension Loan Members of Group management: Variable pay programme Other benefits holiday pay expense outstanding (earned 2014) Rolv Erik Ryssdal 3,388 1,332 3, ,925 - Trond Berger 2,692 1,134 2, , Frode Eilertsen 2, , Raoul Grünthal 3, , Camilla Jarlsby 1, , Didrik Munch 2, , ,089 - Lena K. Samuelsson 2, Terje Seljeseth 2,654 1,111 2, , *Sverre Munck resigned from the group management 01 September Gunnar Strömblad resigned from the group management 31 March Details of salary, variable pay and other benefits provided to group management in 2013 (in NOK 1,000): 103

104 Members of Group management: Salary incl. holiday pay Variable pay LTI programme (earned 2013) Other benefits Pension expense Loan outstanding Rolv Erik Ryssdal 3,318 1,102 4, ,748 - Trond Berger 2, , , Frode Eilertsen 1, Raoul Grünthal 3, , Camilla Jarlsby 1, , Didrik Munch 2, , ,050 - Lena K. Samuelsson 3, Terje Seljeseth 2,582 1,037 1, , Sverre Munck 2,488-1, ,130 - Gunnar Strömblad 1, Long-term incentive programme In 2015 Schibsted introduced new LTI programmes; one that will target Group Management (the Senior Executive Plan ) and a broader programme covering other senior managers, and key contributors in the Group (the Key Contributor Plan ). The total number of participants in the Key Contributor Plan is proposed to be between 200 and 300. In both plans granted shares vest with time, subject to continuous employment. The shares vest stepwise in three stages over a period of years. Under the Senior Executive Plan the vesting period is 5 years, whereas the vesting period under the Key Contributor Plan is 4 years. Under both plans the grant level is based on the position/role of the relevant participant. According to the Senior Executive Plan there are certain share ownership requirements. In terms of overall costs, the plans will cost approximately NOK 74 million (assuming 200 participants in the Key Contributor Plan and 9 participants in the Senior Executive Plan). The new LTI programmes replaced the previous programs which were introduced in 2010, and which was divided into four participating levels. Level 1 for the CEO, level 2 for members of Group Management and level 3 and level 4 for key personnel in the Group, as well as the managers/management groups in key subsidiaries. For each level, participants were given a defined "Basic Amount" which calculated as a percentage of salary. The Group Board stipulated guidelines for the percentage to be allocated to the various participant levels in order to ensure flexibility and mobility, while also taking into account individual pay differences and variations in the compensation schemes. Between 11% and 33% of the Basic amount (the "Share Amount ") was awarded at start in form of shares in Schibsted which cannot be sold during the three-year period. If a participant at level 1 or 2 leaves during the three years, the Share Amount shall be refunded. A similar restriction does not apply to participants in level 3 and level 4.The rest, i.e. between 67% and 89% of the Basic amount ("Performance Amount"), is linked to three-year performance criteria. Performance criteria are performance measures that are compared to the three-year EBITA/EBITDA for the Group or participant's operations for level 1, 2 and 3. For level 4 the performance criteria are connected to the development of the market value of the companies during the vesting period compared to a predetermined hurdle. At the end of the three-year period, the participants receive settlement in Schibsted shares based on their goal achievement, and the number of shares is calculated based on the average price during the programme's three-year period. Level 1, 2 and 3 participants receive the full Performance Amount after three years. Level 4 participants receive 1/3 of the Performance Amount after three years and the remaining 2/3 after a one year lock-up period. The maximum settlement in each programme will depend on the target achievement during the period. If the minimum target is not achieved during the three-year period, only the Share Amount will be paid at the end of the three-year programme. For information about the previous LTI-programmes, please see note 27 to the Company's annual financial statements for 2014, which is included in Appendix B of the Prospectus Option programme Until 2010, Schibsted had an option programme for group management and key personnel. The programme was terminated in 2010 by the introduction of a new share-based programme (LTI programme), but until 2014 there were still valid individual outstanding option schemes. The programme is accounted for as a share-based payment transaction settled in equity. Expenses and increase in equity are recognised over the service period of 3 and 4 years. 104

105 Total exercise price for options exercised in 2014 was NOK 1 million (NOK 12 million). Fair value of the shares at the time of exercise was NOK 7 million (NOK 28 million). The table below gives an overview of options exercised by managers included in the option programme. As of 31 December 2014 all options have expired, and there are currently no outstanding options. Opening balance Exercised 2014 Expired and forfeited 2014 Closing balance Average maturity Rolv Erik Ryssdal 30,000 (8,189) (21,811) - - Trond Berger 15,000 (4,094) (10,906) - - Raoul Grünthal 7,500 (2,047) (5,453) - - Camilla Jarlsby 7,500 (2,047) (5,453) - - Total 60,000 (16,377) (43,623) Shares held by members of the Management As at 26 May 2015, the members of the Management have the following shareholdings in the Company (including direct and indirect ownership): Name Position Number of Shares before split Number of A-shares (after Split) Number of B-shares (after Split) Rolv Erik Ryssdal Chief Executive Officer 20,217 20,217 20,217 Trond Berger Terje Seljeseth Lena K. Samuelsson Frode Eilertsen Camilla Jarlsby Chief Financial Officer, Executive Vice President CEO Schibsted Classified Media (SCM) Executive Vice President Communications & CSR EVP Digital and Group Chief Product Officer EVP Organisational Development 12,605 12,605 12,605 9,020 9,020 9,020 5,755 5,755 5,755 2,280 2,280 2,280 12,328 12,328 12,328 Didrik Munch CEO Schibsted Norway 12,328 12,328 12,328 Raoul Grünthal CEO Schibsted Sverige AB 11,896 11,896 11,896 Christian Printzell Halvorsen Chief Product Officer, Schibsted Classified Media 2,880 2,880 2, Benefits upon termination The CEO has termination payment equal to eighteen months salary in addition to the six-month period of notice. The other Group management and managers are normally entitled to termination payments equal to 6-18 months salary, as further specified in the table below. Competition restrictions and curtailments will normally apply during the termination-pay period. The Chairman of the Board has no special remuneration scheme that applies if he resigns. Other than set out below, none of the members of the Group management or supervisory bodies' are entitled to benefits upon termination of employment. Members of Group management: Benefits upon termination (months) Termination period Severance pay period Rolv Erik Ryssdal 6 18 Trond Berger 6 18 Frode Eilertsen 6 n/a Raoul Grünthal 6 18 Camilla Jarlsby 6 n/a Didrik Munch 6 18 Lena K. Samuelsson 6 12 Terje Seljeseth 6 12 Christian Printzell Halvorsen

106 11.5 Pension and retirement benefits Group management pension plans The Group s CEO is entitled and, if Schibsted so requires, obliged to retire at the age of 62. His full annual early retirement pension is 66% of his pensionable earnings. The retirement pension solution means that, when he reaches 67 years of age, the CEO will receive a retirement pension for life which equals 66% of his fixed salary. He is entitled to a disability pension of 66% of his fixed salary. The spouse/cohabitant pension is 50% of his fixed salary and the child pension is 15% of his fixed salary. The Norwegian executive directors are entitled and, if Schibsted so requires, obliged to retire at the age of 62 years. During the period leading up to the ordinary retirement age (67 years), they will receive a pension that is 66% of their fixed salary. Full annual retirement/disability pension for the Norwegian executive directors is 66% of their fixed salary. Other members of the group management have different pension schemes within the limit of benefits to the Norwegian executive directors. The executive directors based in Sweden have defined benefit pension insurance on level with the Norwegian executive directors Details on Group pension plans The Group has occupational pension plans in several countries established partly as defined benefit plans (in Norway), partly as multi-employer defined benefit plans accounted for as defined contribution plans (in Norway and Sweden) and partly as defined contribution plans (in Norway, Sweden and other countries). The Group has its occupational pension plans for its employees in Norwegian companies with Storebrand Livsforsikring AS. These pension plans meet the requirements of the Act on Mandatory occupational pensions applicable to Norwegian companies. Schibsted is entitled to make changes to those pension plans. A significant part of the existing funded defined benefit plans are closed. The terms of the funded defined benefit plans are mainly uniform. The benefits are mainly dependent upon number of years of employment, salary level at retirement age and the amount of benefits from the National Insurance pension. The majority of the funded defined benefit plans comprise retirement pension for life from 67 years and full retirement pension amounts to approximately 66% of the basis (limited to 12G (the social security base amount)) including assumed pension from the National Insurance pension (based on calculated National Insurance pension). Some of the plans include spouse pension, child pension and disability pension. As at the funded defined benefit plans in Norway covered approximately 1,700 working members and approximately 1,850 retirees. Estimated contributions in 2015 to the above mentioned funded defined benefit plans amount to approximately 130 million. Future contributions will be dependent on the accumulation period for each member's pension rights according to the principle of linear accumulation. The terms related to contributions to defined contribution plans in Norway are mainly uniform, and for most companies the contribution amounts to 5% of salaries within the interval from 1G to 6G and 8% in the interval from 6G to 12G. The plans include disability pension. In addition to the pension obligations that arises from the funded defined benefit plans, the Group's Norwegian companies have unfunded defined benefit obligations related to disability pensions (if not covered by other pension plans or insurances), supplementary pensions for salaries above 12G, Agreement-based pension (AFP) and early retirement pensions. The Group's companies outside Norway have pension plans, mainly defined contribution plans, in accordance with local practice and local legislation. The Group has certain pension schemes in Norway and Sweden established in multi-employer plans. These multi-employer plans are defined benefit plans, but the Group does not have access to the necessary information for the accounting years 2014 and 2013 required to account for these plans as defined benefit plans, and the plans are therefore accounted for as defined contribution plans. The amounts recognised in profit or loss and in comprehensive income are as follows: 106

107 NOK thousands Restated Current service cost Past service cost and gains and losses arising from settlements Net interest on the net defined benefit liability (asset) Remeasurements of the net defined benefit liability Net pension expense defined benefit plans Pension expense defined contribution plans Pension expense multi-employer defined benefit plans accounted for as defined contribution plans Net pension expense 1, Of which included in Profit or loss - Personnel expenses (note 27) Of which included in Profit or loss - Other income and expenses Of which included in Profit or loss - Financial expenses (note 29) Of which included in Other comprehensive income Remeasurements of defined pension liabilities Past service cost comprise restructuring costs in the form of pensions as well as the effect of plan amendments. The amounts recognised in the balance sheet are as follows: Present value of funded defined benefit obligations 4,044 3,305 Fair value of plan assets (3,176) (3,054) Present value of unfunded defined benefit obligations 1, Net pension liability 1,911 1,114 The average duration of the defined benefit plan obligation at the end of the reporting period is 27 years. Comparable, restated, figures for 2012 are not available the reported figures are available in the 2012 annual report. Significant actuarial assumptions used to determine the present value of the defined benefit obligation is as follows: Discount rate 2.30% 4.10% Future salary increases 2.75% 3.75% Future increase in the social security base amount 2.50% 3.50% Future pension increases 0.00% 0.60% Schibsted determines the discount rate by reference to high quality corporate bonds. Schibsted has concluded that a deep market exists for covered bonds ("OMF-obligasjoner") in Norway and that this interest rate therefore shall be used as reference under IAS 19 Employee benefits. The assumption regarding expected pension increases is used for pensions being increased in accordance with the Act on Company pensions. For pension agreements containing specific clauses on increases in pension, those clauses are applied. Changes in financial assumptions in 2014 resulted in an increase in defined benefit pension liabilities of NOK 936 million which is recognised in other comprehensive income as a component of the net amount of NOK 804 million in the line item Remeasurements of defined benefit pension liabilities. Following recent years' declining mortality rate and rising life expectancy in Norway, a new mortality table for collective pension insurance was made public in 2013 and Schibsted implemented the new table (K2013) in The resulting increase in defined benefit pension liabilities of NOK 426 million was recognised in other comprehensive income as a component of the net amount of NOK 300 million in the line item Remeasurements of defined benefit pension liabilities Loans and guarantees Loans to group management have no instalments, and the interest rate is 1% lower than the government set benchmark interest rate. 107

108 11.7 Share programme Employees in the Group are given the opportunity four times a year to participate in the Employee Share Saving Plan (ESSP). The plan is to enable employees to take part in Schibsted s value creation by saving in the Schibsted share. All employees in a 50% employment position (or more) employed in a Schibsted majority owned company are eligible to participate. The employee can save up to 5%, but a maximum of NOK 50,000 annually of their base gross salary through payroll deductions in order to purchase shares in Schibsted. The shares are bought quarterly on the employees behalf at market price. Employees can freely sell their shares but will then give up the right to matching shares. After two years from the date of purchase, the employee will receive 1 free Schibsted share for every 2 Schibsted shares the employee have saved (matching shares) Nomination committee Pursuant to the Articles of Association, the Company shall have a nomination committee elected by the Annual General Meeting. The nomination committee consists of John A. Rein (chairman), Spencer Adair and Ann Kristin Brautaset. The nomination committee is elected for a period of two years. The responsibility of the nomination committee is, among other things, to nominate candidates to be elected by the shareholders as members of the Board of Directors and their deputies whenever their respective period of service expires or when a by-election is needed. As far as possible, the nomination committee shall announce its nominations in the shareholders notice of the Annual General Meeting. The nomination committee proposes remunerations to the members of the Board of Directors. The proposal shall be made in advance for a period of one year counting from the date of the Annual General Meeting. The nomination committee may pass opinions on, and may put forward proposals to the General Meeting, in matters regarding the size, composition and working conditions of the Board of Directors, including proposals regarding the election of the Company's auditor and the auditor s remuneration. The CEO and the chairman of the Board of Directors attend the meetings of the nomination committee when necessary Audit committee The Company's audit committee was established in 2007 and consists of Christian Ringnes (chairman), Eva Berneke and Arnaud de Puyfontaine. The audit committee is elected by the Board of Directors for a period of one year at a time. The audit committee prepares the quality assurance of the financial reporting for the Board of Directors. In addition, the audit committee monitors whether the Company's internal control system and risk management systems function efficiently, as well as monitoring the statutory audit of the annual financial statements and the auditor s independence. The Group s CFO is the management s main representative in relation to the Audit Committee and attends all its meetings. The external auditor attends Audit Committee meetings when matters within the external auditors area of responsibility are considered Compensation committee The Company's compensation committee was established in 2004 and consists of Ole Jacob Sunde (chairman), Eugenie van Wiechen and Jonas Fröberg. The compensation committee is elected by the Board of Directors for a period of one year. The CEO attends the meetings of the compensation committee unless his own remuneration is to be discussed. Remuneration for the CEO is decided by the Board of Directors after being prepared by the compensation committee. In addition, the compensation committee discusses general questions regarding remuneration of Management and key managers of key subsidiaries and prepares guidelines thereto. This includes questions regarding successions to key positions in the Group, salaries, bonuses, the use of options and other incentive schemes, severance pay, early retirement pensions and retirement pensions. The guidelines serve as a basis for the Company's policy regarding remuneration of Management and other key managers. 108

109 11.11 Conflicts of interests The board of directors of Blommenholm Industrier, the Company's largest shareholder, consists of John A. Rein (chairman), Per Egil Hegge and Ole Jacob Sunde. Further, the board of directors of the Tinius Trust, which controls Blommenholm Industrier, currently has the same members, with Ole Jacob Sunde as chairman, and John A Rein and. Per Egil Hegge as board members. Ole Jacob Sunde is the chairman of the Board of Directors of Schibsted ASA. Ole Jacob Sunde has been appointed to the Board of Directors of the Company by Blommenholm Industrier pursuant to Article 8 of the Articles of Association. John A. Rein is the chairman of the nomination committee of the Company and also provides legal services to Blommenholm Industrier and to the Tinius Trust through the law firm Wikborg, Rein & Co. There are no other potential conflicts of interests between the duties the members of the Board of Directors and the Management have to Schibsted and their private interests and/or duties. To the Company s knowledge, there are currently no actual or potential conflicts of interest between the Company and the private interests or other duties of any of the Board Members and the members of the Management, including any family relationships between such persons. There are no family relationships between any members of the Board of Directors and/or the Management Convictions for fraudulent offences, bankruptcy etc. None of the members of the Board of Directors or the Management have during the last five years preceding the date of this Prospectus: any convictions in relation to indictable offences or convictions in relation to fraudulent offences; received any official public incrimination and/or sanctions by any statutory or regulatory authorities (including designated professional bodies) or was disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company; or been declared bankrupt or been associated with any bankruptcy, receivership or liquidation in his/her capacity as a founder, director or senior manager of a company or partner of a limited partnership Employees Overview As at the date of this Prospectus, the Company has approximately 6,800 employees. The following table illustrates the approximate number of employees as per the end of each calendar year for 2014 and 2013 and 2012 split by the geographical areas. Geographical area Norway 3,000 3,100 3,200 Sweden 1,769 1,611 1,364 Other countries 2,031 2,189 3,236 Total 6,800 6,900 7, Corporate governance The Company complies with the Norwegian Code of Practice for Corporate Governance issued by the Norwegian Corporate Governance Board, latest edition of 30 October 2014 with the exception of the following: Item 4 Two share classes. Item 4 of the Company's articles of association now provides that the Company will have two share classes. The Norwegian Code of Practice for Corporate Governance recommends that 109

110 companies only have one share class. The Company's creation of two share classes is based on the Company's need to have additional flexibility for raising equity and at the same time securing that the Tinius Trust's position as shareholder of the Company remains stable having the objective of ensuring editorial freedom and integrity for the Group's media houses. Item 5 Freely negotiable shares. Based on Schibsted s publishing responsibilities and role in society as a media company, Schibsted s independence and integrity are ensured through restrictions on ownership and voting rights stated in the Articles of Association. Article 6 states that no shareholder may own or vote at the General Meetings in respect of more than 30% of the shares. Item 6 General Meetings. The Chair of the Board is always present to respond to any questions. Other board members participate when needed. A report on the corporate governance of Schibsted is included in the annual report. Besides the issues described above, it is worth highlighting that the Item 8 of the Articles of Association stipulates that shareholders holding at least 25% of the A-shares in the Company are entitled to appoint one Board member directly. Blommenholm Industrier is currently exercising this right having appointed Ole Jacob Sunde, and has stated that it does not have an intention to seek a change in its board representation for the foreseeable future. 110

111 12. CORPORATE INFORMATION 12.1 Incorporation and address The Company is a Norwegian public limited liability company, incorporated on 26 November 1953 under the laws of Norway. The Company is subject to the Norwegian Public Limited Liability Companies Act. The Company s registration number in the Norwegian Registry of Business Enterprises is Legal name of the Company is Schibsted ASA and the commercial name is Schibsted Media Group. The Company's address is Apotekergaten 10, 0107 Oslo, Norway. The Company's telephone number is The Company s website can be found at The content of is not incorporated by reference into or otherwise forms part of this Prospectus Listing and registration The Company's Shares are listed on Oslo Børs, under the symbol SCH and are registered in the VPS under the Securities Identity Number (ISIN) NO Following the Split: The Company's A-shares will be listed on Oslo Børs, under the symbol SCHA and will be registered in the VPS under the Securities Identity Number (ISIN) NO The Company's B-shares will be listed on Oslo Børs, under the symbol SCHB and will be registered in the VPS under the Securities Identity Number (ISIN) NO The Company s register of shareholders in the VPS is administrated by DNB Bank ASA Group structure The Company is the parent company of the Group. The Company is a holding company with no material direct operations and its principal assets are the equity interests it owns in its operating subsidiaries. A full list of the subsidiaries of the Company as of 31 December 2014 is set out in note 34 to the Company's annual financial statements for 2014, which is included in Appendix B of the Prospectus. The table below sets out subsidiaries and joint ventures which in the opinion of the Company are likely to have a significant effect on the assessment of its assets and liabilities, financial position or profits and losses: Company name Country of incorporation Registered office Field of activity Ownership Subsidiaries Finn.no AS Norway Oslo Online Classifieds % Finn Eiendom AS Norway Oslo Online Classifieds % Blocket AB Sweden Stockholm Online Classifieds % LBC France, SASU France Paris Online Classifieds % Schibsted Classified Media Spain SL (previously Schibsted España S.L.) Spain Barcelona Online Classifieds % ASM Classificados de México SA de CV Mexico Mexico City Online Classifieds % Aftenposten AS Norway Oslo Schibsted Norway Media House % Verdens Gang AS Norway Oslo Schibsted Norway Media House % Aftonbladet Hierta AB Sweden Stockholm Schibsted Sweden Media House % Joint Ventures SnT Classifieds ANS Norway Oslo Online Classifieds % Associated Companies 701 Search Pte Ltd Singapore Singapore Online Classifieds % 12.4 Share capital and share capital history The Company s current share capital is NOK 108,003,615 divided into 108,003,615 Shares, each with a nominal value of NOK 1. After giving effect to the Split, the Company's share capital will be NOK 108,003,615 divided into 108,003,615 A-shares and 108,003,615 B-shares, each with a nominal value of NOK

112 Each of the Company's A-shares carries 10 votes and each of the B-shares carries 1 vote. Except for the differences in voting rights, the A-shares and the B-shares will carry equal rights in all respects. This includes the right to receive dividends as declared by the Company. The dividend policy is described in section 12.9 with further information in section All the Shares are validly issued and fully paid. The table below summarises the development in the Company s share capital for periods covered by the historical financial information included in the Prospectus: Date Type of change Share capital increase (NOK) Share capital (NOK) Subscription price (NOK/share) Par value (NOK/ share) Issued shares Total shares 8 May 2015 Share split N/A 108,003,615 N/A ,003, ,007, December 2014 N/A 108,003,615 N/A ,003,615 1 January 2014 N/A 108,003,615 N/A ,003, December 2013 N/A 108,003,615 N/A ,003,615 1 January 2013 N/A 108,003,615 N/A ,003, December 2012 N/A 108,003,615 N/A ,003,615 1 January 2012 N/A 108,003,615 N/A ,003, Own shares As of the date of this Prospectus, the Company owns 565,204 of its own shares with a face value of NOK 565,204. Treasury shares are deducted from equity and are not recognised as financial assets; thus no carrying amount. Immediately following completion of the Split, the Company will own 565,204 of its own A-shares and 565,204 of its own B-shares. Total face and book value will remain the same as before the split Shareholder agreements The Company is not aware of any shareholders' agreements in relation to its Shares Outstanding authorisations At the annual General Meeting on 8 May 2015, the Board was authorised pursuant to the Public Limited Liability Companies Act section (1) to increase the Company s share capital by up to NOK 5,400, The authority may be used to issue B-shares only. The authority covers (i) capital increases against contributions in cash and contributions other than in cash (ii) the right to incur special obligations for the Company and (iii) resolutions on mergers in accordance with section 13-5 of the Public Limited Liability Companies Act. Further, the authority includes the right to set aside the pre-emptive rights of existing shareholders. The authority is valid until the Annual General Meeting in 2016, but in no event later than 30 June As of the date of this Prospectus, the authorisation has not been used. The resolution of the General Meeting provides that the authorisation may also be used in take-over situations. At the annual General Meeting on 8 May 2015, the Board of Directors was granted authorisation to acquire and sell, on the Company's behalf, shares with a par value of up to NOK 10,800,361. The minimum amount that can be paid for shares is NOK 30 and the maximum amount is NOK 1,000. The Board of Directors is free to decide the acquisition method and possible later sale of shares. The authorisation can also be used to buy or sell shares in takeover situations. The authorisation is valid through to the next Annual General Meeting in 2016 (i.e. no longer than until 30 June 2016). As of the date of this Prospectus, the authorisation has not been used. At the Annual General Meeting on 8 May 2015, the Board of Directors was granted authorisation pursuant to the third paragraph of Article 7 of the Articles of Association to (i) vote in connection with amendments to subsidiaries Articles of Association and (ii) make decisions to sell shares or operations, including private placements, mergers or demergers, in subsidiaries when the net payment (sales amount, merger or demerger payment, etc.) does not exceed NOK 1 billion after financial adjustments. 112

113 12.8 Convertible instruments, warrants and share options Except as described in Sections 11.7 and , neither the Company nor any of its subsidiaries has issued any options, warrants, convertible loans or other instruments that would entitle a holder of any such instrument to subscribe for any shares in the Company or its subsidiaries. Further, neither the Company nor any of its subsidiaries has issued subordinated debt or transferable securities other than the Shares and the shares in its subsidiaries which will be held, directly or indirectly, by the Company. The Company has a long-term incentive (LTI) programme for its employees. The LTI programme includes an element of remuneration through the granting of shares in the Company, subject to certain performance criteria. The programme is described in detail in section The Company has a standing Employee Share Saving Plan (ESSP). The ESSP contains a matching function were employees are awarded one share for every two they have after a two year holding period. The ESSP is described in more detail in section Dividend policy The strategy and vision which Schibsted s Board of Directors has adopted means the Group s operations must respond quickly to changes and continue with a high degree of continuous development. Schibsted s capital structure must be sufficiently robust to maintain the desired freedom of action and to be able to exploit growth opportunities based on strict assessments relating to our allocation of capital. Schibsted will place emphasis on paying a stable to increasing dividend amount over time. In years when there is an economic slowdown, or for other reasons weaker cash flows of the company, the company may reduce or decide not to pay dividend. Schibsted is currently in a phase of investments in online activities which will form a basis for future growth in profitability. The Board has taken a balanced approach to the dividend proposal, and has taken into consideration the fact that the Group is increasingly strengthening its growth profile. On this background, the Board did recommend to the Annual General Meeting that a dividend of NOK 3.50 per share be distributed for the 2014 financial year. This represents no change compared to In 2012 the dividend was also NOK 3.50 per share. The total number of shares is approximately 108 million (before the Split), and a dividend of NOK 3.50 per share means a payout of NOK 376 million (adjusted for shares owned by Schibsted). A dividend of NOK 3.50 per share amounts to around 39% of the net cash flow from operating activities for

114 12.10 Shareholders The table below sets out Schibsted's 20 largest shareholders as registered in VPS as of 26 May 2015 with total outstanding shares of : Name Number of shares Percentage (%) Blommenholm Industrier AS 28,188, % Folketrygdfondet 6,996, % Goldman Sachs & Co Equity Segregat 4,871, % NWT Media AS 4,000, % J.P. Morgan Chase Bank N.A. London 2,882, % The Northern Trust Company Ltd. 2,750, % Montague Place Custody Services 2,681, % Morgan Stanley & Co. LLC 2,615, % Clearstream Banking S.A. 1,998, % The Bank of New York Mellon 1,947, % Morgan Stanley & Co. International 1,876, % J.P. Morgan Chase Bank N.A. London 1,760, % Euroclear Bank S.A./N.V. ('Ba') 1,584, % UBS AG, London Branch 1,389, % J.P. Morgan Chase Bank N.A. London 1,376, % State Street Bank & Trust Company 1,243, % JPMorgan Clearing Corp. 1,223, % Citibank, N.A. 1,223, % Baillie Gifford GL Alpha Pen F 1,040, % State Street Bank and Trust Co. 1,020, % The table above does not reflect the split of the Company's Shares and the creation of the B-shares. The following shareholders owned more than 5% of the issued share capital based on the table above: Blommenholm Industrier AS (26.10%) and Folketrydfondet (6.48%). In addition, based on stock exchange announcements, the following shareholdings, or voting rights, exceed the 5% threshold that are not visible through the VPS provided registry: Baillie Gifford & Co crossed above the 5% threshold on 16 September 2014 and Luxor Capital Group LP went below the 10% threshold on 14 November Neither entity has made any disclosures of large shareholdings in the Schibsted share following this. As far as the Company is aware of, there is no other natural or legal person other than the above mentioned, which indirectly or directly has a shareholding in the Company above 5% which must be disclosed in accordance with Norwegian law. Shareholders with ownership exceeding 5% must comply with disclosure obligations according to the Norwegian Securities Trading Act section 4-3. For more detailed description please see section None of the major shareholders have different voting rights, and prior to the share split all shares in the Company carries equal voting rights. Blommenholm Industrier has according to the Articles of Association of the Company in its capacity as the holder of more than 25% of the shares of the Company the right to appoint a board member. To the extent known to the Company, it is not directly or indirectly owned or controlled by any entity or individual Articles of Association The Company s Articles of Association are set out in Appendix A to this Prospectus. Below is a summary of certain provisions of the Articles of Association. At the annual General Meeting of the Company 8 May 2015 the shareholders resolved to amend the Company's Articles of Association in order to create the B-shares. Further, the shareholders approved certain other amendments required as a result of the creation of two share classes. The revised Articles of Association became effective upon listing of the Shares and are described below. 114

115 Object As set forth in Article 3 of the Articles of Associations the Company's object is to engage in the information business, as well as related business activities. The shareholders shall enable the Company to operate its information business in such a way that editorial freedom and integrity are fully ensured. The requirement for editorial freedom and integrity shall apply to all media and publications encompassed by the Group's Norwegian and international activities Provisions Related to the Members of the Administrative, Management and Supervisory Bodies Pursuant to the Articles of Association, the Board of Directors shall comprise of 6 to 11 members, as well as deputy members, as decided by the annual General Meeting. The employees of the Group shall be represented at the Board of Directors by the number of representatives in accordance with current agreements. At present the employees shall have two board members when the Board of Directors comprises 6, 7 or 8 members, and shall have three board members when the Board of Directors comprises 9, 10 or 11 members. Shareholders owning 25% or more of the Company's capital-shares shall have the right to appoint one of the members of the Board of Directors. See Section 11 Board of Directors, Management, Employees and Corporate Governance. Members of the Board of Directors are elected for one year at a time Registration deadline for the annual General Meeting Pursuant to the Articles of Association, the Company may stipulate a registration deadline which may not be earlier than five days before the annual General Meeting in the notice of the annual General Meeting Voting Rights and Ownership Restrictions Each of the Company's A-shares carries 10 votes and each of the B-shares carries 1 vote. Pursuant to Article 6 of the Articles of Association as amended in the Annual General Meeting 8 May 2015, no shareholder may own more than 30% of the shares or vote for more than 30% of the total number of votes which may be cast under the Company's Articles of Association. In addition to a shareholder s own Shares, shareholdings which are owned or acquired by the following are included when determining this threshold: (a) (b) (c) (d) the shareholder s spouse, minor children or persons with whom the shareholder has a common household; companies where the shareholder has an influence as specified in 1-2 of the Norwegian Public Limited Liability Companies Act; companies within the same group of companies as the shareholder; and anyone with whom the shareholder has a binding collaboration with regard to the exercise of their rights as shareholders Majority requirements Pursuant to Article 7 of the Articles of Association as amended in the Annual General Meeting 8 May 2015, decisions on amendments to the Articles of Association are to be adopted by the General Meeting and require the approval of more than three quarters of both the share capital represented at the General Meeting and the A-shares represented at the General Meeting. This is a higher majority requirement than the general requirement for amending articles of association under Norwegian law, which is two thirds of the votes cast and the share capital represented at the relevant general meeting. Furthermore, the approval of at least three quarters of both the share capital and the A-shares represented at the General Meeting is also required for any decisions relating to, or a vote taken, regarding: (a) Amendments to the Articles of Association of directly or indirectly owned subsidiaries or the sale of shares or operations, including private placements, mergers and demergers in directly or indirectly owned subsidiaries to others than another company in the Schibsted Group. 115

116 (b) The assignment of Aftenposten s and Verdens Gang publication rights to anyone other than another company in the Schibsted Group. Pursuant to Article 7 of the Articles of Association the General Meeting can, with approval of more than three quarters of the share capital represented at the General Meeting and more than three quarters of the A- shares, decide to grant the Board of Directors authorisation to make decisions in matters referred to in subparagraphs a) and b) above Provisions of the Articles of Association that could have an effect of delaying, deferring or preventing a change in control The 30% ownership and voting restriction in Article 6 of the Articles of Association (see section ) and the 3/4 majority requirements in Article 7 of the Articles of Association (see section ) could have an effect of delaying, deferring or preventing a change in control in the Company Certain aspects of Norwegian corporate law The general meeting of shareholders Under Norwegian law, a company s shareholders exercise supreme authority in the Company through the general meeting. In accordance with Norwegian law, the annual General Meeting of the Company s shareholders is required to be held each year on or prior to 30 June. The following business must be transacted and decided at the annual General Meeting: approval of the annual accounts and annual report, including the distribution of any dividend; the Board of Directors declaration concerning the determination of salaries and other remuneration to senior executive officers; any other business to be transacted at the General Meeting by law or in accordance with the Company s Articles of Association In addition to the annual General Meeting, extraordinary General Meetings of shareholders may be held if deemed necessary by the Board of Directors. An extraordinary General Meeting must also be convened for the consideration of specific matters at the written request of the Company s auditors or shareholders representing a total of at least 5% of the share capital. Norwegian law requires that written notice of General Meetings needs be sent to all shareholders whose addresses are known at least three weeks prior to the date of the meeting. The notice shall set forth the time and date of the meeting and specify the agenda of the meeting. It shall also name the person appointed by the board of directors to open the meeting. A shareholder may attend General Meetings either in person or by proxy. The Company will include a proxy form with its notices of General Meetings. A shareholder is entitled to have an issue discussed at a General Meeting if such shareholder provides the Board of Directors with notice of the issue within seven days before the three week notice period, together with a proposal to a draft resolution or a basis for putting the matter on the agenda. The shareholders of the Company as of the date of the General Meeting are entitled to attend the General Meeting. Pursuant to the Articles of Association, however, the Company may stipulate a registration deadline which may not be earlier than five days before the annual General Meeting in the notice of the annual General Meeting. Shareholders who fail to register within any such registration deadline may be denied access to the General Meeting Voting rights Subject to the terms of a company s articles of association to the contrary, Norwegian law provides that each outstanding share shall represent a right to one vote. The Company's Articles of Association deviates from this principle by providing different voting rights for A-shares and B-shares and by imposing a limit on the maximum percentage of votes than can be cast by any one shareholder, see Section No voting rights can be exercised with respect to any treasury Shares held by the Company. 116

117 In general, decisions that shareholders are entitled to make under Norwegian law or the Company s Articles of Association may be made by a simple majority of the votes cast. In the case of elections, the persons who obtain the most votes are elected. However, as required under Norwegian law, certain decisions, including resolutions to set aside preferential rights to subscribe in connection with any share issue, to approve a merger or demerger, to amend the Company's articles of association, to authorise an increase or reduction in the share capital, to authorise an issuance of convertible loans or warrants or to authorise the board of directors to purchase shares and hold them as treasury shares or to dissolve the Company, must receive the approval of at least two-thirds of the aggregate number of votes cast as well as at least two-thirds of the share capital represented at a General Meeting. However, Article 7 of the Company's Articles of Association provides stricter voting requirements with respect to these issues stating that any resolutions to amend the Articles of Association, shall be passed by the General Meeting and shall require the endorsement of more than (i) 3/4 of the share capital represented in the relevant General Meeting and (ii) 3/4 of the A-shares represented in the relevant General Meeting. Norwegian law further requires that certain decisions, which have the effect of substantially altering the rights and preferences of any Shares or class of Shares, receive the approval by the holders of such Shares or class of Shares as well as the majority required for amending the Articles of Association. Decisions that (i) would reduce the rights of some or all shareholders in respect of dividend payments or other rights to assets or (ii) restrict the transferability of shares, require that at least 90% of the share capital represented at the general meeting of shareholders in question vote in favour of the resolution, as well as the majority required for amending the articles of association. Certain types of changes in the rights of shareholders require the consent of all shareholders affected thereby as well as the majority required for amending the articles of association. There are no quorum requirements for General Meetings. In general, in order to be entitled to vote at a General Meeting, a shareholder must be registered as the owner of Shares in the Company s share register kept by the VPS. Under Norwegian law, a beneficial owner of Shares registered through a VPS-registered nominee may not be able to vote the beneficial owner s Shares unless ownership is re-registered in the name of the beneficial owner prior to the relevant General Meeting. Investors should note that there are varying opinions as to the interpretation of Norwegian law in respect of the right to vote nominee-registered shares. In the Company s view, a nominee may not meet or vote for Shares registered on a nominee account. A shareholder must, in order to be eligible to register, meet and vote for such Shares at the General Meeting, transfer the Shares from the nominee account to an account in the shareholder s name. Such registration must appear from a transcript from the VPS at the latest at the date of the General Meeting Additional issuances and preferential rights If the Company issues any new Shares, including bonus shares (i.e. new Shares issued by a transfer from funds that the Company is allowed to use to distribute dividend), the Company s articles of association must be amended, which according to Article 7 of the Company's Articles of Association requires the endorsement of more than (i) 3/4 of the share capital represented in the relevant General Meeting and (ii) 3/4 of the A-shares represented in the relevant General Meeting. Note that according to the background law such decision requires a two-thirds majority of the votes cast as well as at least two-thirds of the share capital represented at a general meeting. In addition, under Norwegian law, the Company s shareholders have a preferential right to subscribe for the new Shares on a pro rata basis in accordance with their then-current shareholdings in the Company. Preferential rights may be set aside by resolution in a general meeting of shareholders passed by the same vote required to approve amendments of the articles of association according to Article 7 of the Company's Articles of Association requires the endorsement of more than (i) 3/4 of the share capital represented in the relevant General Meeting and (ii) 3/4 of the A-shares represented in the relevant General Meeting. Setting aside the shareholders preferential rights in respect of bonus issues requires the approval of the holders of all outstanding Shares. The general meeting of the Company may, in a resolution supported by more than (i) 3/4 of the share capital represented in the relevant General Meeting and (ii) 3/4 of the A-shares represented in the relevant General Meeting, authorise the Board to issue new Shares. Such authorisation may be effective for a maximum of two years, and the nominal value of the Shares to be issued may not exceed 50% of the nominal share capital as at the time the authorisation is registered with the Norwegian Register of Business Enterprises. The shareholders 117

118 preferential right to subscribe for Shares issued against consideration in cash may be set aside by the Board only if the authorisation includes the power for the Board to do so. Any issue of Shares to shareholders who are citizens or residents of the United States upon the exercise of preferential rights may require the Company to file a registration statement in the United Stated under U.S. securities law. If the Company decides not to file a registration statement, these shareholders may not be able to exercise their preferential rights. Under Norwegian law, bonus shares may be issued, subject to shareholder approval and provided, amongst other requirements, that the transfer is made from funds that the Company is allowed to use to distribute dividend. Any bonus issues may be effectuated either by issuing Shares or by increasing the nominal value of the Shares outstanding. If the increase in share capital is to take place by new Shares being issued, these new Shares must be allocated to the shareholders of the Company in proportion to their current shareholdings in the Company Minority rights Norwegian law contains a number of protections for minority shareholders against oppression by the majority, including but not limited to those described in this and preceding and following paragraphs. Any shareholder may petition the courts to have a decision of the Board of Directors or General Meeting declared invalid on the grounds that it unreasonably favours certain shareholders or third parties to the detriment of other shareholders or the Company itself. In certain grave circumstances, shareholders may require the courts to dissolve the Company as a result of such decisions. Shareholders holding in the aggregate 5% or more of the Company s share capital have a right to demand that the Company convenes an extraordinary General Meeting to discuss or resolve specific matters. In addition, any of the Company s shareholders may in writing demand that the Company place an item on the agenda for any General Meeting as long as the Company s Board of Directors is notified within seven days before the deadline for convening the General Meeting and the demand is accompanied with a proposed resolution or a reason for why the item shall be on the agenda. If the notice has been issued when such a written demand is presented, a renewed notice must be issued if the deadline for issuing notice of the General Meeting has not expired Distribution of dividends The Norwegian Public Limited Liability Companies Act provides several constraints on the distribution of dividends: Dividend may only be distributed to the extent that the Company after the distribution has a sound equity and liquidity. The Company may only distribute dividends to the extent that its net assets following the distribution are at least equal to the sum of (i) the Company's share capital, (ii) the reserve for valuation differences and (iii) the reserve for unrealised gains. In determining the distribution capacity, deductions must be made for (i) the aggregate amount of any receivables held by the Company and dating from before the balance sheet date which are secured by a pledge over Shares in the Company, (ii) any credit and collateral etc. from before the balance sheet date which according to sections 8-7 to 8-10 of the Norwegian Public Limited Liability Companies Act must not exceed the Company's distributable equity (unless such credit has been repaid or is set-off against the dividend or such collateral has been released prior to the decision to distribute the dividend), (iii) other dispositions carried out after the balance sheet date which pursuant to law must not exceed the Company's distributable equity and (iv) any amount distributed after the balance sheet date through a capital reduction. The calculation of the distributable equity shall be made on the basis of the balance sheet in the Company's last approved annual accounts, provided, however, that the registered share capital as of the date of the resolution to distribute dividends shall apply. Dividends may also be distributed by the general meeting based on an interim balance sheet which has been prepared and audited in accordance with the provisions applying to the annual accounts and with a balance sheet date which does not lie further back in time than six months before the date of the general meeting's resolution. 118

119 The amount of distributable dividends is calculated on the basis of the Company s separate annual accounts and not on the basis of the consolidated financial statements of the Company and its subsidiaries. A distribution of dividends can be resolved by a majority vote at the general meeting on the basis of a proposal from the Board. The general meeting cannot distribute an amount in excess of what is proposed or accepted by the Board. Following the approval of the annual accounts for the last financial year, the general meeting may authorise the Board of Directors to declare dividends on the basis of the Company's annual accounts. Such authorisations cannot be given for a longer period than until the next annual general meeting of the Company. Dividends may be distributed in cash or in kind. The Norwegian Public Limited Liability Companies Act does not provide for any time limit after which entitlement to dividends lapses. Subject to various exceptions, Norwegian law provides a limitation period of three years from the date on which an obligation is due. There are no dividend restrictions or specific procedures for non-norwegian resident shareholders to claim dividends. For a description of withholding tax on dividends applicable to non-norwegian residents, see Section 14 Norwegian taxation. Any future payments of dividends on the Shares will be denominated in NOK, and will be paid to the shareholders through the VPS. Investors registered in the VPS whose address is outside Norway and who have not supplied the VPS with details of any NOK account, will, however, receive dividends by check in their local currency, as exchanged from the NOK amount distributed through the VPS. If it is not practical in the sole opinion of DNB, being the Company s VPS registrar, to issue a check in a local currency, a check will be issued in USD. The issuing and mailing of checks will be executed in accordance with the standard procedures of DNB. The exchange rate(s) that is applied will be DNB s rate on the date of issuance. Dividends will be credited automatically to the VPS registered shareholders NOK accounts, or in lieu of such registered NOK account, by check, without the need for shareholders to present documentation proving their ownership of the Shares Rights of redemption and repurchase of shares The Company has not issued redeemable shares (i.e. shares redeemable without the shareholder s consent). The Company s share capital may be reduced by reducing the nominal value of the Shares. According to the Norwegian Public Limited Liability Companies Act, such decision requires the approval of two-thirds of the votes cast and share capital represented at a General Meeting. However, capital reduction involves amendments of a company's articles and would accordingly for Schibsted require the support of (i) 3/4 of the share capital represented in the relevant General Meeting and (ii) 3/4 of the A-shares represented in the relevant General Meeting. Redemption of individual Shares requires the consent of the holders of the Shares to be redeemed. The Company may purchase its own Shares if an authorisation to the Board of Directors to do so has been given by the shareholders at a General Meeting with the approval of at least two-thirds of the aggregate number of votes cast and share capital represented. The aggregate nominal value of treasury Shares so acquired may not exceed 10% of the Company s share capital, and treasury shares may only be acquired if the Company s distributable equity, according to the latest adopted balance sheet, exceeds the consideration to be paid for the shares. The authorisation by the shareholders at the General Meeting cannot be given for a period exceeding 18 months. A Norwegian public limited liability company may not subscribe for its own shares Shareholder vote on certain reorganisations A decision to merge with another company or to demerge requires a resolution of the Company s shareholders at a General Meeting passed by more than (i) 3/4 of the share capital represented in the relevant General Meeting and (ii) 3/4 of the A-shares represented in the relevant General Meeting, ref. Article 7 of the Company's Articles of Association. A merger plan, or demerger plan signed by the Board of Directors along with certain other required documentation, would have to be sent to all the Company s shareholders or made available to the shareholders on the Company s website, at least one month prior to the General Meeting which will consider the proposed merger or demerger. 119

120 Liability of board members Members of the Board of Directors owe a fiduciary duty to the Company and its shareholders. Such fiduciary duty requires that the Board Members act in the best interests of the Company when exercising their functions and exercise a general duty of loyalty and care towards the Company. Their principal task is to safeguard the interests of the Company. Members of the Board of Directors may each be held liable for any damage they negligently or wilfully cause the Company. Norwegian law permits the general meeting to discharge any such person from liability, but such discharge is not binding on the Company if substantially correct and complete information was not provided at the general meeting of the Company s shareholders passing upon the matter. If a resolution to discharge the Company s board members from liability or not to pursue claims against such a person has been passed by a general meeting with a smaller majority than that required to amend the Articles of Association, shareholders representing more than 10% of the share capital or, if there are more than 100 shareholders, more than 10% of the shareholders may pursue the claim on the Company s behalf and in its name. The cost of any such action is not the Company s responsibility but can be recovered from any proceeds the Company receives as a result of the action. If the decision to discharge any of the Company s board members from liability or not to pursue claims against the Company s board members is made by such a majority as is necessary to amend the Articles of Association, the minority shareholders of the Company cannot pursue such claim in the Company s name Indemnification of board members Neither Norwegian law nor the Articles of Association contains any provision concerning indemnification by the Company of the Board of Directors. The Company is permitted to purchase insurance for the board members against certain liabilities that they may incur in their capacity as such Distribution of assets on liquidation Under Norwegian law, a company may be liquidated by a resolution of the company s shareholders in a general meeting passed by the same vote as required with respect to amendments to the articles of association. The shares rank equally in the event of a return on capital by the Company upon liquidation or otherwise. 120

121 13. SECURITIES TRADING IN NORWAY This Section 13 includes certain aspects of rules pertaining to securities trading in Norway in a Norwegian incorporated company pursuant to Norwegian legislation, but is however not a full or complete description of the matters described herein. The following summary does not purport to be a comprehensive description of all the legal considerations that may be relevant to a decision to purchase, own or dispose of Shares. Investors are advised to consult their own legal advisors concerning the overall legal consequences of their ownership of Shares Introduction Oslo Børs was established in 1819 and is the principal market in which shares, bonds and other financial instruments are traded in Norway. Oslo Børs is operated by Oslo Børs ASA, which also operates the regulated marketplace Oslo Axess. Oslo Børs has entered into a strategic cooperation with the London Stock Exchange group with regards to, inter alia, trading systems for equities, fixed income and derivatives Trading and settlement Trading of equities on Oslo Børs is carried out in the electronic trading system Millenium Exchange. This trading system was developed by the London Stock Exchange and is in use by all markets operated by the London Stock Exchange as well as by the Borsa Italiana and the Johannesburg Stock Exchange. Official trading on Oslo Børs takes place between 09:00 hours (CET) and 16:20 hours (CET) each trading day, with pre-trade period between 08:15 hours (CET) and 09:00 hours (CET), closing auction from 16:20 hours (CET) to 16:25 hours (CET) and a post-trade period from 16:25 hours (CET) to 17:30 hours (CET). Reporting of after exchange trades can be done until 17:30 hours (CET). The settlement period for trading on Oslo Børs is two trading days (T+2). This means that securities will be settled on the investor s account in the VPS two days after the transaction, and that the seller will receive payment after two days Oslo Clearing ASA, a wholly-owned subsidiary of SIX x-clear Ltd, a company in the Six Group, has a license from the Norwegian FSA to act as a central clearing service, and has from 18 June 2010 offered clearing and counterparty services for equity trading on Oslo Børs. Investment services in Norway may only be provided by Norwegian investment firms holding a license under the Norwegian Securities Trading Act, branches of investment firms from an EEA member state or investment firms from outside the EEA that have been licensed to operate in Norway. Investment firms in an EEA member state may also provide cross-border investment services into Norway. It is possible for investment firms to undertake market-making activities in shares listed in Norway if they have a license to this effect under the Norwegian Securities Trading Act, or in the case of investment firms in an EEA member state, a license to carry out market-making activities in their home jurisdiction. Such market-making activities will be governed by the regulations of the Norwegian Securities Trading Act relating to brokers' trading for their own account. However, market-making activities do not as such require notification to the Norwegian FSA or Oslo Børs except for the general obligation of investment firms being members of Oslo Børs to report all trades in stock exchange listed securities Information, control and surveillance Under Norwegian law, Oslo Børs is required to perform a number of surveillance and control functions. The Surveillance and Corporate Control unit of Oslo Børs monitors market activity on a continuous basis. Market surveillance systems are largely automated, promptly warning department personnel of abnormal market developments. The Norwegian FSA controls the issuance of securities in both the equity and bond markets in Norway and evaluates whether the issuance documentation contains the required information and whether it would otherwise be unlawful to carry out the issuance. Under Norwegian law, a company that is listed on a 121

122 Norwegian regulated market, or has applied for listing on such market, must promptly release any inside information directly concerning the company (i.e. precise information about financial instruments, the issuer thereof or other matters which are likely to have a significant effect on the price of the relevant financial instruments or related financial instruments, and which are not publicly available or commonly known in the market). A company may, however, delay the release of such information in order not to prejudice its legitimate interests, provided that it is able to ensure the confidentiality of the information and that the delayed release would not be likely to mislead the public. Oslo Børs may levy fines on companies violating these requirements The VPS and transfer of shares The Company's shareholder register is operated through the VPS. The VPS is the Norwegian paperless centralised securities register. It is a computerised bookkeeping system in which the ownership of, and all transactions relating to, Norwegian listed shares must be recorded. All transactions relating to securities registered with the VPS are made through computerised book entries. No physical share certificates are, or may be, issued. The VPS confirms each entry by sending a transcript to the registered shareholder irrespective of any beneficial ownership. To give effect to such entries, the individual shareholder must establish a share account with a Norwegian account agent. Norwegian banks, authorised securities brokers in Norway and Norwegian branches of credit institutions established within the EEA are allowed to act as account agents. The entry of a transaction in the VPS is generally prima facie evidence in determining the legal rights of parties as against the issuing company or any third party claiming an interest in the given security. The VPS is liable for any loss suffered as a result of faulty registration or an amendment to, or deletion of, rights in respect of registered securities unless the error is caused by matters outside the VPS control which the VPS could not reasonably be expected to avoid or overcome the consequences of. Damages payable by the VPS may, however, be reduced in the event of contributory negligence by the aggrieved party. The VPS must provide information to the Norwegian FSA on an on-going basis, as well as any information that the Norwegian FSA requests. Further, Norwegian tax authorities may require certain information from the VPS regarding any individual s holdings of securities, including information about dividends and interest payments Shareholder register Under Norwegian law, shares are registered in the name of the beneficial owner of the shares. As a general rule, there are no arrangements for nominee registration, and Norwegian shareholders are not allowed to register their shares in the VPS through a nominee. However, foreign shareholders may register their shares in the VPS in the name of a nominee (bank or other nominee) approved by the Norwegian FSA. An approved and registered nominee has a duty to provide information on demand about beneficial shareholders to the issuer and to the Norwegian authorities. In case of registration by nominees, the registration in the VPS must show that the registered owner is a nominee. A registered nominee has the right to receive dividends and other distributions but cannot vote on shares at general meetings on behalf of the beneficial owners Foreign investment in Norwegian shares Foreign investors may trade shares listed on Oslo Børs through any broker that is a member of Oslo Børs, whether Norwegian or foreign Disclosure obligations If a person's, entity's or consolidated group's proportion of the total issued shares and/or rights to shares in an issuer with its shares listed on a regulated market in Norway (with Norway as its home state, which will be the case for the Company) reaches, exceeds or falls below the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital or the voting rights of that issuer, the person, entity or group in question has an obligation under the Norwegian Securities Trading Act to notify Oslo Børs and the issuer immediately. The same applies if the disclosure thresholds are passed due to other circumstances, such as a change in the Company's share capital. 122

123 13.8 Insider trading According to Norwegian law, subscription for, purchase, sale or exchange of financial instruments that are listed, or subject to the application for listing, on a Norwegian regulated market, or incitement to such dispositions, must not be undertaken by anyone who has inside information, as defined in section 3-2 of the Norwegian Securities Trading Act. The same applies to the entry into, purchase, sale or exchange of options or futures/forward contracts or equivalent rights whose value is connected to such financial instruments or incitement to such dispositions Mandatory offer requirement The Norwegian Securities Trading Act requires any person, entity or consolidated group that becomes the owner of shares representing more than one-third of the voting rights of a Norwegian issuer with its shares listed on a Norwegian regulated market to, within four weeks, make an unconditional general offer for the purchase of the remaining shares in that issuer. A mandatory offer obligation may also be triggered where a party acquires the right to become the owner of shares that, together with the party's own shareholding, represent more than one-third of the voting rights in the issuer and Oslo Børs decides that this is regarded as an effective acquisition of the shares in question. The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells the portion of the shares that exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered. When a mandatory offer obligation is triggered, the person subject to the obligation is required to immediately notify Oslo Børs and the issuer in question accordingly. The notification is required to state whether an offer will be made to acquire the remaining shares in the issuer or whether a sale will take place. As a rule, a notification to the effect that an offer will be made cannot be retracted. The offer is subject to approval by Oslo Børs before the offer is submitted to the shareholders or made public. The offer price per share must be at least as high as the highest price paid or agreed to be paid by the offeror for the shares in the six-month period prior to the date the threshold was exceeded. If the acquirer acquires or agrees to acquire additional shares at a higher price prior to the expiration of the mandatory offer period, the acquirer is required to restate its offer at such higher price. A mandatory offer must be in cash or contain a cash alternative at least equivalent to any other consideration offered. In case of failure to make a mandatory offer or to sell the portion of the shares that exceeds the relevant mandatory offer threshold within four weeks, Oslo Børs may force the acquirer to sell the shares exceeding the threshold by public auction. Moreover, a shareholder who fails to make an offer may not, as long as the mandatory offer obligation remains in unfulfilled, exercise rights in the issuer, such as voting on shares at general meetings of the issuer's shareholders, without the consent of a majority of the remaining shareholders. The shareholder may, however, exercise its rights to dividends and pre-emption rights in the event of a share capital increase. If the shareholder neglects his duty to make a mandatory offer, Oslo Børs may impose a cumulative daily fine that accrues until the circumstance has been rectified. Any person, entity or consolidated group that owns shares representing more than one-third of the votes in a Norwegian issuer with its shares listed on a Norwegian regulated market is required to make an offer to purchase the remaining shares of the issuer (repeated offer obligation) if the person, entity or consolidated group through acquisition becomes the owner of shares representing 40% or more of the votes in the issuer. The same applies correspondingly if the person, entity or consolidated group through acquisition becomes the owner of shares representing 50% or more of the votes in the issuer. The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells the portion of the shares which exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered. Any person, entity or consolidated group that has passed any of the above mentioned thresholds in such a way as not to trigger the mandatory bid obligation, and has therefore not previously made an offer for the remaining shares in the company in accordance with the mandatory offer rules is, as a main rule, required to make a mandatory offer in the event of a subsequent acquisition of shares in the company. 123

124 13.10 Compulsory acquisition Pursuant to the Norwegian Public Limited Liability Companies Act and the Norwegian Securities Trading Act, a shareholder who, directly or through subsidiaries, acquires shares representing 90% or more of the total number of issued shares in a Norwegian public limited company, as well as 90% or more of the total voting rights, has a right, and each remaining minority shareholder of the issuer has a right to require such majority shareholder, to effect a compulsory acquisition for cash of the shares not already owned by such majority shareholder. Through such compulsory acquisition the majority shareholder becomes the owner of the remaining shares with immediate effect. If a shareholder acquires shares representing 90% or more of the total number of issued shares, as well 90% or more of the total voting rights, through a voluntary offer in accordance with the Norwegian Securities Trading Act, a compulsory acquisition can, subject to the following conditions, be carried out without such shareholder being obliged to make a mandatory offer: (i) the compulsory acquisition is commenced no later than four weeks after the acquisition of shares through the voluntary offer, (ii) the price offered per share is equal to or higher than what the offer price would have been in a mandatory offer, and (iii) the settlement is guaranteed by a financial institution authorised to provide such guarantees in Norway. A majority shareholder who effects a compulsory acquisition is required to offer the minority shareholders a specific price per share, the determination of which is at the discretion of the majority shareholder. However, where the offeror, after making a mandatory or voluntary offer, has acquired 90% or more of the voting shares of an issuer and a corresponding proportion of the votes that can be cast at the general meeting, and the offeror pursuant to section 4-25 of the Norwegian Public Limited Liability Companies Act completes a compulsory acquisition of the remaining shares within three months after the expiry of the offer period, it follows from the Norwegian Securities Trading Act that the redemption price shall be determined on the basis of the offer price for the mandatory and/or voluntary offer unless specific reasons indicate that another price is the fair price. Should any minority shareholder not accept the offered price, such minority shareholder may, within a specified deadline of not less than two months, request that the price be set by a Norwegian court. The cost of such court procedure will, as a general rule, be the responsibility of the majority shareholder, and the relevant court will have full discretion in determining the consideration to be paid to the minority shareholder as a result of the compulsory acquisition. Absent a request for a Norwegian court to set the price, or any other objection to the price being offered in a compulsory acquisition, the minority shareholders would be deemed to have accepted the offered price after the expiry of the specified deadline for raising objections to the price offered in the compulsory acquisition Foreign exchange controls There are currently no foreign exchange control restrictions in Norway that would potentially restrict the payment of dividends to a shareholder outside Norway, and there are currently no restrictions that would affect the right of shareholders of a Norwegian issuer who are not residents in Norway to dispose of their shares and receive the proceeds from a disposal outside Norway. There is no maximum transferable amount either to or from Norway, although transferring banks are required to submit reports on foreign currency exchange transactions into and out of Norway into a central data register maintained by the Norwegian customs and excise authorities. The Norwegian police, tax authorities, customs and excise authorities, the National Insurance Administration and the Norwegian FSA have electronic access to the data in this register. 124

125 14. TAXATION The following is a summary of certain Norwegian tax considerations relevant to the acquisition, ownership and disposition of shares by holders that are residents of Norway for purposes of Norwegian taxation ("Resident Shareholders") and holders that are not residents of Norway for such purposes ("Non-resident Shareholders"). The summary is based on applicable Norwegian laws, rules and regulations as they exist as at the date of this Prospectus. Such laws, rules and regulations may be subject to changes after this date, possibly on a retroactive basis for the same tax year. The summary is of a general nature and does not purport to be a comprehensive description of all the tax considerations that may be relevant to the Shareholders and does not address foreign tax laws. Please note that special rules apply for shareholders that cease to be tax resident in Norway or that for some reason are no longer considered taxable to Norway in relation to their shareholding. Each Shareholder should consult with and rely upon their own tax advisor to determine the particular tax consequences for him or her and the applicability and effect of any Norwegian or foreign tax laws and possible changes in such laws. For the purpose of the summary below, a reference to a Norwegian or foreign shareholder or company refers to tax residency rather than nationality Tax consequences of the share split The creation of the B-shares entails that each of the Company's existing shares, with par value NOK 1.00, will be split into one A-share, par value NOK 0.50, and one B-share, par value NOK The A-shares will have ten votes each, while the B-shares will have one vote each. The shares will have the same economic rights. In the view of the Company, the split of the existing shares into one A-share and one B-share, with different voting rights, but equal economic rights, will not constitute a taxable realisation according to Norwegian tax practice. The shareholders' cost price as well as any unused tax-free allowance (Norwegian: Skjermingsfradrag) on existing shares shall be split based on the same ratio as the split of par value, meaning that 50% shall be allocated to the A-share and 50% shall be allocated to the B-share. The same is the case for paid in capital for tax purposes Taxation of dividends Resident Corporate Shareholders Norwegian corporate Shareholders (i.e. limited liability companies, mutual funds, savings banks, mutual insurance companies or similar entities resident in Norway for tax purposes) ("Resident Corporate Shareholders") are generally exempt from tax on dividends received on shares in Norwegian limited liability companies, pursuant to the participation exemption (Norwegian: Fritaksmetoden). However, 3% of dividend income is generally deemed taxable as general income at a flat rate of 27%, implying that dividends distributed from the Company to resident corporate Shareholders are effectively taxed at a rate of 0.81% Resident Personal Shareholders Shareholders who are individuals tax resident in Norway ("Resident Personal Shareholders") are in general tax liable to Norway for their worldwide income. Dividends distributed to Resident Personal Shareholders are taxed as ordinary income at a flat rate of 27% to the extent the dividends exceed a statutory tax-free allowance (Norwegian: Skjermingsfradrag). The allowance is calculated on a share-by-share basis, and the allowance for each share is equal the cost price of the share multiplied by a determined risk-free interest rate based on the effective rate after tax of interest on treasury bills (Norwegian: "Statskasseveksler") with three months maturity. The allowance is allocated to the Shareholder owning the share on 31 December in the relevant income year. Norwegian Personal Shareholders who transfer shares during an income year will thus not be entitled to deduct any calculated allowance related to the year of transfer. The Directorate of Taxes announces the risk free-interest rate in January the year after the income. The risk-free interest rate for 2014, was 0.9%. 125

126 Any part of the calculated allowance one year exceeding dividend distributed on the same share ("excess allowance") can be carried forward and set off against future dividends received on, or capital gains upon realization of the same share. Furthermore, excess allowance can be added to the cost price of the share and included in basis for calculating the allowance on the same share the following year Non-resident Shareholders Dividends distributed to Shareholders not resident in Norway for tax purposes ("Non-resident Shareholders") are in general subject to withholding tax at a rate of 25%, unless otherwise provided for in an applicable tax treaty or the recipient is covered by the specific regulations for corporate shareholders tax-resident within the European Economic Area ( EEA ) (ref. the section below for more information on the EEA exemption). The company distributing the dividend is responsible for the withholding. Norway has entered into tax treaties with approximate 80 countries. In most tax treaties the withholding tax rate is reduced to 15%. In accordance with the present administrative system in Norway, the Norwegian distributing company will normally withhold tax at the regular rate or reduced rate according to an applicable tax treaty, based on the information registered with the VPS with regard to the tax residence of the Non-resident Shareholder. Dividends paid to Non-resident Shareholders in respect of nominee- registered shares will be subject to withholding tax at the general rate of 25% unless the nominee, by agreeing to provide certain information regarding beneficial owners, has obtained approval for a reduced or zero rate from the Central Office for Foreign Tax Affairs ("COFTA") (Norwegian: Sentralskattekontoret for utenlandssaker). Non-resident Shareholders who are exempt from withholding tax and Shareholders who have been subject to a higher withholding tax than applicable in the relevant tax treaty, may apply to the Norwegian tax authorities for a refund of the excess withholding tax. The application is to be filed with COFTA. If a Non-resident Shareholder is engaged in business activities in Norway, and the shares are effectively connected with such business activities, dividends distributed to such shareholder will generally be subject to the same taxation as that of resident Shareholders, cf. the description of tax issues related to resident Shareholders above. Non-resident Shareholders should consult their own advisers regarding the availability of treaty benefits in respect of dividend payments, including the ability to effectively claim refunds of withholding tax Non-resident Shareholders tax-resident within the EEA Non-resident Shareholders who are individuals tax-resident within the EEA ( Foreign EEA Personal Shareholders ) are upon request entitled to a deductible allowance. The Shareholder shall pay the lesser amount of (i) withholding tax according to the rate in an applicable tax treaty or (ii) withholding tax at 25% of taxable dividends after allowance. Foreign EEA Personal Shareholders may carry forward any unused allowance, if the allowance exceeds the dividends. Non-resident Shareholders that are corporations tax-resident within the EEA for tax purposes ( Foreign EEA Corporate Shareholders ) are exempt from Norwegian tax on dividends distributed from Norwegian limited liability companies, provided that the Foreign EEA Corporate Shareholder in fact is genuinely established within the EEA and performs real economic activity within the EEA Taxation upon realisation of shares Resident Corporate Shareholders Resident Corporate Shareholders are generally exempt from tax on capital gains upon the realization of shares in Norwegian limited liability companies. Losses upon the realization and costs incurred in connection with the purchase and realization of such shares are not deductible for tax purposes Resident Personal Shareholders Resident Personal Shareholders are taxable in Norway for capital gains upon the realization of shares, and have a corresponding right to deduct losses that arise upon such realization. The tax liability applies irrespective of time of ownership and the number of shares realised. Gains are taxable as general income in 126

127 the year of realization, and losses can be deducted from general income in the year of realization. The tax rate for general income is currently 27%. The taxable gain or loss is calculated per share as the difference between the consideration received and the cost price of the share, including any costs incurred in relation to the acquisition or realization of the share. Any unused allowance on a share (ref. above) may be set off against capital gains related to the realization of the same share, but may not lead to or increase a deductible loss i.e. any unused allowance exceeding the capital gain upon the realization of the share will be lost. Furthermore, unused allowance may not be set of against gains from realization of other shares. If a Shareholder disposes of shares acquired at different times, the shares that were first acquired will be deemed as first sold (the FIFO-principle) when calculating a taxable gain or loss Non-resident Shareholders As a general rule, capital gains generated by Non-resident Shareholders are not taxable in Norway unless the shares are effectively connected with business activities carried out or managed in Norway (in which case capital gains will generally be subject to the same taxation as that of resident Shareholders, cf the description of tax issues related to resident Shareholders above), or the shares are held by an individual who has been a resident of Norway for tax purposes with unsettled/postponed exit tax calculated on the shares at the time of cessation as Norwegian tax resident Net wealth tax Norwegian limited liability companies and certain similar entities are exempt from Norwegian net wealth tax. For other resident Shareholders (i.e. Shareholders who are individuals), the shares will form part of the basis for the calculation of net wealth tax. The current marginal net wealth tax rate is 0.85% of taxable values. Listed shares are valued at 100% of their quoted value on 1 January in the assessment year (the year following the income year) Inheritance tax Norway does not impose inheritance tax. However, the heir acquires the donor's tax input value of the shares based on principles of continuity. Thus, the heir will be taxable for any increase in value during the donor's ownership, at the time of the heir's realization of the shares Stamp duty There is currently no Norwegian stamp duty or transfer tax on the transfer or issuance of shares. 127

128 15. ADDITIONAL INFORMATION 15.1 Legal proceedings The Group has received claims from Swedish tax authorities for repayment of value added tax for previous years of SEK 295 million. The basis for those claims is a decision in the EU-court in 2010 stating that certain printing services shall have a VAT-rate of 6%, not 25%. Two verdicts in The Supreme Administrative Court in Sweden issued 26 February 2014 related to similar cases, implies that the Swedish tax authorities will be entitled to claim repayment of value added taxes for previous years provided that the Group will be able to have similar amounts refunded from the supplier of printing services. The Company is of the opinion that the Group s financial exposure is very limited. In the 2014 financial statements the repayment of SEK 295 million is recognised as liability in other liabilities and the similar amount is recognised in other receivables. Except as set out above are no governmental, legal or arbitration proceedings, including any such proceedings which are pending or threatened of which the issuer is aware, during a period covering at least the previous 12 months which may have, or have had in the recent past significant effects on the Group s financial position or profitability Material contracts Other than as set out below, neither the Group nor any member of the Group has entered into any material contracts outside the ordinary course of business for the two years prior to the date of this Prospectus, or any other contract outside the ordinary course of business which contains any provision under which any member of the Group has any obligation or entitlement Joint venture agreements with Naspers, Telenor and Singapore Press Holdings (SPH) In September 2013 Schibsted entered into an agreement with Telenor regarding the establishment of the 50/50 joint venture, SnT Classifieds, to provide online classifieds services in selected key markets in South America and Asia. At the same time Telenor joined Schibsted and Singapore Press Holdings (SPH) in the South East Asian online classifieds joint venture 701 Search Pte (701), where the parties will own 1/3 of the shares each. In November 2014 Schibsted entered in an agreement with Naspers, Telenor and Singapore Press Holdings (SPH) to establish joint ventures for the development of their online classifieds platforms in Brazil, Indonesia, Thailand and Bangladesh. The joint ventures were established in January 2015 with the following ownership structure: - Brazil: 50.0% Naspers and 50.0% SnT Classifieds - Indonesia: 64.0% Naspers and 36.0% 701 Search - Thailand: 55.9% 701 Search and 44.1% Naspers - Bangladesh: 50.3% SnT Classifieds and 49.7% Naspers As part of the agreement, 701 Classifieds transferred its online classifieds business in the Philippines to Naspers. This would allow 701 Search to focus its efforts in Thailand. In certain other markets in Latin America and Asia, Schibsted, SnT Classifieds and 701 Search, respectively, acquired Naspers' operations. At the same time, Naspers acquired the operations of Schibsted, SnT Classifieds and 701 Search in certain other markets Related party transactions Schibsted has relationships with joint ventures and associated companies, see note 13 "Investments in joint ventures and associated companies" to the Group's consolidated financial statements for For loans to associated companies and joint ventures, see note 15 "Other non-current assets" and note 17 "Trade and other receivables" to the Group's consolidated financial statements for Christian Ringnes, member of the Board of Directors and the Audit Committee, controls the company from which Schibsted's former subsidiary Eesti Meedia hires offices in Tallinn. In September 2013, Schibsted sold Eesti Meedia. The office rental amounted to NOK 5 million in the period prior to the sale in 2013 and NOK 7m in

129 For information remuneration to Management, see note 27 Personnel expenses and share-based payment to the Group's consolidated financial statements for Property and plants Owned property Schibsted does not own any property or equipment that is material in terms of the consolidated annual revenue Leased property The table below sets out the principal real estate properties that the Group holds pursuant to lease agreements with an annual rent of more than NOK 20 million as of 20 April 2015: Location of property Surface areas (square metres) Occupant Description/utilisation Annual rent (NOK) Term Akersgaten 55 (Oslo, Approximately Verdens Gang / Office building/mainly used by the Norway) 30,000 Aftenposten Group 85,800, Production building/printing Sandakerveien 121 Approximately Schibsted facility. The mentioned surfaces are (Oslo, Norway) 44,000 Eiendom AS entirely used by the Group 58,900, Grensen 5/7 (Oslo, Approximately Office building / partly used by the Finn AS Norway) 10,700 Group 29,700, Västra Järnvägstan (Stockholm, Sweden) Approximately Schibsted Sweden Office building/mainly used by the Group 51,900, For detailed information on the Group's property, plant and equipment for the years ended 31 December 2014, 2013 and 2012 see note 12 to the Group's consolidated financial statements of Environment The Group believes that its operations have little negative impact on the environment. The chemicals used to produce the newspapers are handled as special waste and recycled to the extent possible. Agreements with licensed transport companies ensure that special waste is collected safely. Ordinary operations do not involve any danger of emissions from the printing plants. During 2014, Schibsted s printing operations consumed 68,000 tons of paper, 1,700 tons of printing ink and 28.5 gigawatt hours of electricity. The Group's newspaper companies in Norway and Sweden arrange for unsold newspapers to be returned and sold on for recycling. The Group is not aware of any environmental issues that may affect the Company s utilisation of tangible assets. The Group's online activities have negligible impact on the environment Research and development, dependency on contracts, patents and licenses Schibsted Media Group spends substantial resources on improving and developing products for new platforms and markets. In 2014 significant resources were allocated to establishing a central organisation for joint development of services and technology. These development efforts will continue in The backdrop for these expenditures is the increasing globalisation of the competition in the online sector and the move towards more identity-driven products. This makes it critical to create more targeted advertising and end-user products and to develop products faster and more efficiently. By centralising a larger part of the core development, the Group is to free up capacity in the operational units for new product development. Central teams will be established to develop common tech platforms for both media houses, online classifieds, for advertising and login services. Additional information on investments in intangible assets can be found in Section There are no patents or no licences, industrial, commercial or financial contracts or new manufacturing processes which the issuer is dependent and that are considered material to Schibsted s business of profitability. 129

130 15.7 Regulatory environment General Schibsted is subject to the relevant legislation in the countries in which the Group operates. Below is an overview of certain legislation which affects Schibsted s operations Data protection rules Schibsted is subject to data protection rules in the various jurisdiction in which it operates. Notably, the EU Data Protection Directive imposes restrictions on the collection, use and other processing of personal data and on the transfer of personal data out of the EEA. The requirements with respect to the collection and processing of data, the rights of users and the obligations imposed on companies collecting data vary to a substantial extent from country to country (even among countries that have implemented the EU Data Protection Directive). Data protection legislation includes, among other things, rules on how data may be collected, used and shared with third parties, such as advertisers Competition Law Schibsted is subject to laws governing competition in the markets in which it operates. The competition law rules vary from jurisdiction to jurisdiction. Most jurisdictions, however, have rules which authorize the authorities charged with enforcing the competition rules to intervene against mergers, acquisitions and concentrations which may restrict competition. Furthermore, competition rules will normally prohibit certain types of activities which restrict competition, such as price fixing and marked sharing agreements, as well as the abuse of a dominant position on a given market Norwegian media ownership rules Schibsted's Norwegian operations are governed by the Norwegian Act No. 53 relating to the Supervision of the Acquisition of Newspapers and Broadcasting Enterprises of 13 June 1997 (the "Media Ownership Act"). The Norwegian Media Authority (the "Media Authority") enforces the Media Ownership Act. The objective of the Media Ownership Act is "to promote freedom of expression, genuine opportunities to express one's opinion and a comprehensive range of media". Under the Media Ownership Act, the Media Authority may intervene against acquisitions of ownership shares in media enterprises if (i) the acquirer, alone or in cooperation with others, possesses or gains a significant ownership position in the national or regional media market and (ii) the acquirer s ownership of the media enterprise conflicts with the purpose of the Media Ownership Act. The Media Authority may also intervene against certain types of cooperation agreements Documents on display Copies of the following documents will be available for inspection at the Company's offices at Apotekergata 10, N-0107 Oslo, Norway, during normal business hours from Monday to Friday each week (except public holidays) for a period of twelve months from the date of this Prospectus. The Company's Articles of Association and Certificate of Incorporation All reports, letters, and other documents, historical financial information, valuations and statements prepared by any expert at the Company's request any part of which is included or referred to in the registration document The historical financial information of the Company and its subsidiary undertakings for each of the two financial years preceding the publication of this Prospectus This Prospectus 15.9 Statement regarding sources The Company confirms that when information in this Prospectus has been sourced from a third party it has been accurately reproduced and as far as the Company is aware and is able to ascertain from the information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. 130

131 16. DEFINITIONS AND GLOSSARY The following definitions and glossary apply in this Prospectus unless otherwise dictated by the context, including the foregoing pages of this Prospectus. Ad Shorthand for advertisement AGM Annual general meeting Articles of Association The articles of association of the Company A-shares Big Data Blommenholm Industrier A-shares in the Company Broad term for data sets so large or complex that traditional data processing applications are inadequate. Challenges include analysis, capture, curation, search, sharing, storage, transfer, visualization, and information privacy. The term often refers simply to the use of predictive analytics or other certain advanced methods to extract value from data, and seldom to a particular size of data set Blommenholm Industrier AS Board of Directors or Board The board of directors of the Company B-shares B-shares in the Company CEO The chief executive officer of the Company CFO The chief financial officer of the Company Company Schibsted ASA Corporate Governance Code The Norwegian Code of Practice for Corporate Governance dated 30 October 2014 CRM Customer Relationship Management CSR Corporate Social Responsibility EEA The European Economic Area EGM Extraordinary general meeting ESSP Employee Share Saving Plan EU EU Prospectus Directive The European Union Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State Forward-looking statements Statements made that are not historic and thereby predictive as defined in Section 4.2 FRN Floating-rate note G The National Insurance Scheme's basic amount General Meeting The general meeting of the Company 131

132 Greenfield investment Term relating to investments into new markets without a previous position Group The Company and its subsidiaries IAS International Accounting Standard IFRS International Financial Reporting Standards as adopted by the EU ISIN Securities number in the Norwegian Central Securities Depository (VPS) Listing The listing of the B-shares on Oslo Børs Listing Manager SEB LTI Long-Term Incentive (Programme) m Million(s) M&A Mergers and acquisitions Management The Group s senior management team Manager SEB MUV Monthly Unique Visitors NIB Nordic Investment Bank NIBOR Norwegian InterBank Offered Rate NOK Norwegian Kroner, the lawful currency of Norway Non-Norwegian shareholders Shareholders who are not resident in Norway for tax purposes Norwegian FSA Norwegian corporate shareholders Norwegian personal shareholders The Financial Supervisory Authority of Norway (Nw.: Finanstilsynet) Shareholders who are limited liability companies and certain similar corporate entities resident in Norway for tax purposes Personal shareholders resident in Norway for tax purposes Norwegian Securities Trading Act The Norwegian Securities Trading Act of 29 June 2007 no. 75 (Nw.: verdipapirhandelloven) OLC Oslo Børs P.p Online Classifieds Oslo Børs ASA or, as the context may require, Oslo Børs, a Norwegian regulated stock exchange operated by Oslo Børs ASA Percentage point - the arithmetic difference of two percentages Prospectus This Prospectus Relevant Member State Each Member State of the EEA which has implemented the EU Prospectus Directive. Schibsted Schibsted ASA 132

133 SCM Schibsted Classified Media SEB Skandinaviska Enskilda Banken AB (publ.) Oslo branch (enterprise number: ) Share(s) Shares in the share capital of the Company or any one of them SNO Split SPH Schibsted Norway The split of the Company's Shares, whereby one existing Share will be split into one A- share and one B-share Singapore Press Holdings SSE Schibsted Sweden U.S. Securities Act The United States Securities Act of 1933, as amended VPS The Norwegian Central Securities Depository (Nw.: Verdipapirsentralen) 133

134 Appendix A A 1

135 A 2

136 A 3

137 A 4

138 Appendix B B 1

139 ANNUAL REPORT SCHIBSTED MEDIA GROUP 2014 INDEX THIS IS SCHIBSTED MEDIA GROUP... 3 CEO... 4 KEY FIGURES... 6 BOARD OF DIRECTORS REPORT... 8 STATEMENT OF EXECUTIVE COMPENSATION SOCIAL RESPONSIBILITY CORPORATE GOVERNANCE MEMBERS OF THE BOARD THE NOMINATION COMMITTEE S REPORT SHARE INFORMATION FINANCIAL STATEMENTS / GROUP NOTES / GROUP FINANCIAL STATEMENTS / ASA NOTES / ASA AUDITOR S REPORT B 2

140 THIS IS SCHIBSTED MEDIA GROUP Our strategy of becoming a global leader within our chosen fields is a bold one. It consists of three elements that work seamlessly together: Online Classifieds, Growth and Media Houses. ONLINE CLASSIFIEDS We aim to be a global leader in online classified marketplaces and offer our users the best possible solutions and services. GROWTH We invest in great entrepreneurs and help scale their businesses locally and internationally by leveraging the Schibsted ecosystem. MEDIA HOUSES We are building world-class digital media houses that will shape the media landscape for years to come. ENGAGING MORE THAN 200 MILLION PEOPLE WORLDWIDE From Mexico to Malaysia, from Brazil to Norway millions of people interact with Schibsted companies every day. Job seekers and employers are connected. Deals are made. Old cars find new owners. Prices are compared. And the latest fashion is browsed...these are just some of the ways our services empower people in their daily life. All around the world. Our international reach requires that we understand and are sensitive to the diversity of our customers and companies. We are committed to constantly innovating and improving our services to meet the needs of people all around the world. Today and tomorrow. 175 YEARS OF INNOVATION AND ENTREPRENEURSHIP 2014 marked Schibsted s 175th anniversary. What began in 1839 as a small publishing company founded by Christian Schibsted has evolved into an international organization with interests in a wide range of areas. We ve come a long way and Schibsted Media Group continues to move forward. Fast. Online Classifieds We are meeting our customers needs with our ever-expanding range of smart products and services. Schibsted is becoming increasingly international, and we re not standing still. We re moving forward. Fast. We ensure that new and old sofas can be sold. News reports are read and watched when, where and how consumers want. Weather reports are checked with quick online services. Carpenters are found through a couple of clicks. TV viewing is planned. Maps and routes are checked. ESTABLISHED PHASE Norway: Finn.no Sweden: Blocket.se, Bytbil.com France: Leboncoin.fr Spain: Coches.net, Fotocasa.es, Segundamano.es, Milanuncios.com, InfoJobs.net Italy: Subito.it Austria: Willhaben.at Hungary: Hasznaltauto.hu Malaysia: Mudah.my Ireland: Done Deal INVESTMENT PHASE Wholly-owned online classifieds sites in Germany, Finland, Belgium, Portugal, Romania, Mexico, Colombia, Malaysia, Poland, Belarus, Morocco, Vietnam and England Online classifieds sites owned through joint ventures in Brazil, Chile, Indonesia, Thailand, Bangladesh, Switzerland, The Philippines, Singapore and Pakistan Media Houses SCHIBSTED NORGE VG media house (online and single-copy print newspapers) Subscription-based media houses (Aftenposten, Bergens Tidende, Stavanger Aftenblad, Fædrelandsvennen) Schibsted Growth Other activities (primarily printing, distribution and book publishing) SCHIBSTED SVERIGE Aftonbladet media house (online and single-copy print newspapers) Svenska Dagbladet (subscription-based media house) Schibsted Growth (focused on online personal finance, price comparisons, online coupons and online directories) 3 SCHIBSTED ANNUAL REPORT 2014 CEO TO THE NEXT LEVEL For Schibsted Media Group, 2015 will be characterized by three important issues: our media houses will continue their digital transformation; our classifieds business, including our joint ventures with Naspers, will develop further; and we will take a big step up in technology. Together, this will take us to the next level. Looking back on the past year, I m proud to see so many excellent achievements in our companies and in the Group. Schibsted has a mission of Empowering people in their daily life, and we have fulfilled that promise with numerous product improvements and innovations all across our business areas. To mention just a few: Leboncoin launched an automated ad reviewing tool, thereby saving costs on manual ad reviews and at the same time minimizing fraud for our users. Blocket s excellent environmental report showed the enormously positive recycling benefits for the environment. We re leading the way in mobile development of the classifieds market, benefitting a huge number of new consumers. And our media houses continue to win prizes for high-quality journalism and digital development while growing their audiences simultaneously. And for the first time, we launched our own Future Report, sharing our insights in technology, trends and media. This is a good example of Empowering people in practice! Find out more at schibstedfuturereport.com. 4 Exciting joint ventures in Online Classifieds At the turn of the year, the Schibsted, Naspers, Telenor and SPH joint ventures for online classifieds in four key markets Brazil, Indonesia, Thailand and Bangladesh were formally established. These joint ventures will bring substantial benefits to consumers, who will be able to buy and sell goods in better, more comprehensive marketplaces. They will also enable the companies to more efficiently share costs, expertise and people, while building awareness about vibrant online classifieds offerings to consumers. By joining forces, we will be well placed to develop our marketplaces even more efficiently. We have our strongest positions in Europe, holding leading positions in countries like Norway, Sweden, France, Ireland, Spain, Austria and Italy. Going forward, it is vital that we continue to develop and consolidate these positions. I d also like to mention Spain in particular. We now have ownership of many leading sites in Spain, such as Segundamano, Infojobs, Coches and Fotocasa. In addition to that, we ve acquired the exciting company Milanuncios. We have a clear vision for and commitment to the Spanish market, and we see it as a key country for future growth. World-class digital media houses It is fair to say that 2014 was also challenging for us in many ways. The severe decline in print advertising continues in the media B 3

141 houses, and is expected to do so in Of course, this came as no surprise to us. We ve been working very hard for several years to build the digital media houses of the future. I m pleased with what we ve achieved so far, but I also think it wise to be realistic and to realize that a lot of work still remains. In the midst of this transformation, we still continue to produce great journalism! In April, Bergens Tidende won the Skup award for Jannes story. VG won numerous awards for their coverage of the chess world championship, and Aftonbladet launched the viral success site Lajkat.se. Aftonbladet also broke new and historic ground with its coverage of the traditional Party leaders debate on web TV. And Aftenposten shocked politicians and ordinary citizens alike with its revelations about mobile surveillance in downtown Oslo, a powerful story that is bound to have repercussions. A step up in technology In recent years, users have changed behavior at a faster pace than ever before. They consume media in new ways and across platforms, they expect online services to follow them seamlessly, they expect services not only to know them but also to anticipate their needs. They seek one-click solutions and immediate response, and have become more qualified and adept as digital consumers, expecting only the best from us. Better technology will allow us to deliver services that help people in ways they never dreamed possible. The new game of logged-in users, data analytics, and sophisticated technology requires us to have global scale infrastructure and expertise but it also requires local strength and consumer knowledge. Only by being sufficiently present in our users daily lives can we actually be able to fully understand and anticipate their needs and interests. In the years to come we will move towards offering our users a seamless experience between all our sites, across all devices, with useful and relevant personalization. To meet these challenges, we re coordinating our efforts and investing heavily in technology, such as building new global platforms for our media houses, online marketplaces and digital advertising. This will increase our capability for swift ROLV ERIK RYSSDAL CEO Schibsted Media Group SCHIBSTED ANNUAL REPORT 2014 CEO innovation and make us more agile in adapting to the constantly changing needs of our users. As you can see, we ve accomplished some great things and we re doing it as we speak. But we re not done. It s now time for us to move to the next level. We need to be daring and we need to solve some really tough issues. We need to change even more to adapt to the future. While doing so, we must make sure we retain the best of our culture the drive, the heart and the innovative spirit and combine it with world-class technology. Only then can we view ourselves as a company that brings its users the very best experiences and that truly contributes to Empowering people in their daily life. 5 SCHIBSTED ANNUAL REPORT 2014 KEY FIGURES KEY FIGURES (NOK million) Restated Restated Operating revenues 14,975 14,870 14,763 14,378 13,768 Operating expenses (13,034) (13,093) (12,754) (12,232) (11,605) Income from associated companies Gross operating profit (EBITDA) 1,941 1,777 2,043 2, Depreciation and amortisation (467) (476) (479) (505) (588) Share of profit (loss) of joint ventures and associated companies (841) (123) Impairment loss (131) (150) (548) (191) (110) Other revenues and expenses (287) (50) 1,909 Operating profit 510 1, ,439 3,410 Profit (loss) before taxes 382 1, ,331 3,399 Gross operating margin (EBITDA) (%) Equity ratio (%) Net interest bearing debt/ebitda Earnings per share (NOK) (1.67) Earnings per share - adjusted (NOK) (1.46) Diluted earnings per share (NOK) (1.67) Cashflow from operating activities per share (NOK) ONLINE CLASSIFIEDS Operating revenues 4,741 4,184 3,647 3,198 Gross operating profit (EBITDA) 1, , Gross operating margin (EBITDA) (%) SCHIBSTED NORGE MEDIA HOUSE (Norway) Operating revenues 6,217 6,338 6,485 6,529 Gross operating profit (EBITDA) Gross operating margin (EBITDA) (%) SCHIBSTED SVERIGE MEDIA HOUSE (Sweden) Operating revenues 3,762 3,720 3,538 3,611 Gross operating profit (EBITDA) Gross operating margin (EBITDA) (%) MEDIA HOUSES INTERNATIONAL Operating revenues ,004 Gross operating profit (EBITDA) (35) 4 (3) 38 DEFINITIONS EBITDA margin Gross operating profit (loss) /Operating revenues Equity ratio Equity / Total assets. Earnings per share Profit (loss) attributable to owners of the parent / Average number of shares outstanding. Diluted earnings per share Profit (loss) attributable to owners of the parent / Average number of shares outstanding (diluted). Cash flow from operating activities per share Cash flow from operating activities/average number of shares outstanding. 6 B 4

142 SCHIBSTED ANNUAL REPORT 2014 SCHIBSTED MEDIA GROUP 7 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT BOARD OF DIRECTORS REPORT 2014 Schibsted is developing into a technology-based, global media company. We have made important advances in this direction over the past year, and we have much to do in the years to come. We have the important building blocks needed for this journey within our current business units; online classified ads, publishing, and growth. Online classifieds is currently the star performer in our portfolio. The agreement with Naspers will improve our business opportunities in key emerging markets. In 2015, we will focus on further improving our positions in Europe. Publishing is meeting harsh market conditions. The migration from print to digital platforms is old news. So is the rapid decline of advertising revenues. Expenditure is shifting away from traditional mass marketing to targeted, personalized messages. This is part of a larger trend whereby web users move from being anonymous to being identified and logged in. Schibsted approaches these changes head-on. We believe it is better to drive change rather than be driven by it. As a result, we are investing heavily in developing our capacity to process and analyze data. We will expand our tech hubs in Oslo, Stockholm, Krakow and Barcelona and establish a new hub in London. Our ambition is to deliver outstanding value to our users as well as to our advertisers. 8 OLE JACOB SUNDE Chairman of the Board B 5

143 We recognize that this ambition will require a new mindset. Just as ink and the printing press were the tools of traditional media, so must technology and data science become our everyday business tools; and we will need to master them to meet the challenge from global competitors. Our advantage is that collectively, our many sites particularly in Norway and Sweden provide us with rich information to feed our datasets. These data will enable us to produce superior services to our many users. Collection and storage of digital identities are attracting increased attention in Europe. In Schibsted, we will collect and store personal data in an accessible, transparent, and secure manner. As a news organization, we are used to handling personal data with respect. Schibsted owes its success to extraordinary people with unique skills, talent, and diverse backgrounds working within a rewarding entrepreneurial culture. The combination of effort, flexibility, and dedication that has brought the Group to where it is today is commendable. The personal and professional development of our employees and the recruitment of the best new talent are paramount to taking Schibsted to the next level. We can offer them a unique combination of strong, entrepreneurial teams and a long history of contributing to society. Schibsted s services make an impact. Our news sites scrutinize power and enable people to engage in matters that affect their lives. Our marketplaces support recycling and eco-friendly trade. Our innovative growth services help people make smarter choices. Schibsted empowers the digital user. In 2015, we will continue our quest of Shaping the media of tomorrow. Today. SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 9 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT HIGHLIGHTS IN 2014 Schibsted Media Group has during 2014 continued to fulfill its ambitions building global leadership in online classifieds as well as world-class digital media houses. The online classifieds operations have strengthened their positions in 2014 through solid growth in revenues and profits in our established markets and through significant growth in traffic and user engagement in early stage markets. The agreement to form joint ventures with Naspers in several emerging markets significantly increases the chances of success in these geographies. Our media houses have grown significantly online. The media houses have been able to slow the decline in circulation as a result of the launch of new, attractive online/print bundled products. The industry-wide decline in print advertising revenues has led to negative pressure on profit margins for the media houses overall. The Group achieved operating revenues of NOK 14,975 million; a growth of 1 percent. Gross operating profit (EBITDA) grew from NOK 1,777 million to NOK 1,941 million. Online share of revenues grew to 54 percent compared to 47 percent in Online classifieds share of EBITDA of 62 percent, up from 44 percent in A global leader in online classifieds Revenue growth of 19 percent in SCM. 13 percent growth including Finn.no. Continued high rate of growth and solid profit margins in Leboncoin.fr. Successful refocusing on traffic growth for Spanish operations, which were further strengthened by the acquisition of Milanuncios, the largest classifieds site in Spain. Joint ventures established with Naspers in four key emerging markets, including Brazil. This will speed up the development towards profitability and reduce the investments required. The agreement increases the chances of establishing clear market-leading positions both in the joint venture markets and in certain other markets where parties are buying each other s operations. Strong growth in traffic and user engagement for Finn.no after adopting a freemium strategy for private miscellaneous. Good growth in Sweden, supported by investments in new verticals real estate and jobs. Continued improvements with significant growth in traffic and revenues in markets like Italy, Austria and Ireland. Significantly improved market position in early stage Investment phase markets like Mexico, Chile and Vietnam. Good traction in Germany for mobile only-classifieds app Shpock. 10 B 6

144 Building world-class digital media houses The significant structural changes in the industry continued, with print advertising declining 20 percent and online advertising growing 8 percent. Mobile was a key driver of digital growth, whereas web TV contributed increasingly. Total EBITDA margin for media houses 9 percent (10%). Solid performance for single-copy newspapers VG and Aftonbladet, driven by online growth and increased cover prices for the print newspaper. Increased circulation revenues for subscription-based newspapers in Norway after successful introduction of digital payment solutions and bundled subscriptions. Some EBITDA margin decline as a result of rapid print advertising decline. Schibsted Growth initiatives, particularly within digital personal finance services, continued its growth in Sweden and Norway. Strengthened focus on technology and product development Established a central technology and product developing unit with the aim to build common tech platforms for both media houses and classifieds, for advertising and login services. The aim is to increase efficiency in the development process, the speed of roll out and quality of new services and free up time and resources for innovation and true product development. The Board proposes allocating a dividend of NOK 3.50 (3.50) per share for the 2014 financial year. SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 11 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT ANALYSIS OF THE 2014 FINANCIAL STATEMENTS Schibsted Media Group presents its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), as approved by the EU. Implementation of IFRS are applied retrospectively from 1 January 2013 and comparable figures for 2013 have been restated. SCHIBSTED MEDIA GROUP (NOK million) * Operating revenues 14,975 14,870 Operating expenses (13,034) (13,093) Gross operating profit (EBITDA) 1,941 1,777 Depreciation and amortisation (467) (476) Share of profit(loss) from joint ventures and associated companies (841) (123) Impairment loss (131) (150) Other income and expenses Operating profit 510 1,675 Gross operating profit (EBITDA) margin 13 % 12 % Gross operating profit (EBITDA) ex. SCM Investment phase 2,444 2,647 Gross operating profit (EBITDA) margin ex. SCM Investment phase 16 % 18 % SCM Investment phase (503) (870) * Restated Operating revenues reported for the Group increased by 1 percent from 2013 to The increase in revenues stems from good growth within the Group s online classifieds as well as from digital media within the media houses. The online classifieds segment had a growth in operating revenues from 2013 to 2014 of 13 percent. The most important growth driver was Leboncoin.fr. The top line is hampered by a weak Spanish economy and a reduced monetization to build traffic. The growth in operating revenues for SCM, the operations outside Norway, was 19 percent. The Norwegian market-leading online classifieds site Finn.no reported a reduced growth rate due to the decision to turn the private miscellaneous market place into a freemium model and to the market-driven slowdown in recruitment ads. Advertising revenues (including online classifieds) increased by 1 percent from 2013 to The structural migration from print to online caused advertising revenues from print to decrease by 20 percent. Online newspaper advertising had a growth of 8 percent, while advertising revenues from online classifieds increased by 10 percent. Changes in readership habits and acceleration in the speed of transition to digital media 12 B 7

145 have, as in previous years, led to a considerable decline in circulation volumes of the single-copy newspapers VG and Aftonbladet. This decline was to a large extent compensated by price increases, and total single-copy circulation revenues fell by 5 percent. The subscription newspapers were able to slow down the subscription volume decline through the launch of attractive online and print/online bundled subscriptions. Underlying circulation revenues from newspaper subscriptions increased by 5 percent. The Group s total operating expenses experienced a reported decline of 1 percent. In order to capture opportunities in the market and to build number-one positions, Schibsted is investing significant amounts in the launch of online classifieds in new markets, based on Blocket technology. The projects are characterized by a short development phase and active marketing in order to build market positions and future growth. In 2014, the investment, defined as gross operating loss (EBITDA) for the operations in Investment phase, was NOK 1,306 million. Of this, NOK 503 million affected the gross operating profit negatively. The remaining NOK 803 million was incurred in joint ventures, and is under IFRS reported on a net result basis (the equity method), included in net operating profit (EBIT). In addition, Schibsted has incurred significant costs related to digital competence and technology, such as Schibsted Payment ID (SPiD), advanced data analytics, mobile platforms, and web TV. The Group continuously works on adapting the cost base in the media houses to market trends. Significant cost reductions have been made to the print editions in 2014, and this focus will be maintained going forward. The impairment loss of NOK 131 million (NOK 150 million) is a result of negative trends in certain markets. The losses in 2014 were mainly related to tangible assets in the printing operations. In 2013 the loss was mainly related to the Group s 35 percent ownership interest in Metro Nordic Sweden AB. Other income and expenses in 2014 were net NOK 8 million (NOK 647 million). On the positive side, the Group achieved a net gain on disposal of real estate and minor subsidiaries. On the negative side, the Group also incurred restructuring costs relating to cost reductions in the media houses. In February 2014 Schibsted agreed to acquire Milanuncios.com, which over the last few years has gained a significant position in Spain. This reinforces Schibsted s position as a clear market leader in the Spanish online classifieds market. The founder of Milanuncios received proceeds of EUR 50 million in cash and 10 percent of the shares in the combined Schibsted Classified Media Spain (excluding 20 Minutos). The acquisition was examined by the Spanish competition authorities and finally approved in December 2014 on the condition that SCM Spain implements a temporary remedy to meet the concerns the CNMC had regarding the market shares in the professional part of the motor market in Spain. In November 2014 Schibsted, together with our partners Telenor and Singapore Press SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 13 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT Holdings, agreed with Naspers to merge operations of online classifieds platforms in four key markets: Brazil, Indonesia, Thailand and Bangladesh. The transaction will bring substantial benefits to consumers. Combining the platforms will make it faster and easier than ever for people to trade and turn their items into cash. They will be able to choose from a wider selection of items and be more successful in selling their own items to a larger audience of buyers. By coming together, the businesses would also be able to share costs, expertise and people to more effectively build awareness of the benefits of a vibrant online classifieds offering to consumers. The transactions closed on 9 January 2015 after all conditions precedent had been satisfied. Underlying development Underlying growth in revenues (adjusted for currency effects, acquisitions and divestments, and joint ventures are included using proportionate consolidation) was 9 percent for Online classifieds in The Online classifieds operations outside Norway grew 14 percent underlying. Schibsted Norge Media House and Schibsted Sverige Media House had both an underlying decline in revenues of 2 percent in Media Houses International had an underlying decline in revenues of 5 percent in 2014 as a whole. The Group increased its revenues by 1 percent, underlying. Underlying development of Schibsted s operating expenses was +7 percent in In total, currency effects affected Schibsted s 2014 operating revenues positively by NOK 250 million in The operating expenses were increased by 189 million through currency changes. Events after the reporting period In November 2014 Schibsted, Naspers, Telenor and Singapore Press Holdings (SPH) agreed to establish joint ventures for the development of their online classifieds platforms in four key markets - Brazil, Indonesia, Thailand and Bangladesh. The ownership structure in the joint ventures will be as follows: Brazil: 50% Naspers and 50% SnT Classifieds, Indonesia: 64% Naspers and 36% 701 Search, Thailand: 55.9% 701 Search and 44.1% Naspers and Bangladesh: 50.3% SnT Classifieds and 49.7% Naspers. SnT Classifieds is an equal shareholding joint venture between Schibsted and Telenor and 701 Search is an equal partnership joint venture amongst Schibsted, Telenor and SPH. As part of the agreement, 701 Search will transfer its online classifieds business in the Philippines to Naspers, who will manage the operation. In certain other markets in Latin America and Asia Schibsted, SnT Classifieds and 701 Search, respectively, acquire Naspers operations. At the same time, Naspers acquires the operations of Schibsted, SnT Classifieds and 701 Search in certain other markets. Schibsted expects that the transaction will result in a gain in the 14 B 8

146 range of NOK million. The transaction is not expected to have any significant tax effects, and it is cash neutral. The relevant transactions were closed in January 2015 and the joint ventures were than established. In March 2015, Schibsted disposed of its 76% interest in Aspiro AB after accepting a public offer from Project Panther Bidco Ltd, a company controlled by S. Carter Enterprises LLC, to acquire Aspiro AB. The offer was declared unconditional on 13 March Schibsted s interest in Aspiro AB was held by Streaming Media AS, a subsidiary in which Schibsted holds a 74.62% interest. A gain of approximately NOK 200 million is expected to be recognized from the disposal. Schibsted and Naspers reached in February 2015 an agreement whereby Schibsted acquires Naspers OLX operation in Hungary. Including the leading car vertical Hasznaltauto.hu, Schibsted will be the clear online classifieds market leader in Hungary after the transaction. At the same time, Naspers acquires Schibsted s online classifieds operations in Romania and Portugal. The Hungarian and Romanian transactions have been completed while completion of the transaction in Portugal is subject to clearance by the competition authorities in the country. The three transactions are cash neutral. On 12 February 2015 Schibsted agreed to divest its 50 percent of the online classifieds operations in Switzerland (Tutti.ch and Car4You.ch) to the existing partner Tamedia. Schibsted receives a consideration of EUR 15 million and an earn-out subject to financial KPIs by 2018 of maximum CHF 12.5 million. The transaction is subject to approval of the Swiss Competition Commission. Balance sheet At year-end 2014, the Group had total balance sheet assets of NOK 17.9 billion (NOK 16.5 billion). Non-current assets constitute the largest component at NOK 14.3 billion (NOK 12.7 billion). The carrying amount of the Group s goodwill and other intangible assets was NOK 11.9 billion (NOK 10.2 billion). The carrying amount of the goodwill and intangible assets with indefinite life was tested as at 31 December No significant impairment charges were made in 2014 or 2013 regarding goodwill or other intangible assets with indefinite life. Schibsted s holding of treasury shares, acquired under current authorization from the Annual General Meeting to increase the number of treasury shares to maximum 10,800,361 during a period of 12 months, was reduced from 655,075 shares to 582,218 shares during The decrease is a result of shares sold and transferred to employees in connection with various incentive programs. SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 15 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT Liquidity As of 31 December 2014, Schibsted s net interest-bearing debt was NOK 2.1 billion, compared to NOK 1.1 billion as of 31 December One of the loans from Eksportfinans (EUR 25 million) was repaid at maturity in January. In April, Schibsted successfully completed issuance of NOK 600 million in the Norwegian bond market. The loan was received 6 May and maturity is in May The floating rate note is priced at 3 months NIBOR basis points. In June, one of the NIB loans was repaid at maturity. The EUR 325 million revolving credit facility, with maturity in August 2015, was refinanced in July and replaced by a new long-term loan facility of EUR 300 million. The new facility has a term of 5 years with two extension options of one year each. In addition to this facility, Schibsted has a further EUR 125 million credit facility maturing in March At year-end 2014, none of the facilities were drawn. Schibsted s revolving credit facilities and bank loans are subject to financial covenants linked to the ratio of net interest-bearing debt to gross operating profit (EBITDA). This ratio was 1.07 at the end of 2014 and is well within the financial covenant. The Group s liquidity reserve consists of long-term unutilized revolving credit facilities and cash reserves, and amounted to NOK 4.6 billion at year-end. This gives a liquidity reserve of 31 percent of annual revenues. Cash flows Net cash flow from operating activities amounted to NOK 1,230 million for the year 2014, compared to NOK 716 million in The increase in net cash flow is mainly related to improved change in working capital and increase in gross operating profit. Net cash flow from investing activities was NOK -1,580 million for the year 2014, compared to NOK 471 million in The Group has invested NOK 630 million (NOK 520 million) in fixed and intangible assets. The increase is mainly related to renovation of office premises in connection with co-location of VG and Aftenposten in Oslo. Proceeds from sales of fixed and intangible assets, mainly related to sales of office buildings, amount to NOK 375 million (NOK 343 million). Net payments related to business combinations were NOK 532 million (NOK 258 million). Payments related to investments in other shares came to NOK 835 million (NOK 116 million). The majority of the investments in other shares are related to capital contributions to lossmaking joint ventures and associates. Net cash flow from financing activities was NOK -116 million for the year 2014, compared to NOK -1,116 million in Dividends paid to shareholders of Schibsted ASA and noncontrolling interests amount to NOK 509 million (NOK 433 million). Net change of interest 16 B 9

147 bearing debt totaled NOK 512 million (NOK -230 million) and net cash payments from changes in ownership interests amount to NOK -150 million (NOK -478 million). Research and development activities Schibsted s vision is Shaping the media of tomorrow. Today. To achieve this, we have to constantly innovate and improve. This is done systematically across business areas, whether it is media houses or online classifieds. Schibsted Media Group invests substantial resources in improving and developing products for new platforms and markets. In 2014 significant resources have been allocated to establishing a central organization for joint development of services and technology. The backdrop for this decision is the increasing globalization of the competition in the online sector and the move towards more identity-driven products. This makes it critical to create more targeted advertising and end-user products and to develop our products faster and more efficiently. By centralizing a larger part of the core development, the intention is to free up capacity in the operational units for new product development. Innovation has always been an important part of the DNA of Schibsted Media Group and its organizations and companies. We are innovative is one of our four core values. Given the challenges posed by the digital transformation and rapidly changing market conditions, innovation will be an even more important tool for future growth. Schibsted Media Group is recognized as one of the most innovative media companies in the world. Constant innovation is key in order to maintain this position. To emphasize the importance of innovation in Schibsted, innovation awards in two categories were presented for the fourth year running. The New Business Innovation Award 2014 was awarded to Aftenposten (Norway) for the development and launch of the mobile app Aftenposten+. Aftenposten+ captures the needs of a leanback user experience, giving its brand a fresh and modern look. The product is clearly based on Aftenposten s core brand values, at the same time as it differs from other products in a way that leads to strong customer value. The other finalists were Blocket.se for its redesign of the real estate section and Aftonbladet/Politism for the launch of the political affairs site Politism.se. Leboncoin (France) won the Core Business Innovation Award 2014 for its development of Serenity. Serenity improves the customer experience by making the review process much faster, at higher quality, and without fraud. It represents a true innovation right at the core of our classified businesses. It is the first time in Schibsted Media Group that a robot is able to make decisions on its own, lifting the automated reviewing process to new levels. All the Group s companies are making continuous efforts to further develop existing products and to develop products that will provide new revenue flows. Expenditure related to the development of intangible assets is normally charged to the profit and loss statement because from an accounting perspective the requirement to demonstrate future economic value will normally not be met. SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 17 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT ANALYSIS OF MARKET RISK Schibsted is operating in an industry that is subject to constant change. Our ambition, underpinned by our business model and strategy, is to remain resilient in the face of the constant game-changing disruption through innovation and continuously challenging ourselves to improve. Schibsted s advertising revenues are to a certain extent affected by cyclical developments in real economy figures, notably GDP growth, unemployment rates, and consumer confidence. The Group s advertising revenues from the recruitment market and, to a lesser extent, the real estate market and display advertising, are the revenue streams most exposed to cyclicality. In 2014 the Group s advertising revenues amounted to 59 percent (59 percent) of total revenues. In total, five percent of Schibsted s revenues come from recruitment advertising, of which 81 percent is digital. Most of these revenues come from the print newspapers in Schibsted Norge, InfoJobs Spain, and Finn.no. Most of the future growth is expected to come from consumer-oriented classifieds services such as Blocket and Leboncoin. These revenues are considered to have a relatively low degree of cyclicality. The Group s revenues from the print newspapers are impacted by structural changes in media consumption, resulting in accelerated migration from print to digital consumption. Moreover, the Group is facing structural changes in the digital advertising market as advertising revenues follow the user consumption patterns from print to digital platforms. The Group s ambition is to proactively address and reduce the impact of these risks, and the key focus areas in the Group s strategy contribute to achieving this. Examples of action taken by the Group are the implementation of user payment systems in all media houses and proactive efforts towards building a position in web TV. The Group is increasing its efforts in joint development of platforms for media houses and online classifieds as well as advertising technology and analytics is another important measure. As a global player in an industry subject to technology developments that advance at an increasingly rapid pace, the Group is exposed to potential competition from disruptive players, technology or business models. The classifieds operations also face a competitive environment in several markets. Strategic initiatives such as the Group s commitment to technology and innovation, and to diversification of revenue streams from the media houses, online classifieds, and the growth companies, are all aimed at reducing the impact of this risk. Additionally, in order to mitigate and diversify risk and seize opportunities in online classifieds operations in emerging markets, Schibsted signed a new partnership with Telenor, Singapore Press Holdings and Naspers in The transaction was closed in January Schibsted has Norwegian krone (NOK) as its basic currency, and through its operations outside Norway is exposed to fluctuations in the exchange rates of other currencies. Schibsted has exchange rate risks linked to both balance sheet monetary items and the translation of investments in foreign operations. The Group makes use of loans in foreign currencies and financial derivatives (forward contracts and cross-currency swaps) to reduce its foreign exchange exposure. The loans in foreign currencies and financial derivatives are managed actively in accordance with the Group s financial strategy in order to reduce the currency risk. Exchange rate fluctuations may affect the ratio of net interest-bearing debt to gross operating profit (EBITDA). A general 10-percent depreciation of NOK will increase the Group s net 18 B 10

148 interest-bearing debt by around NOK 205 million as of 31 December 2014 and will cause a change in the ratio of net interest-bearing debt to EBITDA of around 0.1. Virtually all of the Group s debt as at 31 December 2014 was subject to a variable interest rate. Thus, both interest bearing debt and cash balances are affected by changes in interest rates. A general change of one percentage point in the variable interest rate will change Schibsted s net interest expenses by approximately NOK 21 million. Schibsted uses newsprint and is therefore exposed to price fluctuations in the paper market. A one-percent change in price alters the Group s raw material costs by around NOK 5 million per year. The price of newsprint in Norway, Sweden and Spain is negotiated with suppliers each year. At the end of 2014, the Group had limited exposure to the stock market and therefore less risk of losses. Account receivables are diversified through a high number of customers, customer categories, and markets. Account receivables consist of a combination of prepaid subscriptions or advertisements and sales invoiced after delivery of the product. The credit risk posed by some receivables (prepaid subscriptions and payments made by credit card on purchase date) is minimal, while for other receivables it is higher. Credit risk will also vary across the countries in which we operate. Credit insurance is also used to some extent. Overall, the credit risk is considered low. Robust public structures and support to the media business have been instrumental in securing media diversity and a public arena for opinion and debate in Norway. Now, in the midst of the digital transformation, such structures and support are more important than ever. Schibsted is therefore working actively to influence the government s media policy together with Mediebedriftenes Landsforening (the Norwegian Media Businesses Association) and other participants. Schibsted s view is that the new government signals changes that will modernize the country s media policy and align it with the challenges faced by the media industry today. The media ownership regulations will be handled by one public authority (Konkurransetilsynet/Competition Authority). A thorough review of the scope of the public service broadcaster NRK will be conducted in order to limit the possibility of its superior economic power inadvertently weakening operative and financial opportunities for other media channels. In the digital transformation, it is important to uphold the zero VAT rate on printed news, and also to extend it to digital platforms. The Norwegian government has now put this question before the EFTA Surveillance Authority (ESA). Schibsted hopes the matter will be concluded as soon as possible and results in zero VAT both on print and digital news, thereby stimulating both digital product innovation and digital news consumption. Schibsted continues to participate in and closely follow the ongoing process and debate on media policy. SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 19 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT OPERATING SEGMENT ANALYSIS Online classifieds ONLINE CLASSIFIEDS (NOK million) * Operating revenues 4,741 4,184 Gross operating profit (EBITDA) 1, Gross operating profit (EBITDA) margin 30 % 24 % Gross operating profit (EBITDA) ex investment phase 1,905 1,862 Gross operating profit (EBITDA) margin ex. SCM Investment phase 41 % 46 % Gross operating profit (EBITDA) investment phase (503) (870) * Restated Schibsted has market leading, profitable positions in the online classifieds markets in Norway, Sweden, France, Spain, Italy, Ireland, Austria, Malaysia and Hungary. This business area also includes online classifieds sites in several early stage markets; both fully owned and through joint ventures. MAIN FEATURES IN 2014: The online classifieds developed strongly in most markets in 2014, and Schibsted focused on creating further growth through innovation and product improvement alongside continued investments in less developed markets. This operating segment had a growth of 13 percent in operating revenues in The top line is hampered by the weak Spanish economy combined with the decision to reduce monetization and focus on traffic growth in Spain. Also, the soft development in the Norwegian recruitment market together with Finn.no s decision to turn the private generalist market to a freemium model affected the growth rate negatively. The investments in new ventures, defined as gross operating loss (EBITDA) for the Investment phase operations increased from NOK 1,000 million in 2013 to NOK 1,306 million in Of this, NOK 503 million affected the consolidated EBITDA, whereas NOK 803 million was incurred in joint ventures and was reported on one line, not included in EBITDA. Excluding investment phase operations, online classifieds had an EBITDA margin of 41 percent (46 percent). Focus on traffic growth and new verticals in markets like Norway, Spain and Italy had a negative effect on the margin. A joint venture agreement with Naspers was announced in November The agreement increases the chances of establishing clear market-leading positions both in the joint venture markets of Brazil, Indonesia, Thailand and Bangladesh, and in certain other markets where parties are buying each other s operations. The transaction was closed in January In February 2014 Schibsted agreed to acquire Milanuncios.com which over the last few years has gained a significant position in Spain. This reinforces Schibsted s position as a clear market leader in the Spanish online classifieds market. The founder of Milanuncios will receive proceeds of EUR 50 million in cash and 10 percent of the shares in the combined Schibsted Classified Media Spain (excluding 20 Minutos). The acquisition was examined by the Spanish competition authorities and was finally approved in December B 11

149 In 2014 Schibsted agreed to merge its Moroccan online classifieds site Bikhir.ma with the competitor Avito. The traffic growth has accelerated since the merger. Schibsted owns 52 percent of Avito.ma, which is also the name of the new company. In 2014 Schibsted bought out minorities in the Irish online classifieds site DoneDeal.ie. In March 2014 the holdings were increased from 50.1 to 90.1 percent. ESTABLISHED OPERATIONS FRANCE LEBONCOIN.FR Leboncoin.fr is the leading online classifieds marketplace in France. The site ranks among the top four online sites in terms of traffic measured by page views (source: Comscore, December 2014) and has a strong position within generalist, cars, real estate and jobs ads. LEBONCOIN.FR (EUR million) * Operating revenues Gross operating profit (EBITDA) Gross operating profit (EBITDA) margin 67 % 67 % * Restated MAIN FEATURES IN 2014: Operating revenues grew by 21 percent in 2014 compared to The revenue growth came from a broad range of sources. Brand advertising, listing fees for professional customers, and premium placements for professional and private customers all contributed well to the growth. Contributing negatively to growth is the decline in partner revenues from Google, as the company focuses more on controlling the display ad sales process internally. The EBITDA margin was unchanged at 67 percent. Increased costs particularly related to ramping up in-house sales resources, marketing, technology development and strengthening the organization. During 2014 Leboncoin has continued to strengthen its position as the leading site for professional car listings in France. The positions in real estate and jobs are also strong in terms of volume and traffic. For four years Leboncoin.fr has had a cooperation agreement with Spir Communication in the real estate market. The agreement expired at the end of During Q3 and Q4 2014, Leboncoin.fr was selling stand-alone subscriptions to real estate agents, competing with Spir, which was selling bundle packages including listings on Leboncoin. Revenues from stand-alone real estate contracts will gradually be phased in during 2015 and SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 21 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT SWEDEN BLOCKET.SE/BYTBIL.SE Blocket.se is the number-one website for online classified ads in Sweden as well as one of the country s strongest brands. Bytbil.se is the leading classifieds site for cars in Sweden. BLOCKET.SE/BYTBIL.SE (SEK million) * Operating revenues Gross operating profit (EBITDA) Gross operating profit (EBITDA) margin 52 % 52 % * Restated MAIN FEATURES IN 2014: Blocket s/bytbil s operating revenues grew by 8 percent in The trend in the professional markets was strong in 2014, both as a result of good trends in the new real estate and jobs verticals and general price optimization. The trend in the private market was hampered by a shift in volumes for second-hand cars from C2C towards B2C. Blocket spends resources on building new revenue models in order to ensure long-term growth, and the trends for both the real estate and jobs verticals were good in Both the real estate and jobs verticals have a negative impact on the EBITDA figures during the start-up phase. NORWAY FINN.NO Finn.no is clearly the number-one website for online classified ads in Norway. The company is the market leader in the field of car, real estate, recruitment and generalist ads. FINN.NO (NOK million) * Operating revenues 1,446 1,406 Gross operating profit (EBITDA) Gross operating profit (EBITDA) margin 44 % 49 % * Restated MAIN FEATURES IN 2014: Finn.no continued to develop positively in 2014 with a revenue growth of 3 percent. Traffic, measured by number of visits, grew by 14 percent, fuelled particularly by the influx in mobile traffic. The change to freemium reduced revenues in Finn.no by around NOK 40 million in 2014, or around 3 percent. The number of listings has increased by close to 200 percent. The change was made in order to further strengthen traffic and user engagement on Finn.no, and the effect has been very positive. 22 B 12

150 As a result of softer macro conditions in Norway, Finn.no has experienced a decline in volumes and revenues in the recruitment vertical. The decline affected Finn.no s total revenues by close to 8 percent. Operating costs increased by 6 percent from 2013 to The cost increase was lower than in previous years, as the company has adapted to the lower top-line growth trend. SCM SPAIN SCM Spain is the clear leader in the Spanish online classifieds market with clear number-one positions in generalist, cars and jobs, as well as a joint number-one position in real estate. The company operates under the main brands Segundamano.es, Milanuncios.com, Coches.net, InfoJobs.net and Fotocasa.es. SCM SPAIN (EUR million) * Operating revenues Gross operating profit (EBITDA) Gross operating profit (EBITDA) margin 17 % 28 % * Restated MAIN FEATURES IN 2014: After taking full control over the operation in 2013, in 2014 Schibsted has focused on traffic growth and market share in Spain. This has been successful, and the traffic trends have been positive during the year. Revenues declined by 4 percent as the level of monetization was reduced in order to stimulate traffic and user engagement. EBITDA margin was 17 percent (28%). The development of SCM Spain has improved significantly towards the end of 2014, and in Q the revenues grew for the first quarter since Q The general macro economy in Spain is improving, and SCM Spain is set to benefit from this. The new sales on the recruitment vertical InfoJobs.net grew by around 20 percent in Q4 2014, which indicates a positive revenue trend in An agreement to acquire the generalist site Milanuncios.com was entered into in February Milanuncios has in recent years built up a leading position in Spain, measured by traffic. The acquisition will significantly strengthen Schibsted s competitive strength in Spain going forward. The acquisition was approved by the Spanish competition authorities in December SCM Spain will implement a remedy to meet the concerns the competition authorities had regarding the market shares in the professional part of the motor market in Spain. The remedy is behavioral, and requires SCM Spain to grant a license to Autocasión Hoy S.A, a part of Vocento Group. The license is for two years and gives Autocasión Hoy S.A an exclusive right to commercialize the professional car section of Milanuncios. The license fee is not substantial, and the license has a limited impact on the Schibsted synergies from the acquisition. SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 23 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT OTHER ESTABLISHED OPERATIONS Subito.it (Italy) is the leading generalist and car classifieds site in Italy. Despite a harsh macroeconomic environment, Subito saw good and accelerating growth rates in In order to increase the gap to competitors in the Italian online classifieds market, Subito.it has increased its investments in marketing. This has yielded good results in the form of an increased pace of growth in revenues and traffic. Subito.it is the ninth-largest website in Italy in terms of traffic measured by page views (source: Comscore, December 2014). Donedeal.ie (Ireland) is the leading generalist website in Ireland. The site continued to develop well with good growth in revenues and traffic. Parts of the increased revenues were reinvested in improved products and market positions. Willhaben.at (Austria) is the leader in the generalist and real estate market. It also has a strong position in the car market, and the site is in the top five online sites in Austria in terms of page views (source: Comscore, December 2014). The site continues to grow fast in terms of traffic, and revenue growth accelerated in Mudah.my is the clear market leader in online classifieds in Malaysia, and holds strong positions in generalist, cars, and real estate. Mudah s revenues showed a healthy growth rate, and the site produced positive EBITDA. The site is the fifth-largest online site in Malaysia in terms of traffic measured by page views (source: Comscore, December 2014). At the end of 2012 Schibsted acquired 50 percent of Haznaltauto.hu, the leading car classifieds site in Hungary, and increased the stake to 100 percent in The site holds a strong position in the Hungarian market, and the revenues grew well in The site produces healthy EBITDA margins. INVESTMENT PHASE Schibsted Classified Media has a clear goal of laying the foundations for future growth by establishing in new markets. The businesses in this phase are mainly launched on the basis of the successful Swedish Blocket concept. Experiences from successful establishments in core markets form the basis for investments in online classifieds in new markets. In 2014 the portfolio of online classifieds sites in Investment phase has developed well and has increased traffic significantly. Telenor joined Schibsted as a joint venture partner in South America and in certain Asian markets in December The cooperation, which also included Singapore Press Holdings in South East Asia, worked well. In November 2014 Schibsted, together with Telenor and Singapore Press Holdings, entered into an agreement with Naspers to form joint ventures in Brazil, Indonesia, Thailand and Bangladesh. In addition, the parties agreed to buy and sell each other s assets in certain 24 B 13

151 other markets. Combining the platforms will make it faster and easier than ever for people to trade and turn their items into cash. They will be able to choose from a wider selection of items and be more successful in selling their own items to a larger audience of buyers. By coming together, the businesses would also be able to share costs, expertise and people to more effectively build awareness of the benefits of a vibrant online classifieds offering to consumers. The transactions closed on 9 January 2015 after all conditions precedent had been satisfied. The joint ventures hold strong market-leading positions in all the markets, apart from in Bangladesh, where the position is number two. In Morocco, Schibsted merged its online classifieds site Bikhir.ma with the main competitor Avito.ma in Schibsted owns 52 percent of the merged entity, which has experienced accelerating traffic growth after the merger. Outside the joint ventures with Naspers, Schibsted hold market positions with great potential in several markets. Sites like Segundamano.mx in Mexico, Yapo.cl in Chile (50/50 joint venture with Telenor) and Tori.fi in Finland are all number one in their respective markets. Schibsted has increased the ownership in the mobile-only app Shpock. The app has shown a promising trend in Germany. In total, Schibsted Classified Media s Investment phase operations include activities in a total of 19 countries. The online concept was launched in 11 of these countries without local organization. The total amount invested increased in 2014, mainly through marketing in already established markets. In 2014 the investment charged to gross operating profit (EBITDA) was EUR 60.3 million (116.8 million). In addition, EUR 96.1 million was invested through joint ventures, an amount which does not affect EBITDA, but which does affect operating profit (EBIT). In total, investments amounted to EUR million. SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 25 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT Schibsted Norge Media House The media houses in Schibsted Norge comprise single-copy newspaper VG (print and online), the subscription-based newspapers Aftenposten, Bergens Tidende, Stavanger Aftenblad, and Fædrelandsvennen (print and online), printing plant operations, distribution operations, the book publishing company Schibsted Forlag, and Schibsted Growth. SCHIBSTED NORGE MEDIA HOUSE (NOK million) * Operating revenues 6,217 6,338 Gross operating profit (EBITDA) Gross operating profit (EBITDA) margin 9 % 11 % * Restated MAIN FEATURES IN 2014: Advertising revenues from online increased by 18 percent, while print advertising revenues decreased by 19 percent. Total advertising revenues declined by 9 percent. Subscription revenues increased by 10 percent as new online/print bundled subscriptions have been well received. Single-copy revenues decreased by 2 percent, supported by significant price increases. Total operating revenues fell by 2 percent in 2014 compared to Schibsted Norge Media House is influenced by the structural migration from print to online, whereas online media consumption is increasing rapidly, a trend the media houses benefit from. Mobile and web TV are important growth drivers. At the same time, print newspapers are losing market shares in both the readership and the advertising markets. Rapid adaption of the business model and cost base is required in order to be relevant and profitable in the digital future. The media houses are addressing the challenges in print media with ongoing efficiency measures, and these are progressing as planned. At the same time, more resources are being allocated to digital activities. The ambition is to create world-class digital media houses. The declining trend in print advertising is expected to continue, and continued online growth and innovation will be crucial to securing the future on the basis of highquality editorial products combined with healthy financial results. 26 B 14

152 SINGLE-COPY NEWSPAPER - VERDENS GANG (VG) Verdens Gang publishes Norway s clearly leading online newspaper VG.no and the marketleading single-copy newspaper. VG.no is one of the absolute biggest websites in Norway, irrespective of category. SCHIBSTED NORGE SINGLE COPY NEWSPAPER VERDENS GANG (NOK million) * Operating revenues 2,009 1,951 of which offline 1,292 1,365 of which online Gross operating profit (EBITDA) Gross operating profit (EBITDA) margin 16 % 16 % * Restated MAIN FEATURES IN 2014: Total revenues for VG increased by 3 percent, and EBITDA increased by 5 percent in 2014 compared to The growth was a result of the positive trend online. VG s online revenues increased by 22 percent, fuelled by good trends for mobile advertising and web TV. VG also experienced strong growth for its premium subscription-based editorial product VG+, which had more than 50,000 subscribers at the end of This was an increase of 38 percent compared to the previous year. Print circulation revenues were unchanged in 2014 compared to Price increases supported the revenues, whereas print circulation volumes on weekdays fell by 16 percent and on Sundays by 15 percent. Print advertising revenues decreased by 23 percent from 2013 to The total operating expenses increased by 3 percent. The increase was a result of significant ramp-up of activities within web TV. Web TV is the fastest growing segment within online advertising in Norway, according to IRM statistics. The position as Norway s largest website, measured in terms of unique users, was maintained during the year. SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 27 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT SUBSCRIPTION-BASED NEWSPAPERS Schibsted Norge owns leading subscription-based newspapers in four of Norway s largest cities: Oslo, Bergen, Stavanger, and Kristiansand. Each newspaper also has online editions that are leaders in their respective markets. SCHIBSTED NORGE SUBSCRIPTIONBASED NEWSPAPERS (NOK million) * Operating revenues 3,381 3,571 of which print 2,841 3,214 of which online Gross operating profit (EBITDA) Gross operating profit (EBITDA) margin 7 % 10 % * Restated MAIN FEATURES IN 2014: Total circulation revenues for the subscription-based newspapers increased by 6 percent in Successful introduction of online and online/print bundled subscriptions have been well received by consumers. The circulation volume in 2014 was 2 percent higher than in Online advertising revenues increased by 14 percent and stem mostly from mobile. This increase could not compensate for the decline in print advertising revenues, which was 18 percent in 2014 compared to Schibsted s media houses work continuously on adapting the cost base to market trends and at the same time develop the online operations. Cost reduction measures of around NOK 400 million were announced in 2012 and have been executed according to plan during 2013 and Further cost reductions are planned. Operating expenses decreased by 2 percent in 2014 compared to B 15

153 Schibsted Sverige Media House Schibsted Sverige consists of three key business areas: Aftonbladet (Sweden s leading online newspaper and largest print-based single-copy newspaper), Svenska Dagbladet (print-based subscription and online newspaper) and Schibsted Growth (web-based growth companies including Hitta). SCHIBSTED SVERIGE MEDIA HOUSE (NOK million) * Operating revenues 3,762 3,720 Gross operating profit (EBITDA) Gross operating profit (EBITDA) margin 10 % 10 % * Restated MAIN FEATURES IN 2014: Advertising revenues from online increased by 4 percent, while print advertising revenues decreased by 15 percent in 2014 compared to Total operating revenues increased by 1 percent in 2014, as the markets for print advertising and circulation volumes declined. The positive development online, including continued growth and significant margin improvement in Schibsted Growth resulted in an improved EBITDA of 9 percent in 2014 compared to The media houses are addressing the challenges in print media with cost reduction programs and ongoing efficiency measures, and these are progressing as planned. At the same time, more resources are being allocated to digital activities. The ambition is to create world-class digital media houses. The declining trend in print advertising is expected to continue, and continued online growth and innovation will be crucial to secure the future on the basis of high-quality editorial products combined with healthy financial results. SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 29 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT SINGLE-COPY NEWSPAPER - AFTONBLADET Aftonbladet is a media house with number-one positions in both the print and online sectors. Aftonbladet is Sweden s leading news media in all channels: print, online, mobile, and web TV. SCHIBSTED SVERIGE SINGLE COPY NEWSPAPER AFTONBLADET (SEK million) * Operating revenues 2,019 2,051 of which offline 1,320 1,430 of which online Gross operating profit (EBITDA) Gross operating profit (EBITDA) margin 12 % 14 % * Restated MAIN FEATURES IN 2014: Aftonbladet s online revenues increased by 13 percent in 2014, driven particularly by mobile advertising and web TV. Total revenues for Aftonbladet declined by 2 percent, as the markets for print advertising and print circulations declined. Print circulation revenues decreased by 6 percent, supported by price increases. The circulation volume declined by 17 percent on weekdays. Advertising revenues for Aftonbladet s print edition decreased by 15 percent compared to Total operating expenses for Aftonbladet increased by 1 percent in Focus was on reducing costs related to the print edition and on strengthening the online product. Significant investments were made in the web TV service, which affected EBITDA negatively. 30 B 16

154 SUBSCRIPTION-BASED NEWSPAPERS - SVENSKA DAGBLADET (SVD) Svenska Dagbladet is the third-largest subscription-based newspaper in Sweden and holds a particularly strong position in the Stockholm region. SCHIBSTED SVERIGE SUBSCRIPTION BASED NEWSPAPER SVENSKA DAGBLADET (SVD) (SEK million) * Operating revenues 960 1,033 Gross operating profit (EBITDA) 35 1 Gross operating profit (EBITDA) margin 4 % 0 % * Restated MAIN FEATURES IN 2014: SvD increased its gross operating profit from SEK 1 million to SEK 35 million in The positive trend was a result of a cost reduction of 10 percent, which is evidence of the company s ability to adapt to market trends during the year. Total revenues declined by 7 percent, supported by an online growth of 46 percent. The circulation volume for SvD (weekdays) decreased by 9 percent from 2013 to 2014, and circulation revenues declined by 8 percent. Print advertising revenues declined by 15 percent in SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 31 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT SCHIBSTED GROWTH Schibsted Growth consists of a portfolio of web-based growth companies. These companies benefit greatly from the strong traffic positions and brands of Schibsted s established operations in Sweden. SCHIBSTED GROWTH (SEK million) * Operating revenues Gross operating profit (EBITDA) Gross operating profit (EBITDA) margin 22 % 15 % * Restated MAIN FEATURES IN 2014: Schibsted Growth has strong market positions in areas like personal finance (Lendo.se, Compricer.se, Kundkraft.se and Mobilio.se), online coupons, price comparisons, and online directories. The companies offer consumer information services and showed a revenue growth of 27 percent in 2014, excluding Hitta.se. Hitta s revenues declined by 14 percent as the market for online directory services contracted. The revenue growth was supported by the acquisition of 100 percent of the shares of Compricer AB in September Compricer operates an online personal finance marketplace (compricer.se) and is a good strategic fit with the existing portfolio of fastgrowing personal finance services in Schibsted Growth. Underlying revenue growth, excluding the effect from acquisitions and divestments, was 9 percent, and 28 percent excluding Hitta.se Most of the portfolio s operations experienced good revenue growth. Significant amounts are being reinvested in marketing and customer acquisition. Among the most important contributors to revenue and EBITDA growth was the online coupon service Let s Deal. 32 B 17

155 Media Houses International Media House International consists of the Group s free newspapers: 20 Minutes in France and 20 Minutos in Spain. The media house operations (newspapers, magazines, and TV channels) in the Baltics were sold with effect from 1 September MEDIA HOUSES INTERNATIONAL (NOK million) * Operating revenues of which 20 Minutes of which Eesti Meedia (Baltics) Gross operating profit (EBITDA) (35) 4 of which 20 Minutes (36) (32) of which Eesti Meedia (Baltics) - 36 * Restated MAIN FEATURES IN 2014: Operating revenues decreased by an underlying 5 percent in 2014 compared to Reported revenues declined by 73 percent as a result of the divestment of Eesti Meedia in September The market conditions for free newspapers in Spain and France have been challenging in Increased online advertising revenues have not been sufficient to offset the decline in print advertising. 20 Minutes France is owned 50 percent by Schibsted, and is reported according to the equity method consolidated with our proportionate share of net profits on one line included in net operating profit (EBIT), but not in EBITDA. SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 33 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT Outlook ONLINE CLASSIFIEDS Schibsted sees continued revenue growth potential and a good margin outlook for its portfolio of established online classifieds sites. On a mid- to long-term horizon the target for annual revenue remains at percent. Our leading French site Leboncoin.fr holds significant long-term potential in new verticals and products, like real estate. The monetization of real estate will gradually be ramped up during 2015 and into 2016 as a consequence of the expiry of the bundle agreement with Spir. Leboncoin.fr can now sell real estate listings exclusively on a stand-alone basis. In Sweden, Blocket is building market positions that will form the basis for increased revenues in the real estate and recruitment markets. Blocket.se is expected to have a high single digit growth rate in Our online classifieds positions in Spain are strengthened through the acquisition of Milanuncios.com and through positive traffic development on existing sites. Together with positive macroeconomic development, this forms a good platform for revenue growth in New product offerings and continuous price optimization are expected to further monetize the large traffic volumes in the key operations in Norway, Sweden and France. Finn.no (Norway) has turned free for certain private categories to increase user engagement. Together with several other initiatives, this will form the basis for the next-generation online marketplace. A somewhat weaker macroeconomic trend in Norway may have a negative effect on certain revenue categories, mainly recruitment. In 2015 Finn.no is expected to have a low single-digit revenue growth rate. Traffic and volume increase as well as broader product platforms are expected to support revenue growth for the remaining group of established sites in Italy, Austria, Ireland, Malaysia and Hungary. Our strategy of building online classifieds positions in new markets will continue. As a result of the joint venture agreement, the investments are expected to be reduced by close to 50 percent in 2015 compared to Some of the investments will still be in joint ventures and associated companies, which are not included in the EBITDA. Healthy growth in key operational parameters indicates good progress for Investment-phase sites, which lends confidence to our investment strategy. The consolidation which Schibsted is part of in markets like Brazil is expected to speed up the process towards profitability and increase the chances of establishing clear market-leading online classifieds sites. MEDIA HOUSES The media houses in Schibsted will continue the transformation into world-class digital media houses based on strong editorial products. This involves investments in digital 34 B 18

156 competence and technology such as payment solutions (SPiD), CRM systems, mobile platforms, web TV, strengthened sales units, and continued development of the consumer finance offering. Overall, the structural digital shift and the transformation process are expected to lead to some margin contraction for Schibsted s media houses compared to the levels in recent years. Our subscription-based newspapers are expected to produce EBITDA margins in the range of 0-10 percent, whereas VG and Aftonbladet are likely to have margins in the range of percent. INVESTMENTS IN TECH AND ONLINE PRODUCT DEVELOPMENT The build-up of Schibsted s central technology and product development resources will continue in Central teams will be established to develop common tech platforms for both media houses, online classifieds, for advertising and login services. Our ambition is to increase efficiency in the development process, the speed of roll out and quality of new services and free up time and resources for innovation and true product development. These development efforts are expected to represent investments of around NOK million in Going concern assumption The Group s economic and financial position is good. Based on the Group s long-term strategy and forecasts, and in accordance with Section 3-3a of the Norwegian Accounting Act, the Board confirms that the use of the going concern assumption is appropriate. The 2014 financial statements have been prepared on this assumption. Statement of corporate governance In accordance with Section 3-3b of the Norwegian Accounting Act, a statement of corporate governance has been prepared. The statement is included as a separate document in the annual report. Statement of corporate social responsibility In accordance with Section 3-3c of the Norwegian Accounting Act, a statement of corporate social responsibility has been prepared. The statement is included as a separate document in the annual report. SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 35 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT INFORMATION ON THE ENVIRONMENT Working environment Schibsted aims to be a leading company in Europe in terms of developing talent, managers, and employees. The work on attracting talented people, developing good managers, and creating competent organizations is given high priority by the Group s senior management and subsidiaries. Competitive terms of employment and a stimulating working environment with good opportunities for personal and professional development form part of this strategy. At year-end, Schibsted had approximately 6,800 (6,900) employees, around 3,800 (3,800) of whom worked outside Norway. The Group s sickness absence rate was three percent (3 percent) of total working hours. Of all the Group s companies, operations at the printing plants involve the highest risk of injury. At year-end, Schibsted owned four newspaper printing plants: Schibsted Norge s printing plants in Oslo, Bergen (2) and Stavanger in Norway. Six (5) injuries that resulted in sickness absence were reported in Nine (5) minor personal injuries such as bruise injuries and cuts were reported. In recent years, the threat against our journalists and editors has increased. Acts and threats of violence against journalists is not a new phenomenon, but the nature of the threats has changed. This applies both to journalists covering events in conflict zones and to those covering our home markets such as Sweden, Norway, France and Spain. In addition to the increased risk associated with having a presence in conflict areas, there is the threat posed by religious and political extremists and mentally unstable persons. Schibsted has therefore sharpened its focus on security to protect our employees. This includes gaining a better understanding of the threats we are facing and establishing specific security measures for individuals and media houses. This work will continue in the future. External environment Schibsted Media Group is a significant player in the recycling market through our online classifieds sites. Our marketplaces extend the life cycle of a range of products and contribute to reducing the need for manufacturing new ones. Production of the Group s newspapers is a digital process up to the printing stage, and has little impact on the external environment. Printing of newspapers has a relatively neutral effect on the environment, and the chemicals used to produce the newspapers are treated as special waste and recycled as far as possible. Agreements with approved transport companies ensure that special waste is collected safely. Normal operations do not involve any danger of emissions from the printing plants. The printing plants used 68 thousand tons (100 thousand tons) of paper, 1.7 thousand tons (2.3 thousand tons) of printing ink, and 28.5 GWh (36.9) of electricity in The Group s newspaper companies in Norway and Sweden arrange for unsold newspapers to be returned and resold for recycling. The Group s other operations pollute the environment to a minor extent only. 36 B 19

157 Schibsted aims to be a leading company in Europe in terms of developing talent, managers, and employees 37 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT ORGANIZATIONAL DEVELOPMENT Organizational development (OD) in Schibsted is about supporting the Group in the execution of business strategies. The key question for OD to answer is what it takes for our people and organizations to deliver on the strategic priorities set by the Board and Group Management Team. As the digital transformation speeds up, we need to speed up our innovations. Whereas in the old days we could investigate and prepare new ideas for months before launching, we now take a more iterative approach to testing, learning and adjusting. Inspired by Lean startup thinking and A/B testing, we encourage our organizations to take some risks, move quickly, learn, and adjust. Competence building and organizational development are critical to Schibsted s success. Our priority areas for future development will be digital skills, new competencies in journalism, sales, branding, and leadership skills for new and experienced managers. We will also focus more heavily on recruitment, talent, and performance management as well as on increasing mobility between our companies and geographical locations. Our aim is to empower talented people to constantly develop and to take advantage of exciting career opportunities as our business grows. Success within all of these areas is critical to achieving our business objectives. This part of our strategy applies to the management teams at both Group and subsidiary levels. To this end, we continually focus on improving our development programs for sales people, our trainee program for young talents, and our management programs for new and experienced managers. Gender balance is part of our overall diversity strategy. In order to increase the number of female leaders, our KPI has been that 50 percent of all newly employed managers throughout the Group should be female. The figures for 2014 show that 39 percent of our employees are female and that 46 percent of our newly recruited managers are female. When we look at the overall figures for the whole Group, 36 percent of our managers are female, but if we look at the different management levels throughout the Group, the picture changes: in Group management (Level 1), the proportion of female leaders is 22 percent. In management teams at divisional level (Level 2), the proportion of female leaders is 28 percent. In management teams at company level (Level 3), the picture is more differentiated and varies between business segments. In broad terms, the proportion of female leaders is approximately 30 percent at Level 3. In 2014 Schibsted has become an even more global company. We focus on diversity and believe that the right mix of competencies, beliefs, backgrounds, and gender will enhance our innovation capabilities. We will continue to pursue our focus on diversity in We have started to consolidate our technical competence and have recruited key people in central positions. Highly skilled and talented people have joined us to share their knowledge and experience from global tech players. Together with our great people with long 38 B 20

158 experience in Schibsted, we believe we have the competitive edge to compete and succeed in a global market. In order to take the next step in attracting international tech competence, we decided to hire in-house technical recruiters to find more of the critical competence we need to execute our business strategy. Attracting and retaining top talent is and will continue to be one of our main priorities. In an international business like ours, where we are competing with the world s biggest companies, the importance of attracting top talent is more vital than ever before. Based on the number and quality of applicants to our trainee programs and on the level of interest in permanent positions in our companies from all over the world, we are in a good position for further developing the organization. One of the consequences of Schibsted s relatively decentralized structure and culture is that our companies are used to having responsibility for their own development and growth. As we develop more cooperation between the companies and establish horizontal services, we also seek out common solutions in OD areas such as employee surveys, 360 degree assessments, business-specific training programs, and mobility programs. In 2014 we implemented a new applicant tracking system in the recruitment processes of all our divisions and at corporate level. This means that we can now work seamlessly across the Group and across functions with our recruitment processes. During 2014 we strengthened our cooperation within our OD partnership. The three members of this partnership are each responsible for OD in their respective divisions and work closely with OD Corporate. Together we have designed a portfolio of new e-learning leadership training modules, making it possible for leaders to customize their own competence development in line with business needs. The work within the OD partnership aims to improve efficiency and alignment of OD initiatives at all levels within the Group. An example of good alignment is the cooperation between OD corporate and our media houses in the area of digital training for journalists and editorial managers. Discrimination The companies working environment committees work continuously on promoting a good working environment and thus minimizing incidents of workplace discrimination. Further measures to promote this objective as stated in the Norwegian Anti-Discrimination Act are not considered necessary. SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT 39 SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT DIVIDEND AND CAPITAL STRUCTURE Schibsted Media Group is a listed company, and our aim is that our shares should be perceived as an attractive investment. A competitive return should be based on a healthy economy. The goal is to ensure a competitive return through long-term growth in the share price and dividend. The company s shares should as far as possible achieve a price which reflects the company s long-term earnings capacity. Schibsted holds strong positions in the Scandinavian media markets. The media houses strong brands and market-leading positions help ensure a good cash flow, even with continuing structural changes and lower profitability for print newspapers. Online classifieds operations both in Scandinavia and internationally contribute with strong, profitable growth was a good year for Schibsted Media Group, with solid revenues and improvements in many of the markets in which the Group operates. The Group s financial flexibility has been stable during the year. At the end of 2014, the Group had a strong balance sheet, good cash flow, and healthy liquidity. Schibsted s capital structure shall be sufficiently robust to maintain the desired scope of action and exploit growth opportunities based on strict assessment of our allocation of capital. Schibsted will place emphasis on having a fixed dividend payout ratio which, over time, will constitute percent of the Group s normalized cash flow per share. In years of economic slowdown, the company will aim to pay a dividend at the upper part of the target range, provided the Group s capital structure allows this. Schibsted is currently in a phase of investments in online activities which will form a basis for future growth in profitability. The Board has taken a balanced approach to the dividend proposal, and has taken into consideration the fact that the Group is increasingly strengthening its growth profile. On this background, the Board will recommend to the Annual General Meeting that a dividend of NOK 3.50 per share be distributed for the 2014 financial year. This represents no change compared to The total number of shares is 108 million, and a dividend of NOK 3.50 per share means a payout of NOK 376 million (adjusted for shares owned by Schibsted). A dividend of NOK 3.50 per share amounts to around 39 percent of the net cash flow from operating activities for B 21

159 SCHIBSTED ASA Schibsted ASA is the parent company of the Group. The company s accounts have been presented in accordance with the Norwegian Accounting Act and generally accepted accounting practices in Norway (NGAAP). Operating revenues amounted to NOK 71 million (NOK 49 million). The operating expenses of NOK 321 million (NOK 271 million) relate to Group administration services. The operating loss in 2014 was NOK -250 million (NOK -222 million). Net financial items include distributions (dividends and group contributions) from subsidiaries of NOK 731 million. The pre-tax profit on ordinary operations amounted to NOK 385 million (NOK 2,887 million). Schibsted ASA had 91 (103) employees at year-end, 19 (32) of whom were trainees assigned to the Group s companies. The Group s CEO is Schibsted ASA s President and CEO. A merger with the subsidiary Schibsted Finans AS with accounting effect from 1 January 2014 is completed. Oslo, 24 march 2015 BOARD OF DIRECTORS SCHIBSTED ASA OLE JACOB SUNDE CHAIRMAN OF THE BOARD BIRGER STEEN TANYA CORDREY JONAS FRÖBERG ANNE LISE VON DER FEHR ARNAUD DE PUYFONTAINE EUGENIE VAN WIECHEN ROLV ERIK RYSSDAL, CEO SCHIBSTED ANNUAL REPORT 2014 BOARD OF DIRECTORS REPORT The Board of Schibsted ASA proposes allocating the profit for the year as follows: PROFIT FOR THE YEAR NOK 394 million. PROPOSED ALLOCATION: Allocated to dividend, NOK 3.50 per share NOK 376 million Transferred from other equity NOK 18 million Group contributions to subsidiaries total NOK 87 million. EVA BERNEKE GUNNAR KAGGE CHRISTIAN RINGNES 41 SCHIBSTED ANNUAL REPORT 2014 STATEMENT OF EXECUTIVE COMPENSATION STATEMENT OF EXECUTIVE COMPENSATION 1. Basis for the Group s executive compensation policy The Group Board of Schibsted ASA ( Schibsted ) considers the employees as the Group s most important resource. A competitive remuneration policy that attracts and retains talented employees is therefore crucial to our business. The company s human resource policy covers several factors, including terms related to pay and pension, working environment, development programs, and more traditional employee benefits. The executive compensation policy is part of the company s human resource policy. 2. Guidelines for the executive compensation policy The guidelines regarding executive compensation are determined by the Group Board. Schibsted s Group CEO and Group Management Team are directly covered by the guidelines. The guidelines are also normative for the remuneration of other senior managers and management groups in our core businesses. 3. Period of application This statement of executive compensation applies for the coming financial year; see section 6-16 a) (2) of the Norwegian Public Limited Companies Act. The Group Board will base its work on this statement, following discussions at the Annual General Meeting on 8 May Main principles of the company s executive compensation policy The Group Board regularly assesses the Group s executive compensation policy to ensure that the compensation packages offered to our executives are reasonable, well balanced, and competitive. The fixed salary of the Group s managers shall be moderate and shall form the basis for the assessment of various additional benefits as part of the managers total compensation, annual variable pay, long-term incentive program, and pension schemes. The Group s further growth and profitability depend on the employees efforts to ensure continuous business development and improvement in profitability. To motivate managers to make such efforts, variable pay and other incentive schemes are linked to factors which they can directly influence. These schemes must be reasonable in relation to the Group s results and to the value created for the shareholders. 42 B 22

160 4.1. FIXED SALARY The fixed salary (the gross annual salary before tax and before variable pay and other additional benefits are calculated) shall represent the key component of manager compensation. The increase in fixed salaries is expected to be moderate DIRECTORS FEES Employees do not receive directors fees for board appointments when they serve as board members as part of their position. Employee representatives are exempted from this rule BENEFITS IN KIND AND OTHER SPECIAL SCHEMES Senior executives will normally be given benefits in kind in line with common market practice, such as mobile phone, laptop, broadband, newspapers, company car or car allowance, and parking. There are no specific restrictions on what other benefits may be agreed. The Group s management loan scheme was terminated in 2006 and has not since been offered to new managers. This scheme entitled managers to a loan of NOK 400, ,000 secured by a mortgage against the borrower s property. Schibsted ASA has posted an unconditional guarantee of NOK 2.5 million for the remaining loan portfolio, which currently represents approximately NOK 7 million VARIABLE PAY AND OTHER INCENTIVE SCHEMES Guidelines have been established for the use of variable pay and other incentive schemes in the Group. The Group Board believes that incentive schemes are necessary to ensure long-term value creation and entrepreneurship. Such schemes may consist of short-term incentives (normally annual) and long-term incentives (normally three years) SHORT-TERM INCENTIVE SCHEMES Senior executives participate in an annual variable pay program that is linked to target achievement each year. Other Group employees may also participate in such schemes. Variable pay is limited to a maximum of six months salary for the Group CEO and varies from three to six months salary for other members of the Group Management Team. For the top manager/editor-in-chief of larger units, the maximum payment is normally limited to four months salary. For other employees taking part in short-term incentive schemes, the maximum payment is normally limited to three months salary. Variable pay consists of two parts: one part is linked to financial criteria, the other to strategic, operational, and organizational criteria. These criteria form part of an overall assessment. The payment of variable compensation to senior executives for the 2014 financial year is shown in note 27 to the financial statements. SCHIBSTED ANNUAL REPORT 2014 STATEMENT OF EXECUTIVE COMPENSATION 43 SCHIBSTED ANNUAL REPORT 2014 STATEMENT OF EXECUTIVE COMPENSATION LONG-TERM INCENTIVE SCHEMES FOR EXECUTIVES The objective of having long-term incentive schemes is to promote long-term value creation. By receiving a minor portion of the long-term value creation, the interests of the managers and the shareholders are aligned. In 2010, Schibsted s options program was replaced by a Long-Term Incentive Program (LTI Program), an annual, rolling, three-year share purchase program. The program was expanded in 2012 to include several online classifieds companies and management groups. The LTI Program provides settlement in Schibsted shares, mainly based on the performance and target achievement of the participant s employer company. Ownership of Schibsted shares promotes common goals and encourages cooperation between the companies. Customized incentive programs may be introduced for selected companies, especially for growth and start-up companies. Such programs will also be long-term, but may contain elements of monetary rewards. The main elements of Schibsted s current LTI Program are as follows: Schibsted s LTI Program is divided into four participant levels. Level 1 is for the Group CEO, Level 2 is for members of the Group Management Team. Level 3 and Level 4 are for selected key managers in the Group and managers/management groups in key subsidiaries. Level 3 relates to the media house business while Level 4 relates to online classifieds (Level 1, 2 and 3 participants are included in the LTI-1 Program, whereas Level 4 participants are included in the LTI-2 Program). The participants at each level are given a defined basic amount, calculated as a percentage of their fixed salary. Guidelines have been established regarding allocations to the respective participant levels in order to ensure flexibility and mobility while also taking into account individual pay differences and variations in the compensation schemes. At the start of the program, between 11 and 33 percent of the base amount ( share purchase amount ) is awarded in the form of Schibsted shares and is subject to a lock-in period until the program expires (three years). If a Level 1 or Level 2 participant leaves the Group during the lock-in period, shares that were bought for the share purchase amount must be handed back. No corresponding restriction applies to Level 3 and Level 4 participants. The remaining percent of the base amount ( performance amount ) is linked to three-year performance or target achievements. At the end of the three-year period, the participants receive settlement in Schibsted shares based on their target achievement over the three-year period. The number of shares is calculated based on the average price during the program s three-year period. Level 1, 2 and 3 participants receive the full performance amount after three years. Level 4 participants receive one third of the performance amount after each program s three-year period, and the remaining two thirds one year thereafter. The maximum settlement amount in each program will depend on target 44 B 23

161 achievement during the period. If the minimum target is not reached during the three-year period, only the share purchase amount will be paid at the end of the three-year program. In a media market that is constantly undergoing rapid change and facing tougher competition, the Group Board reviews incentive schemes on an ongoing basis to ensure that the program(s) support Group strategic objectives and meet executive talent needs. The current LTI Program(s) will be reviewed in The general structure of the program (performance period, equity vehicles, etc.) will remain the same for Group Management. Amendments will primarily be related to performance measures; going forward, overall performance assessment will be more closely linked to the Group s strategic pillars. The Group Board determines the allocation to the CEO. Other allocations are determined by the CEO within the program s frameworks and in compliance with the Board s allocation guidelines. The CEO s allocations are reported to the Board. Guidelines apply to the adjustment of targets during the measurement period. The final outcome of the LTI Program is determined by the Group Board. Employees leaving the Group during the three-year period of each LTI Program are normally not entitled to partial accrual. An exception applies to the share purchase amount for Level 3 and Level 4 participants, and in general if a participant leaves the Group due to illness, death, early retirement, normal retirement or other special circumstances. In such cases, entitlement to partial accrual is granted. Level 1 and Level 2 participants are required to hold their LTI shares for 2 years following the end of each LTI Program. The final cost of each LTI Program, measured as the cost over the program s cycle, depends on the number of participants, the individual participant s salary, share price development, and performance during the three-year period EMPLOYEE SHARE SAVING PROGRAM FOR ALL GROUP EMPLOYEES To motivate and retain our Group employees, the Group Board decided to introduce a share saving program for all Group employees in This program replaced the previous share purchase program for employees in Norway and Sweden. All Group employees are invited to save up to 5 percent, but a maximum of NOK 50,000, annually of their base gross salary through payroll deductions in order to purchase shares in Schibsted. The share purchase is made on market terms four times a year, after the release of Schibsted s quarterly results. Employees who choose to hold their shares for two years ( holding period ) and who are still employed by the Group at the end of the holding period receive one free bonus share from Schibsted per two shares purchased and held during the holding period. SCHIBSTED ANNUAL REPORT 2014 STATEMENT OF EXECUTIVE COMPENSATION 45 SCHIBSTED ANNUAL REPORT 2014 STATEMENT OF EXECUTIVE COMPENSATION 5. Pension schemes The Group CEO and other senior executives in Norway are, like other employees, members of the Group s pension schemes; see note 21 to Schibsted s consolidated financial statements. The Group CEO and other senior executives in the Group have individual pension plans which mainly entitle them to early retirement pension from the age of 62 (early retirement pension) and thereafter a lifelong retirement pension, disability pension, child pension, and spouse/cohabitant pension in addition to pension entitlements under the national insurance scheme. The pension costs for senior executives in Schibsted ASA are stated in note 27 to the financial statements. As from 2012, the Group s pension scheme for new managers in Norway is a defined contribution scheme. This is considered to be in line with market developments and will over time contribute to reducing the Group s pension costs. Most of the Group senior executives based in Sweden belong to defined contribution pension schemes entitling them to benefits in line with those offered to Norwegian senior executives from the age of 62 years. The Group Board is of the opinion that the current schemes for senior executives based in Sweden are adapted to the market, and these schemes will continue in 2015 without any major changes. Pension levels and schemes for senior executives outside Norway and Sweden must be viewed in connection with the individual manager s overall salary and employment conditions, and should be comparable to the overall compensation package offered to managers in Norway and Sweden. Local rules governing pension entitlement, social security entitlement, taxation, etc. are taken into account when designing individual pension plans. 6. Severance pay The Group CEO is entitled to severance payment equivalent to 18 months salary in addition to pay during the six-month notice period. Members of the Group Management Team and senior executives are normally entitled to severance pay equivalent to 6-18 months salary, depending on their position. A non-compete clause and provisions governing reduction in the severance pay normally apply during the severance pay period. 7. Agreements entered into or amended in 2014 and their impact on the company and the shareholders The Group Board believes that the guidelines for share-based remuneration promote value creation in the company/group and that the impact they have on the company and shareholders is positive. 46 Oslo, March 2015 Board of Directors, Schibsted ASA B 24

162 47 SCHIBSTED ANNUAL REPORT 2014 SOCIAL RESPONSIBILITY STATEMENT OF CORPORATE SOCIAL RESPONSIBILITY mission of Empowering people in their daily life, our values and our core business. We believe that we, together with our users, can contribute to a more transparent and sustainable society in what we do every day. Rolv Erik Ryssdal, CEO, Schibsted Media Group OUR MISSION AND VALUES Schibsted Media Group s mission is Empowering people in their daily life. We empower people by providing them with news and opinions, by providing transparent and secure marketplaces, and by defending freedom of the press and editorial integrity. Throughout our history we have been driven by a desire to challenge conventions and to think in new directions. We consider ourselves a defining force within our industry, and as such our vision is Shaping the media of tomorrow. Today. The values that support our mission and vision are: We have integrity We are innovative We are a team We are here to win You don t have to compromise between sustainability and profitability. The belief that sustainability means having to forgo profit is a misconception. Re-examining your value chain with a keen eye on sustainability will reveal new ways of operating that improve externalities while reducing costs or increasing revenues at the same time. To me, building a sustainable business is closely linked to innovation. You examine your business from the outside and ask if you could organize it more intelligently. We have an innovation culture, so I m optimistic that identifying and integrating sustainability will continue to be part of our way of doing business. Ole Jacob Sunde, Board Chair, Schibsted Media Group Schibsted Media Group s corporate social responsibility is closely linked to our OUR PRINCIPLES In Schibsted our corporate social responsibility is our awareness and our ability to solve social and environmental concerns while meeting the expectations of our shareholders. It is closely linked to our mission, vision, and values. In other words, our corporate social responsibility dictates how we care about our own people and the world around us, including our users and readers, our employees, local communities impacted by our operations, the environment, and society at large. Our ambition is to maximize the creation of shared value for our shareholders, our stakeholders, and society at large while minimizing potentially adverse impacts of our operations. In Schibsted we draw a distinction between our corporate social responsibility which is a strategic business issue and charity, sponsorship, and philanthropy. While we acknowledge that charity, sponsorship, and philanthropy represent a valuable contribution towards creating a better world and enhancing our companies reputation and brands, we firmly believe that our corporate social responsibility goes beyond that. Our corporate social responsibility also includes our principles relating to human rights, labor rights, and anti-corruption as described in our Code of Conduct. In addition to the areas mentioned in the 48 B 25

163 Code of Conduct, our corporate social responsibility policy includes our principles relating to the environment. ENDORSEMENTS AND MEMBERSHIPS Schibsted Media Group has been a member of the UN Global Compact since 2009, and continues to support and promote its ten principles. Schibsted is also committed to complying with the OECD Guidelines for Multinational Enterprises, which contain voluntary principles covering a variety of issues affecting companies social responsibilities. In 2011 Schibsted became a member of the Nordic Media CSR Forum with the aim of setting the agenda for corporate social responsibility in the media sector. Since 2012 Schibsted has participated in the UK-based CSR Media Forum. For more information and the Forum s activity report for 2014, visit mediacsrforum.org. THE SIX PILLARS OF OUR CORPORATE SOCIAL RESPONSIBILITY Our corporate social responsibility is structured around six pillars: Responsible business People and society Human rights, labor rights, and professional development Environment Governance and ethics Charity and humanitarian activities Responsible business Trustworthiness and quality are essential for Schibsted our users must be able to trust our news, products, and services. We believe this contributes to empowering people in their daily life and thereby building societies that are more transparent. For our media houses, this implies having systematic quality assurance procedures at all stages in the journalistic process and a keen awareness of how the content we publish influences our readers and society. For more information about out quality assurance process, visit for the Annual Editorial Report. For our classifieds operations and online services, responsible business implies creating marketplaces that are reliable, effective, and safe for our users. Our classifieds sites work proactively to prevent various forms of undesirable activity such as advertising of illegal or unethical products, illegal marketing, and fraud. EDITORIAL FREEDOM AND EDITORIAL GOVERNANCE One of Schibsted Media Group s prime responsibilities is to ensure editorial freedom and the right to freedom of speech. The free media play a critical role in underpinning strong, viable democracies. Schibsted s Articles of Association state that the shareholders shall enable Schibsted to operate its information business in such a way that editorial freedom and integrity are fully ensured. EDITORIAL GOVERNANCE In 2011 Schibsted s Editors Forum adopted a framework for editorial governance in the Group s publishing businesses. This framework safeguards the principle of editorial freedom and defines it explicitly for the benefit of Schibsted s publishing companies in countries where this principle is not enshrined in local law. SCHIBSTED ANNUAL REPORT 2014 SOCIAL RESPONSIBILITY A Schibsted editor shall promote freedom of opinion and defend the democratic values of society, with full respect for human rights, equality, and diversity. A Schibsted editor shall have personal and full responsibility for all content, including advertising, and shall ensure its integrity in every respect. A Schibsted editor has a free and independent role, and is entitled to independent leadership of the editorial department and editorial activities and to the freedom to shape editorial opinions within the framework of the fundamental ideas of the medium. A Schibsted editor shall ensure a form of journalism that makes it clear to the reader what is being presented as information and facts and what is being presented as the opinion of the medium. A Schibsted editor shall make it clear to the reader what is independent editorial content and what is commercial promotion. A Schibsted editor shall focus on editorial quality and credibility and shall establish ethical and journalistic standards to this end. The ethical guidelines should cover journalistic research as well as publishing. A Schibsted editor shall protect freedom of speech, freedom of the press, the principle of public access to official documents, the free flow of information, and free access to sources. A Schibsted editor shall protect individuals and groups against injustice and shall report matters of public interest. This framework of editorial governance has been presented to and endorsed by the Group Board. In addition to the Group wide editorial framework, our media houses have issued company specific editorial code of ethics. 49 SCHIBSTED ANNUAL REPORT 2014 SOCIAL RESPONSIBILITY ANNUAL EDITORIAL REPORTS Schibsted s Norwegian publishing businesses prepare annual editorial reports and publish them on their websites. Summaries of these reports, as well as reports from our Swedish and international publishing businesses, are published on the Group s website. The purpose of the annual editorial reports is to increase transparency in our editorial activities. In the reports, the editors-in-chief present a status report describing editorial goals, challenges, and results during the past year. The editors-in-chief submit the reports to their respective boards of directors. Due to the principle of editorial independence, these reports are not subject to a board resolution. However, the editors-in-chief may be asked questions about matters of interest from a publishing or journalistic perspective. Furthermore, the Group s annual editorial report is presented to the Group 50 Board by the president of Schibsted s Editors Forum. The annual editorial report includes information on editorial quality control, how the newspapers work with sources, and the number of complaints to the respective countries press complaints bodies. The annual editorial reports are available at CLASSIFIEDS SITES AND ONLINE SERVICES All the online marketplaces and portals operate under a set of rules to prevent fraud and advertising of illegal or unethical goods. All our sites inform users of the terms and conditions of use, and several have also implemented comprehensive and transparent consumer safety and privacy policies, notably Blocket, LetsDeal, and Finn. We practice a zero-tolerance policy with respect to fraud, and work proactively and strategically on security. Furthermore, our sites cooperate with authorities such as the police and customs agencies to prevent fraudulent activities on our sites. Local manual and automatic ad reviewing processes are in place to prevent weapons, drugs, and other illegal or counterfeit items from being advertised on our sites. Our sites also practice a zero-tolerance policy with respect to pornography and prostitution. If the Group acquires companies that do not follow our policies at the time of acquisition, the Group has established procedures to ensure that such activities are discontinued as soon as possible after acquisition. DATA ANALYTICS, PERSONALIZATION AND PRIVACY With our strategic focus on technology and advanced data analytics, we aim to create B 26

164 insights from our data that benefit our users through improved and more relevant products and a unique user experience, from great content recommendations to convenient payment systems and seamless cross-device experiences. In our recent Future Report, we noted that the era of online anonymity has given way to the era of online identity. Nowadays, all online activity leaves a data trail providing companies with sufficient information to create digital identities. We strongly believe that services that are tailored to the individual user represent the future, and see the same trend internationally in both editorial content and advertising. For Schibsted, the opportunities represented by the digital transformation and increased insight also imply a stronger focus on privacy protection. Based on our value of integrity, we are highly committed to transparency and to compliance with privacy legislation. To underline this commitment, the Group appointed a Group Privacy Officer in The Group Privacy Officer conducts close and proactive dialog with the Norwegian Data Protection Authority to ensure that our activities comply with privacy regulations. In addition, the Group participates in the annual CSR Media Conference and in the UK-based Media CSR Forum, where privacy protection in the media sector has been high on the agenda. In 2014 the Group issued its privacy mission statement and initiated a privacy program. Our privacy mission statement reads as follows: Data and information about our users and employees are essential to Schibsted Media Group s strategy for product development and growth. Our privacy commitments shall enable us to utilize data to create value for individuals, partners and the Group within the constraints set by the law and accepted privacy principles such as transparency, security and individual choice. The key objectives of our privacy program are to ensure compliance with our legal obligations, embed data privacy into our corporate culture and products, maintain public trust, and to support and guide Schibsted s data-driven innovation. We have already completed several activities under our privacy program: news user terms and conditions and privacy policies have been issued in Norway and Sweden. Various data mapping activities have been completed to ensure our personal data SCHIBSTED ANNUAL REPORT 2014 SOCIAL RESPONSIBILITY inventories are updated. In December 2014 Schibsted issued a new group data policy prohibiting advertisers and third parties from processing personal data without the user s explicit consent and heavily restricting anonymous segmenting, profiling, and tracking on Schibsted sites. In 2015 we will continue to work with advertisers and other parties to implement these policies. During the year, data protection authorities conducted reviews of Schibsted subsidiaries in Norway and Sweden. We offered our full cooperation and do not expect to receive any fines or significant negative feedback. We received approximately 100 requests for access to data from our users during We currently handle such requests manually, but are working on automating the process to facilitate our users access to their data. 51 SCHIBSTED ANNUAL REPORT 2014 SOCIAL RESPONSIBILITY In 2015 we will continue our work on the privacy program and focus on transparency and user empowerment through a privacy dashboard solution. We will also focus on staff privacy training and awareness. People and society By people and society is meant the impacts on society at large of initiatives implemented by the Group and its subsidiaries and aimed at external stakeholders. These include concepts aimed at users, local communities, target groups, etc. developed by the Group and its subsidiaries or through strategic partnerships. SCHIBSTED FUTURE REPORT In 2014 we published the first-ever Schibsted Future Report. The report is Schibsted Media Group s take on some 52 of the profound changes in user behavior and technology that are revolutionizing people s everyday life all over the world and of the opportunities these changes offer. Our mission of Empowering people in their daily life implies a responsibility to act as a driving force in the digital transformation of society by providing digital consumers with innovative, high-quality and user-friendly products. The Schibsted Future Report is an attempt to gather and understand some of the digital trends we see today and which we believe will evolve and impact users, readers, and businesses in the years ahead. THE CHANGING MEDIA LANDSCAPE Major changes are taking place both in our industry and in the world around us. Over the past few years, the media industry has been transformed by disruptive technologies, new distribution methods, and new ways to consume information. Explosive growth in mobile, news on demand and web TV consumption are signs of a diverse, multifaceted publishing landscape. While facing these changes, our media houses are transitioning from print organizations to online organizations. Although the media landscape is changing, the role of the media remains the same, though is perhaps more important than ever. Faced with an abundance of information from a multitude of sources, the need for relevant and credible information is greater than ever. The ability to highlight and facilitate discussions on critical issues in society, amplify the voices that cannot be heard on social media and place events in a larger context all remain important aspects of this role. This is how the media move society forward. In Schibsted, we believe that our efforts to build world-class digital media houses will enable us to manage this important role even better. The digital platforms offer new opportunities for increased product relevance through continuous live coverage, interactive storytelling across multiple channels, and increased reader involvement. Continuous live reporting implies that journalistic decisions must be made in a fraction of the time available in traditional media; this, however, must not be allowed to compromise the quality and credibility of our content. Articles published on all our media houses online platforms are open to comment by our readers. Increased reader involvement, facilitated by mobile platforms, strengthens transparency and focuses on quality in the relationship between the readers and the B 27

165 journalists. Moreover, the digital debate arenas bring public debate to more citizens and enable more people to have their voice heard. The media houses have implemented several measures to prevent harassment, threats, and hateful comments. Our moderators monitor debates and remove comments that are deemed inappropriate. Most of our media houses require people to be logged in via social media etc. to be able to comment on articles. In addition to traditional news reporting, our media houses have also created several new meeting places for our users, places where they can share knowledge and experiences with each other. ONLINE CLASSIFIEDS: A PEOPLE S MOVEMENT Our classified operations are online marketplaces that facilitate transactions of goods between individuals. In several of our markets, the classifieds sites have become a people s movement, where secure and simple solutions create new possibilities for consumers. In our mature markets, the users add value to the marketplace by inventing new ways of trading. Our marketplaces are simple, practical, and local, and create a personal relationship between buyer and seller. The many ways in which our marketplaces empower people to help each other therefore align perfectly with the Group s mission. Our online services facilitate transactions of goods and services between individuals and companies and serve as portals for retrieving information. Consumers use our marketplaces to search for information they need in their daily life, enabling them to make better informed and smarter purchase decisions. Some examples from our subsidiaries are presented below. DEMOCRACY AND FREEDOM By promoting and defending democracy and freedom of speech, practicing reliable and independent journalism, and facilitating marketplaces for services and jobs, we play a positive and important role in society and in people s lives. Aftenposten Sweatshop deadly fashion In April 2014 Aftenposten published the video series Sweatshop deadly fashion. In five episodes, the series follows three Norwegian teenagers visiting Cambodia. The purpose of the trip was to describe the working conditions of the country s textile workers. The youngsters gained insight into the working conditions in a textile factory, experienced the hardship of living on a textile worker s wage, and visited one of the textile workers at home. The video series received considerable attention in Norway, and by September 2014 it has reached almost 800,000 viewers. Aftenposten followed up with editorial coverage from the current affairs and features desks, the financial desk wrote a story on the key players and owners of the largest fashion producers in Scandinavia, and the youth commentary section (SI:D) published letters written by the teenagers while they were on the road in Cambodia. EMPLOYABILITY Several of the countries in which we operate have high unemployment rates, particularly among young people. Several of our classifieds sites and job sites represent SCHIBSTED ANNUAL REPORT 2014 SOCIAL RESPONSIBILITY an important source for the unemployed to find jobs in a tough job market. As an example, more than new job ads were posted on our job classifieds site in Spain and Italy in InfoJobs.es Improving employability InfoJobs Spain is a member of Prepárate, a collaborative jobs venue, organized voluntarily by HR and coaching expert companies. Under this project InfoJobs shares knowledge and tools to help job seekers to improve their employability by focusing on their personal and professional development. In 2009, InfoJobs launched InfoJobs Commitment, a series of initiatives aimed at increasing employability among vulnerable groups such as the young, the unemployed, and the disabled, all of whom are particularly affected by the financial crisis. To date, InfoJobs has launched a total of 16 Compromiso (commitments). YOUTH Svenska Dagbladet Helping young people improve reading and writing skills In May 2014 Svenska Dagbladet launched a new website to stimulate interest in reading and writing and to aid teaching. The deterioration in Sweden s uppersecondary school pupils reading and writing skills is causing general concern and has added further fuel to the debate over education in schools. The site provides teachers, parents, and pupils with useful tools to stimulate interest in reading and writing and to aid teaching. It also contains guides to journalism for teachers to use in the classroom. Many teachers devote a lot of time to finding the right kind of original texts for their pupils to use in connection with writing columns or news articles. 53 SCHIBSTED ANNUAL REPORT 2014 SOCIAL RESPONSIBILITY This is essentially an issue of democracy in the sense that reading and writing skills are the cornerstones of democracy. Our experience is that the issue of school education is currently attracting a lot of interest, not least among our readers. It s vital that our young people can read and write without difficulty, and for us to be able to contribute to that feels important, inspirational, and fun. You could say that this is closely related to Svenska Dagbladet s trademark. Gunilla Asker, CEO, Svenska Dagbladet Aftonbladet Svenska Hjältar school project: Discussing ethics and moral courage with young people Aftonbladet s annual campaign Svenska Hjältar [Swedish heroes] pays tribute to everyday heroes through editorial coverage across all platforms. The project started as a response to one of the most common criticisms of the media in general and of the tabloids in particular of reporting only negative news. The 2014 edition was the sixth in the series. In 2014 the school 54 visits continued, and the tour, headed by Svenska Hjältar s spokesperson Mark Levengood, visited a total of 4,400 ninth graders in ten different cities to discuss ethics, moral courage, and humanity based on five Swedish heroes stories. In the five videos, which are also featured on the Svenska Hjältar website, five young people talk about preventing rape, bouncing back from a life-changing accident, overcoming drug abuse, intervening when children are abused, and speaking up against bullies. Politism.se Revitalizing the political debate among young people Politism.se was launched in 2013 with the objective of putting news in a political context and revitalizing the political debate among young people. The site was created as a response to the fact that many young people are politically engaged, but have nowhere to channel this engagement. The site has a unique five-step model for reader comments, reader interaction and reader influence over the news that is published on the site, and is unlike any other media channel in Sweden today. Politism.se was nominated for the Swedish Magazine Publishers Association digital publication award in Blocket Partnership with Retoy: Teaching sustainability through play Blocket has a strategic partnership with Retoy.se, a charity that creates arenas and events where children discover how fun and easy it is to be sustainable and environmentally friendly. At the events, children practice sustainable consumption in toy swap bazaars, and recreate new toys from old toys and recycled materials in in Retoy Labs. Through participating in these events the children also learn about the United Nations Convention on the Rights of the Child. Blocket supports the charity through quarterly donations and employee participation in Retoy s events. Bergens Tidende and Aftenposten Debate arenas for youth Aftenposten s SI;D (launched in 2005) and Bergens Tidende s BTbatt (launched in 2008) are arenas where youth between the age of 13 and 18 can participate in public debates by expressing their opinions, thoughts, and concerns. The print and online editions are dedicated to debate articles written by young people. AWARDS Schibsted s media houses received several awards in For a full listing of these awards, visit the 2014 Annual Editorial Report due for publication in May INCREASING TRANSPARENCY IN CONSUMER MARKETS Personal finance In recent years, Schibsted Media Group has launched several services that contribute B 28

166 to increased transparency in the field of consumer services. These services are easy to use and provide an efficient way for consumers to compare different service providers. One such example is Lendo, a marketplace for consumer loans in Sweden and Norway. When customers submit applications for consumer loans through Lendo, they receive offers from several banks, making it easier to compare terms and choose the bank with the best offer. SERVICES Mittanbud.no is another example of a service that increases transparency. Launched in 2009, it has become the leading online marketplace for connecting buyers and sellers of services in Norway. The service was first developed to advertise skilled trades and services, but has since been expanded with new services every year. Since its launch, Mittanbud.no has handled over 400,000 projects throughout the country. The site also provides users with advice on how to write contracts and how to verify the quality and professionalism of service providers, including supplier evaluations posted by users. To date, 30,000 suppliers have registered, and users have posted more than 33,000 supplier evaluations of work performed. Human rights, labor rights and professional development Schibsted supports and values international human rights principles, and works to ensure that the Group is not involved in any breaches of human rights. An important element in these efforts is the right to freedom of expression. Schibsted Media Group recognizes our employees right to freedom of association and collective negotiations, and facilitates elections of employee representatives. Schibsted also recognizes the International Labor Organization s fundamental conventions and national legislation on labor standards. Schibsted practices a policy of zero tolerance of forced labor and child labor across the Group, and managing this risk is high on our agenda. The companies working environment committees work continuously to facilitate a good working environment and thus minimize workplace discrimination. EMPLOYEE REPRESENTATION De ansattes representasjon er ivaretatt Employee representation is safeguarded in several ways. The main arenas for employee representation are listed below. For more details, visit 1. Employee representatives on the Group Board: To date, the Group Board consists of 10 members, three of whom are employee representatives elected by the employees for two-year terms 2. Group employee representatives: Schibsted currently has three full-time Group employee representatives. Their task is to safeguard the interests of all employees in matters dealt with at Group level. 3. Schibsted European Work Council (EWC): the EWC is intended to serve as a forum for information, dialog, and consultation between employees and the Group Management Team. SCHIBSTED ANNUAL REPORT 2014 SOCIAL RESPONSIBILITY The EWC currently consists of 35 representatives elected by and among the employees. The EWC convenes twice a year. Our Group employee representatives visit our subsidiaries on a regular basis and review local working conditions and the results of the annual Schibsted Employee Survey with the local management. The representatives also organize meetings to which all local employees are invited to inform them about the different levels of employee representation within the Group. EQUAL OPPORTUNITIES Schibsted is a knowledge enterprise that is reliant on talented employees. Principles governing equal opportunities are stated in our Code of Conduct. We will ensure that employment-related decisions are based on relevant qualifications, merit, performance, and other job-related factors, and we will not tolerate discrimination in employment. As an example, Schibsted has a clear objective to provide equal development opportunities for men and women. We strive to achieve a good gender balance when recruiting candidates for our competence and trainee programs. The Group Management Team has implemented initiatives to further enhance gender equality. Since 2011 all business units within Schibsted report on gender equality when hiring or promoting to management positions as part of their quarterly reports to the Group Management Team and the Group Board. Each company and unit carefully monitors their employee surveys and implements actions based on the results. 55 SCHIBSTED ANNUAL REPORT 2014 SOCIAL RESPONSIBILITY PROFESSIONAL DEVELOPMENT Competence building and organizational development are critical to Schibsted s future success. As a knowledge enterprise in a disruptive industry, ensuring that our people have the right competence and expertise is a strategic priority. We have several competence-based learning programs including innovation and brand building such as Schibsted Sales Academy, Schibsted Sales and Business School, and Schibsted Journalism School. We also have cross-functional programs such as the Management Training Program, the Project Management Program, the Mentor Program, and the Continuous Improvement Program. For more information on professional development in Schibsted Media Group, visit Environment Schibsted Media Group aims to ensure that protecting the environment becomes an integral part of daily activities across the Group. Our principles related to the environment are included in our corporate social responsibility policy. Our ambition is to continuously work to reduce the environmental impact of our operations. Additionally, we want to contribute to reducing the environmental impact of society at large by giving people the opportunity to make environmentally friendly choices by buying second-hand goods. We are continuously striving to adapt the best practices of our subsidiaries across the Group. With the exception of our printing plants, the extent of environmental impact through pollution by our operations is very limited extent. More details about the impact of 56 our operations on the environment are provided below. CLASSIFIEDS Schibsted Media Group is a major player in the second-hand market through our online classifieds sites. Our marketplaces extend the economic life cycle of a range of products and contribute to reducing the need for manufacturing new ones, thus alleviating the pressure on critical resources. In 2014 more than 327 million ads were posted on our largest classifieds sites: Blocket, Leboncoin, Subito, Willhaben, Bomnegocio, and Segundamano. These sites facilitate the exchange of millions of used items per year, to a value of several billion euros. Scandinavian consumers buy more and more second-hand goods for every year that passes. In addition to the financial benefits of shopping second-hand, studies in Sweden show that environmental considerations have become an increasingly important driver buying and selling in this marketplace. The more than 300,000 ads at Finn s giveaway category clearly show that Norwegians are increasingly focusing on finding new owners for their used goods. Since 2004, the number of ads in Finn has increased from 150,000 to more than 2 million. The introduction of free ads to the generalist vertical resulted in a tripling of ads posted in Finn publishes an annual trend report which includes the key figures and developments in the Norwegian market for used goods. In 2014 two of our subsidiaries organized successful campaigns promoting the environmental benefits of second-hand goods. Blocket captured the attention of the Swedish people during the summer and autumn with several campaigns on the environmental benefits of buying and selling second-hand. The campaign was launched on 19 August, World Overshoot Day, in cooperation with Aftonbladet. The campaign, called Together we make a difference, was followed up by a new advertising film called Thank you for buying and selling second-hand and more recently Second-hand challenge where Swedes were challenged to not buy any new goods for a 21-day period. The campaign site was visited by 55,000 unique users, and a total of 1,000 people signed up for the challenge. Finally, for Christmas, Blocket produced a short film in which children and adults gave their views on a sustainable Christmas. The film was spread in social media and received a warm reception. In the fall of 2014 Subito.it launched a PR campaign aimed at convincing Italians of the benefits of trading second-hand. Blocket Environmental initiatives Blocket is in many aspects our most advanced subsidiary when it comes to actively managing the environmental impact. In 2012 Blocket initiated an environmental study together with the IVL Swedish Environmental Research Institute to examine the environmental impacts of Blocket. The results of the study, which were published in May 2013, were impressive: Blocket users potential for reducing greenhouse gas emissions and the environmental benefits of second-hand trading amounted to an impressive 1.6 million tons of CO2 equivalents. Achieving an equivalent reduction in greenhouse gas emissions would require B 29

167 stopping all road traffic in Stockholm for one and half years or all road traffic in Sweden for one month. An updated version of the study was presented in Blocket s annual environmental report in 2014 along with information about Blocket users potential for reducing greenhouse gas emissions and the climate benefits of second-hand trading. In 2014 Blocket launched its sustainability website blocket.se/hallbarhetsarbete, providing information on Blocket s sustainability approach, inspiring sustainable consumption, as well as Blocket s initiatives to reduce the company s carbon footprint. Blocket has also implemented an environmental policy formalizing principles related to the use of technology, recycling, and energy. Kundkraft.se Shifting to green energy In December 2014 Kundkraft.se, a site where consumers can compare prices between electricity suppliers, announced that they would only procure electricity from 100-percent renewable sources and offer it at the same low prices. AWARDS AND NOMINATIONS In May 2014 Blocket won the prestigious Swedish Recycling Industries Inspirational Award for encouraging the reuse of products. The Swedish Recycling Industry citation read: Blocket has contributed to a significantly more efficient use of resources by creating a marketplace for reuse of products that are not discarded but can be used again by a new owner. By stimulating the market to use products over and over again, before they ultimately become waste, the winner has helped to reduce the extraction of virgin raw materials and carbon footprint significantly. PRINTING PLANTS Up to the printing stage, production of the SCHIBSTED ANNUAL REPORT 2014 SOCIAL RESPONSIBILITY Group s newspapers is a digital process and has little impact on the external environment. A newspaper printing plant has a relatively neutral effect on the environment, and the chemicals used to produce the newspapers are treated as special waste and recycled as far as possible. Agreements with approved transport companies ensure safe collection of special waste. Negotiations with paper suppliers are conducted at Group level, and all paper suppliers to our plants meet strict environmental criteria such as the Swan Eco Label, the Forest Stewardship Council, and the Programme for the Endorsement of Forest Certification. All companies in Schibsted Media Group operate in compliance with applicable environmental regulations. Schibsted currently owns four printing plants: one in Oslo, two in Bergen and one in Stavanger. Our newspaper production processes are digital all the way to the printers. 57 SCHIBSTED ANNUAL REPORT 2014 SOCIAL RESPONSIBILITY If polluting chemicals are used, the processes take place in closed systems. Source separation processes have been introduced for almost every type of waste. Schibsted Norge Trykk in Oslo now separates as much as 99 percent of its waste. Special waste is collected by approved transport companies, and the general volume of waste has been significantly reduced. Waste paper, cardboard, waste products from paper reels, and undistributed newspapers account for as much as 96 percent of the total waste volume. The printing plant in Oslo is a member of Grønt Punkt, a waste recovery and recycling company, and pays an environmental fee to ensure proper treatment of all packaging and supervision of external suppliers. The Oslo printing plant issues annual environmental reports on their environmental policy and on the environmental impact of their printing processes. Normal operations do not involve any risk of harmful emissions from the printing plants. All the printing plants owned by Schibsted in Norway are licensed under the Nordic Eco Label scheme to use the Swan Eco Label on all printed matter produced. The Swan Eco Label is the best known and most frequently used ecolabeling scheme in the Nordic countries. Our companies in Sweden use V-TAB for most of their printing needs. V-TAB operates a system for environmental and quality control, and nine of its ten printing plants are certified under ISO 14001:2004 and ISO 9001:2008. Our printing plants in 1 Trend in printing plants consumption of paper, printing ink and electricity Paper (thousand tons) Printing ink (thousand tons) Electricity (GWh) Total emissions from main operations Newspaper tco2e 47,562 57,544 58,561 62,521 73,356 Paper, heatset tco2e Total 48,066 58,234 59,213 63,242 73,356 Transportation and stationary combustion Transportation tco2e 1,494 1,940 1,812 1,667 1,916 Stationary combustion tco2e Total tco2e 1,654 2,106 1,985 1,921 2,317 Electricity District heating/cooling tco2e Other electricity tco2e 3,541 5,234 5,374 4,872 5,402 Total tco2e 3,685 5,668 5,831 5,215 6,020 Total emissions tco2e 53,404 66,008 67,029 70,378 81, Sweden are licensed to use the Swan Eco Label on all the print items they produce. Our companies in Spain and France use multiple printing suppliers for their printing needs, and most of them are certified under recognized environmental standards. The Group s newspaper companies in Norway, Sweden, Spain, and France arrange for unsold newspapers to be returned and sold for recycling. As a direct consequence of digitalization and structural changes in the media industry in Scandinavia, paper consumption levels at our printing plants continue to decrease. MEASURES TO REDUCE ENVIRONMEN- TAL IMPACTS BY OUR SUBSIDIARIES Property Schibstedhuset, located in central Stockholm, is one of the world s most advanced office buildings in terms of energy efficient solutions and materials. Its energy consumption is a third of what is usual for equivalent buildings. Surplus energy is obtained by recovering excess body heat produced by the 200,000 commuters who pass through the Central Railway Station every day. Cooling comes from Lake Klara (a canal in central Stockholm). In its relocation process, Schibsted Sverige made several conscious choices to reduce its environmental impact, such as effective use of office space, video conferencing facilities, renovation of existing furniture, indoor environmental requirements, lighting control, follow-me printing systems, environmental requirements for cleaning services, coordination of transport, and systematic waste management. According to a study conducted in cooperation with KTH Stockholm, our Swedish B 30

168 operations have reduced their environmental impact by more than 50 percent since relocating to Schibstedhuset in Schibsted Sverige measures the environmental impact of its energy consumption, business travel, transport, and commuting on an annual basis. A report with a detailed analyses and a breakdown of the main figures is prepared, and the key figures are presented to the Swedish management team. Schibsted Sverige has several ongoing initiatives, including development of an environmental policy for Schibsted Sverige and an application for environmental certification for Schibstedhuset. The Group Management Team will investigate how we can formalize and implement the Swedish practices throughout the Group. All the Group s major subsidiaries have implemented measures to reduce their environmental impact, notably through recycling and waste management initiatives. CARBON DISCLOSURE PROJECT Every year, Schibsted conducts a survey of emissions of greenhouse gases in our main subsidiaries. The results of the survey form the basis of reports to the Carbon Disclosure Project. A summary of emissions from the Group s 20 largest subsidiaries is presented on the previous page. For more information on the Carbon Disclosure Project, visit Governance and ethics Good corporate governance is an important premise for achieving our mission and vision. Schibsted Media Group emphasizes openness, transparency, accountability, equal treatment, and a long-term perspective in our way of doing business. For more information on governance in Schibsted Media Group, please refer to the Statement of Corporate Governance. TINIUS TRUST The Tinius Trust was founded by Schibsted s previously largest owner, Tinius Nagell-Erichsen. The ownership must uphold the freedom and independence of Schibsted s media services, said Tinius Nagell-Erichsen. His justification for setting up the trust was to consolidate his ownership interest in the Schibsted Group in order to create confidence that Schibsted s newspapers and other media outlets would always be able to maintain their position as free and independent. Nagell-Erichsen wanted to use his influence to protect Schibsted as a group of free and independent editors, characterized by trustworthiness and quality combined with a long-term and healthy financial development. He also wanted to ensure that the Group s publications upheld values such as freedom of religion, tolerance, human rights, and democratic principles. These principles are enshrined in the Trust s articles of association and reflected in the Group s articles of association and the framework for editorial governance. More information about the Tinius Trust can be found at SCHIBSTED MEDIA GROUP S CODE OF CONDUCT One of Schibsted Media Group s core values is integrity. Integrity has always been a vital part of how we do business, as it is decisive for maintaining the trust on which a media organization depends. For many years now Schibsted Media Group has SCHIBSTED ANNUAL REPORT 2014 SOCIAL RESPONSIBILITY demonstrated and continues to demonstrate high standards of integrity. In December 2011 the Group Board adopted the Schibsted Media Group Code of Conduct. The Code of Conduct clearly supports the Group s value of integrity, and applies to all Group Board members and employees of Schibsted Media Group, including entities in which we own more than 50 percent voting rights. Where Schibsted Media Group does not exercise such control, the Board members appointed by Schibsted shall promote the main principles outlined in the Code of Conduct. The Code of Conduct serves as a guide for individual employees daily business interactions, and clarifies the Group s standard for proper conduct in a number of areas. The way in which we interact with each other, our customers, our suppliers and our users, helps build Schibsted Media Group s reputation as a media group with high integrity. For more information, please refer to Schibsted Media Group s Code of Conduct. Schibsted Media Group s expansion into emerging markets in recent years has implied working in new cultural environments. While this may represent challenges with respect to the Code of Conduct, we believe that our corporate culture, governance model, and close follow-up of local management contribute to reducing the risks associated with internationalization. We work continuously to improve communication, understanding, and monitoring of compliance with the Code of Conduct in our emerging and established markets. We shall continue and strengthen our efforts to be acknowledged as a media group with 59 SCHIBSTED ANNUAL REPORT 2014 SOCIAL RESPONSIBILITY a strong commitment to integrity in all our operations. After implementing the Code of Conduct throughout the Group in 2012, we focused on assessing performance and identifying improvement areas in In 2014 we focused on integrating training in our Code of Conduct with our existing training programs, such as the Schibsted Sales Academy, the Schibsted Leadership Program, the Management Trainee Program, Schibsted Journalism Academy, and the Project Management Program. In the annual Schibsted Employee Survey, 70 percent of respondents stated that they have gained an understanding of the Code of Conduct. WHISTLEBLOWING Schibsted Media Group promotes a culture in which discussing compliance issues is an integrated part of our business and in which employees should feel comfortable raising compliance issues with their colleagues and superiors. There are a number of channels available for reporting compliance concerns, one of them being the Schibsted Media Group SpeakUp system, implemented in The SpeakUp system is a last-resort tool for reporting compliance issues, offering anonymity for the reporter as well as the opportunity to establish a dialog. Reports can be made in the reporter s native language by a web interface or telephone. The handling of reported compliance concerns through the SpeakUp system is outsourced. For more information, please refer to Schibsted Media Group s Code of Conduct. No material compliance concerns were raised through the SpeakUp in ANTI-CORRUPTION Schibsted Media Group practices a policy of zero tolerance of corruption. Our Code of Conduct covers principles related to bribery and facilitation payments, business gifts, and entertainment, and provides our employees, leaders, and Board members with guidance on this important issue. Please refer to our Code of Conduct for more information on how to report compliance issues and on our principles regarding corruption. In 2011 Schibsted Media Group became a member of Transparency International. Transparency International raises awareness of the damaging effects of corruption, and works with partners in government, business, and civil society to develop and implement effective measures to handle corruption. Transparency International s report includes requirements on country-bycountry reporting. We disclose the legally required country-specific information for our largest operations. Although our ambition is to be open and transparent about our operations, the requirements on the country-by-country figures would compromise information about certain markets that are sensitive from a strategic and competition point of view. We therefore chose not to include such reports for all countries, but will review this decision on an annual basis. SUSTAINABLE INTERNATIONALIZATION In 2011 the Group Board approved Schibsted Classified Media s Guidelines on Internationalization. These guidelines align with official Norwegian foreign policy and the principles set out in the 2009 Government white paper on corporate social responsibility in a global economy. When launching operations in new countries, the following principles apply: Strict adherence to the ten principles of the UN Global Compact and their inclusion in the employment contracts of all personnel An obligation to enforce adherence, and reasonable efforts to ensure compliance by employees, partners and suppliers. Furthermore, the decision to launch in a new country is subject to approval by the Group Management Team. OPERATING IN COUNTRIES SUBJECT TO SANCTIONS The Group s classifieds site Kufar is located in Belarus, a county that is currently subject to sanctions imposed by the EU and the Norwegian and US governments. Kufar s operations are not directly affected by the sanctions. However, the Group Treasury and Compliance Officer have had close dialog with the general manager of Kufar to ensure that our site prohibits the sale and purchase of embargoed goods and all dealings with the persons, companies and entities listed in the sanctions. Charity and humanitarian activities As of 31 December 2014 the Group has no strategic partnerships at Group level. However, several of our subsidiaries have engaged in charity and humanitarian work in Furthermore, the employees of several subsidiaries, including VG, Fædrelandsvennen, and Aftenposten, decided to forgo B 31

169 their annual Christmas present and donate money to various charities instead. A selection of initiatives by our people and subsidiaries in 2014 is presented below. Finn s partnership with SOS Children s Villages Finn partnered SOS Children s Villages and built a house in the Football Village in Livingstone, Zambia. The house is called The House of Opportunities. Growing up here gives children the opportunity to lead a meaningful life. The house opened in autumn 2008, and is part of a village that houses 179 children. The initiative is run by a group of enthusiasts in the company, and Finn annually contributes towards the operating costs of the house. In recent years, Finn employees have donated money to this project instead of receiving company Christmas gifts and have contributed towards developing a new mobile-based donor concept called SOS MAYDAY. DoneDeal Foundation In February 2010 DoneDeal began work on systemizing its charity activities. In 2012 the DoneDeal Foundation was created to formalize the company s philanthropic activities, and in 2014 it organized six DoneDeal charity months during which the company donated 10 percent of every new ad placed on DoneDeal to three charities nominated by its users and selected by staff members at DoneDeal. As of November 2014, EUR 192,860 had been donated to Irish charities. The DoneDeal foundation focuses on charities that operate in four main categories: people, education, health, and animals. Using the power of e-commerce on the DoneDeal site, the Foundation supports multiple charities by providing funding that can significantly impact the work they do. Funding is designed to ensure the effectiveness, impact, and long-term success of individual charities and groups. The foundation also supports communications efforts by advertising through its commercial site to raise awareness about the organization and increase its impact. Let s Deal Fundraising event for children s rights. Let s Deal in Sweden organized a clearance sale where members could buy Christmas presents at the same time as they raised money for Barnens rätt i samhället (Children s rights in society) (BRIS). Many children living in Sweden do not have the good fortune of enjoying that typical cozy, SCHIBSTED ANNUAL REPORT 2014 SOCIAL RESPONSIBILITY Christmas spirit. So, on 26 November, Let s Deal held a clearance sale event in Gothenburg with two goals: to give Let s Deal members a chance to buy their Christmas gifts at affordable prices and to raise funds for the organization BRIS. The prices were heavily reduced from the previous deal prices, which meant that many members could do their Christmas shopping way ahead of time. The event was attended by 500 Let s Deal members and raised a total of SEK 25,000 for BRIS. 61 SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE STATEMENT OF CORPORATE GOVERNANCE Good corporate governance is an important prerequisite for achieving Schibsted Media Group s vision and for implementing our strategy. Sound corporate governance contributes to the Group s long-term value creation and ensures effective and sustainable use of the Group s resources. Schibsted Media Group is a listed company, and our guidelines for corporate governance are in accordance with the Norwegian Code of Practice for Corporate Governance, the current edition of which was published on 30 October 2014 and is available at The Group Board s Statement of Corporate Governance follows the structure of the Code. This statement also includes an item describing other key functions within the Group (item 16) as well as information on corporate governance, pursuant to the Accounting Act, section 3-3b. Corporate governance in Schibsted is subject to annual review and consideration by the Group Board, which also reviews the content of this Statement of Corporate Governance. 62 B 32

170 1. Statement of corporate governance The Group Board has approved the Group s policy for corporate governance that the Group will comply with the Norwegian Code of Practice for Corporate Governance. The Group s values represent an important foundation for corporate governance and are important for developing a sound and strong corporate culture. We have integrity We are innovative We are a team We are here to win More details on our mission, vision and values are available on our website ETHICS AND CORPORATE SOCIAL RESPONSIBILITY A sound corporate culture is essential to building and maintaining trust both internally and externally. Schibsted s Group Board prepared a Code of Conduct which was approved by the Board in December The Code of Conduct applies to the Group Board members and to all employees within Schibsted Media Group. The Code of Conduct includes our key principles and ethical guidelines, serves as a guide for each individual employee s daily internal and external business interactions, and reflects our standard for proper behavior. The Code of Conduct is subject to periodic review, and is available on the Group s website. Additionally, some subsidiaries have adopted company-specific codes of conduct which, in addition to the principles set out in the Group Code of Conduct, also include principles pertaining to the respective companies. SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE Schibsted Speak Up our whistle-blower hotline with external anonymous reporting was launched at the beginning of Schibsted s primary social responsibility is to safeguard and promote editorial freedom and transparent marketplaces. Schibsted aims to be a group that contributes to democracy and diversity through its integrity and editorial independence. A free and independent media is an important prerequisite and underpins strong and open democracies. Schibsted s core values rest on this foundation and are firmly enshrined in the Group s Articles of Association. See the Statement of Corporate Social Responsibility or visit our website at for more information about our Code of Conduct, Corporate Social Responsibility, and anti-corruption program. 63 SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE 2. Business activities 64 Schibsted s purpose clause reads as follows: The purpose of the company is to engage in the information business, as well as related business activities. The shareholders shall enable the company to operate its information business in such a way that editorial freedom and integrity are fully ensured. The requirement for editorial freedom and integrity shall apply to all media and publications encompassed by the Norwegian and international activities of the Schibsted Group. The Articles of Association are presented on our website, Schibsted Media Group is an international media group headquartered in Oslo. Schibsted has operations in 31 countries. Schibsted s strategy comprises two main objectives: further development of our media houses and of our worldwide online classifieds services. Strong media houses and classifieds operations represent the core of our activities, and our corporate growth strategy is based on close collaboration between different media channels. Our objective is to develop our business activities so that we can offer our users a wide range of services, irrespective of which channels they choose to use. The diversity of Schibsted s product range is closely aligned with our strong tradition of editorial freedom and our ability to adapt to a media market that is constantly undergoing rapid change. The Group s objectives and principal strategies are further described on the Group s website, B 33

171 3. Equity and dividend EQUITY As at , the Group s equity is NOK 6,790 million, equivalent to an equity ratio of 38 percent. The Group Board considers this equity level appropriate to the Group s objectives, strategy and risk profile. DIVIDEND POLICY Schibsted Media Group is a listed company that aims to provide a competitive return based on a sound financial position. The Group Board considers it essential that the company s shares be perceived as an attractive investment. One of the financial targets is therefore to maximize the shareholders return through long-term growth in the share price and dividend. Schibsted s target is to have a fixed dividend payout ratio which, over time, should be percent of the Group s normalized cash flow per share. The Annual General Meeting approves the annual dividend based on the Group Board s recommendation. The Group s dividend policy is described in more detail under Share Information. PURCHASE OF OWN SHARES To allow flexibility in its capital management strategy, the Group Board has requested the Annual General Meeting for authorization to repurchase the Group s own shares. Such authorization is granted by the Annual General Meeting for one year at a time. At the Annual General Meeting in 2014, the Group Board s authorization to repurchase own shares in accordance with the Norwegian Public Limited Liability Companies Act was SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE extended. The authorization states certain terms and conditions: a) The authorization is valid until the next Annual General Meeting of Schibsted ASA in 2015 (i.e. until no later than 30 June 2015). b) The total nominal value of the shares acquired under this authorization may not exceed NOK 10,800,361. c) The minimum amount that can be paid for a share is NOK 30. The maximum amount that can be paid for a share is NOK 500. d) The Board is free to decide the acquisition method and possible later sale of the shares. e) The shares may serve as settlement in the Company s Long-term Incentive Program (LTI Program) and Employee Share Saving Program (ESS Program), and may also be used in connection with mergers, demergers, acquisitions and divestments. The authorization may also be exercised in a takeover situation. The authorization may also be used to buy or sell shares in takeover situations. See item 14 of this statement for further details. Further details on how the authorization has been used are provided under Share Information. 65 SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE 4. Equal treatment of shareholders and transactions with related parties 66 Schibsted has one class of shares, with each share carrying equal rights. RESTRICTIONS ON OWNERSHIP AND VOTING RIGHTS Based on Schibsted s publishing responsibilities and role in society as a media company, Schibsted s independence and integrity are safeguarded through restrictions on ownership and voting rights laid down in the Articles of Association. Article 6 states that no shareholder may own or vote at the Annual General Meetings in respect of more than 30 percent of the shares. Article 7 states that important decisions relating to the Group s key companies must be submitted to Schibsted s shareholders for their approval. According to the wording of this provision, any amendments to the Articles of Association or any sales of shares or operations or corresponding transactions in any subsidiary must be submitted to Schibsted s General Meeting for approval, with the exception of intercompany transactions, which are exempt in their entirety. Through annual resolutions, the Annual General Meeting may authorize the Group Board to manage specific areas of the protection offered under in this provision. Such authorization was granted at the 2014 Annual General Meeting and will apply until the next Annual General Meeting. The authorization granted in 2014 states Pursuant to the third paragraph of Article 7 of the Articles of Association, the Board of Directors is authorized to make decisions on the following matters referred to in the second paragraph, litra a of Article 7 of the Articles of Association: a) Voting relating to amendments to subsidiaries Articles of Association. b) Decisions to sell shares or operations, including private placements, mergers or demergers, in subsidiaries when the net payment (sales amount, merger or demerger payment, etc.) does not exceed NOK 1 billion after financial adjustments. Within the framework of the Group CEO s general authorization, the Board of Directors may delegate its authority pursuant to this authorization to the management. A director appointed pursuant to the second paragraph of Article 8 of the Articles of Association may demand that certain matters which are covered by this authorization are nonetheless to be submitted to the General Meeting for its decision. In general, this means that major transactions are covered by the Group Board s authorization and must therefore be submitted to Schibsted s General Meeting. The proposal is explained in more detail in the notice of the Annual General Meeting. TRANSACTIONS INVOLVING OWN SHARES The acquisition of own shares, in accordance with the Group Board s authorization referred to in item 3 of this statement, must take place in the market at the stock exchange price and in accordance with generally accepted Norwegian stock exchange practices. Acquired shares may be sold in the market or used as settlement for the acquisition of businesses, for general share schemes for the Group s employees, and for the Group s Long-Term Incentive Program (LTI Program) for selected Group managers. The LTI Program is described in more detail in the Statement of Executive Compensation and in the notice of the Annual General Meeting. TRANSACTIONS WITH RELATED PARTIES In 2014, the Board determined that there were no transactions between the Company and its shareholders, Group Board members, executive personnel, or related parties that could be described as material transactions and as such require valuation by an independent third party. B 34

172 5. Freely negotiable shares Schibsted s shares are freely negotiable subject to the restrictions stated in the Articles of Association, Article 6, which states that no shareholder may own or vote at the Annual General Meetings in respect of more than 30 percent of the shares. Schibsted has introduced its Long-term Incentive Program (LTI Program), which is a performance-based share purchase program that targets a large group of managers. The LTI Program provides settlement in Schibsted shares. There are some restrictions on the sale of shares distributed through the LTI Program. See the Statement of Executive Compensation for further details. SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE 67 SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE 6. General meetings 68 The shareholders exercise the highest authority through the Annual General Meeting. The Annual General Meeting considers and decides on matters that are important to Schibsted in a way that reflects the shareholders views. The Annual General Meeting must be held within six months after the end of each financial year. Extraordinary General Meetings are held as required, in accordance with the Articles of Association or the Public Limited Liability Companies Act, or if required by at least five percent of the shareholders. NOTICE The Annual General Meeting for this year is scheduled for 8 May The notice of the Annual General Meeting and documents to be considered are posted on the Schibsted website no later than 21 days prior to the meeting. Shareholders not registered electronically will receive the notice by regular post with information on how documents to be considered at the meeting may be downloaded from our website. The deadline for electronic registration is two working days prior to the meeting. ATTENDANCE Representatives of the Group Board, at least one representative of the Nomination Committee, and the external auditor are required to attend the Annual General Meeting. At a minimum, the Group s CEO and CFO must attend the meeting as representatives of the management. Shareholders who cannot attend the Annual General Meetings but who wish to exercise their voting rights may authorize a proxy by the deadline for registration. An authorization form containing voting instructions may also be given to the Chair of the Group Board. The authorization form is enclosed with the notice of the Annual General Meeting. More information on how to appoint a proxy and how to propose resolutions for consideration by the meeting is stated in the notice of the Annual General Meeting and on Schibsted s website. In 2014, the Annual General Meeting was held on 7 May. Seventeen shareholders were present or were represented by proxies and thus 53.9 percent of the aggregate share capital was represented. AGENDA The agenda is prepared by the Group Board, and the agenda items must comply with Article 10 of the Articles of Association. Minutes of the Annual General Meeting are made available on the Group s website at B 35

173 7. Nomination Committee The Nomination Committee is regulated by the provisions in Article 10 of Schibsted s Articles of Association, which also states the Nomination Committee s mandate. THE WORK OF THE NOMINATION COMMITTEE The Nomination Committee prepares a recommendation to the Annual General Meeting regarding the election of shareholder representatives and their deputies to the Group Board. The Nomination Committee s most important task is to continually review the Group Board s overall expertise and experience in relation to the challenges facing the Group at any given time. The Nomination Committee also proposes the remuneration payable to the Group Board s members at the Annual General Meeting. COMPOSITION OF THE NOMINATION COMMITTEE The Nomination Committee is elected by the Annual General Meeting for two years at a time and consists of three members. The Annual General Meeting elects the Chair of the Nomination Committee. SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE The majority of the Nomination Committee is independent of both the Group Board and Schibsted s management. The CEO and Chair of the Group Board attend Nomination Committee meetings as required, normally once or twice a year. Schibsted s VP Head of Investor Relations acts as secretary to the Nomination Committee. The members of the current Committee was re-elected by the Annual General Meeting on 7 May 2014 and consists of John A. Rein (Chair), Gunn Wærsted and Nils Bastiansen. See the Nomination Committee s Report for further details on the work of the Nomination Committee. 69 SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE 8. Board of Directors: composition, independence and employee representation 70 Schibsted is exempt from the rules governing the establishment of a corporate assembly. An agreement has been entered into with the employees regarding representation on the Group Board. COMPOSITION OF THE GROUP BOARD Pursuant to Article 8 of Schibsted s Articles of Association, the Group Board must consist of six to eleven members in addition to deputy members. The Group s employees must be represented on the Group Board by employee representatives in accordance with prevailing agreements with the company (Representation Agreement). At present, the Board consists of ten members, of whom seven are shareholder representatives and three are employee representatives. Two employee representatives are elected from Norway and one from the country in which we have the most significant operations outside Norway, currently Sweden. The Annual General Meeting elects the shareholder representatives to the Board. The Nomination Committee prepares a recommendation of candidates for election to the Board. The recommendation is distributed to the shareholders along with the notice of the Annual General Meeting. The Annual General Meeting elects the Chair of the Board. The Group Board s shareholder representatives are elected for one year at a time while the employee representatives are elected for two years at a time. Pursuant to Article 8 in the Articles of Association, any shareholder owning at least 25 percent of the shares in the company is entitled to appoint a Board member directly. Blommenholm Industrier AS, which owns 26.1 percent of the shares, is the only shareholder holding this right. At the Annual General Meeting in 2014, Blommenholm Industrier AS exercised its right to directly appoint one member and nominated Ole Jacob Sunde. The Group Board has appointed a representative from Schibsted Editors Forum as an observer. More information on the Editor s Forum is available on our website More information on the individual Board members is available on our website INDEPENDENCE OF THE GROUP BOARD The independence of the Group Board is described in more detail in the Nomination Committee s Report. Pursuant to section 6-27 of the Public Limited Liability Companies Act, a Board member may not participate in the discussion or decision of any matter that is of such personal importance to himself/ herself or to any related party that he/ she must be deemed to have a special and prominent personal or financial interest in the matter. Each Board member is personally responsible for reviewing whether or not there are any such circumstances that are objectively likely to affect public confidence in the Board member s independence or that may lead to a conflict of interest in connection with a matter to be considered by the Board. Such circumstances must be brought to the B 36

174 SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE attention of the Chair of the Group Board. The Rules of Procedure specifically mention Board members involvement in competing businesses. The Board members shareholdings are disclosed in note 12 of Schibsted ASA s financial statements. Blommenholm Industrier is Schibsted s largest shareholder. The Board of Blommenholm Industrier consists of John A. Rein (Chair), Ole Jacob Sunde and Per Egil Hegge. The Tinius Trust controls Blommenholm Industrier. The Tinius Trust Board consists of Ole Jacob Sunde (Chair), John A. Rein and Per Egil Hegge. Ole Jacob Sunde is the Chair of Schibsted s Group Board. John A. Rein is the Chair of the Nomination Committee. GROUP BOARD MEETINGS IN 2014 In 2014, the Group Board held a total of nine meetings, of which one was a strategy meeting lasting for two days. In addition, some issues were decided via correspondence. The Board considers such a procedure justifiable in the case of matters that have previously been discussed at a board meeting. Meetings that are not on the meeting schedule may be conducted by telephone. The strategy meeting is normally held in June, and forms the basis for the Group s strategy and budget processes. Attendance at board meetings and board committee meetings in 2014: Board Audit Committee Compensation Committee Attendance at meetings meetings meetings meetings Ole Jacob Sunde 9/9 4/4 Karl-Christian Agerup 2/3 (until May 2014) 2/4 (until May 2014) Jonas Fröberg 9/9 4/4 Eugénie van Wiechen 9/9 2/4 (new June 2014) Marie Ehrling 3/3 (until May 2014) 3/3 (until May 2014) Arnaud de Puyfontaine 8/9 3/3 (new June 2014) Eva Berneke 9/9 6/6 Christian Ringnes 9/9 6/6 Tanya Cordrey 6/6 (new June 2014) Birger Steen 5/6 (new June 2014) Anne Lise Mørch von der Fehr 9/9 Gunnar Kagge 9/9 71 SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE 9. The work of the Board of Directors 72 ROLE OF THE GROUP BOARD The Group Board supervises both the Group s day-to-day management as performed by the CEO and Schibsted s general activities. The Group Board actively participates in shaping Schibsted s strategy, and ensures that the businesses are properly organized and that adequate governance and control systems are implemented. The Group Board also supervises the Group s financial performance, establishes necessary guidelines, and adopts plans and budgets for the businesses. The Group Board appoints the CEO and prepares the job description and terms and conditions for the position. The Group Board also considers issues pertaining to appointments to key positions within the Group. RULES OF PROCEDURE The Group Board has established internal Rules of Procedure that describe the Board s responsibilities, duties and administrative procedures. The Rules of Procedure also state the CEO s duties in relation to the Board. The Board conducts an annual review of procedures for the Board and general management. ORGANIZATION OF BOARD MEETINGS The Group Board works on the basis of an annual meeting schedule, which is normally agreed at the first meeting after the Annual General Meeting. The meeting schedule includes strategic planning, business issues and supervisory activities. At the same meeting, the Board appoints the members of the Board s Compensation Committee and Audit Committee. The company s Vice President Investor Relations acts as secretary to the Group Board. The CEO, in consultation with the Chair of the Group Board, prepares matters for consideration by the Group Board. Emphasis is placed on timely preparation and distribution of documents to ensure that the Group Board has a satisfactory basis for its work. Board meetings are presided over by the Chair of the Group Board. The Group Board convenes at a 30 minutes closed session without participation of the Group Management at the beginning of every Board meeting. The meeting schedule, board documents and other important documents relating to the Board s work (Stock Exchange Handbook, Rules of Procedure, mandates for the Board and the committees, stock exchange notices and press releases, etc.), as well as general analyses and market information, are made available to the Board members through the Board Portal, a web-based tool for Board members. The Board Portal simplifies and rationalizes the work of the Board members and provides access to up-to-date information. It also allows the Board members to study presentations given at meetings, information on external environments, competitive situations, etc. GROUP BOARD S SELF-EVALUATION The Group Board annually evaluates its own work and submits a written report to the Nomination Committee. The report forms the basis for the Nomination Committee s annual evaluation of the Board s work. The Nomination Committee performs additional assessments of the Group Board members through interviews conducted either by the Committee s members or by external consultants. The Group Board considers itself to work well, B 37

175 with members whose expertise and experience complement each other. INTERACTION WITH THE COMPANY The Group Board is regularly invited to selected seminars and conferences arranged by Schibsted, such as the annual Schibsted Journalism Awards. Schibsted is a member of the Norwegian Institute of Directors. This membership gives the Board members the opportunity to participate in seminars and discussion groups to consider key issues that affect the Board s work and the work of the committees. GROUP BOARD COMMITTEES Schibsted has established an Audit Committee and a Compensation Committee which contribute to thorough preparation and consideration of matters covered by the committees respective mandates. As Schibsted has gradually grown in size and become more international, the scope of the Board s work and the complexity of the issues it must address have increased. The Board finds that establishment of the Compensation Committee and an Audit Committee has improved the Board s preparatory work and consideration of complex issues. The committees work well and interact well with the Board with regard to the exchange of information and the division of roles and responsibilities. The committees enable the Board to thoroughly consider important issues relating to corporate governance, risk management, internal controls and compensation schemes, and give the Board more time to consider fundamental and strategic issues. At the same time, the Group Board is aware that the use of committees may diminish the Board s responsibility, and the committees are therefore only used when necessary due to the complexity and scope of an issue. COMPENSATION COMMITTEE The Compensation Committee is a Group Board committee with no decision-making authority. The members of the Compensation Committee are appointed by and from the Group Board and serve one-year terms. The Compensation Committee prepares matters relating to the remuneration of the Group CEO. The committee also assists the Board by dealing with issues of principle, guidelines, and strategies for the remuneration of other members of the Group Management Team and of senior managers in key subsidiaries. The Committee monitors the use of longterm incentives in the Group and makes preparations for the Board s annual consideration of the LTI Program for selected managers. For further details, see item 12 of this statement. The CEO attends committee meetings apart from those at which remuneration of the CEO is considered. The company s EVP Organizational Development acts as secretary to the Compensation Committee. The Committee was established in The current members of the Committee are: Ole Jacob Sunde (Chair), Eugenie van Wiechen and Jonas Fröberg. SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE AUDIT COMMITTEE The Audit Committee is a Group Board committee with no decision-making authority. The members of the Audit Committee are appointed by and from the Group Board and serve one-year terms. The Audit Committee prepares the Group Board s processes for quality assurance of financial reports. The committee monitors the Group s internal control system and risk management systems for financial reporting, and reviews and monitors the external auditor s work and independence. The Audit Committee conducts reviews of the Group s core activities, in which representatives of the Group Management Team and local management also participate. The Group s CFO is the management s main representative in relation to the Audit Committee and attends all its meetings. The external auditor attends Audit Committee meetings when matters within the external auditors area of responsibility are considered. The company s Compliance Officer acts as secretary to the Audit Committee. The Audit Committee was established in 2007 and currently comprises the following members: Christian Ringnes (Chair), Eva Berneke and Arnaud de Puyfontaine. 73 SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE 10. Risk management and internal control 74 Schibsted s risk management and internal control system for financial reporting is based on internationally recognized frameworks, such as the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The risk management and internal control system reflects Schibsted s management model, and the CEO and CFO of the entities are responsible for maintaining an effective internal control system for financial reporting. This includes ensuring that the entity has the necessary capacity and competence to carry out adequate internal controls. FINANCIAL REPORTING Management submits periodic reports on the status of the Group to assist the Board in its work on monitoring and control of the Group s operations. The reports cover financial reporting of the Group s key figures, the status of business-related matters, financial market information, non-financial indicators, and a status report on each business area. The Board has established procedures for monitoring and control of the Group s ongoing projects. The establishment of the Audit Committee in 2007 has strengthened this function in the Group. The Audit Committee s main duty is to monitor the integrity of the company s financial statements and financial reporting process and internal controls. This includes reviewing the annual audited financial statements and quarterly financial statements, and the results of the annual audit and any interim reviews carried out by the external auditor. The quarterly and annual financial reports are also reviewed by the Group Board. In addition to conducting normal reviews of the figures, emphasis is also placed on reviewing discretionary assessments and estimates as well as any changes to accounting practices. Schibsted s Group Accounting prepares the Group s financial reports and ensures compliance with current accounting standards and legislation. When preparing the quarterly reports, reasonableness checks and more detailed reconciliation controls are performed in connection with the quality assurance of figures reported by subsidiaries and the consolidated Group figures. Group Accounting supports subsidiaries and provides technical accounting expertise as required. Quarterly financial review meetings are also held with the largest companies in our business areas. Schibsted s Group Accounting publishes financial and accounting manuals that are made available to all the subsidiaries on the Group s intranet. These manuals describe reporting requirements, content, guidelines and deadlines. See item 13 Information and Communication in this statement for more details on external reporting of financial information and dialog with shareholders. MONITORING OF RISK MANAGEMENT AND INTERNAL CONTROLS WITHIN THE COMPANY Each manager in the Group is responsible for risk management and internal controls within his/her area of responsibility. Schibsted continuously implements and further develops guidelines for all the companies relating to their ongoing supervision of risk management and internal B 38

176 controls for financial reporting. The Compliance Officer is responsible for initiating and monitoring the annual risk management and internal controls process in the Group on behalf of the Group s CFO and CEO. The Compliance Officer reports in practice and administratively to the CFO. If necessary, the Compliance Officer will report directly to the Audit Committee. Schibsted ASA is a Norwegian group of companies with considerable international shareholdings. Companies outside Norway have established governing bodies in accordance with local legislation in their respective countries. Internal control of financial reporting is monitored by these governing bodies and supported by day-to-day supervision by management teams and external auditors. Management teams in our business areas performed a bottom-up and top-down risk assessment in the autumn of The Group Management Team reviewed an overall risk assessment of strategy, market, legal, compliance, and ethical issues as well as operational and organizational risk assessments. The results of these risk assessments were reviewed at meetings between the Audit Committee and the Group Board. See the section on Analysis of Market Risk in the Board of Directors Report for further details on the Group s market risks. See note 9 to the financial statements for further details on the Group s financial risks. Overview of the Group s key risks in 2014 Risk factor Inherent risk Residual risk Competition from disruptive players/business models High High High dependency on advertising revenue High High (structural changes and cyclicality) Structural change in media consumption (accelerated migration) High High Competition risk in selected classified markets High Medium SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE 75 SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE 11. Remuneration of group board members 76 The Annual General Meeting determines the remuneration of the Group Board members. The directors fees are determined one year in advance. They are fixed amounts and are not related to performance or incentive schemes. Any payments made to Board members beyond normal directors fees are disclosed in note 27 of the financial statements. See the Nomination Committee s Report and note 27 of the financial statements for further details on remuneration of the Group Board members. B 39

177 12. Remuneration of executive personnel The Compensation Committee prepares matters for the Board concerning remuneration of the Group CEO. The Committee also assists the Group Board in dealing with matters of principle, guidelines, and strategies linked to the overall remuneration of other members of the Group Management Team and of senior managers in key subsidiaries. Schibsted s Statement of Executive Compensation gives an account of the main principles of the Group s executive remuneration policy, including the scope SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE and organization of bonus schemes and of the Group s Long-term Incentive Program (LTI Program). The Statement of Executive Compensation is considered by the Annual General Meeting and made available to the shareholders on the company s website when the notice of the Annual General Meeting is issued. 77 SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE 13. Information and communication 78 DIALOG WITH SHAREHOLDERS AND THE FINANCIAL MARKET Communication with the Norwegian and international stock markets has high priority for Schibsted. Schibsted s dedicated and active management and investor relations department maintains regular contact with the financial markets to ensure that relevant and sufficient information reaches the market in a timely manner.the objective is to increase awareness about the company, create confidence in Schibsted in the investment market, achieve improved liquidity for our shares, and provide a basis for correct pricing of the share. Openness, accessibility and transparency are fundamental to good relationships with investors, analysts and other players in the financial market. The Group Board is regularly updated on these activities. REPORTING OF FINANCIAL INFORMATION Schibsted wants investors to have confidence in the integrity of its financial reporting. In accordance with its mandate, the Group Board s Audit Committee monitors the work on preparing the company s financial reports. Schibsted publishes its financial figures quarterly. Open presentations to investors are held in connection with the Group s quarterly reports, at which the CEO and CFO review the results and comment on the market and outlook. The Chair of the Group Board also attends the presentations. Members of the Group Management Team attend the presentations as required. The presentations in connection with the quarterly results are published on the company s website. The complete Annual Report and Directors Report are published on the company s website at least 21 days before the Annual General Meeting. Schibsted s financial calendar is announced for one year at a time and published on our website. OTHER MARKET INFORMATION In accordance with the Norwegian Securities Trading Act and Stock Exchange Act, notifications are distributed to the Oslo Børs and national and international news agencies and are published on Schibsted s website. Schibsted regularly arranges Investor Days in order to present its strategy and other key development trends. Schibsted s Investor Day was last held on 18 November 2014 in Barcelona. A video webcast of the event and the presentation material are available on the company s website. In 2014 Schibsted ranked, for the fourth consecutive year, among the top five in the Stockman Awards. The Stockman Awards go to the listed companies in Norway that are best at providing the finance industry and shareholders with continuous information about their activities, and who also, based on principles of financial analysis, publish the best annual and quarterly reports. See Share Information and the company s website for further details. B 40

178 14. Take-overs The Group Board has prepared principles and guidelines for handling any take-over bids. These principles were revised in For more on this subject, please refer to the discussion of restrictions in the company s statutes on ownership and voting rights attached to the shares in item 4 of this statement. As stated in item 3 of this statement, the Group Board obtained renewed authorization from the Annual General Meeting in 2014 to repurchase the Group s own shares, pursuant to the Norwegian Public Limited Liability Companies Act. The authorization stipulates that the Group Board is free to determine the method of acquisition and any later sale of the shares and that the authorization may also be used to buy and sell shares in take-over situations. SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE Section 6-17, subsection (2) of the Securities Trading Act permits the Annual General Meeting to grant the Board such authorizations. The Board s use of such authorizations is, however, restricted under section 14 of the Norwegian Code of Practice for Corporate Governance. The Group Board must consider the use of such authorizations in the context of the specific take-over situation. As referred to above, the Group Board has prepared guidelines for handling any take-over bids and the issue of using authorizations in company acquisition situations is highlighted as one of the Group Board s most important tasks if a take-over situation should arise. 79 SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE 15. Auditor 80 APPOINTMENT OF AUDITOR The external auditor is elected by the Annual General Meeting. The Audit Committee presents a recommendation on the appointment of an external auditor to the Group Board. The Group Board s recommendation is then presented to the Annual General Meeting, which makes the final decision. As a general rule, all Group companies must use the same audit firm. Exceptions may be approved by the Group CFO. An invitation to tender for the Group s external audit services as from the 2011 financial year was issued in the autumn of Following a thorough evaluation by management and the Audit Committee, it was decided to continue to retain Ernst & Young as the company s auditor. GROUP BOARD S RELATIONSHIP WITH THE EXTERNAL AUDITOR According to its mandate, the Audit Committee is responsible for ensuring that Schibsted is subject to an independent and effective external audit. The Audit Committee evaluates the following factors relating to the external auditor each year: The audit firm s independence The quality of the auditing services The estimated fee The Audit Committee evaluates the external auditor s fee and makes a recommendation to the Group Board. The Group Board submits a proposal to the Annual General Meeting regarding the approval of the external auditor s fee. See note 27 to the financial statements for information on remuneration of the external auditor for the financial year The external auditor presents an annual plan for the audit work to the Audit Committee. The company s external auditor is present when the management presents the preliminary consolidated financial statements to the Group Board and also when the final results are presented if deemed necessary. The external auditor also reviews internal controls as part of the annual audit procedures, and reports identified weaknesses and proposed improvements to the Audit Committee. The external auditor regularly attends Audit Committee meetings and holds meetings with the Group Board without the management present. The external auditor attends the company s Annual General Meeting and comments on the Auditor s Report. INDEPENDENCE OF THE EXTERNAL AUDITOR The external auditor must under no circumstances perform advisory services or other services which could potentially affect or raise doubts about the auditor s independence. The Group has prepared guidelines on the relationship with the external auditor. The amount of non-audit services provided by the external auditor in 2014 is compliant with the requirements in the Auditing and Auditors Act and guidelines from the Financial Supervisory Authority of Norway. The Group Board finds the advisory services provided by the external auditor in 2014 not to influence the auditor s independence but acknowledges the potential issues this entails. The Audit Committee is responsible for ensuring that the auditor does not provide any prohibited non-audit services for the Group. See note 27 to the financial statements for information on fees relating to auditing and consultancy services. B 41

179 16. Other key bodies in the group GROUP EMPLOYEE REPRESENTATIVES The Group has established a Group Employee Representative scheme that is intended to safeguard the employees interests in relation to the Group Management Team in cases dealt with at Group level that may be of importance to the Group s employees as a whole. More information is available on our website, SCHIBSTED S GROUP COUNCIL Schibsted s Group Council was established in 2004 based on the rules governing the Establishment of European Works Councils. The Group Council s objective is to promote development, motivation, joint responsibility and mutual trust between management and employees. The Group Council is intended to ensure active collaboration and to serve as a forum for information, discussion and dialog within the Group. SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE The Group Council cooperates closely with the Group Employee Representatives. The Group Council is a supplement to the employees representation in the subsidiaries. The Group Council places emphasis on facilitating regular contact between employees across national boundaries. The Group Council convenes twice a year. The Schibsted European Works Council currently comprises 35 representatives from seven countries who are elected by and among the employees. The Group Council is headed by Group Employee Representative Morten Lia. 81 SCHIBSTED ANNUAL REPORT 2014 CORPORATE GOVERNANCE 17. Deviations from the code of practice 82 DEVIATIONS FROM THE NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE According to the Group s own evaluation, we deviate from the recommendations of the Norwegian Code of Practice for Corporate Governance on two points: Section 5 Freely negotiable shares Based on Schibsted s publishing responsibilities and role in society as a media company, Schibsted s independence and integrity are ensured through restrictions on ownership and voting rights laid down in the Articles of Association. Article 6 states that no shareholder may own or vote at the Annual General Meetings in respect of more than 30 percent of the shares. Section 6 Annual General Meeting The Board Chair is always available to respond to any questions. Other Board members attend as necessary. B 42

180 83 SCHIBSTED ANNUAL REPORT 2014 MEMBERS OF THE BOARD MEMBERS OF THE BOARD ( ) The Board of Schibsted ASA currently consists of 10 members. 7 are elected by the shareholders while three are elected by and from the employees. Ole Jacob Sunde (born 1954) Tanya Cordrey (born 1966) Birger Steen (born 1966) CHAIRMAN OF THE BOARD Board member since May Chairman of the Board since May Chairman of the Compensation Committee since it was established in The founder and chairman of the board of Formuesforvaltning ASA (2000). Established Industrifinans Forvaltning ASA in 1983 and was managing director until Former consultant in McKinsey & Co. ( ). Various other directorships, including chairman of the board of The Tinius Trust and member of the board of Blommenholm Industrier AS. MBA (Université de Fribourg, Sveits) 1976 and Kellogg School of Management, Northwestern University (USA) (with distinction) Member of the board since Tanya Cordrey is Chief Digital Officer at Guardian News & Media since April She is on the senior executive team at Guardian News & Media. She was previously Digital Development Director at Guardian News & Media, General Manger, Environment at Guardian News and Media, General Manger UK and Chief marketing Officer, marketing, Product and Sales at Zopa, Product Director UK at ebay AG, General Manger at BabyCentre.co.uk and Manager, Strategy & Marketing at BBC News & Current Affairs. Tanya holds a MBA from London Business School (1997), MA Management Studies & Politics, Westminster University (1994), BA Liberal Arts, East Anglia University (1987) and BA (Hons) European History, East Anglia University. Member of the board since Birger Steen is CEO of Parallels, a world leader in the virtualization and cloud services platform market, and is based in Seattle, WA. He previously served as Vice President of WW SMB & Distribution at Microsoft Corp. in Redmond and as General Manager of Microsoft Russia and Microsoft Norway. Prior to joining Microsoft in 2002, Birger was CEO of Scandinavia Online and Vice President of Business Development with Schibsted ASA. His first engagement with the Schibsted group took place while he worked for McKinsey & Company as a consultant and engagement manager from 1993 to Before joining McKinsey, Birger was as an Oil trader with Norwegian Oil Trading in Lithuania. Birger holds a Master of Science degree in Computer Science and Industrial Engineering from the Norwegian Institute of Technology in Trondheim. He also holds a degree in Russian Language from the Defense School of Intelligence and Security and received his MBA from INSEAD in France. 84 B 43

181 Eva Berneke (born 1969) Board member in Schibsted since May CEO of KMD from March MSc in Mechanical Engineering Technical University of Denmark, 1992, and MBA, INSEAD (Executive Management Training Program) Deputy chairman of Board of Directors of Copenhagen Business School. Member of Board of Directors of Lego. Member of the Danish Council for Technology and Innovation under the Danish Ministry of Science, Technology & Innovation. Member of the Board of Directors of the Industrialization Fund for Development and Eastern Countries (IFU,IØ). Christian Ringnes (born 1954) Deputy board member in Schibsted from May 2002 to Elected as ordinary board member in May Managing director and major owner in Eiendomsspar AS/ Victoria Eiendom AS (1984- ). McKinsey & Company, INC -Scandinavia, consultant (1981/82) and project manager (1983/84), Manufactures Hanover Trust Company, Assistant to Area Manager, Nordic Countries (1978/79). Chairman of the board in NSV-Invest AS, Sundt AS, Dermanor AS, Oslo Flaggfabrikk and Mini Bottle Gallery AS. Board member in Thor Corporation AS and Oslo s Council for City Architecture. Harvard Business School, Boston, USA ( ), Master of Business Administration. Ecole des Hautes Estudes Commerciales, Universite de Lausanne ( ), MBA. Eugénie van Wiechen (born 1969) Member of the board in Schibsted since May CEO of FD Mediagroep, The Netherlands. Previously Managing Director in LinkedIn. com, The Netherlands; Managing Director in ebay.nl, Marktplaats.nl, The Netherlands; Publisher Young Women s Magazines and Director Consumer Marketing in Sanoma Uitgevers, The Netherlands; Management Consultant and Engagement Manager in McKinsey& Company, The Netherlands. Educated at the University of Amsterdam in Chemical Engineering (MSc, 1994) and INSEAD, Fontainebleau, France (MBA, 1997). SCHIBSTED ANNUAL REPORT 2014 MEMBERS OF THE BOARD Arnaud de Puyfontaine (born 1964) Member of the board in Schibsted since May Chairman of the Management Board of Vivendi Group, Vice-Chairman and member of the Supervisory Board in the Canal+ Group, Director in GVT Participações SA (Brazil). Arnaud de Puyfontaine started as a consultant at Arthur Andersen and later on, in 1989, as project manager at Rhône-Poulenc. In 1990, he joined Le Figaro as Executive Director. In 1995, as a member of the founding team of the Emap Group in France, he headed Télé Poche and Studio Magazine, managed the acquisition of Télé Star and Télé Star Jeux, and started up the Emap Star Division before becoming Chief Executive Officer of Emap France in Chairman and Chief Executive Officer of Emap France in 1999, he served from 2000 to 2005 as Chairman of EMW, the Emap/ Wanadoo digital subsidiary. In 2006, he was appointed Chairman and Chief Executive Officer of Editions Mondadori France and headed all digital business for the Mondadori Group in In 2009, he became Chief Executive Officer of Hearst UK. In 2011, on behalf of the Hearst Group, he led the acquisition of the 102 magazines of the Lagardère Group published abroad. 85 SCHIBSTED ANNUAL REPORT 2014 MEMBERS OF THE BOARD He was later on appointed Executive Vice President of Hearst Magazines International before being appointed Managing Director Western Europe in Born in 1964, Arnaud de Puyfontaine is a graduate of the ESCP, the Multimedia Institute and the Harvard Business School program. He was Chairman of ESCP Europe Alumni from 2011 to Educated at the Paris European School of Management, France in MBA, ESCP, ESCP (1988), Harvard Business School (2000). Other positions and functions Kepler, Independent Director Schibsted Media Group, Independent Director Iceberg lux, member of the Advisory Committee Gunnar Kagge (born 1960) Board member of Schibsted since Gunnar Kagge (1960) has worked at Aftenposten since Formerly employed at NTB and the Norwegian Confederation of Business and Industry (NHO). He has mainly been writing about politics and economy, covering negotiations between employers and unions, trends in the workplace and the big organizations. Elected leader of the local journalist union Board member of SKUP, NJ Schibsted and deputy board member 86 of NJ. He is educated with a degree in history from the University of Oslo. All through school and studies he worked as a freelancer at Aftenposten, from 1975 and onwards. Anne Lise von der Fehr (born 1969) Board member of Schibsted since May Reporter and subeditor at VG since April Elected leader of the board of the local journalist union in VG ( ). Member of the European Works Council, Schibsted ( ). Leader of Norwegian Journalists local union within Schibsted ( ). Deputy member of the board of VG AS ( ). Reporter and subeditor Asker og Bærum Budstikke ( ). Researcher at Holmgang, TV2 ( ). Board member of the Foundation of Asker and Bærum Budstikke (2009-), deputy member ( ). She holds a masters degree in Political Science from the University of Oslo, has studied History of Literature and has an International Diploma in Journalism from England. Jonas Fröberg (born 1972) Board member of Schibsted Media Group since May With Svenska Dagbladet since 2006 as trade and industry reporter, chronicler and automotive editor. Reporter and web editor at the financial desk Dagens Nyheter ( ). Deputy Regional Director at Svensk Näringsliv ( ). MSc in Political Science Umeå University 1997, BBA Handelshögskolan, Umeå University (1998), Bachelor of Arts in Business Administration, University of Derby England (1998). Studied cultural journalism, Umeå University (2005) Member of the board at Schibsted Sverige ( ). Member of the board at Svenska Dagbladet (2009-). Elected member at Journalistklubben Svenska Dagbladet (2008-). B 44

182 87 SCHIBSTED ANNUAL REPORT 2014 THE NOMINATION COMMITTE S REPORT THE NOMINATION COMMITTE S REPORT The Nomination Committee consists of John A Rein (Chair), Gunn Wærsted and Nils Bastiansen. The Nomination Committee is elected for two years at a time. Gunn Wærsted has declared that she will not stand for reelection, and Nils Bastiansen has asked to be replaced. The Committee proposes to elect Spencer Adair and Ann Kristin Brautaset as new members of the Committee. More information about Spencer Adair and Ann Kristin Brautaset is available on Schibsted s web site. In recent years, the Nomination Committee has had a long-term focus on internationalization of the Group Board. meetings only in the event of an absence. No alternate directors have been appointed by the shareholders. The Group Board consists of seven shareholder-elected directors and three directors elected by the employees. The editor-in-chief of Verdens Gang, Oslo, has been appointed as an observer to the Group Board. The employees have elected two alternate directors. Alternate directors attend the The Group Board s working language is English. THE NOMINATION COMMITTEE S WORK ON RECRUITMENT FOR THE BOARD The Board s shareholder-elected directors are up for election each year. The Nomination Committee is continuously working on the recruitment of new directors and evaluation 88 of the Group Board s work. The Nomination Committee makes efforts to ensure that recruitment to Schibsted s Group Board has a sufficient balance between continuity and renewal, and that the Group Board has expertise and experience within the fields of the Group s operations, both inside and outside Scandinavia. In addition, Schibsted seeks to comply with the Norwegian Public Limited Companies Act s gender balance requirements. The current Group Board has only functioned for one year, and the Nomination Committee proposes that the present shareholder-elected directors are reelected. Accordingly, the Annual General Meeting is invited to vote on the following directors at the Group Board for the period : Ole Jacob Sunde (Chair, Norwegian) Eva Berneke (Danish) Tanya Cordrey (British) Arnaud de Puyfontaine (French) Christian Ringnes (Norwegian) Birger Steen (Norwegian) Eugenie van Wiechen (Dutch) In the election period (as per 17 April 2015), the Nomination Committee has held one meeting. The candidates are presented in the notice to the Annual General Meeting. The notices, and a detailed presentation of the candidates, are available on the Schibsted website at The Nomination Committee proposes one ballot for each individual director at the Annual General Meeting on 8 May B 45

183 THE DIRECTORS INDEPENDENCE Information on the directors business relationships with shareholders or others with links to the shareholders, or to Schibsted, is provided under Corporate Governance. The representation on the Group Board reflects the ownership shares in Schibsted and the right to elect directors, which, according to Schibsted s Articles of Association, belongs to shareholders holding at least 25 per cent of the shares ( 8). As a consequence of Ole Jacob Sunde s links with Blommenholm Industrier and the Tinius Trust, the Nomination Committee does not consider him to be an independent director. The Nomination Committee considers the other directors to be independent. Thus, six of the seven shareholder-elected Group Board members are considered independent. THE GROUP BOARD S COMPENSATION COMMITTEE AND AUDIT COMMITTEE The members of the Compensation Committee and the Audit Committee are both elected by the Group Board for a one-year period. The task of these select committees is to prepare the case files and documentation for the Group Board s consideration. In the assessment of the Group Board s work, the preparatory efforts by the select committees are identified as important and positive contributions to the sound and thorough consideration of complex matters. COMPENSATION AND REMUNERATION All compensation and remuneration payable to Schibsted s corporate bodies is All figures in NOK a) Group Board members Chair 800, ,000 Other directors 375, ,000 Alternate directors 16,000 16,000 b) Members of the Compensation Committee Chair 93,000 90,000 Other committee members 62,000 60,000 c) Members of the Audit Committee Chair 137, ,000 Other committee members 88,000 85,000 d) Members of the Nomination Committee Chair, per meeting 16,000 16,000 Other committee members, per meeting 11,000 11,000 SCHIBSTED ANNUAL REPORT 2014 THE NOMINATION COMMITTE S REPORT stipulated in advance for one year at a time by the Annual General Meeting based on a compensation and remuneration proposal from the Nomination Committee. The Nomination Committee considers the current compensation to Group Board members to be in line with market practice. Taking this into account, the compensation should normally be adjusted annually in order to avoid larger adjustments and achieve with general wage inflation in society as a whole. The Nomination Committee proposes to continue this practice, and proposes the following adjustments for the period A comparison with current figures is also provided below. An allowance of NOK 100,000 may be granted to Group Board members resident outside Oslo. For the upcoming period the Nomination Committee has adopted the following allowance tariffs: NOK 50,000 for Group Board members resident outside Oslo but in the Nordic countries, and NOK 100,000 for Group Board members resident outside the Nordic countries. 89 SCHIBSTED ANNUAL REPORT 2014 SHARE INFORMATION SHARE INFORMATION Schibsted Media Group is a listed company, and our aim is that our shares should be perceived as an attractive investment. A competitive return should be based on a sound financial position and be ensured through long-term growth in the share price and a dividend. The company s share price should accurately reflect the company s long-term earning capacity. The strategy and vision adopted by Schibsted s Board implies that the Group s operations must adapt quickly and develop rapidly. Schibsted s capital structure must be sufficiently robust to enable us to maintain the desired freedom of scope in view of the exposure some of our operations have to cyclical fluctuations. Established online classifieds operations in Scandinavia, France and other countries contribute to strong, profitable growth. At the same time, Schibsted has an ambitious expansion strategy for its online classifieds businesses, and invests significant amounts through it profits on broadening the Group s international footprint. The media houses strong brands and market-leading positions contribute well to the Group s cash flow. THE SCHIBSTED SHARE - KEY FIGURES *** 2012**** Highest share price (NOK) Lowest share price (NOK)*) Share price at year end (NOK)*) Earnings per share Earnings per share - adjusted Dividend per share 3.50 ** Average number of outstanding shares 107,388, ,273, ,026, ,020, ,337,507 83,256,121 Outstanding shares at year end 107,421, ,348, ,104, ,941, ,773, ,303,474 *) Historical share price adjusted for the split out of subscription rights in connection with the rights issue in **) As proposed by the Board of Directors. ***) 2013 figures restated in 2014 to reflect the implementation of IFRS 11 Joint Arrangements. ****) 2012 figures restated i 2013 to reflect the implementation of IAS 19 Employee Benefits. 90 B 46

184 Dividend and repurchase of shares The distribution of dividend and the opportunity to repurchase shares are regarded as suitable ways to adapt the capital structure. The Group s dividend policy is to pay out percent of the Group s cash flow per share. In periods of weak economic conditions, the dividend level is maintained as long as the Group s capital structure permits. Such a dividend level implies that the return on Schibsted s shares is competitive in the Norwegian market and among European media companies. The Board has decided to propose to the Annual General Meeting on 8 May 2015 to pay a dividend for 2014 of NOK 3.50 per share. Depending on the decision of the Annual General Meeting, the dividend will be paid on 20 May 2015 to those registered as shareholders on the date of the Annual General Meeting. The Annual General Meeting has authorized Schibsted s Board to repurchase up to 10 percent of the company s shares. The repurchases will take place in the market over time and should be viewed in connection with Schibsted s dividend policy, investment opportunities, a nd longterm perspectives for its capital structure. The Board will ask the Annual General Meeting to also grant authorization for the coming period for use in a takeover situation. No shares were repurchased in Shareholder structure Blommenholm Industrier, which is controlled by the Tinius Trust, is Schibsted s largest shareholder, giving the Group long-term ownership stability. A consequence of this is that the number of shares issued will normally remain stable over time. This means that earnings from operations, combined with loans, will be the key source of financing for growth in the form of acquisitions or organic investments. This implies that Schibsted should secure its scope of action by maintaining a relatively high level of equity and low debt-to-equity ratio over time. Financial independence and a strong financial position are also important for ensuring public confidence and trust in our media businesses. Schibsted s shares are freely marketable. The wording of the company s Articles of Association reflects the Group s publishing responsibilities and role in society as a media company. Schibsted s independence and integrity are ensured through restrictions on ownership and voting rights in article 6 of the Articles of Association. No shareholder may own or exercise voting rights for more than 30 percent of the shares represented at the Annual General Meeting. Any shareholder owning 25 percent or more of Schibsted s shares is entitled to appoint one director directly. Blommenholm Industrier, which owns 26.1 percent of the shares, is currently the only shareholder to hold this right. The Tinius Trust ( has a controlling interest in Blommenholm Industrier. SCHIBSTED ANNUAL REPORT 2014 SHARE INFORMATION 91 SCHIBSTED ANNUAL REPORT 2014 SHARE INFORMATION Return The Schibsted share is listed on Oslo Børs with the ticker code SCH. The share is one of the most traded in Norway, and has been a part of the OBX index during The Schibsted share is covered by sell-side analysts in Scandinavia and London. At year-end 2014, 15 sell-side institutions, six of them based outside Scandinavia, officially covered the Schibsted share. In 2014, the Schibsted share produced a return for shareholders of 19.3 percent, including dividend of NOK 3.50 per share (reinvested). By comparison, the Oslo Børs Benchmark Index (OSEBX) produced a return of 5.0 percent. Shareholders The number of registered Schibsted shareholders declined in 2014 from 4,707 to 4,399. At year-end 2014, 58 percent of Schibsted shares were owned by non-norwegian shareholders (NWT Media AS counted as a Swedish shareholder).the corresponding figure for the previous year was 56 percent. On average, 277,000 Schibsted shares were traded per day on Oslo Børs in 2014, accounting for 17 percent more than in The value of trading in Schibsted shares on Oslo Børs increased 45 percent to NOK 99.6 million per day in The turnover velocity of the Schibsted share on Oslo Børs was 63.5 percent in 2014, compared with 54.1 percent in This trend is somewhat better than the trend on Oslo Børs, where the turnover velocity increased from 48.5 percent in 2013 to 52.0 percent in Around 40 percent of the trading in the Schibsted share takes place on alternative trading platforms. This share remained relatively stable throughout SHAREHOLDERS Share of non-norwegian 58 % 56 % 54 % 48 % registered shareholders: Number of shareholders: 4,399 4,707 4,869 5,275 Number of shares: 108,003, ,003, ,003, ,003,615 Number of treasury shares (year-end): 582, ,075 1,061,958 4,230, B 47

185 Schibsted conducts a quarterly analysis of shareholders registered at nominee accounts. This list is the outcome of this analysis and gives a richer picture of Schibsted s underlying shareholders than what is the case of the VPS register. Updated as of 22 January Rank Fund manager % Shares 1 Blommenholm Industrier AS % 28,188,589 2 Baillie Gifford & Co % 8,955,112 3 Luxor Capital Group, L.P % 8,297,484 4 Folketrygdfondet 5.90 % 6,375,977 5 Alecta pensionsförsäkring, ömsesidigt 2.78 % 3,000,000 6 Caledonia (Private) Investments Pty Limited 2.53 % 2,730,589 7 Capital Research Global Investors 2.41 % 2,602,283 8 Adelphi Capital LLP 2.29 % 2,473,888 9 Scopia Capital Management LLC 2.01 % 2,169, Marathon Asset Management LLP 1.98 % 2,138, SAFE Investment Company Limited 1.85 % 1,996, Tybourne Capital Management (HK) Limited 1.57 % 1,693, Tweedy, Browne Company LLC 1.35 % 1,453, Nordea Funds Oy 1.29 % 1,398, Swedbank Robur AB 1.27 % 1,376, Platinum Investment Management Ltd % 1,264, Danske Capital (Norway) 1.11 % 1,194, The Vanguard Group, Inc % 1,140, Taube, Hodson, Stonex Partners, LLP 1.02 % 1,096, KLP Forsikring 0.99 % 1,066,320 The shareholder ID data are provided by Nasdaq OMX. The data are obtained through the analysis of beneficial ownership and fund manager information provided in replies to disclosure of ownership notices issued to all custodians on the Schibsted share register. Whilst every reasonable effort is made to verify all data, neither Nasdaq OMX nor Schibsted can guarantee the accuracy of the analysis. For an overview of the 20 largest shareholders as of 31 December 2014 from the public VPS-list, refer to the annual accounts for Schibsted ASA, note 12. SCHIBSTED ANNUAL REPORT 2014 SHARE INFORMATION 93 SCHIBSTED ANNUAL REPORT 2014 FINANCIAL STATEMENTS / GROUP CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note 2014 Restated 2013 Operating revenues 7 14,975 14,870 Raw materials and finished goods 26 (696) (850) Personnel expenses 27 (5,564) (5,314) Other operating expenses 28 (6,774) (6,929) Gross operating profit (loss) 1,941 1,777 Depreciation and amortisation 11, 12 (467) (476) Share of profit (loss) of joint ventures and associated companies 13 (841) (123) Impairment loss 11,12,13 (131) (150) Other income and expenses Operating profit (loss) 510 1,675 Financial income Financial expenses 29 (174) (236) Profit (loss) before taxes 382 1,490 Taxes 30 (509) (453) Profit (loss) (127) 1,037 Profit (loss) attributable to non-controlling interests Profit (loss) attributable to owners of the parent (180) 1,011 Earnings per share (NOK) 31 (1.67) 9.43 Diluted earnings per share (NOK) 31 (1.67) 9.42 Earnings per share - adjusted (NOK) 31 (1.46) 3.90 Diluted earnings per share - adjusted (NOK) 31 (1.46) B 48

186 SCHIBSTED ANNUAL REPORT 2014 FINANCIAL STATEMENTS / GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note 2014 Restated 2013 Profit (loss) (127) 1,037 Other comprehensive income: Items that will not be reclassified to profit or loss: Remeasurements of defined benefit pension liabilities 21 (804) (300) Income tax relating to remeasurements of defined benefit pension liabilities Share of other comprehensive income of joint ventures and associated companies 13 (42) - Items that will be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Hedges of net investments in foreign operations (24) (132) Income tax relating to hedges of net investments in foreign operations Other comprehensive income (211) 622 Comprehensive income (338) 1,659 Comprehensive income attributable to non-controlling interests Comprehensive income attributable to owners of the parent (391) 1, SCHIBSTED ANNUAL REPORT 2014 FINANCIAL STATEMENTS / GROUP CONSOLIDATED BALANCE SHEET Restated Restated (NOK million) Note ASSETS Intangible assets 11 11,906 10,212 9,027 Investment property Property, plant and equipment 12 1,220 1,431 1,771 Investments in joint ventures and associated companies Non-current financial assets Deferred tax assets Other non-current assets Non-current assets 14,276 12,684 11,832 Inventories Trade and other receivables 17 2,797 2,514 2,272 Current financial assets Cash and cash equivalents , Current assets 3,598 3,767 3,365 Total assets 17,874 16,451 15,197 EQUITY AND LIABILITIES Share capital Treasury shares 19 (1) (1) (1) Other paid-in equity 1,527 1,490 1,464 Other equity 4,926 5,728 4,293 Equity attributable to owners of the parent 6,560 7,325 5,864 Non-controlling interests Equity 6,790 7,586 6,109 Deferred tax liabilities Pension liabilities 21 1,911 1, Non-current interest-bearing borrowings 22 2,132 1,971 2,124 Other non-current liabilities Non-current liabilities 5,773 4,234 4,233 Current interest-bearing borrowings Income tax payable Other current liabilities 24 4,324 3,926 4,143 Current liabilities 5,311 4,631 4,855 Total equity and liabilities 17,874 16,451 15,197 Oslo, 24 March 2015 Schibsted ASA s Board of Directors Ole Jacob Sunde Chairman of the Board Birger Steen Arnaud de Puyfontaine Tanya Cordrey Christian Ringnes Eva Berneke Anne Lise von der Fehr Gunnar Kagge Jonas Fröberg Eugénie Van Wiechen Rolv Erik Ryssdal CEO 96 B 49

187 SCHIBSTED ANNUAL REPORT 2014 FINANCIAL STATEMENTS / GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note 2014 Restated 2013 CASH FLOW FROM OPERATING ACTIVITIES Profit (loss) before taxes 382 1,490 Gain from remeasurement of previously held equity interest in business combination achieved in stages and remeasurement of contingent consideration (91) (2) Share of profit of joint ventures and associated companies Dividends received from joint ventures and associated companies Taxes paid (635) (636) Sales losses / (gains) non-current assets (121) (943) Amortisation and impairment losses intangible assets Depreciation and impairment losses property, plant and equipment Impairment loss associated companies Impairment losses financial instruments 29-3 Change in working capital 220 (4) Net cash flow from operating activities 1, CASH FLOW FROM INVESTING ACTIVITIES Purchase of intangible assets and property, plant and equipment 11, 12 (630) (520) Acquisition of subsidiaries, net of cash acquired 32 (532) (258) Proceeds from sale of intangible assets and property, plant and equipment Proceeds from sale of subsidiaries, net of cash sold Investments in / sale of other shares (786) (66) Other investments / sales (16) 64 Net cash flow from investing activities (1,580) 471 Net cash flow before financing activities (350) 1,187 CASH FLOW FROM FINANCING ACTIVITIES New interest-bearing loans and borrowings Repayment of interest-bearing loans and borrowings (359) (1,164) Payment due to increase in ownership interests in subsidiaries (150) (478) Capital increase 23 1 Purchase / sale of treasury shares 8 24 Dividends paid to owners of the parent 20, 32 (376) (375) Dividends paid to non-controlling interests 32, 35 (133) (58) Net cash flow from financing activities (116) (1,116) Effects of exchange rate changes on cash and cash equivalents Net increase / (decrease) in cash and cash equivalents (457) 224 Cash and cash equivalents as at 1.1 1, Cash and cash equivalents as at , SCHIBSTED ANNUAL REPORT 2014 FINANCIAL STATEMENTS / GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Foreign Other currency Noncontrolling Share Treasury paid-in Retained transl. (NOK million) Note capital shares equity earnings reserve Total interests Total As at (1) 1,464 5,106 (813) 5, ,109 Profit (loss) ,011-1, ,037 Remeasurements of defined benefit pension liabilities (300) - (300) - (300) Income tax relating to remeasurements of defined benefit pension liabilities Translation differences Hedging of net investment in foreign operations (132) (132) - (132) Tax effect hedging of net investment in foreign operations Comprehensive income , ,659 Capital increase Share-based payment Dividends paid to owners of the parent (375) - (375) - (375) Dividends to non-controlling interests (58) (50) Change in treasury shares Business combinations Loss of control of subsidiaries (1) (1) Changes in ownership of subsidiaries that do not result in a loss of control Total transactions with the owners (189) - (163) (19) (182) As at Restated 108 (1) 1,490 5, , , B 50

188 SCHIBSTED ANNUAL REPORT 2014 FINANCIAL STATEMENTS / GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (NOK million) Note Share capital Treasury shares Other paid-in equity Retained earnings Foreign currency transl. reserve Total Noncontrolling interests Total As at Restated 108 (1) 1,490 5, , ,586 Profit (loss) (180) - (180) 53 (127) Remeasurements of defined benefit pension liabilities (804) - (804) - (804) Income tax relating to remeasurements of defined benefit pension liabilities Share of other comprehensive income of joint ventures and associated companies (42) - (42) - (42) Translation differences Hedging of net investment in foreign operations (24) (24) - (24) Tax effect hedging of net investment in foreign operations Comprehensive income (809) 418 (391) 53 (338) Capital increase Share-based payment Dividends paid to owners of the parent (376) - (376) - (376) Dividends to non-controlling interests (133) (107) Change in treasury shares Business combinations Changes in ownership of subsidiaries that do not result in a loss of control (69) - (69) 21 (48) Total transactions with the owners (411) - (374) (84) (458) As at (1) 1,527 4, , , SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP TABLE OF CONTENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2014 All amounts are in NOK million unless otherwise stated. NOTE 1: COMPANY INFORMATION NOTE 2: SIGNIFICANT ACCOUNTING POLICIES NOTE 3: USE OF ESTIMATES NOTE 4: CHANGES IN THE COMPOSITION OF THE GROUP NOTE 5: BUSINESS COMBINATIONS NOTE 6: EVENTS AFTER THE REPORTING PERIOD NOTE 7: DISCLOSURE OF OPERATING SEGMENTS NOTE 8: OTHER INCOME AND EXPENSES NOTE 9: FINANCIAL RISK MANAGEMENT NOTE 10: FINANCIAL INSTRUMENTS BY CATEGORY NOTE 11: INTANGIBLE ASSETS NOTE 12: PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY NOTE 13: INVESTMENTS IN JOINT VENTURES AND ASSOCIATED COMPANIES NOTE 14: FINANCIAL ASSETS NOTE 15: OTHER NON-CURRENT ASSETS NOTE 16: INVENTORIES NOTE 17: TRADE AND OTHER RECEIVABLES NOTE 18: CASH AND CASH EQUIVALENTS NOTE 19: NUMBER OF SHARES NOTE 20: DIVIDENDS NOTE 21: PENSION PLANS NOTE 22: INTEREST-BEARING BORROWINGS NOTE 23: OTHER NON-CURRENT LIABILITIES NOTE 24: OTHER CURRENT LIABILITIES NOTE 25: FINANCIAL LIABILITIES BUSINESS COMBINATIONS AND INCREASES IN OWNERSHIP INTERESTS NOTE 26: RAW MATERIALS AND FINISHED GOODS NOTE 27: PERSONNEL EXPENSES AND SHARE-BASED PAYMENT NOTE 28: OTHER OPERATING EXPENSES NOTE 29: FINANCIAL ITEMS NOTE 30: TAXES NOTE 31: EARNINGS PER SHARE NOTE 32: SUPPLEMENTAL INFORMATION TO THE CONSOLIDATED STATEMENT OF CASH FLOWS NOTE 33: TRANSACTIONS WITH RELATED PARTIES NOTE 34: SUBSIDIARIES NOTE 35: NON-CONTROLLING INTERESTS 100 B 51

189 NOTE 1 COMPANY INFORMATION Schibsted ASA is domiciled in Norway. The company s head office is located at Apotekergaten 10, Oslo. The company s postal address is P.O. Box 490 Sentrum, 0105 Oslo. The company is a public limited liability company listed on the Oslo Stock Exchange under ticker SCH. Schibsted Media Group is one of Scandinavia s leading media groups. The major businesses are in Norway, Sweden, France and Spain, but the Group also has operations in other countries in Europe, Latin America, Asia and Africa. Schibsted s operations are divided in four operating segments: Online classifieds, Schibsted Norge media house, Schibsted Sverige media house and Media Houses International. Schibsted has a presence in classifieds, printed newspapers, online newspapers and directories. The financial statements were approved by the Board of Directors on 24 March 2015 and will be proposed to the General Meeting 8 May NOTE 2 SIGNIFICANT ACCOUNTING POLICIES BASIS FOR THE PREPARATION OF THE FINANCIAL STATEMENTS The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The consolidated financial statements have been prepared based on a historical cost basis, with the exception of financial instruments in the categories Financial assets and Financial liabilities at fair value through profit or loss and Financial assets available for sale which are measured at fair value and Loans and receivables and Other financial liabilities which are measured at amortised cost. In the consolidated income statement, expenses are presented using a classification based on the nature of the expenses. Determining the carrying amounts of some assets and liabilities requires management to estimate the effects of uncertain future effects on those assets and liabilities at the balance sheet date. Key sources of estimation uncertainty at the balance sheet date having a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed in note 3. CHANGE IN ACCOUNTING POLICIES Except for the mandatory implementation of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities as at 1 January 2014, the accounting policies adopted are consistent with those of the financial year IFRS 10 Consolidated financial statements has replaced the portion of IAS 27 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Consolidated and Separate Financial Statements that addressed the principles for the presentation and preparation of consolidated financial statements. In addition it also includes the issues previously raised in SIC-12 Consolidation Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The implementation of IFRS 10 has had no effect on the determination of whether an investee must be consolidated in the financial statements of Schibsted. IFRS 11 Joint Arrangements has replaced IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities Non-monetary contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities using proportionate consolidation. Instead, entities meeting the definition of a joint venture must be accounted for using the equity method. This affects the presentation of joint ventures in profit or loss and in the balance sheet, but has generally no effect on net profit or equity. The implementation of IFRS 11 has affected the presentation of all investments previously accounted for as joint ventures using proportionate consolidation. The investments classified as joint ventures are disclosed in note 13 Investments in joint ventures and associated companies. The use of the equity method in accounting for joint ventures also implies that an investment retained in a former joint venture becoming an associated company shall not be remeasured at fair value. The implementation of IFRS 11 has consequently reduced the gain recognised in profit or loss in 2013 related to reduced ownership interest in 701 Search Pte. by NOK 525 million with a corresponding effect on equity. IFRS 11 Joint Arrangements is applied retrospectively. As a result of the accounting policy change, the following adjustments were made to the financial statements: As previously Effect of Restated (NOK million) reported restatement As at 1 January 2013: Consolidated balance sheet: Intangible assets 9,113 (86) 9,027 Property, plant and equipment 1,777 (6) 1,771 Investments in joint ventures and associated companies Other non-current assets Inventories 117 (5) 112 Trade and other receivables 2,447 (175) 2,272 Cash and cash equivalents 1,031 (53) 978 Other non-current liabilities 296 (3) 293 Other current liabilities 4,293 (150) 4, SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP As previously Effect of Restated (NOK million) reported restatement As at and for the year ended 31 December 2013: Consolidated income statement: Operating revenues 15,232 (362) 14,870 Raw materials and finished goods (871) 21 (850) Personnel expenses (5,474) 160 (5,314) Other operating expenses (7,228) 299 (6,929) Depreciation and amortisation (490) 14 (476) Share of profit (loss) of joint ventures and associated companies 13 (136) (123) Other income and expenses 1,169 (522) 647 Financial expenses (237) 1 (236) Profit (loss) 1,562 (525) 1,037 Earnings per share (NOK) (4.89) 9.43 Diluted earnings per share (NOK) (4.89) 9.42 Consolidated statement of comprehensive income: Comprehensive income 2,184 (525) 1,659 Consolidated balance sheet: Intangible assets 10,337 (125) 10,212 Property, plant and equipment 1,439 (8) 1,431 Investments in joint ventures and associated companies 1,074 (420) 654 Deferred tax assets 123 (6) 117 Other non-current assets Inventories 53 (2) 51 Trade and other receivables 2,623 (109) 2,514 Current financial assets 28 (28) - Cash and cash equivalents 1,240 (38) 1,202 Equity attributable to owners of the parent 7,850 (525) 7,325 Deferred tax liabilities 741 (5) 736 Other non-current liabilities 458 (45) 413 Current interest-bearing borrowings 428 (82) 346 Income tax payable 360 (1) 359 Other current liabilities 3,976 (50) 3,926 IFRS 12 Disclosure of Interests in Other entities specifies disclosure requirements related to investments in subsidiaries, joint arrangements, associated companies and structured entities. The implementation of IFRS 12 only affects the extent and presentation of note disclosures. CONSOLIDATION PRINCIPLES The consolidated financial statements include the parent Schibsted ASA and all subsidiaries, presented as the financial statements of a single economic entity. Intragroup balances, transactions, income and expenses are eliminated. 102 Subsidiaries are all entities controlled, directly or indirectly, by Schibsted ASA. The group controls an entity when it is exposed to, or has rights to, variable returns from the involvement with the entity and has the ability to affect those returns through power over the entity. Power over an entity exists when the group has existing rights that give it the current ability to direct the activities that significantly affect the entity s returns. Generally, there is a presumption that a majority of voting rights result in control. The group considers all relevant facts and circumstances in assessing whether control exist, including contractual arrangements and potential voting rights to the extent that those are substantive. Subsidiaries are included in the consolidated financial statements from the date Schibsted ASA effectively obtains control of the subsidiary (acquisition date) and until the date Schibsted ASA ceases to control the subsidiary. Non-controlling interests is the equity in a subsidiary not attributable, directly or indirectly, to the parent Schibsted ASA. Non-controlling interests are presented in the consolidated balance sheet within equity, separately from the equity of the owners of the parent. Profit or loss and comprehensive income attributable to non-controlling interests are disclosed as allocations for the period of profit or loss and comprehensive income attributable to non-controlling interests and owners of the parent, respectively. All business combinations in which Schibsted ASA or a subsidiary is the acquirer, i.e. the entity that obtains control of an other entity or business, are accounted for by applying the acquisition method. The identifiable assets acquired and the liabilities including contingent liabilities assumed are measured at their acquisition-date fair values. Any non-controlling interest in the acquiree is measured either at fair value or at the proportionate share of the acquiree s identifiable net assets. The consideration transferred is measured at fair value. Any excess of the aggregate of the consideration transferred, the amount recognised for non-controlling interests and the fair value of any previously held equity interest in the acquiree over the net of identifiable assets acquired and liabilities assumed, is recognised as goodwill. Acquisitionrelated costs incurred, except those related to debt or equity, are expensed. The acquisition-date fair value of contingent consideration is recognised as part of the consideration transferred in exchange for the acquiree. Subsequent changes in the fair value of contingent consideration deemed to be a liability is recognised in profit or loss. In business combinations achieved in stages, the previously held equity interest is remeasured at its acquisition-date fair value with the resulting gain or loss recognised in profit or loss. Changes in ownership interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of noncontrolling interests is adjusted to reflect the change in their relative share in the subsidiary. Any difference between the amount by which the non-controlling interests is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the parent. When control of a subsidiary is lost, the assets and liabilities of the subsidiary and the carrying amount of any non-controlling interests are derecognised. Any B 52

190 consideration received and any investment retained in the former subsidiary is recognised at their fair values. The difference between amounts recognised and derecognised is recognised as gain or loss in profit or loss. Amounts recognised in other comprehensive income related to the subsidiary are reclassified to profit or loss or transferred to equity similarly as if the parent had disposed of the assets and liabilities directly. Amounts reclassified to profit or loss (including accumulated translation differences and accumulated fair value adjustments to Financial assets available for sale) are included in gain or loss on loss of control of subsidiary in profit or loss. INVESTMENTS IN JOINT ARRANGEMENTS AND ASSOCIATES A joint arrangement is an arrangement of which two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement and exists when decisions about the relevant activities require the unanimous consent of the parties sharing control. Investments in joint arrangements are classified as joint ventures if they are structured through separate vehicles and the parties have rights to the net assets of the arrangements. An associate is an entity over which Schibsted ASA, directly or indirectly through subsidiaries, has significant influence. Significant influence is normally presumed to exist when Schibsted controls 20% or more of the voting power of the investee. Investments in joint ventures and associates are accounted for using the equity method. On initial recognition, the investment is recognised at cost. The Group s share of the investee s profit or loss is recognised in profit or loss and the share of changes in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. Distributions received reduce the carrying amount of the investment. When the Group s share of losses of a joint venture or an associate equals or exceeds the interest in the joint venture or associate, the Group does not recognise further losses unless it has incurred legal or constructive obligations. The interest in a joint venture or an associate includes any long-term unsecured receivables. The use of the equity method is discontinued from the date an investment ceases to be a joint venture or an associate. The difference between the total of the fair value of any retained interest and any proceeds from disposing of a part interest in a joint venture or an associate, and the carrying amount of the investment, is recognised as gain or loss in profit or loss. If the Group s ownership interest in a joint venture or an associate is reduced, but the equity method is still applied, a gain or loss from the partial disposal is recognised in profit or loss. The retained interest is not remeasured. Gains or losses resulting from upstream or downstream transactions between the Group and a joint venture or an associate, including any sale or contribution of subsidiaries to a joint venture or an associate, are recognised only to the extent of unrelated investors ownership interests in the joint venture or associate. Whenever there is objective evidence that an investment may be impaired, that investment is tested for impairment and an impairment loss is recognised if its recoverable amount (higher of value in use and fair value less costs to sell) is less than its carrying amount. Impairment losses are reversed if the loss no longer exists. SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP ACCRUAL, CLASSIFICATION AND VALUATION PRINCIPLES Classification current / non-current distinction Cash and cash equivalents, assets included in the normal operating cycle and other financial assets expected to be realised within twelve months after the reporting period are classified as current assets. Liabilities included in the normal operating cycle and liabilities due to be settled within twelve months after the reporting period are classified as current liabilities. Other assets and liabilities are classified as non-current. Operating segments The division into operating segments is based on the organisation of the Group and corresponds to the internal management reporting to the chief operating decision maker, defined as the CEO. Revenue recognition Revenue from sale of goods is recognised when delivery has occurred and the significant risks and rewards of ownership have been transferred to the buyer. Revenue from the rendering of services is recognised by reference to the stage of completion of the transaction (the percentage of completion method) provided that the outcome of the transaction can be estimated reliably. Discounts are recognised as a revenue reduction. Advertising revenue in printed media is recognised when inserted. Subscription revenues for printed media are invoiced in advance and recognised upon delivery over the subscription period. Revenue from other sales of goods, including casual sales, are recognised upon delivery, taking into account estimated future returns. Online advertising revenue is recognised when displayed. Other revenues from the internet, including subscription based revenues, are recognised in the periods in which the service is rendered. Commissions related to sales of ads and casual sales are recognised as operating expenses. When goods are sold or services rendered in exchange for dissimilar goods or services, revenue is recognised in accordance with the recognition policy related to relevant goods or services. Revenue is measured at the fair value of the goods or services delivered or received, depending on which item that can be measured reliably. Interest income is recognised using the effective interest method and dividends are recognised when the right to receive payment is established. Government grants Government grants are recognised when there is reasonable assurance that the conditions attaching to them will be complied with, and that the grants will be received. Government grants, including press subsidies, are recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate. Financial instruments The Group initially recognises loans, receivables and deposits on the date that they are originated. All other financial assets and financial liabilities (including financial assets designated at fair value through profit or loss) are recognised 103 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. The Group classifies at initial recognition its financial instruments in one of the following categories: Financial assets or financial liabilities at fair value through profit or loss, Loans and receivables, Financial assets available for sale and Other financial liabilities. The classification depends on the purpose for which the financial instruments were acquired. Financial assets or financial liabilities at fair value through profit or loss are financial assets held for trading and acquired primarily with a view of selling in the near term. The category consists of financial derivatives unless they are designated and effective hedging instruments. Financial derivatives are included in the balance sheet items Trade and other receivables and Other current liabilities. These financial assets and liabilities are measured at fair value when recognised initially, and transaction costs are charged to expense as incurred. Subsequently, the instruments are measured at fair value, with changes in fair value, including interest income, recognised in profit or loss as financial income or financial expenses. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The category is included in the balance sheet items Other non-current assets, Trade and other receivables and Cash and cash equivalents. Loans and receivables are recognised initially at fair value plus directly attributable transaction costs. Subsequently, loans and receivables are measured at amortised cost using the effective interest method, reduced by any impairment loss. Short-term loans and receivables are for practical reasons not amortised. Effective interest related to loans and receivables is recognised in profit or loss as Financial income. Financial assets available for sale are non-derivative financial assets that are designated as available for sale or which are not classified in any other category. Carrying amount of financial assets available for sale is included in the balance sheet items Non-current financial assets and Current financial assets. These financial assets are measured initially at fair value plus directly attributable transaction costs. Changes in fair value are recognised in other comprehensive income, except for impairment losses that are recognised in profit or loss. When an investment is derecognised, the cumulative gain or loss is transferred to profit or loss under financial income or expenses. Dividends are recognised when the right to receive payment is established. Financial liabilities not included in any of the above categories are classified as other financial liabilities. The category other financial liabilities is included in the balance sheet items Non-current interest-bearing borrowings, Other non-current liabilities, Current interest-bearing borrowings and Other current liabilities. Other financial liabilities are recognised initially at fair value. Subsequently, other financial liabilities are measured at amortised cost using the effective interest method. Effective interest is recognised in income as financial expenses. Shortterm financial liabilities are for practical reasons not amortised. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire and the Group has transferred substantially all the risks and rewards of ownership. Financial liabilities are derecognised when the obligation is discharged, cancelled or expires. Any rights and obligations created 104 or retained in such a transfer are recognised separately as assets or liabilities. Financial assets and liabilities are offset and the net amount presented in the balance sheet when the Group has a legal right to offset the amounts and intends to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the securities are impaired. Indications of impairment is evaluated separately for each investment, but normally decline in value of more than 20% compared to cost will be considered to be significant, and normally a decline in value below cost lasting for more than 12 months will be considered to be prolonged. For Trade and other receivables, default in payments, significant financial difficulties of the debtor or probability that the debtor will enter bankruptcy or debt settlement negotiations are considered to be indicators that the Group will not be able to collect all amounts due according to the original terms of the receivables. The carrying amount of the trade receivables is reduced through the use of an allowance account, and the loss is recognised as other operating expenses in the income statement, while impairment of other financial assets are recognised as financial expenses. Fair value of financial instruments is based on quoted prices in an active market if such markets exist. If an active market does not exist, fair value is established by using valuation techniques that are expected to provide a reliable estimate of the fair value. The fair value of listed securities is based on current bid prices. The fair value of unlisted securities is based on cash flows discounted using an applicable risk-free market interest rate and a risk premium specific to the unlisted securities. Fair value of forward contracts is estimated based on the difference between the spot forward price of the contracts and the closing rate at the date of the balance sheet. The forward rate addition and deduction is recognised as interest income or interest expense. Fair value of interest and currency swaps is estimated based on discounted cash flows, where future interest rates are derived from market-based future rates. Treasury shares and transaction costs of equity transactions Own equity instruments which are reacquired (treasury shares) are deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. Consideration paid or received is recognised directly in equity. The transaction costs of issuing or acquiring own equity instruments are accounted for as a deduction from equity, net of any related income tax benefit. Foreign currency translation Each individual entity included in the consolidated financial statements measures its results and financial position using the currency of the primary economic environment in which it operates (the functional currency). The consolidated financial statements are presented in NOK which is Schibsted ASA s functional and presentation currency. Foreign currency transactions are translated into the entity s functional currency on initial recognition by using the spot exchange rate at the date of the transaction. At the balance sheet date, assets and liabilities are translated from foreign currency to the entity s functional currency by B 53

191 translating monetary items using the exchange rate at the balance sheet date translating non-monetary items that are measured in terms of historical cost in a foreign currency using the exchange rate at the transaction date, and translating non-monetary items that are measured at fair value in a foreign currency using the exchange rate at the date when the fair value was determined. Exchange differences arising on the settlement of, or on translating monetary items not designated as hedging instruments, are recognised in profit or loss in the period in which they arise. When a gain or loss on a non-monetary item is recognised in other comprehensive income, any exchange component of that gain or loss is also recognised in other comprehensive income. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is also recognised in profit or loss. On initial designation of a hedge, the Group formally documents the relationship between the hedging instrument(s) and the hedged item(s), including risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be highly effective in offsetting the changes in the fair value or cash flows for the respective hedged items during the period for which the hedge is designated. Gains or losses related to loans or currency derivatives in foreign currencies, designated as hedging instruments in a hedge of a net investment in a foreign operation, are recognised in other comprehensive income until disposal of the operation. Upon incorporation of a foreign operation into the consolidated financial statements by consolidation, proportionate consolidation or the equity method, the results and financial position is translated from the functional currency of the foreign operation into NOK (the presentation currency) by using the stepby-step method of consolidation. Assets and liabilities are translated at the closing rate at the balance sheet date and income and expenses are translated at average rates for the period. Resulting exchange differences are recognised in other comprehensive income until the disposal of the foreign operation. Goodwill and fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation, is treated as assets and liabilities of that foreign operation. They are therefore expressed in the functional currency of the foreign operation and translated at the closing rate at the balance sheet date. Property, plant and equipment Property, plant and equipment are measured at its cost less accumulated depreciation and accumulated impairment losses. The depreciable amount (cost less residual value) of property, plant and equipment is allocated on a systematic basis over its useful life. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item, is depreciated separately. Costs of repairs and maintenance are recognised in profit or loss as incurred. Cost of replacements and improvements are recognised in the carrying amount of the asset. SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no economic benefits are expected from its use or disposal. Gain or loss arising from derecognition is included in profit or loss when the item is derecognised. Investment property Property that is not owner-occupied, but held to earn rentals or for capital appreciation, is classified as investment property. Investment property is measured at cost less accumulated depreciation and accumulated impairment losses. Intangible assets Intangible assets are measured at its cost less accumulated amortisations and accumulated impairment losses. Amortisation of intangible assets with a finite useful life is allocated on a systematic basis over its useful life. Intangible assets with an indefinite useful life are not amortised. Costs of developing software and other intangible assets are recognised as an expense until all requirements for recognition as an asset is met. The requirements for recognition as an asset include, among other requirements, the requirement to demonstrate probable future economic benefits and the requirement that the cost of the asset can be measured reliably. Costs incurred after the time that all the requirements for recognition as an asset are met are recognised as an asset. The cost of an internally generated intangible asset is the sum of expenditure incurred from the time all requirements for recognition as an asset are met and until the time the asset is capable of operating in the manner intended by management. Expenditure related to development of technology-based intangible assets to be used in new markets will normally be charged to expense as the requirement to demonstrate probable future economic benefits will normally not be met. Subsequent expenditure incurred in the operating stage to enhance or maintain an intangible asset are normally recognised as an expense as the requirement to demonstrate probable increased economic benefits will normally not be met. Impairment of non-financial assets Property, plant, equipment, intangible assets and goodwill are reviewed for impairment whenever an indication that the carrying amount may not be recoverable is identified. Goodwill and other intangible assets that have an indefinite useful life are tested annually for impairment. Impairment indicators will typically be changes in market developments, the competitive situation or technological developments. An impairment loss is recognised in the Income statement if the carrying amount of an asset (cash generating unit) exceeds its recoverable amount. The recoverable amount is the higher of value in use and fair value less cost to sell. Value in use is assessed by discounting estimated future cash flows. Estimated cash flows are based on management s experience and market knowledge for the given period, normally five years. For subsequent periods growth factors are used that do not exceed the long-term average rate of growth for the relevant market. Expected cash flows are discounted using an after tax discount rate that takes into account the expected long-term interest rate with the addition of a risk margin appropriate for the assets being tested. For the purpose of impairment testing, assets, except goodwill, are grouped together into the smallest group of assets that generates independent cash 105 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP flows (cash-generating units). Goodwill acquired in a business combination is, from the acquisition date, allocated to the cash-generating units, or groups of cash-generating units, that is expected to benefit from the synergies of the combination. Testing for impairment of goodwill is done by comparing recoverable amount and carrying amount of the same groups of cash-generating units as to which goodwill is allocated. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill. Any remaining amount is then allocated to reduce the carrying amounts of the other assets in the unit on a pro rata basis. Impairment losses are reversed if the loss no longer exists for all property, plant and equipment and intangible assets with the exception of goodwill where impairment losses are not reversed. Leases Leases are classified as either finance leases or as operating leases. Leases that transfer substantially all the risks and rewards incidental to the asset are classified as finance leases. Other leases are classified as operating leases. When Schibsted is lessee in a finance lease, the leased asset and the liability related to the lease is recognised in the balance sheet. Depreciable leased assets are depreciated systematically over the useful life of the asset. Lease payments are apportioned between interest expense and reduction of the liability. Lease payments related to operating leases are recognised as an expense over the lease term. Borrowing costs Borrowing costs are generally recognised as an expense in the period in which they are incurred. Borrowing costs that are directly attributable to the acquisition, construction or production of an asset, that necessarily takes a substantial period of time to get ready for its intended use or sale ( qualifying asset ), are capitalised as part of the cost of that asset. Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories are assigned by using the first-in, first-out (FIFO) cost formula and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Post-employment benefits Pension plans, including multi-employer plans, are classified as defined contribution plans or defined benefit plans depending on the economic substance of the plan. Pension plans in which Schibsted s obligation is limited to the payment of agreed contributions and in which the actuarial risk and the investment risk fall on the employee, are classified as defined contribution plans. Other plans are classified as defined benefit plans. As net defined benefit liability is recognised the present value of the benefit obligation at the balance sheet date, less fair value of plan assets. Net pension expense related to defined benefit plans include service cost and net interest on the net defined benefit liability recognised in profit or loss 106 and remeasurements of the net defined benefit liability recognised in other comprehensive income. The present value of defined benefit obligations, current service cost and past service cost is determined using the Projected Unit Credit Method and actuarial assumptions regarding demographic variables and financial variables. Past service cost is the change in the present value of the defined benefit obligation resulting from a plan amendment or curtailment. Past service cost is recognised at the earlier date of when the plan amendment or curtailment occurs and when related restructuring costs or termination benefits are recognised. The contribution payable to a defined contribution plan attributable to the reporting period is recognised in profit or loss. Multi-employer plans classified as defined benefit plans, but for which sufficient information is not available to enable recognition as a defined benefit plan, are accounted for as if they were defined contribution plans. Social security taxes are included in the determination of defined benefit obligations and net pension expense. Share-based payment In equity settled share-based payment transactions with employees, the employee services and the corresponding equity increase is measured by reference to the fair value of the equity instruments granted. The fair value of the equity instruments are measured at grant date, and is recognised as personnel expenses and equity increase immediately or over the vesting period when performance vesting conditions require an employee to serve over a specified time period. At each reporting date the companies remeasure the estimated number of equity instruments that is expected to vest. The amount recognised as an expense is adjusted to reflect the number of equity instruments which is expected to be, or actually become vested. In cash settled share-based payment transactions with employees, the employee services and the incurred liability is measured at the fair value of the liability. The employee services and the liability are recognised immediately or over the vesting period when performance vesting conditions require an employee to serve over a specified time period. Until the liability is settled, the fair value of the liability is revised at each balance sheet date and at settlement date, with changes in fair value recognised in profit or loss. Income taxes Current tax, which is the amount of income taxes payable in respect of taxable profit for a period, is, to the extent unpaid, recognised as a liability. If the amount paid exceeds the amount due, the excess is recognised as an asset. A deferred tax liability is recognised for all taxable temporary differences, except for liabilities arising from the initial recognition of goodwill. A deferred tax asset is recognised for deductible temporary differences, the carryforward of unused tax losses and the carryforward of unused tax credits to the extent that it is probable that future taxable profit will be available against which these benefits can be utilised. B 54

192 No deferred tax liability is recognised for taxable temporary differences associated with investments in subsidiaries and interests in joint ventures when Schibsted is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The Group records provisions relating to uncertain or disputed tax provisions at the amount expected to be paid. The provision is reversed if the disputed tax position is settled in favour of the Group and can no longer be appealed. Tax expense (tax income) comprises current tax expense (current tax income) and deferred tax expense (deferred tax income). Any amount recognised as current tax assets or liabilities and deferred tax assets or liabilities are recognised in profit or loss, except to the extent that the tax arises from a transaction or event recognised in other comprehensive income or directly in equity or arises from a business combination. Provisions, contingent liabilities and contingent assets A provision is recognised when an obligation exists (legal or constructive) as a result of a past event, it is probable that an economic settlement will be required as a consequence of the obligation, and a reliable estimate can be made of the amount of the obligation. The best estimate of the expenditure required to settle the obligation is recognised as a provision. When the effect is material, the provision is discounted using a market based pre-tax discount rate. A provision for restructuring costs is recognised when a constructive obligation arises. Such an obligation is assumed to have arisen when the restructuring plan is approved and the implementation of the plan has begun or its main features are announced to those affected by it. Contingent liabilities and contingent assets are not recognised. Contingent liabilities are disclosed unless the possibility of an economic settlement as a consequence of the obligation is remote. Contingent assets are disclosed where an economic settlement as a consequence of the asset is probable. Other income and expenses Income and expenses included in operating profit, but being of a non-recurring nature and material in relation to operating segments, are reported on a separate line in the income statement. Other income and expenses will normally include restructuring costs, material gains and losses on sale of property, plant and equipment or intangible assets, as well as gains or losses relating to sale of subsidiaries, joint ventures and associated companies. Non-current assets held for sale A non-current asset (or disposal group) is classified as held for sale if its carrying amount will be recovered principally through a sales transaction rather than through continuing use. A disposal group includes assets to be disposed of, by sale or otherwise, together in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction. A non-current asset or a disposal group classified as held for sale is measured at the lower of carrying amount and fair value less costs to sell. Non-current SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP assets classified as held for sale and non-current assets that are part of a disposal group classified as held for sale, are not depreciated. Non-current assets and assets of a disposal group classified as held for sale are presented separately from other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet. Discontinued operations The results of discontinued operations are presented separately in the income statement. A component of the Group that either has been disposed of or is classified as held for sale, and represents a separate major line of business, is classified as discontinued operations. The results of discontinued operations are presented separately from the period the operation is disposed of or classified as held for sale. Previous periods are reclassified so that all items related to discontinued operations are presented separately from continuing operations for all periods presented. Statement of cash flows The statement of cash flows is prepared under the indirect method. Cash and cash equivalents include cash, bank deposits and other monetary instruments with a maturity of less than three months at the date of purchase. Earnings per share Earnings per share and diluted earnings per share are presented for ordinary shares. Earnings per share are calculated by dividing profit (loss) attributable to owners of the parent by the weighted average number of shares outstanding. Diluted earnings per share is calculated by dividing net income attributable to owners of the parent by the weighted average number of shares outstanding, adjusted for all dilutive potential shares. Dividends Dividends are recognised as a liability at the date such dividends are appropriately approved by the company s shareholders meeting. IFRS AND IFRIC INTERPRETATIONS NOT YET EFFECTIVE IASB has published certain new standards and interpretations and amendments to existing standards and interpretations that are not effective for the annual period ending and that are not applied when preparing these financial statements. New and amended standards and interpretations expected to be relevant the Group s financial position, performance or disclosures are disclosed below. None of the changes disclosed are EU-approved. IFRS 9 Financial Instruments was finalized in 2014 and involves changes related to classification and measurement, hedge accounting and impairment of financial instruments. The standard will replace IAS 39 Financial Instruments: Recognition and Measurement. No mandatory date of implementation is set, but will be at the earliest. Schibsted will evaluate the potential impact of the standard in the period until implementation. IFRS 15 Revenues from Contracts with Customers will replace all existing standards and interpretations related to revenue recognition. The core principle of IFRS 15 is that revenue is recognised to depict the transfer of agreed goods or services to customers by an amount that reflects the consideration to which the entity expects to be entitled. The standard applies to all revenue contracts and 107 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP also provides a model for the recognition and measurement of sales of certain non-financial assets. Mandatory date of implementation is Schibsted will evaluate the potential impact of the standard in the period until implementation. IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures are amended to eliminate an inconsistency between those standards regarding the sale or contribution of assets between an investor and its associate or joint venture. The main change is that a full gain or loss is to be recognised when a transaction involves a business. Under current accounting policies, gain or loss is recognised only to the extent of unrelated investors ownership interests in the joint venture or associate. No mandatory date of implementation is set, but will be at the earliest. The amendments will be implemented prospectively to transactions occurring in annual periods beginning on or after the date of implementation. NOTE 3 USE OF ESTIMATES In many areas the consolidated financial statements are affected by estimates. Important areas in which the use of estimates has significant effect on carrying amounts, and thus involves a risk of changes that could affect results in future periods, are described below. The valuation of intangible assets in connection with business combinations and the testing of property, plant and equipment and intangible assets for impairment (see note 11 Intangible assets and note 12 Property, plant and equipment and investment property) will to a large extent be based on estimated future cash flows. Correspondingly, the expected useful lives and residual values included in the calculation of depreciation and amortisation will be based on estimates. The Group has activities within established media, but is also active in establishing positions at an early point in time in new media channels both through business combinations and its own start-ups. Estimates related to future cash flows and the determination of discount rates to calculate present values are based on management s expectations on market developments, the competitive situation, technological development, the ability to realise synergies, interest rate levels and other relevant factors. Such estimates involve uncertainty, and management s view on, and the actual development in the matters referred to, may change over time. Changes in management s opinion and actual development may lead to impairment losses in future periods. Tangible and intangible assets are tested for impairment if there are indications that an asset may be impaired. Intangible assets that are not amortised are, as a minimum, tested annually for impairment. Indications of impairment will typically be changes in market development, the competitive situation and technological development. In the same way, depreciation and amortisation schedules and any residual values are reviewed periodically. The risk of changes in expected cash flows that affect the financial statements will naturally be higher in markets in an early phase and be more limited in established markets. Further, the risk of changes will be significantly higher in periods with uncertain macroeconomic prognosis. 108 Uncertainty related to the macroeconomic situation in Spain has resulted in impairment losses of totally NOK 1,636 million being recognised in the years 2008 and The integration with Milanuncios, positive traffic development and positive macroeconomic development has reduced the risk of further impairment losses having to be recognised. Value in use for SCM Spain is calculated using a pre-tax discount rate (WACC) of 10.5% and a sustained growth of 1.5%. The expected net cash flows related to SCM Spain may decrease by approximately 30% compared to the estimates actually used, before any impairment loss will have to be recognised. The structural changes in media consumption, with accelerated migration from print to digital results in pressure on profits and cash flows for the media houses in Norway and Sweden. Rapid adaption of the business model and cost base is required to be relevant and profitable in the digital future. Inability to convert print cash flows to digital cash flows can consequently lead to a negative adjustment to the cash flows. Value in use of the Norwegian subscription based newspapers and related operations is calculated using a pre-tax discount rate (WACC) of 12.2% and a sustained growth of 0%. Changes in significant assumptions would have increased (decreased) recoverable amount (NOK million) at of these operations as follows: WACC +1% (123) (1%) 144 Sustained growth year 6 and forward +1% 149 (1%) (121) An increase in WACC and a decrease in sustained growth of 1 percentage point would have resulted in an impairment loss of NOK 23 million and NOK 21 million, respectively. The estimates of future cash flows are uncertain. The expected future net cash flows related to the Norwegian subscription based newspapers may decrease by approximately 6.6% compared to the estimates actually used, before any impairment loss will have to be recognised. Impairment losses of NOK 131 million is recognised in NOK 105 million of those impairment losses were related to plant and equipment of Norwegian printing operations. Accounting for pension obligations requires that financial assumptions relating among others to the discount rate, expected salary increases and expected increases in pensions and National Insurance basic amount are determined. The effect on the defined benefit liabilities from changes i financial actuarial assumptions is disclosed in note 21 Pension plans. Certain financial instruments are measured at fair value. When no quoted market price is available, fair value is estimated using different valuation techniques. The Group s financial instruments and valuation techniques are presented in note 10 Financial instruments by category. Contingent consideration in business combinations and the present value of future consideration to be paid related to non-controlling interests put options over shares in subsidiaries are recognised as financial liabilities, see note 25 Financial liabilities business combinations and increases in ownership interests. B 55

193 The liabilities are recognised using estimated value, and the estimate can be changed in future periods as the consideration to be paid is dependent upon future fair value and / or future results. Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with tax planning strategies. Schibsted could potentially at any time be involved in litigations as a result of the Group s ordinary operations. The financial implications of litigations are constantly monitored and a liability is recognised when it is probable that the litigation will result in a future payment and a reliable estimate of the liability can be made. NOTE 4 CHANGES IN THE COMPOSITION OF THE GROUP CHANGES IN 2014: Schibsted has in 2014 invested NOK 555 million (net NOK 532 million adjusted for cash in acquired companies) related to acquisition of subsidiaries (business combinations). See note 5 Business combinations for further information related to the business combinations. Schibsted has in 2014 invested NOK 206 million related to increased ownership interests in subsidiaries. The most significant investments are the increase of ownership interest in DoneDeal Ltd. from 50.09% to 90.1% and the increase of ownership interest from 98.5% to 100% in InfoJobs S.A. Changes in ownership interests in subsidiaries is accounted for as equity trancations. The effect on the equity attributable to owners of the parent is presented in the table below: Consideration paid (206) Financial liabilities previously recognised related to non- controlling interests put options 211 Adjustment to non-controlling interests - Adjustment to equity attributable to owners of the parent 5 Schibsted has in 2014 lost control over certain subsidiaries through disposals and contribution to joint ventures. The sales price amount to NOK 9 million and a net gain of NOK 27 million is recognised in profit or loss in the line item Other income and expenses. In September 2014, Schibsted disposed of an office building in Stavanger through the sale of 100% of the shares of Nykirkebakken 2 AS. A lease-back agreement, expiring at the end of the third quarter of 2026, with options to prolong, is entered into. The transaction will have a net negative annual effect on gross operating profit of around NOK 25 million. A gain on sale of NOK 89 million is recognised in profit or loss in the line item Other income and expenses. SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP DoneDeal Ltd. and InfoJobs S.A. are included in operating segment Online classifieds. Nykirkebakken 2 AS is included in operating segment Schibsted Norge media house. CHANGES IN 2013: Schibsted has in 2013 invested NOK 295 million (net NOK 258 million adjusted for cash in acquired companies) related to acquisition of subsidiaries (business combinations). See note 5 Business combinations for further information related to the business combinations. Schibsted has in 2013 invested NOK 602 million related to increased ownership interests in subsidiaries. The most significant investments are the increase of ownership interest in Anuntis Segundamano Espana SL from 76.23% to 100% and the increase of ownership interest from 55% to 95% in Sibmedia Interactive S.R.L. (tocmai.ro). Schibsted has in 2013 sold shares for NOK 33 million related to decreased ownership interests in subsidiaries, mainly related to reduced ownership interest from 100% to 90.2% in Hittapunktse AB. Changes in ownership interests in subsidiaries is accounted for as equity trancations. The effect on the equity attributable to owners of the parent is presented in the table below: Consideration received 33 Consideration paid (602) Financial liabilities previously recognised related to non- controlling interests' put options 598 Adjustment to non-controlling interests (10) Adjustment to equity attributable to owners of the parent 19 Schibsted has in 2013 lost control over certain subsidiaries through disposals. The sales price amount to NOK 908 million and a net gain of NOK 554 million is recognised in profit or loss in the line item Other income and expenses. Significant transactions are disclosed below. In September 2013, Schibsted disposed of its operations in the Baltic countries. A loss of NOK 216 million is recognised in profit or loss in the line item Other income and expenses. In September 2013, Schibsted and Telenor agreed to form a joint venture for online classified services in selected key markets in South America and Asia. The transaction was closed in December The new company SnT Classifieds is owned 50/50 by the two parties. Schibsted contributed its South American assets Bomnegocio.com (Brazil) and Yapo.cl (Chile) into the joint venture while Telenor contributed its Bangladesh asset Cellbazaar.com. In addition, Schibsted received a cash contribution from Telenor. A gain of NOK 755 million, related to the 50% interest disposed of, is recognised in profit or loss in the line item Other income and expenses. From closing, Schibsted has accounted for its investment in SnT Classifieds as a Joint Venture. In September 2013, Schibsted reduced its ownership interest in Schibsted Classified Media AG (tutti.ch) from 100% to 50% by contributing the company to a newly established joint venture. Schibsted has in addition disposed of certain other businesses, including the film distributor Sandrew Metronome and Aspiro TV. A net gain of NOK 15 million is recognised in profit or loss in the line item Other income and expenses. 109 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Simultaneously with the establishing of SnT Classifieds, Telenor also entered as an equal partner with Schibsted and Singapore Press Holdings, each owning 1/3 of the company, in the South East Asian online classifieds operation 701 Search Pte. A gain of NOK 256 million is recognised in profit or loss in the line item Other income and expenses. From closing, Schibsted has accounted for its investment in 701 Search Pte. as an associated company. In December 2013, Schibsted disposed of an office building in Bergen through the sale of 100% of the shares of Krinkelkroken 1 AS. A lease-back agreement, expiring at the end of the first quarter of 2017, with options to prolong, is entered into. The transaction will have a net negative annual effect on gross operating profit of around NOK 20 million. A gain on sale of NOK 130 million is recognised in profit or loss in the line item Other income and expenses. Anuntis Segundamano Espana SL, Sibmedia Interactive S.R.L, SnT Classifieds, Schibsted Classified Media AG and 701 Search Pte are included in operating segment Online classifieds. Hittapunktse AB is included in operating segment Schibsted Sverige media house. Krinkelkroken 1 AS is included in operating segment Schibsted Norge media house. Sandrew Metronome and Aspiro are included in Other. NOTE 5 BUSINESS COMBINATIONS BUSINESS COMBINATIONS IN 2014: Schibsted has in 2014 invested NOK 532 million related to acquisition of new subsidiaries (business combinations). The amount comprises cash consideration transferred reduced by cash and cash equivalents of the acquiree. In March 2014, Schibsted increased its ownership interest in Használtautó Informatikai Kft from 50% to 100% through acquisition of shares. The company operates a Hungarian online market place for cars (hasznaltauto.hu). The previously held equity interest was accounted for as a joint venture and the business combination is accounted for as a step acquisition. In November 2014, Schibsted acquired Milanuncios.com, one of the leading generalist online classified businesses in Spain through purchase of assets. The business was acquired in exchange for a cash component of EUR 50 million and a 10% participation in the combined Schibsted Classified Media Spain, comprising all of the Group s online classified businesses in Spain. The purchase price allocation related to Milanuncios is preliminary pending final assesment of identifiable assets. Schibsted has also been involved in some other minor business combinations, including business combinations accounted for as step acquisitions. In step acquisitions, the previously held equity interest is measured at fair value at the acquisition date, and a total gain from remeasurement of NOK 40 million is recognised in profit or loss in the line item Other income and expenses. Acquisition-related costs of NOK 10 million are recognised in profit or loss in the line item Other income and expenses. 110 The tables below summarise the consideration transferred and the amounts recognised for assets acquired and liabilities assumed after the business combinations: Total business Milanuncios Other combinations Consideration: Cash Contingent consideration Non-controlling ownership interest in subsidiary Consideration transferred ,020 Fair value of previously held equity interest Total ,140 Amounts for assets and liabilities recognised: Trademarks (indefinite useful life) Customer relations Data systems and licenses Property, plant and equipment Trade receivables and other receivables Cash and cash equivalents Deferred tax liabilities - (7) (7) Current liabilities - (7) (7) Total identifiable net assets Non-controlling interests - (5) (5) Goodwill Total ,140 The goodwill of NOK 591 million recognised is attributable to inseparable non-contractual customer relationships, the assembled workforce of the companies and synergies. NOK 417 million of the goodwill recognised is expected to be deductible for income tax purposes. The business combinations are carried out as part of Schibsted s growth strategy, and the businesses acquired are good strategic fits with existing operations within the Schibsted Media Group. The fair value of acquired receivables is NOK 5 million, of which NOK 4 million are trade receivables. There is no material difference between the gross contractual amounts receivable and the fair value of the receivables. Non-controlling interests are measured at the proportionate share of the acquiree s identifiable net assets. When Schibsted is obligated to acquire ownership interests from non-controlling interests, a financial liability is recognised with a corresponding adjustment to equity, see note 25 Financial liabilities business combinations and increases in ownership interests. The companies acquired in the business combinations have since the acquisition dates contributed NOK 30 million to operating revenues and contributed positively NOK 3 million to consolidated profit (loss). B 56

194 If the acquisition date of all business combinations, except for the acquisition of Milanuncios.com, was as of , the operating revenues of the Group would have increased by NOK 13 million and profit (loss) would have increased by NOK 1 million. No separate financial statements exist for the business Milanuncios.com for the period before the acquisition. BUSINESS COMBINATIONS IN 2013: Schibsted has in 2013 invested NOK 179 million related to acquisition of new subsidiaries (business combinations). The amount comprises consideration transferred reduced by cash and cash equivalents of the acquiree. Schibsted has in addition paid NOK 79 million of contingent consideration related to prior year s business combinations (leboncoin.fr). In July 2013, Schibsted increased its ownership interest in Sentinel Software AS from 33% to 87% through acquisition of shares. The company has developed and operates the industry system for handling used cars in Norway. The previously held equity interest was accounted for as an associated company and the business combination is accounted for as a step acquisition. The previously held equity interest is measured at fair value at the acquisition date, and a gain from remeasurement of NOK 2 million is recognised in profit or loss in the line item Other income and expenses. In September 2013, Schibsted acquired 100% of the shares of Compricer AB. The company operates an online personal finance market place (compricer.se) and is a good strategic fit with the existing portfolio of fast growing personal finance services in Schibsted. Schibsted has also been involved in some other minor business combinations. The tables below summarise the consideration transferred and the amounts recognised for assets acquired and liabilities assumed after the business combinations: SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Total business combinations Consideration: Cash 216 Contingent consideration 166 Consideration transferred 382 Fair value of previously held equity interest 22 Total 404 Amounts for assets and liabilities recognised: Trademarks (indefinite useful life) 48 Trademarks (definite useful life) 4 Customer relations 6 Data systems and licenses 29 Property, plant and equipment 3 Trade receivables and other receivables 35 Cash and cash equivalents 37 Deferred tax liabilities (13) Non-current interest-bearing borrowings (5) Other non-current liabilities (2) Current liabilities (49) Total identifiable net assets 93 Non-controlling interests (3) Goodwill 314 Total 404 The goodwill of NOK 314 million recognised is attributable to inseparable noncontractual customer relationships, the assembled workforce of the companies and synergies. NOK 14 million of the goodwill recognised is expected to be deductible for income tax purposes. The business combinations are carried out as part of Schibsted s growth strategy, and the businesses acquired are good strategic fits with existing operations within the Schibsted Media Group. The fair value of acquired receivables is NOK 35 million, of which NOK 16 million are trade receivables. There is no material difference between the gross contractual amounts receivable and the fair value of the receivables. Non-controlling interests are measured at the proportionate share of the acquiree s identifiable net assets. When Schibsted is obligated to acquire ownership interests from non-controlling interests, a financial liability is recognised with a corresponding adjustment to equity, see note 25 Financial liabilities business combinations and increases in ownership interests. The companies acquired in the business combinations have since the acquisition dates contributed NOK 71 million to operating revenues and contributed negatively NOK 9 million to consolidated profit (loss). If the acquisition date of all business combinations was as of , the operating revenues of the Group would have increased by NOK 94 million and profit (loss) would have decreased by NOK 12 million. 111 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 6 EVENTS AFTER THE REPORTING PERIOD In November 2014 Schibsted, Naspers, Telenor and Singapore Press Holdings (SPH) agreed to establish joint ventures for the development of their online classifieds platforms in four key markets Brazil, Indonesia, Thailand and Bangladesh. The ownership structure in the joint ventures will be as follows: Brazil: 50% Naspers and 50% SnT Classifieds, Indonesia: 64% Naspers and 36% 701 Search, Thailand: 55.9% 701 Search and 44.1% Naspers and Bangladesh: 50.3% SnT Classifieds and 49.7% Naspers. SnT Classifieds is an equal shareholding joint venture between Schibsted and Telenor and 701 Search is an equal partnership joint venture amongst Schibsted, Telenor and SPH. As part of the agreement, 701 Search will transfer its online classifieds business in the Philippines to Naspers, who will manage the operation. In certain other markets in Latin America and Asia Schibsted, SnT Classifieds and 701 Search, respectively, acquire Naspers operations. At the same time, Naspers acquires the operations of Schibsted, SnT Classifieds and 701 Search in certain other markets. Schibsted expects that the transaction will result in a gain in the range of NOK million. The transaction is not expected to have any significant tax effects, and it is cash neutral. The relevant transactions were closed in January 2015 and the joint ventures were then established. In March 2015, Schibsted disposed of its 76% interest in Aspiro AB after accepting a public offer from Project Panther Bidco Ltd, a company controlled by S. Carter Enterprises, LLC to acquire Aspiro AB. The offer was declared unconditional on 13 March Schibsted s interest in Aspiro AB was held by Streaming Media AS, a subsidiary in which Schibsted holds a 74.62% interest. A gain of approximately NOK 200 million is expected to be recognised from the disposal. Schibsted and Naspers reached in February 2015 an agreement whereby Schibsted acquires Naspers OLX operation in Hungary. Including the leading car vertical Hasznaltauto.hu, Schibsted will be the clear online classifieds market leader in Hungary after the transaction. At the same time, Naspers acquires Schibsted s online classifieds operations in Romania and Portugal. The Hungarian and Romanian transactions have been completed while completion of the transaction in Portugal is subject to clearance by the competition authorities in the country. The three transactions are cash neutral. On 12 February 2015 Schibsted agreed to divest its 50 percent of the online classifieds operations in Switzerland (Tutti.ch and Car4You.ch) to the existing partner Tamedia. Schibsted receives a consideration of EUR 15 million and an earn-out subject to financial KPIs by 2018 of maximum CHF 12.5 million. The transaction is subject to approval of the Swiss Competition Commission. 112 NOTE 7 DISCLOSURE OF OPERATING SEGMENTS Schibsted reports four operating segments; Online classifieds, Schibsted Norge media house, Schibsted Sverige media house and Media Houses International. Operating segment Online classifieds comprises the Norwegian online marketplace Finn and Schibsted Classified Media comprising all the Group s online classifieds operations outside Norway. Operating segment Schibsted Norge media house comprises the media houses VG, Aftenposten, Bergens Tidende, Stavanger Aftenblad and Fædrelandsvennen, printing and distribution operations, and the publishing house Schibsted Forlag. Operating segment Schibsted Sverige media house comprises publishing, where Aftonbladet and Svenska Dagbladet are the main units, and Schibsted Growth, a portfolio of internet based growth companies (including the online directory service Hitta). Media Houses International comprises the concept for free newspapers 20 Minutes in Spain and France and Eesti Meedia Group (sold in September 2013, see note 4 Changes in the composition of the Group) comprising the Group s operations in the Baltic States. Other comprises operations not included in the four reported operating segments, including Sandrew Metronome (sold in April 2013), Aspiro and Mötesplatsen. Headquarters comprises the Group s headquarter Schibsted ASA and centralised functions within finance, real estate and IT. Eliminations comprise intersegment sales. Transactions between operating segments are conducted on normal commercial terms. Headquarters has the majority of its operating revenues from other operating segments. The reported operating segments have only insignificant shares of intragroup operating revenues. The division into operating segments corresponds to the management structure and the internal reporting to the Group s chief operating decision maker, defined as the CEO. The division reflects an allocation based partly on the type of operation and partly on geographical location. In the operating segment information presented, Gross operating profit (loss) is used as measure of operating segment profit or loss. For internal control and monitoring, Operating profit (loss) is also used as measure of operating segment profit or loss. B 57

195 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Information about operating revenues and profit (loss) by operating segments is as follows: Schibsted Schibsted Norge Sverige Media Online media media Houses Head classifieds house house International Other quarters Eliminations Total Subscription revenues - 1, ,864 Casual sales revenues - 1, ,221 Advertising revenues 4,434 2,568 1, ,790 Other revenues ,100 Operating revenues from external customers 4,637 6,155 3, ,975 Operating revenues from other segments (611) - Operating revenues 4,741 6,217 3, (611) 14,975 Operating expenses (3,339) (5,680) (3,377) (166) (427) (656) 611 (13,034) Gross operating profit (loss) 1, (35) (65) (283) - 1,941 Depreciation and amortisation (135) (192) (73) (4) (6) (57) - (467) Share of profit (loss) of joint ventures and associated companies (871) 2 (4) (2) (841) Impairment loss (22) (105) (4) (131) Other income and expenses (1) 2 (19) (68) 8 Operating profit (loss) (42) (69) (325) (68) 510 Schibsted Schibsted Norge Sverige Media Online media media Houses Head Restated classifieds house house International Other quarters Eliminations Total Subscription revenues - 1, ,770 Casual sales revenues 9 1,256 1, ,328 Advertising revenues 3,945 2,810 1, ,721 Other revenues ,051 Operating revenues from external customers 4,082 6,288 3, ,870 Operating revenues from other segments (561) - Operating revenues 4,184 6,338 3, (561) 14,870 Operating expenses (3,192) (5,615) (3,366) (485) (396) (600) 561 (13,093) Gross operating profit (loss) (51) (245) - 1,777 Depreciation and amortisation (139) (209) (50) (23) (14) (41) - (476) Share of profit (loss) of joint ventures and associated companies (141) 1 10 (9) (123) Impairment loss (2) (1) (147) (150) Other income and expenses (90) (219) (14) (3) Operating profit (loss) 1, (247) (79) (273) - 1, SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Information about operating revenues by products and services are as follows: Operating revenues 2014 Restated 2013 Classified 4,695 4,188 Printed newspapers 6,985 7,992 Online newspapers 3,439 2,858 Live pictures 4 5 Others Eliminations (922) (784) Total 14,975 14,870 Operating revenues include government grants at NOK 54 million in 2014 and NOK 59 million in In addition barter agreements are included with NOK 57 million in 2014 and NOK 77 million in Information about operating revenues and non-current assets by geographical areas In presenting geographical information, attribution of operating revenues is based on the location of group companies. There are no significant differences between the attribution of operating revenues based on the location of group companies and an attribution based on the customers location. Non-current assets are attributed based on the geographical location of the assets. Operating revenues 2014 Restated 2013 Norway 7,801 7,699 Sweden 4,636 4,725 France 1, Spain Baltics Other Europe Other countries Total 14,975 14,870 Non-current assets 2014 Restated 2013 Norway 3,077 3,292 Sweden 2,005 1,948 France 3,874 3,593 Spain 3,829 2,695 Baltics - - Other Europe Other countries Total 13,746 12,370 Non-current assets comprise assets excluding deferred tax assets and financial instruments, expected to be recovered more than twelve months after the reporting period. 114 NOTE 8 OTHER INCOME AND EXPENSES Operating income and operating expenses that are of a non-recurring nature and are of material importance to the operating segments are separated from other ordinary operating revenues and operating expenses and reported in a separate line in the income statement. Other income and expenses consist of: 2014 Restated 2013 Restructuring costs (239) (158) Gain (loss) on sale of subsidiaries, joint ventures and associated companies Gain (loss) on sale of intangible assets, property, plant and equipment and investment property Gain (loss) on amendment of pension plans - (1) Gain from remeasurement of previously held equity interest in business combination achieved in stages 40 2 Acquisition-related costs (10) - Other 101 (128) Total Restructuring costs of NOK 239 million relate mainly to staff reductions in Schibsted Norge s and Schibsted Sverige s subscription newspapers, in addition to the close down of printing operations in Kristiansand. A gain of NOK 27 million is recognised related to loss of control of businesses through disposals and contribution to joint venture. Transactions include sale of the travel website Destinationpunktse AB and the contribution of Schibsted s online classified operations in Morocco to a newly established joint venture. A gain of NOK 89 million is recognised related to sale of an office building in Stavanger. For further explanation see note 4 Changes in the composition of the Group. Schibsted has been involved in certain business combinations accounted for as step acquisitions, including the acquisition of Használtautó Informatikai Kft. A total gain from remeasurement of previously held equity interests is recognised by NOK 40 million. Acquisition related costs of NOK 10 million arose from the purchase of the Spanish classified site Milanuncios. Other includes decrease in contingent consideration related to prior business combination and change in provision related to refocusing of the online classifieds operations in France. B 58

196 2013 Restructuring costs of NOK 158 million mainly came from Schibsted Sverige media house, Anuntis and the Norwegian printing operations. Gain (loss) on sale of subsidiaries, joint ventures and associated companies include gains and losses on sale of SnT Classifieds, 701 Search Pte, the operations in the Baltic countries and other businesses. For further explanation see note 4 Changes in the composition of the Group. Gain (loss) on sale of intangible assets, property, plant and equipment and investment property include gain on sale of an office building in Bergen. Other includes a provision related to refocusing of the online classified operations in France. NOTE 9 FINANCIAL RISK MANAGEMENT Funding and capital management Schibsted is a listed company that aims to provide a competitive rate of return based on healthy finances. Schibsted aims to maximise the shareholders return through long-term growth in the share price and dividend. The Group s strategy and vision imply a high rate of change and development of the Group s operations. Schibsted s capital structure must be sufficiently robust in order to maintain the desired freedom of action and utilise growth opportunities based on strict assessments relating to allocation of capital. The Group s capital consists of net interest-bearing debt and equity: 2014 Restated 2013 Non-current interest-bearing borrowings 2,132 1,971 Current interest-bearing borrowings Cash and cash equivalents 745 1,202 Net interest-bearing debt 2,083 1,115 Group equity 6,790 7,586 Net gearing (net interest-bearing debt/ equity) Undrawn long-term bank facilities 3,841 3,772 Schibsted will emphasise having a fixed dividend payout ratio which, over time, is to be 25 40% of the Group s normalised cash flow per share. In years when there is an economic slowdown, the company will try to pay dividend at the upper part of the target interval provided that the Group s capital structure allows this. Funding and control of refinancing risk is handled by Group treasury on the parent company level. Schibsted has a diversified loan portfolio both in terms of loan sources and maturity profile. The most important funding sources are the Norwegian bond market and banks. Schibsted does not have an official SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP credit rating, but is rated by lenders and was classified BBB by most of them. Schibsted s objective is to be considered as an investment grade rated company over time (BBB- or better) and for the time being official rating is not considered necessary. The financial flexibility is considered as good and the Group s ratio of net interest-bearing debt to gross operating profit was 1.1 according to the definition of the loan agreements at the end of The target level is 1 2. Refinancing risk is considered as low. Available liquidity should at all times be equal to at least 10% of expected annual revenues. Available liquidity refers to the Group s cash and cash equivalents and available long-term bank facilities. Financial risk Schibsted is exposed to financial risks, such as currency risk, interest rate risk, liquidity risk and credit risk. Group treasury is responsible for keeping the Group s exposure in financial risks in accordance with the financial strategy over time. Currency risk Schibsted has Norwegian kroner (NOK) as its base currency, but is through its operations outside Norway also exposed to fluctuations in the exchange rates of other currencies, mainly Euro (EUR) and Swedish kronor (SEK). Schibsted has currency risks linked to both balance sheet monetary items and the translation of investments in foreign operations. The Group makes use of loans in foreign currencies and financial derivatives (forward contracts and cross currency swaps) to reduce its currency exposure. The loans in foreign currencies and the financial derivatives are managed actively in accordance with the Group s financial strategy. The Group s monetary items exposure appears in note 22 Interest-bearing borrowings and in note 18 Cash and cash equivalents. As at the Group had entered into several forward contracts involving the purchase and sale of currencies and several interest rate and currency swap agreements for this purpose. Currency gains and losses relating to borrowings and forward contracts which hedge net investments in foreign operations are recognised in Other comprehensive income until the foreign operation is disposed of. Other currency gains and losses are recognised in the income statement on an ongoing basis as other financial income or expenses. As at Schibsted has the following forward contracts, which all mature in 2015: Currency Amount NOK Forward contracts, sale CHF 6 45 Forward contracts, sale EUR Forward contracts, sale SEK As at forward contracts for the sale of SEK 150 million are related to hedging of net investments in foreign operations. Fair value of the contracts accounted for as hedges was NOK (6) million as at Fair value of other forward contracts was NOK 1 million as at Cash flows in foreign currencies relating to considerable investments or significant individual transactions are hedged by using financial instruments. At year-end the Group had no such contracts. The Group s foreign exchange 115 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP exposure relating to operations is low, since most of the cash flows take place in the individual businesses local currency. As at Schibsted has the following cross currency swaps, which mature in : Currency NOK Currency Payment Receive Cross currency swap EUR 35 Cross currency swap EUR 38 Cross currency swap EUR 50 Cross currency swap SEK 450 Cross currency swap SEK 200 Euribor 6 months + margin 300 Euribor 3 months + margin 315 Euribor 3 months + margin 405 Stibor 3 months +margin 400 Stibor 3 months +margin 185 Nibor 6 months + margin Nibor 3 months + margin Nibor 3 months + margin Nibor 3 months + margin Nibor 3 months + margin The cross currency swap agreements are linked to bonds and floating rate notes and matches the payments completely during the contract period. The agreements are accounted for as hedges. The fair value of the agreements was NOK (136) million as at Schibsted follows a currency hedging strategy where parts of net investments in foreign operations are hedged. As at % of the Group s net interest-bearing debt and derivatives was in EUR. Similarly, 31% of the Group s net interest-bearing debt and derivatives was in SEK. The sensitivity of exchange rate fluctuations is as follows: if NOK changes by 10% compared to the actual rate as at for SEK and EUR, the carrying amount of the Group s net interest-bearing debt and currency derivatives in total will change by approximately NOK 205 million. Currency effects will have a limited effect on Group profits since changes in value will be tied to instruments hedging the net foreign investments or matching interest-bearing loans to non- Norwegian subsidiaries. A change in exchange rates also affects the translation of net foreign assets to NOK. The equity effect of these changes is to some extent reduced by the Group s currency hedging, where changes in the value of net foreign assets are mitigated by changes in the value of the Group s foreign-denominated interestbearing borrowings and currency derivatives. Interest rate risk Schibsted has floating interest rates on most of its interest-bearing borrowings according to the financial strategy, see note 22 Interest-bearing borrowings, and is thereby influenced by changes in the interest market. A change of 1 percentage point in the floating interest rate means a change in Schibsted s interest expenses of approximately NOK 28 million. This will partly be compensated by a change in interest income of approximately NOK 7 million. Interest rate swap agreements have been entered into to swap the bonds issued in 2012 from fixed interest rates to floating interest rates based on Nibor 6 months with addition of a margin. An interest rate swap has also been entered into converting the floating rate note issued in December 2012 from Nibor 3 months with addition of a margin to Nibor 6 months with addition of a margin. 116 As at Schibsted has the following interest rate swap agreements in NOK: Amount Pay Receive Interest rate swap 150 Nibor 6 months + margin 5.9% Interest rate swap 150 Nibor 6 months + margin 5.9% Interest rate swap 250 Nibor 6 months + margin 5.4% Interest rate swap 150 Nibor 6 months + margin Nibor 3 months + margin The fair value of the interest rate swap agreements was NOK 56 million as at Raw materials risk Schibsted is a consumer of newsprint and is therefore exposed to price changes. A change in the price of 1% has an impact on raw materials expenses for the Group of approximately NOK 5 million per year. Newsprint prices in Norway, Sweden and Spain are negotiated annually with suppliers and have already been settled for Credit and counterparty risk The Group has recorded a low level of losses relating to trade receivables, see Note 17 Trade and other receivables. Account receivables are diversified through a high number of customers, customer categories and markets. Account receivables consist of a combination of prepaid subscription or advertisements and sales invoiced after delivery of the product. For some receivables there are no or very little credit risk (prepaid subscription and payments made by credit card at purchase date) and for other receivables the credit risk is higher. Credit risk will also vary among countries in which Schibsted operates. To some extent credit insurance is also used. In total the credit risk is considered as low. Net carrying amount of the Group s financial assets, except for equity instruments, represents maximum credit exposure, and the exposure as at is disclosed in note 10 Financial instruments by category. Exposure related to the Group s trade receivables is disclosed in note 17 Trade and other receivables. Schibsted has a conservative placement policy where excess liquidity is used for loan repayments. Until due date the excess liquidity is temporarily placed in the Group s cash pool, and at times in the short-term money market with the relationship banks. Schibsted requires all relationship banks to have a certain rating. Liquidity risk At year-end the Group s portfolio of loans and loan facilities is well diversified both regarding maturity profile and lenders. At the end of 2014 Schibsted has a long-term liquidity reserve of NOK 4.6 billion and net interest-bearing debt is NOK 2,083 million. The liquidity reserve corresponds to 31% of the Group s turnover. The Group has as target that the aggregate liquidity reserve should be at least 10% of the next 12 months expected turnover. Schibsted s loan agreements contain financial covenants regarding the ratio of net interest-bearing debt to gross operating profit. The ratio shall normally not exceed 3, but can be reported at higher levels up to three quarters during the loan period, as long as the ratio stays below 4. According to the definition of the loan agreements, the ratio was 1.1 as at B 59

197 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 10 FINANCIAL INSTRUMENTS BY CATEGORY Carrying amount of assets and liabilities are divided into categories as follows: Balance as at Note Financial assets and Financial liabilities at fair assets Other Other value through Loans and available financial assets and profit or loss receivables for sale liabilities liabilities Intangible assets 11 11, ,906 Property, plant and equipment and investment property 12 1, ,287 Investments in joint ventures and associated companies Non-current financial assets Deferred tax assets Other non-current assets Inventories Trade and other receivables 17 2,797-2, Cash and cash equivalents Total assets 17,874-3, ,513 Deferred tax liabilities Pension liabilities 21 1, ,911 Non-current interest-bearing borrowings 22 2, ,132 - Other non-current liabilities Current interest-bearing borrowings Income tax payable Other current liabilities 24 4, ,147 1,172 Total liabilities 11, ,678 4,261 Financial Balance assets and Financial as at liabilities at fair assets Other Other value through Loans and available financial assets and Note Restated profit or loss receivables for sale liabilities liabilities Intangible assets 11 10, ,212 Property, plant and equipment and investment property 12 1, ,499 Investments in joint ventures and associated companies Non-current financial assets Deferred tax assets Other non-current assets Inventories Trade and other receivables 17 2, , Cash and cash equivalents 18 1,202-1, Total assets 16, , ,832 Deferred tax liabilities Pension liabilities 21 1, ,114 Non-current interest-bearing borrowings 22 1, ,971 - Other non-current liabilities Current interest-bearing borrowings Income tax payable Other current liabilities 24 3, , Total liabilities 8, ,372 2, SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP The fair value of the Group s financial derivatives is as follows: Assets Liabilities Forward contracts Interest rate and currency swap Warranties Total The Group s financial assets and liabilities measured at fair value, analysed by valuation method, are as follows: : Level 1 Level 2 Level 3 Total Financial assets available for sale Financial liabilities at fair value through profit or loss Financial liabilities business combina tions and increases in ownership interests Restated : Level 1 Level 2 Level 3 Total Financial assets available for sale Financial assets at fair value through profit or loss Financial liabilities at fair value through profit or loss Financial liabilities business combina tions and increases in ownership interests The different valuation methods have been defined as follows: Level 1: Valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Valuation based on inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). Level 3: Valuation based on inputs for the asset or liability that are unobservable market data. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and these prices represent actual and regularly occurring market transactions on an arm s length basis. These instruments are included in level 1. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs are not based on observable market data, the instrument is included in level Changes in level 3 instruments: Net carrying amount 1.1 (527) (1,051) Additions (526) (173) Settlements Changes in fair value recognised in equity Changes in fair value recognised in other comprehensive income (23) (103) Changes in fair value recognised in profit or loss 48 (25) Net carrying amount (809) (527) Changes in fair value recognised in other comprehensive income is recognised in the line item Exchange differences on translating foreign operations. Changes in fair value recognised in profit or loss is recognised in the line item Financial expenses and Other income and expenses. NOTE 11 INTANGIBLE ASSETS Other intangible Goodwill assets Total Net carrying amount ,235 2,977 10,212 Additions Additions on purchase of businesses ,128 Disposals - (1) (1) Disposals on sale of businesses - (1) (1) Reclassification - (2) (2) Amortisation - (205) (205) Impairment loss (4) (22) (26) Translation differences Net carrying amount ,234 3,672 11,906 As at Cost 10,004 5,123 15,127 Accumulated amortisation and impairment losses (1,770) (1,451) (3,221) Net carrying amount 8,234 3,672 11,906 B 60

198 Other intangible Goodwill assets Total Restated Net carrying amount ,384 2,643 9,027 Additions Additions on purchase of businesses Disposals on sale of businesses (181) (18) (199) Reclassification Amortisation - (208) (208) Impairment loss - (17) (17) Translation differences Net carrying amount ,235 2,977 10,212 As at Restated Cost 9,001 4,129 13,130 Accumulated amortisation and impairment losses (1,766) (1,152) (2,918) Net carrying amount 7,235 2,977 10,212 Other intangible assets include: Carrying amount Expected useful life Restated Trademarks Indefinite 3,163 2,495 Trademarks Finite Software and licenses Finite Customer relations Finite Total 3,672 2,977 Trademarks with indefinite expected useful lives can be specified on cash-generating units as follows: Operating segment 2014 Restated 2013 Schibsted Norge Schibsted Sverige Schibsted Norge media house Schibsted Sverige media house SCM Spain Online classifieds 1, SCM France Online classifieds SCM Italy Online classifieds SCM Belgium Online classifieds SCM Ireland Online classifieds SCM Hungary Online classifieds 18 - SCM Romania Online classifieds 5 5 Total 3,163 2,495 Trademarks with an indefinite expected useful life have been acquired through acquisitions and are expected to generate cash flows over an indefinite period of time. SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Intangible assets with a finite expected useful life are as a general rule amortised on a straight line basis over the expected useful life. The amortisation period of intangible assets is years. The amortisation method, expected useful life and any residual value are assessed annually. Schibsted has a clear goal of building a foundation for future growth by establishing in new markets. This is done to a large extent within Schibsted Classified Media through establishing operations that are primarily based on the successful Swedish Blocket.se concept. For operations successfully established; technology, trademarks and goodwill that may have a significant value, will have been developed through the expenditure incurred. Such expenditure do not meet the requirements for recognition as intangible assets during the establishment phase, and all the expenditure related to such roll-outs, mainly marketing expenditure, are thus recognised as an expense when it is incurred. Such investments reduced Gross operating profit by NOK 503 million in 2014 and NOK 870 million in Goodwill can be specified on cash-generating units as follows: Operating segment 2014 Restated 2013 Schibsted Forlag Schibsted Norge media house VG Group Schibsted Norge media house Schibsted Vekst Schibsted Norge media house 8 7 Other Schibsted Norge Schibsted Norge media house Schibsted Sverige Schibsted Sverige media house Compricer Schibsted Sverige media house Hitta Schibsted Sverige media house Finn.no Online classifieds SCM France Online classifieds 2,913 2,702 SCM Spain Online classifieds 2,385 1,810 SCM Sweden Online classifieds SCM Hungary Online classifieds SCM Belgium Online classifieds SCM Ireland Online classifieds Other online classifieds Online classifieds Aspiro Other Møteplassen Other Total 8,234 7,235 Recoverable amounts of the cash-generating units were estimated based on value in use. Expected cash flows in 2014 are discounted using a pre-tax discount rate from 10.5% to 12.2% (10% to 12%) and expected sustained growth year 6 and forward of 0% to 1.5%. When discount rates are determined, consideration is given to the risk-free interest rate with risk premium for the relevant country as well as business specific risk. For SCM France, recoverable amount is significantly higher than the carrying amount. For SCM Spain, recoverable amount exceeds the carrying amount by approximately NOK million and for Schibsted Norge (subscription based newspapers and related operations) by approximately NOK 100 million. See Note 3 Use of estimates for sensitivity related to recoverable amount for SCM Spain and Schibsted Norge. 119 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 12 PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY Equipment, Buildings and Investment Plant and furniture and land properties machinery similar assets Total Net carrying amount ,499 Additions Additions on purchase of businesses Disposals (274) - - (10) (284) Disposals on sale of businesses (15) (2) Reclassification - - (4) 6 2 Depreciation (21) - (88) (153) (262) Impairment loss - (1) (104) - (105) Translation differences Net carrying amount ,287 As at Cost ,079 1,505 4,086 Accumulated depreciation and impairment loss (187) (1) (1,728) (883) (2,799) Net carrying amount , Restated Net carrying amount ,839 Additions Additions on purchase of businesses Disposals (204) - - (9) (213) Disposals on sale of businesses (71) - (90) (6) (167) Reclassification (23) (23) Depreciation (31) - (107) (130) (268) Impairment loss (3) (3) Translation differences Net carrying amount ,499 As at Restated Cost ,030 1,311 4,165 Accumulated depreciation and impairment loss (230) - (1,570) (866) (2,666) Net carrying amount , B 61

199 Investment properties and property, plant and equipment, excluding land, are depreciated on a straight line basis over their estimated useful lives. Depreciation schedules reflect the assets residual value. Items of property, plant and equipment where material components can be identified with different useful lives are depreciated over the individual component s expected useful life. Depreciation is calculated over the estimated useful lives: Buildings (25-50 years), Plant and machinery (5-20 years), Equipment, furniture and similar assets (3-10 years). The depreciation method, expected useful life and any residual value are reviewed annually. Investment property Schibsted has two properties classified as investment properties as at The properties are a separable and unused property reserve in Stavanger with a carrying amount of NOK 63 million and a commercial building in Farsund with a book value of NOK 4 million. Valuations from real estate agents are obtained and the fair values as at are not expected to deviate significantly from the carrying amount. Lease agreements Property, plant and equipment include assets owned under financial lease agreements. These assets have a cost of NOK 23 million in 2014 and NOK 23 million in 2013, and a carrying amount of NOK 7 million in 2014 and NOK 9 million in Depreciation amounts to NOK 2 million for 2014 and NOK 2 million for Schibsted has lease obligations related to off-balance sheet operating assets, mainly office buildings. Rental expenses were NOK 474 million in 2014 and NOK 401 million in 2013 (restated). The most significant leases relate to the leases of Aftenposten s premises at Biskop Gunnerus gate 14A in Oslo (the agreement expires in 2019), Schibsted Sverige s premises in Västra Järnvägsgatan 21 in Stockholm (the agreement expires 2020), VG s premises at Akersgata 55 (the agreement expires in 2023) and Schibsted Norge s premises in Sandakerveien 121 (the agreement expires in 2025). The most significant of the Group s leases contains a right to an extension. SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Future minimum payments under non-cancellable operational leases where Schibsted is the lessee are as follows: 2014 Restated 2013 Within one year Between one and five years 1,637 1,455 More than five years 1,061 1,146 NOK 22 million is recognised as sublease payments related to the Group s operating leases in 2014 and NOK 20 million in Expected future minimum lease payments for non-cancellable subleases are NOK 136 million as at and NOK 6 million as at Schibsted s rental income related to operating leases for office premises was NOK 14 million in 2014 and NOK 17 million in Future minimum payments under non-cancellable operating leases where Schibsted is the lessor are as follows: Within one year 6 13 Between one and five years 7 10 More than five years SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 13 INVESTMENTS IN JOINT VENTURES AND ASSOCIATED COMPANIES All investments held by Schibsted in joint arrangements are classified as joint ventures. All joint ventures and associated companies are accounted for using the equity method. The development in carrying amount of investments in joint ventures and associated companies is as follows: Restated Associated Associated Joint ventures companies Total Joint ventures companies Total Carrying amount 1.1 (4) Additions Diluted capital increase Disposals (1) - (1) (10) (9) (19) Transition to / from subsidiary (4) (10) (14) (75) (22) (97) Transition to / from joint venture / associated companies (1) 1 - (165) Share of profit or loss (649) (192) (841) (136) 13 (123) Share of other comprehensive income - (42) (42) Gain (loss) (6) (6) Impairment loss (130) (130) Dividends received - (36) (36) (3) (56) (59) Translation differences (16) 6 (10) Other changes (9) 10 1 Carrying amount (17) (4) Of which presented in Investments in joint ventures and associated companies Of which presented in Other current liabilities (90) - (90) (99) - (99) Of which presented as a reduction of Other non-current assets (19) - (19) (10) - (10) Additions comprise mainly share of capital increases in joint ventures with losses. Losses recognised in excess of the investment in ordinary shares are applied to other long-term interests such as long term receivables that, in substance, form part of the net investment in that joint venture or associated company. After the net interest is reduced to zero, additional losses are provided for, and a provision recognised, to the extent that legal or constructive obligations are incurred on behalf of the joint venture or associated company. 122 B 62

200 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP The carrying amount of investments in joint ventures and associated companies comprise the following investments: Restated Associated Associated companies Interest held Joint ventures companies Interest held Joint ventures SnT Classifieds 50% (90) - 50% (99) - 20 Minutes France 50% 31-50% 32 - SCM Austria 50% (4) - 50% (2) - Hasznaltauto % 67 - SCM Switzerland 50% (15) - 50% (8) - SCM Morocco 50% Polaris Media ASA 29% % Search Pte. Ltd % % Pret d'union 18.30% % - 40 TT Nyhetsbyrån 30% % - 40 Finderly GmbH 49.99% % - 19 Metro Nordic Sweden AB 35% % - 20 Other investments Carrying amount (17) 455 (4) 549 Schibsted operates its investments in online classifieds marketplaces through subsidiaries, joint ventures and associates. SnT is a joint venture with operating marketplaces in Brazil, Chile, Bangladesh, Pakistan and Thailand. SnT s operations in Argentina were sold in August Minutes France is a joint venture that operates mediahouse with free newspaper in France. Polaris is a Norwegian media group that operates local and regional media houses. 701 is an associated company operating marketplaces in Malaysia, the Phillippines, Indonesia and Vietnam. Pret d Union is an associated company operating peer to peer lending market in Continental Europe. TT Nyhetsbyrån is an associated company operating within news and pictures in Sweden. Finderly GmbH (Shpock) is an associated company operating mobil marketplaces in Germany and UK. Metro Nordic Sweden AB is an associated company operating free daily newspaper in Sweden. 123 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP The following table sets forth summarised financial information for material joint ventures as at : SnT Other Total Interest held % Income statement and statement of comprehensive income: Revenue 63 Depreciation and amortisation (2) Interest income 4 Interest expense (34) Taxes - Profit or loss (1,202) Other comprehensive income - Total comprehensive income (1,202) Share of Profit or loss (601) (48) (649) Share of other comprehensive income - Share of total comprehensive income (601) (48) (649) Dividends received - Balance sheet: Cash and cash equivalents 59 Other current assets 173 Non current assets 96 Current financial liabilities (excluding trade payables) 430 Other current liabilities 60 Non-current financial liabilities (excluding trade payables) 43 Other non-current liabilities - Net assets (205) Share of net assets (103) Goodwill 13 Carrying amount (90) 73 (17) Fair value (if there is a quoted market) n/a 124 The following table sets forth summarised financial information for material joint ventures as at : 701 Search SnT Pte Ltd Other Total Interest held % 33% Income statement and statement of comprehensive income: Revenue 6 41 Depreciation and amortisation - (2) Interest income - - Interest expense - - Taxes - - Profit or loss (65) (176) Other comprehensive income - - Total comprehensive income (65) (176) Share of Profit or loss (33) (88) (15) (136) Share of other comprehensive income - - Share of total comprehensive income (33) (88) (15) (136) Dividends received - - Balance sheet: Cash and cash equivalents 3 - Other current assets 71 - Non current assets 12 - Current financial liabilities ( excluding trade payables) Other current liabilities 13 - Non-current financial liabilities (excluding trade payables) 21 - Other non-current liabilities - - Net assets (219) - Share of net assets (109) - Goodwill 10 - Carrying amount (99) - 95 (4) Fair value (if there is a quoted market) n/a n/a 701 Search Pte. Ltd transitioned from joint venture (50% interest) to associate company (33% interest) in December The first 11 months of 2013 are therefore reported in table for joint ventures. The last month of 2013 is reported in the table for associated companies. B 63

201 The following table sets forth summarised financial information for material associated companies as at : 701 Search Polaris Pte Ltd Media ASA Other Total Interest held % 29% Income statement and statement of comprehensive income: Revenue 59 1,659 Profit or loss (523) 107 Other comprehensive income - (100) Total comprehensive income (523) 7 Share of Profit or loss (174) 31 (49) (192) Share of other comprehensive income - (29) (13) (42) Share of total comprehensive income (174) 2 (62) (234) Dividends received - (25) (11) (36) Balance sheet: Curent assets Non current assets 12 1,165 Current liabilities Non-current liabilities Net assets Share of net assets Goodwill - 63 Carrying amount Fair value (if there is a quoted market) n/a 298 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP The following table sets forth summarised financial information for material associated companies as at : 701 Search Polaris Pte Ltd Media ASA Other Total Interest held % 29% Income statement and statement of comprehensive income: Revenue 4 1,745 Profit or loss (36) 48 Other comprehensive income - - Total comprehensive income (36) 48 Share of Profit or loss (12) Share of other comprehensive income - - Share of total comprehensive income (12) Dividends received - (25) (31) (56) Balance sheet: Curent assets Non current assets 16 1,176 Current liabilities Non-current liabilities Net assets Share of net assets Goodwill - 64 Carrying amount Fair value (if there is a quoted market) n/a SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 14 FINANCIAL ASSETS The development in carrying amount of investments categorised as financial assets available for sale is as follows: 2014 Restated 2013 As at Additions - 2 Disposals due to loss of control of subsidiary - (4) As at Of which non-current financial assets Of which current financial assets - - Financial assets consist of: 2014 Restated 2013 Shares unlisted Total financial assets NOTE 15 OTHER NON- CURRENT ASSETS Other non-current assets consist of: 2014 Restated 2013 Loans to joint ventures and associated companies Prepaid expenses 6 5 Other receivables Total There are no significant differences between the fair value and the carrying value of loans to joint ventures and associated companies and other receivables as the interest calculation is based on a market rate. 126 NOTE 16 INVENTORIES Inventories consist of: 2014 Restated 2013 Books and other inventories Newsprint purchased Total There was no write-down of inventories to net realisable value in 2014 or Inventories carried at fair value less costs of sales were NOK 29 million as at and NOK 28 million as at NOTE 17 TRADE AND OTHER RECEIVABLES Trade receivables and other receivables consist of: 2014 Restated 2013 Trade receivables 1,836 1,865 Less provision for impairment of trade receivables (73) (85) Trade receivables (net) 1,763 1,780 Prepaid expenses and accrued revenue Income tax receivables Loans to joint ventures and associated companies Financial assets at fair value through profit or loss (note 10) - 2 Other receivables Total 2,797 2,514 The carrying amount of trade and other receivables is considered to represent a reasonable approximation of fair value. Schibsted has received claims from Swedish tax authorities for repayment of value added tax for previous years of SEK 295 million. The basis for those claims is a decision in the EU-court in 2010 stating that certain printing services shall have a VAT-rate of 6%, not 25%. Two verdicts in The Supreme Administrative Court in Sweden issued 26 February 2014 related to similar cases, implies that the Swedish tax authorities will be entitled to claim repayment of value added taxes for previous years provided that Schibsted will be able to have similar amounts refunded from the supplier of printing services. Schibsted is of the opinion that the Group s financial exposure is very limited. In the 2014 financial B 64

202 statements the repayment of SEK 295 million is recognized as asset in other receivables and the similar amount is recognized in other liabilities, see note 24 Other current liabilities. The maximum exposure to credit risk at the reporting date for trade and other receivables is the carrying value of the receivables. In some group entities credit insurance and other agreements are obtained. Carrying value of trade receivables with security is NOK 138 million as at Movements in the Group s provision for impairment of trade receivables are as follows: 2014 Restated 2013 As at 1.1 (85) (80) Provision for impairment (36) (37) Receivables written off as uncollectible Unused amounts reversed Disposal on sale of group companies - 2 Translation differences (3) 1 As at (73) (85) As at trade receivables of NOK 88 million were impaired. The amount of the provision was NOK 73 million. As at trade receivables of NOK 121 million were impaired and the provision was NOK 85 million. The aging of impaired trade receivables is as follows: 2014 Restated 2013 Not due* Up to 45 days 8 23 More than 45 days Total * Also includes provisions not individualised As at trade receivables of NOK 597 million were past due but not impaired, compared to NOK 512 million as at These receivables relate to a number of independent customers in different locations. The aging of the past due, not impaired trade receivables, is as follows: 2014 Restated 2013 Up to 45 days More than 45 days Total SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 18 CASH AND CASH EQUIVALENTS 2014 Restated 2013 Cash and cash equivalents 745 1,202 The carrying amounts of the Group s cash and cash equivalents are denominated in the following currencies: 2014 Restated 2013 NOK SEK EUR Other Total 745 1,202 Carrying amount of cash and bank deposits is considered to represent a reasonable approximation of fair value. Schibsted has a multi-currency cash pool with Danske Bank in which almost all the Nordic subsidiaries are included. The cash pool has been established to optimise liquidity management for Schibsted. The Group has an overdraft facility under the cash pool system of NOK 400 million. At the end of 2014 this facility was not drawn. Excess liquidity is mainly placed in the cash pool or in the short-term money market. The bank deposits of subsidiaries outside the Nordic countries are deposited at local banks. The deposit and borrowing interest rates in Danske Bank are based on Ibor rates for each currency with a subtraction or addition of a margin. The Ibor rates are fixed daily in the market. A cross-currency netting of margins is established for the currencies in the cash pool. Other bank deposits are credited interests based on the bank s daily deposit rates in each country. Of the Group s cash and cash equivalents, NOK 18 million are considered to be restricted as at Payroll withholding tax is not included in restricted cash as the Group has provided a tax guarantee instead. 127 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 19 NUMBER OF SHARES The development in share capital and other paid-in equity is set out in the Consolidated statement of changes in equity. The development in the number of issued and outstanding shares is as follows: Number of shares Number of shares Outstanding Treasury shares Issued Outstanding Treasury shares Issued As at ,348, , ,003, ,104, , ,003,615 Decrease in treasury shares 72,857 (72,857) - 244,080 (244,080) - As at ,421, , ,003, ,348, , ,003,615 The Group s share capital consists of 108,003,615 shares of NOK 1 par value. No shareholder may own or vote at a shareholders meeting for more than 30% of the shares. The Annual Shareholders Meeting has given the Board authorisation to acquire treasury shares up to 10,800,361 shares (10%). The authorisation was renewed at the Annual Shareholders Meeting on 7 May 2014 for a period until the Annual Shareholders Meeting in At the Annual Shareholders Meeting on 8 May 2015 the Board will present a resolution to extend the authorisation for the Board to purchase and dispose of up to 10% of the share capital in Schibsted ASA according to the Norwegian public limited liability companies act under the conditions evident from the notice of the Annual Shareholders Meeting. In connection with exercise of share options under an earlier option programme for key employees, Schibsted has during 2014 sold 4,211 treasury shares for a total consideration of NOK 0.2 million. Schibsted has in April and June 2014 transferred a total of 45,112 treasury shares to key managers in connection with a performance-based share purchase programme. Fair value of treasury shares transfered were NOK 6.6 million. In 2014, 23,534 treasury shares were sold in connection with offers to the Group s employees to purchase shares. The total consideration was NOK 7.8 million. In connection with exercise of share options under an earlier option programme for key employees, Schibsted has during 2013 sold 131,880 treasury shares for a total consideration of NOK 19 million. Schibsted has in May and June 2013 transferred a total of 100,363 treasury shares at NOK to key managers in connection with a performance-based share purchase programme. Total value consideration was NOK 25 million. In December 2013, 11,837 treasury shares at NOK were sold in connection with an offer to the Group s employees to purchase shares at a discounted price of NOK The total consideration was NOK 4 million. As at Schibsted held 582,218 treasury shares. During the first quarter of 2015 the company has reduced its number of treasury shares by 10,902 in connection with the Employee saving plan. The holding as at 24 March 2015 was 571,316 shares B 65

203 NOTE 20 DIVIDENDS At Schibsted s Annual Shareholders Meeting on 8 May 2015 a dividend of NOK 3.50 per share will be proposed (total NOK 376 million). No provision for this dividend has been recognised in the Group s balance sheet as at In 2014 dividends of NOK 3.50 per share were paid (total NOK 376 million). NOTE 21 PENSION PLANS Schibsted has occupational pension plans in several countries established partly as defined benefit plans (in Norway), partly as multi-employer defined benefit plans accounted for as defined contribution plans (in Norway and Sweden) and partly as defined contribution plans (in Norway, Sweden and other countries). Schibsted has its occupational pension plans for its employees in Norwegian companies with Storebrand Livsforsikring AS. These pension plans meet the requirements of the Act on Mandatory occupational pensions applicable to Norwegian companies. Schibsted is entitled to make changes to those pension plans. A significant part of the existing funded defined benefit plans are closed. The terms of the funded defined benefit plans are mainly uniform. The benefits are mainly dependent upon number of years of employment, salary level at retirement age and the amount of benefits from the National Insurance pension. The majority of the funded defined benefit plans comprise retirement pension for life from 67 years and full retirement pension amounts to approximately 66% of the basis (limited to 12G (the social security base amount)) including assumed pension from the National Insurance pension (based on calculated National Insurance pension). Some of the plans include spouse pension, child pension and disability pension. As at the funded defined benefit plans in Norway covered approximately 1,700 working members and approximately 1,850 retirees. Estimated contributions in 2015 to the above mentioned funded defined benefit plans amount to approximately 130 million. Future contributions will be dependent on the accumulation period for each member s pension rights according to the principle of linear accumulation. The terms related to contributions to defined contribution plans in Norway are mainly uniform, and for most companies the contribution amounts to 5% of salaries within the interval from 1G to 6G and 8% in the interval from 6G to 12G. The plans include disability pension. In addition to the pension obligations that arises from the funded defined benefit plans, the Group s Norwegian companies have unfunded defined benefit obligations related to disability pensions (if not covered by other pension plans or insurances), supplementary pensions for salaries above 12G, Agreementbased pension (AFP) and early retirement pensions. SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP The Group s companies outside Norway have pension plans, mainly defined contribution plans, in accordance with local practice and local legislation. The Group has certain pension schemes in Norway and Sweden established in multi-employer plans. These multi-employer plans are defined benefit plans, but the Group does not have access to the necessary information for the accounting years 2014 and 2013 required to account for these plans as defined benefit plans, and the plans are therefore accounted for as defined contribution plans. The amounts recognised in profit or loss and in comprehensive income are as follows: Restated Current service cost Past service cost and gains and losses arising from settlements Net interest on the net defined benefit liability (asset) Remeasurements of the net defined benefit liability Net pension expense defined benefit plans Pension expense defined contribution plans Pension expense multi-employer defined benefit plans accounted for as defined contribution plans Net pension expense 1, Of which included in Profit or loss Personnel expenses (note 27) Of which included in Profit or loss Other income and expenses Of which included in Profit or loss Financial expenses (note 29) Of which included in Other comprehensive income Remeasurements of defined pension liabilities Past service cost comprise restructuring costs in the form of pensions as well as the effect of plan amendments. The amounts recognised in the balance sheet are as follows: Present value of funded defined benefit obligations 4,044 3,305 Fair value of plan assets (3,176) (3,054) Present value of unfunded defined benefit obligations 1, Net pension liability 1,911 1,114 The average duration of the defined benefit plan obligation at the end of the reporting period is 27 years. 129 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Changes in net pension liability, present value of defined benefit obligations and plan assets are as follows: Net pension Defined benefit Net pension Defined benefit liability obligations Plan assets liability obligations Plan assets As at 1.1 1,114 4,168 3, ,856 2,947 Current service cost (1) Past service cost and gains and losses arising from settlements (5) Interest income and expense Remeasurements (36) Contributions to the plan (85) 3 88 (147) Payments from the plan (82) (199) (117) (84) (198) (114) Business combinations and disposals (10) (10) - Social security costs (24) (24) - (22) (22) - As at ,911 5,087 3,176 1,114 4,168 3,054 Contributions to the plan includes NOK 3 million (NOK 4 million) of contributions from plan participants. Remeasurements of defined benefit pension obligations include: Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions Other remeasurements (experience adjustments) (107) (188) Remeasurements of defined benefit pension obligations Remeasurements of fair value of plan assets include: Return on plan assets, excluding amounts included in interest Cost of managing plan assets (17) (13) Other remeasurements (experience adjustments) (44) (101) Remeasurements of fair value of plan assets 25 (36) The fair value of plan assets is disaggregated by class as follows: Quoted in active Quoted in active 2014 markets Unquoted 2013 markets Unquoted Global equities 5.2% 100% % 100% - Norwegian equities 1.5% 100% - 2.0% 100% - Private equity 2.6% - 100% 3.3% - 100% Alternative investments 2.5% - 100% 3.1% - 100% Real estate 8.7% - 100% 11.3% - 100% Bonds 10.6% 95% 5% 4.2% 95% 5% Corporate bonds 24.0% 80% 20% 39.8% 80% 20% Bonds loans & receivables 45.9% 80% 20% Money market / other (1.0%) 100% % 100% - Total 100.0% 100.0% The actual return on plan assets (value-adjusted return on relevant portfolio of assets) was approximately 6.6% in 2014 and approximately 5.3% in B 66

204 The plan assets were transferred to a new portfolio as per 1 January The risk profiles of the portfolios are similar but the new portfolio has a different allocation between classes of interest-bearing investments. Significant actuarial assumptions used to determine the present value of the defined benefit obligation is as follows: Discount rate 2.30% 4.10% Future salary increases 2.75% 3.75% Future increase in the social security base amount 2.50% 3.50% Future pension increases 0.00% 0.60% Schibsted determines the discount rate by reference to high quality corporate bonds. Schibsted has concluded that a deep market exists for covered bonds ( OMF-obligasjoner ) in Norway and that this interest rate therefore shall be used as reference under IAS 19 Employee benefits. The assumption regarding expected pension increases is used for pensions being increased in accordance with the Act on Company pensions. For pension agreements containing specific clauses on increases in pension, those clauses are applied. Changes in financial assumptions in 2014 resulted in an increase in defined benefit pension liabilities of NOK 936 million which is recognised in Other comprehensive inccome as a component of the net amount of NOK 804 million in the line item Remeasurements of defined benefit pension liabilities. Following recent years declining mortality rate and rising life expectancy in Norway, a new mortality table for collective pension insurance was made public in 2013 and Schibsted implemented the new table (K2013) in The resulting increase in defined benefit pension liabilities of NOK 426 million was recognised in Other comprehensive income as a component of the net amount of NOK 300 million in the line item Remeasurements of defined benefit pension liabilities. SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Sensitivity analysis, indicating increase (decrease) in present value of defined benefit pension liabilities, for significant actuarial assumptions is as follows: Discount rate increase 0,5 percentage points (394) (299) Discount rate decrease 0,5 percentage points Future salary increases increase 0,5 percentage points Future salary increases decrease 0,5 percentage points (224) (172) Future increase in social security base amount increase 0,5 percentage points (108) (82) Future increase in social security base amount decrease 0,5 percentage points Future pension increases increase 0,5 percentage points Future pension increases decrease 0,5 percentage points (34) (216) Any increases or decreases in present value of defined benefit pension liabilities from changes in actuarial assumptions are recognised in other comprehensive income. 131 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 22 INTEREST-BEARING BORROWINGS The Group has the following composition and maturity structure on its interest-bearing borrowings: Current Non-current 2014 Restated Bond issues 400-1,800 1,600 Bank loans Financial lease agreements Other loans Total ,132 1,971 Maturity within 3 months Maturity between 3 months and 1 year Maturity between 1 and 2 years Maturity between 2 and 5 years Maturity beyond 5 years - - 1, Total ,143 1,975 Schibsted has issued two bonds with fixed interests, but due to interest rate swap agreements almost all of the Group s non-current interest-bearing borrowings are at floating interest rates in practice. For information on interest rate risk, see note 9 Financial risk management. The interest rate periods relating to the Group s borrowings are between one and six months. Schibsted has a loan portfolio with a diversified maturity profile. For the portfolio of bonds and floating rate notes, there is a difference of NOK (142) million between the book value and the market value (based on tax value as at ). This is partly compensated by existing interest rate swap agreements, see note 9 Financial risk management. The current terms of the Group s other interest-bearing borrowings as at have been reviewed and compared to the market pricing at year-end, and the carrying amount is considered to represent a reasonable approximation to fair value. Carrying amount in NOK million of interest-bearing borrowings breaks down as follows by currency: 2014 Restated 2013 NOK 2,330 1,785 EUR Other Total 2,828 2,317 In the second quarter, Schibsted ASA issued a floating rate note of NOK 600 million and the total amount of bonds and floating rate notes issued are NOK 2,200 million as at : 132 Loan Amount Interest rate ISIN NO ( ) 400 FRN: Nibor 3 months bps ISIN NO ( ) 500 FRN: Nibor 3 months bps ISIN NO ( ) % ISIN NO ( ) % ISIN NO ( ) 150 FRN: Nibor 3 months bps ISIN NO ( ) 600 FRN: Nibor 3 months bps The bonds with fixed interest rate, and the floating rate note maturing in 2022 have been swapped to floating interest rate, Nibor 6 months with addition of a margin. In addition, cross currency swap agreements have been entered into to match the payments of some of the bonds and floating rate notes, see note 9 Financial risk management. The Group has a bank loan of EUR 25 million. This loan was entered into in January 2011 and expires in January There are no installments before maturity date. The interest terms on the loan are based on Euribor with the addition of a margin. The Group has a bank loan of NOK 121 million. The loan has a term of 12 years from 2007 and the interest terms are six month Nibor with the addition of a margin. The loan has a repayment schedule with installments twice a year. The Group has a short-term bank loan with maturity in January The loan amounted to EUR 30 million as at A new long-term revolving credit facility of EUR 300 million was signed in July. The facility has a term of five year plus two extension options each of one year. Final maturity will therefore be in 2019, 2020 or The new facility replaced a facility of EUR 325 million and at the end of 2014 Schibsted has two long-term revolving credit facilities of in total EUR 425 million. None of the facilities were drawn as of year-end For both facilities the lenders consists of seven Nordic and international banks. The facilities have interest terms based on Euribor with the addition of a margin. Schibsted must pay a commitment fee to maintain the facilities availability. The commitment fee is calculated as a percentage of the loan margin, on the undrawn part of the facilities. As at , Schibsted has available long-term revolving credit facilities totalling NOK 3,841 million through the unutilised drawing right on the loan facilities of in total EUR 425 million. Schibsted s loan agreements contain financial covenants regarding the ratio of net interest-bearing debt (NIBD) to gross operating profit (EBITDA). The reported ratio was well within the financial covenants as at See note 9 Financial risk management Liquidity risk. The Group has provided guarantees of NOK 7 million. The Group has no mortgage debt. B 67

205 NOTE 23 OTHER NON-CURRENT LIABILITIES Other non-current liabilities consist of: 2014 Restated 2013 Financial liabilities related to noncontrolling interests' put options (note 25) Financial derivatives (note 10) Contingent considerations business combinations (note 25) Other non-current employment benefits Provision for restructuring costs Provision for other obligations Other non-current liabilities Total other non-current liabilities SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 24 OTHER CURRENT LIABILITIES Other current liabilities consist of: 2014 Restated 2013 Financial liabilities related to noncontrolling interests' put options (note 25) Contingent considerations business combinations (note 25) 25 - Trade payables Prepaid revenues Public duties payable Accrued salaries and other current employment benefits Accrued expenses Provision for restructuring costs Other liabilities Total other current liabilities 4,324 3,926 The Group has no other significant liabilities with an uncertain payment date. Provision for restructruing costs as at is pertaining to accrued restructuring cost in the Scandinavian companies. Schibsted has received claims from Swedish tax authorities for repayment of value added tax for previous years of SEK 295 million. The basis for those claims is a decision in the EU-court in 2010 stating that certain printing services shall have a VAT-rate of 6%, not 25%. Two verdicts in The Supreme Administrative Court in Sweden issued 26 February 2014 related to similar cases, implies that the Swedish tax authorities will be entitled to claim repayment of value added taxes for previous years provided that Schibsted will be able to have similar amounts refunded from the supplier of printing services. Schibsted is of the opinion that the Group s financial exposure is very limited. In the 2014 financial statements the repayment of SEK 295 million is recognized as liability in other liabilities and the similar amount is recognized in other receivables, see note 17 Trade and other receivables. 133 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 25 FINANCIAL LIABILITIES BUSINESS COMBINATIONS AND INCREASES IN OWNERSHIP INTERESTS Development in financial liabilities recognised related to non- controlling interests put options and contingent considerations in business combinations is as follows: Non-controlling Contingent interests put options considerations As at Additions Settlement (206) (598) - (79) Disposals Change in fair value recognised in equity (13) (148) - - Change in fair value recognised in profit or loss - - (59) - Interest expenses Translation differences As at Of which non-current (note 23) Of which current (note 24) The maturity profile of the financial liabilities is as follows: Non-controlling Contingent interests put options considerations Maturity within 1 year Maturity between 1 and 2 years Maturity between 2 and 5 years When non-controlling interests have put options related to shares in subsidiaries and Schibsted is required to acquire such shares, a financial liability is recognised. Any liability resulting from a contingent consideration arrangement in a business combination is recognised as a financial liability as part of the consideration transferred in exchange for the acquiree. The liabilities are measured at fair value which is based on the best estimate of future considerations. The estimates take into account the principles for determination of the consideration in the existing agreements. The estimates take further into account, when relevant, management s expectations regarding future economic development used in determining recoverable amount in impairment tests. A liability related to non-controlling interests put options is initially recognised directly in equity. Change in fair value of the liability, except for interest expenses, is also recognised directly in equity. In the consolidated statement of changes in equity, such amounts are included in the line item Changes in ownership of subsidiaries that do not result in loss of control. 134 Changes in the fair value of a liability related to contingent consideration arrangements are recognised in profit or loss. The most significant liabilities related to non-controlling interests put options as at are related to shareholdings in Schibsted Classified Media Spain S.L (Online classifieds) and Lets Deal AB (Schibsted Sverige media house). Liabilities related to contingent consideration arrangements recognised as at are mainly related to the acquisition of Compricer AB (Schibsted Sverige media house). NOTE 26 RAW MATERIALS AND FINISHED GOODS Raw materials and finished goods consist of: 2014 Restated 2013 Newsprint, raw materials and purchased goods TV / Film production expenses - 71 Changes in inventories 5 (65) Total B 68

206 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 27 PERSONNEL EXPENSES AND SHARE-BASED PAYMENT Personnel expenses consist of: 2014 Restated 2013 Salaries and wages 4,082 3,936 Social security costs Net pension expense (note 21) Share-based payment Other personnel expenses Total 5,564 5,314 Number of man-years 6,946 6,573 Details of salary, variable pay and other benefits provided to group management in 2014 (in NOK 1,000): Salary incl. LTI programme Members of Group management: holiday pay Variable pay (earned 2014) Other benefits Pension expense Loan outstanding Rolv Erik Ryssdal 3,388 1,332 3, ,925 - Trond Berger 2,692 1,134 2, , Frode Eilertsen 2, , Raoul Grünthal 3, , Camilla Jarlsby 1, , Didrik Munch 2, , ,089 - Lena K. Samuelsson 2, Terje Seljeseth 2,654 1,111 2, , Loans to group management have no installments, and the interest rate is 1% lower than the government set benchmark interest rate. Details of salary, variable pay and other benefits provided to group management in 2013 (in NOK 1,000): Salary incl. LTI programme Members of Group management: holiday pay Variable pay (earned 2013) Other benefits Pension expense Loan outstanding Rolv Erik Ryssdal 3,318 1,102 4, ,748 - Trond Berger 2, , , Frode Eilertsen 1, Raoul Grünthal 3, , Camilla Jarlsby 1, , Didrik Munch 2, , ,050 - Lena K. Samuelsson 3, Terje Seljeseth 2,582 1,037 1, , Sverre Munck 2,488-1, ,130 - Gunnar Strömblad 1, Loans to group management have no installments, and the interest rate is 1% lower than the government set benchmark interest rate. Sverre Munck was resigned from the group management 1 September Gunnar Strömblad was resigned from the group management 31 March Variable pay Schibsted s CEO and other executive management participate in an annual variable pay programme that is linked to annual achievements of targets. The targets 135 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP are twofold and related to financial and non-financial targets. The criteria are part of a total evaluation. For the CEO the variable pay is limited to a maximum of six months salary. For other executive management, the variable portion of salary varies from a maximum of three to six months salary. The CEO and other executive directors also participate in Schibsted s threeyear performance based share programme (LTI), linked to the three-year performance criteria. Termination payment schemes The CEO has termination payment equal to eighteen months salary in addition to the six-month period of notice. The other Group management and managers are normally entitled to termination payments equal to 6-18 months salary, depending on the level of their position. Competition restrictions and curtailments will normally apply during the termination-pay period. The Chairman of the Board has no special remuneration scheme that applies if he resigns. Pension schemes The Group s CEO is entitled and, if Schibsted so requires, obliged to retire at the age of 62. His full annual early retirement pension is 66% of his pensionable earnings. The retirement pension solution means that, when he reaches 67 years of age, the CEO will receive a retirement pension for life which equals 66% of his fixed salary. He is entitled to a disability pension of 66% of his fixed salary. The spouse/cohabitant pension is 50% of his fixed salary and the child pension is 15% of his fixed salary. The Norwegian executive directors are entitled and, if Schibsted so requires, obliged to retire at the age of 62 years. During the period leading up to the ordinary retirement age (67 years), they will receive a pension that is 66% of their fixed salary. Full annual retirement/disability pension for the Norwegian executive directors is 66% of their fixed salary. Other members of the group management have different pension schemes within the limit of benefits to the Norwegian executive directors. The executive directors based in Sweden have a defined benefit pension insurance on level with the Norwegian executive directors. 136 B 69

207 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Remuneration to the Board of Directors in 2014 (in NOK 1,000): Board remuneration from Board Commitee other group Salary incl. Other Pension Total remuneration* remuneration companies holiday pay benefits cost remuneration Members of the Board and Committees: Ole Jacob Sunde, chairman of the Board and the Compensation Committee Eva Berneke, member of the Board and the Audit Committee Tanya Cordrey, member of the Board from Arnaud de Puyfontaine, member of the Board and the Audit Committee from Christian Ringnes, member of the Board and the Audit Committee, chairman of the Audit Committee from Birger Steen, member of the Board from Eugénie van Wiechen, member of the Board and member of the Compensation Committee from Karl-Christian Agerup, member of the Board until and member of the Compensation Committee until Marie Ehrling, member of the Board until and Chairman of the Audit Committee until Anne-Lise Mørch von der Fehr, employee representative of the Board ** ,412 Jonas Fröberg, employee representative of the Board and member of the Compensation Committee ** ,019 Gunnar Kagge, employee representative of the Board ** ,182 Torbjörn Harald Ek, deputy employee representative of the Board ** Finn Våga, deputy employee representative of the Board ** , ,099 John A. Rein, chairman of the Election Committee Nils Bastiansen, member of the Election Committee Gunn Wærsted, member of the Election Committee Total 4, , ,524 * Board remunerations include compensation for travelling hours to directors who do not live in Oslo. ** For employee representatives total remuneration includes salary and other benefits in their ordinary position. Auditor Fees to the Group s auditors for the fiscal year 2014 were as follows: Audit Other attestation Tax advisory Other non-audit (NOK 1,000 excl. VAT) services services services services Total Schibsted group Ernst & Young 12, ,034 3,886 18,958 Other auditors ,302 Total 13, ,512 4,688 21,260 Schibsted ASA Ernst & Young 1, , SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Share-based payment (included in personnel expenses) consists of: Expense LTI programme Of which is equity settled Of which is cash settled Option programme Until 2010, Schibsted had an option programme for group management and key personnel. The programme was terminated in 2010 by the introduction of a new share-based programme (LTI programme), but the individual outstanding option schemes are still valid. The programme is accounted for as a share-based payment transaction settled in equity. Expenses and increase in equity are recognised over the service period of 3 and 4 years. The development in the number of options outstanding has been as follows: Outstanding , ,500 Exercised (16,377) (90,701) Expired and forfeited (43,623) (51,799) Outstanding ,000 Of which fully vested - 60,000 Total exercise price for options exercised in 2014 was NOK 1 million (NOK 12 million). Fair value of the shares at the time of exercise was NOK 7 million (NOK 28 million). Options outstanding for managers included in the option programme are presented below: Opening Expired and Closing balance Exercised forfeited balance Average maturity Rolv Erik Ryssdal 30,000 (8,189) (21,811) - - Trond Berger 15,000 (4,094) (10,906) - - Raoul Grünthal 7,500 (2,047) (5,453) - - Camilla Jarlsby 7,500 (2,047) (5,453) - - Total 60,000 (16,377) (43,623) - - Long-term incentive programme (LTI programme) In 2010, Schibsted introduced an annual rolling three-year performancebased share programme (LTI programme) for key managers in the Group. The programme was expanded in 2012 to include Online classified companies and management groups. The scheme includes a total of 91 participants in the 2012 programme, 100 participants in the 2013 programme and 119 participants in the 2014 programme. The LTI programme is divided into four participating levels. Level 1 is for the CEO, level 2 for members of Group Management and level 3 and level 4 for key personnel in the Group, as well as the managers/management groups in key subsidiaries. For each level, participants are given a defined Basic Amount which is calculated as a percentage of salary. The Group Board has stipulated guidelines for the percentage to be allocated to the various participant levels in 138 order to ensure flexibility and mobility, while also taking into account individual pay differences and variations in the compensation schemes. Between 11% and 33% of the Basic amount (the Share Amount ) is awarded at start in form of shares in Schibsted which cannot be sold during the three-year period. If a participant at level 1 or 2 leaves during the three years, the Share Amount shall be refunded. A similar restriction does not apply to participants in level 3 and level 4. The rest, i.e. between 67% and 89% of the Basic amount ( Performance Amount ), is linked to three-year performance criteria. Performance criteria is performance measures that are compared to the three-year EBITA/EBITDA for the Group or participant s operations for level 1, 2 and 3. For level 4 the performance criteria is connected to the development of the market value of the companies during the vesting period compared to a predetermined hurdle. At the end of the three-year period, the participants receive settlement in Schibsted shares based on their goal achievement, and the number of shares is calculated based on the average price during the programme s three-year period. Level 1, 2 and 3 participants receive the full Performance Amount after three years. Level 4 participants receive 1/3 of the Performance Amount after three years and the remaining 2/3 after a one year lock-up period. The maximum settlement in each programme will depend on the target achievement during the period. If the minimum target is not achieved during the three-year period, only the Share Amount will be paid at the end of the three-year programme. Upon payment of the Share Amount and Performance Amount, Schibsted is responsible for tax deduction on behalf of the participant so that only the net amount after tax is paid in Schibsted shares. The programme is therefore treated partly as a share-based payment transactions settled in cash (tax) and partly as share-based payment transactions settled in equity (net payment in form of shares). The expense related to the portion that is recognised as a share-based payment transaction settled in equity is recognised in equity, while the expense related to the portion that is treated as a share-based payment transaction settled in cash is recognised as a liability. The expense and the increase in equity or liability are recognised over the vesting period of 3 or 4 years for the parts of the total compensation that contains a service condition throughout the three or four-year period. This applies to the Performance Amount and the part of Share Amount for level 1 and 2 that is recognised as a share-based payment transactions settled in equity. The remaining expense and increase in equity or liability are recognised immediately upon the start of the programme. Performance Amounts will vary based on the degree of achievement of the performance criteria. Expenses to be recognised over the vesting period are estimated at the end of each reporting period based on the estimated fair value of the liability for transactions that are settled in cash and based on the number of equity instruments that is expected to vest for transactions settled in equity. B 70

208 Estimated total expense of the LTI programme s maturity (3 and 4 years): Programme Programme Programme Value Share Amount at grant date Value Performance Amount at grant date Adjustment to Performance Amount (4) (1) 4 Estimated total expense over the programme's maturity Programme Programme Programme Total Recognised in Personnel expense in Recognised in Personnel expense in Recognised in Personnel expense in To be recognised over the remaining vesting period In case a minimum performance target is reached, the estimated total expense for Performance Amount will be increased or decreased in a range of 50 percent. If not, the Performance Amount will be NOK 0. Assumptions used for calculating the value of the LTI programme: Programme Programme Programme Dividends Closing price used for bonus shares level 1, 2, 3 and 4 granted Closing price used for bonus shares level 4 granted Average price of the programme Closing price Risk-free interest rate 1.47% 1.28% 1.70% Model Monte Carlo Monte Carlo Monte Carlo Share programme Employees in the Group are given the opportunity four times a year to participate in the Employee Share Saving Plan (ESSP). The plan is to enable employees to take part in Schibsted s value creation by saving in the Schibsted share. All employees in a 50% employment position (or more) employed in a Schibsted majority owned company are eligible to participate. The employee can save up to 5 percent, but a maximum of NOK 50,000 annually of their base gross salary through payroll deductions in order to purchase shares in Schibsted. The shares are bought quarterly on the employees behalf at market price. Employees can freely sell their shares but will then give up the right to matching shares. After two years from the date of purchase, the employee will receive 1 free Schibsted share for every 2 Schibsted shares the employee have saved (matching shares). SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 28 OTHER OPERATING EXPENSES Other operating expenses consist of: 2014 Restated 2013 Distribution 1,020 1,053 Commissions Rent, maintenance, office expenses and energy PR, advertising and campaigns 1,367 1,607 Printing contracts Editorial material Professional fees Travelling expenses IT expenses Other operating expenses Total 6,774 6,929 NOTE 29 FINANCIAL ITEMS Financial income and financial expenses consist of: 2014 Restated 2013 Interest income Gain on sale of financial assets available for sale 5 3 Dividends received - 1 Other financial income - 1 Total financial income Interest expenses (144) (163) Net foreign exchange loss (10) (44) Impairment loss financial assets available for sale - (3) Other financial expenses (20) (26) Total financial expenses (174) (236) 139 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Net foreign exchange loss consists of: Net foreign exchange gain (loss) currency derivatives (108) (4) Net foreign exchange gain (loss) other financial instruments 98 (40) Net foreign exchange loss (10) (44) Interest expenses includes NOK 34 million (NOK 25 million) related to pension liabilities, see note 21 Pension plans. Schibsted hedges its currency exposure in SEK and EUR by using loans and derivatives, see note 9 Financial risk management. As a result of this, foreign exchange gain (loss) effects in the income statement will normally be limited. Net foreign exchange losses in 2014 and 2013 are primarily related to currency effects in the Group s businesses outside the eurozone. Financial income and financial expenses include the following amounts of interest income and interest expenses related to financial assets and liabilities that are not included in the category financial assets or financial liabilities at fair value through profit or loss: 2014 Restated 2013 Interest income Interest expenses (144) (163) NOTE 30 TAXES The Group s income tax expense comprises the following: 2014 Restated 2013 Current income taxes Deferred income taxes (295) (273) Taxes Of which recognised in profit or loss Of which recognised in other comprehensive income (224) (121) The Group s effective tax rate differs from the nominal tax rate in countries where the Group has operations. The relationship between tax expense and accounting profit (loss) before taxes is as follows: Restated 2013 Profit (loss) before taxes 382 1,490 Estimated tax expense based on nominal tax rate in Norway Tax effect share of profit (loss) of joint ventures and associated companies Tax effect impairment loss goodwill 1 - Tax effect impairment loss investments in associated companies - 36 Tax effect gain from remeasurement of previously held equity interest in business combination achieved in stages (11) (1) Tax effect other permanent differences 11 (226) Change in unrecognised deferred tax assets Effect of tax rate differential abroad 29 (3) Effect of changes in tax rates - 5 Effect of adjustments recognised related to prior periods 3 (7) Taxes recognised in profit or loss Permanent differences include, in addition to non-deductible operating expenses, tax-free dividends and gains (losses) on sale of shares as well as non-deductible impairment losses related to shares. Gain (loss) on sale of subsidiaries, joint ventures and associated companies are recognised in the line item other income and expenses, while gain (loss) on sale and impairment losses of financial assets available for sale are recognised in the line item financial income and expenses, respectively. The Group s net deferred tax liabilities (assets) are made up as follows: 2014 Restated 2013 Current items (84) (56) Pension liabilities (496) (292) Other non-current items 1,138 1,183 Unused tax losses (814) (646) Calculated net deferred tax liabilities (assets) (256) 189 Unrecognised deferred tax assets Net deferred tax liabilities (assets) recognised Of which deferred tax liabilities Of which deferred tax assets (413) (117) The Group s unused tax losses are related to operations in Norway, Sweden, Spain, Mexico and Brazil as well as other countries in which Schibsted Classified Media has established online classified operations. The majority of the tax losses can be carried forward for an unlimited period. Approximately 30% of the unused tax losses expire in the period until B 71

209 The development in the recognised net deferred tax liabilities (assets) is as follows: 2014 Restated 2013 As at Change included in tax expenses (295) (273) Change from purchase and sale of subsidiaries 7 13 Translation differences As at Deferred tax assets are recognised when it is likely that the benefit can be realised through expected future taxable profits. The Group s deferred tax assets recognised are mainly related to operations in Norway and Spain. The Group s unrecognised deferred tax assets are mainly related to foreign operations with recent tax losses where future taxable profits may not be available before unused tax losses expire. Deferred tax liabilities and assets are offset for liabilities and assets in companies which are included in local tax groups. NOTE 31 EARNINGS PER SHARE Average number of shares outstanding (diluted) is calculated as follows: Average number of shares outstanding 107,388, ,273,587 Adjustment for dilutive effect shares outstanding 10,590 54,623 Average number of shares outstanding (diluted) 107,399, ,328,210 The dilutive effect is calculated as the difference between the number of shares which can be acquired on exercise of outstanding options and the number of shares which could be acquired at fair value (calculated as the average price of the Schibsted share in the period) for the consideration which is to be paid for the shares which can be acquired based on outstanding options. Earnings per share is calculated as profit (loss) attributable to owners of the parent divided by the average number of shares outstanding Restated 2013 Profit (loss) attributable to owners of the parent (180) 1,011 Average number of shares outstanding 107,388, ,273,587 Earnings per share (NOK) (1.67) 9.43 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Diluted earnings per share is calculated as profit (loss) attributable to owners of the parent divided by the average number of shares outstanding, adjusted for the dilutive effect of all potential shares Restated 2013 Profit (loss) attributable to owners of the parent (180) 1,011 Average number of shares outstanding (diluted) 107,399, ,328,210 Diluted earnings per share (NOK) (1.67) 9.42 Earnings per share - adjusted is calculated as profit (loss) attributable to owners of the parent adjusted for items reported in the income statement as Other income and expenses and Impairment loss, adjusted for taxes and noncontrolling interests. The number of shares included in the calculation is the same as the number for earnings per share and diluted earnings per share, as described above Restated 2013 Profit (loss) attributable to owners of the parent (180) 1,011 Other income and expenses (8) (644) Impairment loss Tax and non-controlling effect of Other income and expenses and Impairment loss (100) (99) Profit (loss) attributable to owners of the parent adjusted (157) 418 Average number of shares outstanding 107,388, ,273,587 Earnings per share adjusted (NOK) (1.46) 3.90 Average number of shares outstanding (diluted) 107,399, ,328,210 Diluted earnings per share adjusted (NOK) (1.46) SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 32 SUPPLEMENTAL INFORMATION TO THE CONSOLIDATED STATEMENT OF CASH FLOWS Interest and dividends included in the consolidated statement of cash flows are as follows: 2014 Restated 2013 Cash flow from operating activities: Interest paid (92) (107) Interest received (note 29) Dividends received (note 13 and 29) Cash flow from financing activities: Dividends paid to owners of the parent (376) (375) Dividends paid to non-controlling interests (133) (58) Schibsted s consolidated statement of cash flows presents net payments and receipts on the acquisition and sale of subsidiaries. The liquidity effect of acquisitions consists of: 2014 Restated 2013 Cash in acquired companies Acquisition cost other current assets 5 35 Acquisition cost non-current assets 1, Aggregate acquisition cost assets 1, Equity and liabilities assumed (19) (72) Contingent consideration paid - 79 Contingent consideration deferred (2) (166) Gross purchase price 1, Fair value of previously held equity interest (note 5) (120) (22) Cash in acquired companies (23) (37) Purchase price settled in other than cash and cash equivalents (463) - Acquisition of subsidiaries, net of cash acquired The liquidity effect of sales consists of: 2014 Restated 2013 Cash in sold companies 9 59 Carrying amount other current assets Carrying amount non-current assets Aggregate carrying amount assets Equity and liabilities transferred (11) (156) Gain (loss) Gross sales price Cash in sold companies (9) (59) Proceeds from sale of subsidiaries, net of cash sold NOTE 33 TRANSACTIONS WITH RELATED PARTIES For remuneration to management, see note 27 Personnel expenses and sharebased payment. Schibsted has relationships with joint ventures and associated companies, see note 13 Investments in joint ventures and associated companies. For loans to associated companies and joint ventures, see note 15 Other non-current assets and note 17 Trade and other receivables. Christian Ringnes, member of the Board and the Audit Committee, controls the company from which Schibsted s subsidiary Eesti Meedia hires offices in Tallinn. In September 2013, Schibsted sold Eesti Meedia. The office rental amounted to NOK 5 million in the period prior to the sale in B 72

210 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 34 SUBSIDIARIES The following subsidiaries were directly and indirectly owned as at : Online classifieds Location Finn.no AS Oslo 89.88% 89.88% Bilanalyse AS * Oslo % Byttestrøm.no AS * Oslo % Eiendomsprofil AS Bergen 40.58% 40.58% Finn Eiendom AS Oslo 79.56% 79.56% Finn SMB AS Oslo 89.88% 89.88% Lendo AS Oslo 89.88% 95.95% Penger.no AS Oslo 89.88% 92.92% Personal Finance AS Oslo 89.88% - Sentinel Software AS Trondheim 78.23% 78.23% Schibsted Classified Media AS Oslo % % Anuntis Chile, S.A. Santiago de Chile 99.99% 99.99% Anuntis Segundamano España SL * Barcelona % ASM Classificados de México SA de CV Mexico City % % Bikhir IP AB Stockholm % - Blocket AB Stockholm % % Blocket Wäxt AB Stockholm % % Byt Bil Nordic AB Stockholm % % CustoJusto Unipessoal, Lda Lisbon % % DoneDeal Ltd Wexford 90.10% 50.09% Dotadv S.r.l Rome % - Editora Balcão Ltda Rio de Janeiro 99.99% 99.99% Editora Urbana Ltda Bogotá % % Használtautó Informatikai Kft *** Budapest % - Hebdo Mag Brazil Holdings BV Amsterdam % % Hebdo Mag Brazil Holdings Ltda Rio de Janeiro 99.99% 99.99% Infobras Spain S.L Barcelona 76.23% 76.23% Infojobs Brasil Atividades de Internet Ltda (previously Anuntis Brasil Actividades de Internet Ltda) Sao Paulo 76.23% 76.23% InfoJobs Italia S.r.l Milan 74.00% 72.89% InfoJobs S.A. * Barcelona % IT Competence Center S.L * Barcelona % Kapaza BV Amsterdam % % Kapaza! Belgium NV Brussels % % LBC France, SASU Paris % % OOO Schibsted Classified Media (previously Schibsted Classified Media LLC) Minsk % % Primerama S.L. * Barcelona % Schibsted Classified Media Hungary Kft Budapest % % Schibsted Classified Media Ireland Ltd Dublin % % Schibsted Classified Media Morocco SARL ** Casablanca % Schibsted Classified Media NV Amsterdam % % Schibsted Classified Media Spain SL (previously Schibsted España S.L.) Barcelona 90.00% % 143 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Schibsted Développement SASU Paris % % Schibsted France SASU Paris % % Schibsted Ibérica S.L Madrid % % SCM Growth Partner AB Stockholm % % SCM Hellas MEPE Athens % % SCM Local, SASU Paris % % SCM Northern Europe AB Stockholm % % SCM Servizi S.r.l. Milan % - SCM Suomi Oy Helsinki % % SCM Ventures AB Stockholm % % SCM Ventures BV Amsterdam % % Sibmedia Interactive S.R.L. Sibiu 95.00% 95.00% StepStone AB * Stockholm % Subito.it S.r.l Milan % % Tripwell Sweden AB Stockholm % % Schibsted Norge media house Location Schibsted Norge AS Bergen % % Aftenposten AS Oslo % % Aftenposten Mobil AS Oslo % % AS Farsund Aktiebogtrykkeri Farsund 86.20% 86.20% Askøyværingen AS Askøy % % Avisprodukter AS Bergen % Avisretur AS Oslo 50.10% 50.10% Bergens Ringen DA Bergen % Bergens Tidende AS Bergen % % BT Adrift1 AS Bergen % % BetaVest AS (previously BT Beta AS) Bergen % % BT Respons AS Bergen % Bydelsavisene Bergen AS ** Bergen % Bygdanytt AS Bergen % % Distribution Innovation AS Oslo 60.00% 60.00% Duplo Media AS Horten 70.00% 70.00% E24 Dine Penger AS Oslo % % Ebok.no AS Oslo 97.57% 97.57% Fanaposten AS ** Bergen % Forlaget Strilen AS Lindås % % Fædrelandsvennen AS Kristiansand % % Husleie.no AS Lillehammer 57.76% - Ilaks AS Godvik 51.00% - Janaflaten 24 AS Stavanger % % Katapult Bøker AS Oslo % % Kickback AS Oslo 57.57% - Kristiansand Avis AS Kristiansand % % Let's Deal AS Oslo 74.20% 74.20% Lindesnes AS Mandal % % Lokalavisene AS Bergen % % Lyderhorn Bydelsavis AS ** Bergen % Media AS Kristiansand % % 144 B 73

211 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Mittanbud.no AS Oslo % % Nykirkebakken 2 AS Stavanger % Offshore.no AS Bergen % % Radio Sør AS Kristiansand % % Riks AS Oslo % % Schibsted Distribusjon AS Oslo % % Schibsted Distribusjon Vest AS Sandnes % % Schibsted Distribusjon Øst AS Oslo % % Schibsted Eiendom Vest AS Stavanger % % Schibsted Forlag AS Oslo % % Schibsted Förlag AB Helsingborg % % Schibsted Magasiner AS Oslo % % Schibsted Norge Annonseproduksjon AS Kristiansand % % Schibsted Norge Kundesenter AS Fagernes % % Schibsted Norge Salg AS Oslo % % Schibsted Tech Polska sp z.o.o Krakow % % Schibsted Trykk AS Oslo % % Schibsted Trykk Bergen AS Godvik % % Schibsted Trykk Flesland AS Bergen % % Schibsted Trykk Kristiansand AS Kristiansand % % Schibsted Trykk Oslo AS Oslo % % Schibsted Trykk Stavanger AS Sandnes % % Schibsted Vekst AS Oslo 95.95% 95.95% Schibsted Vekst Holding AS (previously Schibsted Vekst Hylleselskap 1 AS) Oslo 95.95% 95.95% Stavanger Aftenblad AS Stavanger % % Stokkamyrveien 30 AS Stavanger % % Strandgaten og Eilertsbakken Eiendomsselskap AS Farsund 86.20% 86.20% Sydvesten Lokalavis AS ** Bergen % Søgne og Songdalen Budstikke AS Søgne 97.14% 97.14% Sørlandssamkjøringen AS Mandal 62.00% 62.00% Trafikkfondet AS Oslo % % TV Sør AS Kristiansand % % Tyggo AS * Oslo % Verdens Gang AS Oslo % % Vestnytt AS Fjell % % VG Mobil AS * Oslo % VGTV AS Oslo % % WoldCam AS Stavanger % Kaupang Konferanser AS (previously WR Start Up 62 AS) Bergen 50.00% 50.00% Åsane Tidende AS ** Bergen % Schibsted Sverige media house Location Schibsted Sverige AB Stockholm % % A Perfect Guide Sales Scandinavia AB Stockholm 84.50% 84.50% A Perfect Guide Scandinavia AB Stockholm 84.50% 84.50% Aftonbladet Hierta AB Stockholm 91.00% 91.00% Aftonbladet Kolportage AB * Stockholm % Allt om Stockholm AB Stockholm % - Beauty The You Way AB (previously The You Way AB) Stockholm 91.00% 91.00% 145 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Bokavård Sverige AB Stockholm 51.00% - Compricer AB Stockholm % % Destinationpunktse AB Stockholm % E24 Näringsliv AB * Stockholm % European Factoring Exchange AB Stockholm 74.97% - FlexiDrive Sverige AB Stockholm 80.00% 80.00% HB Svenska Dagbladets AB & Co Stockholm 99.41% 99.41% Hittapunktse AB Stockholm 90.20% 90.20% Klart Vädertjänster AB Stockholm % % Kundkraft i Sverige AB Stockholm % % Lendo AB Stockholm 98.50% 98.50% Lendo OY Helsinki 98.50% - Lets deal AB Stockholm 51.55% 51.55% Mediateam Bemanning AB Stockholm 51.00% 51.00% Mini Media Sweden AB Stockholm 51.00% 51.00% Mobilio Sweden AB Stockholm 85.00% 85.00% Omnipunktse AB Stockholm % % Personal Finance Sverige AB Stockholm % % PGME Sverige AB Stockholm % % Plan 3 AB Stockholm % 99.41% Pricespy Ireland Ltd Dublin % - PriceSpy Media Ltd Manukau % 98.00% Prisjakt Norge AB Stockholm % 98.00% Prisjakt Polen Sp z.o.o Krakow % 98.00% Prisjakt Sverige AB Ängelholm % 98.00% Rörlig Bild Sverige AB * Stockholm % Sandrew Metronome AB * Stockholm % Schibsted Centralen AB Stockholm % % Schibsted Media AB Stockholm % % Schibsted Personal Finance Bolån AB Stockholm % % Schibsted Sales and Inventory AB (previously Schibsted Sales AB) Stockholm % % Schibsted Sök AB * Stockholm % Schibsted Tillväxtmedier AB Stockholm % % Schibsted Tillväxtmedier Annonsförsäljning AB Stockholm % % Schibsted TM AB Stockholm % % Schibsted TM II AB Stockholm % % ServiceFinder Sverige AB Stockholm 69.95% 69.95% Suredo AB Stockholm 98.50% 98.50% Svenska Dagbladet Annons AB Stockholm 99.41% 99.41% Svenska Dagbladet Holding AB Stockholm 99.41% 99.41% Svenska Dagbladets AB Stockholm 99.41% 99.41% TVNU Sweden AB Stockholm % % Viktklubbpunktse AB Stockholm % - Media Houses International Location Min Holding AG Zurich % % 20 Min International B.V. Rotterdam % % 20 Minutos España, S.L. Madrid % % Carrie & Serena S.L. * Madrid % Grupo 20 Minutos S.L. Madrid % 99.87% 146 B 74

212 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP Other Location Streaming Media AS Oslo 74.62% 72.82% Aspiro AB Malmö 56.67% 55.30% Aspiro AS Oslo 56.67% 55.30% Aspiro Innovation AB Malmö 56.67% 55.30% Aspiro Søk AS Oslo 56.67% 55.30% Aspiro TV AS Oslo 56.67% 55.30% RADR Entertainment AB Stockholm 56.67% 55.30% Rubberduck Media Lab Inc Carlsbad 56.67% 55.30% SMS Opplysningen 1985 AS Oslo 56.67% 55.30% SMS Opplysningen 2100 AS Oslo 56.67% 55.30% TIDAL International AB Malmö 56.67% - TIDAL US AB Malmö 56.67% - WiMP Music AB Malmö 56.67% 55.30% WiMP Music ApS (previously WiMP ApS) Copenhagen 56.67% 55.30% WiMP Music AS Oslo 56.67% 55.30% WiMP Music GmbH Berlin 56.67% 55.30% WiMP Music SP. Z O.O. Warsaw 56.67% 55.30% WiMP Norway AS Oslo 56.67% 55.30% Tesked AB Varberg 97.98% 97.98% Mötesplatsen i Norden AB Varberg 97.98% 97.98% E24 International AB Stockholm % % Schibsted AG Berlin % % Schibsted Movie AS * Oslo % Schibsted Multimedia AS Oslo % % Schibsted Print Media AS Oslo % % Headquarters Location Schibsted Eiendom AS Oslo % % Schibsted epayment AS Oslo % - Schibsted Finans AS * Oslo % Schibsted IT AS Oslo % % Schibsted Media Group UK Ltd London % - Schibsted Payment AS Oslo % % * Merged with other companies in Schibsted group. ** From subsidiary to joint venture. *** From joint venture to subsidiary. 147 SCHIBSTED ANNUAL REPORT 2014 NOTES / GROUP NOTE 35 NON-CONTROLLING INTERESTS Non-controlling interests (NCI) are related to the following subsidiaries: Non- Profit (loss) Non- Profit (loss) controlling attributable Accumulated Dividends controlling attributable Accumulated Dividends Location interest (%) to NCI NCI paid to NCI interest (%) to NCI NCI paid to NCI Finn Group Oslo 10.12% % Aftonbladet Hierta Group Stockholm 9.00% % Streaming Media Group Oslo 25.38% (26) % (39) 48 - Lets Deal AB Stockholm 48.45% % Other (10) (13) 23 8 Total Summarized financial information for subsidiaries with material non-controlling interests (NCI) are as followed: Finn Group Cash and cash equivalents 736 1,170 Other current assets Non-current assets excluding goodwill Goodwill Total assets 1,354 1,839 Current liabilities Non-current liabilities Total liabilities Operating revenues 1,446 1,406 Gross operating profit (loss) Profit (loss) Comprehensive income Net cash flow from operating activities Net cash flow from investing activities (147) (51) Net cash flow from financing activities (794) (280) Net increase (decrease) in cash and cash equivalents (434) B 75

213 SCHIBSTED ANNUAL REPORT 2014 FINANCIAL STATEMENTS / ASA SCHIBSTED ASA INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note Operating revenues Personnel expenses 4 (152) (145) Depreciation and amortisation 5 (4) (2) Other operating expenses 6 (165) (124) Operating profit (loss) (250) (222) Financial income 7 1,021 3,721 Financial expenses 7 (386) (612) Net financial items 635 3,109 Profit (loss) before taxes 385 2,887 Taxes 8 9 (83) Profit (loss) 394 2, SCHIBSTED ANNUAL REPORT 2014 FINANCIAL STATEMENTS / ASA SCHIBSTED ASA BALANCE SHEET AS AT 31 DECEMBER (NOK million) Note ASSETS Deferred tax assets Property, plant and equipment and licences Investments in subsidiaries 9 15,607 14,975 Investments in associated companies 9 1,541 1,541 Investments in other shares Other non-current assets 10 5,849 1,604 Non-current assets 23,127 18,198 Current assets ,279 Cash and cash equivalents Current assets 602 1,286 Total assets 23,729 19,484 EQUITY AND LIABILITIES Share capital Treasury shares (1) (1) Other paid-in capital 1,447 1,432 Retained earnings 10,191 9,848 Equity 13 11,745 11,387 Pension liabilities Other non-current liabilities 15 3,396 2,795 Non-current liabilities 3,645 2,998 Current liabilities 15 8,339 5,099 Total equity and liabilities 23,729 19,484 Oslo, 24 March 2015 Schibsted ASA s Board of Directors Ole Jacob Sunde Chairman of the Board Birger Steen Arnaud de Puyfontaine Tanya Cordrey Christian Ringnes Eva Berneke Anne Lise von der Fehr Gunnar Kagge Jonas Fröberg Eugénie Van Wiechen Rolv Erik Ryssdal CEO 150 B 76

214 SCHIBSTED ANNUAL REPORT 2014 FINANCIAL STATEMENTS / ASA SCHIBSTED ASA STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note CASH FLOW FROM OPERATING ACTIVITIES Profit (loss) before taxes 385 2,887 Tax payable - (6) Depreciation and amortisation Impairment loss on shares Gain on sale of non-current assets - (6) Share-based payment (6) (3) Group contributions included in financial income 7 (247) (917) Change in current assets (1,322) (16) Change in current liabilities (5,128) 757 Difference between pension cost and cash flow related to pension plans 11 8 Change in other accruals - 1 Net cash flow from operating activities (6,225) 3,227 CASH FLOW FROM INVESTING ACTIVITIES Purchase of intangible assets and property, plant and equipment 5 (4) (7) Change in non-current assets 10 4, Acquisition of subsidiaries - (10,350) Sale of shares - 9 Net cash flow from investing activities 4,462 (10,047) CASH FLOW FROM FINANCING ACTIVITIES Change in non-current interest-bearing borrowings 15 (2) (301) Change in current interest-bearing borrowings ,292 Change in non-current accruals on obligations 1 1 Group contributions received (net) Dividends paid 13 (376) (375) Purchase / sale of treasury shares Net cash flow from financing activities 1,320 6,814 Merger effect Net increase (decrease) in cash and cash equivalents 157 (6) Cash and cash equivalents as at Cash and cash equivalents as at SCHIBSTED ANNUAL REPORT 2014 NOTES / ASA TABLE OF CONTENTS NOTES TO THE SCHIBSTED ASA FINANCIAL STATEMENTS 2014 All amounts are in NOK million unless otherwise stated NOTE 1: ACCOUNTING POLICIES NOTE 2: MERGER NOTE 3: OPERATING REVENUES NOTE 4: PERSONNEL EXPENSES AND MAN-YEARS NOTE 5: PROPERTY, PLANT AND EQUIPMENT AND LICENCES NOTE 6: OTHER OPERATING EXPENSES NOTE 7: FINANCIAL ITEMS NOTE 8: TAXES NOTE 9: INVESTMENTS IN SHARES NOTE 10: NON-CURRENT AND CURRENT ASSETS NOTE 11: CASH AND CASH EQUIVALENTS NOTE 12: SHAREHOLDER STRUCTURE NOTE 13: EQUITY NOTE 14: PENSION PLANS NOTE 15: NON-CURRENT AND CURRENT LIABILITIES NOTE 16: GUARANTEES AND PROVISIONS OF SECURITY 152 B 77

215 NOTE 1 ACCOUNTING POLICIES The financial statements of Schibsted ASA have been prepared in accordance with the provisions of the Norwegian Accounting Act and Generally Accepted Accounting Principles in Norway. Revenue recognition Operating revenues are recognised when the goods are delivered or the service rendered. Classification Assets and liabilities related to the normal operating cycle are classified as current assets and current liabilities. Receivables and liabilities not related to the normal operating cycle are classified as current if they are of a shortterm nature, normally due within one year. Shares and other investments not intended for continued use or ownership are classified as current assets. Other assets and liabilities are classified as non-current. Shares Shares are measured at cost and impairment loss is recognised if the carrying amount exceeds the recoverable amount. The impairment is reversed if the basis for the write-down is no longer present. Group contributions received are included in financial income provided that the Group contribution received does not represent a repayment of capital invested. Group contributions that represent a repayment of capital invested are accounted for as a reduction in the cost of investments in subsidiaries. Net Group contributions payable (gross Group contributions less the associated tax effect) are included in the cost of investments in subsidiaries. Dividends from subsidiaries and associated companies are included in financial income. Gain on intra-group sales of subsidiaries, in excess of retained earnings of the subsidiaries sold, is recognised as deferred income and classified as noncurrent liabilities. Property, plant and equipment and intangible assets Property, plant and equipment and intangible assets are measured at cost less accumulated depreciation, amortisation and impairment. Property, plant and equipment and intangible assets with limited economic lives are depreciated over the expected economic life. An impairment loss is recognised if the carrying amount exceeds the recoverable amount. The recoverable amount is the higher of net sales value and the present value of future cash flows expected to be generated. Impairment losses are reversed if the basis for the impairment is no longer present. Leases Leases are classified as either finance leases or as operating leases. Leases that transfers substantially all the risks and rewards incidental to the asset are classified as finance leases. Other leases are classified as operating leases. When Schibsted ASA is lessee in a finance lease, the leased asset and the liability related to the lease are recognised in the balance sheet. Depreciable leased assets SCHIBSTED ANNUAL REPORT 2014 NOTES / ASA are depreciated systematically over the useful life of the asset. Lease payments are apportioned between interest expense and reduction of the liability. Lease payments related to operating leases are recognised as expenses over the lease term. Foreign currency Foreign currency monetary items are translated at the closing rate at the date of the balance sheet. Foreign currency gains and losses are reported in the income statement in the lines Financial income and Financial expenses respectively. Trade receivables Trade receivables are measured at fair value including allowance for bad debt. Treasury shares The cost of acquisition and proceeds from sale of treasury shares are offset against equity. Pension expense - Defined benefit plans Schibsted ASA has chosen, in accordance with NRS 6, to use measurment and P&L classification rules according to IAS 19R Employee Benefits. Pension liabilities related to defined benefit plans are measured at the net present value of future pension benefits earned at the balance sheet date. Plan assets are measured at fair value. As a result of the application of IAS 19R, the periods net interest expense is now calculated by applying the discount rate for the liability at beginning of period to the net liability. Net interest expense consists therefore of interest on the obligation and return on assets, both calculated using the discount rate. Changes in net pension obligation as a result of premium payments and pension payments are taken into account. The difference between the actual and the recorded return on plan assets are recogniced with final effect directly as other equity. Current service cost and net interest income (expense) are recogniced immediately. Current service cost is classified as payroll expenses in the income statement, while net interest income (expenses) are classified as financial items. Changes in value, both assets and liabilities are recorded with final effect directly as other equity. Gains and losses on the curtailment or settlement of a defined benefit plan are recognised at the time the curtailment or settlement occurs. A curtailment occurs when a company adopts a significant reduction in the number of employees covered by a plan or changes the terms of a defined bene fit plan such that a significant part of future earnings to current employees will no longer qualify for benefits, or will qualify only for reduced benefits. Introduction of a new benefit plan or an improvement of the current plan will involve changes in the obligation. This is expensed on a straight line basis over the period until the effect of the change is retained. The introduction of new systems or changes to existing plans that have retroactive effect so that employees immediately have earned a paid-up policy (or change in paid-up policy) are recogniced immediately. 153 SCHIBSTED ANNUAL REPORT 2014 NOTES / ASA Gains or losses on the curtailment or settlement of pension plans are recognized when they occur. Pension expense - Defined contribution plans For pension plans as defined as contribution plans, for accounting purposes, the contribution payable is recogniced as pension cost. Share-based payment In equity settled share-based payment transactions with employees, the fair value of the employee services and the corresponding equity increase are measured by reference to the fair value of the equity instruments granted. The fair value of equity instruments granted is measured at grant date, and recognised as personnel expenses and equity increase immediately or over the vesting period when performance vesting conditions require an employee to serve over a specified time period. The estimated number of equity instruments expected to vest are remeasured at each reporting date. The amount recognised as an expense is adjusted to reflect the number of equity instruments which are expected to be, or actually become vested. In cash settled share-based payment transactions with employees, the employee services and the incurred liability are measured at the fair value of the liability. The employee services and the liability are recognised immediately or over the vesting period when performance vesting conditions require an employee to serve over a specified time period. Until the liability is settled, the fair value of the liability is revised at each balance sheet date and at settlement date, with changes in fair value recognised in profit or loss. Restructuring costs Restructuring costs are recognised in accordance with the matching principle and therefore expenses not related to revenues in future periods are charged to expense when incurred. Restructuring costs are incurred when a restructuring plan is approved and announced. Taxes Income taxes are calculated from the profit (loss) before tax and comprise taxes payable and the change in deferred taxes. Deferred tax assets and liabilities are calculated in accordance with the liability method without discounting and provided for all differences between the carrying amount in the balance sheet and the tax base of assets and liabilities, and for unused tax losses. Deferred tax assets are recognised only when it is expected that the benefit can be utilised through sufficient taxable profits from expected future earnings. Contingent liabilities Contingent liabilities are recognised when it is more probable than not that the liability will become effective. The best estimate of the amount to be paid is included in other provisions in the balance sheet. Other obligations, for which no liability is recognised, are disclosed in notes to the financial statements. Dividend The dividend for the financial year, as proposed by the Board of Directors, is recognised as a liability as at Statement of cash flows The statement of cash flows is prepared using the indirect method. Cash and cash equivalents include cash, bank deposits and other monetary instruments with a maturity of less than three months at the date of purchase. 154 NOTE 2 MERGER To achieve a more rational organization of Schibsted there has, with effect from 1 January 2014, been a merger with the wholly owned subsidiary Schibsted Finans AS and the parent Schibsted ASA as the acquiring company. The merger is conducted in accordance with the Act of Allmenaksjeloven 13 24, after a joint merger plan for the merger between subsidiary and parent company. In accordance with the Act on NRS 9 point 6 the accounting of the merger is completed by the rules of group continuity. Assets and liabilities of the merged company will continue in the acquiring company with the values used in the consolidated financial statement of Schibsted. There are no differences between group values and company values. In accordance with the Act on Taxation chapter 11 ( Skatteloven ) the merger is completed by the rules of full tax continuity. By the merger effective date at 5 December 2014, Schibsted ASA acquired Schibsted Finans assets, rights and obligations as a whole without settlement, and Schibsted Finans dissolved. Total merger effect recognized in equity is NOK 345 million (Note 13 Equity). Comparative figures has not been restated. NOTE 3 OPERATING REVENUES Operating revenues consist of: Operating revenues Total Operating revenues consist of consultant fees and income from lease of office premises, as well as fees for subsidiaries participation in programmes for management and organisational development. B 78

216 NOTE 4 PERSONNEL EXPENSES AND MAN-YEARS Personnel expenses consist of: Salaries and wages Social security costs Net pension expense (note 14) Other personnel expenses 5 6 Share-based payment Total The number of man-years, including trainees, was 94 in Note 27 Personnel expenses and share-based payment to the consolidated financial statements contains further information concerning auditor s fee and remuneration to management, including share-based payment. NOTE 5 PROPERTY, PLANT AND EQUIPMENT AND LICENCES Equipment, furniture, vehicles Licences Cost as at Additions 2 2 Disposals - - Cost as at Accumulated depreciation and amortisation (11) (1) Accumulated depreciation on scrapped items - - Depreciation and amortisation for the year (3) (1) Accumulated depreciation and amortisation (14) (2) Carrying amount Depreciation method Straight line Straight line Depreciation period 3 10 years 3 5 years The depreciation and amortisation for the year include depreciation of leasehold improvements of NOK 1 million. Operating lease payments of NOK 31 million are expensed in 2014 and consist mainly of leased computer technology amounted to 6 million and leased office premises amounted to 21 million with a remaining lease term of 4,5 years with an option to extend for another 3 years and 9 months. SCHIBSTED ANNUAL REPORT 2014 NOTES / ASA NOTE 6 OTHER OPERATING EXPENSES Other operating expenses consist of: Rent and maintenance (note 5) Office and administrative expenses Professional fees Travel, meetings and marketing Total NOTE 7 FINANCIAL ITEMS Financial income consists of: Interest income Interest income group Cash-Pool (note 11) Group contributions received Dividends from subsidiaries 125 2,525 Dividends from associated companies Gain on sale of shares - 6 Foreign exchange gain (agio) 70 1 Total 1,021 3,721 Gain on sale of shares in 2013 is related to partly sale of Streaming Media AS of NOK 0.6 million and the liquidation of Scanpix AB of NOK 5.7 million. Foreign exchange relates to bank accounts. Financial expenses consist of: Interest expenses Interest expenses cash pool system (note 11) 82 - Interest expenses on pension plans (note 14) 7 5 Impairment loss on shares Foreign exchange loss (disagio) on financial derivatives Other financial expenses 21 4 Total SCHIBSTED ANNUAL REPORT 2014 NOTES / ASA Of interest expenses NOK 89 million, NOK 84 million relates to bond issues compared to NOK 83 million in The impairment losses on shares in 2014 relates to Schibsted Payment of NOK 21 million, Schibsted Eiendom AS of NOK 54 million and Schibsted IT AS of NOK 4 million. Impairment loss on shares in 2013 relates to Schibsted Print Media AS of NOK 380 million, Schibsted Movie AS of NOK 155 million and reversal of the impairment loss related to Streaming Media AS in 2012 of NOK 15 million. Other financial expenses in 2014 and 2013 relate primarily to financial instruments and bank charges. NOTE 8 TAXES Set out below is a specification of the difference between the profit before taxes and taxable income of the year: Profit (loss) before taxes 385 2,887 Dividends and tax free group contributions received (499) (3,103) Group contributions payable (87) (289) Other permanent differences Change in temporary differences Effect of changes in accounting policy and unrecognised actuarial gain (loss) in the pension liability (34) (26) Taxable income - 5 Tax rate 27% 28% Taxes payable and taxes charged to expenses are calculated as: Calculated taxes payable - 1 Change in net deferred tax asset (43) (8) Tax related to change in tax rate on deferred tax - 2 Tax related to changes in accounting policy and unrecognised actuarial gain (loss) in the pension liability 9 7 Tax related to Group contributions payable Previous years inadequate provision accrued tax 2 - Taxes (9) The net deferred tax asset consists of the following: Temporary differences related to: Property, plant and equipment (1) (2) Pension liabilities (249) (203) Other current liabilities (157) (8) Total basis for deferred tax asset (407) (213) Tax rate 27% 28% Net deferred tax liability (asset) with 27% tax, 28% tax (110) (60) The effect on Net deferred tax liability (asset) related to change in tax rate from 28% to 27% - 2 Net deferred tax liability (asset) (110) (58) Effective tax rate is a result of: Profit (loss) before taxes 385 2,887 Tax charged based on nominal rate Tax effect permanent differences (115) (727) Tax related to change in tax rate from 28% to 27% on deferred tax - 2 Previous years inadequate accrued tax 2 - Taxes (9) 83 B 79

217 SCHIBSTED ANNUAL REPORT 2014 NOTES / ASA NOTE 9 INVESTMENTS IN SHARES Carrying Carrying Ownership % amount amount Shares in subsidiaries Location Schibsted Norge AS Bergen 3,649 3,649 Schibsted Eiendom AS Oslo Schibsted Finans AS Oslo Schibsted Movie AS Oslo - 60 Schibsted Multimedia AS Oslo 11,373 10,285 Schibsted Print Media AS Oslo Schibsted Sverige AB Stockholm Schibsted IT AS Oslo - 2 Schibsted Payment AS Oslo 5 10 Streaming Media AS Oslo Total 15,607 14,975 Group contributions payable to subsidiaries, NOK 63 million (net) is capitalised as part of investments in subsidiaries. There has been a merger with the wholly owned subsidiary Schibsted Finans AS and the parent Schibsted ASA as the acquiring company. Total merger effect recognized in equity is NOK 345 million. (Note 2 Merger and note 13 Equity). Ownership % Carrying Shares in associated companies Location amount Equity Profit (loss) Finn.no AS Oslo 1, Polaris Media ASA Trondheim Svanedamsveien 10 AS Kristiansand Total 1,541 Other shares Schibsted Vekst AS Oslo 2 Schibsted Tech Polska sp. z.o.o 1.00 Krakow - Total 2 Finn.no AS and Schibsted Vekst AS are also held by other Group companies and are therefore in the consolidated financial statements note 34 presented as subsidiaries. The fair value of the shares in Polaris Media ASA is NOK 298 million as at 31 December SCHIBSTED ANNUAL REPORT 2014 NOTES / ASA NOTE 10 NON-CURRENT AND CURRENT ASSETS Non-current receivables consist of: Group companies liabilities in cash-pool (note 11) 5,836 - Other receivables from Group companies - 1,600 Other receivables 13 4 Total 5,849 1,604 Non-current receivables from Group companies in 2013 consist of loans to Schibsted Finans AS wich now is merged with Schibsted ASA. Current assets consist of: Current receivables from Group companies 390 1,260 Other receivables Total 438 1, NOTE 11 CASH AND CASH EQUIVALENTS After the merger with Schibsted Finans, Schibsted ASA has taken over the role as the ultimate parent of Schibsted multi-currency corporate cash-pool system in Danske Bank in which almost all the subsidiaries in the Nordic countries are included. The Corporate cash-pool system is established to contribute to an optimal liquidity management for Schibsted. Net assets in the cash-pool as at amounts to NOK 149 million of total bank deposits of NOK 164 million. The corporate cash-pool system implies that Schibsted ASA has a facility account in Danske Bank. Schibsted ASA is the bank s contractual customer, and it is on the facility account that receivables or liabilities (funds or overdrafts) with the bank emerges. For each company Schibsted ASA associates to the facility account, the Danske Bank create one or more retail bank accounts with the individual associated company as account holder. Facility account and retail accounts together constitute the group account system. It is a prorata responsibility related to the cash pool arrangement. Through the retail bank accounts money is transferred to/from the associated companies to/from the facility account. Each time a retail bank account receives money, it occurs in principle a claim on the owner of the facility account, and each time it is paid from a retail bank account arises debt to the owner of the facility account. Payments from retail account can only be made if it is deposited funds on the facility account. The subsidiaries withdrawals and funds at retail accounts are classified as receivables and liabilities in Schibsted ASA s balance sheet. Liabilities are classified in their entirety as current. The classification of receivables as current or non-current depends on agreement with each subsidiary. As at 31 December 2014 the receivable is long-term in its entirety. Of liability to group companies as at 31 December 2014 NOK 7 billion consists of funds in retail account (note 15), and receivables from group companies amounts to NOK 5.8 billion as withdrawals on retail account (note 10). Interest from receivables and liabilities are estimated with market terms. See note 18 Cash and Cash equivalents to the consolidated financial statements. B 80

218 NOTE 12 SHAREHOLDER STRUCTURE The 20 largest shareholders as at 31 December 2014: Number of shares Share in % Blommenholm Industrier 28,188, % Folketrygdfondet 6,740, % NWT Media AS 4,000, % Goldman Sachs & Co Equity, Security Client Segregation 3,506, % The Northern Trust company Ltd 3,000, % UBS AG, London Branch 2,656, % J.P.Morgan Chase Bank 2,602, % The Bank Of New York Mellon 2,281, % Montague Place Custody Services 2,102, % Clearstream Banking S.A 2,062, % J.P.Morgan Chase Bank 1,760, % Morgan Stanley & Co 1,736, % State Street Bank and Trust Co 1,709, % Citibank N.A 1,661, % State Street Bank and Trust Co. 1,448, % JP Morgan Clearing Co 1,417, % J.P.Morgan Chase Bank 1,376, % The Bank Of New York Mellon SA/NV 1,356, % JP Morgan Clearing Co 1,126, % The Northern Trust Co 1,059, % Total 20 largest shareholders 71,795, % The shareholderes are based on the public VPS list. For further information regarding the ownership, see the chapter Shareholder information in Schibsted s annual report. SCHIBSTED ANNUAL REPORT 2014 NOTES / ASA Number of shares owned by the Board of Directors and the Group Management: Number of shares Ole Jacob Sunde 100,000 Eva Berneke 4,020 Christian Ringnes 40,000 Anne-Lise Mørch von Der Fehr 201 Gunnar Kagge 291 Rolv Erik Ryssdal 20,154 Trond Berger 12,542 Camilla Jarlsby 12,265 Raoul Grünthal 11,738 Terje Seljeseth 9,020 Didrik Munch 7,480 Lena K. Samuelsson 5,693 Frode Eilertsen 2,217 Total Board of Directors and Group Management 225,621 The total number of issued shares in Schibsted ASA was 108,003,615 and the number of shareholders was 4,399, as at 31 December Foreign ownership was 51.56% (52.1%). Schibsted ASA owned 582,218 treasury shares at 31 December The Annual Shareholders Meeting gave the Board of Directors authorisation to acquire treasury shares up to 10,800,361 shares (10%). The authorisation was renewed at the Annual Shareholders Meeting 7 May 2014 for a period until the Annual Shareholders Meeting in At the Annual Shareholders Meeting on 8 May 2015 the Board will present a resolution to extend the authorisation to the Board of Directors for the purchase and disposal of up to 10 percent of the share capital in Schibsted ASA in accordance with the Norwegian Public Limited Liability Companies Act based on the conditions presented in the notification to the Annual Shareholders Meeting. Ole Jacob Sunde, is also member of the Board in Blommenholm Industrier. 159 SCHIBSTED ANNUAL REPORT 2014 NOTES / ASA NOTE 13 EQUITY The development in the company s equity in 2014 is as follows: Share capital Treasury Other Retained shares paid-in capital earnings Total Equity as at (1) 1,432 9,848 11,387 Merger Change in treasury shares Share-based payment (7) (6) Unrecognised actuarial gain (loss) in pension plans (25) (25) Profit (loss) Dividend (376) (376) Equity as at (1) 1,447 10,191 11,745 Schibsted ASA s share capital consists of 108,003,615 shares of NOK 1 par value. The par value of treasury shares is presented on a separate line within Other paid-in capital with a negative amount. No shareholder may own or vote at the Annual Shareholders Meeting for more than 30 percent of the shares. There has been a merger with the wholly owned subsidiary Schibsted Finans AS and the parent Schibsted ASA as the acquiring company. The merger was completed by accounting- and tax group continuity with effect from 1 January Restated figures are not calculated. Total merger effect recognized in equity is NOK 345 million (See note 2). NOTE 14 PENSION PLANS The company is obliged to have an occupational pension scheme in accordance with the Act on Mandatory Company Pensions ( Lov om obligatorisk tjenestepensjon ). The company s pension scheme meets the requirements of the Act. As at 31 December 2014 the company s pension plan had 94 members. Note 21 Pension Plans to the consolidated financial statements contains further description of the pension plans and the principal assumptions applied. Schibsted ASA has chosen, in accordance with NRS 6, to use measurment and P&L classification rules according to IAS 19R Employee Benefits. As at 1 January 2013, Schibsted ASA applied IAS 19 Employee Benefits (June 2011) ( IAS 19R ) and changed the basis for calculating the pension liability and costs. See Note 1 Accounting policies. 160 B 81

219 Amounts recognised in profit or loss: Current service cost Net interest cost on pension liabilities 7 5 Net pension expense defined benefit plans Pension expense defined contribution plans 3 3 Pension expense new pension plan (AFP) - 1 Net pension expense Pension expense recognised as Personnel expenses Pension expense recognised as Financial expenses 7 5 Amounts recognised in the balance sheet: Present value of funded defined benefit obligations Fair value of plan assets (54) (58) Present value (net of plan assets) of funded defined benefit obligations 11 5 Present value of unfunded defined benefit obligations Pension liabilities Social security tax included in present value of defined benefit obligations Changes in pension liabilities: As at Net pension expense Contributions / benefits paid (11) (12) Unrecognised actuarial gain (loss) recognised in equity (incl. tax) As at New measurment of defined benefit obligation includes: Actuarial gains and losses arising from changes in demographic assumptions - 21 Actuarial gains and losses arising from changes in financial assumptions 41 - Other effects of remeasurement ( experience deviation) (7) 1 Remeasurment of defined benefit obligations SCHIBSTED ANNUAL REPORT 2014 NOTES / ASA NOTE 15 NON-CURRENT AND CURRENT LIABILITIES Non-current liabilities consist of: Liabilities to credit institutions Bond issues 1,800 1,600 Financial derivatives 82 - Liabilities Group companies - 2 Deferred income from sale of subsidiaries 1,184 1,184 Other liabilities 10 9 Total 3,396 2,795 Current liabilities consist of: Trade creditors 2 3 Public duties payable Dividends accrued Group companies receivables in cash-pool (note 11) 7,024 - Current liabilities Group company (cash pool system) (note 11) - 3,604 Liabilities to credit institutions Bond issues Financial derivatives 52 - Financial derivatives, unrealized loss on forward contracts 6 - Accrued interest Current liabilities to Group companies 96 1,058 Taxes payable (note 8) 2 1 Other current liabilities Total 8,339 5,099 Gain on intra-group sales of subsidiaries, in excess of retained earnings of the subsidiaries sold, are recognised as deferred income (note 7 Financial items). Interest rate used on Group Companies balance on retail accounts in the Cash Pool is estimated with market terms (note 11 Cash and cash equivalents). Financial risk Funding and control of refinancing risk is handled by Group treasury on the parent company level. Schibsted has a diversified loan portfolio both in terms of loan sources and maturity profile. The most important funding sources are the Norwegian bond market and banks. For management of interest rate risk and currency risk, see note 9 Financial Risk Management and note 22 Interest-bearing Borrowings to the consolidated financial statements. 161 SCHIBSTED ANNUAL REPORT 2014 NOTES / ASA Schibsted ASA issued a floating rate note of NOK 600 million in second quarter and the total amount of bonds and floating rate notes issued are NOK 2,200 million as at : Current Non-current Interest rate ISIN NO ( ) FRN: Nibor 3 months bps ISIN NO ( ) FRN: Nibor 3 months bps ISIN NO ( ) % ISIN NO ( ) % ISIN NO ( ) FRN: Nibor 3 months bps ISIN NO ( ) FRN: Nibor 3 months bps Total Bond issues 400-1,800 1,600 Den Nordiske Investeringsbank, NOK FRN: Nibor 6 months + 50 bps Eksportfinans 5Y EUR 25 mill FRN: Nibor 3 months + 43,75 bps Skandinaviske Enskilda Bank, EUR 30 mill ,15% Total Liabilities to credit institutions As at Schibsted has the following cross country swaps (carrying amounts), which mature in : Currency NOK Current Non-current Currency payment receive liabilities liabilities Cross currency swap EUR Nibor 6 months + margin 20 - Cross currency swap EUR Nibor 3 months + margin - 28 Cross currency swap EUR Nibor 3 months + margin - 47 Cross currency swap SEK Nibor 3 months + margin 32 - Cross currency swap SEK Nibor 3 months + margin - 7 Total Derivatives The cross currency swap agreements are linked to bonds and floating rate notes and matches the payments completely during the contract period. The fair value of the agreements was NOK (136) million as at The agreements are accounted for as hedges. Unrealized loss on forward contracts is (6) million per and is presented as current liabilities. Schibsted ASA has a bank loan of EUR 25 million. This loan was entered into in January 2011 and expires in January There are no installments before maturity date. The interest terms on the loan are based on Euribor with the addition of a margin. Schibsted ASA has a bank loan of NOK 121 million. The loan has a term of 12 years from 2007 and the interest terms are six month Nibor with the addition of a margin. The loan has a repayment schedule with installments twice a year. The Group has a short term bank loan with maturity in January The loan amounted to EUR 30 million as at A new long term revolving credit facility of EUR 300 million was signed in July. The facility has a term of five year plus two extension options of one year. Final maturity will therefore be in 2019, 2020 or The new facility replaced a facility of EUR 325 million and at the end of 2014 Schibsted has two long term revolving credit facilities of totally EUR 425 million. None of the facilities were drawn as of year-end For both the facilities the lenders consists of seven Nordic and international banks. The facilities have interest terms based on Euribor with the addition of a margin. Schibsted must pay a commitment fee to maintain the facilities availability. The commitment fee is calculated as a percentage of the loan margin, on the undrawn part of the facilities. As at , Schibsted has available long-term revolving credit facilities totalling NOK 3,841 million through the unutilised drawing right on the loan facilities of totally EUR 425 million. Schibsted s loan agreements contain financial covenants regarding the ratio of net interest-bearing debt (NIBD) to gross operating profit (EBITDA). The reported ratio was well within the financial covenants as at See note 9 Financial risk management Liquidity risk to the consolidated financial statements. 162 B 82

220 NOTE 16 GUARANTEES AND PROVISIONS OF SECURITY Guarantees for loans and drawing facilities on behalf of Group companies 4,686 5,346 Other guarantees on behalf of Group companies Other guarantees 7 9 Total 4,981 5,634 NOK 0.4 billion of the total of NOK 4.7 billion of guarantees for loans and credit facilities were drawn at the end of At the end of 2013 a total of NOK 0.7 billion was drawn. A guarantee of NOK 242 million to Danske Bank is included in Other guarantees on behalf of Group companies. The amount relates to guarantees for tax withholdings and other guarantees, as well as guarantees regarding subsidiaries unsecured pension liabilities of NOK 47 million related to key management personnel. Other guarantees include a guarantee of unfunded pension liabilities of NOK 4 million. In addition NOK 0.5 million pledged as security for trading on Nord Pool and StatNett SF, as well as Guarantees related to loans to employees in the Group of NOK 2.5 million. Note 27 Personnel expenses and share-based payment in the consolidated financial statements contains further information regarding loans to members of the Group management. For significant lease agreements Schibsted ASA has issued parent company guarantee as security for payment of office rent. SCHIBSTED ANNUAL REPORT 2014 DECLARATION DECLARATION BY THE BOARD OF DIRECTORS AND CEO We confirm that, to the best of our knowledge, the financial statements for the period from 1 January to 31 December 2014 has been prepared in accordance with applicable accounting standards and gives a true and fair view of the Group and the Company s consolidated assets, liabilities, financial position and results of operations, and that the Report of the Board of directors provides a true and fair view of the development and performance of the business and the position of the Group and the Company together with a description of the key risks and uncertainty factors that they are facing. Oslo, 24 March 2015 Schibsted ASA s Board of Directors Ole Jacob Sunde Chairman of the Board Birger Steen Tanya Cordrey Eva Berneke Christian Ringnes Arnaud de Puyfontaine Eugénie Van Wiechen Gunnar Kagge Anne Lise von der Fehr Jonas Fröberg Rolv Erik Ryssdal CEO 163 SCHIBSTED ANNUAL REPORT 2014 AUDITOR S REPORT 164 B 83

221 SCHIBSTED ANNUAL REPORT 2014 AUDITOR S REPORT 165 Schibsted ASA Apotekergaten 10 PO Box 490 Sentrum NO-0105 Oslo, Norway Phone Fax schibsted@schibsted.no B 84

222 Appendix C C 1

223 Annual Report Index THIS IS SCHIBSTED MEDIA GROUP... 3 CEO... 4 KEY FIGURES... 6 BOARD OF DIRECTORS REPORT... 8 STATEMENT OF EXECUTIVE COMPENSATION SOCIAL RESPONSIBILITY CORPORATE GOVERNANCE MEMBERS OF THE BOARD THE NOMINATION COMMITTEE S REPORT SHARE INFORMATION FINANCIAL STATEMENTS / GROUP NOTES / GROUP FINANCIAL STATEMENTS / ASA NOTES / ASA AUDITOR S REPORT C 2

224 This is Schibsted Media Group Schibsted Media Group is an international media group with approximately 6,900 employees in 29 countries. Schibsted has two strategic pillars: first, we will further develop our strong media houses with the aim of creating world-class digital media houses. Second, we will grow in online classifieds through further development of established positions and through expansion into new markets. Our ambition is to achieve a global leading position in online classifieds. Almost half of our total revenues and two thirds of our EBITDA come from online platforms. Our growth within the digital business is based on close interaction between different media channels, both in our media houses and in our online classifieds businesses. This applies to developing new concepts and technologies, exchanging traffic to our sites, expertise, collecting and analyzing user data, and sales activities. ONLINE CLASSIFIEDS ESTABLISHED PHASE Finn.no (Norway) Blocket.se/Bytbil.com (Sweden) Leboncoin.fr (France) Anuntis (Spain) InfoJobs.net (Spain) Subito.it (Italy) Willhaben.at (Austria) DoneDeal.ie (Ireland) Hasznaltauto.hu (Hungary) Mudah.my (Malaysia) INVESTMENT PHASE Comprises activities in 17 countries with local offices A fundament is Schibsted s strong tradition of continuously adapting to a rapidly developing media market. We have long historical roots as a provider of independent news, information, and transparent marketplaces. These values are articulated in our mission statement: Empowering people in their daily life. MEDIA HOUSES SCHIBSTED NORGE Subscription-based media houses (Aftenposten, Bergens Tidende, Stavanger Aftenblad, Fædrelandsvennen) Single-copy sales media house (VG) Others (Schibsted Vekst, Schibsted Trykk, Schibsted Forlag) SCHIBSTED SVERIGE Subscription-based media house (Svenska Dagbladet) Single-copy sales media house (Aftonbladet) Schibsted Tillväxtmedier MEDIA HOUSES INTERNATIONAL 20 Minutes (France) 20 Minutos (Spain) Eesti Meedia (the Baltics) sold in September SCHIBSTED ANNUAL REPORT 2013 CEO Shaping our digital future now As we put 2013 behind us, we can safely say that we have taken some significant steps towards fulfilling our ambitions of becoming a global leader in online classifieds and of building world-class digital media houses. The media business is in the midst of a massive transformation from print to digital. I am therefore pleased to see that Schibsted Media Group has delivered strong financial results in Equally pleasing is the fact that we have reached several milestones in our strategy: we have managed to establish and consolidate the position of our online classifieds sites around the world and we continue the digital transition of our media houses at full speed and with a clear direction for the future. GLOBAL LEADER IN ONLINE CLASSIFIEDS sense, it is good for people, and it is good for the environment that second-hand goods can be traded easily. Blocket s survey in Sweden (in cooperation with the Swedish Environmental Research Institute) showed that Blocket has a substantial and positive environmental impact. This is something of which we are very proud. We are joining forces with Telenor in order to strengthen our efforts in South America and Asia. Schibsted and Telenor make a very good fit: we are a leading provider of online classifieds reaching around 100 million people worldwide; Telenor is one of the world s leading mobile companies already providing communication and internet services to 150 million customers in Europe and Asia. Together, we can increase our chance to succeed in these exciting markets. I am also pleased that we have acquired full ownership of Anuntis in Spain. Spain is an important country where we hold strong positions and where I think we will be well placed once the Spanish economy finally recovers. WORLD-CLASS DIGITAL MEDIA HOUSES Our media houses have played an important role in society for more than a hundred years and will continue to do so, even as our readers increasingly use our mobile and digital platforms instead of print. By November 2013 all our Scandinavian media houses Aftonbladet, VG, SvD, Our mission is Empowering people in their daily life, and by providing high quality digital marketplaces we are doing just that. Sites like Leboncoin (France), Blocket (Sweden), and Finn (Norway) are extremely popular and have become an integral part of people s daily life. Our other sites are also growing in popularity and have become market leaders in countries like Italy, Austria, and Malaysia to mention just a few. Many of our sites have grown substantially in 2013, and I hold high expectations for the future. During 2013 we invested around NOK 1 billion in establishing and building our online classified sites around the world. This work is progressing well, and we will continue with a high investment level in We do this because we believe it makes good business 4 C 3

225 Stavanger Aftenblad, Bergens Tidende, Fædrelandsvennen, and Aftenposten had implemented digital payment solutions for our quality journalism. Although their models differ slightly, we see that our customers and readers have generally responded positively to the change. There is a growing understanding that it costs money to produce quality content, and we are grateful to all our readers for following us into the digital age. We produce a considerable amount of quality content for web TV. Aftonbladet s brand new TV studio is customized for live broadcasts and direct contact with their viewers. Aftonbladet has been offering live web TV broadcasts four evenings a week and has successfully launched several new web TV shows, including the true crime series Brottcentralen. VGTV is also doing well, and its coverage of the world championship in chess was nothing short of impressive. I am more convinced than ever that web TV represents a key element in the digital media house of the future and is an area where we increase our focus. I would also like to mention Aftenposten s initiative My vote 2013, a project aimed at motivating young people to vote in the general election. Through a series of articles and in cooperation with twenty-five other newspapers, a clear message was sent: use your vote! The campaign contributed to getting more young people to vote in 2013 than for the past twenty-four years! I applaud this initiative as a good example of the media s social responsibility. The digital transition will continue to be our top priority in Many exciting projects and initiatives are in the pipeline. Although we are leading the way, we still have a long way to go. With our strong positions, strong brands, and competent people I am optimistic that we will succeed in reaching our goals. TECHNOLOGY FOCUS TO AID RELEVANCE We have already facilitated secure and easy digital login and payment solutions across the Schibsted sites, and at the start of 2014 more than two million users were registered in Schibsted Payment id (SPiD). It is important for us to know our ROLV ERIK RYSSDAL CEO SCHIBSTED MEDIA GROUP SCHIBSTED ANNUAL REPORT 2013 CEO customers better so that we can provide them with content they find relevant. We will therefore focus on advanced data analytics, an exciting area from which we have a lot to learn and gain. This is an important area for both the media houses and the classified sites, and constitutes a core building block of Schibsted s digital transformation. I am confident that we will make substantial progress in this area in the coming years. At Schibsted we have a reputation for being innovative and enterprising. The decisions we made to embrace the internet fifteen years ago by establishing Finn. no and by our early digital focus in the media houses have laid the foundation for where we are today. Consequently, the priorities we set today will shape our digital future tomorrow. Digital development will continue at a high pace, no doubt with some unexpected twists and turns along the way. I am confident that Schibsted Media Group is well equipped to take advantage of the exciting opportunities the digital transformation offers. 5 SCHIBSTED ANNUAL REPORT 2013 KEY FIGURES Key Figures (NOK million) Operating revenues 15,232 14,763 14,378 13,768 12,745 Operating expenses (13,573) (12,754) (12,232) (11,605) (11,184) Income from associated companies (67) Gross operating profit (EBITDA) 1,672 2,043 2,185 2,199 1,494 Depreciation and amortisation (490) (479) (505) (588) (662) Impairment loss (150) (548) (191) (110) (161) Other revenues and expenses 1,169 (287) (50) 1,909 (236) Operating profit 2, ,439 3, Profit (loss) before taxes 2, ,331 3, Gross operating margin (EBITDA) (%) Equity ratio (%) Net interestbearing debt/ebitda Earnings per share (NOK) Earnings per share - adjusted (NOK) Diluted earnings per share (NOK) Cashflow from operating activities per share (NOK) ONLINE CLASSIFIEDS Operating revenues 4,265 3,647 3,198 Gross operating profit (EBITDA) 862 1, Gross operating margin (EBITDA) (%) SCHIBSTED NORGE MEDIA HOUSE (Norway) Operating revenues 6,368 6,485 6,529 Gross operating profit (EBITDA) Gross operating margin (EBITDA) (%) SCHIBSTED SVERIGE MEDIA HOUSE (Sweden) Operating revenues 3,731 3,538 3,611 Gross operating profit (EBITDA) Gross operating margin (EBITDA) (%) MEDIA HOUSES INTERNATIONAL Operating revenues ,004 Gross operating profit (EBITDA) 2 (3) 38 Gross operating margin (EBITDA) (%) DEFINITIONS EBITDA margin Gross operating profit (loss) /Operating revenues Equity ratio Equity / Total assets. Earnings per share Profit (loss) attributable to owners of the parent / Average number of shares outstanding. Diluted earnings per share Profit (loss) attributable to owners of the parent / Average number of shares outstanding (diluted). Cash flow from operating activities per share Cash flow from operating activities/average number of shares outstanding. 6 C 4

226 SCHIBSTED ANNUAL REPORT 2013 SCHIBSTED MEDIA GROUP 7 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT Board Of Directors Report BREAKING DIGITAL BARRIERS The Board of Directors In front, from left: Christian Ringnes, Jonas Fröberg, Anne Lise von der Fehr, Karl-Christian Agerup, Marie Ehrling Behind, from left: Eva Berneke, Eugénie van Wiechen, Ole Jacob Sunde (Chairman of the Board), Arnaud de Puyfontaine, Gunnar Kagge If you are unable to change at the same pace as your customers, your business will soon suffer. This is particularly true in the media industry, where the pace of change is accelerating, led by rapid, technological advances and subsequent changing customer behavior and preferences. Schibsted s vision, Shaping the media of tomorrow Today, recognizes this challenge. We will not fear change; we will embrace it and make it our ally. After only 15 years, the digital transformation of the industry is still in an early phase. The Board s top priority will be to ensure that Schibsted continues to pursue its digital ambitions at full speed and strength: We will target global leadership in online classifieds We will build world-class digital media houses We will invest in the competence and capacity we need for achieving our goals In the course of 2014, after 175 years of operating its business mainly based on print products, Schibsted will break the barrier of deriving more than 50 percent of its revenues from digital. To achieve this, the Board will continue to support a high level of investment in online classifieds, with emphasis on reaching profitable positions in our current new markets. The recent partnership with Telenor will help us attain this goal. Schibsted already enjoys leadership positions in many countries. In 2014, we will invest to strengthen our existing leaders in their efforts to enhance their profitability. 8 C 5

227 In order to remain relevant to our readers, the Board considers it important that Schibsted should continue to build world-class digital media houses. We therefore support the many initiatives within digital product development, digital user payment, and quality digital journalism in our media houses and expect this development to accelerate throughout The ongoing digitalization process brings different parts of Schibsted Media Group closer together. Our business units share many common challenges which we are addressing with common solutions. One example is the successful establishment of Schibsted Payment ID (SPiD) for login and digital payment on our sites. This in turn enables us to further explore advanced data analytics as a core building block in our digital transformation. We aim to create insights from our data that will benefit our users with improved and more relevant products. In 2014, we will invest substantially in digital competence and capacity. Technological change affects and challenges all parts of our business. New technology and increasing globalization have changed our business; we no longer have the unique position previously provided by national borders and languages. Our media houses have long felt the competition from international giants like Facebook and Google in the advertisement market. This is also true when it comes to content; we have to acknowledge that quality sites like those of the BBC, the New York Times, and others are competitors that are only a few clicks away on the smartphone. Consequently, Schibsted Media Group must be globally oriented in all its business units and in all new initiatives. As change is the only constant, we strive to build an organization that absorbs continuous learning and adapts to change in a positive way. Change will come increasingly faster, at all levels, and will impact how we perform work processes, both individually and as a team. Therefore, in order to fulfill our mission of Empowering people in their daily life, we must empower our employees in their daily work. SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 9 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT HIGHLIGHTS IN 2013 In 2013, Schibsted Media Group took significant steps towards fulfilling its ambitions of becoming a global leader in online classifieds and of building world-class digital media houses. The financial results achieved in the established online classifieds operations and the media houses were solid. At the same time, a significant increase in investments has resulted in strengthened positions for online classifieds in new markets. The Group achieved operating revenues of NOK 15,232 million; an underlying growth of 2 percent. Gross operating profit (EBITDA) (excluding online classifieds in Investment phase) grew from NOK 2,573 million to NOK 2,672 million. Online share of revenues grew to 47 percent compared to 40 percent in 2012 Online share of EBITDA (excluding online classifieds Investment phase) of 76 percent, unchanged from TARGETING GLOBAL LEADERSHIP IN ONLINE CLASSIFIEDS Underlying revenue growth of 14 percent. Key markets Norway, Sweden and France remain the most important growth drivers. Continued improvements in markets like Italy, Austria, Ireland and Malaysia. Significantly increased investments in new ventures yielded strong growth in traffic and advertising volumes across the portfolio of classifieds sites in 35 countries. Underlying EBITDA (excluding Investment phase) grew by 12 percent. New online classifieds partnership with Telenor in emerging markets strengthens the Group s financial capabilities and gives access to Telenor s deep insights in emerging markets, mobile development, and consumer behavior. Bought out minority shareholder in Anuntis in Spain, and secured full operational control of some of the country s key online classifieds sites. Steps taken to regain traffic growth momentum to secure long-term market leadership. 10 C 6

228 BUILDING WORLD-CLASS DIGITAL MEDIA HOUSES The significant structural changes in the industry continued, with print advertising declining 14 percent and online advertising growing 14 percent. Mobile was a key driver of digital growth. The implementation of a significant cost reduction program combined with digital growth is an essential factor in maintaining healthy revenues and EBITDA development in the media houses. Total EBITDA margin 10 percent compared to 11 percent in All newspapers introduced payment solutions for digital news with positive initial response from the market. Significant investments and revenue growth in web TV. Continued focus on digital innovation, with services like OMNI reaping prizes for its game-changing news distribution app. Schibsted Growth initiatives, particularly within digital personal finance services, continued its growth in Sweden and Norway. The first Schibsted Growth investment made in France, through a position in the peer-to-peer lending club Prêt d Union. The Board proposes allocating a dividend of NOK 3.50 (3.50) per share for the 2013 financial year SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 11 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT ANALYSIS OF THE 2013 FINANCIAL STATEMENTS Schibsted Media Group presents its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), which are approved by the EU. Amendments to IAS 19 Employee Benefits are applied retrospectively. Comparable figures for 2012 have been restated. SCHIBSTED MEDIA GROUP (NOK million) Operating revenues 15,232 14,763 Operating expenses (13,573) (12,754) Gross operating profit (EBITDA) before share 1,659 2,009 profit (loss) from associated companies Share of profit(loss) from associated companies Gross operating profit (EBITDA) 1,672 2,043 Depreciation and amortisation (490) (479) Impairment loss (150) (548) Other income and expenses 1,169 (287) Operating profit 2, Gross operating profit (EBITDA) margin 11 % 14 % Gross operating profit (EBITDA) ex. SCM Investment phase 2,672 2,573 Gross operating profit (EBITDA) margin ex. SCM Investment phase 18 % 18 % SCM Investment phase (1,000) (530) Operating revenues reported for the Group increased by three percent from 2012 to The underlying growth (adjusted for acquisitions and disposals of enterprises and currency fluctuations) was two percent. The increase in revenues stems from good growth within the Group s online classifieds as well as from digital media within the media houses. The online classifieds segment had an underlying growth in operating revenues from 2012 to 2013 of 14 percent. This growth was mainly driven by Leboncoin, Finn and Blocket. The topline is hampered by a weak Spanish economy. The underlying growth in operating revenues, excluding the Spanish operations, was 18 percent. Underlying growth in advertising revenues from 2012 to 2013 was two percent (including online classifieds). The structural migration from print to online caused advertising revenues from print to decrease by an underlying 14 percent. Online newspaper advertising had underlying growth of 14 percent, while advertising revenues from online classifieds increased by 12 percent. 12 C 7

229 Changes in readership habits and acceleration in the speed of transition to digital media have led to a considerable decline in circulation volumes of the single-copy newspapers VG and Aftonbladet. This decline was partly compensated by price increases, and total single-copy newspaper circulation revenues fell by an underlying seven percent. The subscription newspapers are facing the same challenge of declining circulation, though on a smaller scale. Underlying circulation revenues from subscription-based newspapers increased by three percent. The Group s total operating expenses experienced an underlying increase of six percent. In order to capture opportunities in the market and to build number-one positions, Schibsted is investing significant amounts in the launch of online classifieds in new markets, based on Blocket technology. The projects are characterized by a short development phase and active marketing in order to build market positions and future growth. In 2013, the consolidated financial statements were charged by a gross operating loss (EBITDA) of NOK 1,000 million (NOK 530 million) from the portfolio of classifieds websites in the investment phase. In addition, Schibsted has incurred significant costs related to digital competence and technology, such as Schibsted Payment ID (SPiD), CRM systems, mobile platforms, and web TV. At the same time, costs in the print newspapers were reduced. The impairment loss of NOK 150 million (NOK 548 million) is a result of negative trends in certain markets. The losses in 2013 were mainly related to the Group s 35-percent ownership interest in Metro Nordic Sweden AB. The losses in 2012 were related to the Group s online classifieds operations in Spain and in Metro Nordic Sweden AB. Other income and expenses in 2013 were net NOK 1,169 million (NOK -287 million). On the positive side, the Group achieved a net gain on sales of subsidiaries, joint ventures, and associated companies (mainly SnT/701 search partnership with Telenor) and a gain on sales of property in Norway. On the negative side, the Group made a loss on sales of subsidiaries, joint ventures, and associated companies (mainly Eesti Meedia in the Baltics). The Group also incurred restructuring costs relating to the cost reduction program for the media houses implemented in SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 13 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT EVENTS AFTER THE REPORTING PERIOD In February 2014 Schibsted agreed to acquire Milanuncios.com which over the last few years has gained a significant position in Spain. This reinforces Schibsted s position as a clear market leader in the Spanish online classified market. The founder of Milanuncios will receive proceeds of EUR 50 million in cash and 10 percent of the shares in the combined Schibsted Classified Media Spain (excluding 20 Minutos). Expected closing in April/May Schibsted has in 2014 bought out minorities in the Irish online classifieds site DoneDeal.ie. In 2011 Schibsted bought 50.1 percent of the company. In March 2014 the holdings were increased to 90.1 percent. BALANCE SHEET At year-end 2013, the Group had total balance sheet assets of NOK 17.2 billion (NOK 15.4 billion). Non-current assets constitute the largest component at NOK 13.2 billion (NOK 11.8 billion). The carrying amount of the Group s goodwill and other intangible assets was NOK 10.3 billion (NOK 9.1 billion). The carrying amount of the goodwill and intangible assets with indefinite life was tested as at 31 December There was no impairment of goodwill in In 2012 the goodwill was impaired by NOK 350 million. Intangible assets were impaired by NOK 17 million in 2013 (NOK 7 million). Schibsted s holding of treasury shares, acquired under current authorization from the Annual General Meeting to increase the number of treasury shares to 10,800,361 during a period of 12 months, was reduced from 899,155 shares to 655,075 shares during The decrease is a result of shares sold and transferred to employees in connection with various incentive programs. LIQUIDITY Schibsted s net interest bearing debt was NOK 1.2 billion as at 31 December 2013, down from NOK 1.4 billion at 31 December No new bonds or floating rate notes (FRNs) were issued during 2013, but one FRN was repaid in December 2013 on maturity. The EUR 175 million revolving credit facility with maturity in August 2013 was continued in Q as a EUR 125 million revolving credit facility with a five-year maturity. Including the new facility, Schibsted has long-term loan facilities totaling EUR 450 million. At year-end 2013, none of the facilities was drawn. Schibsted has a diversified loan portfolio in relation to both 14 C 8

230 lenders and terms to maturity. The revolving credit facilities mature in 2015 and The facility with maturity in 2015 is planned to be refinanced during Schibsted s revolving credit facilities and bank loans are subject to financial covenants linked to the ratio of net interest-bearing debt to gross operating profit (EBITDA). This ratio was 0.63 at the end of 2013 and is well within the financial covenant. Due to the closing of SnT with Telenor and the sale of property during Q4, liquidity at year-end was very good. The Group s liquidity reserve consisted of long-term unutilized revolving credit facilities and cash reserves, and amounted to NOK 5.0 billion at year-end. This gives a liquidity reserve of 33 percent of annual revenues. CASH FLOWS Net cash flows from operating activities in 2013 were NOK 635 million compared to NOK 1,275 million in Reduced profit before taxes, adjusted for other revenues and expenses, and a less positive development in working capital are the main reasons for the reduction from The net cash flows from investing activities amounted to NOK 477 million (NOK -400 million). The Group has invested NOK 531 million (NOK 366 million) in fixed and intangible assets. Net payments related to business combinations came to NOK 257 million (NOK 94 million). Net proceeds from sales of subsidiaries, joint ventures and tangible and intangible fixed assets came to NOK 1,358 million (NOK 33 million). The net cash flows from financing activities were NOK -1,059 million in 2012 (NOK -591 million). Dividends paid to shareholders of Schibsted ASA and non-controlling interests amount to NOK 433 million (NOK 429 million). Net repayment of interest bearing debt totaled NOK 173 million (NOK 183 million) and net cash payments from changes in ownership interests of subsidiaries amount to NOK 478 million (NOK 39 million). COST REDUCTION MEASURES The structural changes in the media landscape are happening faster than ever before. Tablets and smartphones are accelerating the shift to digital platforms. In this context, Schibsted s media houses need to invest substantially in digital competence and at the same time reduce the cost base. In August 2012 Schibsted Media Group announced an ambition to reduce costs with a full-year effect of approximately NOK 500 million over the next two years in the subscription-based newspapers in Norway and Sweden an in the free newpaper in Spain. Approximately NOK 400 million of the savings were planned for the Norwegian subscription-based media houses Aftenposten, Bergens Tidende, Stavanger Aftenblad, and Fædrelandsvennen. SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 15 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT Around SEK 50 million of cost reduction measures were planned for the Swedish media houses, mainly Svenska Dagbladet, and measures totaling a full-year effect of NOK million was already implemented in the Spanish free newspaper operation. A substantial part of the cost reductions will be realized through headcount reductions. The cost reductions were accomplished according to plan in 2013 and will continue in 2014 in order to achieve full effect by year-end. Restructuring charges of NOK 161 million (NOK 260 million) are charged to the operating profit in 2013, under Other income and expenses. RESEARCH AND DEVELOPMENT ACTIVITIES Schibsted s vision is Shaping the media of tomorrow. Today. To achieve this, we have to constantly innovate and improve. This is done systematically across business areas, whether it is media houses or online classifieds. Schibsted Media Group invests substantial resources in improving and developing products for new platforms and markets. Innovation has always been an important part of the DNA of Schibsted Media Group and its organizations and companies. We are innovative is one of our four core values. Given the challenges posed by the digital transformation and rapidly changing market conditions, innovation will be an even more important tool for future growth. In 2013, Schibsted wanted to honor excellent achievements and to make innovation an even more visible part of what we do. Two Innovation awards were therefore created; one for new business innovation and one for core business innovation. The New Business Innovation Award 2013 was awarded to OMNI (Sweden) for its unique editorial concept. OMNI gathers news from all over in one place. OMNI dares to cannibalize the existing business and has developed a completely new work process that will affect how we work with news in the future. The other finalists were Tactus-VG Mobil (Norway) and FINN Småjobber (Norway). Bomnegocio (Brazil) won the Core Business Innovation Award Bomnegocio s concept is optimization of marketing spending online. This will significantly affect the cost level and hit rate of SCM sites, and is a game changer in a very competitive market. The other finalists were VGTV (Norway) and FINN Mobil (Norway) All the Group s companies are making continuous efforts to further develop existing products and to develop products that will provide new revenue flows. Expenditure related to the development of intangible assets is normally charged to the profit and loss statement because from an accounting perspective the requirement to demonstrate future economic value will normally not be met. 16 C 9

231 ANALYSIS OF MARKET RISK Schibsted is operating in an industry that is subject to constant change. Our ambition, underpinned by our business model and strategy, is to remain resilient in the face of the constant game-changing disruption through innovation and continuously challenging ourselves to improve. Schibsted s advertising revenues are to a certain extent affected by cyclical developments in real economy figures, notably GDP growth, unemployment rates, and consumer confidence. The Group s advertising revenues from the recruitment market and, to a lesser extent, the real estate market and display advertising, are the revenue streams most exposed to cyclicality. In 2013 the Group s advertising revenues amounted to 59 percent (59 percent) of total revenues. In total, five percent of Schibsted s revenues come from recruitment advertising, of which 73 percent is digital. Most of these revenues come from the print newspapers in Schibsted Norge, InfoJobs Spain, and Finn.no. Most of the future growth is expected to come from consumer-oriented classifieds services such as Blocket and Leboncoin. These revenues are considered to have a relatively low degree of cyclicality. The Group s revenues from the print newspapers are impacted by structural changes in media consumption, resulting in accelerated migration from print to digital consumption. Moreover, the Group is facing structural changes in the digital advertising market as advertising revenues follow the user consumption patterns from print to digital platforms. The Group s ambition is to proactively address and reduce the impact of these risks, and the key focus areas in the Group s strategy contribute to achieving this. Examples of action taken by the Group are the implementation of user payment systems in all media houses by 31 December 2013 and proactive efforts towards building a position in web TV. The Group s current technology and advanced data analytics efforts are examples going forward. As a global player in an industry subject to technology developments that advance at an increasingly rapid pace, the Group is exposed to potential competition from disruptive players, technology or business models. The classifieds operations also face a competitive environment in several markets. Strategic initiatives such as the Group s commitment to technology and innovation, and to diversification of revenue streams from the media houses, online classifieds, and the growth companies, are all aimed at reducing the impact of this risk. Additionally, in order to mitigate and diversify risk and seize opportunities in online classifieds operations in emerging markets, Schibsted entered into a partnership with Telenor in Schibsted has Norwegian krone (NOK) as its basic currency, and through its operations outside Norway is exposed to fluctuations in the exchange rates of other currencies. Schibsted has exchange rate risks linked to both balance sheet monetary items and the translation of investments in foreign operations. The Group makes use of loans in foreign currencies and financial derivatives (forward contracts and cross-currency swaps) to reduce its foreign exchange exposure. The loans in foreign currencies and financial derivatives are managed actively in accordance with the Group s financial strategy in order to reduce the currency risk. SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 17 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT Exchange rate fluctuations may affect the ratio of net interest-bearing debt to gross operating profit (EBITDA). A general 10-percent deterioration in NOK will increase the Group s net interest-bearing debt by around NOK 115 million as at 31 December 2013 and will cause a change in the ratio of net interest-bearing debt to EBITDA of around Virtually all of the Group s debt as at 31 December 2013 was subject to a variable interest rate. The net interest bearing debt is affected by changes in the interest rate market. A change of one percentage point in the variable interest rate will change Schibsted s interest expenses by approximately NOK 12 million. Schibsted uses newsprint and is therefore exposed to price fluctuations in the paper market. A one-percent change in price alters the Group s raw material costs by around NOK 4 million per year. The price of newsprint in Norway, Sweden and Spain is negotiated with suppliers each year. At the end of 2013, the Group had limited exposure to the stock market and therefore less risk of losses. Account receivables are diversified among many customers, customer categories, and markets. Account receivables consist of a combination of prepaid subscriptions or advertisements and sales invoiced after delivery of the product. The credit risk posed by some receivables (prepaid subscriptions and payments made by credit card on purchase date) is minimal, while for other receivables it is higher. Credit risk will also vary among countries we operate in. Credit insurance is also used to some extent. Overall, the credit risk is considered low. Robust public structures and support to the media business have been instrumental in securing media diversity and a public arena for opinion and debate in Norway. Now, in the midst of the digital transformation, such structures and support are more important than ever. Schibsted is therefore working actively to influence the government s media policy together with Mediebedriftenes landsforening (the Norwegian Media Businesses Association) and other participants. Schibsted s view is that the new government signals changes that will modernize the country s media policy and align it with the challenges faced by the media industry today. The media ownership regulations will be handled by one public authority (Konkurransetilsynet/Competition Authority). The same, low VAT rate on both print and digital news. A thorough review of the scope of the public service broadcaster NRK in order to limit the possibility of its superior economic power inadvertently weakening operative and financial opportunities for other media channels. Schibsted continues to participate in and closely follow the ongoing process and debate on media policy. 18 C 10

232 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 19 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT OPERATING SEGMENT ANALYSIS ONLINE CLASSIFIEDS ONLINE CLASSIFIEDS (NOK million) Operating revenues 4,265 3,647 Gross operating profit (EBITDA) 862 1,100 Gross operating profit (EBITDA) ex investment phase 1,862 1,630 Gross operating profit (EBITDA) investment phase (1,000) (530) Schibsted has strong, profitable positions in the online classifieds markets in Norway, Sweden, France, Spain, Italy, Ireland, Austria, Malaysia and Hungary. This business area also includes a portfolio of classified ad websites in an investment phase in a number of different markets. MAIN FEATURES IN 2013: The online classifieds services did well in many countries in 2013, and Schibsted focused on creating further growth through innovation and product improvement alongside continued rollout of the concept in interesting markets. This operating segment had underlying growth of 14 percent in its operating revenues (after adjusting for exchange rate fluctuations and acquisitions and disposals). The topline is hampered by the weak Spanish economy. Excluding the Spanish operations, the underlying growth rate in the operating revenues was 18 percent. Gross operating loss (EBITDA) for the investment phase increased from NOK 530 million in 2012 to NOK 1,000 million in Excluding investment phase operations, online classifieds had an EBITDA margin of 45 percent (46 percent). Investments in rollouts in new markets had a negative effect on the margin. A new online classifieds partnership with Telenor in emerging markets strengthens the Group s financial capabilities and gives access to Telenor s deep insights in emerging markets, mobile development and consumer behavior. Bought out minority shareholder in Anuntis in Spain, and secured full operational control of some of the country s key online classifieds sites. Steps taken to regain traffic growth momentum to secure long-term market leadership. Schibsted has in 2014 bought out minorities in the Irish online classifieds site DoneDeal.ie. In 2011 Schibsted bought 50.1 percent of the company. In March 2014 the holdings were increased to 90.1 percent. In February 2014 Schibsted agreed to acquire Milanuncios.com which over the last few years has gained a significant position in Spain. This reinforces Schibsted s position as a clear market leader in the Spanish online classified market. The founder of Milanuncios will receive proceeds of EUR 50 million in cash and 10 percent of the shares in the combined Schibsted Classified Media Spain (excluding 20 Minutos). Expected closing in April/May C 11

233 ESTABLISHED OPERATIONS NORWAY FINN.NO Finn.no is clearly the number-one website for online classified ads in Norway. The company is the market leader in the field of car, real estate, recruitment and generalist ads. FINN.NO (NOK MILLION) Operating revenues 1,406 1,266 Gross operating profit (EBITDA) before share of profit (loss) from associated companies MAIN FEATURES IN 2013: 2013 was a good year for all of Finn.no s markets. The company achieved a top-line growth of 11 percent and a record profit. The volume of classifieds listings increased in the real estate and general verticals. Volumes in the recruitment vertical declined, and in the car vertical were flat. The revenue growth was supported by price increases and brand advertising. Revenues from real estate ads grew by 16 percent in 2013, while car ads and recruitment ads increased by 9 and 2 percent respectively. Generalist revenues increased by 9 percent and travel by 10 percent. The growth was due to a combination of price and volume. Operating costs increased by 11 percent from 2012 to The increase was due to a higher level of activity in Finn.no maintains its status as the largest website in Norway, measured in number of page views. SWEDEN BLOCKET.SE/BYTBIL.SE Blocket.se is the number-one website for online classified ads in Sweden as well as one of the country s strongest brands. Bytbil.se is the leading classifieds site for cars in Sweden. BLOCKET.SE/BYTBIL.SE (SEK MILLION) Operating revenues Gross operating profit (EBITDA) before share of profit (loss) from associated companies MAIN FEATURES IN 2013: Blocket s/bytbil s operating revenues grew by 12 percent in Revenues were affected by a weak car sales market in Sweden, with fewer second-hand transactions. Blocket/Bytbil ended the year with strong growth in operating revenue, due mainly to product development and price increases. The growth in Q compared to Q was 22 percent. Blocket saw increased traffic volumes in 2013, with a strong contribution from mobile. Blocket spends resources on building new revenue models in order to ensure long-term growth, and has launched products in both the real estate and recruitment segments. The products are growing well both in terms of traffic and listing volumes, but are having a negative impact on the EBITDA figures during the start-up phase. SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 21 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT FRANCE LEBONCOIN.FR Leboncoin.fr remains the clearly leading online classifieds marketplace in France. The site is top four in France among all online sites when it comes to traffic measured by page views (source: Comscore, December 2013). LEBONCOIN.FR (EUR MILLION) Operating revenues Gross operating profit (EBITDA) before share of profit (loss) from associated companies MAIN FEATURES IN 2013: Operating revenues grew by 27 percent in 2013 compared to The revenue growth came from a broad range of sources. Brand advertising, listing fees for professional customers, and premium placements for professional and private customers all contributed well to the growth. The EBITDA margin was 67 percent (68%). Increased costs particularly related to ramping up in-house sales resources, marketing, and strengthening the organization. OTHER ESTABLISHED OPERATIONS Anuntis (Spain) consists of the generalist site, Segundamano.es, the classifieds site for cars, Coches.net, and the Spanish real estate site, Fotocasa.es. Revenues decreased four percent from 2012 to After Schibsted took full control of Anuntis in July 2013, the focus shifted to growth in traffic and market share. Infojobs (Spain): The unemployment rate in Spain at the end of 2013 was 26 percent, and in a very demanding year InfoJobs.net revenues fell eight percent compared to 2012 but managed to keep healthy margins. The site retained its position as the preferred job portal of both companies and jobseekers. Donedeal.ie (Ireland) is the leading generalist website in Ireland. The site continued to develop well with good growth in revenues and traffic. Parts of the increased revenues were reinvested in improved products and market positions. Subito.it (Italy) is the leading generalist and car classifieds site in Italy. Despite a harsh macroeconomic environment, Subito saw good growth rates in Subito.it is the ninth largest web site in Italy overall when it comes to traffic measured by page views (source: Comscore, December 2013). 22 C 12

234 Willhaben.at (Austria) is the leader in the generalist and real estate market. It also has a strong position in the car market, and the site is in the top five online sites in Austria among all online sites when it comes to traffic measured by pageviews (source: Comscore, December 2013). In 2013, revenues continued to grow well, and EBITDA margins improved. The Malaysian Blocket copy Mudah.my was moved from Investment phase to Established phase in Mudah is the clear market leader in online classifieds in Malaysia, and holds strong positions in generalist, cars, and real estate. Mudah s revenues showed a healthy growth rate, and the site produced positive EBITDA. The site is the fourth-largest online site in Malaysia in terms of traffic measured by page views (source: Comscore, December 2013). Schibsted acquired 50 percent of Haznaltauto.hu, the leading car classifieds site in Hungary, at the end of The site holds a strong position in the Hungarian market, and is proving profitable. INVESTMENT PHASE Schibsted Classified Media has a clear goal of laying the foundations for future growth by establishing in new markets. The businesses in this phase are mainly launched on the basis of the successful Swedish Blocket concept. Experiences from successful establishments in core markets form the basis for investments in online classifieds in new markets. In most markets the return on investment is positive in terms of improved reach for the sites and strengthened positions compared with competitors. Schibsted Classified Media s investment phase operations include activities in a total of 35 countries. The online concept was launched in 18 of these countries without local organization. The amounts invested increased in 2013, mainly through marketing in previously established markets, but also in new markets. In 2013 the investment charged to EBITDA was EUR million, a sharp increase compared to EUR 70.9 million in The investments mostly comprise marketing initiatives. SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 23 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT SCHIBSTED NORGE MEDIA HOUSE The media houses in Schibsted Norge comprise single-copy newspaper VG (print and online), the subscription-based newspapers Aftenposten, Bergens Tidende, Stavanger Aftenblad, and Fædrelandsvennen (print and online), printing plant operations, distribution operations, the book publishing company Schibsted Forlag and the online growth company Schibsted Vekst. SCHIBSTED NORGE MEDIA HOUSE (NOK million) Operating revenues 6,368 6,485 Gross operating profit (EBITDA) MAIN FEATURES IN 2013: Operating revenues fell by an underlying two percent in 2013 compared to Subscription revenues increased by three percent and single-copy revenues decreased by seven percent. Advertising revenues from online increased by 25 percent, while print advertising revenues decreased by 13 percent. Schibsted Norge Media House is feeling the effects of the structural migration from print to online. Print newspapers are losing market shares in both the readership and the advertising markets, and must adapt and transform rapidly in order to be relevant and profitable in the digital future. The media houses are addressing the challenges in print media with cost efficiency programs and ongoing efficiency measures, and these are progressing as planned. At the same time, more resources are being allocated to digital activities. The ambition is to create worldclass digital media houses. The declining trend in print advertising is expected to continue, and continued online growth and innovation will be crucial to securing the future on the basis of high-quality editorial products combined with healthy financial results. 24 C 13

235 SUBSCRIPTION-BASED NEWSPAPERS Schibsted Norge owns leading subscription-based newspapers in four of Norway s largest cities: Oslo, Bergen, Stavanger, and Kristiansand. Each newspaper also has online editions that are leaders in their respective markets. SCHIBSTED NORGE SUBSCRIPTIONBASED NEWSPAPERS (the former Media Norge newspapers) (NOK million) Operating revenues 3,726 3,906 of which print 3,261 3,556 of which online Gross operating profit (EBITDA) before share of profit (loss) from associated companies of which print of which online Circulation weekdays (copies) 1) 381, ,875 Advertising volume (column meters) 1) 119, ,838 1) Total of Aftenposten, Bergens Tidende, Stavanger Aftenblad and Fædrelandsvennen MAIN FEATURES IN 2013: In 2013, EBITDA in three out of four media houses decreased compared to 2012, with the exception of Fædrelandsvennen. Print advertising revenues decreased by 14 percent in 2013 compared to Online advertising revenues increased by 20 percent and stem mostly from mobile. This increase could not compensate for the shortfall in print advertising revenues. Circulation volumes fell by four percent in 2013 on weekdays. Circulation revenues were flat from 2012 to 2013 as a result of price increases. All the subscription-based newspapers in Norway introduced digital payment models for content during The exception was Fædrelandsvennen, which already did so in The experience so far is positive, but experimentation with different models will continue. As part of the transition plan for Schibsted s media houses, Schibsted Norge had ambitions in 2012 to implement cost measures of around NOK 400 million during 2013 and This process is on track. Operating expenses in 2013 decreased seven percent compared to SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 25 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT SINGLE-COPY NEWSPAPER VERDENS GANG (VG) Verdens Gang publishes Norway s clear leader in single-copy newspapers. The online edition, VG.no, is the largest online newspaper in Norway and one of the absolute biggest websites, irrespective of category. VERDENS GANG (NOK MILLION) Operating revenues 1,951 1,920 of which print 1,329 1,429 of which online of which other Gross operating profit (EBITDA) before share of profit (loss) from associated companies of which print of which online of which other 6 4 Circulation weekdays (copies) 164, ,353 Advertising volume (column meters) 11,778 10,713 MAIN FEATURES IN 2013: Print advertising revenues decreased by 10 percent from 2012 to VG online (including mobile) increased by 29 percent, fuelled by good trends for mobile advertising and web TV. The increase more than compensated for the shortfall in print advertising revenues. Weekday circulation fell by 13 percent, Sunday circulation by 11 percent. Price increases contributed positively and reduced the circulation revenues decline to six percent. The total operating expenses for the print edition were reduced by five percent as a result of good cost control and lower circulation volumes. The increase in operating expenses for online is extensive, and is attributed to the dedicated focus on innovation and content, particularly for mobile and web TV. These efforts were particularly intensified in mobile and web TV. VG holds leading positions in both these channels, which are likely to be significant drivers for revenue growth in the years to come. VGTV aims to be the hub for Schibsted s national web TV services. The position as Norway s largest website, measured in terms of unique users, was maintained during the year. VG Mobil experienced a strong increase in traffic during the year and has set new traffic records. 26 C 14

236 SCHIBSTED SVERIGE MEDIA HOUSE Schibsted Sverige consists of three key business areas: Aftonbladet (print-based single-copy sales and online newspaper), Svenska Dagbladet (print-based subscription and online newspaper) and Schibsted Tillväxtmedier (web-based growth companies including Hitta). SCHIBSTED SVERIGE MEDIA HOUSE (NOK million) Operating revenues 3,731 3,538 Gross operating profit (EBITDA) MAIN FEATURES IN 2013: Operating revenues decreased by an underlying one percent in 2013 compared to Subscription revenues increased by two percent and single-copy revenues decreased by eight percent. Advertising revenues from online increased by eight percent, while print advertising revenues decreased by 16 percent. Like Schibsted Norge Media House, Schibsted Sverige Media Houses is feeling the effects of the structural migration from print to online. Print newspapers are losing market shares in terms of both readership and advertising, and must adapt and transform rapidly in order to be relevant and profitable in the digital future. The media houses are addressing the challenges in print media with cost reduction programs and ongoing efficiency measures, and these are progressing as planned. At the same time, more resources are being allocated to digital activities. The ambition is to create world class digital media houses. The declining trend in print advertising is expected to continue, and continued online growth and innovation will be crucial to secure the future on the basis of high-quality editorial products combined with healthy financial results. SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 27 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT SINGLE-COPY NEWSPAPER - AFTONBLADET Aftonbladet is a media house with number-one positions in both the print and online sectors. Aftonbladet is Sweden s leading news media in all channels: print, online, mobile, and web TV. AFTONBLADET (SEK MILLION) Operating revenues 2,066 2,168 of which print 1,443 1,621 of which online Gross operating profit (EBITDA) before share of profit (loss) from associated companies of which print of which online Circulation weekdays (copies) 176, ,300 Advertising volume (column meters) 16,913 17,725 MAIN FEATURES IN 2013: Advertising revenues for Aftonbladet s print edition decreased by 22 percent compared to Online advertising increased by 16 percent but could not fully compensate for the shortfall in print advertising. Web TV and mobile are the main drivers of online growth. Circulation revenues decreased by eight percent as a result of lower paid circulation on weekdays (-15 percent) and lower volumes of additional products. Price increases made positive contributions. The cover price increased from SEK 13 to SEK 15 as of 24 June Total operating expenses for the print edition were reduced by 11 percent as a result of good cost control and lower circulation volumes. The increase in total operating expenses for online was related to development projects, especially in web TV. 28 C 15

237 SUBSCRIPTION-BASED NEWSPAPERS SVENSKA DAGBLADET (SvD) Svenska Dagbladet is the third-largest subscription-based newspaper in Sweden and holds a particularly strong position in the Stockholm region. SVENSKA DAGBLADET (SVD) (SEK MILLION) Operating revenues 1,033 1,087 of which print 951 1,020 of which online Gross operating profit (EBITDA) before share of 1 59 profit (loss) from associated companies of which print of which online Circulation weekdays (copies) 159, ,400 Advertising volume (column meters) 22,688 22,780 MAIN FEATURES IN 2013: The circulation volume for SvD (weekdays) decreased by nine percent from 2012 to Circulation revenues decreased eight percent. In April 2013, Svenska Dagbladet launched a new print/online bundled subscription model. Free access to the web version is limited to 25 articles per month. This move is in line with Schibsted s aim to develop new digital revenue streams. Print advertising revenues decreased by 13 percent in 2013 compared to Online advertising increased by 14 percent. The company has good cost control and the operating expenses for the print newspaper decreased by one percent in SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 29 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT GROWTH COMPANIES SCHIBSTED TILLVÄXTMEDIER Schibsted Tillväxtmedier consists of a portfolio of web-based growth companies. These companies benefit greatly from the strong traffic positions and brands of Schibsted s established operations in Sweden. SCHIBSTED TILLVÄXTMEDIER (SEK MILLION) Operating revenues 1,043 1,000 of which Hitta Gross operating profit (EBITDA) before share of profit (loss) from associated companies of which Hitta MAIN FEATURES IN 2013: Schibsted Tillväxtmedier has built strong market positions in personal finance (Lendo.se, Suredo.se, Kundkraft.se and Mobilio.se). The companies offer consumer information services and showed good underlying growth in In September 2013, Schibsted Tillväxtmedier acquired 100 percent of the shares of Compricer AB. The company operates an online personal finance marketplace (compricer.se) and is a good strategic fit with the existing portfolio of fast-growing personal finance services in Schibsted Tillväxtmedier. Hitta experienced a decrease in revenues of seven percent from 2012 to The EBITDA margins were, however, strengthened. The company invested in improving both the product and the organization during Most of the portfolio s operations experienced good growth and improvements in their results, and overall this made a positive contribution to the operating profit, but the personal finance operations were the most important growth drivers. The operating expenses are charged with high marketing costs in order to build future positions. The underlying revenue growth from 2012 to 2013 was 15 percent. 30 C 16

238 MEDIA HOUSES INTERNATIONAL Media House International consists of the Group s free newspapers: 20 Minutes in France and 20 Minutos in Spain. The media house operations (newspapers, magazines, and TV channels) in the Baltics were sold with effect from 1 September MEDIA HOUSES INTERNATIONAL (NOK MILLION) Operating revenues of which Eesti Meedia (Baltics) of which 20 Minutes Gross operating profit (EBITDA) 2 (3) of which Eesti Meedia (Baltics) of which 20 Minutes (37) (48) MAIN FEATURES IN 2013: Operating revenues decreased by an underlying six percent i n 2013 compared to The weak market trend was addressed by cost reductions. 20 Minutos in Spain is a part of Schibsted s ongoing transition program, and cost measures with an annual effect of around NOK million were implemented during Q Total operating expenses for the Spanish operations decreased by 23 percent from 2012 to Minutes France decreased its operating expenses by seven percent from 2012 to SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 31 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT OUTLOOK ONLINE CLASSIFIEDS Schibsted sees continued revenue growth potential and a good margin outlook for its portfolio of established online classifieds sites. New product offerings and continuous price optimization are expected to further monetize the large traffic volumes in the key operations in Norway, Sweden, and France. Finn will turn free for certain categories to boost user engagement. Parts of the private listings on Finn Torget will be turned into a freemium model during This change is one of several moves expected to accelerate listings growth and increase traffic. This move could have a negative revenue effect in 2014 of around NOK 40 million. A somewhat weaker macroeconomic trend in Norway may have a negative effect on the advertising revenues, particularly recruitment. Traffic and volume increases as well as broader product platforms are expected to support revenue growth for the remaining group of established sites in Italy, Austria, Ireland, Malaysia, and Hungary. Schibsted has taken an active approach to consolidate the Spanish online classifieds market. After buying out the minority shareholders in Anuntis during 2013, we have in February 2014 agreed to acquire Milanuncios.com. Through this, we are strengthening our traffic position in Spain significantly, and hence reinforcing our position as a market leader. In time, this creates opportunities to monetize the Spanish market further. Our leading French site Leboncoin.fr holds significant long-term potential in new verticals and products, although growth may slow down in the short term due to prudent monetization strategies and tougher year-on-year comparisons. Our strategy of establishing proven successful online classifieds concepts in new markets will continue. The new joint ventures in emerging markets with Telenor make it possible for us to do more and we can move faster. Going forward the investments in new ventures will continue at a relatively high level. Healthy growth in key operational parameters indicates good progress for Investment-phase sites, which lends confidence to our investment strategy. MEDIA HOUSES Our media houses have made significant headway in the transition from traditional to digital media. The Group holds strong positions on all digital platforms, particularly for mobile. Schibsted Media Group will continue the transformation into world-class digital media houses based on strong editorial products. This involves investments in digital competence and technology such as payment solutions (SPiD), CRM systems, mobile platforms, web TV, strengthened sales units, and continued development of the consumer finance offering. It is previously announced that the investment in data analytics and technology will have a 32 C 17

239 negative EBITDA effect of NOK million in The web TV efforts are expected to affect the EBITDA negatively by around NOK 50 million. A weaker macroeconomic market in Norway is expected to put further pressure on print advertising revenues and especially from recruitment. Overall, the structural digital shift and the transformation process are expected to lead to softer margins for Schibsted s media houses than experienced in recent years. GOING CONCERN ASSUMPTION The Group s economic and financial position is good. Based on the Group s long-term strategy and forecasts, and in accordance with Section 3-3a of the Norwegian Accounting Act, the Board confirms that the use of the going concern assumption is appropriate. The 2013 financial statements have been prepared on this assumption. STATEMENT ON CORPORATE GOVERNANCE In accordance with Section 3-3b of the Norwegian Accounting Act, a statement on corporate governance has been prepared. The statement is included as a separate document in the annual report. STATEMENT ON CORPORATE SOCIAL RESPONSIBILITY In accordance with Section 3-3c of the Norwegian Accounting Act, a statement on corporate social responsibility has been prepared. The statement is included as a separate document in the annual report. SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 33 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT INFORMATION ON THE ENVIRONMENT WORKING ENVIRONMENT Schibsted aims to be a leading company in Europe in terms of developing talent, managers, and employees. The work on attracting talented people, developing good managers, and creating competent organizations is given high priority by the Group s senior management and subsidiaries. Competitive terms of employment and a stimulating working environment with good opportunities for personal and professional development form part of this strategy. At year-end, Schibsted had approximately 6,900 (7,800) employees, around 3,800 (4,600) of whom worked outside Norway. In the 2012 figures Eesti Media was included with approximately 1,100 employees. Eesti Media was divested in September 2013 and not included in the figures at yearend The Group s sickness absence rate was three percent (4 percent) of total working hours. Of all the Group s companies, operations at the printing plants involve a higher risk of injury. After selling Kroonpress in Estonia in September 2013, Schibsted owned five newspaper printing plants at year-end: Schibsted Norge s printing plants in Oslo, Bergen (2), Stavanger, and Kristiansand in Norway. One (7) injury that resulted in sickness absence was reported in Two (1) minor personal injuries such as crushes and cuts were reported. EXTERNAL ENVIRONMENT Schibsted Media Group is a large player in the market for reuse of products through our online classifieds sites. Our marketplaces extend the useful life of a range of products and contribute to reducing the need for manufacturing new ones. Production of the Group s newspapers is a digital process up to the printing stage, and has little impact on the external environment. A newspaper printing works has a relatively neutral effect on the environment, and the chemicals used to produce the newspapers are treated as special waste and recycled as far as possible. Agreements with approved transport companies ensure that special waste is collected safely. Normal operations do not involve any danger of emissions from the printing plants. The printing plants used 100 thousand tons (118 thousand tons) of paper, 2.3 thousand tons (2.7 thousand tons) of printing ink, and 36.9 GWh (38.9) of electricity in The Group s newspaper companies in Norway and Sweden arrange for unsold newspapers to be returned and resold for recycling. The Group s other operations pollute the environment to a minor extent only. 34 C 18

240 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 35 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT ORGANIZATIONAL DEVELOPMENT Organizational development (OD) in Schibsted is about execution of business strategies. The key question for OD to answer is what it takes for our people and organizations to deliver on different business goals. As the digital transformation is speeding up, we need to speed up our innovations. Whereas in the old days we could investigate and prepare new ideas for months before launching, we now work in a more iterative process with testing, learning and adjusting. Inspired by Lean startup thinking and A/B testing, we encourage our organizations to take some risks, move quickly, learn and adjust. One of the consequences of Schibsted s relatively decentralized structure and culture is that our companies are used to having responsibility for their own development and growth. As we develop more cooperation between the companies and establish horizontal services, we also strive to find common solutions in OD areas such as employee surveys, 360 degree assessments of our top 250 managers, business specific training programs, and mobility programs. During 2013, we worked on developing our OD partnership. The members of this partnership are responsible for OD in each of our three divisions, working together with OD corporate. This group has chosen to focus on a new leadership development program, to improve our recruitment abilities, and to introduce performance management across the Group. In a cooperation between corporate and our divisions we are now designing a portfolio of new leadership training modules to be launched in 2014, making it possible for leaders to customize their own competence development. To attract and keep top talent is one of our main focus areas. In an international business as ours, where we now can feel the competition from some of the world s biggest companies, the importance of attracting top talent is more vital than ever before. We are working with this issue on many different levels and with different methods. Based on the number and quality of applicants to our trainee programs, and the interest in permanent positions in our companies from all over the world, we are in a good position for further developing the organization. The work within the OD partnership is aiming at improving efficiency and alignment of OD initiatives at all levels within the Group. An example of good alignment is the cooperation between OD corporate and our media houses in the area of digital training for journalists and editorial managers. We have agreed that the media houses themselves take care of the basic training relevant for all their editorial staff while Schibsted Journalism Academy focuses on training for operative editorial leaders and specialists. DISCRIMINATION The companies working environment committees are continuously striving to promote a good working environment and thus minimize incidents of workplace discrimination. Further measures to promote this objective as stated in the Norwegian Anti-Discrimination Act are not considered necessary. 36 C 19

241 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT 37 SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT DIVIDEND AND CAPITAL STRUCTURE Schibsted is a listed company that aims to provide a competitive rate of return based on a healthy financial position. Schibsted s Board believes it is essential that the company s shares be perceived as an interesting investment option. One of the Board s goals is therefore to maximize shareholder return through long-term growth in the share price and dividend. The Board will attempt to ensure that the price of the company s shares reflects the Group s long-term earnings capacity as far as possible. Schibsted holds strong positions in the Scandinavian media markets. The media houses strong brands and market-leading positions help ensure a good cash flow, even with continuing structural changes and lower profitability for print newspapers. Online classifieds operations both in Scandinavia and internationally contribute with strong, profitable growth was a good year for Schibsted Media Group, with strong revenues and improvements in many of the markets in which the Group operates. The Group s financial flexibility has been stable during the year. At the end of 2013, the Group had a strong balance sheet, good cash flow, and healthy liquidity. Schibsted s capital structure shall be sufficiently robust to maintain the desired scope of action and exploit growth opportunities based on strict assessment of our allocation of capital. Schibsted will place emphasis on having a fixed dividend payout ratio which, over time, will constitute percent of the Group s normalized cash flow per share. In years of economic slowdown, the company will aim to pay a dividend at the upper part of the target range, provided the Group s capital structure allows this. Schibsted is currently in a phase of investments in online activities which will form a basis for future growth in profitability. The Board has taken a balanced approach to the dividend proposal, and has taken into consideration the fact that the Group is increasingly strengthening its growth profile. On this background, the Board will recommend to the Annual General Meeting that a dividend of NOK 3.50 per share be distributed for the 2013 financial year. This represents no change compared to The total number of shares is 108 million, and a dividend of NOK 3.50 per share means a payout of NOK 376 million (adjusted for shares owned by Schibsted). A dividend of NOK 3.50 per share amounts to around 75 percent of the net cash flow from operating activities for C 20

242 SCHIBSTED ASA Schibsted ASA is the parent company of the Group. The company s accounts have been presented in accordance with the Norwegian Accounting Act and generally accepted accounting practices in Norway (NGAAP). Operating revenues amounted to NOK 49 million (NOK 55 million). Operating expenses of NOK 271 million (NOK 249 million) relate to Group administration services. The operating loss in 2013 was NOK -222 million (NOK -194 million). Net financial items include distributions (dividends and group contributions) from subsidiaries of NOK 3,548 million. The pre-tax profit on ordinary operations amounted to NOK 2,887 million (NOK 2,540 million). Schibsted ASA had 103 (104) employees at year-end, 32 (35) of whom were trainees assigned to the Group s companies. The Group s CEO is Schibsted ASA s President and CEO. Oslo, 25 March 2014 BOARD OF DIRECTORS SCHIBSTED ASA OLE JACOB SUNDE CHAIRMAN OF THE BOARD KARL-CHRISTIAN AGERUP MARIE EHRLING JONAS FRÖBERG ANNE LISE VON DER FEHR ARNAUD DE PUYFONTAINE EUGENIE VAN WIECHEN ROLV ERIK RYSSDAL, CEO SCHIBSTED ANNUAL REPORT 2013 BOARD OF DIRECTORS REPORT The Board of Schibsted ASA proposes allocating the profit for the year as follows: PROFIT FOR THE YEAR NOK 2,804 million PROPOSED ALLOCATION: Allocated to dividend, NOK 3.50 per share NOK 376 million Transferred to other equity NOK 2,428 million Group contributions to subsidiaries total NOK 289 million. EVA BERNEKE GUNNAR KAGGE CHRISTIAN RINGNES 39 SCHIBSTED ANNUAL REPORT 2013 STATEMENT OF EXECUTIVE COMPENSATION Statement of Executive Compensation 1. BASIS FOR THE COMPANY S EXECUTIVE COMPENSATION POLICY The Group Board of Schibsted ASA ( Schibsted ) considers the employees as the Group s most important resource. A competitive remuneration policy that attracts and retains talented employees is therefore crucial to our business. The company s human resource policy covers several factors, including terms related to pay and pension, working environment, development programs, and more traditional employee benefits. The executive compensation policy is part of the company s human resource policy. 2. WHO IS COVERED BY THE GUIDELINES? The guidelines regarding executive compensation are determined by the Group Board. Schibsted s Group CEO and Group Management Team are directly covered by the guidelines. The guidelines are also normative for the remuneration of other senior managers and management groups in our core businesses. 3. PERIOD OF APPLICATION The statement applies for the coming financial year; see section 6-16 a) (2) of the Norwegian Public Limited Companies Act. The Group Board will base its work on this statement, following discussions at the Annual General Meeting on 7 May Schibsted s previous practice has been to submit the proposed statement of executive compensation to the Annual General Meeting for the current year. It is proposed to change this practice by submitting the Board s statement of executive compensation to the Annual General Meeting in the year prior to the financial year in which it should apply. The abovementioned practice will imply that this statement of executive compensation will cover the financial years 2014 and As from the Annual General Meeting in 2015, the statement of executive compensation will cover only one financial year, which means that in 2015 it will cover MAIN PRINCIPLES OF THE COMPANY S EXECUTIVE COMPENSATION POLICY The Group Board regularly assesses the Group s executive compensation policy to ensure that compensations offered are reasonable, well balanced, and competitive. The fixed salary of the Group s managers is moderate and forms the basis for the assessment 40 C 21

243 of various additional benefits as parts of the managers total compensation, annual variable pay, long-term incentive program, pension schemes, and other benefits. The Group s further growth and profitability depend on the employees efforts to ensure continuous business development and improvement in profitability. To motivate managers to make such efforts, variable pay and other incentive schemes are linked to factors that they can directly influence. These schemes must be reasonable in relation to the Group s results and to the value created for the shareholders Fixed salary The fixed salary (the gross annual salary before tax and before variable pay and other additional benefits are calculated) shall represent the key component of manager compensation. The increase in fixed salaries is expected to be moderate Directors fees Employees do not receive directors fees for board appointments where they serve as board members as part of their position. Employee representatives are exempted from this rule Benefits in kind and other special schemes Senior executives will normally be given the benefits in kind in line with common market practice, such as mobile phone, laptop, broadband, newspapers, company car or car allowance, and parking. There are no special restrictions on what other benefits may be agreed. The Group s management loan scheme was brought to an end in 2006 and has not been offered to new managers since. This scheme entitled managers to a loan of NOK 400, ,000 secured by a mortgage against the borrower s property. Schibsted ASA has posted an unconditional guarantee of NOK 2.5 million for the remaining loan portfolio, which currently represents approximately NOK 9 million Variable pay and other incentive schemes Guidelines have been established for the use of variable pay and other incentive schemes in the Group. The Group Board believes that incentive schemes are necessary to ensure long-term value creation and entrepreneurship. Such schemes may consist of short-term incentives (normally annual) and long-term incentives (normally three years) Short-term incentive schemes Senior executives participate in an annual variable pay program that is linked to target achievement each year. Other Group employees may also participate in such schemes. Variable pay is limited to a maximum of six months salary for the Group CEO and varies from three to six months salary for other members of the Group Management Team. SCHIBSTED ANNUAL REPORT 2013 STATEMENT OF EXECUTIVE COMPENSATION 41 SCHIBSTED ANNUAL REPORT 2013 STATEMENT OF EXECUTIVE COMPENSATION For the top manager/editor-in-chief of larger units, the maximum payment is normally limited to four months salary. For other employees taking part in short-term incentive schemes, the maximum payment is normally limited to three months salary. Variable pay consists of two parts: one part is linked to financial criteria, the other to strategic, operational, and organizational criteria. These criteria form part of an overall assessment. The payment of variable compensation to senior executives for the 2013 financial year is shown in note 27 to the financial statements Long-term incentive schemes for executives The objective of having long-term incentive schemes is to promote long-term value creation. By receiving a minor portion of the long-term value creation, the interests of the managers and the shareholders are aligned. In 2010, Schibsted s options program was replaced by the Long-Term Incentive program (LTI program); an annual, rolling, three-year share purchase program. The program was expanded in 2012 to include several online classifieds companies and management groups. The introduction of an LTI program for a large group of managers means that we have common rules for incentive schemes in large parts of the Group. This in turn leads to administrative savings and creates greater predictability and equal treatment throughout the Group. The LTI program provides settlement in Schibsted shares, mainly based on the performance and target achievement of the participant s employer company. Ownership of Schibsted shares promotes common goals and encourages cooperation between the companies. Specialized incentive programs may be introduced for selected companies, especially in growth and start-up companies. Such programs will also be long-term, but may contain elements of cash. The main elements of Schibsted s LTI program are as follows: Schibsted s LTI program is divided into four participant levels. Level 1 is for the Group CEO, Level 2 is for members of the Group Management Team. Level 3 and Level 4 are for selected key managers in the Group and managers/management groups in key subsidiaries. Level 3 relates to the media house business while Level 4 relates to online classifieds. The participants at each level are given a defined basic amount, calculated as a percentage of their fixed salary. Guidelines has been established regarding allocations to the respective participant levels in order to ensure flexibility and mobility while also taking into account individual pay differences and variations in the compensation schemes. 42 C 22

244 At the start of the program, between 11 and 33 percent of the base amount ( share purchase amount ) is awarded in the form of Schibsted shares and subject to a lock-in period until the program expires (three years). If a Level 1 or Level 2 participant leaves the company during the lock-in period, shares that were bought for the share purchase amount must be handed back. No corresponding restriction applies to Level 3 and Level 4 participants. The remaining percent of the base amount ( performance amount ) is linked to three-year performance or target achievements. At the end of the three-year period, the participants receive settlement in Schibsted shares based on their target achievement over the three-year period. The number of shares is calculated based on the average price during the program s three-year period. Level 1, 2 and 3 participants receive the full performance amount after three years. Level 4 participants receive one third of the performance amount after each program s three-year period, and the remaining two thirds one year thereafter. The maximum settlement amount in each program will depend on target achievement during the period. If the minimum target is not achieved during the three-year period, only the share purchase amount will be paid at the end of the three-year program. The Group Board determines the allocation to the CEO. Other allocations are determined by the CEO within the program s frameworks and in compliance with the Board s allocation guidelines. The CEO s allocations are reported to the Board. Guidelines apply to the adjustment of the targets during the measurement period. The final outcome of the LTI program is determined by the Group Board. Employees leaving the company during the three-year period of each LTI program are normally not entitled to partial accrual. An exception applies to the share purchase amount for Level 3 and Level 4 participants, and in general if a participant leaves the company due to illness, death, early retirement, normal retirement or other special reasons. In such cases, entitlement to partial accrual is granted. Level 1 and Level 2 participants are required to hold their LTI-shares for 2 years following the end of each LTI-program. The final cost of the 2014 LTI program, measured as the cost over the program s cycle, depends on the number of participants, the individual participant s salary on the allocation date, share price performance, and target achievement during the three-year period. The cost of the LTI program in 2014 (2013 figures in brackets), with 108 (112) participants, is estimated at NOK 79 million (NOK 76 million) if the expected target achievement is reached (excluding employers contribution). If the maximum outcome is achieved, the cost is estimated at NOK 161 million (NOK 133 million) (excluding employers contributions). If target achievement falls below the minimum requirement, the cost of the program will only relate to the share purchase payment and is estimated at NOK 18 million (NOK 18 million) (excluding employers contributions). SCHIBSTED ANNUAL REPORT 2013 STATEMENT OF EXECUTIVE COMPENSATION 43 SCHIBSTED ANNUAL REPORT 2013 STATEMENT OF EXECUTIVE COMPENSATION Introduction of a share saving program for all Group employees effective from 2014 To motivate and retain our Group employees, the Group Board has decided to introduce a share saving program for all Group employees including executives participating in the LTI program. The share saving program will be effective from This program replaces the previous share purchase program for employees in Norway and Sweden. All Group employees will be invited to save up to 5 percent, but a maximum of NOK 50,000, annually of their base salary through payroll deductions in order to purchase shares in Schibsted. The share purchase will be made on market terms four times a year, after the release of Schibsted s quarterly results. Employees, who chose to hold their shares for two years ( holding period ) and are still employed by the Group at the end of the holding period, will receive one free bonus share from Schibsted per two shares purchased and held during the holding period. 5. PENSION SCHEMES The Group CEO and other senior executives in Norway are, like other employees, members of the Group s company pension schemes; see note 21 to Schibsted s consolidated financial statements. The Group CEO and other senior executives in the Group have individual pension plans which mainly entitle them to early retirement pension from the age of 62 (early retirement pension) and thereafter a lifelong retirement pension, disability pension, child pension, and spouse/cohabitant pension in addition to pension entitlements under the national insurance scheme. The pension costs for senior executives in Schibsted ASA are stated in note 27 to the financial statements. As from 2012, the Group s pension scheme for new managers in Norway is a defined contribution scheme. This is considered to be in line with market developments and will over time contribute to reducing the Group s pension costs. Most of the Group senior executives based in Sweden belong to defined contribution pension schemes entitling them to benefits in line with those offered to Norwegian senior executives from the age of 62 years. The Group Board is of the opinion that the current schemes for senior executives based in Sweden are adapted to the market, and these schemes will continue in 2014 without any major changes. Pension levels and schemes for senior executives outside Norway and Sweden must be viewed in connection with the individual manager s overall salary and employment conditions and should be comparable to the overall compensation package offered to managers in Norway and Sweden. Local rules governing pension legislation, social security entitlement, taxation, etc. are taken into account when designing individual pension plans. 44 C 23

245 6. SEVERANCE PAY The Group CEO is entitled to a severance payment equivalent to 18 months salary in addition to the six-month notice period. Members of the Group Management Team and senior executives are normally entitled to severance pay equivalent to 6 18 months salary, depending on their position. A non-compete clause and provisions governing reduction in the severance pay normally apply during the severance pay period. 7. AGREEMENTS ENTERED INTO OR AMENDED IN 2013 AND THEIR IMPACT ON THE COMPANY AND THE SHAREHOLDERS The Group Board believes that the guidelines for share-based remuneration promote value creation in the company/group and that the impact they have on the company and shareholders is positive. Oslo, 25 March 2014 Board of Directors, Schibsted ASA Schibsted Media Group s headquarters in Oslo SCHIBSTED ANNUAL REPORT 2013 STATEMENT OF EXECUTIVE COMPENSATION 45 SCHIBSTED ANNUAL REPORT 2013 SOCIAL RESPONSIBILITY Statement of Corporate Social Responsibility OUR MISSION AND VALUES Schibsted Media mission is Empowering people in their daily life. We empower people by providing them with news and opinions, by providing transparent and secure marketplaces, and by defending freedom of the press and editorial integrity. Throughout our history we have been driven by a desire to challenge conventions and to think in new directions. We consider ourselves a defining force within our industry, and as such our vision is Shaping the media of tomorrow. Today. The values that support our mission and vision are: We have integrity We are innovative We are a team We are here to win You don t have to compromise between sustainability and profitability. It s a misconception to think that sustainability means foregoing profits for a better world. Re-examining your value chain with a keen eye on sustainability will reveal new and different ways of operating which are better for the externalities and at the same time reduce costs or increase revenues. To me, building a sustainable business is closely linked to innovation. You examine your business from the outside and ask if you could organize it more intelligently. We have an innovation culture, so I m optimistic that identifying and integrating sustainability will continue to be part of our way of doing business. Ole Jacob Sunde, Board Chair, Schibsted Media Group. Schibsted Media Group s history is founded on a long tradition of independent news, information, and transparent marketplaces. Trustworthiness and quality are essentials for a media group our users must be able to trust our news and products. We believe this contributes to empowering people in their daily life and thereby to building more transparent and sustainable societies. Rolv Erik Ryssdal, CEO, Schibsted Media Group. OUR PRINCIPLES In Schibsted we define our corporate social responsibility in terms of how we integrate social and environmental concerns within our business operations and interactions with our stakeholders at the same time as we address the expectations of our shareholders. It is closely linked to our mission, vision, and values. In other words, our corporate social responsibility dictates how we care about our own people and the world around us, including our users and readers, our employees, local communities impacted by our operations, the environment, and society at large. Our ambition is to maximize the creation of shared value for our shareholders, our stakeholders, and society at large while minimizing potentially adverse impacts of our operations. 46 C 24

246 In Schibsted we draw a distinction between our corporate social responsibility which is a strategic business issue and charity, sponsorship, and philanthropy. We acknowledge that charity, sponsorship, and philanthropy represent a valuable contribution towards creating a better world and towards contributing positively to our companies reputation and brands, but we firmly believe that our corporate social responsibility goes beyond that. Our corporate social responsibility also includes our principles relating to human rights, labor rights, and anti-corruption as described in our Code of Conduct. In addition to the areas mentioned in the Code of Conduct, our corporate social responsibility policy includes our principles relating to the environment. ENDORSEMENTS AND MEMBERSHIPS Schibsted Media Group has been a member of the UN Global Compact since 2009, and continues to support and promote its ten principles. Schibsted is also committed to comply with the OECD s guidelines for multinational companies, which contain voluntary principles covering a variety of issues affecting companies social responsibilities. In 2011, Schibsted became a member of the Nordic Media CSR Forum with the aim of setting the stage for corporate social responsibility in the media sector. For more information and the Forum s activity report for 2013, visit HOW WE WORK ON CORPORATE SOCIAL RESPONSIBILITY In 2013, the Board initiated a corporate social responsibility project led by our Executive Vice President for Communication and CSR. The project has had close dialog with the Chair of the Board and the CEO. The project is closely linked to our mission Empowering people in their daily life and thereby to our core business. The objective of the project is to bring CSR to the strategic level, thus making it very clear that CSR is integrated in our daily business. We therefore express our CSR approach through two specific dimensions: Empower people & Empower business THE SIX PILLARS OF OUR CORPORATE SOCIAL RESPONSIBILITY Our corporate social responsibility is structured around six pillars: Responsible business People and society Human rights, labor rights, and professional development Environment Governance and ethics Charity and humanitarian activities RESPONSIBLE BUSINESS Trustworthiness and quality are essentials for Schibsted our users must be able to trust our news, products, and services. We believe this contributes to empowering people in their daily life and thereby building societies that are more transparent. For our media houses, this implies having a systematic and structured quality assurance process for all steps of the journalistic process and a keen awareness of how the SCHIBSTED ANNUAL REPORT 2013 SOCIAL RESPONSIBILITY content we publish influences our readers and society. For more information about out quality assurance process, visit for the Annual Editorial Report. For our classifieds operations and online services, responsible business implies creating marketplaces that are reliable, effective, and safe for our users. Our classified sites work proactively to prevent various forms of undesirable activity such as advertising of illegal or unethical products, illegal marketing, and fraud. EDITORIAL FREEDOM AND EDITORIAL GOVERNANCE One of Schibsted Media Group s foremost responsibilities is to ensure editorial freedom and the right to freedom of speech. Free media play a critical role in underpinning strong, viable democracies. Schibsted s Articles of Association states that the shareholders shall enable Schibsted to operate its information business in such a way that editorial freedom and integrity are fully ensured. EDITORS FORUM The Schibsted Editors Forum serves as a watchdog, guarding the principles of publishing within Schibsted Media Group. The Editors Forum consists of approximately 40 editors with responsibility for Schibsted Media Group s media houses and print and digital products. They meet twice a year to discuss common challenges and to share experiences, best practices, and case studies from the world of publishing. The aim is to enhance quality and standards of journalism within the Group. 47 SCHIBSTED ANNUAL REPORT 2013 SOCIAL RESPONSIBILITY EDITORIAL GOVERNANCE In 2011, Schibsted s Editors Forum adopted a framework for editorial governance in the Group s publishing businesses. The framework safeguards the principle of editorial freedom and defines it explicitly for the benefit of Schibsted s publishing companies in countries where this principle is not enshrined in local law. A Schibsted editor shall promote freedom of opinion and defend the democratic values of society, with full respect for human rights, equality, and diversity. A Schibsted editor shall have personal and full responsibility for all content, including advertising, and shall ensure that media act with integrity in every respect. A Schibsted editor has a free and independent role, and is entitled to independent leadership of the editorial department and editorial activities and to the freedom to shape editorial opinions within the framework of the fundamental ideas of the medium. A Schibsted editor shall ensure a form 48 of journalism that makes it clear to the reader what is being presented as information and facts and what is being presented as the opinion of the medium. A Schibsted editor shall make it clear to the reader what is independent editorial content and what is commercial promotion. A Schibsted editor shall focus on editorial quality and credibility and shall establish ethical and journalistic standards to this end. The ethical guidelines should cover journalistic research as well as publishing. A Schibsted editor shall protect the freedom of speech, the freedom of the press, the principle of access to official documents, the free flow of information, and free access to sources. A Schibsted editor shall protect individuals and groups against injustice and shall uncover matters critical to society. This framework of editorial governance has been presented to and endorsed by the Group Board. ANNUAL EDITORIAL REPORTS Schibsted s publishing businesses prepare annual editorial reports and publish them on the Group s website. The purpose of the annual editorial reports is to increase transparency in our editorial activities. In the report, the editors-in-chief present a status report describing editorial goals, challenges, and results during the past year. The editors-in-chief submit the reports to their respective boards of directors. Due to the principle of editorial independence, these reports will not be subject to a board resolution. However, the editor-in-chief may answer questions about matters of interest from a publishing or journalistic perspective. Furthermore, the Group s annual editorial report is presented to the Group Board by the president of Schibsted s Editors Forum. The annual editorial report includes information on editorial quality control, how the newspapers work with sources, and the number of complaints to the respective countries press complaints bodies. Visit for the annual editorial reports. CLASSIFIEDS SITES AND ONLINE SERVICES All the online marketplaces and portals operate under a set of rules to prevent fraud and advertising of illegal or unethical goods. Our sites inform users of the terms and conditions of use, and several sites have implemented comprehensive and transparent consumer safety and privacy policies, notably Blocket, LetsDeal, and Finn. Manual and automatic ad reviewing processes are in place locally to ensure that weapons, drugs, and other illegal or counterfeit items are not advertised on the sites. C 25

247 All sites also have a zero-tolerance policy against pornography and prostitution. If the Group acquires companies that do not follow our policies at the time of acquisition, the Group has established procedures to ensure that such activities are discontinued as soon as possible after acquisition. DIGITAL IDENTIFICATION AND ENHANCED USER EXPERIENCE In 2011, Schibsted Payment was formed to establish a single-sign-on and payment solution for the Schibsted companies. Schibsted Payment ID (SPiD) is the primary product of Schibsted Payment, delivering an easy and secure way to log in and pay across many services. The goal is to make digital identification and payment transactions safe and easy for users and service/content providers. Combined with our strategic focus on technology and advanced data analytics, we aim to create insights from our data that benefit our users with improved and more relevant products and a unique user experience. We believe that content adapted to individual users represents the future, and the Group is currently working on a solution that offers users freedom of choice. The international trend is to use such features not only for editorial content, but also for advertising. In 2013, the focus on data protection increased in society at large. For Schibsted, the opportunities represented by digitalization and increased insight also imply a stronger focus on privacy protection. Based on our value of integrity, we are highly committed to transparency and compliance with privacy legislation. To underline this commitment, the Group appointed a data protection officer in A key priority for the Group is to provide its users with sufficient and easily understandable information about the terms and other mechanisms to ensure that they understand what we do with the information we gather and why they are provided with specific content. SCHIBSTED ANNUAL REPORT 2013 SOCIAL RESPONSIBILITY PEOPLE AND SOCIETY By people and society is meant the impacts on society at large of initiatives implemented by the Group and its subsidiaries and aimed at external stakeholders. These include concepts aimed at users, local communities, target groups, etc. developed by the Group and its subsidiaries or through strategic partnerships. THE CHANGING MEDIA LANDSCAPE Changes in consumption habits and the accelerated speed of transition from traditional channels to mobile platforms accelerated in Our media houses and online marketplaces have taken significant steps to adapt to this changing environment and to meet the needs and expectations of the users of our traditional and digital products and services. Although the media landscape is changing, the role of the media remains the same. By highlighting and facilitating discussions on critical issues in society, the media move society forward. One of the most powerful strengths of the media is the ability to effect change. Schibsted believes our efforts to build world-class digital media houses will enable us to manage this important role even better. The digital platforms offer new opportunities for increased product relevance through continuous live coverage, interactive storytelling, and increased reader involvement. Continuous live reporting implies that journalistic decisions must be made in a fraction of the time available in traditional media; this, however, must not be allowed to compromise the quality and credibility of the content. Articles published on all our media houses online platforms are open to comment by our 49 SCHIBSTED ANNUAL REPORT 2013 SOCIAL RESPONSIBILITY readers. Increased reader involvement, facilitated by mobile platforms, strengthens transparency and focus on quality in the relationship between the readers and the journalists. Additionally, the digital debate arenas bring public debates to a greater number of citizens and enable more people to have their voice heard. The media houses have implemented several measures to prevent harassment, threats, and hateful comments. The media houses have moderators monitoring the debates and removing comments deemed inappropriate. Most of our media houses require people to be logged in via social media etc. to be able to comment on articles. In addition to traditional news reporting, our media houses have also created 50 several new meeting places for our users, places where they can share knowledge and experiences with each other. ONLINE CLASSIFIEDS: A PEOPLE S MOVEMENT Our classified operations are online marketplaces that facilitate transactions of goods between individuals. In several of our markets, the classifieds sites have become a people s movement, where secure and simple solutions create new possibilities for consumers. In our mature markets, the users add value to the marketplace by inventing new ways of trading. The marketplaces are simple, practical, and local, and create a personal relationship between buyer and seller. Our marketplaces empower people to help each other in useful ways and therefore align perfectly with the Group s mission. Our online services enable transactions of goods and services between individuals and companies, and serve as portals for retrieving information. Consumers use our marketplaces to search for information they need in their daily life, enabling them to make better-informed and smarter purchase decisions. Leboncoin Recognized as a people s movement in France In January 2013, the renowned French newspaper Le Monde published an extensive article on the tremendous success of Schibsted s French classifieds site Leboncoin. After only six years, Leboncoin has become the second-most popular website in France, measured in terms of viewing time. It has more than 17 million unique visitors every month, and more than 3.6 million people visit the site daily. Seven new ads are placed every second, and currently total 21 million ads altogether. The article in Le Monde stated that Leboncoin has not only become the leading site in terms of sales of physical items: it is also a tool that has allowed citizens to invent new consumer and exchange practices. In the middle of an economic recession, many people have found new ways of earning their income with the help of Leboncoin. The media scientist Jacques Le Goff said: Leboncoin is the marketplace of the twenty-first century. It is a historic change, and creates a personal relationship between buyer and seller. Thus, it empowers people to help each other in useful ways. C 26

248 A selection of examples from our subsidiaries is presented below. DEMOCRACY AND FREEDOM By promoting and defending democracy and freedom of speech, practicing reliable and independent journalism, and facilitating marketplaces for services and jobs, we play a positive and important role in society and in people s lives. Aftenposten Min Stemme: Encouraging political participation by young people During the Norwegian general election in 2013, Aftenposten launched the editorial campaign Min Stemme [My vote] aimed at encouraging young people to participate in the election. The main ideas were to use advertisement space to motivate people to vote and to focus on young people. Twenty-six media houses and commercial and non-commercial partners joined the project, which resulted in national advertising campaigns, editorial coverage, and increased interaction with readers. Aftonbladet Nya Tuffe Sverige: Ordinary people s experiences with authorities Aftonbladet s webpage entitled Nya Tuffa Sverige [The new, tougher Sweden] depicts ordinary people s hardships and experiences with the authorities hardened attitude towards people enduring hardship, unemployment, illness etc. Bergens Tidende The Janne story and «I verdens rikeste land» In 2013, Bergens Tidende s investigative journalism put the spotlight on how two Norwegian children had their childhood destroyed due to system failure and neglect. The so-called Janne story was one of the most-shared articles in Norway in 2013, and received more than 40,000 likes on Facebook. This brought an important failure of the Norwegian welfare state to the attention of people outside the newspaper s traditional readership. In the article series I verdens rikeste land [In the richest country of the world], the newspaper used innovative methods to show how public funds are spent. Svenska Dagbladet Hyreskollen: Increased transparency in the housing rental market In 2013, Svenska Dagbladet launched Hyreskollen [Check your rent] as part of series of investigative articles into the scarcity of rental apartments, particularly for young people in the Stockholm area, and illegal price levels for subletting. In cooperation with Blocket.se, Hyreskollen invited readers and users to register their housing rent in order to compare prices for similar apartments. Thousands of stories were generated, forcing the responsible minister to take action. Aftenposten Bak forsiden : Increased transparency in the journalistic process In September 2013, Aftenposten launched the Facebook page «Bak forsiden» [Behind the front page].the aims behind the initiative were to increase reader understanding of the journalistic process and to increase transparency in editorial decisions and ethical dilemmas faced by journalists and editors. Readers and others can interact and ask questions directly to eight journalists and editors. Aftenposten also has a dedicated website on the online edition providing tips on how to contact journalists and information about Aftenposten s anonymous news tips hotline. SCHIBSTED ANNUAL REPORT 2013 SOCIAL RESPONSIBILITY EMPLOYABILITY Several of the countries in which we operate have high unemployment rates, particularly among young people. Several of our classifieds sites and job sites represent an important source for the unemployed to find jobs in a tough job market. As an example, more than 500,000 new job ads were posted on our job classifieds site in Spain and Italy in InfoJobs.es Improving employability InfoJobs Spain is a member of Prepárate, a collaborative jobs venue, organized voluntarily by HR and coaching expert companies. Under this project InfoJobs shares knowledge and tools to help job seekers to improve their employability by focusing on their personal and professional development. In 2009, InfoJobs launched InfoJobs Commitment, a series of initiatives aimed at increasing employability among vulnerable groups such as the young, the unemployed, and the disabled, all of whom are particularly affected by the financial crisis. To date, InfoJobs has launched a total of 16 Compromiso (commitments). YOUTH Blocket Partnership with Retoy: Teaching sustainability through play Blocket has a strategic partnership with Retoy.se, a charity that creates arenas and events where children discover how fun and easy it is to be sustainable and environmentally friendly. At the events, children practice sustainable consumption in toy swap bazaars, and recreate new toys from old toys and recycled materials in in Retoy Labs. Through participating in these events the children also learn about United Nations Convention of the Rights of the Child. Blocket supports the charity 51 SCHIBSTED ANNUAL REPORT 2013 SOCIAL RESPONSIBILITY through quarterly donations and employee participation in Retoy s events. Bergens Tidende and Aftenposten Debate arenas for youth Aftenposten s SI;D (launched in 2005) and Bergens Tidende s BTbatt (launched in 2008) are arenas where youth between the age of 13 and 18 can participate in public debates by expressing their opinions, thoughts, and concerns. The paper and online editions are dedicated to debate articles written by young people. Aftonbladet Svenska Hjältar school project: Discussing ethics and moral courage with young people Aftonbladet s annual campaign Svenska Hjältar [Swedish heroes] pays tribute to everyday heroes through editorial coverage across all platforms. In 2013, the campaign featured a school project where the editor-in-chief and Svenska Hjältar s spokesperson Mark Levengood visited ninth graders from 16 different schools to 52 discuss ethics, moral courage, and humanity based on five Swedish heroes stories. In the five videos, which are also featured on the Svenska Hjältar website, five young people talk about how they fought against bullying, coping with parents with addiction problems, overcame tough conditions, and intervened in abuse and assault situations. InfoJobs.es Promoting young entrepreneurship and knowledge InfoJobs.es in Spain financed six local grants worth EUR 1,500 each to promote the entrepreneurial mindset of young people (Compromiso nº13). In the last program, Compromiso 16, InfoJobs Spain invited its customers to sponsor schools. The aim is to provide emotional education and practical knowledge to young people. AWARDS Schibsted s media houses received several awards in For a full listing of these awards, visit the 2013 Annual Editorial Report due for publication in May KNOWLEDGE AND INFORMATION: INCREASED TRANSPARENCY IN CONSUMER MARKETS Personal finance In recent years, Schibsted Media Group has launched several services that contribute to increased transparency in the field of consumer services. These services are easy to use and are an efficient way for consumers to compare different service providers. One such example is Lendo, a marketplace for consumer loans in Sweden and Norway. When customers submit applications for consumer loans through Lendo, they receive offers from several banks, making it easier to compare terms and choose the bank with the best offer. In 2012, Lendo Sweden and the Riksbank (Sweden s central bank) started a joint review to better understand how an online marketplace for consumer loans is affecting competition within the consumer loans industry. The Riksbank s review of the retail payment market in Sweden was published in June 2013 and can be found here: In 2013, Schibsted Media Group took a leading position in Swedish online personal finance by acquiring the personal finance marketplace Compricer.se. Compricer has a broad product portfolio in the personal finance segments, with 25 different categories, and is particularly strong in insurance. It complements Schibsted Tillväxtmedier s existing portfolio of personal finance sites like Lendo, Suredo, Kundkraft, Elpriser.se, Mobilio, and MittBolån.se. The synergies between Schibsted s strength in online and offline media enable Compricer to help more consumers make informed decisions about their personal finances. C 27

249 SERVICES Mittanbud.no is another example of a service that increases transparency. Founded in 2009, it has become the leading online marketplace for connecting buyers and sellers of services in Norway. The service was first developed to advertise skilled trades and services, but has since been expanded with new services every year. Since its launch, Mittanbud.no has handled over 300,000 projects throughout the country. The site also provides users with advice on how to write contracts and how to verify the quality and professionalism of service providers, including supplier evaluations posted by users. To date, 23,000 suppliers have registered, and users have posted more than 25,000 supplier evaluations of work performed. CONSUMER GOODS In 2012, Schibsted acquired 96 percent of Prisjakt.nu. Prisjakt is a market leader in consumer support in online marketplaces. As one of Sweden s largest independent information and price comparison services, Prisjakt helps customers reach the best choice in products, prices and suppliers. HUMAN RIGHTS, LABOR RIGHTS AND PROFES- SIONAL DEVELOPMENT Schibsted supports and values international human rights principles, and works to ensure that the Group is not involved in any breaches of human rights. An important element in these efforts is the right to freedom of expression. Schibsted Media Group recognizes our employees right to freedom of association and collective negotiations, and facilitates elections of employee representatives. Schibsted also recognizes the International Labor Organization s fundamental conventions and national legislation on labor standards. Schibsted practices zero tolerance of forced labor and child labor across the Group, and managing this risk is high on our agenda. The companies working environment committees work continuously to facilitate a good working environment and thus minimize workplace discrimination. EMPLOYEE REPRESENTATION Employee representation is safeguarded in several ways. The main arenas for employee representation are listed below. For more details, visit 1. Employee representatives on the Group Board: To date, the Group Board consists of 10 members, three of whom are employee representatives elected by the employees for two-year terms. 2. Group employee representatives: Schibsted currently has three full-time Group employee representatives. Their task is to safeguard the interests of all employees in matters dealt with at Group level. 3. Schibsted European Work Council (EWC) the EWC is intended to serve as a forum for information, dialog, and consultation between employees and the Group Management Team. The EWC currently consists of 35 representatives elected by and among the employees. The EWC convenes twice a year. SCHIBSTED ANNUAL REPORT 2013 SOCIAL RESPONSIBILITY Our Group employee representatives visit our subsidiaries on a regular basis and review local working conditions and the results of the annual Schibsted Employee Survey with the local management. The representatives also organize meetings to which all local employees are invited, to inform them about the different levels of employee representation within the Group. In 2013, the Employee News intranet site was revitalized, and now includes news and updates on working conditions and other matters affecting employees in our various subsidiaries. EQUAL OPPORTUNITIES Schibsted is a knowledge enterprise that is reliant on talented employees. Principles governing equal opportunities are stated in our Code of Conduct. We will ensure that employment related decisions are based on relevant qualifications, merit, performance, and other job-related factors, and we will not tolerate discrimination relating to employment. As an example, Schibsted has a clear objective to provide equal development opportunities for men and women. We strive to achieve a good gender balance when recruiting candidates for our competence and trainee programs. The Group Management Team has implemented initiatives to further enhance gender equality. Since 2011, all business units within Schibsted report on gender equality when hiring or promoting to management positions as part of their quarterly reports to the Group Management Team and the Group Board. Each company and unit carefully monitors their employee surveys and implements actions based on the results. In January 2012, a group of female managers from the Swedish companies 53 SCHIBSTED ANNUAL REPORT 2013 SOCIAL RESPONSIBILITY established a network with the objective of empowering female talent. The network organizes regular meetings facilitated by internal or external people. The network meetings serve as a platform discussing opportunities and growth, and for exchanging experiences and ideas. In 2013, Schibsted organized two Lean In gatherings focusing on how to empower female talent in Schibsted. The first Lean In gathering for women in Schibsted Media Group was held in May, when the main topic was inspired by Facebook COO Sheryl Sandberg s book entitled Lean In. The initiative proved extremely popular, and the second gathering held in November 2013 focused on how female employees in Schibsted can make the transition from talented employee to leader. PROFESSIONAL DEVELOPMENT Competence building and organizational development are critical to Schibsted s future success. As a knowledge enterprise in a disruptive industry, it is a strategic priority to ensure that our people have the right competence and expertise. We have principles we call the Schibsted Way, and several competence-based learning programs including innovation and brand building, Schibsted Sales Academy, Schibsted Sales and Business School, and Schibsted Journalism School. We also have cross-functional programs such as the Management Training Program, the Project Management program, the Mentor Program, and the Continuous Improvement Program. For further information on professional development in Schibsted Media Group, visit 54 AWARDS European Great Place to Work In 2013, 2119 companies participated in the national Great Place to Work (GPTW) surveys in 19 countries around Europe. Of these, 100 companies were shortlisted as Europe s best places to work. On the list of the 50 Best Small and Medium Workplaces, Schibsted Media Group was represented by Blocket (number 11), InfoJobs (number 23), and Finn (number 40). ENVIRONMENT Schibsted Media Group aims to ensure that protecting the environment becomes an integral part of daily activities across the Group. Our principles related to the environment are included in our corporate social responsibility policy. Our ambition is to continuously work to reduce the environmental impact of our operations. Additionally, we want to contribute to reducing the environmental impact of society at large by giving people the opportunity to make environmentally friendly choices by buying second-hand goods. We are continuously striving to adapt the best practices of our subsidiaries across the Group. With the exception of our printing plants, our operations impact the environment through pollution to a very limited extent. Details about the impact of our operations on the environment are provided below. CLASSIFIEDS Schibsted Media Group is a large player in the market for the reuse of products through our online classifieds sites. Our marketplaces extend the economic life cycle of a range of products and contribute to reducing the need for manufacturing new products, thus alleviating the pressure on critical resources. In 2013, more than 250 million ads were posted on our largest classifieds sites (Blocket, Leboncoin, Subito, Willhaben, Bomnegocio and Segundamano. Our largest classified sites each facilitate the exchange of millions of used items per year, to a value of several billion euros. The reuse market has increased significantly in our mature markets, supported by an increased focus on the environmental impact of the consumption society and by more temporary vintage trends. A survey conducted by Blocket in 2013 shows that 39 percent of users name environmental concerns as the main reason for using the service, representing an increase from 29 percent in In France, a study entitled Overview of Product Reuse in France conducted by the French Environment and Energy Management Agency (ADME) indicated that people put items they previously would have thrown away up for resale. In Norway, the National Institute for Consumer Research (SIFO) will launch a study to find out how online reuse marketplaces influence consumption. As these studies and surveys show, the approach to ownership of goods is starting to change: the leasing approach is gradually gaining ground for items such as furniture and household objects. Our classifieds sites acts as enablers and accelerators of this phenomenon. As an illustration, in 2013 Finn s Torget (generalist marketplace) where individuals sell, give away, and purchase second-hand goods, registered an annual 17-per-cent increase in the Give away category, with more than 270,000 ads posted during the year. C 28

250 Blocket Environmental initiatives Blocket is in many aspects our most advanced subsidiary when it comes to actively managing the environmental impact. In 2012, Blocket started an environmental study together with the IVL Swedish Environmental Research Institute. The aim of the study was to determine the environmental impacts of Blocket. The study, which was published in May 2013, presented impressive results: according to the study, the Blocket users potential reduction of emissions and the environmental benefits of second-hand trade amounts to an impressive 1.6 million tonnes of CO2 equivalents. Achieving an equivalent reduction in greenhouse gas emissions would require stopping all road traffic in Stockholm for one and half years or all road traffic in Sweden for one month. Additionally, Blocket has implemented an environmental policy formalizing principles related to the use of technology, recycling, and energy. Finn.no Bruktduellen and Christmas campaigns In 2013, Finn.no launched Bruktduellen (Second-hand Challenge), a campaign that builds on the international trend to shop less. The initiative invited users to enter into agreements with friends on social media and commit not to buy any new goods for 50 days. For every hashtag posted, Finn.no donated money to the Rainforest Foundation Norway, resulting in 13,500 users saving money, reducing environmental impacts, and saving three million square meters of rainforest. In December 2013, Finn.no launched an advertising campaign in some Norwegian newspapers encouraging readers and users to buy second-hand items as Christmas presents. MEDIA HOUSES Editorial coverage and editorial campaigns As part of the editorial responsibility to uncover matters critical to society, several of our newspapers published articles SCHIBSTED ANNUAL REPORT 2013 SOCIAL RESPONSIBILITY covering climate change and provided insights into political processes. Bergens Tidende Gamifying reduction of inner city pollution In February 2013, Bergens Tidende launched PUST (Breathe), an editorial campaign encouraging readers to reduce their car use in order to reduce smog and congestion in the Bergen area. The campaign invited individuals and companies to register their alternative way of commuting on the PUST website and competing against each other. The campaign resulted in 3,200 participants, more than 32,000 green commutes, and more than 32,000 green kilometers. PRINTING PLANTS Production of the Group s newspapers is a digital process up to the printing stage, and has little impact on the external environment. A newspaper printing plant has a relatively neutral effect on the environment, and the chemicals used to produce the newspapers are treated as special waste and recycled as far as possible. Agreements with approved transport companies ensure that special waste is collected safely. All companies in Schibsted Media Group operate within the scope of applicable environmental regulations. After selling Kroonpress in Estonia in August 2013, Schibsted currently owns five printing plants: one in Oslo, two in Bergen, one in Stavanger, and one in Kristiansand. Our newspaper production processes are digital all the way to the printers. If polluting chemicals are used, the processes take place in closed systems. Source separation processes have been introduced for almost every type of waste. 55 SCHIBSTED ANNUAL REPORT 2013 SOCIAL RESPONSIBILITY Schibsted Norge Trykk in Oslo now separates as much as 99 percent of its waste. Special waste is collected by approved transport companies, and the general volume of waste has been significantly reduced. Waste paper, cardboard, waste products from paper reels, and undistributed newspapers account for as much as 96 percent of the total waste volume. The printing plant in Oslo is a member of Grønt Punkt, a waste recovery and recycling company, and pays an environmental fee to ensure proper treatment of all packaging and supervision of external suppliers. Normal operations do not involve any danger of harmful emissions from the printing plants. All the printing plants owned by Schibsted in Norway are licensed under the Nordic Eco Label scheme to use the Swan Eco Label on all printed matter produced. The Swan Eco Label is the best known and most frequently used eco-labeling scheme in the Nordic countries. In Sweden, newspapers print the main part of their circulation with the printing supplier V-TAB. V-TAB operates a system for environmental and quality control, and nine of its ten printing plants are certified under ISO 14001:2004 and ISO 9001:2008. All printing plants have been granted licenses by the Nordic Eco Label scheme in Sweden to use the Swan Eco Label on all the print items it produces. In Spain and France, the newspapers print their circulation with different external printing suppliers. Most of the printing 1 Trend in printing plants consumption of paper, printing ink and electricity Paper (thousand tons) Printing ink (thousand tons) 2,3 2,7 2,7 2,6 Electricity (GWh) 36,9 38,9 43,6 40,8 2 Total emissions from main operations* Newspaper tco2e Paper, heatset tco2e Total Transportation and stationary combustion Transportation tco2e Stationary combustion tco2e 166,4 173,2 253,5 401,9 242,4 Total tco2e ,4 1920,5 2317, Electricity District heating/cooling tco2e Other electricity tco2e Total tco2e Total emissions tco2e * Emissions from Norwegian entities have been reported from 1 October 2012 to 30 September plants are certified under recognized environmental standards. The Group s newspaper companies in Norway, Sweden, Spain, and France arrange for unsold newspapers to be returned and sold for recycling. As a direct consequence of digitalization and structural changes in the media industry in Scandinavia, the consumption levels of our printing plants continue to decrease. EFFORTS TO REDUCE ENVIRONMENTAL IMPACT IN OUR SUBSIDIARIES Property Schibstedhuset, located in central Stockholm, is one of the world s most advanced office buildings in terms of energy efficient solutions and materials. Its energy consumption is a third of what is usual for equivalent buildings. Surplus energy is obtained by recovering excess body heat produced by the 200,000 commuters who pass through the Central Railway Station every day. Cooling comes from Lake Klara (a canal in central Stockholm). In its relocation process, Schibsted Sverige made several conscious choices to reduce environmental impact such as effective use of office space, video conferencing facilities, renovation of existing furniture, environmental requirements for the entire interior, light control, follow-me printing systems, environmental requirements for cleaning services, coordination of transport, and systematic waste management. According to a study conducted in cooperation with KTH Stockholm, our Swedish operations have reduced their environmental impact by more than 50 percent since relocating to Schibstedhuset in C 29

251 Schibsted Sverige measures its environmental impact of energy consumption, business travel, transport, and commuting on an annual basis. A report with detailed analyses and a breakdown of the main figures is prepared, and the key figures are presented to the Swedish management team. Schibsted Sverige has several ongoing initiatives, including development of an environmental policy for Schibsted Sverige and application for environmental certification for Schibstedhuset. At Group level, we will investigate how we can formalize and implement the Swedish practices throughout the Group. Although the Group did not have a companywide environmental policy in 2013, several of our subsidiaries have implemented measures to reduce their environmental impact. WASTE MANAGEMENT All companies located at Schibstedhuset in Sweden and several other subsidiaries such as Finn, Leboncoin, Blocket, Bergens Tidende, Aftenposten, and InfoJobs Spain have implemented waste management measures. CARBON DISCLOSURE PROJECT Every year, Schibsted conducts a survey of emissions of greenhouse gases in our main subsidiaries. The results of these surveys form the basis of reporting to the Carbon Disclosure Project. The summary of emissions from the Group s 20 largest subsidiaries on page 56. AWARDS AND NOMINATIONS In 2013, Finn.no was nominated for the City of Oslo s environmental award. GOVERNANCE AND ETHICS Good corporate governance is an important premise for achieving our mission and vision. Schibsted Media Group emphasizes openness, transparency, accountability, equal treatment, and a long-term perspective in our way of doing business. For more information on governance in Schibsted Media Group, please refer to the Statement of Corporate Governance. TINIUS TRUST The Tinius Trust was founded by Schibsted s previous largest owner, Tinius Nagell-Erichsen. The ownership must uphold the freedom and independence of Schibsted s media services, said Tinius Nagell-Erichsen. His justification for setting up the trust was to consolidate his ownership interest in the Schibsted Group in order to create confidence that Schibsted s newspapers and other media outlets would always be able to maintain their position as free and independent. Nagell-Erichsen wanted to use his influence to protect Schibsted as a group of free and independent editors, characterized by trustworthiness and quality in conjunction with a long-term and healthy financial development. He also wanted to ensure that the Group s publications would uphold values such as freedom of religion, tolerance, human rights, and democratic principles. These principles are also enshrined in the objectives stated in the Trust s articles of association. The principles are mirrored in the Group s articles of association and referred to by the framework for editorial governance. More information about the Tinius Trust can be found at SCHIBSTED ANNUAL REPORT 2013 SOCIAL RESPONSIBILITY SCHIBSTED MEDIA GROUP S CODE OF CONDUCT One of Schibsted Media Group s core values is integrity. Integrity has always been a vital part of how we do business, as it is decisive for maintaining the trust on which a media organization depends. Schibsted Media Group has for many years demonstrated and continues to demonstrate that it upholds high standards of integrity. However, we must always ensure that we stay alert and continuously focus on delivering results with integrity. In December 2011, the Group Board issued the Schibsted Media Group Code of Conduct. The Code of Conduct clearly supports the Group s value of integrity, and applies to all Group Board members and employees of Schibsted Media Group, including entities in which we own more than 50 percent voting rights. Where Schibsted Media Group does not exercise such control, the board members appointed by Schibsted shall promote the main principles outlined in the Code of Conduct. The Code of Conduct serves as a guide for individual employees daily business interactions, and clarifies the Group s standard for proper conduct in a number of areas. The way in which we interact with each other, our customers, our suppliers and our users, helps build Schibsted Media Group s reputation as a media group with high integrity. For further information, please refer to Schibsted Media Group s Code of Conduct. The expansion into emerging markets undertaken by the Group in recent years implies working with new cultures, which may represent challenges with respect to the Code of Conduct. 57 SCHIBSTED ANNUAL REPORT 2013 SOCIAL RESPONSIBILITY We believe our corporate culture, governance model, and close follow-up of local management contribute to reducing the risks associated with internationalization. We work continuously to improve communication, understanding, and monitoring of compliance with the Code of Conduct in our emerging and established markets. We shall continue and strengthen our efforts to be recognized as a media group with a strong commitment to operating with integrity. In 2012, we implemented the Code of Conduct throughout the Group. In 2013, we focused on assessing performance and identifying improvement areas. In 2014, our focus will be on integrating Code of Conduct training in our existing training programs such as Schibsted Sales Academy, the Schibsted Leadership Program and our training programs for new joiners. 58 Additionally, we will monitor awareness of the Code of Conduct through the Schibsted Employee Survey and perform targeted training based on geographical regions and positions as required. The Compliance Officer will also conduct annual compliance reviews with the general managers of our subsidiaries. WHISTLEBLOWING Schibsted Media Group promotes a culture in which discussing compliance issues is an integrated part of our business and in which employees should feel comfortable raising compliance issues with their colleagues and superiors. There are a number of channels available for reporting compliance concerns, one of them being the Schibsted Media Group SpeakUp system, implemented in The SpeakUp system is a last resort for reporting compliance issues and offers anonymity for the reporter as well as the possibility of conducting a dialog. Reports may be made in the reporter s native language by a web-interface or telephone. The handling of reported compliance concerns through the SpeakUp system is outsourced. For further information, please refer to Schibsted Media Group s Code of Conduct. No material compliance concerns were raised through the SpeakUp in ANTI-CORRUPTION Schibsted Media Group has a zero tolerance for corruption. Our Code of Conduct covers principles related to bribery and facilitation payments, business gifts, and entertainment, and provides our employees, leaders, and board members with guidance on this important issue. Please refer to our Code of Conduct for more information on how to report compliance issues and on our principles regarding corruption. In 2011, Schibsted Media Group became a member of Transparency International. Transparency International raises awareness of the damaging effects of corruption, and works with partners in government, business, and civil society to develop and implement effective measures to handle corruption. In 2013, Schibsted achieved a score of 69 percent, ranking as number 17 of the 50 companies in Transparency International Norway s report on transparency in corporate reporting from We continuously focus on improving our anti-corruption work, and have identified improvement areas on which we are C 30

252 working systematically to address. In 2013, the Group worked on establishing a detailed framework for analyzing fraud and corruption risks. This work will be finalized and rolled out in 2014 as part of the annual compliance review. Transparency International s report includes requirements on country-by-country reporting. We disclose the legally required country-specific information for our largest operations. Although our ambition is to be open and transparent about our operations, the requirements on the country-by-country figures would divulge information about certain markets that are sensitive from a strategic and competition point of view. We therefore chose not to include such reports for all countries, but will reevaluate this decision on an annual basis. OUR SUSTAINABILITY APPROACH WITH REGARDS TO INTERNATIONALIZATION In 2011, the Group Board approved Schibsted Classified Media s guidelines on internationalization. The guidelines align with official Norwegian foreign policy and the principles in the 2009 Government white paper on corporate social responsibility in a global economy. When launching operations in new countries the following principles prevail: Strict adherence to the ten UN Global Compact Principles to be included in the employment contracts of all personnel Obligation to enforce adherence, reasonable efforts to ensure compliance by employees, partners and suppliers Additionally, the decision to launch in a new country is subject to approval by the Group Management Team. CHARITY AND HUMANI- TARIAN ACTIVITIES As of 31 December 2013, the Group has no strategic partnerships at Group level. However, several of our subsidiaries have engaged in charity and humanitarian work in Additionally, the employees of several subsidiaries including VG, Fædrelandsvennen, Aftenposten, and Ayosdito forfeited their annual Christmas present, and donated money to various charities instead. A selection of initiatives by our people and subsidiaries.in 2013 is presented below. CustoJusto Selling a spot in heaven: Helping Portuguese families in need The objective of CustoJusto s 2013 charity campaign was to help its users help other Portuguese people affected by the financial crisis In late November CustoJusto. pt launched a charity campaign called Vende-se Lugar no Céu [Selling a Spot in Heaven]. The objective of the campaign was to invite everyone to make donations to the Portuguese Red Cross. The final amount of donations will be used by the Red Cross to help Portuguese families in need by promoting the education and integration of children in a social environment. DoneDeal Foundation In February 2010, DoneDeal started systemizing its charity activities. In 2012, The DoneDeal Foundation was created to formalize the company s philanthropic activities. As of October 2013, almost EUR 600,000 had been donated to Irish charities. The DoneDeal foundation focuses on charities that operate in four main categories: people, education, health, and SCHIBSTED ANNUAL REPORT 2013 SOCIAL RESPONSIBILITY animals. Using the power of e-commerce on the DoneDeal site, the foundation supports multiple charities by providing funding that can significantly impact the work they do. Funding is designed to ensure the effectiveness, impact, and long-term success of individual charities and groups. The foundation also supports communications efforts by advertising through its commercial site to raise awareness about the organization and increase its impact. Ayosdito.ph Helping the victims of typhoon Haiyan When the Philippines was hit by the typhoon Haiyan, Ayosdito.ph collected clothes and money to help the victims. The employees donated money normally spent on traditional Christmas gifts. In the wake of the typhoon, Erlend Schei, developer and self-declared nerd in Finn.no, called on colleagues and fellow nerds to support Red Cross work among the typhoon victims in the Philippines through his Nerd Aid initiative. Leboncoin Encouraging employees to engage in charity and humanitarian work Employees at Leboncoin are rewarded with one additional day off for time spent engaging in charity and humanitarian work. 59 SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE Statement of Corporate Governance Good corporate governance is an important prerequisite for achieving Schibsted Media Group s vision and implementing our strategy. Sound corporate governance contributes to the Group s long term value creation at the same time as the Group s resources are used in an efficient and sustainable manner. Corporate governance defines the business framework that all activities in the Group should operate within, and clarifies the roles and responsibilities between governing bodies in the Group. Sound corporate governance involves transparency and trustful interaction with the various stakeholders. Schibsted Media Group is a listed company and our guidelines for corporate governance are in accordance with the Norwegian Corporate Governance Board Code of Practice. The Code of Practice is available on the NCBG website at The Group Board s Statement on Corporate Governance follows the structure of the Code and addresses each section of the Code, dated 23 October The statement also includes an item 16, which describes other key functions within the Group. Information on corporate governance, which Schibsted is required to provide in its Annual Report according to the Accounting Act, Section 3-3b, is also provided. Corporate governance in Schibsted is subject to annual review and discussion by the Group Board, which also reviews the content of this Statement on Corporate Governance. 60 C 31

253 1. CORPORATE GOVERNANCE REPORT The Group Board has approved the Group s policy for corporate governance stating that the Group will comply with the Norwegian Code of Practice for Corporate Governance. The Group s values represent an important foundation for corporate governance and are important to develop a sound and strong corporate culture. We have integrity We are innovative We are a team We are here to win For further details of our mission, vision and values can be found on our website ETHICS AND CORPORATE SOCIAL RESPONSIBILITY A sound corporate culture is essential to building and maintaining trust both internally and externally. Schibsted s Group Board prepared a Code of Conduct for the Group which was approved by the Board in December The Code of Conduct applies to the Group board members and to all employees within Schibsted Media Group. The Code of Conduct includes our key principles and ethical guidelines, and serves as a guide for each individual employee s daily internal and external business interactions, and reflects our standard for proper behaviour. The Code of Conduct is subject to annual review, and is available on the Group s website. SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE Additionally, a number of subsidiaries have adopted a company-specific Code of Conduct which - in addition to the principles set out in the Group Code of Conduct - also includes additional principles pertaining to the company. Schibsted Speak Up - our whistle-blower hotline with external anonymous reporting - was launched at the beginning of Schibsted s primary social responsibility is to safeguard and promote editorial freedom. Schibsted aims to be a Group that contributes to democracy and diversity through its integrity and editorial independence. A free and independent media is an important prerequisite and underpins strong and open democracies. Schibsted s core values rest on this foundation and are firmly enshrined in the Group s Articles of Association. For further information about of our Code of Conduct, Corporate Social Responsibility, and anti-corruption program, please refer to the Statement of Corporate Social Responsibility or visit our website at 61 SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE 2. BUSINESS ACTIVITIES 62 Schibsted s statutory objective reads as follows: The purpose of the company is to engage in the information business, as well as related business activities. The shareholders shall enable the company to operate its information business in such a way that editorial freedom and integrity are fully ensured. The requirement for editorial freedom and integrity shall apply to all media and publications encompassed by the Norwegian and international activities of the Schibsted Group. The Articles of Association are shown in full here: Schibsted Media Group is an international media group headquartered in Oslo. Schibsted has operations in 29 countries. Schibsted s strategy comprises two main objectives: further development of our media houses and worldwide online classifieds services. Strong media houses represent the core of our activities, and our corporate growth strategy is based on close collaboration between different media channels. Our objective is to develop our business activities so that we can offer our users a wide range of services, irrespective of which channels they choose to use. The diversity of Schibsted s product range is closely aligned with our strong tradition of editorial freedom and our ability to adapt to a media market that is constantly undergoing rapid change. The Group s objectives and principal strategies are further described on the Group s website, C 32

254 3. EQUITY AND DIVIDEND EQUITY As at , the Group s equity is NOK 8,111 million, equal to an equity ratio of 47 per cent. The Group Board considers this equity level appropriate to the Group s objectives, strategy and risk profile. DIVIDEND POLICY Schibsted Media Group is a listed company aiming to provide a competitive return based on healthy finances. The Group Board believes it is essential that the company s shares are perceived to be an attractive investment alternative. One of the financial targets is therefore to maximize the shareholders return through long-term growth in the share price and dividend. Schibsted s target is to have a fixed dividend payout ratio which, over time, should be per cent of the Group s normalized cash flow per share. The Annual General Meeting approves the annual dividend based on the Group Board s recommendation. The Group s dividend policy is described in more detail in the Share information. PURCHASE OF OWN SHARES In order to have flexible capital management, the Group Board has requested the General Meeting for authorization to repurchase the Group s own shares. SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE Such an authorization is granted by the General Meeting for one year at a time. At the Annual General Meeting in 2013, the Group Board s authorization to repurchase own shares in accordance with the Norwegian Public Limited Companies Act was extended. The authorization states certain terms and conditions: a) The authorization is valid until the next Annual General Meeting of Schibsted ASA in 2014 (i.e. until no later than 30 June 2014). b) The total nominal value of the shares acquired under this authorization may not exceed NOK 10,800,361. c) The minimum amount that can be paid for a share is NOK 30. The maximum amount that can be paid for a share is NOK 500. d) The Board is free to decide the acquisition method and possible later sale of the shares. The authorization may also be used to buy or sell shares in take-over situations. For further comments on the authorization, refer to item 14 of this report. For information on how the authorization has been used, refer to Share information. 63 SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE 4. EQUAL TREATMENT OF SHAREHOLDERS AND TRANSACTIONS WITH CLOSE ASSOCIATES 64 Schibsted has one class of shares, with equal rights linked to each share. RESTRICTIONS ON OWNERSHIP AND VOTING RIGHTS Based on Schibsted s publishing responsibilities and role in society as a media company, Schibsted s independence and integrity are safeguarded through restrictions on ownership and voting rights stated in the Articles of Association. Article 6 states that no shareholder may own or vote at the General Meetings in respect of more than 30 per cent of the shares. Article 7 states that important decisions relating to the Group s key companies are to be submitted to Schibsted s shareholders for their approval. According to the wording of this provision, any amendments to the Articles of Association or any sales of shares or operations or corresponding transactions in any subsidiary are to be submitted to Schibsted s General Meeting for approval, with the exception of intercompany transactions which are exempt in their entirety. Through annual resolutions, the General Meeting can authorize the Group Board to manage further specified parts of the protection, which is inherent in this provision. Such an authorization was granted at the 2013 Annual General Meeting and applies until the next Annual General Meeting. The authorization granted in 2013 states Pursuant to the third paragraph of Article 7 of the Articles of Association, the Board of Directors is authorized to make decisions on the following matters referred to in the second paragraph, litra a of Article 7 of the Articles of Association: a) Voting relating to amendments to subsidiaries Articles of Association. b) Decisions to sell shares or operations, including private placements, mergers or demergers, in subsidiaries when the net payment (sales amount, merger or demerger payment, etc.) does not exceed NOK 1 billion after financial adjustments. Within the framework of the Group CEO s general authorization, the Board of Directors may delegate its authority pursuant to this authorization to the management. A director appointed pursuant to the second paragraph of Article 8 of the Articles of Association may demand that certain matters which are covered by this authorization are nonetheless to be submitted to the General Meeting for its decision. In total, this means that major transactions will not be covered by the Group Board s authorization and must therefore be submitted to Schibsted s General Meeting. The proposal is explained in further detail in the notice calling the General Meeting. TRANSACTIONS INVOLVING OWN SHARES The acquisition of own shares, in accordance with the Group Board s authorization referred to in item 3 of this report, is to take place in the market at the stock exchange price and in accordance with generally accepted Norwegian stock exchange practices. The disposal of acquired shares should be performed in the market, as settlement for the purchase of operations, to general share schemes for the Group s employees and to the Group s Longterm Incentive (LTI) program for selected Group managers. The Group s LTI program is described in further detail in the Statement of executive compensation and in the notice calling the General Meeting. TRANSACTIONS WITH CLOSE ASSOCIATES In 2013, the Board determined that there were no transactions between the Company and shareholders, members of the Group Board, executive personnel or close associates of any such parties that could be described as material transactions and as such requiring valuation from an independent third party. C 33

255 5. FREELY NEGOTIABLE SHARES Schibsted s shares are freely negotiable subject to the restrictions stated in Article 6 of the Articles of Association. Article 6 states that no shareholder may own or vote at the General Meetings in respect of more than 30 per cent of the shares. Schibsted has introduced its Long-term Incentive (LTI) program which is a performance-based share purchase program that targets a large group of managers. The LTI program provides settlement in Schibsted shares. There are some restrictions on the sale of shares distributed through the LTI program. For further information, please refer to the Statement of executive compensation. SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE 65 SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE 6. GENERAL MEETINGS 66 Through the General Meeting, the shareholders exercise the supreme authority of the company. The General Meetings deal with and decide on issues which are important to Schibsted in a way that reflects the shareholders views. An Annual General Meeting must be held within six months after the end of each financial year. Extraordinary General Meetings are to be held as required in accordance with the Articles of Association or Public Limited Companies Act or if required by at least five per cent of the shareholders. NOTICE The Annual General Meeting for this year is scheduled for 7 May The notice calling the general meetings and documents to be considered is posted on the Schibsted website no later than 21 days prior. Shareholders not registered as electronic recipients will receive the notice by regular post with information that documents to be considered at the meeting may be downloaded from the website. The deadline for electronic registration is two working days prior to the meeting. PARTICIPATION Representatives of the Group Board, at least one representative of the Nomination Committee and the External Auditor are required to attend the Annual General Meeting. As a minimum, the Group s CEO and CFO are to attend the meeting as representatives of the management. Shareholders that cannot attend the General Meetings but wish to exercise their voting rights may authorize a proxy by the deadline for registration. An authorization containing voting instructions may also be given to the chair of the Group Board. The authorization form to be used is enclosed with the notice calling the meeting. Further information on how to appoint a proxy and how to raise an issue for consideration by the meeting is stated both in the notice calling the General Meeting and on Schibsted s website. In 2013, the Annual General Meeting was held on 30 April. A total of 23 shareholders were present or represented by proxies and thus 64.4 per cent of the aggregate share capital was represented. AGENDA The agenda is to be set by the Group Board and the main matters are to be in compliance with Article 10 of the Articles of Association. Previously, the General Meeting has elected the entire Board as a coherent unit. This represents a deviation from item 6 of the Code of Practice stating that the General Meeting should vote separately on each candidate nominated. To be in line with the recommended practice, the Nomination Committee proposes one ballot for each individual director at the General Meeting on 7 May Minutes of the Annual General Meeting will be made available on the Group s website, at C 34

256 7. NOMINATION COMMITTEE The Nomination Committee is laid down in Article 10 of Schibsted s Articles of Association, which also states the Nomination Committee s main mandate. THE NOMINATION COMMITTEE S WORK The Nomination Committee prepares a recommendation to the General Meeting regarding the election of the shareholders representatives and their alternate representatives to the Group Board. The Nomination Committee s most important task is to ensure a continuous evaluation of the Group Board s overall expertise and experience in relation to the challenges facing the Group at any time. The Nomination Committee also proposes the remuneration payable to the Group Board s members at the Annual General Meeting. THE COMPOSITION OF THE NOMINATION COMMITTEE The Nomination Committee is elected by the General Meeting for two years at a time and consists of three members. The General Meeting elects the chair of the Nomination Committee. SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE The majority of the Nomination Committee is independent of both the Group Board and Schibsted s management. The CEO and chair of the Group Board attend Nomination Committee meetings as required, normally once or twice a year. Schibsted s Head of Legal Affairs acts as the secretary to the Nomination Committee. The current Committee was re-elected for a two year term by the Annual General Meeting on 11 May 2012 and consists of John A. Rein (chair), Gunn Wærsted and Nils Bastiansen. For more information on the Nomination Committee s work, refer to the Nomination Committee s Report. 67 SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE 8. BOARD OF DIRECTORS: COMPOSITION, INDEPENDENCE AND EMPLOYEE REPRESENTATION 68 Schibsted is exempt from the rules concerning the establishment of a corporate assembly. An agreement has been entered into with the employees regarding representation on the Group Board. THE COMPOSITION OF THE GROUP BOARD According to Article 8 of Schibsted s Articles of Association, the Group Board should consist of six to eleven members plus any alternate members. The Group s employees will be represented on the Group Board by Employee Representatives in accordance with prevailing agreements with the company (the Representation Agreement). At present, the Board consists of ten members, of whom seven are shareholder representatives and three are Employee Representatives. Two Employee Representatives are chosen from Norway and one from the country in which we have the most significant operations outside Norway, currently Sweden. The Annual General Meeting elects the shareholder representatives to the Board. The Nomination Committee draws up a recommendation for the shareholders nominees to the Board prior to the election. The recommendation of nominees is sent to the shareholders along with the notification of the Annual General Meeting. The Annual General Meeting elects the Chair of the Board. The Group Board s shareholder members are elected for one year at a time while Employee Representatives are elected for two years at a time. According to Article 8 in the Articles of Association any shareholder owning at least 25 per cent of the shares in the company is entitled to appoint a Board member directly. Blommenholm Industrier AS, which owns 26.1 per cent of the shares, is the only shareholder that has this right. At the General Meeting in 2013, Blommenholm Industrier AS exercised its right to directly appoint one director and gave notice that this person is Ole Jacob Sunde. The Group Board has appointed a representative from Schibsted Editors Forum as an observer. More information on the Editor s Forum can be found on our website: Detailed information on the individual board members can be found on the website THE GROUP BOARD S INDEPENDENCE The Group Board s independence is described in further detail in the Nomination Committee s report. According to section 6-27 of the Public Limited Companies Act, a director may not take part in the discussions on or decision regarding an issue that is of such importance to the director or any of the director s related parties, that the director must be regarded as having a prominent personal or economic special interest in the matter. It is the individual director s responsibility to continuously assess whether or not there are any such circumstances that are objectively likely to weaken the public s confidence in the director s independence or which may lead to conflicts of interest in connection with C 35

257 SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE the Board s handling of the matter. Such circumstances are to be brought to the attention of the chair of the Group Board. The Board s instructions particularly deal with directors participation in competing enterprises. The Directors shareholdings are disclosed in note 13 of Schibsted ASA s Annual Financial Statements. Blommenholm Industrier is Schibsted s largest shareholder. The Board of Blommenholm Industrier consists of John A. Rein (chair), Ole Jacob Sunde and Per Egil Hegge. The Tinius Trust controls Blommenholm Industrier. The Tinius Trust board consists of Ole Jacob Sunde (chair), John A. Rein and Per Egil Hegge. Schibsted director Karl-Christian Agerup has been elected as Ole Jacob Sunde s personal alternate member on the boards of the Tinius Trust and Blommenholm Industrier. Ole Jacob Sunde is the chair of Schibsted s Group Board. John A. Rein is the chair of the Nomination Committee. Formuesforvaltning, in which Ole Jacob Sunde (chair of the Board) is a major shareholder, has a management agreement with Blommenholm Industrier. GROUP BOARD MEETINGS IN 2013 In 2013, the Group Board held a total of nine meetings, of which one was a strategy meeting lasting for two days. In addition, some issues were decided per capsulam. The Board considers such a procedure justifiable when issues have previously been discussed in a Board meeting. Meetings that are not on the meeting schedule may be attended by telephone. The strategy meeting is normally held in June, and forms the basis for the Group s strategy- and budget processes. Participation on the board meetings and board committees in 2013 Board Audit committee Compensation Participation in meetings meetings meetings Committee meetings Ole Jacob Sunde 9/9 3/3 Karl-Christian Agerup 9/9 3/3 Marie Ehrling 8/9 8/8 Anne Lise Mørch von der Fehr 9/9 Gunnar Kagge 8/9 Arnaud de Puyfontaine 8/9 Eva Berneke 9/9 8/8 Jonas Fröberg 9/9 3/3 Eugénie van Wiechen 9/9 Christian Ringnes 8/9 7/8 69 SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE 9. THE WORK OF THE BOARD OF DIRECTORS 70 THE GROUP BOARD S ROLE The Group Board monitors both the Group s day-to-day management as performed by the CEO and Schibsted s general activities. The Group Board actively participates in shaping Schibsted s strategy and ensures that the businesses are properly organized and that adequate governance and control systems are implemented. The Group Board also monitors the Group s financial performance, establishes necessary guidelines, and adopts plans and budgets for the businesses. The Group Board appoints the CEO and prepares the job description and terms and conditions for the position. The Group Board also discusses issues pertaining to the succession of key positions within the group. BOARD INSTRUCTIONS The Group Board has established internal rules of procedures that describe the Board s responsibilities, duties and administrative procedures. The rules of procedure also state the CEO s duties in relation to the Board. The Board reviews the rules of procedure to the Board and general management each year. MEETING STRUCTURE The Group Board works on the basis of an annual meeting schedule, which is normally agreed to at the first meeting after the Annual General Meeting. The meeting schedule includes strategic planning, business issues and oversight activities. At the same meeting, the Board appoints the members of the Board s Compensation Committee and Audit Committee. The company s Vice President Investor Relations is the Group Board secretary. The CEO, in consultation with the chair of the Group Board, prepares the issues that are to be dealt with by the Group Board. Emphasis is placed on issues being well prepared with documentation being sent out in advance so that the Group Board has a satisfactory basis for its work. The Board discussions are presided over by the chair of the Group Board. The meeting schedule, board documents and other important documents linked to the board work (stock exchange manual, board instructions, mandates for the board and committees, stock exchange notices and press releases, etc.), as well as general analyses and market information, are available to the directors through the Directors Portal, which is a web-based reading tool for the directors. The Directors Portal simplifies the directors work and makes it more efficient, and gives the Board easier access to up-to-date information. It also allows the directors to study presentations given at meetings and the industry s regulatory framework, market and competitive situation, etc. THE GROUP BOARD S EVALUATION OF ITS OWN WORK The Group Board annually evaluates its own work and delivers a written report to the Nomination Committee. The report forms the basis for the Nomination Committee s annual board evaluation work. The Nomination Committee performs additional assessments of the Group Board, by interviewing the Board members themselves or using external consultants. The Group Board considers itself to be well functioning, with directors whose expertise and experience complement each other. INTERACTION WITH THE COMPANY On a regular basis, the Group Board is invited to selected seminars and conferences arranged by Schibsted such as Schibsted s annual Journalism Award. C 36

258 Schibsted is a member of the Norwegian Institute of Directors. The membership gives the Board members an opportunity to participate in seminars and discussion groups that consider key issues which affect the Board s work and the work of the committees. In order to strengthen and utilize the directors expertise and experience relating to the Group s operations, Group directors may also sit on the boards of the Group s subsidiaries. Currently, Karl-Christian Agerup is a board member for Aftenposten. THE GROUP BOARD S USE OF COMMITTEES Schibsted has established an Audit Committee and a Compensation Committee which contribute to thorough preparations and discussions on matters covered by the committees mandates. As Schibsted has gradually grown in size and become more international, the Board s scope of work, and the complexity of the issues addressed have increased. The Board considers that the establishment of a Compensation Committee and an Audit Committee has improved the Board s preparatory work and discussions of complex cases. The committees function well and interact well with the Board, both with regard to the exchange of information and the division of responsibilities and work. The committees allow the Board to deal thoroughly with issues in important areas relating to corporate governance, risk management, internal controls and compensation schemes, and allow the Board more time to discuss fundamental and strategic issues. At the same time, the Group Board is aware that the use of committees may lead a dilution of responsibility. Committees are therefore only used when required due to the complexity and scope of an issue. THE GROUP BOARD S COMPENSATION COMMITTEE The Compensation Committee is a sub-committee to the Group Board and has no decision-making authority. The Compensation Committee is appointed by and among the Group Board for one-year terms. The Compensation Committee prepares matters relating to the Group CEO s remuneration for the Board. In addition, the committee assists the Board by dealing with fundamental questions, guidelines and strategies linked to the overall remuneration paid to other members of the Group management and senior managers in key subsidiaries. The Committee monitors the use of longterm incentives in the Group and makes preparations for the Board s annual discussions on the LTI program for selected managers. For further information, refer to item 12 of this report. The CEO attends Committee meetings except for discussions of his own remuneration. The company s Head of Legal Affairs acts as secretary to the Compensation Committee. The Committee was established in Members of the Committee at present: Ole Jacob Sunde (chair), Karl-Christian Agerup and Jonas Fröberg. THE GROUP BOARD S AUDIT COMMITTEE The Audit Committee is a sub-committee of the Group Board and has no decisionmaking authority. The Audit Committee is appointed by and among the Group Board for one-year terms. SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE The Audit Committee prepares the Board s quality assurance of the financial reports. In addition, the committee monitors the Group s internal control system and risk management systems for financial reporting, and assesses and monitors the external auditor s work and independence. As part of its work, the Audit Committee conducts targeted reviews of the Group s main activities in which representatives of the Group management and local management also participate. In 2013, the Audit Committee s review focused on three areas of strategic importance to the Group: Firstly the IT strategy, the IT organization and governance and IT reliability. Second Schibsted Payment, including the business model, organization and governance, and privacy protection. Thirdly, a review of the Brazilian classified operations, including organization and governance, the market and competitors, operational and financial performance, and risk management and internal control. The Group s CFO is the management s main representative in relation to the Audit Committee and attends all Committee meetings. The External Auditor attends Audit Committee meetings when matters falling within the External Auditors area of responsibility are considered. The company s Compliance Officer acts as secretary to the Audit Committee. The Audit Committee which was established in 2007 presently has the following members: Marie Ehrling (chair), Christian Ringnes, and Eva Berneke. 71 SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE 10. RISK MANAGEMENT AND INTERNAL CONTROL 72 Schibsted s risk management and internal control system for financial reporting is based on internationally recognized frameworks, such as COSO. The risk management and internal control system reflects Schibsted s management model and the CEO and CFO of the entities are responsible for maintaining an effective internal control system over financial reporting. This includes safeguarding that the entity has the capacity and competence necessary to carry out adequate internal control. FINANCIAL REPORTING As a tool to assist in the Board s oversight and control of the Group s operations, management prepares periodic reports on Group status. The reports provide periodic the financial reporting of the Group s key figures, the status of business matters, financial market information, non-financial indicators, and a status report on each business area. The Board has established routines for oversight and governance of the Group s ongoing projects. The establishment of an Audit Committee in 2007 has strengthened this function in the Group. The Audit Committee s main responsibility is to exercise oversight of the integrity of the company s financial statements and financial reporting process and internal controls. This includes the review of the annual audited financial statements and quarterly financial statements, and the results of the annual audit and any interim reviews carried out by the External Auditor. The quarterly and annual financial reports are also reviewed by the Group Board. In addition to the examination of the figures, emphasis is also placed on reviewing critical judgements and estimates in addition to any changes to accounting practices. Schibsted s Group Accounting prepares the Group s financial reports and ensures compliance with prevailing accounting standards and legislation. When preparing the quarterly reports, general controls on the reasonableness and more detailed reconciliation controls are performed in connection with the quality assurance of figures reported by subsidiaries and the consolidated Group figures. Group Accounting supports subsidiaries and provides technical accounting expertise as required. Quarterly financial review meetings are also held with the largest companies in our operating segments. Schibsted s Group Accounting publishes financial and accounting manuals that are available to all the subsidiaries on the Group s intranet. These manuals describe reporting requirements, content, guidelines and deadlines. For information on external reporting of financial information and dialogue with shareholders, please refer to item 13 - Information and Communication - in this report. MONITORING OF RISK MANAGEMENT AND INTERNAL CONTROLS WITHIN THE COMPANY Each manager in the Group is responsible for risk management and internal controls within his/her area of responsibility. Schibsted is continuously implementing and further developing guidelines for all companies relating to their continuous follow-up of risk management and internal controls over financial reporting. C 37

259 The Compliance Officer is responsible for initiating and monitoring the annual risk management and internal controls process in the Group on behalf of the Group s CFO and CEO. The Compliance Officer reports functionally and administratively to the CFO. If necessary, the Compliance Officer will report directly to the Audit Committee. Cross-functional management teams performed a bottom-up and top-down risk assessment for our operating segments in the autumn A consolidated risk assessment considering strategic and market; financial; legal, compliance and ethics; and operational and organizational risks was reviewed by the Group Management team. The result of this risk assessment has been reviewed at Audit Committee and Group Board meetings. Schibsted ASA is a Norwegian group of companies with considerable international shareholdings. Companies outside Norway have established governing bodies in accordance with local legislation in each individual country. The internal controls over financial reporting are monitored by these governing bodies with assistance from management s day-to-day monitoring and the External Auditor s testing. To improve the quality of financial reporting in the Group, reduce vulnerability and streamline processes, two service centers were set up in 2010, one in Sweden and one in Norway. The Service Centers are centers of expertise with consultants and service personnel available to deliver finance, credit, invoicing and payroll functions; and to support compliance pertaining to accounting, finance and tax laws and regulations. The majority of the Norwegian and Swedish subsidiaries receive accounting services from the service centers. For further information on the Group s market risks, please refer to the Analysis Overview of the Group s most important risks in 2013 Risk factor Inherent risk Residual risk Structural changes in the digital advertising market High High Competition risk in selected classified markets High High Structural change in media consumption (accelerated migration) High High Competition from disruptive players/business models High High High dependency on advertising revenue (cyclicality) High Medium SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE of market risk section in the Board of Directors report. For further information on the Group s financial risk, refer to note 9 of the Group s Annual Financial Statements. 73 SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE 11. REMUNERATION OF THE BOARD OF DIRECTORS 74 The Annual General Meeting determines the remuneration payable to the Group. The directors fees are decided in advance for one year at a time and are fixed amounts that do not depend on results or involve options. Any payments made to directors in addition to the normal directors fees are disclosed in note 27 of the Group s Annual Financial Statements. For further information on remuneration of the Group Board, refer to the Nomination Committee s report and to note 27 of the Group s Annual Financial Statements. C 38

260 12. REMUNERATION OF EXECUTIVE PERSONNEL The Compensation Committee prepares matters for the Board concerning the Group CEO s remuneration. In addition, the Committee assists the Group Board in dealing with fundamental questions, guidelines and strategies linked to the overall remuneration for other members of the Group management and senior managers in key subsidiaries. Schibsted s statement regarding the determination of salary and other remuneration to the management, gives an account of SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE the main principles of the Group s management remuneration policy, including the extent and arrangement of bonus schemes and the Group s Long-term Incentive (LTI) program. The statement of executive compensation is discussed by the Annual General Meeting and made available to the shareholders on the company s website when the notice calling the Annual General Meeting is sent out. 75 SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE 13. INFORMATION AND COMMUNICATION 76 DIALOGUE WITH SHAREHOLDERS AND THE FINANCIAL MARKET Communication with the Norwegian and international stock markets has a high priority for Schibsted. Schibsted s dedicated and active management and investor relations department work on a daily basis with the financial markets to make sure that relevant and sufficient information reach the market in a timely manner and provides a basis for a correct pricing of Schibsted shares. The objective is to increase knowledge about the company, build trust in Schibsted in the investment market, achieve improved liquidity for our shares, and create the basis for the correct pricing of the share. Openness, accessibility and transparency are fundamental to good relationships with investors, analysts and other players in the financial market. The Group Board is regularly updated on these activities. THE REPORTING OF FINANCIAL INFORMATION Schibsted aims to issue financial reports that investors can have confidence in. In accordance with its mandate, the Group Board s Audit Committee monitors the work on the company s financial reports. Schibsted publishes its financial figures quarterly. In connection with the Group s quarterly reports, open presentations to investors are held. At these presentations, the CEO and CFO review the results and comment on the market and outlook. The chair of the Group Board also attends these presentations. Members of the Group management attend these presentations as required. The presentations in connection with the quarterly results are published on the company s website. The complete Annual Financial Statements and Directors Report are published on the company s website at least 21 days before the Annual General Meeting. Schibsted s financial calendar is announced for one year at a time and published on the website. OTHER MARKET INFORMATION In accordance with the Norwegian Securities Trading Act and Stock Exchange Act, notifications are distributed to the Oslo Børs and national and international news agencies and are published on Schibsted s website. Schibsted regularly arranges Investor Days in order to present its strategy and other key development trends. Schibsted s Investor Days were last held on October 9 (London) and 10 (New York) A video webcast of the event and the presentation material are available on the company s website. In 2013 Schibsted ranked, for the third consecutive year, among the top five in the Stockman Awards. The Stockman Awards go to the listed companies in Norway that are best at providing the finance industry and shareholders with continuous information about their activities, and who also, based on principles of financial analysis, publish the best annual and quarterly reports. For further information, refer to Share information and the company s website. C 39

261 14. TAKE-OVERS The Group Board has prepared principles and guidelines for handling any take-over bids. These principles were revised in For more on this subject, please refer to the discussion of restrictions in the company s statutes on ownership and voting rights attached to the shares in item 4 of this statement. As referred to in item 3 of this statement, the Group Board obtained continuing authority to buy back the Group s own shares in accordance with the Norwegian Public Limited Companies Act at the Annual General Meeting in The authority stipulates that the Group Board is free to determine the method of acquisition and any later sale of the shares and that the authorization may also be used to buy and sell shares in take-over situations. SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE Section 6-17, second subsection of the Securities Trading Act, allows the General Meeting to grant the Board such authorizations. The Board s use of such authorizations is, however, restricted under item 14 of the NCBG s Code of Practice. The Group Board must consider the use of such authorizations in the context of the specific take-over situation. As referred to above, the Group Board has prepared guidelines for handling any take-over bids and the issue of using authorizations in company acquisition situations is highlighted as one of the Group Board s most important tasks if a take-over situation should arise. 77 SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE 15. AUDITOR 78 APPOINTMENT OF AUDITOR The External Auditor is elected by the General Meeting. The Audit Committee presents a recommendation on the appointment of an External Auditor to the Group Board. The Group Board s recommendation is then presented to the General Meeting, which makes the formal appointment of the Group s External Auditor. As a general rule, all Group companies are to use the same audit firm. Exceptions may be approved by the Group CFO. Tenders for the Group s external audit services as from the 2011 financial year were invited in the autumn of Following a thorough evaluation by management and the Audit Committee, it was decided to continue with Ernst & Young as the company s auditor. THE GROUP BOARD S RELATIONSHIP WITH THE EXTERNAL AUDITOR According to its mandate, the Audit Committee is responsible for ensuring that Schibsted is subject to an independent and effective external audit. The Audit Committee evaluates the following factors relating to the External Auditor each year: The audit firm s independence The quality of the auditing services The estimated fee The Audit Committee will submit a proposal to the Group Board and the Annual General Meeting regarding the approval of the External Auditor s fee. For information on the fees payable to the External Auditor for the 2013 financial year, refer to note 27 of the Group s Annual Financial Statements. The External Auditor presents an annual plan for the audit work to the Audit Committee. The company s External Auditor is present when the management presents the preliminary consolidated financial statements to the Group Board, and also when the final results are presented if deemed necessary. The External Auditor also reviews internal controls as part of the annual audit procedures, and reports identified weaknesses and proposed improvements to the Audit Committee. The External Auditor regularly attends Audit Committee meetings and holds annual meetings with the Group Board at which the management is not present. The External Auditor attends the company s Annual General Meeting and comments on the Auditor s Report. THE EXTERNAL AUDITOR S INDEPENDENCE The External Auditor must under no circumstances perform advisory services or other services which could potentially affect or raise doubts about the auditor s independence. The Group has prepared guidelines on the relationship with the external auditor. The amount of non-audit services provided by the External Auditor in 2013 is compliant with the requirements in the Norwegian Auditors Act and guidelines from the Financial Supervisory Authority of Norway. In the Group Board s view, the advisory services provided by the External Auditor in 2013 do not influence the auditor s independence, but the Group Board acknowledges the potential issues related to this. The Audit Committee is responsible for ensuring that the auditor does not provide any prohibited non-audit services for the Group. See note 27 for information on fees related to auditing and consulting. C 40

262 16. OTHER KEY BODIES IN THE GROUP GROUP EMPLOYEE REPRESENTATIVES The Group has established a Group employee representative scheme that is intended to safeguard the employees interests in relation to the Group management in cases dealt with at Group level that may be of importance to the Group s employees as a whole. Further information may be found at our website EDITORS FORUM The Group s international Editors Forum is described in greater detail in the Statement of Corporate Social Responsibility. SCHIBSTED S GROUP COUNCIL Schibsted s Group Council was established in 2004 based on the rules stipulated concerning the Establishment of European Works Councils. SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE The Group Council s objective is to promote development, motivation, co-responsibility and mutual trust between the management and the employees. The Group Council is intended to ensure active collaboration and to be a forum for information, discussion and dialogue within the Group. The Group Council cooperates closely with the Group Employee Representatives. The Group Council is a supplement to the employees representation in the subsidiaries. Importance is attached to continuous contact between employees across national boundaries. The Council convenes twice a year. The Schibsted European Work Council currently comprises 35 representatives from seven countries who are elected by and among the employees. The Council is headed by Group Employee Representative Morten Lia. 79 SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE 17. DEVIATIONS FROM THE CODE OF PRACTICE 80 DEVIATIONS FROM THE CODE OF PRACTICE According to the Group s own evaluation, we deviate from the Code of Practice on two points: Item 5 Freely negotiable shares Based on Schibsted s publishing responsibilities and role in society as a media company, Schibsted s independence and integrity are ensured through restrictions on ownership and voting rights stated in the Articles of Association. Article 6 states that no shareholder may own or vote at the General Meetings in respect of more than 30 per cent of the shares. Item 6 General Meetings The Chair of the Board is always present to respond to any questions. Other board members participate when needed. C 41

263 SCHIBSTED ANNUAL REPORT 2013 CORPORATE GOVERNANCE 81 SCHIBSTED ANNUAL REPORT 2013 MEMBERS OF THE BOARD Members of the Board ( ) The Board of Schibsted ASA currently consists of ten members. The shareholders elect seven while three are elected by and from the employees. The shareholder-elected members are elected each year. The employee-elected board members are up for election every two years. OLE JACOB SUNDE KARL-CHRISTIAN AGERUP MARIE EHRLING CHAIRMAN OF THE BOARD Board member since May Chairman of the Board since May Chairman of the Compensation Committee since it was established in The founder and chairman of the board of Formuesforvaltning ASA (2000). Established Industrifinans Forvaltning ASA in 1983 and was managing director until Former consultant in McKinsey & Co. ( ). Various other directorships, including chairman of the board of The Tinius Trust and member of the board of Blommenholm Industrier AS. MBA (Université de Fribourg, Sveits) 1976 and Kellogg School of Management, Northwestern University (USA) (with distinction) Elected as a deputy board member in Schibsted in May Board member since May CEO Oslotech AS ( d.d.) Northzone Ventures, Founder and partner ( ). HU GIN AS, Founder and managing director ( ). McKinsey & Co, Associate ( ), Engagement Manager ( ). Millipore Corp, Boston, USA, Corporate Planner ( ). Vice Chairman of the board of Norfund. Massachusetts Institute of Technology (MIT) Alfred P Sloan School of Management, Master of Science in Management (1990). The Copenhagen School of Business and Administration. MBA/HA (1988). Personal deputy for Ole Jacob Sunde in the Tinius Trust. Board member in Schibsted since May Chair Telia Sonera AB, Vice chair Nordea AB, member of the board at Securitas AB, Oriflame Cosmetics SA, Centre for Advanced Studies of Leadership (CASL) at the Stockholm School of Business and Administration, Business Executive Council IVA and for the World Childhood Foundation. Marie Ehrling was CEO of TeliaSonera AB from 2003 to From 1982 until 2002 she worked for the SAS Group, among others as Vice CEO in SAS AB and CEO for SAS Scandinavian Airlines ( ) and as CEO for SAS Ground Services ( ). Head of Information at the Swedish Ministry of Finance ( ) and the Swedish Ministry of Education ( ), Financial Analysist in Fourth Swedish National Pension Fund ( ). Bachelor of Science Business Administration and Economics from Stockholm School of Business and Administration (1977). 82 C 42

264 EVA BERNEKE Board member in Schibsted since May CEO KMD. Previously CEO of Wholesale at TDC AS Denmark. Appointed to the Executive Committee in MSc in Mechanical Engineering Technical University of Denmark, 1992, and MBA, INSEAD (Executive Management Training Program) Member of Board of Directors of Copenhagen Business School. Member of the Danish Council for Technology and Innovation under the Danish Ministry of Science, Technology & Innovation. Member of the Board of Directors of the Industrialization Fund for Development and Eastern Countries (IFU, IØ). CHRISTIAN RINGNES Deputy board member in Schibsted from May 2002 to Elected as ordinary board member in May Managing director and major owner in Eiendomsspar AS/Victoria Eiendom AS (1984- ). McKinsey & Company, INC -Scandinavia, consultant (1981/82) and project manager (1983/84), Manufactures Hanover Trust Company, Assistant to Area Manager, Nordic Countries (1978/79). Chairman of the board in NSV-Invest AS, Sundt AS, Dermanor AS, Oslo Flaggfabrikk and Mini Bottle Gallery AS. Board member in Thor Corporation AS and Oslo s Council for City Architecture. Harvard Business School, Boston, USA ( ), Master of Business Administration. Ecole des Hautes Etudes Commerciales, Universite de Lausanne ( ), MBA. EUGÉNIE VAN WIECHEN Member of the board in Schibsted since May CEO FD Mediagroep. Previously Publishing Director in FD Mediagroep, The Netherlands, Managing Director in LinkedIn.com, The Netherlands; Managing Director in ebay.nl, Marktplaats.nl, The Netherlands; Publisher Young Women s Magazines and Director Consumer Marketing in Sanoma Uitgevers, The Netherlands; Management Consultant and Engagement Manager in McKinsey& Company, The Netherlands. Educated at the University of Amsterdam in Chemical Engineering (MSc, 1994) and INSEAD, Fontainebleau, France (MBA, 1997). SCHIBSTED ANNUAL REPORT 2013 MEMBERS OF THE BOARD ARNAUD DE PUYFONTAINE Member of the board in Schibsted since May Senior Executive Vice President, Media and Content Activities in Vivendi. Previously CEO of Hearst Magazines UK and EVP Hearst Magazines International, President of the Industry Committee in Summit Conference on the Press, France; President, Mondadori France Group and CEO, Mondadori France magazines operations, France; CEO and Chairman, Emap France and Excelsior Publications, COO, Emap France and Managing Director, Emap Star, France; Managing Director, Publisher of the daily newspapers, Le Figaro Economie, Le Figaro Grande Ecoles and Le Figaro Défense, Le Figaro, France; OTC Project Manager, Rhone Poulenc Sante, Indonesia; Consultant, Audit & Consulting, Arthur Andersen, France. Board Memberships: Mondadori; Emap; Magazine Publishing Association APPM France; PPA UK, Magazine Union SPMI; Distribution Group NMPP; Aspen Institute; 24h00.fr, ecommerce site; SGAM AI; Le Cercle and Dialogue Economique, France. Educated at the European School of Management, France in MBA, ESCP, ESCP (1988), Harvard Business School (2000). 83 SCHIBSTED ANNUAL REPORT 2013 MEMBERS OF THE BOARD GUNNAR KAGGE EMPLOYEE ELECTED Gunnar Kagge (1960) has worked at Aftenposten since Formerly employed at NTB and the Norwegian Confederation of Business and Industry (NHO). He has mainly been writing about politics and economy, covering negotiations between employers and unions, trends in the workplace and the big organizations. Elected leader of the local journalist union Board member of SKUP, NJ Schibsted and deputy board member of NJ. He is educated with a degree in history from the University of Oslo. All through school and studies he worked as a freelancer at Aftenposten, from 1975 and onwards. 84 ANNE LISE VON DER FEHR EMPLOYEE ELECTED Member of the board in Schibsted since May Reporter and subeditor at VG since April Elected leader of the board of the local journalist union in VG ( ). Member of the European Work Council, Schibsted ( ). Leader of Norwegian Journalists local union within Schibsted ( ). Deputy member of the board of VG AS ( ). Reporter and subeditor Asker og Bærum Budstikke ( ). Researcher at Holmgang, TV2 ( ). Board member of the Foundation of Asker and Bærum Budstikke (2009- ), deputy member ( ). She holds a master degree in Political Science from the University of Oslo, has studied History of Literature and has an International Diploma in Journalism from England. JONAS FRÖBERG EMPLOYEE ELECTED Member of the board in Schibsted Media Group since May With Svenska Dagbladet since 2006 as trade and industry reporter, chronicler and automotive editor. Reporter and web editor at the financial desk, Dagens Nyheter ( ). Deputy Regional Director at Svensk Näringsliv ( ). MSc in Political Science Umeå University 1997, BBA Handelshögskolan, Umeå University, BBA University of Derby England (1998). Studied cultural journalism, Umeå University (2005). Member of the board at Schibsted Sverige ( ) and Svenska Dagbladet (2009-). C 43

265 SCHIBSTED ANNUAL REPORT 2013 MEMBERS OF THE BOARD 85 SCHIBSTED ANNUAL REPORT 2013 THE NOMINATION COMMITTEE S REPORT The Nomination Committee s Report 2013 The Nomination Committee consists of John A Rein (chair), Gunn Wærsted and Nils Bastiansen. The Nomination Committee is elected for two years at a time and is up for election at the Annual General Meeting on 7 May 2014 In recent years, the Nomination Committee has had a long-term focus on internationalization of the Group Board. The Group Board consists of seven shareholder-elected directors and three directors elected by the employees. The leader of the Group s Editors Forum has been appointed as an observer to the Group Board. The employees have elected two alternate directors. Alternate directors attend the meetings only in the event of an absence. No alternate directors have been appointed by the shareholders. The Group Board s working language is English. THE NOMINATION COMMITTEE S WORK ON RECRUITMENT FOR THE BOARD The Board s shareholder-elected directors are up for election each year. The Nomination Committee is continuously working on the recruitment of new directors and evaluation of the Group Board s work. In 2013, the Nomination Committee has used an external recruitment bureau to conduct a thorough Board Review as well as the search for potential Board candidates. The Board Review included interviews with all Board members and key management. The Board Review has been discussed by the Board. In the election period (as per 17 March 2014), the Nomination Committee has held 9 meetings, including interviews with potential candidates to the Board. The Nomination Committee makes efforts to ensure that recruitment to Schibsted s Group Board has a sufficient balance between continuity and renewal, and that the Group Board has expertise and experience within the fields of the Group s operations, both inside and outside Scandinavia. In addition, Schibsted seeks to comply with the Norwegian Public Limited Companies Act s gender balance requirements. Based on the Board Review, the Nomination Committee is satisfied that the Group Board is a well-functioning corporate body. At the Annual general meeting on 7 May 2014, the Nomination Committee invites the shareholders to vote on the shareholder directors at the Group Board for the period The candidates are presented in the notice to the annual general meeting. The notice, and a detailed presentation of the candidates, is available on the Schibsted website at The Nomination Committee has reconsidered whether there should be a ballot for each individual director. The Norwegian Recommendation for Corporate Governance recommends individual ballots for each individual director. To comply with the recommended practice, the Nomination Committee proposes one ballot for each individual director at the General Meeting on 7 May C 44

266 THE DIRECTORS INDEPENDENCE Information on the directors business relationships with shareholders or others with links to the shareholders, or to Schibsted, is provided under Corporate Governance. The representation on the Group Board reflects the ownership shares in Schibsted and the right to elect directors, which, according to Schibsted s Articles of Association, belongs to shareholders holding at least 25 per cent of the shares ( 8). As a consequence of Ole Jacob Sunde s links with Blommenholm Industrier and the Tinius Trust, the Nomination Committee does not consider him to be an independent director. The Nomination Committee considers the other directors to be independent. Thus, six of the seven shareholder-elected Group Board members are considered independent. THE GROUP BOARD S COMPENSATION COMMITTEE AND AUDIT COMMITTEE The Compensation Committee and Audit Committee are both elected by the Group Board for a one-year period. The task of these select committees is to prepare the case files and documentation for Group Board consideration. In the annual assessment of the Group Board s work, the preparatory efforts by the select committees are identified as important and positive contributions to the sound and thorough consideration of complex cases. The Nomination Committee appreciates the need for the Group Board to be able to prepare complicated matters in committees. In general terms, the Nomination Committee is highly aware of the responsibilities that rest on the Group Board for its decisions and assessments, including the complex matters that require a preliminary examination in a select committee. All figures in NOK a) Group Board members Chair 755, ,000 Other directors 325, ,000 Alternate directors 16,000 16,000 b) Members of the Compensation Committee Chair 87,000 90,000 Other committee members 57,000 60,000 (c) Members of the Audit Committee Chair 129, ,000 Other committee members 82,000 85,000 (d) Members of the Nomination Committee Chair, per meeting 16,000 16,000 Other committee members, per meeting 11,000 11,000 An allowance of NOK 100,000 may be granted to Group Board members resident outside Oslo. For the upcoming period the Nomination Committee has adopted the following allowance tariffs: NOK 50,000 for Group Board members resident outside Oslo but in the Nordic countries, and NOK 100,000 for Group Board members resident outside the Nordic countries SCHIBSTED ANNUAL REPORT 2013 THE NOMINATION COMMITTEE S REPORT COMPENSATION AND REMUNERATION All compensation and remuneration payable to Schibsted s corporate bodies is stipulated in advance for one year at a time by the Annual General Meeting based on a compensation and remuneration proposal from the Nomination Committee. The Nomination Committee considers the present compensation to Group Board members to be in line with market practice. Taking this into account, the compensation should normally be adjusted annually in order to avoid larger adjustments and achieve with general wage inflation in society as a whole. The Nomination Committee proposes to continue this practice, and proposes the following adjustments for the period A comparison with present figures is also provided below: 87 SCHIBSTED ANNUAL REPORT 2013 SHARE INFORMATION Share information Schibsted Media Group is a listed company, and our aim is that our shares should be perceived as an attractive investment. A competitive return should be based on a healthy economy. The goal is to ensure a competitive return through long-term growth in the share price and dividend. The company s shares should as far as possible achieve a price which reflects the company s long-term earnings capacity. The strategy and vision on which Schibsted s Board has agreed implies that the Group s operations must adapt quickly and develop rapidly. Schibsted s capital structure must be sufficiently robust to enable us to maintain the desired freedom of action. A cornerstone of Schibsted is its positions in the Scandinavian online and print media markets. Some of these operations are exposed to advertising markets that are subject to cyclical fluctuations. Our media houses strong brands and market-leading positions help to ensure a stable, good cash flow. Established online classifieds operations in Scandinavia, France and other countries contribute to strong, profitable growth. At the same time, Schibsted has an ambitious expansion strategy for its online classifieds businesses, and invests significant amounts over the P&L broadening our international footprint. THE SCHIBSTED SHARE - KEY FIGURES Highest share price (NOK) Lowest share price (NOK)*) Share price at year end (NOK)*) Earnings per share Earnings per share - adjusted Dividend per share 3.50**) Average number of 107,273, ,026, ,020, ,337,507 83,256,121 outstanding shares Outstanding shares at 107,348, ,104, ,941, ,773, ,303,474 year end *) Historical share price adjusted for the split out of subscription rights in connection with the rights issue in **) As proposed by the Board of Directors. 88 C 45

267 DIVIDEND AND BUYBACK OF SHARES The distribution of dividend and the opportunity to buy back shares are regarded as suitable ways to adapt the capital structure. The Group s dividend policy is to pay out percent of the Group s cash flow per share. In periods of weak economic conditions, the dividend level is maintained as long as the Group s capital structure permits. Such a dividend level implies that the return on Schibsted s shares is competitive in both the Norwegian market and among European media companies. The Board has decided to propose to the General Meeting on 7 May 2014 to pay a dividend for 2013 of NOK 3.50 per share. Depending on the decision of the General Meeting, the dividend will be paid on 20 May 2014 to those registered as shareholders on the date of the General Meeting. The general meeting has authorized Schibsted s Board to buy back up to 10 percent of the company s shares. The buybacks will take place in the market over time and should be viewed in connection with Schibsted s dividend policy, investment opportunities, and longterm perspectives for its capital structure. The Board will ask the General Meeting to also allow the authorization for the coming period to be used in an acquisition situation. No buyback of shares was carried out in SHAREHOLDER STRUCTURE Blommenholm Industrier, which is controlled by the Tinius Trust, is Schibsted s largest shareholder, giving the Group long-term ownership stability. A consequence of this is that the number of issued shares will normally remain stable over time. This means that earnings from operations, combined with loans, will be the most important source of financing for growth in the form of acquisitions or organic investments. This implies that Schibsted should secure its freedom of action by maintaining a relatively high level of equity and low debt-to-equity ratio over time. Financial independence and a strong financial position are also important for ensuring public confidence and trust in our media businesses. Schibsted s shares are freely marketable. The wording of the company s Articles of Association reflects the Group s publishing responsibilities and role in society as a media company. Schibsted s independence and integrity are ensured through restrictions on ownership and voting rights in article 6 of the Articles of Association. No shareholder may own or exercise voting rights for more than 30 percent of the shares represented at a general meeting. Any shareholder owning 25 percent or more of Schibsted s shares is entitled to appoint one director directly. Blommenholm Industrier, which owns 26.1 percent of the shares, is currently the only shareholder to hold this right. The Tinius Trust has a controlling interest in Blommenholm Industrier. SCHIBSTED ANNUAL REPORT 2013 SHARE INFORMATION 89 SCHIBSTED ANNUAL REPORT 2013 SHARE INFORMATION RETURN The Schibsted share is listed on Oslo Børs with the ticker code SCH. The share is among the most traded in Norway, and has been a part of the OBX index during Schibsted is covered by sell-side analysts in Scandinavia and in London. At year-end 2013, fourteen analysts had an official coverage of Schibsted, five of whom were based outside Scandinavia. In 2013, the Schibsted share produced a return for shareholders of 72.9 percent, including dividend of NOK 3.50 per share (reinvested). By comparison, the Oslo Børs Benchmark Index (OSEBX) produced a return of 23.6 percent. Updated share information, graph showing share price performance over longer or shorter intervals and comparison with other companies is available at Schibsted IR websites. SHAREHOLDERS The number of registered Schibsted shareholders declined in 2013 from 4,869 to 4,707. At year-end 2013, 56 percent of Schibsted shares were owned by non-norwegian shareholders (NWT Media AS counted as a Swedish shareholder). One year earlier, this share was 54 percent. On average, 237,000 Schibsted shares were traded per day on Oslo Børs in 2013, which was 7 percent fewer than in However, the value of the trading in Schibsted shares on Oslo Børs increased 35 percent to NOK 68.4 million per day in The turnover velocity in the Schibsted share on Oslo Børs was 54.1 percent in 2013, compared with 59.6 percent in The slight decline is better than the trend on Oslo Børs, where the turnover velocity declined from 60.7 percent in 2012 to 48.5 percent in At the same time, activity on alternative trading platforms is capturing market shares. SHAREHOLDERS Share of non-norwegian registered shareholders: 56% 54% 48% Number of shareholders: 4,707 4,869 5,275 Number of shares: 108,003, ,003, ,003,615 Number of own shares: 655,075 1,061,958 4,230, C 46

268 SHAREHOLDERS Schibsted conducts a quarterly analysis of shareholders registered at nominee accounts. This list is the outcome of this analysis and gives a richer picture of Schibsted s underlying shareholders than what is the case of the VPS register. Updated as of 20 January Rank Name Share Holding 1 Blommenholm Industrier AS 26,10 28,188,589 2 Folketrygdfondet 6,90 7,456,976 3 Luxor Capital Group, L.P. 6,45 6,971,066 4 Baillie Gifford & Co. 6,20 6,701,102 5 NWT Media As 3,70 4,000,000 6 Alecta pensionsförsäkring, ömsesidigt 3,06 3,302,000 7 Caledonia (Private) Investments Pty Limited 2,50 2,697,612 8 SAFE Investment Company Limited 1,87 2,019,943 9 Capital Research Global Investors 1,76 1,902, Marathon Asset Management LLP 1,74 1,882, Taube, Hodson, Stonex Partners, LLP 1,67 1,800, Tweedy, Browne Company LLC 1,39 1,505, Swedbank Robur AB 1,11 1,198, Danske Capital (Norway) 1,03 1,107, Handelsbanken Asset Management 0,96 1,041, Fidelity Worldwide Investment (UK) Ltd. 0,96 1,036, Adelphi Capital LLP 0,91 986, The Vanguard Group, Inc. 0,91 979, Newbrook Capital Advisors, L.P. 0,89 956, DNB Asset Management AS 0,88 947,436 Total 71,00 76,681,125 The shareholder ID data are provided by Nasdaq OMX. The data are obtained through the analysis of beneficial ownership and fund manager information provided in replies to disclosure of ownership notices issued to all custodians on the Schibsted share register. Whilst every reasonable effort is made to verify all data, neither Thomson Reuters or Schibsted can guarantee the accuracy of the analysis. For an overview of the 20 largest shareholders as of 31 December 2013 from the public VPS-list, refer to the annual accounts for Schibsted ASA, note 13. SCHIBSTED ANNUAL REPORT 2013 SHARE INFORMATION 91 SCHIBSTED ANNUAL REPORT 2013 FINANCIAL STATEMENTS / GROUP CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note 2013 Restated 2012 Operating revenues 7 15,232 14,763 Raw materials and finished goods 26 (871) (1,057) Personnel expenses 27 (5,474) (5,226) Other operating expenses 28 (7,228) (6,471) Share of profit (loss) of associated companies Gross operating profit (loss) 1,672 2,043 Depreciation and amortisation 11, 12 (490) (479) Gross operating profit (loss) after depreciation and amortisation 1,182 1,564 Impairment loss 11, 12, 13 (150) (548) Other income and expenses 8 1,169 (287) Operating profit (loss) 2, Financial income Financial expenses 29 (237) (224) Profit (loss) before taxes 2, Taxes 30 (453) (426) Profit (loss) 1, Profit (loss) attributable to non-controlling interests Profit (loss) attributable to owners of the parent 1, Earnings per share (NOK) Diluted earnings per share (NOK) Earnings per share adjusted (NOK) Diluted earnings per share adjusted (NOK) C 47

269 SCHIBSTED ANNUAL REPORT 2013 FINANCIAL STATEMENTS / GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note 2013 Restated 2012 Profit (loss) 1, Other comprehensive income: Items that will not be reclassified to profit or loss: Remeasurements of defined benefit pension liabilities 21 (300) 812 Income tax relating to remeasurements of defined benefit pension liabilities (227) Share of other comprehensive income of associated companies - 9 Items that will be reclassified subsequently to profit or loss: Change in cumulative unrealised gains financial assets available for sale 14 - (80) Exchange differences on translating foreign operations 933 (328) Hedges of net investments in foreign operations (132) 26 Income tax relating to hedges of net investments in foreign operations (7) Other comprehensive income Comprehensive income 2, Comprehensive income attributable to non-controlling interests Comprehensive income attributable to owners of the parent 2, SCHIBSTED ANNUAL REPORT 2013 FINANCIAL STATEMENTS / GROUP CONSOLIDATED BALANCE SHEET Restated Restated (NOK million) Note ASSETS Intangible assets 11 10,337 9,113 9,611 Investment property Property, plant and equipment 12 1,439 1,777 1,929 Investments in associated companies 13 1, Non-current financial assets Deferred tax assets Other non-current assets Non-current assets 13,215 11,752 12,500 Inventories Trade and other receivables 17 2,623 2,447 2,406 Current financial assets Cash and cash equivalents 18 1,240 1, Current assets 3,944 3,598 3,827 Total assets 17,159 15,350 16,327 EQUITY AND LIABILITIES Share capital Treasury shares 19 (1) (1) (1) Other paid-in equity 1,464 1,464 1,440 Other equity 6,279 4,293 4,777 Equity attributable to owners of the parent 7,850 5,864 6,324 Non-controlling interests Equity 8,111 6,109 6,480 Deferred tax liabilities Pension liabilities 21 1, ,691 Non-current interest-bearing borrowings 22 1,971 2,124 1,907 Other non-current liabilities Non-current liabilities 4,284 4,236 4,669 Current interest-bearing borrowings Income tax payable Other current liabilities 24 3,976 4,293 4,227 Current liabilities 4,764 5,005 5,178 Total equity and liabilities 17,159 15,350 16,327 Oslo, 25 March 2014 Schibsted ASA s Board of Directors Ole Jacob Sunde Chairman of the Board Karl-Christian Agerup Arnaud de Puyfontaine Marie Ehrling Christian Ringnes Eva Berneke Anne Lise von der Fehr Gunnar Kagge Jonas Fröberg Eugénie Van Wiechen Rolv Erik Ryssdal CEO 94 C 48

270 SCHIBSTED ANNUAL REPORT 2013 FINANCIAL STATEMENTS / GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note 2013 Restated 2012 CASH FLOW FROM OPERATING ACTIVITIES Profit (loss) before taxes 2, Gain from remeasurement of previously held equity interest in business combination achieved in stages (2) (57) Share of profit of associated companies 13 (13) (34) Dividends received from associated companies Taxes paid (636) (628) Sales losses / (gains) non-current assets (1,468) (65) Amortisation and impairment losses intangible assets Depreciation and impairment losses property, plant and equipment Impairment loss associated companies Write-down of inventories Impairment losses financial instruments Change in working capital Net cash flow from operating activities 635 1,275 CASH FLOW FROM INVESTING ACTIVITIES Purchase of intangible assets and property, plant and equipment 11, 12 (531) (366) Acquisition of subsidiaries and joint ventures, net of cash acquired 33 (257) (94) Proceeds from sale of intangible assets and property, plant and equipment Proceeds from sale of subsidiaries and joint ventures, net of cash sold 33 1,014 9 Investments in / sale of other shares (66) 2 Other investments / sales (27) 23 Net cash flow from investing activities 477 (400) Net cash flow before financing activities 1, CASH FLOW FROM FINANCING ACTIVITIES New interest-bearing loans and borrowings 991 1,220 Repayment of interest-bearing loans and borrowings (1,164) (1,403) Payment due to increase in ownership interests in subsidiaries (478) (39) Capital increase 1 44 Purchase / sale of treasury shares Dividends paid to owners of the parent 20, 33 (375) (375) Dividends paid to non-controlling interests 33 (58) (54) Net cash flow from financing activities (1,059) (591) Effects of exchange rate changes on cash and cash equivalents 156 (31) Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents as at 1.1 1, Cash and cash equivalents as at ,240 1, SCHIBSTED ANNUAL REPORT 2013 FINANCIAL STATEMENTS / GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Foreign Net Other currency unrealised Noncontrolling Share Treasury paid-in Retained transl. gains (NOK million) Note capital shares equity earnings reserve reserve Total interests Total As at (1) 1,440 5,239 (509) 225 6, ,659 Changes in accounting policies (178) - - (178) (1) (179) As at (restated) 108 (1) 1,440 5,061 (509) 225 6, ,480 Profit (loss) Remeasurements of defined benefit pension liabilities Income tax relating to remeasurements of defined benefit pension liabilities (227) - - (227) - (227) Share of other comprehensive income of associated companies Change in fair value of investments available for sale (80) (80) - (80) Translation differences (323) - (323) (5) (328) Hedging of net investment in foreign operations Tax effect hedging of net investment in foreign operations (7) - (7) - (7) Comprehensive income (304) (80) Capital increase Share-based payment Dividends paid to owners of the parent (375) - - (375) - (375) Dividends to non-controlling interests (54) (54) Change in treasury shares Business combinations Loss of control of subsidiaries (3) (3) Changes in ownership of subsidiaries that do not result in a loss of control (331) - - (331) 43 (288) Other changes in the composition of the Group (145) (145) - (145) Total transactions with the owners (690) - (145) (811) 41 (770) As at (1) 1,464 5,106 (813) - 5, , C 49

271 SCHIBSTED ANNUAL REPORT 2013 FINANCIAL STATEMENTS / GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Foreign Net Other currency unrealised Noncontrolling Share Treasury paid-in Retained transl. gains (NOK million) Note capital shares equity earnings reserve reserve Total interests Total As at (1) 1,464 5,106 (813) - 5, ,109 Profil (loss) , , ,562 Remeasurements of defined benefit pension liabilities (300) - - (300) - (300) Income tax relating to remeasurements of defined benefit pension liabilities Translation differences Hedging of net investment in foreign operations (132) - (132) - (132) Tax effect hedging of net investment in foreign operations Comprehensive income , , ,184 Capital increase Share-based payment Dividends paid to owners of the parent (375) - - (375) - (375) Dividends to non-controlling interests (58) (50) Change in treasury shares Business combinations Loss of control of subsidiaries (1) (1) Changes in ownership of subsidiaries that do not result in a loss of control Total transactions with the owners (189) - - (163) (19) (182) As at (1) 1,490 6, , , SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP TABLE OF CONTENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2013 All amounts are in NOK million unless otherwise stated. NOTE 1: COMPANY INFORMATION NOTE 2: SIGNIFICANT ACCOUNTING POLICIES NOTE 3: USE OF ESTIMATES NOTE 4: CHANGES IN THE COMPOSITION OF THE GROUP NOTE 5: BUSINESS COMBINATIONS NOTE 6: EVENTS AFTER THE REPORTING PERIOD NOTE 7: DISCLOSURE OF OPERATING SEGMENTS NOTE 8: OTHER INCOME AND EXPENSES NOTE 9: FINANCIAL RISK MANAGEMENT NOTE 10: FINANCIAL INSTRUMENTS BY CATEGORY NOTE 11: INTANGIBLE ASSETS NOTE 12: PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY NOTE 13: INVESTMENTS IN ASSOCIATED COMPANIES NOTE 14: FINANCIAL ASSETS NOTE 15: OTHER NON-CURRENT ASSETS NOTE 16: INVENTORIES NOTE 17: TRADE AND OTHER RECEIVABLES NOTE 18: CASH AND CASH EQUIVALENTS NOTE 19: NUMBER OF SHARES NOTE 20: DIVIDENDS NOTE 21: PENSION PLANS NOTE 22: INTEREST-BEARING BORROWINGS NOTE 23: OTHER NON-CURRENT LIABILITIES NOTE 24: OTHER CURRENT LIABILITIES NOTE 25: FINANCIAL LIABILITIES BUSINESS COMBINATIONS AND INCREASES IN OWNERSHIP INTERESTS NOTE 26: RAW MATERIALS AND FINISHED GOODS NOTE 27: PERSONNEL EXPENSES AND SHARE-BASED PAYMENT NOTE 28: OTHER OPERATING EXPENSES NOTE 29: FINANCIAL ITEMS NOTE 30: TAXES NOTE 31: EARNINGS PER SHARE NOTE 32: JOINT VENTURES NOTE 33: SUPPLEMENTAL INFORMATION TO THE CONSOLIDATED STATEMENT OF CASH FLOWS NOTE 34: TRANSACTIONS WITH RELATED PARTIES NOTE 35: SUBSIDIARIES 98 C 50

272 NOTE 1 COMPANY INFORMATION Schibsted ASA is domiciled in Norway. The company s head office is located at Apotekergaten 10, Oslo. The company s postal address is P.O. Box 490 Sentrum, 0105 Oslo. The company is a public limited company that is listed on the Oslo Stock Exchange under ticker SCH. Schibsted Media Group is one of Scandinavia s leading media groups. The major businesses are in Norway, Sweden, France and Spain, but the Group also has operations in other countries in Europe, Latin America, Asia and Africa. Schibsted s operations are divided in four operating segments: Online classifieds, Schibsted Norge media house, Schibsted Sverige media house and Media Houses International. Schibsted has a presence in classifieds, printed newspapers, online newspapers and directories. The financial statements were approved by the Board of Directors on 25 March 2014 and will be proposed to the General Meeting 7 May NOTE 2 SIGNIFICANT ACCOUNTING POLICIES BASIS FOR THE PREPARATION OF THE FINANCIAL STATEMENTS The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The consolidated financial statements have been prepared based on a historical cost basis, with the exception of financial instruments in the categories Financial assets and financial liabilities at fair value through profit or loss and Financial assets available for sale which are measured at fair value and Loans and receivables and Other financial liabilities which are measured at amortised cost. In the consolidated income statement, expenses are presented using a classification based on the nature of the expenses. Determining the carrying amounts of some assets and liabilities requires management to estimate the effects of uncertain future effects on those assets and liabilities at the balance sheet date. Key sources of estimation uncertainty at the balance sheet date having a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed in note 3. CHANGE IN ACCOUNTING POLICIES Except for the mandatory implementation of amendments to IAS 19 Employee Benefits and IAS 1 Presentation of Financial Statements and the mandatory implementation of IFRS 13 Fair Value Measurement as at 1 January 2013, the accounting policies adopted are consistent with those of the financial year SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Amendments to IAS 19 Employee Benefits have removed the option for deferred recognition of changes in pension plan assets and liabilities ( the corridor approach ). Actuarial gains (losses) and the actual return on plan assets ( remeasurements ) are recognised in the balance sheet immediately, with a charge or credit to other comprehensive income in the period in which they occur. Such remeasurements are not reclassified to profit or loss subsequently. Interest expense or income is calculated on the net defined benefit liability (asset) by applying the discount rate to the net defined benefit liability (asset). This replaces the interest cost on the defined benefit obligation and the expected return on plan assets. Past service cost is recognised in the period when a plan is amended. Amendments to IAS 19 Employee benefits are applied retrospectively. As a result of the accounting policy change, the following adjustments were made to the financial statements: As previously Effect of Restated (NOK million) reported restatement As at 1 January 2012: Consolidated balance sheet Investments in associated companies 492 (9) 483 Equity attributable to owners of the parent 6,502 (178) 6,324 Non-controlling interests 157 (1) 156 Deferred tax liabilities 798 (66) 732 Pension liabilities 1, ,691 As at and for the year ended 31 December 2012: Consolidated income statement: Personnel expenses (5,241) 15 (5,226) Other income and expenses (257) (30) (287) Financial expenses (176) (48) (224) Taxes (443) 17 (426) Profit (loss) 240 (46) 194 Earnings per share (NOK) 1.73 (0.41) 1.32 Diluted earnings per share (NOK) 1.73 (0,41) 1.32 Consolidated statement of comprehensive income: Remeasurements of defined benefit pension liabilities Income tax relating to remeasurements of defined benefit pension liabilities - (227) (227) Share of comprehensive income of associated companies Other comprehensive income (389) Comprehensive income (149) Consolidated balance sheet: Equity attributable to owners of the parent 5, ,864 Non-controlling interests 248 (3) 245 Deferred tax liabilities Pension liabilities 1,422 (513) SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Amendments to IAS 1 Presentation of Financial Statements have changed the grouping of items presented in other comprehensive income. Items that will be reclassified subsequently to profit or loss are presented separately from items that will not be reclassified. Comparable figures for 2012 are restated. IFRS 13 Fair Value Measurement, establishing a single source of guidance for all fair value measurements, is implemented with prospective effect. Application of IFRS 13 has not materially impacted the fair value measurements of the Group. CONSOLIDATION PRINCIPLES The consolidated financial statements include the parent Schibsted ASA and all subsidiaries, presented as the financial statements of a single economic entity. Intragroup balances, transactions, income and expenses are eliminated. Subsidiaries are all entities that are controlled, directly or indirectly by Schibsted ASA. Control is the power to govern the financial and operational policies of an entity and is normally achieved through ownership of more than half of the voting power of an entity or by virtue of an agreement with other investors. The existence and effect of potential voting rights that are currently exercisable or convertible, are considered when assessing whether control exists. Subsidiaries are included in the consolidated financial statements from the date Schibsted ASA effectively obtains control of the subsidiary (acquisition date) and until the date Schibsted ASA ceases to control the subsidiary. Non-controlling interests is the equity in a subsidiary not attributable, directly or indirectly, to the parent Schibsted ASA. Non-controlling interests are presented in the consolidated balance sheet within equity, separately from the equity of the owners of the parent. Profit or loss and comprehensive income attributable to non-controlling interests are disclosed as allocations for the period of profit or loss and comprehensive income attributable to non-controlling interests and owners of the parent, respectively. All business combinations in which Schibsted ASA or a subsidiary is the acquirer, i.e. the entity that obtains control of an other entity or business, are accounted for by applying the acquisition method. The identifiable assets acquired and the liabilities assumed are measured at their acquisition-date fair values. Any non-controlling interest in the acquiree is measured either at fair value or at the proportionate share of the acquiree s identifiable net assets. The consideration transferred is measured at fair value. Any excess of the aggregate of the consideration transferred, the amount recognised for non-controlling interests and the fair value of any previously held equity interest in the acquiree over the net of identifiable assets acquired and liabilities assumed, is recognised as goodwill. Acquisition-related costs incurred, except those related to debt or equity, are expensed. The acquisition-date fair value of contingent consideration is recognised as part of the consideration transferred in exchange for the acquiree. Subsequent changes in the fair value of contingent consideration deemed to be a liability is recognised in profit or loss. In business combinations achieved in stages, the previously held equity interest is remeasured at its acquisition-date fair value with the resulting gain or loss recognised in profit or loss. 100 Changes in ownership interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of noncontrolling interests is adjusted to reflect the change in their relative share in the subsidiary. Any difference between the amount by which the non-controlling interests is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the parent. When control of a subsidiary is lost, the assets and liabilities of the subsidiary and the carrying amount of any non-controlling interests are derecognised. Any consideration received and any investment retained in the former subsidiary is recognised at their fair values. The difference between amounts recognised and derecognised is recognised as gain or loss in profit or loss. Amounts recognised in other comprehensive income related to the subsidiary are reclassified to profit or loss or transferred to equity similarly as if the parent had disposed of the assets and liabilities directly. Amounts reclassified to profit or loss (including accumulated translation differences and accumulated fair value adjustments to financial assets available for sale) are included in gain or loss on loss of control of subsidiary in profit or loss. Interests in joint ventures A joint venture is an economic activity which, based on a contractual agreement, is subject to joint control by two or more parties. A jointly controlled entity is an entity in which Schibsted holds an ownership interest, and where the entity is subject to joint control based on a contractual agreement between Schibsted and one or more other parties. Schibsted recognises its share in jointly controlled entities using proportionate consolidation. Schibsted combines its share of each of the assets, liabilities, income and expenses of jointly controlled entities with similar items in the consolidated financial statements on a line-by-line basis. When joint control is lost, the difference between the fair value of proceeds received and any retained investment and the carrying amount of the investment is recognised as gain or loss in profit or loss. Investments in associates Associated companies are defined as companies in which Schibsted ASA, directly or indirectly through subsidiaries, does not have a controlling interest but exercises significant management influence. Significant influence is normally presumed to exist when Schibsted controls 20% or more of the voting power of the investee. Associated companies are accounted for applying the equity method of accounting and are initially recognised at cost. The Group s investments in associates include goodwill identified on acquisition, net of any accumulated impairment loss. Schibsted recognises its share of the company s profit (loss) and gains or losses on sale in a separate line in the income statement within operating profit (loss). When the Group s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses. In the balance sheet, the investment is carried at cost adjusted for the share of profit (loss), changes in equity not recognised in profit or loss and dividends received. ACCRUAL, CLASSIFICATION AND VALUATION PRINCIPLES Classification current / non-current distinction Cash and cash equivalents, assets included in the normal operating cycle and C 51

273 other financial assets expected to be realised within twelve months after the reporting period are classified as current assets. Liabilities included in the normal operating cycle and liabilities due to be settled within twelve months after the reporting period are classified as current liabilities. Other assets and liabilities are classified as non-current. Operating segments The division into operating segments is based on the organisation of the Group and corresponds to the internal management reporting to the chief operating decision maker, defined as the CEO. Revenue recognition Revenue from sale of goods is recognised when delivery has occurred and the significant risks and rewards of ownership have been transferred to the buyer. Revenue from the rendering of services is recognised by reference to the stage of completion of the transaction (the percentage of completion method) provided that the outcome of the transaction can be estimated reliably. Discounts are recognised as a revenue reduction. Advertising revenue in printed media is recognised when inserted. Subscription revenues for printed media are invoiced in advance and recognised upon delivery over the subscription period. Revenue from other sales of goods, including casual sales, are recognised upon delivery, taking into account estimated future returns. Online advertising revenue is recognised when displayed. Other revenues from the internet, including subscription based revenues, are recognised in the periods in which the service is rendered. Commissions related to sales of ads and casual sales are recognised as operating expenses. When goods are sold or services rendered in exchange for dissimilar goods or services, revenue is recognised in accordance with the recognition policy related to relevant goods or services. Revenue is measured at the fair value of the goods or services delivered or received, depending on which item that can be measured reliably. Interest income is recognised using the effective interest method and dividends are recognised when the right to receive payment is established. Government grants Government grants are recognised when there is reasonable assurance that the conditions attaching to them will be complied with, and that the grants will be received. Government grants, including press subsidies, are recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate. Financial instruments The Group initially recognises loans, receivables and deposits on the date that they are originated. All other financial assets and financial liabilities (including financial assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP The Group classifies at initial recognition its financial instruments in one of the following categories: Financial assets or financial liabilities at fair value through profit or loss, Loans and receivables, Financial assets available for sale and Other financial liabilities. The classification depends on the purpose for which the financial instruments were acquired. Financial assets or financial liabilities at fair value through profit or loss are financial assets held for trading and acquired primarily with a view of selling in the near term. The category consists of financial derivatives unless they are designated and effective hedging instruments. Financial derivatives are included in the balance sheet items Trade and other receivables and Other current liabilities. These financial assets and liabilities are measured at fair value when recognised initially, and transaction costs are charged to expense as incurred. Subsequently, the instruments are measured at fair value, with changes in fair value, including interest income, recognised in profit or loss as financial income or financial expenses. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The category is included in the balance sheet items Other non-current assets, Trade and other receivables and Cash and cash equivalents. Loans and receivables are recognised initially at fair value plus directly attributable transaction costs. Subsequently, loans and receivables are measured at amortised cost using the effective interest method, reduced by any impairment loss. Short-term loans and receivables are for practical reasons not amortised. Effective interest related to loans and receivables is recognised in profit or loss as Financial income. Financial assets available for sale are non-derivative financial assets that are designated as available for sale or which are not classified in any other category. Carrying amount of financial assets available for sale is included in the balance sheet items Non-current financial assets and Current financial assets. These financial assets are measured initially at fair value plus directly attributable transaction costs. Changes in fair value are recognised in other comprehensive income, except for impairment losses that are recognised in profit or loss. When an investment is derecognised, the cumulative gain or loss is transferred to profit or loss under financial income or expenses. Dividends are recognised when the right to receive payment is established. Financial liabilities not included in any of the above categories are classified as other financial liabilities. The category other financial liabilities is included in the balance sheet items Non-current interest-bearing borrowings, Other non-current liabilities, Current interest-bearing borrowings and Other current liabilities. Other financial liabilities are recognised initially at fair value. Subsequently, other financial liabilities are measured at amortised cost using the effective interest method. Effective interest is recognised in income as financial expenses. Shortterm financial liabilities are for practical reasons not amortised. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire and the Group has transferred substantially all the risks and rewards of ownership. Financial liabilities are derecognised when the obligation is discharged, cancelled or expires. Any rights and obligations created or retained in such a transfer are recognised separately as assets or liabilities. 101 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Financial assets and liabilities are offset and the net amount presented in the balance sheet when the Group has a legal right to offset the amounts and intends to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the securities are impaired. Indications of impairment is evaluated separately for each investment, but normally decline in value of more than 20% compared to cost will be considered to be significant, and normally a decline in value below cost lasting for more than 12 months will be considered to be prolonged. For Trade and other receivables, default in payments, significant financial difficulties of the debtor or probability that the debtor will enter bankruptcy or debt settlement negotiations are considered to be indicators that the Group will not be able to collect all amounts due according to the original terms of the receivables. The carrying amount of the trade receivables is reduced through the use of an allowance account, and the loss is recognised as other operating expenses in the income statement, while impairment of other financial assets are recognised as financial expenses. Fair value of financial instruments is based on quoted prices in an active market if such markets exist. If an active market does not exist, fair value is established by using valuation techniques that are expected to provide a reliable estimate of the fair value. The fair value of listed securities is based on current bid prices. The fair value of unlisted securities is based on cash flows discounted using an applicable risk-free market interest rate and a risk premium specific to the unlisted securities. Fair value of forward contracts is estimated based on the difference between the spot forward price of the contracts and the closing rate at the date of the balance sheet. The forward rate addition and deduction is recognised as interest income or interest expense. Fair value of interest and currency swaps is estimated based on discounted cash flows, where future interest rates are derived from marketbased future rates. Treasury shares and transaction costs of equity transactions Own equity instruments which are reacquired (treasury shares) are deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. Consideration paid or received is recognised directly in equity. The transaction costs of issuing or acquiring own equity instruments are accounted for as a deduction from equity, net of any related income tax benefit. Foreign currency translation Each individual entity included in the consolidated financial statements measures its results and financial position using the currency of the primary economic environment in which it operates (the functional currency). The consolidated financial statements are presented in NOK which is Schibsted ASA s functional and presentation currency. Foreign currency transactions are translated into the entity s functional currency on initial recognition by using the spot exchange rate at the date of the transaction. At the balance sheet date, assets and liabilities are translated from foreign currency to the entity s functional currency by 102 translating monetary items using the exchange rate at the balance sheet date translating non-monetary items that are measured in terms of historical cost in a foreign currency using the exchange rate at the transaction date, and translating non-monetary items that are measured at fair value in a foreign currency using the exchange rate at the date when the fair value was determined. Exchange differences arising on the settlement of, or on translating monetary items not designated as hedging instruments, are recognised in profit or loss in the period in which they arise. When a gain or loss on a non-monetary item is recognised in other comprehensive income, any exchange component of that gain or loss is also recognised in other comprehensive income. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is also recognised in profit or loss. On initial designation of a hedge, the Group formally documents the relationship between the hedging instrument(s) and the hedged item(s), including risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be highly effective in offsetting the changes in the fair value or cash flows for the respective hedged items during the period for which the hedge is designated. Gains or losses related to loans or currency derivatives in foreign currencies, designated as hedging instruments in a hedge of a net investment in a foreign operation, are recognised in other comprehensive income until disposal of the operation. Upon incorporation of a foreign operation into the consolidated financial statements by consolidation, proportionate consolidation or the equity method, the results and financial position is translated from the functional currency of the foreign operation into NOK (the presentation currency) by using the stepby-step method of consolidation. Assets and liabilities are translated at the closing rate at the balance sheet date and income and expenses are translated at average rates for the period. Resulting exchange differences are recognised in other comprehensive income until the disposal of the foreign operation. Goodwill and fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation, is treated as assets and liabilities of that foreign operation. They are therefore expressed in the functional currency of the foreign operation and translated at the closing rate at the balance sheet date. Property, plant and equipment Property, plant and equipment are measured at its cost less accumulated depreciation and accumulated impairment losses. The depreciable amount (cost less residual value) of property, plant and equipment is allocated on a systematic basis over its useful life. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item, is depreciated separately. Costs of repairs and maintenance are recognised in profit or loss as incurred. Cost of replacements and improvements are recognised in the carrying amount of the asset. C 52

274 The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no economic benefits are expected from its use or disposal. Gain or loss arising from derecognition is included in profit or loss when the item is derecognised. Investment property Property that is not owner-occupied, but held to earn rentals or for capital appreciation, is classified as investment property. Investment property is measured at cost less accumulated depreciation and accumulated impairment losses. Intangible assets Intangible assets are measured at its cost less accumulated amortisations and accumulated impairment losses. Amortisation of intangible assets with a finite useful life is allocated on a systematic basis over its useful life. Intangible assets with an indefinite useful life are not amortised. Costs of developing software and other intangible assets are recognised as an expense until all requirements for recognition as an asset is met. The requirements for recognition as an asset include, among other requirements, the requirement to demonstrate probable future economic benefits and the requirement that the cost of the asset can be measured reliably. Costs incurred after the time that all the requirements for recognition as an asset are met are recognised as an asset. The cost of an internally generated intangible asset is the sum of expenditure incurred from the time all requirements for recognition as an asset are met and until the time the asset is capable of operating in the manner intended by management. Expenditure related to development of technology-based intangible assets to be used in new markets will normally be charged to expense as the requirement to demonstrate probable future economic benefits will normally not be met. Subsequent expenditure incurred in the operating stage to enhance or maintain an intangible asset are normally recognised as an expense as the requirement to demonstrate probable increased economic benefits will normally not be met. Impairment of non-financial assets Property, plant, equipment, intangible assets and goodwill are reviewed for impairment whenever an indication that the carrying amount may not be recoverable is identified. Goodwill and other intangible assets that have an indefinite useful life are tested annually for impairment. Impairment indicators will typically be changes in market developments, the competitive situation or technological developments. An impairment loss is recognised in the Income statement if the carrying amount of an asset (cash generating unit) exceeds its recoverable amount. The recoverable amount is the higher of value in use and fair value less cost to sell. Value in use is assessed by discounting estimated future cash flows. Estimated cash flows are based on management s experience and market knowledge for the given period, normally five years. For subsequent periods growth factors are used that do not exceed the long-term average rate of growth for the relevant market. Expected cash flows are discounted using an after tax discount rate that takes into account the expected long-term interest rate with the addition of a risk margin appropriate for the assets being tested. For the purpose of impairment testing, assets, except goodwill, are grouped together into the smallest group of assets that generates independent cash SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP flows (cash-generating units). Goodwill acquired in a business combination is, from the acquisition date, allocated to the cash-generating units, or groups of cash-generating units, that is expected to benefit from the synergies of the combination. Testing for impairment of goodwill is done by comparing recoverable amount and carrying amount of the same groups of cash-generating units as to which goodwill is allocated. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill. Any remaining amount is then allocated to reduce the carrying amounts of the other assets in the unit on a pro rata basis. Impairment losses are reversed if the loss no longer exists for all property, plant and equipment and intangible assets with the exception of goodwill where impairment losses are not reversed. Leases Leases are classified as either finance leases or as operating leases. Leases that transfer substantially all the risks and rewards incidental to the asset are classified as finance leases. Other leases are classified as operating leases. When Schibsted is lessee in a finance lease, the leased asset and the liability related to the lease is recognised in the balance sheet. Depreciable leased assets are depreciated systematically over the useful life of the asset. Lease payments are apportioned between interest expense and reduction of the liability. Lease payments related to operating leases are recognised as an expense over the lease term. Borrowing Costs Borrowing costs are generally recognised as an expense in the period in which they are incurred. Borrowing costs that are directly attributable to the acquisition, construction or production of an asset, that necessarily takes a substantial period of time to get ready for its intended use or sale ( qualifying asset ), are capitalised as part of the cost of that asset. Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories are assigned by using the first-in, first-out (FIFO) cost formula and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Post-employment benefits Pension plans, including multi-employer plans, are classified as defined contribution plans or defined benefit plans depending on the economic substance of the plan. Pension plans in which Schibsted s obligation is limited to the payment of agreed contributions and in which the actuarial risk and the investment risk fall on the employee, are classified as defined contribution plans. Other plans are classified as defined benefit plans. As net defined benefit liability is recognised the present value of the benefit obligation at the balance sheet date, less fair value of plan assets. Net pension expense related to defined benefit plans include service cost and net interest on the net defined benefit liability recognised in profit or loss 103 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP and remeasurements of the net defined benefit liability recognised in other comprehensive income. The present value of defined benefit obligations, current service cost and past service cost is determined using the Projected Unit Credit Method and actuarial assumptions regarding demographic variables and financial variables. Past service cost is the change in the present value of the defined benefit obligation resulting from a plan amendment or curtailment. Past service cost is recognised at the earlier date of when the plan amendment or curtailment occurs and when related restructuring costs or termination benefits are recognised. The contribution payable to a defined contribution plan attributable to the reporting period is recognised in profit or loss. Multi-employer plans classified as defined benefit plans, but for which sufficient information is not available to enable recognition as a defined benefit plan, are accounted for as if they were defined contribution plans. Social security taxes are included in the determination of defined benefit obligations and net pension expense. Share-based payment In equity settled share-based payment transactions with employees, the employee services and the corresponding equity increase is measured by reference to the fair value of the equity instruments granted. The fair value of the equity instruments are measured at grant date, and is recognised as personnel expenses and equity increase immediately or over the vesting period when performance vesting conditions require an employee to serve over a specified time period. At each reporting date the companies remeasure the estimated number of equity instruments that is expected to vest. The amount recognised as an expense is adjusted to reflect the number of equity instruments which is expected to be, or actually become vested. In cash settled share-based payment transactions with employees, the employee services and the incurred liability is measured at the fair value of the liability. The employee services and the liability are recognised immediately or over the vesting period when performance vesting conditions require an employee to serve over a specified time period. Until the liability is settled, the fair value of the liability is revised at each balance sheet date and at settlement date, with changes in fair value recognised in profit or loss. Income taxes Current tax, which is the amount of income taxes payable in respect of taxable profit for a period, is, to the extent unpaid, recognised as a liability. If the amount paid exceeds the amount due, the excess is recognised as an asset. A deferred tax liability is recognised for all taxable temporary differences, except for liabilities arising from the initial recognition of goodwill. A deferred tax asset is recognised for deductible temporary differences, the carryforward of unused tax losses and the carryforward of unused tax credits to the extent that it is probable that future taxable profit will be available against which these benefits can be utilised. 104 No deferred tax liability is recognised for taxable temporary differences associated with investments in subsidiaries and interests in joint ventures when Schibsted is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Tax expense (tax income) comprises current tax expense (current tax income) and deferred tax expense (deferred tax income). Any amount recognised as current tax assets or liabilities and deferred tax assets or liabilities are recognised in profit or loss, except to the extent that the tax arises from a transaction or event recognised in other comprehensive income or directly in equity or arises from a business combination. Provisions, contingent liabilities and contingent assets A provision is recognised when an obligation exists (legal or constructive) as a result of a past event, it is probable that an economic settlement will be required as a consequence of the obligation, and a reliable estimate can be made of the amount of the obligation. The best estimate of the expenditure required to settle the obligation is recognised as a provision. When the effect is material, the provision is discounted using a market based pre-tax discount rate. A provision for restructuring costs is recognised when a constructive obligation arises. Such an obligation is assumed to have arisen when the restructuring plan is approved and the implementation of the plan has begun or its main features are announced to those affected by it. Contingent liabilities and contingent assets are not recognised. Contingent liabilities are disclosed unless the possibility of an economic settlement as a consequence of the obligation is remote. Contingent assets are disclosed where an economic settlement as a consequence of the asset is probable. Other income and expenses Income and expenses included in operating profit, but being of a non-recurring nature and material in relation to operating segments, are reported on a separate line in the income statement. Other income and expenses will normally include restructuring costs, material gains and losses on sale of property, plant and equipment or intangible assets, as well as gains or losses relating to sale of subsidiaries, joint ventures and associated companies. Non-current assets held for sale A non-current asset (or disposal group) is classified as held for sale if its carrying amount will be recovered principally through a sales transaction rather than through continuing use. A disposal group includes assets to be disposed of, by sale or otherwise, together in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction. A non-current asset or a disposal group classified as held for sale is measured at the lower of carrying amount and fair value less costs to sell. Non-current assets classified as held for sale and non-current assets that are part of a disposal group classified as held for sale, are not depreciated. Non-current assets and assets of a disposal group classified as held for sale are presented separately from other assets in the balance sheet. The liabilities of a C 53

275 disposal group classified as held for sale are presented separately from other liabilities in the balance sheet. Discontinued operations The results of discontinued operations are presented separately in the income statement. A component of the Group that either has been disposed of or is classified as held for sale, and represents a separate major line of business, is classified as discontinued operations. The results of discontinued operations are presented separately from the period the operation is disposed of or classified as held for sale. Previous periods are reclassified so that all items related to discontinued operations are presented separately from continuing operations for all periods presented. Statement of cash flows The statement of cash flows is prepared under the indirect method. Cash and cash equivalents include cash, bank deposits and other monetary instruments with a maturity of less than three months at the date of purchase. Earnings per share Earnings per share and diluted earnings per share are presented for ordinary shares. Earnings per share are calculated by dividing profit (loss) attributable to owners of the parent by the weighted average number of shares outstanding. Diluted earnings per share is calculated by dividing net income attributable to owners of the parent by the weighted average number of shares outstanding, adjusted for all dilutive potential shares. Dividends Dividends are recognised as a liability at the date such dividends are appropriately approved by the company s shareholders meeting. IFRS AND IFRIC INTERPRETATIONS NOT YET EFFECTIVE IASB has published certain new standards and interpretations and amendments to existing standards and interpretations that are not effective for the annual period ending and that are not applied when preparing these financial statements. Standards and interpretations expected to have effect on the Group s financial position, performance or disclosures are presented below. Changes with effect for the annual period beginning IFRS 10 Consolidated financial statements replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the principles for the presentation and preparation of consolidated financial statements. In addition it also includes the issues raised in SIC-12 Consolidation Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. IFRS 10 is not expected to have significant effect on the determination of whether an investee must be consolidated in the financial statements of Schibsted. IFRS 11 Joint Arrangements replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities Non-monetary contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities using proportionate consolidation. Instead, jointly controlled entities must be accounted for using the equity method. This will affect the presentation of jointly controlled entities in profit or loss and in the balance sheet, but will SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP generally not affect net profit or shareholders equity. IFRS 11 will affect the presentation of all investments currently accounted for as joint ventures by using proportionate consolidation. The significant operations and their effect on the consolidated financial statements are presented in note 32 Joint Ventures. The use of the equity method of accounting in restated financial statements for 2013 also implies that any investment retained, when reducing ownership interest and reclassifying investment from joint venture to associated company, shall not be remeasured at fair value. This implies that the gain of NOK 781 million recognised in respect of reduced ownership interest in 701 Search Pte., recognised in profit or loss in the line item Other income and expenses, is reduced to NOK 256 million with a corresponding effect on equity. The standard will be implemented with retrospective effect and comparable figures will be restated. Restated figures for 2013 are expected to deviate as follows from figures presented in these consolidated financial statements: Profit and equity is reduced by NOK 525 million as a consequence of change in gain from reduced ownership interest in 701 Search Pte. The use of the equity method of accounting for operations previously recognised using proportionate consolidation has no effect on profit or equity but leads to the following reclassifications in the income statement: Reduction of operating revenues by NOK 362 million. Reduction of operating expenses by NOK 480 million. Recognition of share of profit (loss) of joint ventures by NOK (136) million. Reduction of gross operating profit by NOK 18 million and reduction of operating profit (loss) by NOK 1 million. IFRS 12 Disclosure of Interests in Other Entities includes all of the disclosures previously included in IAS 27 Consolidated and Separate Financial Statements, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures. These disclosures relate to an entity s interests in subsidiaries, joint ventures, associate companies and structured entities. A number of new disclosures are also required, but have no impact on the Group s financial position or performance. Changes with effect for annual periods beginning or later IFRS 9 Financial Instruments, as issued, reflects the two first phases of IASB s work on the replacement of IAS 39 Financial Instruments: Recognition and Measurement, which are classification and measurement of financial assets and financial liabilities and hedge accounting. Third and last phase of this project will address amortised cost measurement and impairment of financial assets. No mandatory effective date has been determined. The Group will evaluate potential effects of IFRS 9 as soon as the final standard, including all phases, is issued. 105 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP NOTE 3 USE OF ESTIMATES In many areas the consolidated financial statements are affected by estimates. Important areas in which the use of estimates has significant effect on carrying amounts, and thus involve a risk of changes that could affect results in future periods, are described below. The valuation of intangible assets in connection with business combinations and the testing of property, plant and equipment and intangible assets for impairment (see note 11 Intangible assets and note 12 Property, plant and equipment and investment property) will to a large extent be based on estimated future cash flows. Correspondingly, the expected useful lives and residual values included in the calculation of depreciation and amortisation will be based on estimates. The Group has activities within established media, but is also active in establishing positions at an early point in time in new media channels both through business combinations and its own start-ups. Estimates related to future cash flows and the determination of discount rates to calculate present values are based on management s expectations on market developments, the competitive situation, technological development, the ability to realise synergies, interest rate levels and other relevant factors. Such estimates involve uncertainty, and management s view on, and the actual development in the matters referred to, may change over time. Changes in management s opinion and actual development may lead to impairment losses in future periods. Tangible and intangible fixed assets are tested for impairment if there are indications that an asset is impaired. Intangible assets that are not amortised are, as a minimum, tested annually for impairment. Indications of impairment will typically be changes in market development, the competitive situation and technological development. In the same way, depreciation and amortisation schedules and any residual values are reviewed periodically. The risk of changes in expected cash flows that affect the financial statements will naturally be higher in markets in an early phase and be more limited in established markets. Further, the risk of changes will be significantly higher in periods with uncertain macroeconomic prognosis. In the present situation management considers the macroeconomic situation in Spain to be particularly affected by uncertainty. Valuation of the Group s assets in SCM Spain is based on cash flows where growth compared to the present cash flows is expected. Lack of improvement in the macroeconomic situation in Spain can consequently lead to a necessary negative adjustment to the cash flows. Goodwill and intangible assets recognised is specified by cash-generating unit in note 11 Intangible assets. In 2012, Schibsted recognised impairment losses related to goodwill of NOK 350 million of which NOK 345 million was related to SCM Spain. The impairment was mainly a consequence of poor macroeconomic development in Spain. In 2008, an impairment loss of NOK 1,291 million related to goodwill of SCM Spain was recognised. In 2013, Schibsted has recognised no impairment losses related to goodwill. 106 Value in use for SCM Spain is in 2013 calculated using a pre-tax discount rate (WACC) of 10.0% and a sustained growth of 1.5%. Changes in significant assumptions used would have increased (decreased) recoverable amount (NOK million) at for SCM Spain as follows: SCM Spain WACC +1% (426) (1%) 576 Sustained growth year 6 and forward +1% 590 (1%) (460) An increase in WACC and a decrease in sustained growth year 6 and forward of one percentage point would not have resulted in recognition of an impairment loss in As described above, the estimated recoverable amount is also affected by the assumptions used for future cash flows. These estimates are uncertain. The expected future net cash flows related to SCM Spain could decrease by approximately 20% compared to the estimates actually used, before any impairment loss would have to be recognised. An impairment loss of NOK 179 million was recognised in 2012 related to the investment in the associated company Metro Nordic Sweden AB. An additional impairment loss of NOK 130 million is recognised in 2013 and remaining carrying amount is NOK 20 million. Accounting for pension obligations requires that financial assumptions relating among others to the discount rate, expected salary increases and expected increases in pensions and National Insurance basic amount are determined. The effect on the defined benefit liabilities from changes in financial actuarial assumptions is disclosed in note 21 Pension plans. Financial instruments are measured at fair value. When no quoted market price is available, fair value is estimated using different valuation techniques. The Group s financial instruments and valuation techniques are presented in note 10 Financial instruments by category. Contingent consideration in business combinations and the present value of future consideration to be paid related to non-controlling interests put options over shares in subsidiaries are recognised as financial liabilities, see note 25 Financial liabilities business combinations and increases in ownership interests. The liabilities are recognised using estimated value, and the estimate can be changed in future periods as the consideration to be paid is dependent upon future fair value and / or future results. Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with tax planning strategies. Schibsted could potentially at any time be involved in litigations as a result of the Group s ordinary operations. The financial implications of litigations are constantly monitored and a liability is recognised when it is probable that the litigation will result in a future payment and a reliable estimate of the liability can be made. C 54

276 NOTE 4 CHANGES IN THE COMPOSITION OF THE GROUP CHANGES IN 2013: Schibsted has in 2013 invested NOK 295 million (net NOK 258 million adjusted for cash in acquired companies) related to acquisition of subsidiaries (business combinations). See note 5 Business combinations for further information related to the business combinations. Schibsted has in 2013 invested NOK 602 million related to increased ownership interests in subsidiaries. The most significant investments are the increase of ownership interest in Anuntis Segundamano Espana SL from 76.23% to 100% and the increase of ownership interest from 55% to 95% in Sibmedia Interactive S.R.L. (tocmai.ro). When ownership interest in subsidiaries increase, the carrying amount of non-controlling interests is adjusted to reflect the change in their relative interest in the subsidiary. The difference between the amount by which the non-controlling interests is adjusted and the fair value of the consideration paid, in excess of any amount already recognised as a liability related to non-controlling interests put options, is recognised directly in equity and attributed to the owners of the parent. Schibsted has in 2013 sold shares for NOK 33 million related to decreased ownership interests in subsidiaries, mainly related to reduced ownership interest from 100% to 90.2% in Hittapunktse AB. When ownership interest in subsidiaries decrease, the carrying amount of non-controlling interests is adjusted to reflect the change in their relative interest in the subsidiary. The difference between the amount by which the non-controlling interests is adjusted and the fair value of the consideration received, is recognised directly in equity and attributed to the owners of the parent. Schibsted has in 2013 lost control over certain subsidiaries through disposals. The sales price amount to NOK 908 million and a net gain of NOK 554 million is recognised in profit or loss in the line item Other income and expenses. Significant transactions are disclosed below. In September 2013, Schibsted disposed of its operations in the Baltic countries. A loss of NOK 216 million is recognised in profit or loss in the line item Other income and expenses. In September 2013, Schibsted and Telenor agreed to form a joint venture for online classified services in selected key markets in South America and Asia. The transaction was closed in December The new company SnT Classifieds is owned 50/50 by the two parties. Schibsted contributed its South American assets Bomnegocio.com (Brazil) and Yapo.cl (Chile) into the joint venture while Telenor contributed its Bangladeshi asset Cellbazaar.com. In addition, Schibsted received a cash contribution from Telenor. A gain of NOK 755 million, related to the 50% interest disposed of, is recognised in profit or loss in the line item Other income and expenses. From closing, Schibsted will account for its investment in SnT Classifieds as a Joint Venture. In September 2013, Schibsted reduced its ownership interest in Schibsted Classified Media AG (tutti.ch) from 100% to 50% by contributing the company to a newly established joint venture. Schibsted has in addition disposed of SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP certain other businesses, including the film distributor Sandrew Metronome and Aspiro TV. A net gain of NOK 15 million is recognised in profit or loss in the line item Other income and expenses. Simultaneously with the establishing of SnT Classifieds, Telenor also entered as an equal partner with Schibsted and Singapore Press Holdings, each owning 1/3 of the company, in the South East Asian online classifieds operation 701 Search Pte. A gain of NOK 781 million, including gain from remeasuring the retained investment at fair value, is recognised in profit or loss in the line item Other income and expenses. Fair value of the retained investment is measured at the price per share paid by Telenor in the transaction. From closing, Schibsted accounts for its investment in 701 Search Pte. as an associated company. In December 2013, Schibsted disposed of an office building in Bergen through the sale of 100% of the shares of Krinkelkroken 1 AS. A lease-back agreement, expiring at the end of the first quarter of 2017, with options to prolong, is entered into. The transaction will have a net negative annual effect on gross operating profit of around NOK 20 million. A gain on sale of NOK 130 million is recognised in profit or loss in the line item Other income and expenses. Anuntis Segundamano Espana SL, Sibmedia Interactive S.R.L, SnT Classifieds, Schibsted Classified Media AG and 701 Search Pte is included in operating segment Online classifieds. Hittapunktse AB is included in operating segment Schibsted Sverige media house. Krinkelkroken 1 AS is included in operating segment Schibsted Norge media house. Sandrew Metronome and Aspiro is included in Other. CHANGES IN 2012: Schibsted has in 2012 invested NOK 87 million (net NOK 35 million adjusted for cash in acquired companies) related to acquisition of subsidiaries (business combinations). See note 5 Business combinations for further information related to the business combinations. Schibsted has in 2012 invested NOK 98 million related to increased ownership interests in subsidiaries. The most significant investments are the increase of ownership interest in Aspiro AB from 64.4% to 75.9% and the increase of ownership interest from 70% to 96% in Prisjakt AB. Schibsted has in 2012 sold shares for NOK 59 million related to decreased ownership interests in subsidiaries. The sale is related to reduced ownership interest from 100% to 73.4% in Streaming Media AS, the company controlling 75.9% of the shares of Aspiro AB. Schibsted has in 2012 sold certain minor businesses, including the business of Tasteline Sweden AB and 100% of the shares of Flytteportalen AS. Net loss on sale of subsidiaries amounts to NOK 7 million and is recognised in profit or loss in the line item Other income and expenses. In November 2012, Schibsted acquired 50% of the shares of Használtautó Kft, the company operating Hungary s leading car classifieds portal. The investment is recognised as a joint venture using proportionate consolidation. In 2012, Schibsted reduced its financial interest in Polaris Media ASA from 43.4% to 29.0% but simultaneously increased its share of voting rights from 7.1% to 29.0%. Consequently, the classification for accounting purposes of the investment i Polaris Media ASA is changed from an available-for-sale financial 107 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP asset to an investment in an associated company. A gain of NOK 69 million is recognised in financial income as a consequence of the reduced financial interest. See note 14 Financial assets. Flytteportalen AS and Használtautó Kft is included in operating segment Online classifieds. Polaris Media ASA is included in operating segment Schibsted Norge media house. Prisjakt AB and Tasteline Sweden AB is included in operating segment Schibsted Sverige media house. Aspiro AB and Streaming Media AS is included in Operating segment Other. NOTE 5 BUSINESS COMBINATIONS BUSINESS COMBINATIONS IN 2013: Schibsted has in 2013 invested NOK 179 million related to acquisition of new subsidiaries (business combinations). The amount comprises consideration transferred reduced by cash and cash equivalents of the acquiree. Schibsted has in addition paid NOK 79 million of contingent consideration related to prior year s business combinations (leboncoin.fr). In July 2013, Schibsted increased its ownership interest in Sentinel Software AS from 33% to 87% through acquisition of shares. The company has developed and operates the industry system for handling used cars in Norway. The previously held equity interest was accounted for as an associated company and the business combination is accounted for as a step acquisition. The previously held equity interest is measured at fair value at the acquisition date, and a gain from remeasurement of NOK 2 million is recognised in profit or loss in the line item Other income and expenses. In September 2013, Schibsted acquired 100% of the shares of Compricer AB. The company operates an online personal finance market place (compricer.se) and is a good strategic fit with the existing portfolio of fast growing personal finance services in Schibsted. Schibsted has also been involved in some other minor business combinations. The tables below summarise the consideration transferred and the preliminary amounts recognised for assets acquired and liabilities assumed after the business combinations: 108 Total business combinations Consideration: Cash 216 Contingent consideration 166 Consideration transferred 382 Fair value of previously held equity interest 22 Total 404 Amounts for assets and liabilities recognised: Trademarks (indefinite useful life) 48 Trademarks (definite useful life) 4 Customer relations 6 Data systems and licenses 29 Property, plant and equipment 3 Trade receivables and other receivables 35 Cash and cash equivalents 37 Deferred tax liabilities (13) Non-current interest-bearing borrowings (5) Other non-current liabilities (2) Current liabilities (49) Total identifiable net assets 93 Non-controlling interests (3) Goodwill 314 Total 404 The goodwill of NOK 314 million recognised is attributable to inseparable non-contractual customer relationships, the assembled workforce of the companies and synergies. NOK 14 million of the goodwill recognised is expected to be deductible for income tax purposes. The business combinations are carried out as part of Schibsted s growth strategy, and the businesses acquired are good strategic fits with existing operations within the Schibsted Media Group. The fair value of acquired receivables is NOK 35 million, of which NOK 16 million are trade receivables. There is no material difference between the gross contractual amounts receivable and the fair value of the receivables. Non-controlling interests are measured at the proportionate share of the acquiree s identifiable net assets. When Schibsted is obligated to acquire ownership interests from non-controlling interests, a financial liability is recognised with a corresponding adjustment to equity, see note 25 Financial liabilities business combinations and increases in ownership interests. The companies acquired in the business combinations have since the acquisition dates contributed NOK 71 million to operating revenues and contributed negatively NOK 9 million to consolidated profit (loss). If the acquisition date of all business combinations was as of , the operating revenues of the Group would have increased by NOK 94 million and profit (loss) would have decreased by NOK 12 million. C 55

277 BUSINESS COMBINATIONS IN 2012: Schibsted has in 2012 invested NOK 35 million related to acquisition of new subsidiaries (business combinations). The amount comprises consideration transferred reduced by cash and cash equivalents of the acquiree. In February, Schibsted increased its ownership interest in Aspiro AB to 64.4% through acquisition of shares based on an offer to acquire all the shares in the company. Aspiro AB is a leading provider of music and TV streaming services. Before the business combination, Schibsted held 18.3% of the shares in Aspiro AB and had the financial interest in 21.3% of the shares through a TRS agreement. These equity interests were accounted for as available-for-sale financial assets. The business combination is accounted for as a step acquisition. The previously held equity interest is measured at fair value at the acquisition date, and a gain from remeasurement of NOK 48 million is recognised in profit or loss in the line item Other income and expenses. Acquisition-related costs of NOK 7 million is recognised in profit or loss in the line item Other income and expenses. In April, Schibsted increased its ownership interest in Economy OK AB from 37.9% to 51.5% through acquisition of shares. Economy OK AB operates the online coupon service Let s deal in Sweden. The previously held equity interest was accounted for as an associated company and the business combination is accounted for as a step acquisition. The previously held equity interest is measured at fair value at the acquisition date, and a gain from remeasurement of NOK 9 million is recognised in profit or loss in the line item Other income and expenses. Schibsted has also been involved in some other minor business combinations. The acquisition of Economy OK AB is a result of the strategy to develop webbased growth companies benefiting from strong traffic positions and brands of established operations in Norway and Sweden. The acquisition of Aspiro AB was based on Schibsted s existing financial exposure and Schibsted s ability to develop web-based operations. The tables below summarise the consideration transferred and the amounts recognised for assets acquired and liabilities assumed after the business combinations: SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Total business combinations Consideration: Cash 87 Consideration transferred 87 Fair value of previously held equity interest 134 Total 221 Amounts for assets and liabilities recognised: Trademarks (indefinite useful life) 5 Customer relations 5 Data systems and licenses 36 Property, plant and equipment 11 Other non-current assets 5 Trade receivables and other receivables 90 Cash and cash equivalents 52 Deferred tax liabilities (10) Current liabilities (96) Total identifiable net assets 98 Non-controlling interests (35) Goodwill 158 Total 221 The business combinations have resulted in recognition of goodwill of NOK 158 million attributable to inseparable non-contractual customer relationships, the assembled workforce of the companies and synergies. None of the goodwill recognised is expected to be deductible for income tax purposes. The fair value of acquired receivables is NOK 90 million, of which NOK 45 million are trade receivables. There is no material difference between the gross contractual amounts receivable and the fair value of the receivables. Non-controlling interests are measured at the proportionate share of the acquiree s identifiable net assets. The companies acquired in the business combinations have since the acquisition dates contributed NOK 235 million to operating revenues and contributed negatively NOK 79 million to consolidated profit (loss). If the acquisition date of all business combinations was as of , the operating revenues of the Group would have increased by NOK 75 million and profit (loss) would have decreased by NOK 13 million. 109 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP NOTE 6 EVENTS AFTER THE REPORTING PERIOD In February Schibsted agreed to acquire Milanuncios.com which over the last few years has gained a significant position in Spain. This reinforces Schibsted s position as a clear market leader in the Spanish online classified market. The founder of Milanuncios will receive proceeds of EUR 50 million in cash and 10% of the shares in the combined Schibsted Classified Media Spain (excluding 20 Minutos). Expected closing in April/May Schibsted has bought out minorities in the Irish online classifieds site DoneDeal. ie. In 2011 Schibsted bought 50.1% of the company. In March 2014 the holdings were increased to 90.1%. 110 NOTE 7 DISCLOSURE OF OPERATING SEGMENTS Schibsted reports four operating segments; Online classifieds, Schibsted Norge media house, Schibsted Sverige media house and Media Houses International. Operating segment Online classifieds comprises the Norwegian online marketplace Finn and Schibsted Classified Media comprising all the Group s online classifieds operations outside Norway. Operating segment Schibsted Norge media house comprises the media houses VG, Aftenposten, Bergens Tidende, Stavanger Aftenblad and Fædrelandsvennen, printing and distribution operations, and the publishing house Schibsted Forlag. Operating segment Schibsted Sverige media house comprises the media houses Aftonbladet and Svenska Dagbladet and a portfolio of internet-based growth companies (including the online directory service Hitta). Media Houses International comprises the concept for free newspapers 20 Minutes in Spain and France and Eesti Meedia Group (sold in September 2013, see note 4) comprising the Group s operations in the Baltic States. Other comprises operations not included in the four reported operating segments, including Sandrew Metronome (sold 1 April 2013), Aspiro and Mötesplatsen. Headquarters comprise the Group s headquarters Schibsted ASA and centralised functions within finance, real estate and IT. Eliminations comprise intersegment sales. Transactions between operating segments are conducted on normal commercial terms. Headquarters has the majority of its operating revenues from other operating segments. The reported operating segments have only insignificant shares of intragroup operating revenues. The division into operating segments corresponds to the management structure and the internal reporting to the Group s chief operating decision maker, defined as the CEO. The division reflects an allocation based partly on the type of operation and partly on geographical location. In the operating segment information presented, Gross operating profit (loss) after depreciation and amortisation is used as measure of operating segment profit or loss. For internal control and monitoring, Gross operating profit (loss) is also used as measure of operating segment profit or loss. C 56

278 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Information about operating revenues and profit (loss) by operating segments is as follows: Schibsted Schibsted Norge Sverige Media Online media media Houses Head classifieds house house International Other quarters Eliminations Total Subscription revenues - 1, ,787 Casual sales revenues 9 1,256 1, ,335 Advertising revenues 4,028 2,810 1, ,017 Other revenues ,093 Operating revenues from external customers 4,163 6,318 3, ,232 Operating revenues from other segments (560) - Operating revenues 4,265 6,368 3, (560) 15,232 Operating expenses (3,388) (5,646) (3,378) (726) (396) (599) 560 (13,573) Share of profit (loss) of associated companies (15) Gross operating profit (loss) (51) (228) - 1,672 Depreciation and amortisation (151) (209) (50) (25) (14) (41) - (490) Gross operating profit (loss) after depreciation and amortisation (23) (65) (269) - 1,182 Schibsted Schibsted Norge Sverige Media Online media media Houses Head Restated classifieds house house International Other quarters Eliminations Total Subscription revenues - 1, ,744 Casual sales revenues 12 1,350 1, ,478 Advertising revenues 3,478 2,974 1, ,654 Other revenues ,887 Operating revenues from external customers 3,535 6,475 3, ,763 Operating revenues from other segments (510) - Operating revenues 3,647 6,485 3, (510) 14,763 Operating expenses (2,547) (5,716) (3,139) (942) (356) (564) 510 (12,754) Share of profit (loss) of associated companies Gross operating profit (loss) 1, (3) (39) (216) - 2,043 Depreciation and amortisation (144) (207) (45) (32) (15) (36) - (479) Gross operating profit (loss) after depreciation and amortisation (35) (54) (252) - 1, SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Information about operating revenues by products and services are as follows: Operating revenues Classified 4,268 3,661 Printed newspapers 8,249 8,415 Online newspapers 2,882 2,255 Live pictures Others Eliminations (783) (566) Total 15,232 14,763 Operating revenues include government grants at NOK 59 million in 2013 and NOK 57 million in In addition barter agreements are included with NOK 77 million in 2013 and NOK 67 million in Information about operating revenues and non-current assets by geographical areas In presenting geographical information, attribution of operating revenues is based on the location of group companies. There are no significant differences between the attribution of operating revenues based on the location of group companies and an attribution based on the customers location. Non-current assets are attributed based on the geographical location of the assets. Operating revenues Norway 7,726 7,842 Sweden 4,736 4,206 France 1, Spain Baltics Other Europe Other countries Total 15,232 14,763 Non-current assets Norway 3,803 3,608 Sweden 1,960 1,412 France 3,566 3,100 Spain 2,697 2,372 Baltics Other Europe Other countries Total 12,923 11,459 Non-current assets comprise assets excluding deferred tax assets and financial instruments, expected to be recovered more than twelve months after the reporting period. 112 NOTE 8 OTHER INCOME AND EXPENSES Operating income and operating expenses that are of a non-recurring nature and are of material importance to the operating segments are separated from other ordinary operating revenues and expenses and reported in a separate line in the income statement. Other income and expenses consist of: 2013 Restated 2012 Restructuring costs (161) (284) Write-down of inventories - (23) Gain (loss) on sale of subsidiaries, joint ventures and associated companies 1,327 (13) Gain (loss) on sale of intangible assets, property, plant and equipment and investment property Gain (loss) on amendment of pension plans (1) (21) Gain from remeasurement of previously held equity interest in business combination achieved in stages 2 57 Acquisition-related costs - (7) Other (128) - Total 1,169 (287) 2013 Restructuring costs of NOK 161 million mainly come from Schibsted Sverige media house, Anuntis and the Norwegian printing operations. Gain (loss) on sale of subsidiaries, joint ventures and associated companies include gains and losses on sale of SnT Classifieds, 701 Search Pte, the operations in the Baltic countries and other businesses. For further explanation see note 4 Changes in the composition of the Group. Gain (loss) on sale of intangible assets, property, plant and equipment and investment property include gain on sale of an office building in Bergen. Other includes a provision related to refocusing of the online classified operations in France Restructuring costs of NOK 284 million are mainly related to measures implemented in connection with the cost reduction programmes introduced to meet the structural changes facing print media. Schibsted Norge and Schibsted Sverige media houses account for NOK 193 million and NOK 55 million respectively. The costs are mainly related to reduction in headcount, but also include certain printing contract termination costs. The remaining restructuring costs are related to restructuring of the free newspapers 20 Minutes, changes in management structure in the Norwegian C 57

279 online classifieds operations Finn, restructuring of Aspiro and the ongoing downscaling of Sandrew Metronome. Write-down of inventories is carried out in Schibsted Forlag. Gain from remeasurement of previously held equity interest in business combination achieved in stages and acquisition related costs relate to Aspiro AB and Economy OK AB. NOTE 9 FINANCIAL RISK MANAGEMENT Funding and capital management Schibsted is a listed company that aims to provide a competitive rate of return based on healthy finances. Schibsted aims to maximise the shareholders return through long-term growth in the share price and dividend. The Group s strategy and vision imply a high rate of change and development of the Group s operations. Schibsted s capital structure must be sufficiently robust in order to maintain the desired freedom of action and utilise growth opportunities based on strict assessments relating to allocation of capital. The Group s capital consists of net interest-bearing debt and equity: Non-current interest-bearing borrowings 1,971 2,124 Current interest-bearing borrowings Current interest-bearing securities 28 3 Cash and cash equivalents 1,240 1,031 Net interest-bearing debt 1,131 1,437 Group equity 8,111 6,109 Net gearing (net interest-bearing debt/ equity) Undrawn long-term bank facilities 3,772 2,386 Schibsted will emphasise having a fixed dividend payout ratio which, over time, is to be 25-40% of the Group s normalised cash flow per share. In years when there is an economic slowdown, the company will try to pay dividend at the upper part of the target interval provided that the Group s capital structure allows this. Funding and control of refinancing risk is handled by Group treasury on the parent company level. Schibsted has a diversified loan portfolio both in terms of loan sources and maturity profile. The most important funding sources are the Norwegian bond market and banks. Schibsted does not have an official credit rating, but is rated by lenders and was classified BBB by most of them. Schibsted s objective is to be considered as an investment grade rated company over time (BBB- or better) and for time being official rating is not considered as necessary. The financial flexibility is considered as good and the Group s ratio of net interest-bearing debt to gross operating profit was 0.6 according to the SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP definition of the loan agreements at the end of The target level is 1-2. Refinancing risk is considered as low. Available liquidity should at all times be equal to at least 10% of expected annual revenues. Available liquidity refers to the Group s cash and cash equivalents and available long-term bank facilities. Financial risk Schibsted is exposed to financial risks, such as currency risk, interest rate risk, liquidity risk and credit risk. Group treasury is responsible for keeping the Group s exposure in financial risks in accordance with the financial strategy over time. Currency risk Schibsted has Norwegian kroner (NOK) as its base currency, but is through its operations outside Norway also exposed to fluctuations in the exchange rates of other currencies, mainly Euro (EUR) and Swedish kronor (SEK). Schibsted has currency risks linked to both balance sheet monetary items and the translation of investments in foreign operations. The Group makes use of loans in foreign currencies and financial derivatives (forward contracts and cross currency swaps) to reduce its currency exposure. The loans in foreign currencies and the financial derivatives are managed actively in accordance with the Group s financial strategy. The Group s monetary items exposure appears in note 22 Interest-bearing borrowings and in note 18 Cash and cash equivalents. As at the Group had entered into several forward contracts involving the purchase and sale of currencies and several interest rate and currency swap agreements for this purpose. Currency gains and losses relating to borrowings and forward contracts which hedge net investments in foreign operations are recognised in Other comprehensive income until the foreign operation is disposed of. Other currency gains and losses are recognised in the income statement on an ongoing basis as other financial income or expenses. As at Schibsted has the following forward contracts, which all mature in 2014: Currency Amount NOK Forward contracts, sale CHF 4 24 Forward contracts, sale SEK Forward contracts, purchase SEK Forward contracts, purchase SGD As at forward contracts for the sale of SEK 155 million are related to hedging of net investments in foreign operations. Fair value of the contracts accounted for as hedges was NOK (3) million as at Fair value of other forward contracts was NOK 0 million as at Cash flows in foreign currencies relating to considerable investments or significant individual transactions are hedged by using financial instruments. At year-end the Group had no such contracts. The Group s foreign exchange exposure relating to operations is low, since most of the cash flows take place in the individual businesses local currency. 113 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP As at Schibsted has the following cross currency swaps, which mature in : Currency NOK Currency Payment Receive Cross currency swap EUR 35 Cross currency swap EUR 38 Cross currency swap SEK 450 Cross currency swap SEK 200 Euribor 6 months + margin 300 Euribor 3 months + margin 315 Stibor 3 months +margin 400 Stibor 3 months +margin 185 Nibor 6 months + margin Nibor 3 months + margin Nibor 3 months + margin Nibor 3 months + margin The cross currency swap agreements are linked to bonds and floating rate notes and matches the payments completely during the contract period. The agreements are accounted for as hedges. The fair value of the agreements was NOK (33) million as at Schibsted follows a currency hedging strategy where parts of net investments in foreign operations are hedged. As at % of the Group s net interestbearing debt including derivatives was in EUR. Similarly, 25% of the Group s net interest-bearing debt including derivatives was in SEK. The degree of hedge is higher than normal due to the low net interest-bearing debt at year end. The sensitivity of exchange rate fluctuations is as follows: if NOK changes by 10% compared to the actual rate as at for SEK and EUR, the Group s net interest-bearing debt (including currency derivatives) will change by approximately NOK 114 million. Currency effects will have a limited effect on Group profits since changes in value will be tied to instruments hedging the net foreign investments, but will change the net interest-bearing debt to gross operating profit ratio by approximately A change in exchange rates also affects the translation of net foreign assets to NOK. The equity effect of these changes is to some extent reduced by the Group s currency hedging, where changes in the value of net foreign assets are mitigated by changes in the value of the Group s foreign-denominated interestbearing borrowings and currency derivatives. Interest rate risk Schibsted has floating interest rates on most of its interest-bearing borrowings according to the financial strategy, see note 22 Interest-bearing borrowings and is thereby influenced by changes in the interest market. A change of 1 percentage point in the floating interest rate means a change in Schibsted s interest expenses of approximately NOK 24 million. This will partly be compensated by a change in interest income of approximately NOK 12 million. Interest rate swap agreements have been entered into to swap the bonds issued in 2012 from fixed interest rates to floating interest rates based on Nibor 6 months with addition of a margin. An interest rate swap has also been entered into converting the floating rate note issued in December 2012 from Nibor 3 months with addition of a margin to Nibor 6 months with addition of a margin. 114 As at Schibsted has the following interest rate swap agreements in NOK: Amount Pay Receive Interest rate swap 150 Nibor 6 months + margin 5.9% Interest rate swap 150 Nibor 6 months + margin 5.9% Interest rate swap 250 Nibor 6 months + margin 5.4% Interest rate swap 150 Nibor 6 months + margin Nibor 3 months + margin The fair value of the interest rate swap agreements was NOK 12 million as at Raw materials risk Schibsted is a consumer of newsprint and is therefore exposed to price changes. A change in the price of 1% has an impact on raw materials expenses for the Group of approximately NOK 4 million per year. Newsprint prices in Norway, Sweden and Spain are negotiated annually with suppliers and have already been settled for Credit and counterparty risk The Group has recorded a low level of losses relating to trade receivables, see Note 17 Trade and other receivables. Account receivables are diversified among many customers, customer categories and markets. Account receivables consist of a combination of prepaid subscription or advertisements and sales invoiced after delivery of the product. For some receivables there is no or very little credit risk (prepaid subscription and payments made by credit card at purchase date) and for other receivables the credit risk is higher. Credit risk will also vary among countries in which Schibsted operates. To some extent credit insurance is also used. In total the credit risk is considered as low. Net carrying amount of the Group s financial assets, except for equity instruments, represents maximum credit exposure, and the exposure as at is disclosed in note 10 Financial instruments by category. Exposure related to the Group s trade receivables is disclosed in note 17 Trade and other receivables. Schibsted has a conservative placement policy where excess liquidity is used for loan repayments. Until due date the excess liquidity is temporarily placed in the Group s cash pool, and at times in the short-term money market with the relationship banks. Schibsted requires all relationship banks to have a certain rating. Liquidity risk At year-end the Group s portfolio of loans and loan facilities is well diversified both regarding maturity profile and lenders. At the end of 2013 Schibsted has a long-term liquidity reserve of NOK 5.0 billion and net interest-bearing debt is NOK 1,131 million. The liquidity reserve corresponds to 33% of the Group s turnover. The Group has as target that the aggregate liquidity reserve should be at least 10% of the next 12 months expected turnover. Schibsted s loan agreements contain financial covenants regarding the ratio of net interest-bearing debt to gross operating profit. The ratio shall normally not exceed 3, but can be reported at higher levels up to three quarters during the loan period, as long as the ratio stays below 4. According to the definition of the loan agreements, the ratio was 0.6 as at C 58

280 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP NOTE 10 FINANCIAL INSTRUMENTS BY CATEGORY Carrying amount of assets and liabilities are divided into categories as follows: Balance as at Note Financial assets and Financial liabilities at fair assets Other Other value through Loans and available financial assets and profit or loss receivables for sale liabilities liabilities Intangible assets 11 10, ,337 Property, plant and equipment and investment property 12 1, ,507 Investments in associated companies 13 1, ,074 Non-current financial assets Deferred tax assets Other non-current assets Inventories Trade and other receivables 17 2, , Current financial assets Cash and cash equivalents 18 1,240-1, Total assets 17, , ,397 Deferred tax liabilities Pension liabilities 21 1, ,114 Non-current interest-bearing borrowings 22 1, ,971 - Other non-current liabilities Current interest-bearing borrowings Income tax payable Other current liabilities 24 3, , Total liabilities 9, ,642 2,401 Financial Balance assets and Financial as at liabilities at fair assets Other Other value through Loans and available financial assets and Note Restated profit or loss receivables for sale liabilities liabilities Intangible assets 11 9, ,113 Property, plant and equipment and investment property 12 1, ,845 Investments in associated companies Non-current financial assets Deferred tax assets Other non-current assets Inventories Trade and other receivables 17 2, , Current financial assets Cash and cash equivalents 18 1,031-1, Total assets 15, , ,973 Deferred tax liabilities Pension liabilities Non-current interest-bearing borrowings 22 2, ,124 - Other non-current liabilities Current interest-bearing borrowings Income tax payable Other current liabilities 24 4, , Total liabilities 9, ,336 2, SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP The fair value of the Group s financial derivatives is as follows: Assets Liabilities Forward contracts Interest rate and currency swap Total The Group s financial assets and liabilities measured at fair value, analysed by valuation method, are as follows: : Level 1 Level 2 Level 3 Total Financial assets available for sale Financial assets at fair value through profit or loss Financial liabilities at fair value through profit or loss Financial liabilities business combinations and increases in ownership interests : Level 1 Level 2 Level 3 Total Financial assets available for sale Financial assets at fair value through profit or loss Financial liabilities business combinations and increases in ownership interests - - 1,067 1,067 The different valuation methods have been defined as follows: Level 1: Valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Valuation based on inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). Level 3: Valuation based on inputs for the asset or liability that are unobservable market data. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and these prices represent actual and regularly occurring market transactions on an arm s length basis. These instruments are included in level 1. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs are not based on observable market data, the instrument is included in level Changes in level 3 instruments: Net carrying amount 1.1 (1,051) (821) Additions (173) (83) Disposals - (1) Settlements Changes in fair value recognised in equity 148 (217) Changes in fair value recognised in other comprehensive income (103) 39 Changes in fair value recognised in profit or loss (25) (25) Net carrying amount (527) (1,051) Changes in fair value recognised in other comprehensive income is recognised in the line item Exchange differences on translating foreign operations. Changes in fair value recognised in profit or loss is recognised in the line item Financial expenses. NOTE 11 INTANGIBLE ASSETS Other intangible Goodwill assets Total Net carrying amount ,452 2,661 9,113 Additions Additions on purchase of businesses Disposals on sale of businesses (183) (14) (197) Reclassification Amortisation - (219) (219) Impairment loss - (17) (17) Translation differences Net carrying amount ,320 3,017 10,337 As at Cost 9,086 4,204 13,290 Accumulated amortisation and impairment losses (1,766) (1,187) (2,953) Net carrying amount 7,320 3,017 10,337 C 59

281 Other intangible Goodwill assets Total Net carrying amount ,878 2,733 9,611 Additions Additions on purchase of businesses Disposals on sale of businesses (12) (1) (13) Reclassification Amortisation - (196) (196) Impairment loss (350) (7) (357) Translation differences (280) (109) (389) Net carrying amount ,452 2,661 9,113 As at Cost 8,203 3,401 11,604 Accumulated amortisation and impairment losses (1,751) (740) (2,491) Net carrying amount 6,452 2,661 9,113 Other intangible assets include: Carrying amount Expected useful life Trademarks Indefinite 2,496 2,201 Trademarks Finite Software and licenses Finite Customer relations Finite Total 3,017 2,661 Trademarks with indefinite expected useful lives can be specified on cash-generating units as follows: Operating segment Schibsted Norge Schibsted Sverige Schibsted Norge media house Schibsted Sverige media house SCM Spain Online classifieds SCM France Online classifieds SCM Italy Online classifieds SCM Belgium Online classifieds SCM Ireland Online classifieds SCM Romania Online classifieds 5 4 Total 2,496 2,201 Trademarks with an indefinite expected useful life have been acquired through acquisitions and are expected to generate cash flows over an indefinite period of time. Intangible assets with a finite expected useful life are as a general rule amortised on a straight line basis over the expected useful life. The amortisation period of intangible assets is years. The amortisation method, expected useful life and any residual value are assessed annually. SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Schibsted has a clear goal of building a foundation for future growth by establishing in new markets. This is done to a large extent within Schibsted Classified Media through establishing operations that are primarily based on the successful Swedish Blocket.se concept. For operations successfully established; technology, trademarks and goodwill that may have a significant value, will have been developed through the expenditure incurred. Such expenditure do not meet the requirements for recognition as intangible assets during the establishment phase, and all the expenditure related to such roll-outs, mainly marketing expenditure, are thus recognised as an expense when it is incurred. Such investments reduced Gross operating profit by NOK 1,000 million in 2013 and NOK 530 million in Goodwill can be specified on cash-generating units as follows: Operating segment Schibsted Forlag Schibsted Norge media house VG Group Schibsted Norge media house Schibsted Vekst Schibsted Norge media house 7 7 Other Schibsted Norge Schibsted Norge media house Schibsted Sverige Schibsted Sverige media house Compricer Schibsted Sverige media house Hitta Schibsted Sverige media house Eesti Meedia Media Houses International Finn.no Online classifieds SCM France Online classifieds 2,702 2,366 SCM Spain Online classifieds 1,811 1,589 SCM Sweden Online classifieds SCM Belgium Online classifieds SCM Ireland Online classifieds SCM Hungary Online classifieds Other online classifieds Online classifieds Aspiro Other Møteplassen Other Total 7,320 6,452 As a result of negative development in certain markets Schibsted has in 2012 recognised impairment losses of NOK 357 million related to goodwill and other intangible assets. Impairment loss goodwill is mainly related to the Group s Online classifieds operations in Spain and is included in the amount with NOK 345 million. Recoverable amounts of the cash-generating units were estimated based on value in use. Expected cash flows in 2013 are discounted using a pretax discount rate (WACC) from 10% to 12% (10.5% to 12.5%) and expected sustained growth year 6 and forward of 1.5% to 3.5%. When WACC is determined, consideration is given to the risk-free interest rate with risk premium for the relevant country as well as business specific risk. For SCM France, recoverable amount is significantly higher than the carrying amount. For SCM Spain, recoverable amount exceeds the carrying amount by approximately NOK 700 million. See Note 3 Use of estimates for sensitivity related to recoverable amount for SCM Spain. 117 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP NOTE 12 PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY Equipment, Buildings and Investment Construction in Plant and furniture and land properties progress machinery similar assets Total Net carrying amount ,845 Additions Additions on purchase of businesses Disposals (204) (9) (213) Disposals on sale of businesses (71) - - (90) (8) (169) Reclassification (23) (23) Depreciation (31) - - (107) (133) (271) Impairment loss (3) (3) Translation differences Net carrying amount ,507 As at Cost ,030 1,333 4,187 Accumulated depreciation and impairment loss (230) - - (1,570) (880) (2,680) Net carrying amount , Net carrying amount ,992 Additions Additions on purchase of businesses Disposals (13) (4) (17) Reclassification (28) 5 (27) - 33 (17) Depreciation (32) - - (112) (139) (283) Impairment loss (12) (12) Translation differences (5) - - (6) (7) (18) Net carrying amount ,845 As at Cost ,653 1,086 3,787 Accumulated depreciation and impairment loss (157) - - (1,069) (716) (1,942) Net carrying amount , C 60

282 Investment properties and property, plant and equipment, excluding land, are depreciated on a straight line basis over their estimated useful lives. Depreciation schedules reflect the assets residual value. Items of property, plant and equipment where material components can be identified with different useful lives are depreciated over the individual component s expected useful life. Depreciation is calculated over the estimated useful lives: Buildings ( years), Plant and machinery (5 20 years), Equipment, furniture and similar assets (3 10 years). The depreciation method, expected useful life and any residual value are reviewed annually. Investment property Schibsted has two properties classified as investment properties as at The properties are a separable and unused property reserve in Stavanger with a carrying amount of NOK 63 million and a commercial building in Farsund with a book value of NOK 5 million. Valuations from real estate agents are obtained and the fair values as at are not expected to deviate significantly from the carrying amount. Lease agreements Property, plant and equipment include assets owned under financial lease agreements. These assets have a cost of NOK 23 million in 2013 and NOK 23 million in 2012, and a carrying amount of NOK 9 million in 2013 and NOK 11 million in Depreciation amounts to NOK 2 million for 2013 and NOK 2 million for Schibsted has lease obligations related to off-balance sheet operating assets, mainly office buildings. Rental expenses were NOK 413 million in 2013 and NOK 404 million in The most significant leases relate to the leases of Aftenposten s premises at Biskop Gunnerus gate 14A in Oslo (revised agreement in 2013 due to relocation, the agreement expires in 2019), Schibsted Sverige s premises in Västra Järnvägsgatan 21 in Stockholm (the agreement expires 2020), VG s premises at Akersgata 55 (the agreement expires in 2023) and Schibsted Norge s premises in Sandakerveien 121 (the agreement expires in 2025). The most significant of the Group s leases contains a right to an extension. Future minimum payments under non-cancellable operational leases where Schibsted is the lessee are as follows: Within one year Between one and five years 1,484 1,214 More than five years 1,154 1,306 NOK 20 million is recognised as sub lease payments related to the Group s operating leases in 2013 and NOK 30 million in Expected future minimum lease payments for non-cancellable subleases are NOK 5 million as at and NOK 21 million as at Schibsted s rental income related to operating leases for office premises was NOK 17 million in 2013 and NOK 15 million in SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Future minimum payments under non-cancellable operating leases where Schibsted is the lessor are as follows: Within one year Between one and five years More than five years 1 7 NOTE 13 INVESTMENTS IN ASSOCIATED COMPANIES The development in the carrying amount of investments in associated companies is as follows: Carrying amount Transition from joint venture Reclassification from financial assets Additions 75 9 Transition to subsidiary (22) (9) Disposals (9) (12) Share of profit (loss) of associated companies Gain (loss) (6) (5) Impairment loss (130) (179) Dividends received (56) (44) Translation differences 21 (8) Other changes 10 - Carrying amount , Impairment loss in associated companies of NOK (130) million (NOK -179 million) is related to Metro Nordic Sweden AB. It is a result of negative market development. The Group s share of assets, liabilities, operating revenues and share of profit (loss) of associated companies are as follows: Assets 1, Liabilities (517) (494) Carrying amount 1, Operating revenues Share of profit (loss) SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Share of profit (loss) of associated companies and carrying amount of investments in associated companies are as follows: Ownership % Share of profit (loss) Carrying amount Location Search Pte. Ltd. Singapore 33 (12) Metro Nordic Sweden AB Stockholm Polaris Media ASA Trondheim Other Total , In December 2013, 701 Search Pte. Ltd. was reclassified from a joint venture to an associated company. See note 4 Changes in the composition of the Group. Until October 2012, Schibsteds investment in Polaris Media ASA was classified as a financial asset into the category available for sale, see note 14 Financial assets. Price quotations are available for shares in Polaris Media ASA. Based on quoted prices at year-end, the value of the investment in Polaris Media ASA is NOK 362 million (NOK 347 million) as at NOTE 14 FINANCIAL ASSETS The development in carrying amount of investments categorised as financial assets available for sale is as follows: As at Additions 26 4 Disposals - (114) Reclassification to associated companies - (210) Reclassification to subsidiaries - (67) Changes in fair value Change recognised in comprehensive income - 29 Change recognised in profit or loss - (1) Reclassification adjustment from comprehensive income to profit (loss) by derecognition - (109) Reclassification adjustment from comprehensive income to equity by derecognition - (145) Translation differences - (11) As at Of which non-current financial assets Of which current financial assets 28 3 Financial assets consist of: Shares unlisted Current interest-bearing securities 28 3 Total financial assets Until February 2012, Schibsted held 18.3% of the shares in Aspiro AB and had the financial interest in an additional 21.3% of the shares through a Total Return Swap. In February 2012, Schibsted increased its ownership interest in Aspiro AB to 64.4% in a business combination achieved in stages. Changes in fair value of the previously held equity interest of 39.6% previously recognised in other comprehensive income was reclassified to profit or loss. A gain from remeasurement of those 39.6% of NOK 48 million is recognised in the line Other income and expenses. 120 C 61

283 Until October 2012, Schibsted held 7.1% of the shares in Polaris Media ASA. From September 2011, Schibsted had a continuing involvement in an additional 36.3% of the shares from an agreement under which Schibsted had transferred those shares to other owners, but where those other owners had a right, but not an obligation, expiring in October 2012, to sell those shares back to Schibsted. Until September 2011, Schibsted had a financial interest in those 36.3% of the shares through a Total Return Swap. In October 2012, 21.9% of the shares were sold back to Schibsted, and Schibsted s equity interest of 29% is from then on accounted for as an investment in an associated company. Changes in fair value previously recognised in comprehensive income related to the 29% interest was charged to equity with NOK 145 million. Changes in fair value previously recognised in comprehensive income related to the 14.4% of the shares not sold back and consequently derecognised, were reclassified to profit or loss. A gain from derecognition of NOK 69 million is recognised in the line Financial income. NOTE 15 OTHER NON- CURRENT ASSETS Other non-current assets consist of: Loans to associated companies - 1 Prepaid expenses 5 13 Other receivables Total There are no significant differences between the fair value and the carrying value of loans to associated companies and other receivables as the interest calculation is based on a market rate. NOTE 16 INVENTORIES Inventories consist of: Books and other inventories Newsprint purchased DVDs and publication rights - 39 Total Write-down of inventories to net realisable value was NOK 0 million in 2013 and NOK 28 million in Inventories carried at fair value less cost of sales were NOK 28 million as at and NOK 32 million as at SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP NOTE 17 TRADE AND OTHER RECEIVABLES Trade receivables and other receivables consist of: Trade receivables 1,982 1,856 Less provision for impairment of trade receivables (88) (80) Trade receivables (net) 1,894 1,776 Prepaid expenses and accrued revenue Income tax receivables Loans to associated companies 8 - Financial assets at fair value through profit or loss (note 10) 2 2 Other receivables Total 2,623 2,447 The carrying amount of trade and other receivables are considered to represent a reasonable approximation of fair value. The maximum exposure to credit risk at the reporting date for trade and other receivables is the carrying value of the receivables. In some group entities credit insurance and other agreements are obtained. Carrying value of trade receivables with security is NOK 167 million as at Movements in the Group s provision for impairment of trade receivables are as follows: As at 1.1 (80) (79) Provision for impairment (40) (52) Receivables written off as uncollectible Unused amounts reversed Disposal on sale of group companies 2 - Translation differences 1 2 As at (88) (80) As at trade receivables of NOK 121 million were impaired. The amount of the provision was NOK 88 million. As at trade receivables of NOK 174 million were impaired and the provision was NOK 80 million. The aging of impaired trade receivables is as follows: Not due* Up to 45 days More than 45 days Total * Also includes provisions not individualised 121 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP As at trade receivables of NOK 528 million were past due but not impaired, compared to NOK 478 million as at These receivables relate to a number of independent customers in different locations. The aging of the past due, not impaired trade receivables, is as follows: Up to 45 days More than 45 days Total NOTE 18 CASH AND CASH EQUIVALENTS Cash and cash equivalents 1,240 1,031 The carrying amounts of the Group s cash and cash equivalents are denominated in the following currencies: NOK SEK EUR Other Total 1,240 1,031 Carrying amount of cash and bank deposits are considered to represent a reasonable approximation of fair value. Schibsted has a multi-currency cash pool with Danske Bank in which almost all the Nordic subsidiaries are included. The cash pool has been established to optimise liquidity management for Schibsted. The Group has an overdraft facility under the cash pool system of NOK 400 million. At the end of 2013 this facility was not drawn. Excess liquidity is mainly placed in the cash pool or in the short-term money market. The bank deposits of subsidiaries outside the Nordic countries are deposited at local banks. The deposit and borrowing interest rates in Danske Bank are based on Ibor rates for each currency with a subtraction or addition of a margin. The Ibor rates are fixed daily in the market. A cross-currency netting of margins is established for the currencies in the cash pool. Other bank deposits are credited interests based on the bank s daily deposit rates in each country. Of the Group s cash and cash equivalents, NOK 17 million are considered to be restricted as at Payroll withholding tax is not included in restricted cash as the Group has provided a tax guarantee instead. C 62

284 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP NOTE 19 NUMBER OF SHARES The development in share capital and other paid-in equity is set out in the Consolidated statement of changes in equity. The development in the number of issued and outstanding shares is as follows: Number of shares Number of shares Outstanding Treasury shares Issued Outstanding Treasury shares Issued As at ,104, , ,003, ,941,657 1,061, ,003,615 Decrease in treasury shares 244,080 (244,080) - 162,803 (162,803) - As at ,348, , ,003, ,104, , ,003,615 The Group s share capital consists of 108,003,615 shares of NOK 1 par value. No shareholder may own or vote at a shareholders meeting for more than 30% of the shares. In December 2013, 11,837 treasury shares at NOK were sold in connection with an offer to the Group s employees to purchase shares at a discounted price of NOK The total consideration was NOK 4 million. The Annual Shareholders Meeting has given the Board authorisation to acquire treasury shares up to 10,800,361 shares (10%). The authorisation was renewed at the Annual Shareholders Meeting on 30 April 2013 for a period until the Annual Shareholders Meeting in At the Annual Shareholders Meeting on 7 May 2014 the Board will present a resolution to extend the authorisation for the Board to purchase and dispose of up to 10% of the share capital in Schibsted ASA according to the Norwegian public limited liability companies act under the conditions evident from the notice of the Annual Shareholders Meeting. During 2012 Schibsted has sold 91,060 treasury shares to key personnel at NOK per share in connection with exercise of 72,500 options with the right to acquire 91,060 shares. The total value consideration was NOK 12 million. Schibsted has in July and December 2012 transferred respectively 28,475 treasury shares at NOK and 23,468 treasury shares at NOK to key managers in connection with performance-based share purchase programme. The total value consideration was NOK 11 million. In connection with exercise of share options under an earlier option programme for key employees, Schibsted has during 2013 sold 131,880 treasury shares for a total consideration of NOK 19 million. In November 2012, 19,800 treasury shares at NOK were sold in connection with an offer to the Group s employees to purchase shares at a discounted price of NOK The total consideration was NOK 4 million. Schibsted has in May and June 2013 transferred a total of 100,363 treasury shares at NOK to key managers in connection with a performance-based share purchase programme. Total value consideration was NOK 25 million. As at Schibsted held 655,075 treasury shares. During the first quarter of 2014 number of treasury shares is unchanged as at The holding as at 14 March 2014 was 655,075 shares. 123 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP NOTE 20 DIVIDENDS At Schibsted s Annual Shareholders Meeting on 7 May 2014 a dividend of NOK 3.50 per share will be proposed (total NOK 376 million). No provision for this dividend has been recognised in the Group s balance sheet as at In 2013 dividends of NOK 3.50 per share were paid (total NOK 375 million). NOTE 21 PENSION PLANS Accounting policy for defined benefit pension plans is changed with effect from 1 January 2013 following mandatory implementation of amendments to IAS 19 Employee Benefits. See note 2 Significant accounting policies for description of those accounting policy changes and disclosure of effects of restatements of previous periods. Schibsted has occupational pension plans in several countries established partly as defined benefit plans (in Norway), partly as multi-employer defined benefit plans accounted for as defined contribution plans (in Norway and Sweden) and partly as defined contribution plans (in Norway, Sweden and other countries). Schibsted has its occupational pension plans for its employees in Norwegian companies with Storebrand Livsforsikring AS. These pension plans meet the requirements of the Act on Mandatory occupational pensions applicable to Norwegian companies. Schibsted is entitled to make changes to those pension plans. A significant part of the existing funded defined benefit plans are closed. The terms of the funded defined benefit plans are mainly uniform. The benefits are mainly dependent upon number of years of employment, salary level at retirement age and the amount of benefits from the National Insurance pension. The majority of the funded defined benefit plans comprise retirement pension for life from 67 years and full retirement pension amounts to approximately 66% of the basis (limited to 12G (the social security base amount)) including assumed pension from the National Insurance pension (based on calculated National Insurance pension). Some of the plans include spouse pension, child pension and disability pension. As at the funded defined benefit plans in Norway covered approximately 1,850 working members and approximately 1,800 retirees. Estimated contributions in 2014 to the above mentioned funded defined benefit plans amount to approximately NOK 130 million. Future contributions will be dependent on the accumulation period for each member s pension rights according to the principle of linear accumulation. The terms related to contributions to defined contribution plans in Norway are mainly uniform, and for most companies the contribution amounts to 5% of salaries within the interval from 1G to 6G and 8% in the interval from 6G to 12G. The plans include disability pension. 124 In addition to the pension obligations that arises from the funded defined benefit plans, the Group s Norwegian companies have unfunded defined benefit obligations related to disability pensions (if not covered by other pension plans or insurances), supplementary pensions for salaries above 12G, Agreement-based pension (AFP) and early retirement pensions. The Group s companies outside Norway have pension plans, mainly defined contribution plans, in accordance with local practice and local legislation. The Group has certain pension schemes in Norway and Sweden established in multi-employer plans. These multi-employer plans are defined benefit plans, but the Group does not have access to the necessary information for the accounting years 2013 and 2012 required to account for these plans as defined benefit plans, and the plans are therefore accounted for as defined contribution plans. The amounts recognised in profit or loss and in comprehensive income are as follows: Restated Current service cost Past service cost and gains and losses arising from settlements Net interest on the net defined benefit liability (asset) Remeasurements of the net defined benefit liability 300 (812) Net pension expense defined benefit plans 468 (537) Pension expense defined contribution plans Pension expense multi-employer defined benefit plans accounted for as defined contribution plans Net pension expense 671 (358) Of which included in Profit or loss Personnel expenses (note 27) Of which included in Profit or loss Other income and expenses Of which included in Profit or loss Financial expenses (note 29) Of which included in Other comprehensive income Remeasurements of defined pension liabilities 300 (812) Past service cost comprise restructuring costs in the form of pensions as well as the effect of plan amendments. The amounts recognised in the balance sheet are as follows: 2013 Restated 2012 Present value of funded defined benefit obligations 3,305 3,015 Fair value of plan assets (3,054) (2,947) Present value of unfunded defined benefit obligations Net pension liability 1, C 63

285 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP The average duration of the defined benefit plan obligation at the end of the reporting period is 28.5 years. Changes in net pension liability, present value of defined benefit obligations and plan assets are as follows: Restated Net pension Defined benefit Net pension Defined benefit liability obligations Plan assets liability obligations Plan assets As at 1 January 909 3,856 2,947 1,691 4,617 2,926 Current service cost Past service cost and gains and losses arising from settlements (5) Interest income and expense Remeasurements (36) (812) (890) (78) Contributions to the plan (147) (134) Payments from the plan (84) (198) (114) (93) (216) (123) Business combinations and disposals (10) (10) Social security costs (22) (22) - (18) (18) - As at 31 December 1,114 4,168 3, ,856 2,947 Contributions to the plan includes NOK 4 million (NOK 3 million) of contributions from plan participants. Remeasurements of defined benefit pension obligations include: 2013 Restated 2012 Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions 26 (801) Other remeasurements (experience adjustments) (188) (89) Remeasurements of defined benefit pension obligations 264 (890) Remeasurements of fair value of plan assets include: 2013 Restated 2012 Return on plan assets, excluding amounts included in interest Cost of managing plan assets (13) (9) Other remeasurements (experience adjustments) (101) (112) Remeasurements of fair value of plan assets (36) (78) The fair value of plan assets is disaggregated by class as follows: Quoted in active Quoted in active 2013 markets Unquoted 2012 markets Unquoted Global equities 10.0% 100% - 8.5% 100% - Norwegian equities 2.0% 100% - 2.1% 100% - Private equity 3.3% - 100% 3.3% - 100% Alternative investments 3.1% - 100% 3.7% - 100% Real estate 11.3% - 100% 13.6% - 100% Bonds 4.2% 95% 5% 11.6% 95% 5% Corporate bonds 39.8% 80% 20% 19.5% 80% 20% Money market / other 26.3% 100% % 100% - Total 100.0% 100.0% 125 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP The actual return on plan assets (value-adjusted return on relevant portfolio of assets) was approximately 5.3% in 2013 and approximately 6.8% in The plan assets are transferred to a new portfolio as per 1 January The risk profiles of the portfolios are similar but the new portfolio has a different allocation between classes of interest-bearing investments. Significant actuarial assumptions used to determine the present value of the defined benefit obligation is as follows: Discount rate 4.10% 3.80% Future salary increases 3.75% 3.50% Future increase in the social security base amount 3.50% 3.25% Future pension increases 0.60% 0.20% The assumption regarding expected pension increases is used for pensions being increased in accordance with the Act on Company pensions. For pension agreements containing specific clauses on increases in pension, those clauses are applied. Following recent years declining mortality rate and rising life expectancy in Norway, a new mortality table for collective pension insurance was made public in 2013 and Schibsted has implemented the new table (K2013) in The resulting increase in defined benefit pension liabilities of NOK 426 million is recognised in Other comprehensive income as a component of the net amount of NOK 300 million in the line item Remeasurements of defined benefit pension liabilities. Schibsted changed in 2012 the reference for determination of discount rate for Norwegian pension plans. Previously, the rate was determined by reference to Norwegian government bonds. With effect from 2012, the rate is determined with reference to high quality corporate bonds. Schibsted has concluded that a deep market exists for covered bonds ( OMF-obligasjoner ) in Norway and that this interest rate therefore shall be used as reference under IAS 19 Employee benefits. The resulting increase in the discount rate significantly reduced the present value of defined benefit obligations at and was the major contributing factor to NOK 812 million of remeasurements of defined benefit pension liabilities being recognised in Other comprehensive income in Sensitivity analysis, indicating increase (decrease) in present value of defined benefit pension liabilities, for significant actuarial assumptions is as follows: 2013 Discount rate increase 0.5 percentage points (299) Discount rate decrease 0.5 percentage points 339 Future salary increases increase 0.5 percentage points 186 Future salary increases decrease 0.5 percentage points (172) Future increase in social security base amount increase 0.5 percentage points (82) Future increase in social security base amount decrease 0.5 percentage points 77 Future pension increases increase 0.5 percentage points 236 Future pension increases decrease 0.5 percentage points (216) Any increases or decreases in present value of defined benefit pension liabilities from changes in actuarial assumptions are recognised in other comprehensive income. C 64

286 NOTE 22 INTEREST-BEARING BORROWINGS The Group has the following composition and maturity structure on its interest-bearing borrowings: Current Non-current Bond issues ,600 1,600 Bank loans Financial lease agreements Other loans Total ,971 2,124 Maturity within 3 months Maturity between 3 months and 1 year Maturity between 1 and 2 years Maturity between 2 and 5 years ,168 Maturity beyond 5 years Total ,975 2,131 Schibsted has issued two bonds with fixed interests, but due to interest rate swap agreements almost all of the Group s non-current interest-bearing borrowings are at floating interest rates in practice. For information on interest rate risk, see note 9 Financial risk management. The interest rate periods relating to the Group s borrowings are between one and six months. Schibsted has a loan portfolio with a diversified maturity profile. For the portfolio of bonds and floating rate notes, there is a difference of NOK -43 million between the book value and the market value (based on tax value as at ). This is partly compensated by existing interest rate swap agreements, see note 9 Financial risk management. Schibsted has not issued any new bonds during The current terms of the Group s other interest-bearing borrowings as at has been reviewed and compared to the market pricing at year-end, and the carrying amount is considered to represent a reasonable approximation to fair value. Carrying amount in NOK million of interest-bearing borrowings breaks down as follows by currency: NOK 1,785 2,076 EUR Other Total 2,399 2,471 Schibsted ASA repaid a floating rate note of NOK 300 million at maturity in December and the total amount of bonds and floating rate notes issued are NOK 1,600 million as at : SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Loan Amount Interest rate ISIN NO ( ) 400 FRN: Nibor 3 months bps ISIN NO ( ) 500 FRN: Nibor 3 months bps ISIN NO ( ) % ISIN NO ( ) % ISIN NO ( ) 150 FRN: Nibor 3 months bps The bonds with fixed interest rate, and the floating rate note maturing in 2022 have been swapped to floating interest rate, Nibor 6 months with addition of a margin. In addition, cross currency swap agreements have been entered into to match the payments of some of the bonds and floating rate notes, see note 9 Financial risk management. The Group has two bank loans of EUR 25 million each. These loans were entered into in January 2011 and expire in January 2014 and January There are no installments before maturity date. The interest terms on these loans are based on Euribor with the addition of a margin. The Group has a bank loan of NOK 148 million. The loan has a term of 12 years from 2007 and the interest terms are six month Nibor with the addition of a margin. The loan has a repayment schedule with installments twice a year. The Group has a EUR bank loan of EUR 0.4 million. The loan, from 2004, follows a repayment schedule with installments twice a year and final maturity in The interest term on the loan is six month Euribor with the addition of a margin. The Group s bank loans also includes a share (pro rata) of loans raised by a joint venture, totalling NOK 82 million. Other loans consists of a loan from an associated company. The loan amounted to NOK 109 million as at Of the revolving credit facility that was entered into in August 2010 there is a remaining facility amount totalling EUR 325 million. The facility matures in A revolving credit facility of EUR 175 million that expired in 2013 was replaced by a new revolving credit facility of EUR 125 million with maturity in For both the facilities the lenders consists of seven Nordic and international banks. None of the facilities were drawn as of year-end The facilities have interest terms based on Euribor with the addition of a margin. Schibsted must pay a commitment fee to maintain the facilities availability. The commitment fee is calculated as a percentage of the loan margin, on the undrawn part of the facilities. As at , Schibsted has available long-term revolving credit facilities totalling NOK 3,772 million through the unutilised drawing right on the loan facilities of totally EUR 450 million. Schibsted s loan agreements contain financial covenants regarding the ratio of net interest-bearing debt (NIBD) to gross operating profit (EBITDA). The reported ratio was well within the financial covenants as at See note 9 Financial risk management Liquidity risk. The Group has provided guarantees of NOK 9 million. The Group has no mortgage debt. 127 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP NOTE 23 OTHER NON-CURRENT LIABILITIES Other non-current liabilities consist of: Financial liabilities related to non-controlling interests' put options (note 25) Provision for other obligations Contingent considerations business combinations (note 25) Other non-current employment benefits Deferred revenue recognition - 5 Provision for restructuring costs Other non-current liabilities 53 6 Total other non-current liabilities Schibsted has received claims from Swedish tax authorities for repayment of value added tax for previous years of SEK 205 million. The basis for those claims is a decision in the EU-court in 2010 stating that certain printing services shall have a VAT-rate of 6%, not 25%. Schibsted challenges these claims and no liability is recognised in the 2013 and 2012 financial statements. Two verdicts in The Supreme Administrative Court in Sweden issued 26 February 2014 related to similar cases, implies that the Swedish tax authorities will be entitled to claim repayment of value added taxes for previous years provided that Schibsted will be able to have similar amounts refunded from the supplier of printing services. Schibsted is of the opinion that the Group s financial exposure is very limited. 128 NOTE 24 OTHER CURRENT LIABILITIES Other current liabilities consist of: Financial liabilities related to non-controlling interests' put options (note 25) Contingent considerations business combinations (note 25) - 71 Trade payables Prepaid revenues Public duties payable Accrued salaries and other current employment benefits Accrued expenses Provision for restructuring costs Other Total other current liabilities 3,976 4,293 The Group has no other significant liabilities with an uncertain payment date. Provision for restructuring costs as at is pertaining to accrued restructuring cost in the Scandinavian companies. C 65

287 NOTE 25 FINANCIAL LIABILITIES BUSINESS COMBINATIONS AND INCREASES IN OWNERSHIP INTERESTS Development in financial liabilities recognised related to non-controlling interests put options and contingent considerations in business combinations is as follows: Non-controlling Contingent interests put options considerations As at Additions Settlement (598) (57) (79) - Change in fair value (148) Interest expenses Translation differences 94 (35) 9 (4) As at Of which non-current (note 23) Of which current (note 24) The maturity profile of the financial liabilties is as follows: Non-controlling Contingent interests put options considerations Maturity within 1 year Maturity between 1 and 2 years Maturity between 2 and 5 years When non-controlling interests have put options related to shares in subsidiaries and Schibsted is recquired to acquire such shares, a financial liability is recognised. Any liability resulting from a contingent consideration arrangement in a business combination is recognised as a financial liability as part of the consideration transferred in exchange for the acquiree. The liabilities are measured at fair value which is based on the best estimate of future considerations. The estimates takes into account the principles for determination of the consideration in the existing agreements. The estimates take further into account, when relevant, management s expectations regarding future economic development used in determining recoverable amount in impairment tests. A liability related to non-controlling interests put options is initially recognised directly in equity. Change in fair value of the liability, except for interest expenses, is also recognised directly in equity. In the consolidated statement of changes in equity, such amounts are included in the line item Changes in ownership interests in subsidiaries that does not result in a loss of control. Changes in the fair value of a liability related to contingent consideration arrangements are recognised in profit or loss. SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Liabilities related to non-controlling interests put options recognised as at are related to shareholdings in InfoJobs S.A., Done Deal Ltd, Sibmedia Interactive S.R.L. and Infobras Spain S.L within the operating segment Online classifieds, Duplo Media AS within the operating segment Schibsted Norge media house and Lendo AB, Prisjakt Sverige AB, ServiceFinder Sverige AB, Lets Deal AB and FlexiDrive Sverige AB within the operating segment Schibsted Sverige media house. Liabilities related to contingent consideration arrangements recognised as at are related to the acquisition of Compricer AB and Offshore.no AS. NOTE 26 RAW MATERIALS AND FINISHED GOODS Raw materials and finished goods consist of: Newsprint, raw materials and purchased goods TV / Film production expenses Changes in inventories (63) 3 Total 871 1, SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP NOTE 27 PERSONNEL EXPENSES AND SHARE-BASED PAYMENT Personnel expenses consist of: 2013 Restated 2012 Salaries and wages 4,058 3,842 Social security costs Net pension expense (note 21) Share-based payment Other personnel expenses Total 5,474 5,226 Number of man-years 6,935 7,951 Details of salary, variable pay and other benefits provided to group management in 2013 (in NOK 1,000): Salary incl. Variable pay Members of Group management: holiday pay (paid 2013) LTI programme Other benefits Pension expense Loan outstanding Rolv Erik Ryssdal 3, , ,748 - Trond Berger 2, , , Camilla Jarlsby 1, , Terje Seljeseth 2, , , Frode Eilertsen 1, Raoul Grünthal 3, , Didrik Munch 2, ,050 - Lena K. Samuelsson 3, , Sverre Munck 2,488 1,763 2, ,130 - Gunnar Strömblad 1, , Loans to group management have no installments, and the interest rate is 1% lower than the government set benchmark interest rate. Sverre Munck was resigned from the group management 1 September Gunnar Strömblad was resigned from the group management 31 March Details of salary, variable pay and other benefits provided to group management in 2012 (in NOK 1,000): Salary incl. Variable pay Members of Group management: holiday pay (paid 2012) LTI programme Other benefits Pension expense Loan outstanding Rolv Erik Ryssdal 3,263 1,041 1, ,323 - Trond Berger 2, , Camilla Jarlsby 1, Sverre Munck 2, , Terje Seljeseth 2, , Gunnar Strömblad 1, , Raoul Grünthal 2, Didrik Munch 2, ,073 - Loans to group management have no installments, and the interest rate is 1% lower than the government set benchmark interest rate. 130 C 66

288 Variable pay Schibsted s CEO and other executive management participate in an annual variable pay programme that is linked to annual achievements of targets. The targets are twofold and related to financial and non-financial targets. The criteria are part of a total evaluation. For the CEO the variable pay is limited to a maximum of six months salary. For other executive management, the variable portion of salary varies from a maximum of four to six months salary. The CEO and other executive directors also participate in Schibsted s three-year performance based share programme (LTI), linked to the three-year performance criteria. Termination payment schemes The CEO has termination payment equal to eighteen months salary in addition to the six-month period of notice. The other Group management and managers are normally entitled to termination payments equal to 6-18 months salary, depending on the level of their position. Competition restrictions and curtailments will normally apply during the termination-pay period. The Chairman of the Board has no special remuneration scheme that applies if he resigns. Pension schemes The Group s CEO is entitled and, if Schibsted so requires, obliged to retire at the age of 62. His full annual early retirement pension is 66% of his pensionable earnings. The retirement pension solution means that, when he reaches 67 years of age, the CEO will receive a retirement pension for life which equals 66% of his fixed salary. He is entitled to a disability pension of 66% of his fixed salary. The spouse/cohabitant pension is 50% of his fixed salary and the child pension is 15% of his fixed salary. The Norwegian executive directors are entitled and, if Schibsted so requires, obliged to retire at the age of 62 years. During the period leading up to the ordinary retirement age (67 years), they will receive a pension that is 66% of their fixed salary. Full annual retirement/disability pension for the Norwegian executive directors is 66% of their fixed salary. Other members of the group management have different pension schemes within the limit of benefits to the Norwegian executive directors. The executive directors based in Sweden have a defined benefit pension insurance on level with the Norwegian executive directors. SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP 131 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Remuneration to the Board of Directors in 2013 (in NOK 1,000): Board remuneration from Board Commitee other group Salary incl. Pension Total remuneration* remuneration companies holiday pay Other benefits cost remuneration Members of the Board and Committees: Ole Jacob Sunde, chairman of the Board and the Compensation Committee Karl-Christian Agerup, member of the Board and member of the Compensation Committee Marie Ehrling, member of the Board and Chairman of the Audit Committee Christian Ringnes, member of the Board and the Audit Committee Eva Berneke, member of the Audit Committee and member of the Board Arnaud de Puyfontaine, member of the Board Eugénie van Wiechen, member of the Board Jonas Fröberg, employee representative of the Board and Compensation Committee ** Anne-Lise Mørch von der Fehr, employee representative of the Board ** ,712 Gunnar Kagge, employee representative of the Board ** ,169 Torbjörn Harald Ek, deputy employee representative of the Board ** Finn Våga, deputy employee representative of the Board from ** ,081 Frank Johan Johansen, deputy employee representative of the Board until ** Arve Jakobsen, deputy employee representative of the Board until ** Hege Lyngved Odinsen, deputy employee representative of the Board until ** Øystein Simensen, deputy employee representative of the Board until ** John A. Rein, chairman of the Election Committee Gunn Wærsted, member of the Election Committee Nils Bastiansen, member of the Election Committee Total 3, , ,325 * Board remunerations include compensation for travelling hours to directors who do not live in Oslo. ** For employee representatives total remuneration includes salary and other benefits in their ordinary position. Auditor Fees to the Group s auditors for the fiscal year 2013 were as follows: Audit Other attestation Tax advisory Other non-audit (NOK 1,000 excl. VAT) services services services services Total Schibsted group Ernst & Young 11, ,423 2,153 17,744 Other auditors ,608 Total 12, ,615 2,610 19,352 Schibsted ASA Ernst & Young , , C 67

289 Share-based payment (included in personnel expenses) consists of: Expense option programme - 1 Expense LTI programme Total Of which is equity settled Of which is cash settled Option programme Until 2010, Schibsted had an option programme for group management and key personnel. The programme was terminated in 2010 by the introduction of a new share-based programme (LTI programme), but the individual outstanding option schemes are still valid. The programme is accounted for as a share-based payment transaction settled in equity. Expenses and increase in equity are recognised over the service period of 3 and 4 years. The development in the number of options outstanding has been as follows: Outstanding , ,000 Exercised (90,701) (72,500) Expired and forfeited (51,799) - Outstanding , ,500 Of which fully vested 60, ,500 Outstanding options as at have the following terms: Expiry date Exercise price (NOK) Number of options 7 October ,000 The maximum gain per share that a manager can achieve when exercising the options is equal to multiplied with the exercise price per share. Each option entails the right to acquire shares. Total exercise price for options exercised in 2013 was NOK 12 million (NOK 12 million). Fair value of the shares at the time was NOK 28 million (NOK 17 million). Options outstanding for managers included in the option programme are presented below: Opening Exercised Expired and Closing balance during forfeited balance Average during maturity Rolv Erik Ryssdal 37,500 (7,500) - 30, Gunnar Strömblad 15,000 (6,106) (8,894) - - Trond Berger 30,000 (15,000) - 15, Sverre Munck 30,000 (18,600) (11,400) - - Raoul Grünthal 15,000 (7,500) - 7, Camilla Jarlsby 7, , Lena K. Samuelsson 15,000 (10,553) (4,447) - - Others 52,500 (25,442) (27,058) - - Total 202,500 (90,701) (51,799) 60,000 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Long-term incentive programme (LTI programme) In 2010, Schibsted introduced an annual rolling three-year performancebased share programme (LTI programme) for key managers in the Group. The programme was expanded in 2012 to include Online classified companies and management groups. The scheme includes a total of 58 participants in the 2011 programme, 91 participants in the 2012 programme and 100 participants in the The LTI programme is divided into four participating levels. Level 1 is for the CEO, level 2 for members of Group Management and level 3 and level 4 for key personnel in the Group, as well as the managers/management groups in key subsidiaries. For each level, participants are given a defined Basic Amount which is calculated as a percentage of salary. The Group Board has stipulated guidelines for the percentage to be allocated to the various participant levels in order to ensure flexibility and mobility, while also taking into account individual pay differences and variations in the compensation schemes. Between 11% and 33% of the Basic amount (the Share Amount ) is awarded at start in form of shares in Schibsted which cannot be sold during the three-year period. If a participant at level 1 or 2 leaves during the three years, the Share Amount shall be refunded. A similar restriction does not apply to participants in level 3 and level 4. The rest, i.e. between 67% and 89% of the Basic amount ( Performance Amount ), is linked to three-year performance criteria. Performance criteria are performance measures that are compared to the three-year EBITA/EBITDA for the Group or participant s operations for level 1, 2 and 3. For level 4 the performance criteria are connected to the development of the market value of the companies during the vesting period compared to a predetermined hurdle. At the end of the three-year period, the participants receive settlement in Schibsted shares based on their goal achievement, and the number of shares is calculated based on the average price during the programme s three-year period. Level 1, 2 and 3 participants receive the full Performance Amount after three years. Level 4 participants receive 1/3 of the Performance Amount after three years and the remaining 2/3 after a one year lock-up period. The maximum settlement in each programme will depend on the target achievement during the period. If the minimum target is not achieved during the three-year period, only the Share Amount will be paid at the end of the three-year programme. Upon payment of the Share Amount and Performance Amount, Schibsted is responsible for tax deduction on behalf of the participant so that only the net amount after tax is paid in Schibsted shares. The programme is therefore treated partly as a share-based payment transactions settled in cash (tax) and partly as share-based payment transactions settled in equity (net payment in form of shares). The expense related to the portion that is recognised as a share-based payment transaction settled in equity is recognised in equity, while the expense related to the portion that is treated as a share-based payment transaction settled in cash is recognised as a liability. The expense and the increase in equity or liability are recognised over the vesting period of 3 or 4 years for the parts of the total compensation that contains a service condition throughout the three or four-year period. This applies to the Performance Amount and the part of Share Amount for level 1 and 2 that is recognised as a share-based payment transactions settled in equity. The remaining expense and increase in equity or liability are recognised immediately upon the start of the programme. 133 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Performance Amounts will vary based on the degree of achievement of the performance criteria. Expenses to be recognised over the vesting period are estimated at the end of each reporting period based on the estimated fair value of the liability for transactions that are settled in cash and based on the number of equity instruments that is expected to vest for transactions settled in equity. Estimated total expense of the LTI programme s maturity (3 and 4 years): Programme Programme Programme Value Share Amount at grant date Value Performance Amount at grant date Adjustment to Performance Amount 8 (10) (8) Estimated total expense over the programme's maturity Programme Programme Programme Total Recognised in Personnel expense in Recognised in Personnel expense in Recognised in Personnel expense in To be recognised over the remaining vesting period In case a minimum performance target is reached, the estimated total expense for Performance Amount will be increased or decreased in a range of 50 percent. If not, the Performance Amount will be NOK 0. Assumptions used for calculating the value of the LTI programme: Programme Programme Programme Dividends Closing price used for bonus shares level 1, 2, 3 and 4 granted Closing price used for bonus shares level 4 granted Average price of the programme Closing price Risk-free interest rate 1.23% 1.34% 1.46% Model Monte Carlo Monte Carlo Monte Carlo Share programme Employees in the Group are given the opportunity each year to buy shares for NOK 7,500 at a 20% discount. 134 NOTE 28 OTHER OPERATING EXPENSES Other operating expenses consist of: Distribution 1,104 1,140 Commissions Rent, maintenance, office expenses and energy PR, advertising and campaigns 1,731 1,176 Printing contracts Editorial material Professional fees Travelling expenses IT expenses Other operating expenses Total 7,228 6,471 NOTE 29 FINANCIAL ITEMS Financial income and financial expenses consist of: 2013 Restated 2012 Interest income Gain on sale of financial assets available for sale 3 70 Dividends received 1 7 Other financial income 1 1 Total financial income Interest expenses (164) (190) Net foreign exchange loss (44) (11) Impairment loss financial assets available for sale (3) (1) Other financial expenses (26) (22) Total financial expenses (237) (224) C 68

290 Net foreign exchange loss consists of: Net foreign exchange gain (loss) currency derivatives (4) 18 Net foreign exchange gain (loss) other financial instruments (40) (29) Net foreign exchange loss (44) (11) Interest expenses includes NOK 25 million (NOK 48 million) related to pension liabilities, see note 21 Pension plans. In 2012 gain on sale of financial assets available for sale is mainly related to the sale of shares in Polaris Media ASA. Schibsted hedges its currency exposure in SEK and EUR by using loans and derivatives, see note 9 Financial risk management. As a result of this, foreign exchange gain (loss) effects in the income statement will normally be limited. Net foreign exchange losses in 2013 and 2012 are primarily related to currency effects in the Group s businesses outside the eurozone. Financial income and financial expenses include the following amounts of interest income and interest expenses related to financial assets and liabilities that are not included in the category financial assets or financial liabilities at fair value through profit or loss: 2013 Restated 2012 Interest income Interest expenses (164) (190) NOTE 30 TAXES The Group s income tax expense comprises the following: 2013 Restated 2012 Current income taxes Deferred income taxes (274) 156 Taxes Of which recognised in profit or loss Of which recognised in other comprehensive income (121) 234 The Group s effective tax rate differs from the nominal tax rate in countries where the Group has operations. The relationship between tax expense and accounting profit (loss) before taxes is as follows: SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP 2013 Restated 2012 Profit (loss) before taxes 2, Estimated tax expense based on nominal tax rate in Norway Tax effect share of profit (loss) of associated companies (4) (10) Tax effect impairment loss goodwill - 98 Tax effect impairment loss investments in associated companies Tax effect gain from remeasurement of previously held equity interest in business combination achieved in stages (1) (16) Tax effect other permanent differences (373) 18 Change in unrecognised deferred tax assets Effect of tax rate differential abroad (3) 22 Effect of changes in tax rates 5 (16) Effect of adjustments recognised related to prior periods (7) - Taxes recognised in profit or loss Permanent differences include, in addition to non-deductible operating expenses, tax-free dividends and gains (losses) on sale of shares as well as non-deductible impairment losses related to shares. Gain (loss) on sale of subsidiaries, joint ventures and associated companies are recognised in the line item Other income and expenses, while gain (loss) on sale and impairment losses of financial assets available for sale are recognised in the line item Financial income and expenses, respectively. The Group s net deferred tax liabilities (assets) are made up as follows: 2013 Restated 2012 Current items (56) (32) Pension liabilities (292) (235) Other non-current items 1,182 1,115 Unused tax losses (802) (561) Calculated net deferred tax liabilities (assets) Unrecognised deferred tax assets Net deferred tax liabilities (assets) recognised Of which deferred tax liabilities Of which deferred tax assets (123) (96) The Group s unused tax losses are related to operations in Norway, Sweden, France, Spain and Italy as well as other countries in which Schibsted Classified Media has established online classified operations. The majority of the tax losses can be carried forward for an unlimited period. Approximately 20% of the unused tax losses expire in the period until SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP The development in the recognised net deferred tax liabilities (assets) is as follows: Restated As at Change included in tax expenses (274) 156 Change from purchase and sale of subsidiaries Translation differences 68 (32) As at Deferred tax assets are recognised when it is likely that the benefit can be realised through expected future taxable profits. The Group s deferred tax assets recognised are mainly related to operations in Norway and Spain. The Group s unrecognised deferred tax assets are mainly related to foreign operations with recent tax losses where future taxable profits may not be available before unused tax losses expire. Deferred tax liabilities and assets are offset for liabilities and assets in companies which are included in local tax groups. NOTE 31 EARNINGS PER SHARE Average number of shares outstanding (diluted) is calculated as follows: Average number of shares outstanding 107,273, ,026,923 Adjustment for dilutive effect shares outstanding 54,623 92,101 Average number of shares outstanding diluted) 107,328, ,119,024 The dilutive effect is calculated as the difference between the number of shares which can be acquired on exercise of outstanding options and the number of shares which could be acquired at fair value (calculated as the average price of the Schibsted share in the period) for the consideration which is to be paid for the shares which can be acquired based on outstanding options. Earnings per share is calculated as profit (loss) attributable to owners of the parent divided by the average number of shares outstanding Restated 2012 Profit (loss) attributable to owners of the parent 1, Average number of shares outstanding 107,273, ,026,923 Earnings per share (NOK) Diluted earnings per share is calculated as profit (loss) attributable to owners of the parent divided by the average number of shares outstanding, adjusted for the dilutive effect of all potential shares Restated 2012 Profit (loss) attributable to owners of the parent 1, Average number of shares outstanding (diluted) 107,328, ,119,024 Diluted earnings per share (NOK) Earnings per share adjusted is calculated as profit (loss) attributable to owners of the parent adjusted for items reported in the income statement as Other income and expenses and Impairment loss, adjusted for taxes and noncontrolling interests. The number of shares included in the calculation is the same as the number for earnings per share and diluted earnings per share, as described above Restated 2012 Profit (loss) attributable to owners of the parent 1, Other income and expenses (1,169) 287 Impairment loss Tax and non-controlling effect of Other income and expenses and Impairment loss (99) (100) Profit (loss) attributable to owners of the parent - adjusted Average number of shares outstanding 107,273, ,026,923 Earnings per share adjusted (NOK) Average number of shares outstanding (diluted) 107,328, ,119,024 Diluted earnings per share adjusted (NOK) C 69

291 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP NOTE 32 JOINT VENTURES Significant operations reported as joint ventures are specified below: Ownership Company Location Operating segments Business Romerike Mediadistribusjon AS 34% 34% Kjeller Schibsted Norge media house Distribution 20 Minutes France S.A.S 50% 50% Paris Media Houses International Free newspapers Willhaben Internet Service GmbH 50% 50% Vienna Online classifieds Classifieds on the Internet Használtautó Informatikai Kft 50% 50% Budapest Online classifieds Classifieds on the Internet SnT Classifieds 50% - Oslo Online classifieds Classifieds on the Internet Swiss Classified Media AG 50% - Zürich Online classifieds Classifieds on the Internet 701 Search Pte. Ltd. - 50% Singapore Online classifieds Classifieds on the Internet AS Ajakirjade Kirjastus - 50% Tallinn Media Houses International Magazines AS SL Õhtuleht - 50% Tallinn Media Houses International Newspapers Express Post AS - 50% Tallinn Media Houses International Distribution These amounts are included in the Group s income statement and balance sheet from joint ventures subject to using proportionate consolidation: Operating revenues Operating expenses (504) (476) Gross operating profit (loss) (117) (61) Profit (loss) before taxes (136) (77) Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities Net assets (4) 146 In September 2013, Schibsted and Telenor agreed to form a joint venture for online classified services in selected key markets in South America and Asia. The transaction was closed in December The new company SnT Classifieds is owned 50/50 by the two parties. From closing, Schibsted will account for its investment in SnT Classifieds as a Joint Venture. Simultaneously with the establishing of SnT Classifieds, Telenor also entered as an equal partner with Schibsted and Singapore Press Holdings, each owning 1/3 of the company, in the South East Asian online classifieds operation 701 Search Pte. From closing, Schibsted will account for its investment in 701 Search Pte. as an associated company. In September 2013, Schibsted reduced its ownership interest in Schibsted Classified Media AG (tutti.ch) from 100% to 50% by contributing the company to a newly established joint venture. In 2012 Schibsted Classified Media acquired 50% of the shares in the Hungarian car portal Használtautó Informatikai Kft. 137 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP NOTE 33 SUPPLEMENTAL INFORMATION TO THE CONSOLIDATED STATEMENT OF CASH FLOWS Interest and dividends included in the consolidated statement of cash flows are as follows: Cash flow from operating activities: Interest paid (133) (118) Interest received (note 29) Dividends received (note 13 and 29) Cash flow from financing activities: Dividends paid to owners of the parent (375) (375) Dividends paid to non-controlling interests (58) (54) Schibsted s consolidated statement of cash flows presents net payments and receipts on the acquisition and sale of subsidiaries and interests in joint ventures. The liquidity effect of acquisitions consists of: Cash in acquired companies Acquisition cost other current assets Acquisition cost non-current assets Aggregate acquisition cost assets Equity and liabilities assumed (73) (142) Contingent consideration paid 79 - Contingent consideration deferred (166) - Gross purchase price Fair value of previously held equity interest (note 5) (22) (134) Cash in acquired companies (note 5) (37) (55) Acquisition of subsidiaries and joint ventures, net of cash acquired The liquidity effect of sales consists of: Cash in sold companies 88 3 Carrying amount other current assets Carrying amount non-current assets Aggregate carrying amount assets Equity and liabilities transferred (193) (2) Gain (loss) 1,335 (7) Fair value of investment retained (690) - Gross sales price 1, Cash in sold companies (88) (3) Proceeds from sale of subsidiaries and joint ventures, net of cash sold 1,014 9 NOTE 34 TRANSACTIONS WITH RELATED PARTIES For remuneration to management, see note 27 Personnel expenses and sharebased payment. For loans to associated companies, see note 15 Other non-current assets and note 17 Trade and other receivables. Christian Ringnes, member of the Board and the Audit Committee, controls the company from which Schibsted s subsidiary Eesti Meedia hires offices in Tallinn. In September 2013, Schibsted sold Eesti Meedia. The office rental amounts to NOK 5 million (7 million) in the period prior to the sale. C 70

292 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP NOTE 35 SUBSIDIARIES The following subsidiaries were directly and indirectly owned as at : Online classifieds Location Finn.no AS Oslo 89.88% 89.88% Bilanalyse AS Oslo 78.23% - Eiendomsprofil AS Bergen 40.58% 40.58% Finn Bil AS * Oslo % Finn Eiendom AS Oslo 79.56% 79.56% Finn Foto AS * Oslo % Finn Jobb AS * Oslo % Finn Oppdrag AS * Oslo % Finn Reise AS * Oslo % Finn SMB AS Oslo 89.88% 89.88% Penger.no AS Oslo 92.92% 92.92% Sentinel Software AS Trondheim 78.23% - Schibsted Classified Media AS Oslo % % Anuntis Brasil Actividades de Internet Ltda (previously Editora Anuntis Segundamano Online do Brazil Ltda) Sao Paulo 76.23% 76.22% Anuntis Chile, S.A. Santiago de Chile 99.99% 76.22% Anuntis Perú, S.A.C Lima % Anuntis Segundamano Argentina Holdings SA ** Buenos Aires % Anuntis Segundamano Argentina S.A ** Buenos Aires % Anuntis Segundamano España SL Barcelona % 76.23% ASM Classificados de México SA de CV Mexico City % 76.22% Blocket AB Stockholm % % Blocket Wäxt AB Stockholm % - Bom Negócio Atividades de Internet Ltda ** Rio de Janeiro % Byt Bil Nordic AB Stockholm % % CustoJusto Unipessoal, Lda Lisbon % % DoneDeal Ltd Wexford 50.09% 50.09% Editora Balcão Ltda Rio de Janeiro 99.99% 99.99% Editora Urbana Ltda Bogotá % 76.23% Hebdo Mag Brazil Holdings BV Amsterdam % % Hebdo Mag Brazil Holdings Ltda Rio de Janeiro 99.99% 99.99% Infobras Spain S.L Barcelona 76.23% - InfoJobs Italia S.r.l Milan 72.89% 72.89% InfoJobs S.A. Barcelona 98.50% 98.50% IT Competence Center S.L Barcelona % 76.23% Kapaza BV Amsterdam % % Kapaza! Belgium NV Brussels % % Kapaza! Holding BV * Amsterdam % LBC France, SAS Paris % % Primerama S.L. Barcelona % - Schibsted Chile, SpA ** Santiago de Chile % Schibsted Classified Media Hungary Kft Budapest % % 139 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Schibsted Classified Media Ireland Ltd Dublin % % Schibsted Classified Media LLC Minsk % % Schibsted Classified Media Morocco SARL Casablanca % % Schibsted Classified Media NV Amsterdam % % Schibsted Classified Media Schweiz AG ** Zurich % Schibsted Développement SASU Paris % % Schibsted España S.L. Barcelona % % Schibsted France SAS Paris % % Schibsted Ibérica S.L Madrid % % SCM Growth Partner AB Stockholm % - SCM Hellas MEPE Athens % % SCM Local, SARL Paris % % SCM Northern Europe AB Stockholm % % SCM Suomi Oy Helsinki % % SCM Ventures AB Stockholm % % SCM Ventures BV Amsterdam % % SFI Holding AS * Oslo % Sibmedia Interactive S.R.L. Sibiu 95.00% 55.00% StepStone AB Stockholm % - Subito.it S.r.l Milan % % Tripwell Sweden AB Stockholm % - Schibsted Norge media house Location Schibsted Norge AS Bergen % % Aftenbladet Eiendom AS * Stavanger % Aftenposten AS Oslo % % Aftenposten Mobil AS Oslo % - AS Farsund Aktiebogtrykkeri Farsund 86.20% 86.20% Askøyværingen AS Askøy % % Avisprodukter AS Bergen % % Avisretur AS Oslo 50.10% 50.10% Bergens Ringen DA Bergen % % Bergens Tidende AS Bergen % % BT Adrift1 AS (previously Fanaposten AS) Bergen % % BT Beta AS Bergen % % BT Respons AS Bergen % % Bydelsavisene Bergen AS Bergen 50.00% - Bygdanytt AS Bergen % % Byttestrøm.no AS Oslo 95.95% - Dine Penger AS * Oslo % Distribution Innovation AS Oslo 60.00% 60.00% Duplo Media AS Horten 70.00% 70.00% E24 Dine Penger AS (previously E24 Næringsliv AS) Oslo % % Ebok.no AS Oslo 97.57% 97.57% Fanaposten AS (previously Åsaneposten AS) Bergen 50.00% % Forlaget Strilen AS Lindås % % Fædrelandsvennen AS Kristiansand % % Fædrelandsvennen Distribusjon AS * Kristiansand % Infill Eiendom AS Stavanger % 140 C 71

293 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP Janaflaten 24 AS Stavanger % % Katapult Bøker AS Oslo % % Krinkelkroken 1 AS Bergen % Kristiansand Avis AS Kristiansand % % Lendo AS Oslo 95.95% 95.95% Let's Deal AS Oslo 74.20% 74.20% Lindesnes AS Mandal % % Lokalavisene AS Bergen % % Lyderhorn Bydelsavis AS Bergen 50.00% - Media AS Kristiansand % % Mittanbud.no AS Oslo % % Nykirkebakken 2 AS Stavanger % % Nykirkebakken 7 AS Stavanger % Offshore.no AS (previously Bergensopplevelser AS) Bergen % % Radio Sør AS Kristiansand % % Riks AS Oslo % % Schibsted Distribusjon AS Oslo % - Schibsted Distribusjon Vest AS (previously Aftenbladet Distribusjon AS) Sandnes % % Schibsted Distribusjon Øst AS (previously Aftenposten Distribusjon AS) Oslo % % Schibsted Eiendom Vest AS Stavanger % % Schibsted Forlag AS Oslo % % Schibsted Förlag AB Helsingborg % % Schibsted Magasiner AS Oslo % % Schibsted Norge Annonseproduksjon AS Kristiansand % - Schibsted Norge Kundesenter AS Fagernes % - Schibsted Norge Salg AS (previously WebTraffic Norge AS) Oslo % % Schibsted Tech Polska sp z.o.o Krakow % % Schibsted Trykk AS Oslo % % Schibsted Trykk Bergen AS Godvik % % Schibsted Trykk Flesland AS Bergen % % Schibsted Trykk Kristiansand AS Kristiansand % % Schibsted Trykk Oslo AS Oslo % % Schibsted Trykk Stavanger AS Sandnes % % Schibsted Vekst AS Oslo 95.95% 95.95% Schibsted Vekst Hylleselskap 1 AS Oslo 95.95% 95.95% Stavanger Aftenblad AS Stavanger % % Stokkamyrveien 30 AS Stavanger % % Strandgaten og Eilertsbakken Eiendomsselskap AS Farsund 86.20% 86.20% Sydvesten Lokalavis AS Bergen 50.00% - Søgne og Songdalen Budstikke AS Søgne 97.14% 57.62% Sørlandspakken Vest AS Kristiansand % Sørlandssamkjøringen AS Mandal 62.00% 62.00% Trafikkfondet AS Oslo % % TV Sør AS Kristiansand % % Tyggo AS Oslo % - Verdens Gang AS Oslo % % Vestnytt AS Fjell % % VG Mobil AS Oslo % % VGTV AS Oslo % SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP WoldCam AS Stavanger % % WR Start Up 62 AS Oslo 50.00% - Åsane Tidende AS Bergen 50.00% - Schibsted Sverige media house Location Schibsted Sverige AB Stockholm % % A Perfect Guide Sales Scandinavia AB Stockholm 84.50% - A Perfect Guide Scandinavia AB Stockholm 84.50% - Aftonbladet Hierta AB Stockholm 91.00% 91.00% Aftonbladet Kolportage AB Stockholm 91.00% 91.00% Compricer AB Stockholm % - Destinationpunktse AB Stockholm % % E24 Näringsliv AB Stockholm % % FlexiDrive Sverige AB Stockholm 80.00% - HB Svenska Dagbladets AB & Co Stockholm 99.41% 99.41% Hittapunktse AB Stockholm 90.20% % Jobb 24 HB Stockholm % Klart Vädertjänster AB (previously K Lartpunktse Vädertjänster AB) Stockholm % % Kundkraft i Sverige AB Stockholm % % Lendo AB Stockholm 98.50% 98.50% Lets deal AB Stockholm 51.55% 51.55% Mediateam Bemanning AB Stockholm 51.00% 51.00% Mini Media Sweden AB Stockholm 51.00% 51.00% Mobilio Sweden AB Stockholm 85.00% 50.10% Omnipunktse AB (previously Resdagboken AB) Stockholm % % Personal Finance Sverige AB Stockholm % % PGME Sverige AB Stockholm % % Plan 3 AB (previously MinTur AB) Stockholm 99.41% 99.41% PriceSpy Media Ltd Manukau 98.00% 96.00% Prisjakt Norge AB Stockholm 98.00% - Prisjakt Polen Sp z.o.o Krakow 98.00% 96.00% Prisjakt Sverige AB Ängelholm 98.00% 96.00% Rörlig Bild Sverige AB Stockholm % % Schibsted Centralen AB Stockholm % % Schibsted Media AB Stockholm % % Schibsted PersonalFinance Bolån AB Stockholm % % Schibsted Sales AB Stockholm % % Schibsted Sök AB Stockholm % % Schibsted Tillväxtmedier AB Stockholm % % Schibsted Tillväxtmedier Annonsförsäljning AB Stockholm % % Schibsted TM AB Stockholm % % Schibsted TM II AB Stockholm % - ServiceFinder Sverige AB Stockholm 69.95% 69.95% Suredo AB Stockholm 98.50% 98.50% Svenska Dagbladet Annons AB Stockholm 99.41% 99.41% Svenska Dagbladet Digitala Medier AB * Stockholm % Svenska Dagbladet Distribution AB * Stockholm % Svenska Dagbladet Holding AB Stockholm 99.41% 99.41% Svenska Dagbladets AB Stockholm 99.41% 99.41% 142 C 72

294 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP The You Way AB Stockholm 91.00% - TVNU Sweden AB Stockholm % % Mediehus International Location Min Holding AG Zurich % % 20 Min International B.V. Rotterdam % % 20 Minutos España S.L. (previously 20 Minutos España S.A.) Madrid % % Carrie & Serena S.L. Madrid 99.87% 63.92% Grupo 20 Minutos SL Madrid 99.87% 99.87% AS Eesti Meedia Tartu % AS Kanal 2 Tallinn % AS Kroonpress Tartu % AS Postimees Tallinn % AS Schibsted Baltics Tallinn % AS Trio LSL Tallinn % Kultuurinet OÜ Tartu % OÜ Meediasüsteemid Tartu % OÜ Webplanet Tallinn % Reisiguru OÜ Tartu % SIA Tvnet Riga % Soov Kirjastus OU Tallinn % UAB 15 Minuciu Vilnius % UAB 15 Minuciu Online Vilnius % UAB Plius Vilnius % UAB Zurnalu Leidybos Grupe Vilnius % Ühinenud Ajalehed AS Tartu % Other Location Sandrew Metronome AB Stockholm % % Sandrew Metronome Danmark A/S Copenhagen % Sandrew Metronome Distribusjon Norge AS Oslo % Sandrew Metronome Distribution Sverige AB Stockholm % Sandrew Metronome International AB Stockholm % Sandrew Metronome Video Finland OY Helsinki % Streaming Media AS Oslo 72.82% 73.40% Aspiro AB Malmö 55.30% 55.74% Aspiro AS Oslo 55.30% 55.74% Aspiro Innovation AB Malmö 55.30% 55.74% Aspiro Søk AS Oslo 55.30% 55.74% Aspiro TV AS Oslo 55.30% 55.74% RADR Entertainment AB (previously Aspiro Inpoc AB) Stockholm 55.30% 55.74% Rubberduck Media Lab Inc Carlsbad 55.30% 55.74% SMS Opplysningen 1985 AS Oslo 55.30% 55.74% SMS Opplysningen 2100 AS Oslo 55.30% 55.74% WiMP ApS Copenhagen 55.30% 55.74% WiMP Music AB (previously Aspiro Musik AB) Malmö 55.30% 55.74% WiMP Music AS Oslo 55.30% 55.74% WiMP Music GmbH Berlin 55.30% 55.74% WiMP Music SP. Z O.O. Warsaw 55.30% 55.74% 143 SCHIBSTED ANNUAL REPORT 2013 NOTES / GROUP WiMP Norway AS Oslo 55.30% 55.74% Tesked AB Varberg 97.98% 97.98% Mötesplatsen i Norden AB Varberg 97.98% 97.98% 20 Min Holding AS * Oslo % E24 France SAS Paris % E24 International AB Stockholm % % European Media Ventures AS * Oslo % Gratisavisen avis1 AS * Oslo % Scanpix Scandinavia AB Stockholm % Schibsted AG Berlin % % Schibsted Movie AS Oslo % % Schibsted Multimedia AS Oslo % % Schibsted Print Media AS Oslo % % SI Företagstjänster AB Stockholm % SI Företagstjänster Holding AB Stockholm % Headquarters Location Schibsted Eiendom AS Oslo % % Schibsted Finans AS Oslo % % Schibsted IT AS Oslo % % Schibsted Payment AS Oslo % % * Merged with other companies in Schibsted group. ** From subsidiary to joint venture. 144 C 73

295 SCHIBSTED ANNUAL REPORT 2013 FINANCIAL STATEMENTS / ASA SCHIBSTED ASA INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note 2013 Restated 2012 Operating revenues Personnel expenses 4 (145) (125) Depreciation and amortisation 5 (2) (2) Other operating expenses 6 (124) (122) Operating profit (loss) (222) (194) Financial income 7 3,721 2,916 Financial expenses 7 (612) (182) Net financial items 3,109 2,734 Profit (loss) before taxes 2,887 2,540 Taxes 8 (83) (134) Profit (loss) 2,804 2, SCHIBSTED ANNUAL REPORT 2013 FINANCIAL STATEMENTS / ASA SCHIBSTED ASA BALANCE SHEET AS AT 31 DECEMBER (NOK million) Note 2013 Restated 2012 ASSETS Deferred tax assets Property, plant and equipment and licences Intangible assets and tangible assets Investments in subsidiaries 9 14,975 5,237 Investments in associated companies 9 1,541 1,541 Investments in other shares Non-current receivables 10 1,604 1,905 Financial assets 18,122 8,686 Non-current assets 18,198 8,751 Current receivables 11 1,279 4,381 Cash and cash equivalents Current assets 1,286 4,394 Total assets 19,484 13,145 EQUITY AND LIABILITIES Share capital Treasury shares (1) (1) Other paid-in capital 1,432 1,422 Paid-in capital 1,539 1,529 Other equity 9,848 7,404 Retained earnings 9,848 7,404 Equity 14 11,387 8,933 Pension liabilities Provisions Non-current liabilities 10 2,795 3,095 Current liabilities 16 5, Total equity and liabilities 19,484 13,145 Oslo, 25 March 2014 Schibsted ASA s Board of Directors Ole Jacob Sunde Chairman of the Board Karl-Christian Agerup Arnaud de Puyfontaine Marie Ehrling Christian Ringnes Eva Berneke Anne Lise von der Fehr Gunnar Kagge Jonas Fröberg Eugénie Van Wiechen Rolv Erik Ryssdal CEO 146 C 74

296 SCHIBSTED ANNUAL REPORT 2013 FINANCIAL STATEMENTS / ASA SCHIBSTED ASA STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note 2013 Restated 2012 CASH FLOW FROM OPERATING ACTIVITIES Profit (loss) before taxes 2,887 2,540 Tax payable (6) - Depreciation and amortisation Impairment loss on shares Gain on sale of non-current assets (6) (2,060) Share-based payment (3) 3 Group contributions included in financial income 7 (917) (621) Change in current receivables (16) (28) Change in current liabilities Difference between pension cost and cash flow related to pension plans 8 14 Change in other accruals 1 (5) Net cash flow from operating activities 3,227 (62) CASH FLOW FROM INVESTING ACTIVITIES Purchase of intangible assets and property, plant and equipment 5 (7) (9) Change in non-current receivables (439) Acquisition of subsidiaries (10,350) (579) Sale of shares 9 3,541 Net cash flow from investing activities (10,047) 2,514 CASH FLOW FROM FINANCING ACTIVITIES Change in non-current interest-bearing borrowings (300) - Change in current interest-bearing borrowings 7,292 (2,760) Group contributions received (net) Dividends paid 14 (375) (375) Purchase / sale of treasury shares Net cash flow from financing activities 6,814 (2,452) Net increase (decrease) in cash and cash equivalents (6) - Cash and cash equivalents as at Cash and cash equivalents as at SCHIBSTED ANNUAL REPORT 2013 NOTES / ASA TABLE OF CONTENTS NOTES TO THE SCHIBSTED ASA FINANCIAL STATEMENTS 2013 All amounts are in NOK million unless otherwise stated NOTE 1: ACCOUNTING POLICIES NOTE 2: CHANGE IN ACCOUNTING POLICIES NOTE 3: OPERATING REVENUES NOTE 4: PERSONNEL EXPENSES AND MAN-YEARS NOTE 5: PROPERTY, PLANT AND EQUIPMENT AND LICENCES NOTE 6: OTHER OPERATING EXPENSES NOTE 7: FINANCIAL ITEMS NOTE 8: TAXES NOTE 9: INVESTMENTS IN SHARES NOTE 10: NON-CURRENT RECEIVABLES AND NON-CURRENT LIABILITIES NOTE 11: CURRENT RECEIVABLES NOTE 12: CASH AND CASH EQUIVALENTS NOTE 13: SHAREHOLDER STRUCTURE NOTE 14: EQUITY NOTE 15: PENSION PLANS NOTE 16: CURRENT LIABILITIES NOTE 17: GUARANTEES AND PROVISIONS OF SECURITY 148 C 75

297 NOTE 1 ACCOUNTING POLICIES The financial statements of Schibsted ASA have been prepared in accordance with the provisions of the Norwegian Accounting Act and Generally Accepted Accounting Principles in Norway. Revenue recognition Operating revenues are recognised when the goods are delivered or the service rendered. Classification Assets and liabilities related to the normal operating cycle are classified as current assets and current liabilities. Receivables and liabilities not related to the normal operating cycle are classified as current if they are of a shortterm nature, normally due within one year. Shares and other investments not intended for continued use or ownership are classified as current assets. Other assets and liabilities are classified as non-current. Shares Shares are measured at cost and impairment loss is recognised if the carrying amount exceeds the recoverable amount. The impairment is reversed if the basis for the write-down is no longer present. Group contributions received are included in financial income provided that the Group contribution received does not represent a repayment of capital invested. Group contributions that represent a repayment of capital invested are accounted for as a reduction in the cost of investments in subsidiaries. Net Group contributions payable (gross Group contributions less the associated tax effect) are included in the cost of investments in subsidiaries. Dividends from subsidiaries and associated companies are included in financial income. Gain on intra-group sales of subsidiaries, in excess of retained earnings of the subsidiaries sold, is recognised as deferred income and classified as non-current liabilities. Property, plant and equipment and intangible assets Property, plant and equipment and intangible assets are measured at cost less accumulated depreciation, amortisation and impairment. Property, plant and equipment and intangible assets with limited economic lives are depreciated over the expected economic life. An impairment loss is recognised if the carrying amount exceeds the recoverable amount. The recoverable amount is the higher of net sales value and the present value of future cash flows expected to be generated. Impairment losses are reversed if the basis for the impairment is no longer present. Leases Leases are classified as either finance leases or as operating leases. Leases that transfers substantially all the risks and rewards incidental to the asset are classified as finance leases. Other leases are classified as operating leases. When Schibsted ASA is lessee in a finance lease, the leased asset and the liability related to the lease are recognised in the balance sheet. Depreciable leased assets SCHIBSTED ANNUAL REPORT 2013 NOTES / ASA are depreciated systematically over the useful life of the asset. Lease payments are apportioned between interest expense and reduction of the liability. Lease payments related to operating leases are recognised as expenses over the lease term. Foreign currency Foreign currency monetary items are translated at the closing rate at the date of the balance sheet. Foreign currency gains and losses are reported in the income statement in the lines Financial income and Financial expenses respectively. Trade receivables Trade receivables are measured at fair value including allowance for bad debt. Treasury shares The cost of acquisition and proceeds from sale of treasury shares are offset against equity. Pension expense Defined benefit plans Schibsted ASA has chosen, in accordance with NRS 6, to use measurment and P&L classification rules according to IAS 19 R Employee Benefits. Pension liabilities related to defined benefit plans are measured at the net present value of future pension benefits earned at the balance sheet date. Plan assets are measured at fair value. As a result of the application of IAS 19R, the periods net interest expense is now calculated by applying the discount rate for the liability at beginning of period to the net liability. Net interest expense consists therefore of interest on the obligation and return on assets, both calculated using the discount rate. Changes in net pension obligation as a result of premium payments and pension payments are taken into account. The difference between the actual and the recorded return on plan assets are recogniced with final effect directly as other equity. Current service cost and net interest income (expense) are recogniced immediately. Current service cost is classified as payroll expenses in the income statement, while net interest income (expenses) are classified as financial items. Changes in value, both assets and liabilities are recorded with final effect directly as other equity. Gains and losses on the curtailment or settlement of a defined benefit plan are recognised at the time the curtailment or settlement occurs. A curtailment occurs when a company adopts a significant reduction in the number of employees covered by a plan or changes the terms of a defined benefit plan such that a significant part of future earnings to current employees will no longer qualify for benefits, or will qualify only for reduced benefits. Introduction of a new benefit plan or an improvement of the current plan will involve changes in the obligation. This is expensed on a straight line basis over the period until the effect of the change is retained. The introduction of new systems or changes to existing plans that have retroactive effect so that employees immediately have earned a policy (or change in policy) are recogniced immediately. 149 SCHIBSTED ANNUAL REPORT 2013 NOTES / ASA Gains or losses on the curtailment or settlement of pension plans are recognized when they occur. Pension expense - Defined contribution plans For pension plans as defined as contribution plans, for accounting purposes, the contribution payable is recogniced as pension cost. Share-based payment In equity settled share-based payment transactions with employees, the fair value of the employee services and the corresponding equity increase are measured by reference to the fair value of the equity instruments granted. The fair value of equity instruments granted is measured at grant date, and recognised as personnel expenses and equity increase immediately or over the vesting period when performance vesting conditions require an employee to serve over a specified time period. The estimated number of equity instruments expected to vest are remeasured at each reporting date. The amount recognised as an expense is adjusted to reflect the number of equity instruments which are expected to be, or actually become vested. In cash settled share-based payment transactions with employees, the employee services and the incurred liability are measured at the fair value of the liability. The employee services and the liability are recognised immediately or over the vesting period when performance vesting conditions require an employee to serve over a specified time period. Until the liability is settled, the fair value of the liability is revised at each balance sheet date and at settlement date, with changes in fair value recognised in profit or loss. Restructuring costs Restructuring costs are recognised in accordance with the matching principle and therefore expenses not related to revenues in future periods are charged to expense when incurred. Restructuring costs are incurred when a restructuring plan is approved and announced. Taxes Income taxes are calculated from the profit (loss) before tax and comprise taxes payable and the change in deferred taxes. Deferred tax assets and liabilities are calculated in accordance with the liability method without discounting and provided for all differences between the carrying amount in the balance sheet and the tax base of assets and liabilities, and for unused tax losses. Deferred tax assets are recognised only when it is expected that the benefit can be utilised through sufficient taxable profits from expected future earnings. Contingent liabilities Contingent liabilities are recognised when it is more probable than not that the liability will become effective. The best estimate of the amount to be paid is included in other provisions in the balance sheet. Other obligations, for which no liability is recognised, are disclosed in notes to the financial statements. Dividend The dividend for the financial year, as proposed by the Board of Directors, is recognised as a liability as at Statement of cash flows The statement of cash flows is prepared using the indirect method. Cash and cash equivalents include cash, bank deposits and other monetary instruments with a maturity of less than three months at the date of purchase. 150 NOTE 2 CHANGE IN ACCOUNTING POLICIES Schibsted ASA has chosen, in accordance with NRS 6, to use measurment and P&L classification rules according to IAS 19 R Employee Benefits. As at January 1, 2013 Schibsted ASA applied IAS 19 Employee Benefits (June 2011) ( IAS 19R ) and changed the basis for calculating the pension liability and costs. The company previously used the corridor approach when recognizing unamortised changes in accounting estimates. The corridor approach is no longer accepted and all changes in accounting estimates shall be recognised in equity in accordance with IAS 19R. In the 2013 financial statements the accumulated change in the accounting estimate has been recognised in equity as at January 1, Previously the return on the plan assets was calculated by using a long-term expected return on the plan assets. As a result of applying IAS 19R, the net interest costs for the period is now calculated by using the discount rate for the liability at the beginning of the period on the net liability. As such the net interest cost consists of interest on the liability and the return on the plan assets, whereas both have been calculated by using the discount rate. Changes in net pension liabilities as a result of payments of premiums and pension payments have been taken into consideration. The difference between the actual return and the accounted return is recognised continuously through equity. Due to the implementation of IAS 19 R the company has chosen to change the classification of the pension costs. The pension benefit payment is reported as a part of personnel expences in the financial statements, while net pension income/expense is classified as a financial cost. IAS19R has been applied retrospective and the comparative figures have been changed. Adjustments in balance sheet as at Balance Effect of Balance restatement Pension liabilities Deferred tax assets Other equity 5,354 (45) 5,309 Adjustments in income statement As previously Effect of Restated 2012 reported restatement 2012 Personal expenses (134) 9 (125) Financial expenses (175) (7) (182) Taxes (133) (1) (134) Profit (loss) 2, ,406 Cange in Change in Change in pension deferred other liabilities tax assets equity Unrecognised actuarial gain (loss) recogniced in equity as at (1) (3) C 76

298 NOTE 3 OPERATING REVENUES Operating revenues consist of: Operating revenues Total Operating revenues consist of consultant fees and income from lease of office premises, as well as fees for subsidiaries participation in programmes for management and organisational development. NOTE 4 PERSONNEL EXPENSES AND MAN-YEARS Personnel expenses consist of: 2013 Restated 2012 Salaries and wages Social security costs Net pension expense (note 15) Other personnel expenses 6 4 Share-based payment Total The number of man-years, including trainees, was 95 in Note 27 Personnel expenses and share-based payment to the consolidated financial statements contains further information concerning auditor s fee and remuneration to management, including share-based payment. SCHIBSTED ANNUAL REPORT 2013 NOTES / ASA NOTE 5 PROPERTY, PLANT AND EQUIPMENT AND LICENCES Equipment, furniture, vehicles Licences Cost as at Additions - 7 Disposals (16) (4) Cost as at Accumulated depreciation and amortisation (26) (4) Accumulated depreciation on scrapped items 16 4 Depreciation and amortisation for the year (1) (1) Accumulated depreciation and amortisation (11) (1) Carrying amount Depreciation method Straight line Straight line Depreciation period 3 10 years 3 5 years The depreciation and amortisation for the year include depreciation of leasehold improvements of NOK 1 million. Operating lease payments of NOK 26 million are expensed in 2013 and consist mainly of leased computer technology amounted to 4 million and leased office premises amounted to 20 million with a remaining lease term of 4,5 years with an option to extend for another 4 years. NOTE 6 OTHER OPERATING EXPENSES Other operating expenses consist of: Rent and maintenance (note 5) Office and administrative expenses Professional fees Travel, meetings and marketing Total SCHIBSTED ANNUAL REPORT 2013 NOTES / ASA NOTE 7 FINANCIAL ITEMS Financial income consists of: 2013 Restated 2012 Interest income Group contributions received Dividends from subsidiaries 2,525 - Dividends from associated companies Gain on sale of shares 6 2,089 Other financial income 1 - Total 3,721 2,916 Gain on sale of shares in 2013 is related to partly sale of Streaming Media AS of NOK 0.6 million and the liquidation of Scanpix AB of NOK 5.7 million (note 9). Gain on sale of shares in 2012 is related to the derecognition of shares in Polaris Media ASA of NOK 26 million (note 9) and to the sale of the subsidiaries Verdens Gang AS and Schibsted Forlag AS to Schibsted Norge AS of NOK 2,062 million. Gain in excess of retained earnings in the subsidiaries sold is treated as deferred income and classified as non-current liabilities (note 10). Financial expenses consist of: 2013 Restated 2012 Interest expenses Interest expenses cash pool system (note 12) - 2 Interest expenses on pension plans (note 15) 5 7 Impairment loss on shares Loss on sale of shares - 29 Other financial expenses 4 2 Total Interest expenses in 2013, NOK 83 million, relates to bond issues compared to NOK 65 million in Impairment loss on shares in 2013 relates to Schibsted Movie AS of NOK 155 million, and reversal of the impairment loss ralated to Streaming Media AS in 2012 of NOK 70 million. The impairment losses on shares in 2012 relates to Streaming Media AS. Loss on sale of shares in 2012 relates to Trafikkfondet AS and Aspiro AB. Other financial expenses in 2013 and 2012 relate primarily to foreign exchange losses and bank charges. 152 NOTE 8 TAXES Set out below is a specification of the difference between the profit before taxes and taxable income of the year: 2013 Restated 2012 Profit (loss) before taxes 2,887 2,540 Dividends and tax free group contributions received (3,103) (84) Group contributions payable (289) (469) Other permanent differences 506 (1,980) Change in temporary differences Effect of changes in accounting policy and unrecognised actuarial gain (loss) in the pension liability (26) - Taxable income 5 20 Tax rate 28% 28% Taxes payable and taxes charged to expenses are calculated as: 2013 Restated 2012 Calculated taxes payable 1 6 Change in net deferred tax asset (8) (4) Tax related to change in tax rate on deferred tax 2 - Tax related to changes in accounting policy and unrecognised actuarial gain (loss) in the pension liability 7 - Tax related to Group contributions payable Taxes The net deferred tax asset consists of the following: 2013 Restated 2012 Temporary differences related to: Property, plant and equipment (2) (2) Pension liabilities (203) (173) Other current liabilities (8) (11) Total basis for deferred tax asset (213) (186) Tax rate 28% 28% Net deferred tax liability (asset) with 28% tax (60) (52) The effect on Net deferred tax liability (asset) related to change in tax rate from 28% to 27% 2 - Net deferred tax liability (asset) (58) (52) C 77

299 SCHIBSTED ANNUAL REPORT 2013 NOTES / ASA Effective tax rate is a result of: 2013 Restated 2012 Profit (loss) before taxes 2,887 2,540 Tax charged based on nominal rate Tax effect permanent differences (727) (578) Tax related to change in tax rate from 28% to 27% on deferred tax 2 - Taxes NOTE 9 INVESTMENTS IN SHARES Carrying Carrying Ownership % amount amount Location Shares in subsidiaries 20 Min Holding AS - Oslo - 2 Schibsted Norge AS Bergen 3,649 1,349 Schibsted Eiendom AS Oslo Schibsted Finans AS Oslo Schibsted Movie AS Oslo Schibsted Multimedia AS Oslo 10,285 2,352 Schibsted Print Media AS Oslo Schibsted Sverige AB Stockholm Schibsted IT AS Oslo 2 2 Schibsted Payment AS Oslo Streaming Media AS Oslo Total 14,975 5,237 Group contributions payable to subsidiaries, NOK 208 million (net) is capitalised as part of investments in subsidiaries. Group contributions from Schibsted Norge AS of NOK 300 million is considered to represent repayment of capital invested and thus recognised as a reduction in the carrying amount of the shares in Schibsted Norge AS. Ownership % Carrying Shares in associated companies Location amount Equity Profit (loss) Finn.no AS Oslo 1, Polaris Media ASA Trondheim Svanedamsveien 10 AS Kristiansand Total 1,541 Other shares Schibsted Vekst AS Oslo 2 Schibsted Tech Polska sp. z.o.o 1.00 Krakow - Total 2 Finn.no AS and Schibsted Vekst AS are also held by other Group companies and are therefore in the consolidated financial statements note 35 presented as subsidiaries. The fair value of the shares in Polaris Media ASA is NOK 361 million based on the last market price. 153 SCHIBSTED ANNUAL REPORT 2013 NOTES / ASA NOTE 10 NON-CURRENT RECEIVABLES AND NON-CURRENT LIABILITIES Non-current receivables consist of: Receivables from Group companies 1,600 1,900 Other receivables 4 5 Total 1,604 1,905 Receivables from Group companies consist of loans to Schibsted Finans AS. The loan amounts and terms are identical to what Schibsted ASA has on the bond loans with Norsk Tillitsmann ASA. Non-current liabilities consist of: Liabilities Group companies 2 3 Bond issues 1,600 1,900 Deferred income from sale of subsidiaries 1,184 1,184 Other liabilities 9 8 Total 2,795 3,095 Gain on intra-group sales of subsidiaries, in excess of retained earnings of the subsidiaries sold, are recognised as deferred income (note 7). Schibsted ASA has issued five unsecured bonds in the Norwegian bond market at a total of NOK 1,600 million as at December The loans have the following characteristics: Loan Issued Amount Maturity Interest ISIN NO Dec 2010 NOK 400 million Dec months Nibor plus 205 basis points ISIN NO March 2012 NOK 500 million March months Nibor plus 215 basis points ISIN NO March 2012 NOK 300 million March % ISIN NO Dec 2012 NOK 150 million Dec months Nibor plus 250 basis points ISIN NO Dec 2012 NOK 250 million Dec % 154 C 78

300 NOTE 11 CURRENT RECEIVABLES Current receivables consist of: Current receivables from Group companies 1, Current receivable related to the cash pool system (note 12) - 3,688 Other receivables Total 1,279 4,381 NOTE 12 CASH AND CASH EQUIVALENTS Total cash and cash equivalents of NOK 7 million include NOK 2.5 million pledged as security for trading on Nord Pool, NASDAQ OMX Oslo ASA and StatNett SF. Schibsted ASA s bank account is included in the Schibsted Group s cash pool with Danske Bank. The cash pool system has been established to contribute to an optimal liquidity management for the Schibsted Group. As at 31 December 2013 Schibsted ASA had drawn NOK million on sub-accounts in the cash pool system, which is managed and controlled by Schibsted Finans AS. The amount is included as current liabilities in the balance sheet. Note 9 Financial risk management and note 18 Cash and cash equivalents to the consolidated financial statements contain further information concerning financial market risk. SCHIBSTED ANNUAL REPORT 2013 NOTES / ASA NOTE 13 SHAREHOLDER STRUCTURE The 20 largest shareholders as at 31 December 2013: Number of shares Share in % Blommenholm Industrier 28,188, % Folketrygdfondet 7,486, % State Street Bank and Trust Co. 4,292, % NWT Media AS 4,000, % The North Trust 3,302, % The Bank Of New York 2,672, % JP Morgan Clearing Co 2,542, % Clearstream Banking S.A 2,139, % Morgan Stanley & Co 1,980, % J.P.Morgan Chase Bank 1,902, % UBS AG, London Branch 1,889, % Goldman Sachs & Co Equity, Security Client Segregation 1,858, % JP Morgan Chase Bank 1,760, % The Northern Trust Co 1,221, % State Street Bank and Trust Co 1,154, % Credit Suisse Securities 1,138, % Skandinaviska Enskilda Banken 1,107, % J.P.Morgan Chase Bank 1,079, % J.P.Morgan Chase Bank 1,078, % Svenska Handelsbanken 955, % Total 20 largest shareholders 71,749, % The shareholderes are based on the public VPS list. For further information regarding the ownership, see the chapter Shareholder information in Schibsted s annual report. 155 SCHIBSTED ANNUAL REPORT 2013 NOTES / ASA Number of shares owned by the Board of Directors and the Group Management: Number of shares Ole Jacob Sunde 121,244 Karl Christian Agerup 3,082 Eva Berneke 4,020 Christian Ringnes 40,000 Anne-Lise Mørch von Der Fehr 201 Gunnar Kagge 259 Rolv Erik Ryssdal Trond Berger 15,843 Camilla Jarlsby 10,006 Terje Seljeseth 13,124 Lena K. Samuelsson 6,730 Didrik Munch 5,169 Raoul Grünthal 9,418 Frode Eilertsen 1,295 Total Board of Directors and Group Management 260,808 The total number of issued shares in Schibsted ASA was 108,003,615 and the number of shareholders was 4,707, as at 31 December Foreign ownership was 52.1 percent (56,6%). Schibsted ASA owned 655,075 treasury shares at 31 December The Annual Shareholders Meeting gave the Board of Directors authorisation to acquire treasury shares up to 10,800,361 shares (10%). The authorisation was renewed at the Annual Shareholders Meeting 30 April 2013 for a period until the Annual Shareholders Meeting in At the Annual Shareholders Meeting on 7 May 2014 the Board will present a resolution to extend the authorisation to the Board of Directors for the purchase and disposal of up to 10 percent of the share capital in Schibsted ASA in accordance with the Norwegian Public Limited Liability Companies Act based on the conditions presented in the notification to the Annual Shareholders Meeting. Ole Jacob Sunde, is also the chairman of the Board in Blommenholm Industrier. NOTE 14 EQUITY The development in the company s equity in 2013 is as follows: Share capital Treasury Other shares paid-in capital Other equity Total Equity as at (1) 1,414 5,354 6,875 Effect of Changes in accounting policy and unrecognised actuarial gain (loss) in pension plans (45) (45) Equity as at (1) 1,414 5,309 6,830 Change in treasury shares Share-based payment Profit (loss) ,406 2,406 Dividend (375) (375) Unrecognised actuarial gain (loss) in pension plans Equity as at (1) 1,422 7,404 8,933 Change in treasury shares Share-based payment Profit (loss) ,804 2,804 Dividend (376) (376) Unrecognised actuarial gain (loss) in pension plans (15) (15) Equity as at (1) 1,432 9,848 11, C 79

301 Schibsted ASA s share capital consists of 108,003,615 shares of NOK 1 par value. The par value of treasury shares is presented on a separate line within Other paid-in capital with a negative amount. No shareholder may own or vote at the Annual Shareholders Meeting for more than 30 percent of the shares. NOTE 15 PENSION PLANS The company is obliged to have an occupational pension scheme in accordance with the Act on Mandatory Company Pensions ( Lov om obligatorisk tjenestepensjon ). The company s pension scheme meets the requirements of the Act. As at 31 December 2013 the company s pension plan had 96 members. Note 21 Pension Plans to the consolidated financial statements contains further description of the pension plans and the principal assumptions applied. In 2012 the company changed the reference for determining the discount rate. Previously the discount rate was determined by reference to the Norwegian governmental bonds. From 2012 an onwards it is determined with a reference to the market yields at the end of the reporting period on high quality corporate bonds. The company has concluded that, by the end of the accounting year 2013, a solid market for the OMF bonds exists in Norway, and this market yield will therefore be used as a reference according to IAS 19 Employee Benefits. The increase in the discount rate as at 31 December 2012 caused a solid reduction of the present value of the future pension benefits (net pension liabilities). Schibsted ASA has chosen, in accordance with NRS 6, to use measurment and P&L classification rules according to IAS 19 R Employee Benefits. As at 1 January 2013, Schibsted ASA applied IAS 19 Employee Benefits (June 2011) ( IAS 19R ) and changed the basis for calculating the pension liability and costs. See Note 1 Accounting policies and Note 2 Change in accounting policies for full description. SCHIBSTED ANNUAL REPORT 2013 NOTES / ASA Amounts recognised in profit or loss: 2013 Restated 2012 Current service cost Net interest cost on pension liabilities 5 7 Net pension expense defined benefit plans Pension expense defined contribution plans 3 3 Pension expense new pension plan (AFP) 1 - Net pension expense Pension expense recognised as Personnel expenses Pension expense recognised as Financial expenses 5 7 Amounts recognised in the balance sheet: 2013 Restated 2012 Present value of funded defined benefit obligations Fair value of plan assets (58) (56) Present value (net of plan assets) of funded defined benefit obligations 5 (1) Present value of unfunded defined benefit obligations Pension liabilities Social security tax included in present value of defined benefit obligations Changes in pension liabilities: 2013 Restated 2012 As at Net pension expense Contributions / benefits paid (12) (9) Unrecognised actuarial gain (loss) recognised in equity (incl. tax) 22 (56) As at Liabilities as at is calculated based on the mortality table K2013. Liabilities as at and cost in 2013 was estimated on the mortality tariff K2005. Changes in applied mortality tariff has led to increased liabilities of NOK 22 million as at SCHIBSTED ANNUAL REPORT 2013 NOTES / ASA NOTE 16 CURRENT LIABILITIES Current liabilities consist of: Trade creditors 3 7 Public duties payable Dividends accrued Current liabilities Group company (cash pool system) (note 12) 3,604 - Current liabilities to Group companies 1, Taxes payable (note 8) 1 6 Accrued interest Other current liabilities Total 5, NOTE 17 GUARANTEES AND PROVISIONS OF SECURITY Guarantees for loans and drawing facilities on behalf of Group companies 5,346 4,639 Other guarantees on behalf of Group companies Other guarantees 9 95 Total 5,634 5,000 NOK 0.7 billion of the total of NOK 5.3 billion of guarantees for loans and credit facilities were drawn at the end of At the end of 2012 a total of NOK 0.6 billion was drawn. A guarantee of NOK 226 million to Danske Bank is included in Other guarantees on behalf of Group companies. The amount relates to guarantees for tax withholdings and other guarantees. In addition a guarantee of NOK 5 million to BNP Paribas regarding Multiprensa Y Mas loan, and guarantees regarding subsidiaries unsecured pension liabilities of NOK 40 million related to key management personnel, as well as a guarantee of NOK 8 million to Grensen 5 7 AS regarding office lease, are included. A Parent Company Guarantee (PCG) to Entra Eiendom AS was provided by Schibsted ASA. The guarantee covers security for payment of office lease. Other guarantees include a guarantee of unfunded pension liabilities of NOK 4 million. In addition NOK 2.5 million pledged as security for trading on Nord Pool, NASDAQ OMX Oslo ASA and StatNett SF, as well as Guarantees related to loans to employees in the Group of NOK 2.5 million and are also included. Note 27 Personnel expenses and share-based payment in the consolidated financial statements contains further information regarding loans to members of the Group management. C 80

302 DECLARATION BY THE BOARD OF DIRECTORS AND CEO We confirm that, to the best of our knowledge, the financial statements for the period from 1 January to 31 December 2013 has been prepared in accordance with applicable accounting standards and gives a true and fair view of the Group and the Company s consolidated assets, liabilities, financial position and results of operations, and that the Report of the Board of directors provides a true and fair view of the development and performance of the business and the position of the Group and the Company together with a description of the key risks and uncertainty factors that they are facing. Oslo, 25 March 2014 Schibsted ASA s Board of Directors Ole Jacob Sunde Chairman of the Board Karl-Christian Agerup Marie Ehrling Eva Berneke Christian Ringnes Arnaud de Puyfontaine Eugénie Van Wiechen Gunnar Kagge Anne Lise von der Fehr Jonas Fröberg Rolv Erik Ryssdal CEO SCHIBSTED ANNUAL REPORT 2013 DECLARATION 159 SCHIBSTED ANNUAL REPORT 2013 AUDITOR S REPORT 160 C 81

303 SCHIBSTED ANNUAL REPORT 2013 AUDITOR S REPORT 161 Schibsted ASA Apotekergaten 10 PO Box 490 Sentrum NO-0105 Oslo, Norway Phone Fax schibsted@schibsted.no C 82

304 Appendix D D 1

305 Annual Report Index CEO LETTER... 4 KEY FIGURES... 6 SCHIBSTED MEDIA GROUP... 7 Online rubrikk... 8 Finn.no 10 Blocket.se/Bytbil.com 11 Leboncoin.fr 12 Other Established Phase 13 Investment Phase 14 Schibsted Norge Subscription newspapers 18 VG Media House 21 Schibsted Sverige Aftonbladet 25 Svenska Dagbladet 26 Schibsted Tillväxtmedier 27 Media Houses International Minutes (France) Minutos (Spain) 30 Eesti Meedia Group 31 SOCIAL RESPONSIBILITY CORPORATE GOVERNANCE THE BOARD OF DIRECTORS NOMINATION COMITTE S REPORT SHAREHOLDER INFORMATION DECLARATION OF MANAGEMENT REMUNERATION FINANCIAL STATEMENT NOTES AUDITORS REPORT D 2

306 SCHIBSTED ANNUAL REPORT 2012 CEO LETTER Ambitions in a digital shift As we enter 2013, we focus on what we want to achieve in the coming months and years. Our ambition is to build world-class digital media houses and take more number-one positions for online classifieds. But first, it is natural to take time to reflect on some of the developments in Last year, the pace of digital changes in the media industry really gained momentum. The mobile use of our websites broke new records week by week. The mobile media revolution and the change in consumer habits mean that we must change as well both in the media houses and in online classifieds to meet our readers and users in the best possible way. Unfortunately for many employees in the Group particularly in our print activities this means there will be less need for some areas of expertise and greater need for digital competence that we currently lack. Even though the measures we are taking have been absolutely necessary, I fully understand and respect that this has been a difficult time for many of our employees and managers. BUILDING WORLD- CLASS DIGITAL MEDIA HOUSES The digital transformation will accelerate at an even faster pace. In 2012, VG mobile had more readers than VG print only five years after the launch of the iphone. The growing popularity of ipads and other tablets are accelerating this rapid development. During this phase of transition from print to digital, we are convinced that our media houses will remain relevant and profitable, and that readers will also pay for quality editorial products in the digital future. We therefore need to focus on building digital media houses of worldclass standard! As part of the strategy, we will continue to experiment and find ways to increase user payment. Fædrelandsvennen has made a promising start in this area, and more of our media houses will follow the same path in With the strength of our traffic, we have an enormous opportunity to change the media landscape using live pictures and web TV. Both VGTV and Aftonbladet TV are constantly sold out on advertisement space. We are convinced that live pictures will 4 be an important part of the digital media houses of the future. Schibsted Media Group is establishing the Schibsted Academy of Journalism in The purpose of the academy will be to further enhance journalistic skills in digital platforms in our media houses. Even when we speed up our digital transition, we must also bear in mind that print will still be important for several years to come. Several high-quality print products have recently been launched. They are both innovative and successful for our companies, and this is something we are proud of. STRONG FOCUS ON CLASSIFIEDS Schibsted Classified Media (SCM) will also have high priority. In 2012, we spent over NOK 500 million on building better sites and taking lead positions. In 2013 we will spend even more. With the high competence and dedication we possess in SCM, I believe we are well placed to take attractive, leading and profitable positions. Winning markets is far more important that high traffic volumes holding numbertwo positions in several countries. We will therefore not be present in all markets, but will aim to win the ones we re in. Schibsted is a company known for durability and long-term commitment. Hence, one of our values is: We are here to win! Our established sites promise significant growth, even though they are already large in their home markets. We have a long way to go to reach our full potential. There is a lot more to gain, both when it comes to extending our positions and to creating more value. This is our challenge in 2013 and the coming years. Digital growth opportunities are steadily growing in revenues and importance. A common challenge is to find new cases or areas where Schibsted can establish strong and leading positions. A number of good developments are taking place in Sweden; personal finance is an area where we are doing very well. Expectations in Norway are high for new concepts such as Lendo and E-bok. COMPETENCE AND INNOVATION Is it possible to reach these goals without innovation? Of course not. In fact, we must really live up to our core value We Are Innovative! if we are to achieve what we want. Closely linked to innovation is competence. Schibsted companies are intensifying the search for employees with digital competence across our business areas. We are also concentrating on further developing our existing workforce. ROLV ERIK RYSSDAL CEO SCHIBSTED MEDIA GROUP SCHIBSTED ANNUAL REPORT 2012 CEO LETTER I see our companies taking ambitious, confident steps on the road towards the digital future, and I think Schibsted Media Group has a good foundation as we continue to search for innovation, development and growth. We are in the midst of a massive transformation. That implies both challenges and opportunities. I look forward with confidence to see what we can accomplish in 2013! 5 D 3

307 SCHIBSTED ANNUAL REPORT 2012 KEY FIGURES Key Figures (NOK million) Operating revenues 14,763 14,378 13,768 12,745 Operating expenses (12,769) (12,232) (11,605) (11,184) Income from associated companies (67) Gross operating profit (EBITDA) 2,028 2,185 2,199 1,494 Depreciation and amortisation (479) (505) (588) (662) Impairment loss (548) (191) (110) (161) Other revenues and expenses (257) (50) (236) Operating profit 744 1,439 3, Profit (loss) before taxes 683 1,331 3, Gross operating margin (EBITDA) (%) Equity ratio (%) Net interestbearing debt/ebitda Earnings per share (NOK) Earnings per share - adjusted (NOK) , Diluted earnings per share (NOK) 1,73 6,99 27, Cashflow from operating activities per share (NOK) ONLINE CLASSIFIEDS Operating revenues 3,647 3,198 Gross operating profit (EBITDA) 1, Gross operating margin (EBITDA) (%) SCHIBSTED NORGE MEDIA HOUSE (Norway) Operating revenues 6,485 6,529 Gross operating profit (EBITDA) Gross operating margin (EBITDA) (%) SCHIBSTED SVERIGE MEDIA HOUSE (Sweden) Operating revenues 3,538 3,611 Gross operating profit (EBITDA) Gross operating margin (EBITDA) (%) MEDIA HOUSES INTERNATIONAL Operating revenues 939 1,004 Gross operating profit (EBITDA) Gross operating margin (EBITDA) (%) - 4 DEFINITIONS EBITDA margin Gross operating profit (loss) /Operating revenues Equity ratio Equity / Total assets. Earnings per share Profit (loss) attributable to owners of the parent / Average number of shares outstanding. Diluted earnings per share Profit (loss) attributable to owners of the parent / Average number of shares outstanding (diluted). Cash flow from operating activities per share Cash flow from operating activities/average number of shares outstanding. 6 Schibsted Media Group Schibsted is an international media group with approximately 7,800 employees in 29 countries. Schibsted s strategy comprises two main objectives: further development of our media houses and establishment of online classifieds services. ONLINE CLASSIFIEDS ETABLISHED PHASE Strong media houses represent the core of our activities, and our corporate growth strategy is based on close collaboration between different media channels. Our objective is to develop our business activities so that we can offer our users a wide range of services, irrespective of which channels they choose to use. INVESTMENT PHASE The diversity of Schibsted s product range is closely aligned with our strong tradition of editorial freedom and our ability to adapt to a media market that is constantly undergoing rapid change. SCHIBSTED ANNUAL REPORT 2012 SCHIBSTED MEDIA GROUP MEDIA HOUSES SCHIBSTED NORGE (Aftenposten, Bergens Tidende, Stavanger Aftenblad, Fædrelandsvennen) Schibsted Trykk, Schibsted Forlag) SCHIBSTED SVERIGE (Svenska Dagbladet) (Aftonbladet) MEDIA HOUSES INTERNATIONAL 7 D 4

308 SCHIBSTED ANNUAL REPORT 2012 ONLINE CLASSIFIEDS Online Classifieds profits for Leboncoin.fr, France s leading classifieds website in Italy, Austria and Ireland conditions for the businesses in Spain Asia and Latin America, including a competitive Brazilian market ONLINE CLASSIFIEDS (NOK million) Operating revenues 3,647 3,198 Gross operating profit (EBITDA) 1, Gross operating profit (EBITDA) ex. Investment phase 1,628 1,405 Operating margin (EBITDA) 30 % 31 % Operating margin (EBITDA) ex. Investment phase 46 % 46 % Gross operating profit (EBITDA) Investment phase (530) (412) The growth rate in operating revenues was 14 percent. Online classifieds is an industry in which significant advantages are derived from holding the position of clear market leader. Both buyers and sellers are attracted to the market leader, laying the foundation for high profitability. Schibsted s online classified business is comprised of market-leading positions with commendable margins in Norway, Sweden, France, Spain, Italy, Austria and Ireland. These are what we refer to as businesses in the Established phase. Growth in these markets in 2012 was strong. Key drivers of growth include: increased volumes, expansion into new market segments, price-optimization, growth in the number of users, and product development. Leveraging expertise, technology and experience from the established markets, Schibsted is expanding and establishing online classified services in new regions. We refer to these companies in the Investment phase, currently in Europe, Asia, Latin America and North Africa. Investments in new markets like these were intensified in 2012, and are treated as operating expenses. These investments primarily take the form of marketing initiatives. 8 While competition from both local and international actors is observable, Schibsted achieved favorable results in the form of increased traffic, advertising, and consolidated market positions in The significance of mobile platforms also increased dramatically in Year-end, mobile platforms accounted for approximately 30 percent of the traffic on Finn.no and same trend. In Finn.no, for example, all product development is executed under the motto Mobile first, whereby all new channels are developed for mobile devices before or in parallel with desktop. page views in the span of only one month. In August Finn.no in Norway had more than 960 million page views. SCHIBSTED ANNUAL REPORT 2012 ONLINE CLASSIFIEDS 9 D 5

309 SCHIBSTED ANNUAL REPORT 2012 ONLINE CLASSIFIEDS FINN.NO service marketplaces Organization restructured to effectively manage a multichannel future FINN (NOK million) Operating revenues 1,266 1,135 Gross operating profit (EBITDA) before share of profit (loss) from associated companies Operating margin (EBITDA) 49 % 47 % Finn.no continued its positive trend. Finn.no was established as a freestanding business in 2000, and is today Norway s undisputed leading online marketplace, with core markets in: auto, boat, property, recruitment, generalist, travel, and trades and services. Finn has a very high market share in the conventional classified markets, and is inarguably Norway s most visited site measured in terms of page views (source: TNS Gallup). As the leading marketplace, Finn is exposed to market fluctuations. The trends for Recruitment and Auto in 2012 were moderate. Systematic work price optimization, product development, and growth in new segments have compensated for this. 11 percent. Underlying growth in the Property segment was 12 percent. Finn s Buy and Sell segment achieved a revenue growth of 15 percent, while Travel increased by 11 percent was the year when mobile surfing really took off on Finn.no. The transition rate of traffic from desktop to mobile platforms has been approximately 1 percent per month. Finn.no s mobile service is among the top 10 services in Norway, and was the fastestgrowing service in 2012 (Source: TNS Gallup). The share of users on mobile platforms at year-end was 30 percent, with a record-breaking Christmas week of 37 percent. 10 MEASURES AND CHANGES Significant strengthening of mobile services Expanded interactivity on Finn Recruitment and connections with social networks penger.no established a service for auto insurance, and already had a marketplace for home loans AWARDS BLOCKET.SE/BYTBIL.COM applications BLOCKET/BYT BIL (SEK million) Operating revenues Gross operating profit (EBITDA) before share of profit (loss) from associated companies Operating margin (EBITDA) 54 % 55 % Blocket/Bytbil continues its positive trend. Blocket.se is Sweden s largest market for online buying and selling, and one of Sweden s strongest brands. The site is the uncontested market leader in the generalist and auto segments. In 2011 Blocket launched new verticals for property and recruitment, and during 2012 it has increased its market share significantly in the property segment. The recruitment market is relatively fragmented. Blocket has established a position among the leading participants in this segment. Bytbil.com is an effective marketplace for the motor industry. The general trend in Sweden for buying and selling second-hand items continued, driven, in part, by greater environmental awareness. On the other hand, the level of activity in the auto market was low, a factor which hampered trends for Blocket and Bytbil. In 2012 Blocket implemented measures such as new functionality and new price models to strengthen revenues. SCHIBSTED ANNUAL REPORT 2012 ONLINE CLASSIFIEDS MEASURES AND CHANGES recruitment segments. Increased the number of affiliated estate agents recruitment of highly skilled employees 11 D 6

310 SCHIBSTED ANNUAL REPORT 2012 ONLINE CLASSIFIEDS LEBONCOIN.FR 39.4% of the French population (source: Médiamétrie NetRatings) professional auto market as an important contributor LEBONCOIN (EUR million) Operating revenues Gross operating profit (EBITDA) before share of profit (loss) from associated companies Operating margin (EBITDA) 68 % 70 % In 2012 Leboncoin.fr continued its positive trend. The site s revenue growth was 52 percent. Leboncoin.fr was launched in 2006 as a model of the Swedish success-story, Blocket. se. Since then, Leboncoin.fr has secured its position as the leading online classifieds site in the French market. Schibsted originally owned 50 percent of the site, but acquired the remainder of the shares in Historically, the cornerstone of Leboncoin.fr s business model has been the sale of secondhand items between private individuals, and this continues to be the case. However, as measured in volume, Leboncoin.fr is also France s largest website for cars and real estate, and is forging ahead with strong growth in both the jobs and holiday home rental markets. Leboncoin benefited from taking a long-term view at inception, focusing on the user experience and ultimately creating an unrivaled consumer-to-consumer people s movement in France. The company s current philosophy is to remain free for individual users, and thus, the core of its classifieds business is widely regarded as a public service in France. views. The website also boosts approximately 5 million users per day. The growth originated from a broad base of revenue drivers. The introduction of paid for professional services in the auto segment in second half of 2011 remained a significant contributor to the growth in Leboncoin.fr has taken the position as the largest classifieds site for cars both in the professional and private markets 12 MEASURES AND CHANGES and completely integrated in-house applications OTHER BUSINESSES IN THE ESTABLISHED PHASE Through the Spanish subsidiaries, Anuntis and InfoJobs, Schibsted Media Group has a strong market position in the generalist, recruitment, cars and real estate segments. Schibsted also has established profitable market leading positions in Italy and Austria. In these markets, Schibsted s presence is the result of the greenfield expansion strategy. In Ireland, Schibsted acquired the majority of DoneDeal.ie in DoneDeal. ie is the market leader in generalist and private car listings in Ireland. SPAIN Segundamano.es Segundamano is the leading generalist classified site in Spain, based on the Blocket platform. In 2012 the site focused on product improvements, launched a highly optimized website for mobile devices. InfoJobs.net 2012 has been a demanding year to operate a job classifieds site in Spain, where unemployment is currently twenty-five percent and demand for job advertising remains low. The activity among job seekers, on the other hand, is high, and InfoJobs retains its position as the preferred job portal, both for companies and candidates. Throughout the year InfoJobs maintained focus on both its product and its people in preparation for eventual improvement in economic conditions. In 2012 InfoJobs was awarded Best Workplace in Spain in the Great Place to Work survey. Coches.net Coches.net maintained its position as the leading classified site for cars in Spain in Similar to peer sites in southern Europe, it was impacted by regional economic headwinds, but has proven to be even more resilient than the real estate and jobs sites. Fotocasa.es Fotocasa.es, the Spanish real estate site, was tested this year by the country s economic crisis, and the domestic property market in particular. In spite of a difficult economic environment and competitive forces, Fotocasa had solid traffic growth in 2012, fuelled, in part, by its mobile products. The site is competing neck and neck with its main competitor for the number-one position in the Spanish real estate market. ITALY Subito.it Modeled on the Blocket platform, Subito was launched in 2007 and has emerged as the leading generalist classified site in Italy was both, Subito s first year reporting profitability and as an established site in the SCM portfolio. Over the year the site strengthened both its competitive position and financial performance through continued growth in traffic and advertisements. In terms of volume, Subito is number one in the market for generalist listings and for cars. Subito.it is the eight largest website in Italy overall when it comes to traffic measured by page views (source: Comscore, December 2012). AUSTRIA Willhaben.at The Austrian classified site Willhaben was launched in January 2006, based on the same concept and technology as Finn.no. Willhaben is the clear market leader in the generalist segment, and also has a SCHIBSTED ANNUAL REPORT 2012 ONLINE CLASSIFIEDS number one position in real estate. It also has a strong position in cars. The site is among the top six online sites in Austria in terms of traffic measured by page views (source: Comscore, December 2012). The willhaben.at site is a joint venture between SCM and the Austrian media company, Styria Medien AG. IRELAND DoneDeal.ie (Ireland) In September 2011, Schibsted Classified Media acquired a majority share in DoneDeal, the leading classifieds website in Ireland. DoneDeal, established in 2005, shares many features with the Blocket concept, including the successful build-out of automobile and jobs verticals. It maintains a leading position in Ireland in brand recognition. It is the clear market leader in the generalist segment and the largest site in terms of volume in the private market for cars. 13 D 7

311 SCHIBSTED ANNUAL REPORT 2012 ONLINE CLASSIFIEDS BUSINESSES IN THE INVESTMENT PHASE emerging markets sites in their respective markets Schibsted Media Group maintains its long-term objective of building a diversified portfolio for future growth by establishing online classifieds sites in new and emerging markets. Schibsted has so far done so by establishing new businesses, based mainly on the successful Swedish platform, Blocket.se. Schibsted has more than 13 years of experience in operating online classifieds sites, and has developed sites from greenfields to clear market leaders in several European countries. Competence and experience is leveraged through the expansion strategy. As of 2012, Schibsted Classified Media s businesses in the Investment phase include organizations. In addition, we operate remote-controlled sites in several markets. While the businesses have historically been concentrated in Europe, Schibsted Classified Media has forged a presence in both Latin America and Asia. The Asian investment is a joint venture with Singapore Press Holdings. Brazil, with its large population and accelerating Internet penetration, remains an attractive and competitive market. Bomnegocio.br (based on the Blocket concept) and InfoJobs.com.br are therefore important investments for Schibsted s achievements have strengthened Schibsted s confidence in its strategy and return on the investments. On this basis, Schibsted has signaled greater activity and investment in EUROPE Kapaza.be (Belgium) Kapaza was established in 2003 and was acquired by Schibsted in May It was migrated to the Blocket platform in June Kapaza is one of the two largest players in Belgium s generalist online classifieds market, and holds leading positions in both professional and private auto and real estate segments. In real estate, this is through an exclusive partnership arrangement in the Flanders region. CustoJusto.pt (Portugal) CustoJusto.pt was launched in the final quarter of 2008 and is part of the Blocket family. As of 2011 the site took a leading position in the generalist segment in terms of page views. However, by the second half of 2012 the market witnessed consolidation between the largest and third-largest players. In 2012, CustoJusto was awarded the Portuguese Consumer s Choice Award as the most user-friendly and trustworthy classified site. Jófogás.hu (Hungary) Launched in January 2010, Jofogas is a more recent Blocket clone, and also demonstrated strong growth in 2012.The website has since secured a leading position in the 14 Hungarian market, and this position was acquisition of HaznaltAuto, Hungary s leading automobile classifieds site. Tocmai.ro (Romania) In June 2011, Schibsted acquired a fiftyfive percent share in Tocmai, a classifieds percent share in the site was also acquired later, leaving the remaining balance of five percent with the founder. Since its launch in the summer of 2009 Tocmai has witnessed strong traffic growth and, securing a leading position in the Romanian market, begun monetization in The company s founder remains on the management team and as a shareholder. Tori.fi (Finland) Launched in December 2009, Tori.fi is Finland s version of Blocket. In 2012 the website has witnessed remarkable loyalty amongst its user base, driving unique content growth and an observable people s movement. Active and loyal users have been instrumental in Tori.fi s fast growth in unique content, making Tori.fi a major destination site in Finland. Tutti.ch (Switzerland) Tutti.ch is the Swiss rendering of Blocket, launched in January The Swiss market is characterized by intense competition between various regional and national players. Tutti.ch reported record traffic figures in 2012 as well as growth of organic traffic, primarily through the mobile application and mobile site. Infojobs.it (Italy) Although the Italian labor market and economy have posed fewer headwinds than in Spain, few Italian businesses are advertising to hire new people. The difficult situation in the market aside, Infojobs.it remains popular amongst job seekers and remains the most-visited job site in the Italian market. ASIA AyosDito.ph (Philippines) AyosDito was launched in the summer of 2009 and is now one of two leaders in the classifieds market in the Philippines saw the launch of successful new mobile products, capitalizing on high mobile usage. Berniaga.com (Indonesia) Berniaga was launched in December 2009, and witnessed rapid growth in a dynamic and promising market. Prioritizing both online and offline marketing strategies, Berniaga has succeeded in driving traffic. Like its Asian peers in the Blocket portfolio, the site has also focused on mobile access and usage. Mudah.my (Malaysia) Mudah (meaning simple or practical ) launched in Malaysia in December 2007, and was the first Blocket venture outside Europe. Today Mudah is the largest classifieds website in Malaysia and has already witnessed meaningful traction and organic growth in its automobile vertical, and monetization in new categories, namely jobs. Mudah s recently launched mobile site has witnessed record traffic overnight, and confirms high market demand for classifieds access on-the-go. LATIN AMERICA Bomnegócio.com (Brazil) Schibsted s generalist classified site in Brazil was launched on the Blocket platform in 2011 and has grown rapidly throughout 2012, with the support of TV advertising campaigns and a strong local team. InfoJobs.com.br (Brazil) The Brazilian job site, Infojobs.com.br is built upon the same model as the Spanish and Italian Infojobs sites was a year marked by strong growth, and Infojobs is now established as one of the top job portals in a job advertising market with large potential. Yapo.cl (Chile) 2012 was the first full year with a local team in place in Chile. Yapo.cl, which is a Blocket-model generalist classifieds site, had a very strong year and is already among the most-visited classified sites in Chile. Successful offline advertising has helped fuel Yapo s remarkable growth. AFRICA Bikhir.ma (Morocco) Bikhir, Blocket s clone in Morocco, has grown rapidly since its introduction in June During this time, Bikhir has not only become one of the leading classifieds site in Morocco, but also one of the most visited websites on the Moroccan online market. The operation recently opened headquarters in Casablanca. SCHIBSTED ANNUAL REPORT 2012 ONLINE CLASSIFIEDS 15 D 8

312 SCHIBSTED ANNUAL REPORT 2012 SCHIBSTED NORGE Schibsted Norge SCHIBSTED NORGE MEDIA HOUSE (NOK million) Advertising revenues, print 2,266 2,489 Circulation revenues, print 2,464 2,478 Other revenues, print Online revenues Other revenues/eliminations Operating revenues 6,485 6,529 Gross operating profit (EBITDA) Operating margin (EBITDA) 12% 14% Schibsted Norge was established as a new organizational unit and wholly owned subsidiary in The media houses in Schibsted Norge comprise the subscription newspapers (print, online and mobile) Aftenposten, Bergens Tidende, Stavanger Aftenblad and Fædrelandsvennen, the single-copy newspaper VG (print, online and mobile), the digital investment company Schibsted Vekst, the printing business Schibsted Trykk, the advertising sales company Webtraffic Norge, and the book publisher Schibsted Forlag. The media industry is undergoing major changes. Both users and advertisers are changing their behavior, and the rate of transition to digital products and services is accelerating. Schibsted has been innovating for many years now, and has managed to gain several market-leading digital positions. Its brands have been reinforced in the digital world, and in 2012 Schibsted Norge reached more users than ever before. Schibsted has responded to the changes in the industry in two ways: first, by concentrating on efficiency and cost reductions in the print publications, and second, by increasing the use of resources and the speed of innovation in the digital part of the business. These changes are being implemented to secure strong editorial products that can provide a basis for healthy, profitable development in the digital future. Cost control in the media houses has been good in 2012, and costs in the print-based part of the business have been reduced. In the second half of 2012 a cost savings program measures include staff reductions, centralized advertisement production and customer service, cooperation on support services and sales, editorial cooperation, greater use of design templates and improved planning of production. Most of the cost reductions will be achieved by reducing the number of staff. 16 The digital commitment in the media houses applies across the board. The use of mobile services is increasing dramatically, and all the businesses are concentrating on both product development and advertising sales on mobile. On the mobile platforms in Norway, VG has established itself in a class of its own. Web TV is another area showing strong growth. Work has also been done on establishing a unit for national advertising sales and targeted recruitment of digital expertise. One key challenge is to establish revenue flows from users of editorial products. In 2012 Fædrelandsvennen created a subscription bundle for its print and online newspapers. Subscribers retain the print newspaper in addition to gaining free access to all content in digital format. The launch has proved successful, and the trend in recent years of falling circulation has been turned around. The goal is to launch similar products in the other subscription newspapers in Schibsted Norge. In 2012 Schibsted Vekst has invested in new digital services in accommodation rental and e-books. At year-end, the company launched Lendo, which has proven highly successful in Sweden. This is a price comparison service in connection with taking up private loans. SCHIBSTED ANNUAL REPORT 2012 SCHIBSTED NORGE 17 D 9

313 SCHIBSTED ANNUAL REPORT 2012 SCHIBSTED NORGE SUBSCRIPTION NEWSPAPERS Consolidated commitment to developing digital products SUBSCRIPTION BASED NEWSPAPERS NORWAY (NOK million) Operating revenues 4,109 4,178 - of which print 3,759 3,895 - of which online Gross operating profit (EBITDA) before share of profit (loss) from associated companies - of which print of which online Gross operating margin (EBITDA) 10 % 13 % Advertsing volume (column meters) 130, ,762 Circulation weekdays (copies) *) 399, ,148 *) Aftenposten, Bergens Tidende, Stavanger Aftenblad, Fædrelandsvennen. Four media houses for subscription newspapers are incorporated in Schibsted Norge: Aftenposten, Bergens Tidende, Stavanger Aftenblad and Fædrelandsvennen, all of which also operate their own news websites. 18 MEASURES AND CHANGES and customer service and editorial content digital bundle subscription product. The market response has been positive and the other three subscription based newspapers in Norway will introduce similar products during 2013 Aftenposten AFTENPOSTEN AFTENPOSTEN (NOK million) Operating revenues 2,078 2,138 Gross operating profit (EBITDA) before share of profit (loss) from associated companies Operating margin (EBITDA) 10 % 13 % Aftenposten is Norway s leading subscription-based media house. Its core businesses comprise publication of Aftenposten print newspaper and aftenposten.no online newspaper. BERGENS TIDENDE BERGENS TIDENDE (NOK million) Operating revenues Gross operating profit (EBITDA) before share of profit (loss) from associated companies Operating margin (EBITDA) 12 % 15 % Bergens Tidende is western Norway s leading media house. Its core businesses comprise publication of Bergens Tidende print newspaper and bt.no online newspaper. BT also owns several local newspapers. SCHIBSTED ANNUAL REPORT 2012 SCHIBSTED NORGE MEASURES AND CHANGES Oslo section in the morning edition from 1 January The free newspaper Osloby was launched at the same time. AWARDS Local Aften Sales Organization of the Year A-magasinet s ipad application Tablet Edition of the Year MEASURES AND CHANGES its own feature series New services online: Sprek (fitness service), Hoopla (event service) and Pust (environmental service) December 2012 AWARDS Everyday Life category. Photographer: Eirik Brekke (investigative journalism): Døden på veiene and PST og Global Shield 19 D 10

314 SCHIBSTED ANNUAL REPORT 2012 SCHIBSTED NORGE STAVANGER AFTENBLAD STAVANGER AFTENBLAD (NOK million) Operating revenues Gross operating profit (EBITDA) before share of profit (loss) from associated companies Operating margin (EBITDA) 13 % 15 % Stavanger Aftenblad is south-west Norway s leading media house. Its core business comprises publication of Stavanger Aftenblad print newspaper and Aftenbladet.no online newspaper. FÆDRELANDSVENNEN FÆDRELANDSVENNEN (NOK million) Operating revenues Gross operating profit (EBITDA) before share of 5 27 profit (loss) from associated companies Operating margin (EBITDA) 1 % 7 % Fædrelandsvennen is southern Norway s leading media house. Its core business comprises publication of Fædrelandsvennen print newspaper and fvn.no online newspaper. 20 MEASURES AND CHANGES from 1 January 2013 AWARDS ( En nasjon i sorg ) MEASURES AND CHANGES online and print editions AWARDS Local News Website of the Year VG MEDIA HOUSE Total advertising revenues were up compared to 2011 payment strategies and organizational changes SINGLE COPY NEWSPAPER VG (NOK million) Operating revenues 1,920 1,906 - of which print 1,429 1,498 - of which online of which other Gross operating profit (EBITDA) before share of from associated companies - of which print of which online of which other 4 8 Operating margin (EBITDA) 16 % 16 % Advertsing volume (column meters) 10,713 11,529 Circulation weekdays (copies) 188, ,588 VG media house publishes VG, Norway s undisputed leading single-copy newspaper. The online edition, VG.no, is the biggest online news site in Norway and one of the biggest websites in Norway irrespective of category. Total operating revenues in 2012 amounted to NOK 1,920 million. Revenues from digital products increased by 26 percent, and were driven by positive trends in mobile advertisements and web TV. SCHIBSTED ANNUAL REPORT 2012 SCHIBSTED NORGE MEASURES AND CHANGES was introduced reporting news events in real time AWARDS action (Helge Mikalsen); 1st prize: Mennesker (Terje Bringedal); 1st prize: Video Nyhet (VGTV) National Website of the Year Web TV Story of the Year 21 D 11

315 SCHIBSTED ANNUAL REPORT 2012 SCHIBSTED NORGE OTHER BUSINESSES SCHIBSTED VEKST Schibsted Vekst invests in companies with potential of becoming market leaders, with a particular focus on digital marketplaces. In 2012 the company s portfolio was strengthened by the launch of Lendo, a new marketplace for consumer loans in Norway, Husleie.no, a service for administrating tenancy agreements, and Ebok.no, a new digital marketplace for e-books. Schibsted Sverige has previously successfully launched Lendo. Ebok.no will be relaunched in Schibsted Vekst now has a presence in the following markets: consumer loans, rental of private accommodation, dating, e-books, and self-service advertising. SCHIBSTED TRYKK Schibsted Trykk is an umbrella company for Schibsted s five printing houses in Oslo, Bergen (two), Stavanger and Kristiansand. Falling volumes and circulation figures characterize the print newspapers, and the overall market in Schibsted Trykk s business area has declined. Schibsted Trykk has nonetheless shown growth compared to 2011 and increased its market shares. A cooperation agreement between Schibsted Trykk and Polaris Trykk ensures nationwide solutions and shorter transport routes for customers. SCHIBSTED FORLAG Schibsted Forlag is Norway s fourth-largest publishing house. It has consolidated its commitment to the digital market, and most books are now also released in digital format. Together with Schibsted Vekst, Schibsted Forlag has acquired Ebok.no. The reason for this acquisition is to compete in the fast-growing digital book market. 22 SCHIBSTED ANNUAL REPORT 2012 SCHIBSTED SVERIGE 23 D 12

316 SCHIBSTED ANNUAL REPORT 2012 SCHIBSTED SVERIGE Schibsted Sverige media sector was consolidated. Aftonbladet s advertising revenues for online higher than for print. SCHIBSTED SVERIGE MEDIA HOUSE (NOK million) Advertising revenues, print Circulation revenues, print 1,469 1,592 Other revenues, print Online revenues 1,384 1,215 Other revenues (111) (92) Operating revenues 3,538 3,611 Gross operating profit (EBITDA) Operating margin (EBITDA) 12% 12% Schibsted Sverige comprises three key business areas: Aftonbladet (single-copy print newspaper and online newspaper), Svenska Dagbladet (morning print newspaper and companies). The growth rate in operating revenues was minus 2 percent. Cost trends have been positive since the profitability measures that were announced in the autumn of 2011 have taken full effect in Schibsted Sverige is in the middle of a structural and economic change in print news press, combined with a focus on growing the digital business revenues, both from online news media and growth companies. In 2012 the Swedish market was also affected by a modest macroeconomic development. A strong online revenue growth is made possible by Schibsted Sverige s leading market position in online traffic. Schibsted Sverige has earned top rankings in terms of average weekly traffic in web, mobile and apps throughout the year. Schibsted Sverige has as much digital traffic from mobile phones alone as the closest competitor has had from all its channels combined (web, apps and mobile). During 2012 Schibsted Sverige has worked to strengthen the platform for future digital growth. Internal resources have been focused on implementing a group-wide online advertising system, launching a centralized sales unit (Schibsted Sales), enhancing the strategic position in web TV, and continuing to invest in the Personal Finance area. 24 AFTONBLADET advertising revenues in online media than in print media. The organization was restructured to give priority to digital platforms. Heavy commitment to competence development of all employees. AFTONBLADET (SEK million) Operating revenues 2,168 2,239 - of which print newspaper 1,621 1,776 - of which online newspaper Gross operating profit (EBITDA) before share of profit (loss) from associated companies - of which print newspaper of which online newspaper Operating margin (EBITDA) 14 % 14 % Advertising volume (column meters) 17,725 18,328 Aftonbladet is Sweden s leading news media in all channels: print, web, mobile and web TV. Revenues from online products increased by 18 percent, while revenues from print decreased by 9 percent. The volume of print advertising was reduced by 3 percent. Aftonbladet continues to lead the way in the media industry s structural reorganization, and is working hard to address readers changing media habits. Throughout 2012 Aftonbladet has retained its position as market leader on all platforms: print, web, mobile and web TV. The total reach of Aftonbladet s products is increased. The trend in mobile is rapidly increasing. Aftonbladet s mobile website is Sweden s second-biggest news website, second only to Aftonbladet s own website, aftonbladet.se. (Source: Orvesto Konsument, KIA Index.) SCHIBSTED ANNUAL REPORT 2012 SCHIBSTED SVERIGE MEASURES AND CHANGES digital payment service Plus, which at year-end had aprox. 160,000 subscribers also provides the possibility to interact with readers media product on web TV, blog, and a magazine for a young, urban, female target group food enthusiasts AWARDS the Year: Carina Bergfeldt 25 D 13

317 SCHIBSTED ANNUAL REPORT 2012 SCHIBSTED SVERIGE SVENSKA DAGBLADET service Sweden to digital production SVENSKA DAGBLADET (SEK million) Operating revenues 1,087 1,148 - of which print newspaper 1,020 1,102 - of which online newspaper Gross operating profit (EBITDA) before share of from associated companies - of which print newspaper of which online newspaper 17 8 Operating margin (EBITDA) 5 % 8 % Advertising volume (column meters) 22,780 24,796 Circulation weekdays (copies) 174, ,600 Svenska Dagbladet is a subscription-based, national newspaper with a particularly strong position in the Stockholm region. was reduces by 8 percent, while Svenska Dagbladet increased its volume shares in the advertising market. Svenska Dagbladet implemented several measures to adapt to the new media world. This included the launch of a new vision based on extensive branding work in which all the employees were involved. 26 MEASURES AND CHANGES content online Consolidated position in the homes market SvD Insikt, a social affairs magazine for ipad, was closed because of poor profitability AWARDS of the Year: Olle Zachrison, Carolina Neurath, Jan Almgren, Mark Malmström, Peter Grensund and Ola Henriksson Grand Journalism Award: Inger Atterstam Jan Almgren, Jonas Fröberg and Ola Wong Year): Olle Zachrison, Carolina Neurath, Jan Almgren, Mark Malmström, Peter Grensund and Ola Henriksson SCHIBSTED TILLVÄXTMEDIER Small and medium-sized enterprises represent the new focus area SCHIBSTED TILLVÄXTMEDIER (SEK million) Operating revenues 1, of which Hitta Gross operating profit (EBITDA) before share of profit (loss) from associated companies Operating margin (EBITDA) 12 % 14 % Schibsted Tillväxtmedier owns and invests in Swedish internet-based growth companies. The brands behind the company s digital marketplaces and consumer services have very strong positions, and the services generate heavy traffic, both alone and through broad cooperation between Schibsted-owned websites. The largest services are: Hitta (search engine), Lendo (consumer loans) and Prisjakt (price comparison). Operating revenues increased by 11 percent. All the companies have shown positive trends in the Personal Finance segment. During the year the companies have intensified work on creating synergies in both product development and sales. This segment currently contains services for consumer loans, insurance, energy, and mobile services, among others. Mobilio.se, a service for mobile phones and mobile subscriptions, was launched in their need for digital marketplaces and recruitment of new customers. Hitta.se will be at the core of this area of commitment. SCHIBSTED ANNUAL REPORT 2012 SCHIBSTED SVERIGE MEASURES AND CHANGES digital marketplaces site for buyers and sellers of invoices 27 D 14

318 SCHIBSTED ANNUAL REPORT 2012 MEDIA HOUSES INTERNATIONAL Media Houses International Challenging situation for the free newspapers in France and Spain of local editions MEDIA HOUSES INTERNATIONAL (NOK million) Operating revenues 939 1,004 Gross operating profit (EBITDA) (3) 38 Operating margin (EBITDA) (0%) 4% In 2012 Schibsted s media houses outside Norway and Sweden were affected by both structural changes and the financial unrest in Europe. Extensive measures were made to both products and costs to address these challenges, especially in Spain. Operating revenues decreased by 6.5 percent. Media Houses International comprises the free newspapers that go under the name of 20 Minutos in Spain and 20 Minutes in France, and Eesti Meedia Group, comprising businesses in the Baltics. Operating revenues decreased by 7 percent MINUTES (FRANCE) 20 MINUTES (France) (EUR million) Operating revenues Gross operating profit (EBITDA) Operating margin (EBITDA) 3% 4% In 2012 the 20 Minutes newspaper was launched in eight new cities and is now distributed every month; an improvement of 7 percent on the previous period (July June 2012 versus Jan-Dec 2011). Schibsted s ownership interest is 50 percent. Advertising revenues in France in 2012 generally fell, by 8 percent for all the newspapers New apps were launched, which resulted in a notable increase in readership on mobile platforms. The number of page views on mobile was higher than on desktops. SCHIBSTED ANNUAL REPORT 2012 MEDIA HOUSES INTERNATIONAL MEASURES AND CHANGES finances. These included recruitment freezes and a focus on distribution costs and paper prices 29 D 15

319 SCHIBSTED ANNUAL REPORT 2012 MEDIA HOUSES INTERNATIONAL 20 MINUTOS (SPAIN) The only big free newspaper in Spain; two competitors were closed 20 MINUTOS (Spain) (EUR million) Operating revenues Gross operating profit (EBITDA) (6.9) (3.6) Operating margin (EBITDA) (40%) (16%) 20 Minutos is Spain s second-most-read general newspaper, with a daily readership of 2.1 million on weekdays. The newspaper is published in eight local editions and covers Spain s largest cities. The weak Spanish newspaper market has made it necessary to implement significant cost reductions. 20 Minutos is a part of Schibsted s ongoing program of change. One measure was to close seven local editions. The numbers of copies and readers were consequently reduced. The newspaper has therefore gone from being Spain s most-read to second-most-read newspaper. At the same time, the biggest competitors among the free newspapers closed in MEASURES AND CHANGES was launched in July 2012 and USA were launched in December 2012 EESTI MEEDIA GROUP online newspapers and print editions EESTI MEEDIA (EUR million) Operating revenues Gross operating profit (EBITDA) Operating margin (EBITDA) 8% 10% Schibsted owns several companies in Estonia, Latvia and Lithuania. The companies are organized through the holding company Eesti Meedia Group, and comprise Estonia s biggest TV company, with Kanal 2, Kanal 11 and Kanal 12, the national newspapers Postimees and Õhtuleht and the Kroonpress printing house, among others. This market is also showing notable growth in the use of mobile platforms. Ühinenud Ajalehed is the leading local media company, with five regional newspapers, and in 2012 it entered the magazine market by launching two free newspapers. The Kroonpress printing house is implementing environmental measures. On Greenlineprint.com, which was launched at the end of 2012, a calculator for calculating emission values for products was introduced. Electricity is for the most part supplied from renewable resources. SCHIBSTED ANNUAL REPORT 2012 MEDIA HOUSES INTERNATIONAL MEASURES AND CHANGES newspaper Linnaleht and new portal payment for online use Baltics 31 D 16

320 SCHIBSTED ANNUAL REPORT 2012 SOCIAL RESPONSIBILITY Social responsibility in Schibsted Media Group Schibsted Media Group s mission is Empowering people in their daily life. We empower people with news and opinions, by providing transparent and secure marketplaces and by defending freedom of the press and editorial integrity. Throughout our history we have been driven by a desire to challenge conventions and think in new directions. We consider ourselves as a defining force within our industry and as such our vision is Shaping the media of tomorrow. Today. The values that shall support our mission and vision are: Schibsted Media Group s social responsibility is closely linked to our mission, vision and values. As such, acting socially responsible is connected to our daily business activities, our stakeholders and our responsibility for people, environment and society that are affected by our business. Social responsibility in Schibsted Media Group is defined as the responsibility of our entities for their impacts on society. The aim of our social responsibility is to maximize the creation of shared value for our shareholders, for our other stakeholders and the society at large in addition to identify, prevent and mitigate our possible adverse impacts on our stakeholders and the society at large. In 2011 Schibsted became a member of the Nordic Media CSR Forum with the aim of setting the stage for corporate social responsibility in the media sector. For more information and the Forum s activity report for 2012 please see Schibsted Media Group s social responsibility also encompasses important principles relating to human rights, employee rights, environment and anti-corruption. Schibsted Media Group has been a member of the UN Global Compact since 2009 and continues to support and promote the ten principles of the Global Compact. Schibsted is also committed to comply with the OECD s guidelines for multi-national companies, which contain voluntary principles covering a variety of issues affecting companies social responsibilities. Our social responsibility agenda is designed around five main areas. These are further described in the following. RESPONSIBLE BUSINESS Trustworthiness and quality are essentials for a media group our users must be able to trust our news and our products. We believe this contribute to empowering people in their daily life and thereby building more transparent societies. 32 Editorial freedom and editorial governance One of Schibsted Media Group s foremost responsibilities is to ensure editorial freedom and the right to freedom of speech. Free media play a leading role in underpinning strong, viable democracies. Schibsted s Articles of Association states that the shareholders shall enable Schibsted to operate its information business in such a way that editorial freedom and integrity are fully ensured. Editors Forum The Schibsted Editors Forum is a watchdog, guarding the principles of publishing within Schibsted Media Group. Editors editors with responsibility for Schibsted Media Group s media houses, print and digital products. They meet twice a year to discuss common challenges and share experiences, best practices and case studies from the world of publishing. The aim is to increase quality and standards of journalism within the Group. Editorial governance In 2011 the Schibsted editors forum adopted a framework for editorial governance applicable for the group s publishing businesses. The framework enshrines the principle of editorial freedom and so explicitly defines it for the benefit of Schibsted s publishing companies in countries where this principle is not embodied in local law. freedom of opinion and defend the democratic values of society, with full respect of human rights, equality and diversity full responsibility for all content, including the advertising, and shall secure that media act with integrity in every respect pendent role, and is entitled to independent leadership of the editorial department and editorial work and full freedom to shape editorial opinions within the frame of fundamental ideas of the medium of journalism that makes it clear to the SCHIBSTED ANNUAL REPORT 2012 SOCIAL RESPONSIBILITY reader what is reporting of information and facts, and what is the opinion of the medium readers what is independent editorial content and what is commercial promotion on editorial quality and credibility, and will establish ethical and journalistic standards according to this goal. The ethical guidelines should cover research as well as publishing freedom of speech, the freedom of the press and the principle of access to official documents as well as the free flow of information and free access to the sources important task of the press to protect individuals and groups against injustice and uncover matters critical to society Annual Editorial Accounts Schibsted s publishing businesses prepare annual editorial accounts and their reports are available on the group s website. The aim of the annual editorial reports is to increase transparency in our editorial activities. In the report, the editors-in-chief present a yearly State of the Union article, describing editorial goals, challenges and results during the past year. Each editor-in-chief presents the report once a year to the board of each media house. The report will not be regarded as a subject for the board decision, due to the principle of editorial independence. The editor-in-chief may however answer questions about matters of interest regarding publishing and journalism. The Group s annual editorial report will likewise be presented to the Group Board once a year by the president of Schibsted s Editors Forum. Please see for the annual editorial reports. 33 D 17

321 SCHIBSTED ANNUAL REPORT 2012 SOCIAL RESPONSIBILITY The changing media landscape During 2012, the use of mobile platforms for consumption of news exploded. Our media houses will lead the way in modern media consumption and we put the audience at the heart of everything we do. All our media houses have during 2012 focused on digital development and have reviewed their product portfolio to ensure the relevance to the audience. Our media houses provide content through multiple channels giving everyone an opportunity to use media. The strength of the online news reporting is in providing breaking news that evolves as the day goes on. On the web and mobile platforms, journalistic decisions must be made in a fraction of the time available in traditional media; however the quality and credibility of the content cannot be jeopardized. Even if the media landscape is changing, the role of the media is still the same. By illuminating and facilitating discussions of critical aspects in the society, media is moving the society forward. One of the most powerful strengths of the media is the ability to effect change. With new digital platforms, Schibsted believes that the 34 work of our media houses may be performed even better. The digital revolution gives new opportunities for live reporting and involving our readers in the news coverage. The quality of information published is higher due to more diverse techniques for storytelling, e.g. through web TV. Mobile platforms also makes it easier for readers to give feedback to the media houses and our journalists are even more conscious regarding quality of content and transparency as the journalists themselves may be part of the online debate. Digital journalism involves readers and users in new ways. As an example, in 2012 VG published an article online where the Norwegians that had their life ruined due to wrong medical treatment or failure in National Health Service. In the online article, VG invited their readers to publish their own stories related to this topic. VG s readers told approximately 100 stories and even if these stories are subjective, the sum of stories tells something about a part of the National Health Service that is important to illuminate. In all our media houses, articles published on online platforms are open for comments from readers. Most of our media houses require people to be logged in through e.g. Facebook, Twitter, Google to be able to comment on articles. This is to prevent harassment, threats and hateful comments. The media houses have moderators monitoring the debates and removing comments considered as inappropriate. In addition to traditional news reporting, our media houses have also created several new meeting places for our users places where they can share knowledge and experiences with other users. Classifieds sites Schibsted Media Group is a large player in the classifieds market. Our classifieds sites are marketplaces that enable transactions of goods between individuals. In several of our markets, the classifieds sites have become a people s movement where secure and simple solutions creates new possibilities for the consumers. In our mature markets, the users add value to the marketplace through inventing new ways of trading. The marketplaces are simple, practical and right next door bringing a personal relationship between buyer and seller. Our online classifieds sites are also considered as portals for consumer s retrieval of information. Consumers are using our marketplaces to search for relevant information to use in their daily life. Our marketplaces empower people to help each other in useful ways and thus fit perfectly with the Group s mission. As an example, in 2012 approximately 300,000 new job ads were posted on our job classifieds site in Spain in With the high unemployment rate in Spain, this service contributes to helping people find a job in a tough job market. All the online marketplaces operate under a set of rules to prevent both fraud and advertisement of illegal and unethical goods. Manual and automatic ad reviewing processes are in place locally to ensure that weapons, drugs and other illegal or counterfeit items are not advertised on the sites. All sites also have a zero-tolerance policy against pornography and prostitution. Digital identification In 2011 Schibsted Payment was formed to establish a single-sign-on and payment solution for the Schibsted companies. SPiD is the primary product of Schibsted Payment delivering an easy and secure way to log in and pay across many services. The goal is to make digital identification and payment safe and easy for users and service/content providers. Transparency in consumer services Schibsted Media Group has launched new services that contribute to increased transparency in the fields of consumer services. The services are easy to use and an efficient way for consumers to compare different service providers. An example is Lendo a marketplace for consumer loans in Sweden and Norway. When a customer submits an application for a consumer loan through Lendo, the consumer will receive offers from several banks making it easier to compare the terms and then choose the bank with the most favorable terms. In 2012, Lendo Sweden and Sweden s central bank ( Riksbanken ) started a joint study to better understand how an online marketplace for consumer loans is affecting the competition within the industry for consumer loans. The study will also look into how increased transparency in such a market affects the household s borrowing costs, availability of credit and the behavior of the banks and the households. Penger.no is another example of a service increasing transparency. The free online service will make it easier for Norwegians to find a mortgage loan online. This is the first time the Norwegian bank community is gathered on one website. SCHIBSTED ANNUAL REPORT 2012 SOCIAL RESPONSIBILITY Consumers can obtain offers from up to three banks at the same time. GOVERNANCE Good corporate governance is an important premise for achieving our mission and vision. Schibsted Media Group emphasizes openness, transparency, accountability, equal treatment and a long-term perspective in our way of doing business. For more information on governance in Schibsted Media Group please refer to the statement of corporate governance. The Tinius Trust The Tinius Trust was founded by Schibsted s previous largest owner, Tinius Nagell-Erichsen. The ownership must uphold the freedom and independence of Schibsted s media services, said Tinius Nagell-Erichsen. His justification for setting up the trust was to consolidate his ownership interest in the Schibsted group so that the ownership can create confidence that Schibsted s newspapers and other media outlets would always be able to maintain their position as free, independent outlets. Tinius wanted to use his influence to protect Schibsted as a group with free and independent editors, characterized by trustworthiness and quality in conjunction with a long-term and healthy financial development. He also wanted to ensure that the group s publications would uphold values such as freedom of religion, tolerance, human rights and democratic principles. This is also embedded in the objectives of the trust set out in its regulations. More information about the Tinius Trust can be found at 35 D 18

322 SCHIBSTED ANNUAL REPORT 2012 SOCIAL RESPONSIBILITY ENVIRONMENT Schibsted Media Group aims to ensure that protecting the environment becomes an integral part of daily activities across the group. Classifieds Schibsted Media Group is a large player in the market for re-use of products through our online classifieds sites. Our marketplaces extend the economic life cycle of a range of products and contribute to reducing the need for manufacturing new products, thus alleviating the pressure on critical resources. In 2012 approximately 200 million ads were posted on our largest classifieds sites (Blocket, FINN, Leboncoin, Subito, Willhaben, Segundamano), an increase of more than 20 percent from the year before. Our largest classified sites each facilitate the exchange of millions of used items per year, at a value of several billion Euros. In 2012, Blocket started an environmental study together with the Swedish Environmental Research Institute (IVL). The aim of the study is to look into Blockets environmental effects. The study is to be completed during Media houses printing plants All companies in Schibsted Media Group operate within the scope of applicable environmental regulations. Schibsted currently owns six printing plants: one in Oslo, two in Bergen, one in Stavanger, one in Kristiansand and one in Estonia. Our newspaper production processes are digital all the way to the printers. The printing business is essentially a relatively clean industry. If polluting chemicals are used, the processes take place in closed systems. Source separation processes have been 36 introduced for almost every type of waste. Schibsted Norge Trykk in Oslo now separates as much as 99 percent of its waste. Special waste is collected by approved transport companies and the general volume of waste has been significantly reduced. Waste paper, cardboard, waste products from paper reels and undistributed newspapers account for as much as 96 percent of the total waste volume. The printing plant in Oslo is member of Grønt Punkt, a waste recovery and recycling company, and pays an environmental fee that ensures proper treatment of all packaging and the supervision of external suppliers. Normal operations do not involve any danger of harmful emissions from the printing plants. All the printing plants Schibsted owns in Norway are licensed under the Nordic Eco label scheme to use the Swan eco label on all printed matter produced. The Swan eco label is the best known and most frequently used eco-labeling scheme in the Nordic countries. In Sweden newspapers print the main part of their circulation with the printing supplier V-TAB. V-TAB operates a system for environmental and quality control and most of their printing plants are certified under to all of their printing plants have been granted licenses by the Nordic Eco label in Sweden to use the Swan Eco label on all the print items they produce. In Spain and France, the newspapers print their circulation with different external printing suppliers. Most of the printing plants are certified under recognized environmental standards. Schibsted s newspaper companies in Norway, Sweden, Spain and France arrange for the collection of unsold/uncollected newspapers for recycling. Property Schibstedhuset (Kungsbrohuset) in central Stockholm, is one of the world s most advanced office buildings so far as energy efficient solutions and materials are concerned. Energy consumption is a third of what is usual for equivalent buildings. Surplus energy is obtained by recovering excess body heat produced by the 200,000 commuters that pass by the Central Railway Station every day. Cooling comes from Lake Klara (a canal in central Stockholm). Carbon disclosure project Every year, Schibsted performs a survey of emissions of greenhouse gases in our main subsidiaries. The result of these surveys forms the basis of reporting to the Carbon Disclosure Project. For more information on the Carbon Disclosure Project, please refer to HUMAN RIGHTS/- LABOR RIGHTS Schibsted supports and values international human rights principles and is working to ensure that the group is not involved in any breaches of human rights. An important element in this is the right to freedom of expression. Schibsted Media Group recognizes our employee s right to freedom of association and collective negotiations, and facilitates election of employee representatives. Schibsted also recognizes the International Labor Organization s fundamental conventions and national legislation on labor standards. Schibsted has a zero tolerance of forced labor and child labor across the Group and managing this risk is on our agenda. The companies working environment committees are continuously striving to facilitate a good working environment and thus minimize the chances of employee discrimination in the workplace. Employee representations Employee representations are safeguarded in several ways. The main arenas for employee representation are listed below. For further information, please refer to 1. Employee representatives on the Boardas of today, the Board consists of 10 members where of three are employee representatives. The employee-elected representatives are elected for two-year terms. 2. Group employee representatives cur- employee representatives. Their task is to safeguard the interests of all employees in relation to Schibsted in cases dealt with at Group level. 3. Schibsted European Work Council (EWC) -the EWC is intended to be a forum for information, dialogue and consultation between employees and the group manage- representatives elected by and from the employees. The EWC meets twice a year. Equal opportunities Schibsted is a knowledge enterprise that is reliant on talented employees. Principles related to equal opportunities are stated in our Code of Conduct. We will ensure that employment related decisions are based on relevant qualifications; merit, performance and other job-related factors and we will not tolerate discrimination relating to employment. As an example, Schibsted has a clear objective to provide equal development opportunities for both men and women. We strive to achieve a good gender balance when recruiting candidates for our competence and trainee programs. The Group Management Team has implemented actions to further enhance gender equality. All business units within Schibsted must report on gender equality when hiring or promoting to management positions. Each company and departments is carefully following their employee surveys and implementing actions based on those results. Code of Conduct Schibsted Media Group has prepared a common Code of Conduct that shall apply to all employees within Schibsted Media Group, including entities in which we own Schibsted Media Group does not exercise such control, the board members appointed by Schibsted shall promote the main principles outlined in the Code of Conduct. The Code of Conduct shall serve as a guide for each individual employee s daily business interactions and clarifies the Group s standard for proper behavior on a number of subjects. The Code of Conduct clearly supports the Group s value of integrity. For further information, please refer to Schibsted Media Group s Code of Conduct. Whistle blowing Schibsted Media Group promotes a culture where discussing compliance issues are an integrated part of business and where employees should feel comfortable raising SCHIBSTED ANNUAL REPORT 2012 SOCIAL RESPONSIBILITY compliance issues with their colleagues and superiors. There are a number of channels available for reporting of compliance concerns, one of them being the Schibsted Media Group Speak-up system. The Speak-up system is a last resort for reporting compliance issues and offers anonymity for the reporter but also the possibility of having a dialogue with an anonymous reporter. Reports may be made in the reporter s native language. The handling of reported compliance concerns through the speak-up system is outsourced. For further information, please refer to Schibsted Media Group s Code of Conduct. ANTI-CORRUPTION Schibsted Media Group has a zero tolerance for corruption. Our Code of Conduct covers principles related to business gifts and entertainment, aiming to provide our employees, leaders and board members with guidance on this important subject. Please refer to our Code of Conduct for more information on our principles regarding corruption and how to report compliance issues. In 2011 Schibsted Media Group became a member of Transparency International. Transparency International raises awareness of the damaging effects of corruption and works with partners in government, business and civil society to develop and implement effective measures to handle corruption. 37 D 19

323 SCHIBSTED ANNUAL REPORT 2012 SOCIAL RESPONSIBILITY MAIN ACHIEVEMENTS ON SOCIAL RESPONSIBILITY IN 2012 The Schibsted Media Group Annual Editorial Report In April 2012 Schibsted Media Group presented its first annual editorial report. The report focuses on the standards of journalism throughout the Schibsted Media Houses across Europe. The aim of the report is to increase transparency in our editorial activities. We firmly believe that increased transparency in journalism and journalistic methods will give strength to credibility and public trust in media. In the Group report, the editors-in-chief will present a yearly State of the Union article, describing editorial goals, challenges and results during the past year. For more information please refer to the Annual Editorial Report The Schibsted Media Group Code of Conduct One of Schibsted Media Group s core values is integrity. Integrity has always been a vital part of how we do business as it is decisive for maintaining the trust on which a media organization depends. Schibsted Media Group has for many years demonstrated and continues to demonstrate that we uphold high standards of integrity; however we must always ensure that we stay alert and continuously focus on delivering results with integrity. We shall continue and strengthen our efforts in being recognized as a media group with a strong commitment to operating with integrity. In December 2011 the Group Board passed the Schibsted Media Group Code 38 of Conduct. In 2012 the focus has been on implementing the Code of Conduct throughout the Group. Through the way we interact with each other, our customers, suppliers and users, we are building Schibsted Media Group s reputation as a media group with high integrity. Schibsted Media Group s Code of Conduct shall serve as a guide for each individual employee s daily business interactions and clarifies the Group s standard for proper behavior. In connection with the implementation of the Code of Conduct, we have also implemented a new reporting channel for raising compliance concerns. The Schibsted Speak Up is a web and telephone based tool for reporting compliance concerns in Schibsted Media Group. The reporter may be anonymous. The handling of reports reported through Schibsted Speak Up is outsourced. A SELECTION OF THE ACHIEVEMENTS OF OUR SUBSIDIARIES IN minutos launching El diari amic, a charity periodical Around New Year 2012, 20 minutos in Spain launched El diari amic a periodic publication dedicated to social solidarity institutions in Catalonia. The publication is inserted into the newspaper every 15 days. The volunteers from the NGOs make the content, explaining their job. The publication is organized and supervised by 20 minutos for choosing to run ads in this charity the advertising revenues from the charity publication to social projects. VG awarded for involving readers online After the 22 July 2011 terrorist attacks in Norway, VG launched a campaign inviting the public to hold hands online. The campaign invited members of the public to write their name and nationality below a small figure which would then hold hands with others who had signed their names immediately before and after. The people from over 200 countries held hands via the website. In 2012, VG was awarded the XMA Cross Media Award in recognition of the way it involved readers after 22 July. The Hold Hands campaign was highlighted as a good example of a successful initiative. Aftenposten launching Aftenposten junior Aftenposten Junior, Norway s only newspaper for kids, was launched in ,500 subscriptions were already sold a week before the first issue was out. In fact, kids themselves have been vital in putting together the newspaper. A group of children evaluated the dummy, commented on the layout, content, size of the photographs and colors and, last but not least, helped choose the name. All together more than 200 children have in one way or another made themselves heard in regard to the newspaper and what that includes news, sports, science, scientific experiments, items about animals, a question and answer section, food and comics. Compared to most newspapers, the font is larger, there are more photographs, the use of color is more extensive and the paper is thicker all according to the children s specifications. In January 2013, the Norwegian Refugee Council honored Aftenposten junior with the Perspektiv Award for NRC s Secretary General Elisabeth Rasmusson gave the following justification for the award: Aftenposten Junior gives children key insights into global issues in an educational way. Conveying this kind of material in the right way is a challenge, and we are pleased to see that Aftenposten has taken it on. FINN.no Norway s best place to work For the second consecutive year the Great Place to Work Institute has declared FINN. no to be Norway s best workplace in the Best Large Workplaces category. The results of the survey show that FINN has improved on all the main parameters since last year. Infojobs Spain s best place to work In the category 100 to 250 employees, Infojobs has been ranked as Spain s best workplace by the Great Place to Work Institute. For the 6th consecutive year Infojobs.net is on the list of the 50 best places to work in Spain. This year they re very proud to be chosen as the best. Happiness, transparency, respect, involvement and motivation form the basis of the workday and work environment of the employees of Infojobs. 20minutos.es - the first news site in Spanish to launch a free accessibility service for people with disabilities For many people with physical or sensory disabilities reading digital information on a computer can include troublesome obstacles, such as visualizing the information, using the keyboard or moving the mouse. In 2012 Schibsted Media Group s Spanish online news site launched its accessibility service. 20minutes.es is the first online news site in Spanish that provides a free real-time service that resolves many of the problems that disabled people encounter when navigating the Internet. Only in Spain an estimated 3,8 million people have some kind of disability. Now, 20minutes.es is accessible to everybody. Thanks to the intelligent interface, and without installing additional software or hardware, disabled users of 20minutos.es can choose between three types of navigation: SCHIBSTED ANNUAL REPORT 2012 SOCIAL RESPONSIBILITY visual impairments mobility, who can navigate by the use of their voice problems, who can read the web by the use of breath or sounds Leboncoin recognized as a people s movement in France In January 2013, the renowned French newspaper, Le Monde, published an extensive article on the tremendous success of Schibsted s French classifieds site Leboncoin. After only 6 years, Leboncoin has become the second most popular website in France measured in time spent on site. It has more than 17 million unique visitors every month, and more than 3.6 million people visit the site every day. Seven new ads are added every second, currently totaling 21 million ads altogether. Leboncoin has not only become the first site in terms of sales of physical items: It is also a tool that has allowed citizens to invent new consumer and exchange practices. In the middle of an economic recession, many people have found new ways of earning their income by the help of Leboncoin. The media scientist Jacques Le Goff notes that: Leboncoin is the marketplace of the 21st century. It is an historic change and brings a personal relationship between buyer and seller. Thus, it empowers people to help each other in useful ways. Awards Schibsted s media houses have in 2012 received several awards. For a full listing of received awards, please refer to the 2012 Annual Editorial Accounts to be published in April D 20

324 SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE Statement on Corporate Governance Good corporate governance is an important prerequisite for achieving Schibsted Media Group s vision and implementing our strategy. Sound corporate governance contributes to the Group s long term value creation at the same time as the Group s resources are used in an efficient and sustainable manner. Corporate Governance defines the business framework that all activities in the Group should operate within, and clarifies the roles and responsibilities between governing bodies in the Group. Sound corporate governance involves transparency and trustful interaction among different stakeholders. Schibsted Media Group is a listed company and our guidelines for corporate governance are in accordance with The Norwegian Corporate Governance Board (NCBG) Code of Practice. The Code of Practice is available on NCBG s website ( The Group Board s statement on corporate governance follows the structure of the Code and addresses each section of the Code, dated 23 October The statement also includes an item 16, which describes other key functions within the Group. Information on corporate governance, which Schibsted is required to provide in its annual report according to the Accounting Act, Section 3-3b is taken into account in this report. Deviations from the Code of Practice According to the Group s own evaluation, we deviate from the Code of Practice on two points: Item 5 Freely negotiable shares Based on Schibsted s publishing responsibilities and role in society as a media company, Schibsted s independence and integrity are ensured through restrictions on ownership and voting rights stated in the Articles of Association. Article 6 states that no shareholder may own or vote at the general meetings in respect of more than 30 per cent of the shares. Item 6 General Meetings There are two deviations on this point. 1) The entire Board is to be elected by the General Meeting. This deviates from item 6 of the Code of Practice stating that the General Meeting should be allowed to choose each candidate. For information on the reason for this deviation, refer to the Nomination Committee s Report. 2) The Chair of the Board is always present to respond to any questions. Other board members participate when needed. Corporate governance in Schibsted is subject to annual reviews and discussions by the Group Board. The content of this statement of corporate governance are reviewed by the Group Board CORPORATE GOVERNANCE REPORT The Group Board has approved the Group s policy for corporate governance stating that the Group will comply with The Norwegian Code of Practice for Corporate Governance. The Group s mission is Empowering people in their daily life. We empower people with news and opinions, by providing transparent and secure marketplaces and by defending freedom of the press and editorial integrity. Throughout our history we have been driven by a desire to challenge conventions and think in new directions. We consider ourselves as a driving force within our industry and as such our vision is Shaping the media of tomorrow. Today. The values that shall support our mission and vision are: The Group s values represent an important foundation for corporate governance and are important to develop a healthy and strong corporate culture. Further description of our mission, vision and values can be found on our website A healthy corporate culture is essential to building and maintaining trust both internally and externally. Schibsted s Group Board has prepared a Code of Conduct for the Group. The Code of Conduct is a set of key ethical guidelines, which are intended to help increase awareness of and promote a continuing commitment to integrity among the Group s staff. SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE The Code of Conduct and a whistle-blower line with external reporting (Schibsted SpeakUp) were re-launched at the beginning of The Group s Code of Conduct is available on the Group s website. The Code of Conduct is subject to annual review. Schibsted s primary social responsibility is to ensure editorial freedom. Schibsted aims to be a Group that contributes to democracy and diversity through its integrity and editorial independence. A free and independent media is an important prerequisite and underpins strong and open democracies. Schibsted s core values rest on this foundation and are firmly enshrined in the Group s statutes. Schibsted s social responsibility also encompasses important principles relating to human rights, employee rights, environment and anti-corruption. The Group s involvement in these areas are largely based on international initiatives that the Group has endorsed, including UN s policy initiative for business, Global Compact and OECD s guidelines for multi-national enterprises. We have taken steps to ensure that these principles are followed throughout our operations. The Group Board continues its work on preparing a strategy for how our companies may contribute to social responsibility in a broader perspective. Our subsidiaries have started several social responsibility initiatives that are integrated in the company s services and products. For further information on the Group s corporate social responsibility, please refer to the section of social responsibility in the annual report or 41 D 21

325 SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE 2. BUSINESS ACTIVITIES 42 Schibsted s statutory objective reads as follows: The purpose of the company is to engage in the information business, as well as related business activities. The shareholders shall enable the company to operate its information business in such a way that editorial freedom and integrity are fully ensured. The requirement for editorial freedom and integrity shall apply to all media and publications encompassed by the Norwegian and international activities of the Schibsted Group. For Articles of Association please refer to Schibsted Media Group is an international media group headquartered in Oslo. Schibsted has operations in 29 countries. Schibsted s strategy comprises two main objectives: further development of our media houses and worldwide online classifieds services. Strong media houses represent the core of our activities, and our corporate growth strategy is based on close collaboration between different media channels. Our objective is to develop our business activities so that we can offer our users a wide range of services, irrespective of which channels they choose to use. The diversity of Schibsted s product range is closely aligned with our strong tradition of editorial freedom and our ability to adapt to a media market that is constantly undergoing rapid change. The Group s objectives and principal strategies are further described on the Group s website, 3. EQUITY AND DIVIDEND Equity As at , the Group s equity is NOK this equity level appropriate to the Group s objectives, strategy and risk profile. Dividend policy Schibsted Media Group is a listed company aiming to provide a competitive return based on healthy finances. The Group Board believes it is essential that the company s shares are perceived to be an interesting investment alternative. A goal is therefore to maximize the shareholders return through long-term growth in the share price and dividend. Schibsted emphasizes having a fixed dividend payout cent of the Group s normalized cash flow per share. The Annual General Meeting approves the annual dividend based on the Group Board s recommendation. The Group s dividend policy is described in more detail in the Shareholder information. Purchase of own shares In order to have flexible capital management, the Group Board has requested the General Meeting for authorization to repurchase the Group s own shares. Such an authorization is granted by the General Meeting for one SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE year at a time. At the Annual General Meeting in 2012, the Group Board was authorized to repurchase own shares in accordance with the Norwegian Public Limited Companies Act. The authorization states certain terms and conditions: a) The authorization is valid until the next Annual General Meeting of Schibsted ASA in 2013 (i.e. until no later than 30 June 2013). b) The total nominal value of the shares acquired under this authorization may not exceed NOK 10,800,361. c) The minimum amount that can be paid for a share is NOK 30. The maximum amount that can be paid for a share is NOK 500. d) The Board is free to decide the acquisition method and possible later sale of the shares. The authorization may also be used to buy or sell shares in takeover situations. For further comments on the authorization, For information on how the authorization has been used, refer to Shareholder information. 43 D 22

326 SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE 4. EQUAL TREATMENT OF SHAREHOLDERS AND TRANSACTIONS WITH CLOSE ASSOCIATES 44 Schibsted has one class of shares, with equal rights linked to each share. Restrictions on ownership and voting rights Based on Schibsted s publishing responsibilities and role in society as a media company, Schibsted s independence and integrity are ensured through restrictions on ownership and voting rights stated in the Articles of Association. Article 6 states that no shareholder may own or vote at the general meetings in respect of more than 30 per cent of the shares. Article 7 states that important decisions relating to the Group s key companies are to be submitted to Schibsted s shareholders for their approval. According to the wording of this provision, any amendments to the Articles of Association or any sales of shares or operations or corresponding transactions in any subsidiary are to be submitted to Schibsted s General Meeting for approval, provided these are not intercompany transactions, which are exempt in their entirety. Through annual resolutions, the General Meeting can authorize the Group Board to manage further specified parts of the protection, which is inherent in this provision. Such an authorization was granted at the 2012 Annual General Meeting and applies until the next Annual General Meeting. The authorization granted in 2012 states Pursuant to the third paragraph of Article 7 of the Articles of Association, the Board of Directors is authorized to make decisions on the following matters referred to in the second paragraph, litra a of Article 7 of the Articles of Association: a) Voting relating to amendments to subsidiaries Articles of Association. b) Decisions to sell shares or operations, including private placements, mergers or demergers, in subsidiaries when the net payment (sales amount, merger or demerger payment, etc.) does not exceed NOK 1 billion after financial adjustments. Within the framework of the Group CEO s general authorization, the Board of Directors may delegate its authority pursuant to this authorization to the management. A director appointed pursuant to the second paragraph of Article 8 of the Articles of Association may demand that certain matters which are covered by this authorization are nonetheless to be submitted to the General Meeting for its decision. In total, this means that major transactions will not be covered by the Group Board s authorization and must therefore be submitted to Schibsted s General Meeting. The proposal is explained in further detail in the notice calling the General Meeting. Transactions involving own shares The acquisition of own shares, in accordance with the Group Board s authorization referred to in item 3 of this report, is to take place in the market at the stock exchange price and in accordance with generally accepted Norwegian stock exchange practices. The disposal of acquired shares should be performed in the market, as settlement for the purchase of operations, to general share schemes for the Group s employees and to the Group s long-term incentive (LTI) program for selected Group managers. The Group s LTI program is described in further detail in the declaration on management remuneration and in the notice calling the General Meeting. Transactions with close associates In 2012, the Board determined that there were no transactions between the Company and shareholders, members of the Group Board, executive personnel or close associates of any such parties that could be described as material transactions and as such requiring valuation from an independent third party. 5. FREELY NEGOTIABLE SHARES Schibsted s shares are freely negotiable subject to the restrictions stated in Article 6 of the Articles of Association. Article 6 states that no shareholder may own or vote at the general meetings in respect of more than 30 per cent of the shares. Schibsted has introduced a performancebased share purchase program (the LTI program) for a large group of managers. The LTI program provides settlement in Schibsted shares. There are some restrictions on the sale of shares distributed through the LTI program. For further information, please refer to the Declaration on management remuneration. SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE 45 D 23

327 SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE 6. GENERAL MEETINGS 46 Through the General Meeting, the shareholders exercise the supreme authority of the company. The general meetings deal with and decide on issues which are important for Schibsted in a way that reflects the shareholders views. An Annual General Meeting must be held within six months after the end of each financial year. Extraordinary general meetings are to be held as required in accordance with the Articles of Association or Public Limited Companies Act or if required by at least five per cent of the shareholders. Notice The Annual General Meeting for this year is scheduled for 30 April The notice calling the general meetings and the documents to be considered at the general meeting is available on Schibsted s website at the latest 21 days before the general meeting. Shareholders not registered as electronic recipients will receive the notice per mail and be notified that documents to be considered at the meeting are available on our website. The deadline for registration is two working days before the general meetings. Participation Representatives of the Group Board, at least one representative of the Nomination Committee and the external auditor are to attend the Annual General Meeting. As a minimum, the Group s CEO and CFO are to attend the meeting as representatives of the management. Shareholders that cannot attend the general meetings but wish to exercise their voting rights may authorize a proxy by the deadline for registration. An authorization containing voting instructions may also be given to the chair of the Group Board. The authorization form to be used is enclosed in the notice calling the meeting. Further information on the use of an authorization and a shareholder s right to have issues dealt with by the General Meeting is stated both in the notice calling the general meetings and on Schibsted s website. In 2012, the Annual General Meeting was held on 11 May. A total of 21 shareholders were present or represented by proxies and thus per cent of the aggregate share capital was represented. Agenda The agenda is to be set by the Group Board and the main matters are to be in compliance with Article 10 of the Articles of Association. The entire Board is to be elected by the General Meeting. This deviates from item 6 of the Code of Practice stating that the General Meeting should be allowed to choose each candidate. For information on the reason for this deviation, refer to the Nomination Committee s Report. Minutes of the Annual General Meeting will be made available on the Group s website, at 7. NOMINATION COMMITTEE The Nomination Committee is laid down in Article 10 of Schibsted s Articles of Association, which also states the Nomination Committee s main mandate. The Nomination Committee s work The Nomination Committee prepares a recommendation to the General Meeting regarding the election of the shareholders representatives and their alternate representatives to the Group Board. The Nomination Committee s most important task is to ensure a continuous evaluation of the Group Board s overall expertise and experience in relation to the challenges facing the Group at any time. The Nomination Committee also proposes the remuneration payable to the Group Board s members at the Annual General Meeting. The composition of the Nomination Committee The Nomination Committee is elected by the General Meeting for two years at a time and consists of three members. SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE The General Meeting elects the chair of the Nomination Committee. The majority of the Nomination Committee is independent of both the Group Board and Schibsted s management. The CEO and chair of the Group Board attend Nomination Committee meetings as required, normally once or twice a year. Schibsted s Head of Legal Affairs carries out the secretariat function for the Nomination Committee. The current Committee was re-elected for a two year term by the Annual General Meeting on 11 May 2012 and consists of John A. Rein (chair), Gunn Wærsted and Nils Bastiansen. For more information on the Nomination Committee s work, refer to the Nomination Committee s Report. 47 D 24

328 SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE 8. CORPORATE ASSEMBLY AND BOARD OF DIRECTORS: COMPOSITION AND INDEPENDENCE 48 Schibsted is exempt from the rules concerning the establishment of a corporate assembly. An agreement has been entered into with the employees regarding representation on the Group Board. The composition of the Group Board According to Article 8 of Schibsted s Articles of Association, the Group Board should consist of six to eleven members plus any alternate members. The Group s employees will be represented on the Group Board by a number of employees in accordance with prevailing agreements with the company (the Representation Agreement). At present, the Board consists of ten members, of whom seven are shareholder representatives and three are employee representatives. Two employee representatives are chosen from Norway and one from the country in which we have the most significant operations outside Norway, currently Sweden. The Annual General Meeting elects the shareholder representatives to the Board. The Nomination Committee draws up a recommendation for the shareholders nominees to the Board in prior to the election. The recommendation of nominees is sent to the shareholders along with the notification of the Annual General Meeting. The Annual General Meeting elects the Chair of the Board. The Group Board s shareholder members are elected for one year at a time while employee representatives are elected for two years at a time. According to article 8 in the Articles of Association any shareholder owning at least 25 per cent of the shares in the company is entitled to appoint a Board member directly. Blommenholm Industrier AS, which owns 26.1 per cent of the shares, is the only shareholder that has this right. At the General Meeting in 2012, Blommenholm Industrier AS exercised its right to directly appoint one director and gave notice that this person is Ole Jacob Sunde. The Group Board has appointed a representative from Schibsted Editors Forum as an observer. More information on the Editor s Forum can be found here. Detailed information on the individual board members can be found on the website The Group Board s independence The Group Board s independence is described in further detail in the Nomination Committee s report. According to section 6-27 of the Public Limited Companies Act, a director may not take part in the discussions on or decision regarding an issue that is of such importance to the director or any of the director s related parties, that the director must be regarded as having a prominent personal or economic special interest in the matter. It is the individual director s responsibility to continuously assess whether or not there are any such circumstances that are objectively likely to weaken the public s confidence in the director s independence or which may lead to conflicts of interest in connection with the Board s handling of the matter. Such circumstances are to be brought to the attention of the chair of the Group Board. The Board s instructions particularly deal SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE with directors participation in competing enterprises. The Directors shareholdings are disclosed in note 12 of Schibsted ASA s annual report. Blommenholm Industrier is Schibsted s largest shareholder. The Board of Blommenholm Industrier consists of John A. Rein (chair), Ole Jacob Sunde and Per Egil Hegge. The Tinius Trust controls Blommenholm Industrier. The Tinius Trust board consists of Ole Jacob Sunde (chair), John A. Rein and Per Egil Hegge. Schibsted director Karl-Christian Agerup has been elected as Ole Jacob Sunde s personal alternate member on the boards of the Tinius Trust and Blommenholm Industrier. Ole Jacob Sunde is the chair of Schibsted s Group Board. John A, Rein is the chair of the Nomination Committe. Formuesforvaltning, in which Ole Jacob Sunde (chair of the Board) is a major shareholder, has a management agreement with Blommenholm Industrier. Director Christian Ringnes controls the company that rents offices to Schibsted s subsidiary Eesti Meedia in Tallinn. Group Board meetings in 2012 In 2012, the Group Board held a total of eight meetings, of which one was a strategy meeting lasting for two days. In addition, some issues were decided per s. The Board considers such a procedure justifiable when issues have previously been discussed in a Board meeting. Meetings that are not on the meeting schedule may be attended by telephone. The strategy meeting is normally held in June, and forms the basis for the Group s strategy- and budget processes. Participation on the board meetings and board committees in 2012: Participation in meetings Board meetings Audit committee meetings Compensation Committee meetings Ole Jacob Sunde 8/8 6/6 Karl-Christian Agerup 8/8 3/3 * 3/3 ** Marie Ehrling 8/8 3/3 ** 3/3 * Anne Lise Mørch von der Fehr 7/8 3/3 * Gunnar Kagge 8/8 Arnaud de Puyfontaine 5/5 ** Eva Berneke 6/8 3/3 ** Christian Ringnes 8/8 6/6 * until June 2012 ** new June D 25

329 SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE 9. THE WORK OF THE BOARD OF DIRECTORS 50 The Group Board s role The Group Board monitors both the group s day-to-day management as performed by the CEO and Schibsted s general activities. The Group Board actively participates in shaping Schibsted s strategy and ensures that the businesses are properly organized and that adequate governance and control systems are implemented. The Group Board also keeps informed of the group s financial performance, establishes necessary guidelines, and adopts plans and budgets for the businesses. The Group Board appoints the CEO and prepares the job description and terms and conditions for the position. The Group Board also discusses issues pertaining to the succession of key positions within the group. Board instructions The Group Board has established internal rules of procedures that describe the Board s responsibilities, duties and administrative procedures. The rules of procedure also state the CEO s duties to the Board. The Board reviews the rules of procedure to the Board and general management each year. Meeting structure The Group Board works on the basis of an annual meeting schedule, which is normally agreed to at the first meeting after the Annual General Meeting. The meeting schedule includes strategic planning, business issues and oversight activities. At the same meeting, the Board appoints the members of the Board s Compensation Committee and Audit Committee. The company s Head of Legal Affairs is the Group Board secretary. The CEO, in consultation with the chair of the Group Board, prepares the issues that are to be dealt with by the Group Board. Emphasis is placed on issues being well prepared with documentation being sent out in advance so that the Group Board has a satisfactory basis for its work. The Board discussions are presided over by the chair of the Group Board. The meeting schedule, board documents and other important documents linked to the board work (stock exchange manual, board instructions, mandates for the board and committees, stock exchange notices and press releases, etc.), as well as general analyses and market information, are available to the directors through the Directors Portal, which is a web-based reading tool for the directors. The Directors Portal simplifies the directors work and makes it more efficient, and gives the Board easier access to up-to-date information. It also allows the directors to study presentations given at meetings and the industry s regulatory framework, market and competitive situation, etc. The Group Board s evaluation of its own work The Group Board evaluates its own work each year and deliver a written report to the Nomination Committee. The report forms the basis for the Nomination Committee s annual board evaluation work. The Nomination Committee performs additional assessments of the Group Board, by interviewing the Board members themselves or using external consultants. The Group Board considers itself to be well functioning, with directors whose expertise and experience complement each other. Interaction with the company On a regular basis, the Group Board is invited to selected seminars and conferences arranged by Schibsted such as Schibsted s annual Journalism Award. Schibsted is a member of the Norwegian Institute of Directors. The membership gives the Board members an opportunity to participate in seminars and discussion groups that consider key issues which affect the Board s work and the work in the committees. In order to strengthen and utilize the directors expertise and experience relating to the Group s operations, Group directors may also be board members in the Group s subsidiaries. Currently, Karl-Christian Agerup is a board member in Aftenposten. The Group Board s use of committees Schibsted has established an Audit Committee and a Compensation Committee, which contributes to thorough preparations and discussions on matters covered by the committees areas of work. As Schibsted has gradually grown in size and become more international, the Board s scope of work, and the complexity of the issues dealt with have increased. The Board considers the establishment of a Compensation Committee and an Audit Committee has improved the Board s preparatory work and discussions of complex cases. The committees function well and interact well with the Board, both with regard to the exchange of information and the division of responsibilities and work. The committees allow the Board to deal thoroughly with issues in important areas relating to corporate governance, internal controls and compensation schemes, and give the Board more time to discuss fundamental and strategic issues. At the same time, the Group Board is aware that the use of committees may lead to it having less responsibility for issues. Committees are therefore only used when required due to the complexity and scope of an issue. The Group Board s Compensation Committee The Compensation Committee is a subcommittee to the Group Board and has no decision-making authority. The Compensation Committee is appointed by and among the Group Board for one year terms. The Compensation Committee prepares matters relating to the Group CEO s remuneration for the Board. In addition, the committee assists the Board by dealing with fundamental questions, guidelines and strategies linked to the overall remuneration paid to other members of the Group management and senior managers in key subsidiaries. The Committee monitors the use of longterm incentives in the Group and makes preparations for the Board s annual discussions on the Group s long-term incentives (the LTI program) for selected managers. For further information, refer to item 12 of this report. The CEO attends Committee meetings unless his own remuneration is to be discussed. The company s Head of Legal Affairs is the secretary of the Compensation Committee. Members of the Committee at present: SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE Ole Jacob Sunde (chair), Karl-Christian Agerup and Jonas Fröberg. The Group Board s Audit Committee The Audit Committee is a sub-committee of the Group Board and has no decisionmaking authority. The Audit Committee is appointed by and among the Group Board for one year terms. The Audit Committee prepares the Board s quality assurance of the financial reports. In addition, the committee monitors the Group s internal control system and risk management systems for financial reporting and assesses and monitors the external auditor s work and independence. As part of its work, the Audit Committee conducts reviews of the Group s main activities in which representatives of the Group management and local management also participate. The Group s CFO and external auditor attend Audit Committee meetings on a regular basis. The company s compliance officer is the secretary of the Audit Committee. The Committee was established in Members of the Committee at present: Marie Ehrling (chair), Christian Ringnes and Eva Berneke. 51 D 26

330 SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE 10. RISK MANAGEMENT AND INTERNAL CONTROL 52 Schibsted s risk management and internal control system for financial reporting is based on internationally recognized frameworks, such as COSO. The risk management and internal control system parallels the management model and the CEO and CFO of the entities are responsible for maintaining an effective internal control system over financial reporting. This includes ensuring that the entity has the capacity and expertise necessary to carry out proper internal control. Financial reporting As a tool for managing the continuous followup and control of the Group s operations, the Board receives a thorough report on the Group s status from management. This includes the financial reporting of the Group s main figures, the status of business matters, financial market information and a status report on each business area. The Board has established routines for following up and governing the Group s ongoing projects. The establishment of an Audit Committee has strengthened this function in the Group. The Audit Committee s main responsibility is to monitor the process prior to the closing of the financial statements and to follow up the internal controls over financial reporting. This takes place through reports from management and the external auditor. Schibsted s quarterly financial reports are reviewed by the Audit Committee and the Group Board. Apart from the normal examination of the figures, emphasis is also placed on reviewing discretionary assessments and estimates in addition to any changes to accounting practices. Schibsted s Group Accounting prepares the Group s financial reports and ensures they are in accordance with prevailing accounting standards and legislation. In connection with the quarterly reports, general controls on the reasonableness and more detailed reconciliation controls are carried out in connection with the quality assurance of figures reported by subsidiaries and of consolidated figures. Group Accounting provides subsidiaries with technical accounting expertise as required. Quarterly review meetings are also held with the largest companies in our operating segments. Schibsted s Group Accounting has prepared financial and accounting manuals that are made available to all the subsidiaries via the group s intranet. These manuals describe reporting requirements, content, guidelines and deadlines. For information on external reporting of financial information and dialogue with shareholders please refer to item 13 Information and Communication of this report. Monitoring of risk management and internal controls within the company Each manager in the Group is responsible for risk management and internal controls within his/her area of responsibility. Schibsted is continuously implementing and further developing guidelines for all companies relating to their continuous follow-up of risk management and internal controls over financial reporting. The compliance officer is responsible for initiating and monitoring the annual risk management and internal controls process in the Group on behalf of the Group s CFO and CEO. The compliance officer reports functionally and administratively to the CFO. If necessary, the compliance officer reports directly to the Audit Committee. A bottom-up and top-down risk assessment in the largest companies in our operating segments was conducted in the autumn of The result of this risk assessment has been reviewed at meetings with the Audit Committee and the Group Board. Schibsted ASA is a Norwegian group of companies with considerable international shareholdings. Companies outside Norway have their own governing bodies in accordance with local legislation of each individual country. The internal controls over financial reporting are monitored by these governing bodies with assistance from the management s day-to-day monitoring and the external auditor s testing. To improve the quality of financial reporting in the Group, reduce vulnerability and streamline processes, two service centers were set up in 2010, one in Sweden and one in Norway. The service centers are intended to be skill centers, advisors and service providers within the finance, credit, invoicing and payroll functions and to support compliance with the laws and regulations which apply to the company relating to finance and tax. Most Norwegian and Swedish subsidiaries receive accounting services from the service centers. This arrangement using a common service center has been successful over time. For further information on the Group s financial risk, refer to note 9 of the group s annual financial statements. Ethics and social responsibility Issues related to ethics and social responsibility fall within the remit of the compliance officer and the Group s legal department. A Code of Conduct for the Group has been prepared and was launched in 2012 together with a new whistleblower line with external reporting (Schibsted SpeakUp). The Code of Conduct will be reviewed annually. The Group s Code of Conduct is available on the group s website. The Group Board works further on crafting a strategy for how our companies may contribute to social responsibility in a broader perspective. For more information on the Group s social responsibility, please refer to the section on social responsibility in the annual report or on SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE 53 D 27

331 SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE 11. REMUNERATION OF THE BOARD OF DIRECTORS 54 The Annual General Meeting determines the remuneration payable to the Group Board each year. The directors fees are decided in advance for one year at a time and are fixed amounts that do not depend on results or involve options. If a payment has been made to directors in addition to the normal directors fees, this is disclosed in note 27 of the group s annual financial statements. For further information on remuneration to the Group Board, refer to the Nomination Committee s report and to note 27 of the group s annual financial statements. 12. REMUNERATION OF EXECUTIVE PERSONNEL The Compensation Committee prepares matters for the Board concerning the Group CEO s remuneration. In addition, the Committee assists the Group Board in dealing with fundamental questions, guidelines and strategies linked to the overall remuneration for other members of the Group management and senior managers in key subsidiaries. The company s declaration regarding the determination of salary and other remuneration to the management of Schibsted, SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE gives an account of the main principles of the company s management remuneration policy, including the extent and arrangement of bonus and long-term incentive schemes. The declaration on management remuneration is discussed by the Annual General Meeting and made available to the shareholders on the company s website when the notice calling the Annual General Meeting is sent out. 55 D 28

332 SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE 13. INFORMATION AND COMMUNICATION 56 Dialogue with shareholders and the financial market Communication with the Norwegian and international stock markets is afforded a high priority at Schibsted. Schibsted s dedicated and active management and investor relations department work on a daily basis with the financial markets to make sure that relevant and sufficient information hits the market at the right time and provides a basis for a correct pricing of Schibsted shares. The goal is to increase knowledge about the company, build trust in Schibsted in the investment market, achieve improved liquidity for our shares and create the basis for the correct pricing of the share. Openness, accessibility and transparency are fundamental to good relationships with investors, analysts and other players in the financial market. The Group Board is regularly updated on these activities. The reporting of financial information Schibsted aims to issue financial reports that investors can have confidence in. In accordance with its mandate, the Group Board s Audit Committee monitors the work on the company s financial reports. Schibsted publishes its financial figures quarterly. In connection with the Group s quarterly reports, open presentations to investors are arranged. At these presentations, the CEO and CFO review the results and comment on the market and outlook. The chair of the Group Board also attends these presentations. Members of the Group management attend these presentations as required. The presentations in connection with the quarterly results are made available on the company s website. The complete annual financial statements and directors report are made available on the company s website at least 21 days before the Annual General Meeting. The company s financial calendar is announced for one year at a time and published on the company s website. Other market information In accordance with the Norwegian Securities Trading Act and Stock Exchange Act, notifications are distributed to the Oslo Stock Exchange and national and international news agencies and are published on Schibsted s website. Schibsted regularly arranges Investor days in order to present its strategy and other key development trends. Schibsted s Investor day was last held February 28th A video webcast of the entire event and the presentation material are available on the company s website. In 2012 Schibsted was, for the second consecutive year, among the top three in the Stockman Awards. The Stockman Awards go to the listed companies in Norway that are best at providing the finance industry and shareholders with continuous information about their activities, and who also, based on principles of financial analysis, publish the best annual and quarterly reports. For further information, refer to Shareholder information and the company s website. 14. TAKE OVERS The Group Board has prepared principles and guidelines for handling any take-over bids. These principles were revised in For more on this subject, please refer to the discussion of restrictions in the company s statutes on ownership and voting this statement. As referred to in item 3 of this statement, the Group Board obtained continuing authority to buy back the group s own shares in accordance with the Norwegian Public Limited Companies Act at the Annual General Meeting in The authority stipulates that the Group Board is free to determine the method of acquisition and any later sale of the shares and that the authorization may also be used to buy and SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE sell shares in takeover situations. Section 6-17, second subsection of the Securities Trading Act allows the general meeting to grant the Board such authorizations. The Board s use of such authorizations is, NCBG s Code of Practice. The Group Board must consider the use of such authorizations in the context of the specific takeover situation. As referred to above, the Group Board has prepared guidelines for handling any take-over bids and the issue of using authorizations in company acquisition situations is highlighted as one of the Group Board s most important tasks if a take-over situation should arise. 57 D 29

333 SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE 15. AUDITOR 58 Appointment of auditor The external auditor is elected by the General Meeting. The Audit Committee presents a recommendation on the appointment of an external auditor to the Group Board. The Group Board s recommendation is then presented to the General Meeting, which makes the formal appointment of the Group s external auditor. As a general rule, all Group companies are to use the same audit firm. Exceptions may be approved by the Group CFO. Tenders for the Group s external audit services as from the 2011 financial year were invited in the autumn of Following a thorough evaluation by management and the Audit Committee, it Young as the company s auditor. The Group Board s relationship with the external auditor According to its mandate, the Audit Committee is responsible for ensuring that Schibsted is subject to an independent and effective external audit. The Audit Committee will evaluate the following factors relating to the external auditor each year: The Audit Committee will submit a proposal to the Group Board and the Annual General Meeting regarding the approval of the external auditor s fee. For information on the fees payable to the external auditor for the 2012 financial year, refer to note 27 of the group s annual financial statements. The external auditor presents a plan for the audit work each year. This plan is presented to the Audit Committee. The company s external auditor is present when the management presents the preliminary consolidated financial statements to the Group Board, and also when the final results are presented if appropriate. The external auditor also conducts an annual review for the Audit Committee of the company s internal controls, including identified weaknesses and proposed improvements. The external auditor regularly attends Audit Committee meetings and holds annual meetings with the Group Board at which the management is not present. The external auditor attends the company s Annual General Meeting and comments on the auditor s report. The external auditor s independence The external auditor must under no circumstances perform advisory services or other services if these may affect or raise doubts about the auditor s independence. The Group has prepared guidelines on the relationship with the external auditor. In the Group Board s view, the advisory services provided by the external auditor in 2012 do not influence the auditor s independence, but the Group Board is aware of the potential issues related to this. This issue is monitored by the Audit Committee. See note 27 for information on fees related to auditing and consulting. 16. OTHER KEY BODIES IN THE GROUP Group employee representatives The Group has established a Group employee representative scheme that is intended to safeguard the employees interests in relation to the Group management in cases dealt with at Group level that may be of importance to the Group s employees as a whole. Further information may be found on Editors Forum The Group s international editors forum is described in greater detail in the section on corporate social responsibility. Schibsted s Group Council Schibsted s Group Council was established concerning the Establishment of European Works Councils. The Group Council s objective is to promote development, motivation, co-responsibility and mutual trust between the management SCHIBSTED ANNUAL REPORT 2012 CORPORATE GOVERNANCE and the employees. The Group Council is intended to ensure active collaboration and to be a forum for information, discussion and dialogue in the Group. The Group Council cooperates closely with the Group employee representatives. The Group Council is a supplement to the employees representation in their own companies. Importance is attached to continuous contact between employees across national boundaries. The Council convenes twice a year. The meetings last for three days and are attended by the CEO and management team the second day. The Schibsted European Work Council from seven countries who are elected by and among the employees. The Council is headed by Morten Lia, Group Employee Representative from Schibsted Norge. 59 D 30

334 SCHIBSTED ANNUAL REPORT 2012 THE BOARD OF DIRECTORS Members of the Board OLE JACOB SUNDE CHAIRMAN OF THE BOARD Board member since May Chairman of the Board since May Chairman of the Compensation Committee since it was chairman of the board of Formuesforvaltning ASA (2000). Established Industrifinans Forvaltning ASA in 1983 and was managing director until Former consultant in directorships, including chairman of the board of The Tinius Trust and member of the board of Blommenholm Industrier AS. MBA (Université de Fribourg, Sveits) 1976 and Kellogg School of Management, Northwestern University (USA) (with distinction) Forskningsparken AS, Managing director ( d.d.) Northzone Ventures, GIN AS, Founder and managing director Millipore Corp, Boston, USA, Corporate Planner ( ). Vice Chairman of the board of Norfund. Massachusetts Institute of Technology (MIT) Alfred P Sloan School of Management, Master of Science in Management (1990). The Copenhagen School of Business and Administration. MBA/HA (1988). Personal deputy for Ole Jacob Sunde in the Tinius Trust. MARIE EHRLING KARL-CHRISTIAN AGERUP Valgt inn som varamedlem til Elected as a deputy board member in Schibsted Board member in Schibsted since May Vice chairman in Nordea AB, member of the board at Securitas AB, Loomis AB, Oriflame Cosmetics SA, Safegate AB, Centre for Advanced Studies of Leadership (CASL) at the Stockholm School of Business and Administration, Business Executive Council IVA and for the World Childhood Foundation. Marie Ehrling was CEO of TeliaSonera AB from 2003 to From 1982 until 2002 she worked for the SAS Group, among others as Vice CEO in SAS AB and CEO for SAS Scandinavian Airlines ( ) and as CEO for SAS Ground Services ( ). 60 Head of Information at the Swedish Ministry of Finance ( ) and the Swedish Ministry of Education ( ), Financial Analysist in Fourth Swedish National Pension Fund ( ). Bachelor of Science Business Administration and Economics from Stockholm School of Business and Administration (1977). EVA BERNEKE Board member in Schibsted since May CEO of Wholesale at TDC AS Denmark. Appointed to the Executive Committee in MSc in Mechanical Engineering Technical University of Denmark, 1992, and MBA, INSEAD (Executive Management Training Program) Member of Board of Directors of Copenhagen Business School. Member of the Danish Council for Technology and Innovation under the Danish. Member of the Board of Directors of the Industrialization Fund for Development and Eastern Countries (IFU, IØ). CHRISTIAN RINGNES Deputy board member in Schibsted from May 2002 to Elected as ordinary board member in May Managing director and major owner in Eiendomsspar AS/Victoria Eiendom AS -Scandinavia, consultant (1981/82) and Manufactures Hanover Trust Company, Assistant to Area Manager, Nordic Countries (1978/79). Chairman of the board in NSV-Invest AS, Sundt AS, Dermanor AS, Oslo Flaggfabrikk and Mini Bottle Gallery AS. Board member in Thor Corporation AS and Oslo s Council for City Architecture. Harvard Business School, Boston, USA ( ), Master of Business Administration. Ecole des Hautes Etudes Commerciales, Universite de Lausanne ( ), MBA EUGÉNIE VAN WIECHEN Member of the board in Schibsted since May Publishing Director in FD Mediagroep, The Netherlands. Previously Managing Director in LinkedIn.com, The Netherlands; Managing Director in ebay.nl, Marktplaats.nl, The Netherlands; Publisher Young Women s Magazines and Director Consumer Marketing in Sanoma Uitgevers, The Netherlands; Management Consultant Company, The Netherlands. Educated at the University of Amsterdam in Chemical Fontainebleau, France (MBA, 1997). ARNAUD DE PUYFONTAINE Member of the board in Schibsted since May CEO of Hearst Magazines UK and EVP Hearst Magazines International. Previously President of the Industry Committee in Summit Conference on the Press, France; SCHIBSTED ANNUAL REPORT 2012 THE BOARD OF DIRECTORS President, Mondadori France Group and CEO, Mondadori France magazines operations, France; CEO and Chairman, Emap France and Excelsior Publications, COO, Emap France and Managing Director, Emap Star, France; Managing Director, Publisher of the daily newspapers, Le Figaro Economie, Le Figaro Grande Ecoles and Le Figaro Défense, Le Figaro, France; OTC Project Manager, Rhone Poulenc Sante, Indonesia; Andersen, France. Board Memberships: Mondadori; Emap; Magazine Publishing Association APPM France; PPA UK, Magazine Union SPMI; Distribution Group merce site; SGAM AI; Le Cercle and Dialogue Economique, France. Educated at the European School of Management, France in MBA, ESCP, ESCP (1988), Harvard Business School (2000). GUNNAR KAGGE Gunnar Kagge (1960) has worked at Aftenposten since Formerly employed at NTB and the Norwegian Confederation of Business and Industry (NHO). He has mainly been writing about politics and economy, covering negotiations between employers and unions, trends in the workplace and the big organizations. 61 D 31

335 SCHIBSTED ANNUAL REPORT 2012 THE BOARD OF DIRECTORS Elected leader of the local journalist union Board member of SKUP, NJ Schibsted and deputy board member of NJ. He is educated with a degree in history from the University of Oslo. All through school and studies he worked as a freelancer at Aftenposten, from 1975 and onwards. ANNE LISE VON DER FEHR Member of the board in Schibsted since May Reporter and subeditor at VG since April Elected leader of the board of the local journalist union in VG ( ). Member of the European Work Council, Schibsted ( ). Leader of Norwegian Journalists local union within Schibsted ( ). Deputy member of the board of VG AS ( ). Reporter and subeditor Asker og Bærum Budstikke ( ). Researcher at Holmgang, TV2 ( ). Board member of the Foundation of Asker and Bærum Budstikke (2009-), deputy member ( ). She holds a master degree in Political Science from the University of Oslo, has studied History of Literature and has an International Diploma in Journalism from England. 62 JONAS FRÖBERG Member of the board in Schibsted Media Group since May With Svenska Dagbladet since 2006 as trade and industry reporter, chronicler and automotive editor. Reporter and web editor at the financial desk, Dagens Nyheter ( ). Deputy Regional Director at Svensk Science Umeå University 1997, BBA Handelshögskolan, Umeå University (1998), Bachelor of Arts in Business Administration, University of Derby England (1998). Studied cultural journalism, Umeå University (2005). Member of the board at Schibsted Sverige ( ). Member of the board, Svenska Dagbladet (2009-). Elected member at Journalistklubben Svenska Dagbladet (2008-). SCHIBSTED ANNUAL REPORT 2012 THE BOARD OF DIRECTORS 63 D 32

336 SCHIBSTED ANNUAL REPORT 2012 NOMINATION COMITTE S REPORT The Nomination Committee s report 2012 The Nomination Committee consists of John A Rein (chair), Gunn Wærsted and Nils Bastiansen. The Nomination Committee is elected for two years at a time and was re-elected for two years at the Annual General Meeting on 11 May In recent years, the Nomination Committee has had a long-term focus on internationalization of the Group Board. Based on the new Group Board representation agreement entered into in 2012, the Group Board consists of seven shareholder-elected directors and three directors elected by the employees. The leader of the Group s Editors Forum has been appointed as an observer to the Group Board. The employees have elected two alternate directors. Alternate directors attend the meetings only in the event of an absence. No alternate directors have been appointed by the shareholders. As from 2012, the Group Board s working language is English. Work of the Nomination Committee with recruitment for the Board The Board s shareholder-elected directors are up for election each year. The Nomination Committee is thus continuously working on the recruitment of new directors and evaluation of the Group Board s work. In the election period , the Nomination Committee has held 7 meetings, including interviews with board members and the CEO. As a basis for its work, the Nomination Committee has received a self-assessment conducted by the Group Board. The Nomination Committee makes efforts to ensure that recruitment to Schibsted s Group Board provides a good balance between continuity and renewal, and that the Group Board has expertise and experience within the fields of the Group s operations, both inside and outside Scandinavia. In addition, Schibsted must comply with the Norwegian Public Limited Companies Act s gender balance requirements. Based on the Group Board s self-evaluation and interviews with the CEO and Group Board members, it is the Nomination Committee s opinion that the Group Board is well functioning. Since the current Group Board has only functioned for one year, the Nomination Committee proposes that the present shareholder-elected directors are re-elected. Accordingly, the Annual General Meeting is invited to vote on the following directors at the Group Board for A more detailed presentation of the candidates is available at Schibsted s Web pages. The Nomination Committee has considered whether there should be one ballot for each individual director instead of one for the entire Group Board. The Nomination Committee proposes one ballot for the entire Group Board, including the Chair. In the Norwegian Recommendation for Corporate Governance, one ballot for each individual director is recommended. Some shareholders have previously questioned Schibsted s practice. The Nomination Committee still believes that the entire Group Board should be elected as one body because an individual candidate s expertise and experience should be considered in connection with the board s overall expertise and requirements. Furthermore, the requirement of a gender balance on the Group Board complicates voting on each individual candidate. The directors independence Information on the directors business relationships with shareholders or others with links to the shareholders, or to Schibsted, is provided under Corporate Governance. The representation on the Group Board reflects the ownership shares in Schibsted and the right to elect directors, which, according to Schibsted s Articles of Association, belongs to shareholders holding at least 25 per cent of the shares ( 8). As a consequence of Ole Jacob Sunde s links with Blommenholm Industrier and the Tinius Trust, and Karl-Christian Agerup s links with the Tinius Trust as Ole Jacob Sunde s personal alternate member, the Nomination Committee does not consider these two directors to be independent. The Nomination Committee considers the other directors to be independent. Thus, five of the seven shareholder-elected Group Board members are independent. 64 Group Board members directorships for subsidiaries The Nomination Committee is aware that some of the Group Board members also hold positions as board members in the Group subsidiaries. At the present time this only applies for Karl-Christian Agerup, who is a board member in Aftenposten. The Nomination Committee acknowledges the need for the Group Board to be able to prepare complicated matters in committees. On a general basis, however, the Nomination Committee emphasizes the Group Board s overall responsibility for the assessments and decisions made, including matters prepared by the committees. The Nomination Committee does not consider the Group Board members less independent due to their directorships in subsidiaries. When considering this practice, the Nomination Committee puts emphasize on the fact that the majority of the subsidiaries directors are not members of the Group Board. The Group Board s Compensation Committee and Audit Committee The Compensation Committee and Audit Committee are both elected by the Group Board for a one-year period. Both committees prepare matters for discussion and decisions in the Group Board. Compensation All compensation payable to Schibsted s corporate bodies is determined in advance for one year at a time and are decided by the Annual General Meeting based on a proposal from the Nomination Committee. The Nomination Committee considers the present compensation to Group Board members to be in line with market practice. The Nomination Committee is however of the opinion that the compensation as a rule should be adjusted annually, in order to achieve a more steady increase in the compensation, following the general wage increase in society. All figures in NOK a) Group Board members Chair 755, ,000 Other directors 325, ,000 Alternate directors 16,000 16,000 b) Members of the Compensation Committee Chair 87,000 85,000 Other members 57,000 55,000 (c) Members of the Audit Committee Chair 129, ,000 Other committee members 82,000 80,000 (d) Members of the Nomination Committee Chair, per meeting 16,000 16,000 Other members, per meeting 11,000 11,000 SCHIBSTED ANNUAL REPORT 2012 NOMINATION COMITTE S REPORT An adjustment was implemented in 2012, mainly to keep up with the general wage increase in society. The Nomination Committee proposes to continue this practice, and proposes the following adjustments for present compensations is set out in the table below: Based on a resolution passed by the Shareholders Meeting in May 2012, a supplementary compensation up to NOK 100,000 may be granted by the Nomination Committee, to directors resident outside Oslo. The Nomination Committee has decided to award the following supplementary compensations for the members resident outside Oslo but in the Nordic countries, and NOK 100,000 for Group Board members resident outside the Nordic countries. The Nomination Committee proposes that the possibility to grant supplementary compensation up to NOK 100,000 is continued. 65 D 33

337 SCHIBSTED ANNUAL REPORT 2012 SHAREHOLDER INFORMATION Shareholder information Schibsted Media Group is a listed company, and our aim is that our shares should be perceived as an attractive investment. A competitive return is to be based on a healthy economy. The goal is to ensure a competitive return through long-term growth in the share price and dividend. The company s shares are in as far as possible to achieve a price, which reflects the company s long-term earnings capacity. The strategy and vision that Schibsted s Board has agreed on implies the Group s operations must adapt quickly and develop rapidly. Schibsted s capital structure must be sufficiently robust so that we can maintain the desired freedom of action. A cornerstone of Schibsted is its positions in the online and print Scandinavian media markets. Some of these operations are exposed to advertising markets that are subject to cyclical fluctuations. Our media houses strong brands and market-leading positions help to ensure a stable, good cash flow. Established Online Classifieds operations in Scandinavia, France and other countries contribute strong, profitable growth. At the same time Schibsted has an ambitious expansion strategy for online classifieds. Hence we invest significant amounts over the THE SCHIBSTED SHARE - KEY FIGURES Lowest share price (NOK)*) Share price at year end (NOK)*) Earnings per share - adjusted Dividend per share 3.50**) outstanding shares year end *) Historical share price adjusted for the split out of subscription rights in connection with the rights issue in **) As proposed by the Board of Directors. 66 DIVIDEND AN BUY BACKS OF SHARES The distribution of dividend and opportunity to buy back shares are regarded as suitable cent of the Group s cash flow per share. In periods of weak economic conditions, the dividend level is maintained as long as the group s capital structure permits. Such a dividend level implies that the return on Schibsted s shares is competitive in both the Norwegian market and among European media companies. The Board has decided to propose to the General Meeting on 30 April 2013 to pay dividend for 2012 of NOK 3.50 per share. Depending on the general meeting s decision, the dividend The general meeting has authorized Schibsted s Board to buy back up to 10 per cent of the company s shares. The buy backs will take place in the market over time and must be seen in connection with Schibsted s dividend policy, investment opportunities and long-term views on its capital structure. The Board will ask the general meeting to allow the authorization for the coming period to also be used in an acquisition situation. During 2012 no buy backs of shares were made. SHAREHOLDER STRUCTURE Blommenholm Industrier, which is in turn controlled by the Tinius Trust, is Schibsted s largest shareholder, giving the Group long-term ownership stability. A consequence of this is also that the number of issued shares will normally be stable for a long time. This means that the earnings from operations, combined with loans, will be the most important financing source for growth in the form of acquisitions or organic investments. This indicates that Schibsted should secure its freedom of action by having a relatively high level of equity and low debt-to-equity ratio over time. Financial independence and a strong financial position are also important for ensuring the public s confidence and trust in our various media. Schibsted s shares are freely marketable. The Company s Articles of Association are worded bearing in mind the Group s publishing responsibilities and role in society as a media company. Schibsted s independence and integrity are ensured through restrictions on ownership and voting rights in article 6 of the Articles of Association. No shareholder may own or vote at a general meeting for more than 30 per cent of the shares. Any shareholder that owns 25 per cent or more of Schibsted ASA s shares is entitled to appoint one director directly. Blommenholm Industrier, which owns 26.1 per cent of the shares, is currently the only shareholder that has this right. The Tinius Trust has a controlling interest in Blommenholm Industrier AS. SCHIBSTED ANNUAL REPORT 2012 SHAREHOLDER INFORMATION 67 D 34

338 SCHIBSTED ANNUAL REPORT 2012 SHAREHOLDER INFORMATION RETURN The Schibsted share is listed on the Oslo Stock Exchange with the ticker code SCH. The share is among the most traded in Norway, and has been a part of the OBX index during Sell side analysts in Scandinavia and in London cover Schibsted. At the year-end 2012, at total of 16 analysts had an official coverage of Schibsted, of which five were based outside Scandinavia. In 2012, the Schibsted share produced a return for shareholders of 61.1 per cent, including dividend of NOK 3.50 per share (reinvested). In comparison, the Oslo Stock Exchange SHAREHOLDERS The number of Schibsted On average, 256,000 Schibsted shares were traded per day on the Oslo Stock Exchange in This is 11 percent fewer than in The turnover velocity in the Schibsted share on Oslo Stock Exchange was 59.6 percent in 2012, compared with 67.3 percent in The decline is consistent with the trend on Oslo Stock Exchange, where the turnover rate declined from 95.5 percent in 2011 to 60.7 percent in At the same time, activity on alternative trading platforms is capturing market share. 68 SHAREHOLDERS Share of non-norwegian registered shareholders: Number of shares: 108,003, ,003,615 1,008,003,615 The 20 largest shareholders as of :: The 20 largest shareholders as of : Number of shares Share in % Blommenholm Industrier AS 28,188, SAFE Investment Company Limited 1,252, DNB Asset Management AS 1,161, Sum 20 largest shareholders 79,399, The shareholder ID data are provided by Thomson Reuters. The data are obtained through the analysis of beneficial ownership and fund manager information provided in replies to disclosure of ownership notices issued to all custodians on the Schibsted share register. Whilst every reasonable effort is made to verify all data, neither Thomson Reuters or Schibsted can guarantee the accuracy of the analysis. For an overview of the 20 largest shareholders as 31 December 2012 from the public VPS-list, refer to the annual accounts for Schibsted ASA, note 12. SCHIBSTED ANNUAL REPORT 2012 SHAREHOLDER INFORMATION 69 D 35

339 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT Board of Directors report 2012 In 2012, the digital transformation and the growing popularity of mobile platforms continued to have a major impact on our main business areas; the online classifieds and the media houses. In light of the massive transformation in the media industry, The Board of Directors sees it as important that Schibsted aims to build world-class digital media houses. The print newspapers will still be valuable to both readers and advertisers in the years ahead, but we see how they are being increasingly challenged by the digital media, most notably on mobile platforms. This is a situation we must address with keen attention. It requires not only reducing costs, but also implementing an extensive and vital strategy for digital growth. The Board supports the many initiatives within digital product development, digital user payment and quality digital journalism in our media houses in We expect this to gather more force in Schibsted Media Group continues to take steps to fulfill our ambition of being a global leader in online classifieds. Schibsted now has market-leading, profitable operations in Norway, Sweden, Spain, France, Italy, Ireland and Austria. Even though many of our sites already are large in their home markets for instance Leboncoin with more than 6 billion monthly pageviews in France - we still expect them to grow further. Valuable experiences from our successful operations are guiding our investments in new markets. We will increase our efforts in We aim at achieving leading and profitable positions in a number of new markets, as well as strengthening our existing leaders. The digital development in the media houses and the online classifieds is strengthening our competence and capacity to build new business within digital consumer services. Promising new concepts benefit greatly from the high traffic on our large internet sites, and are growing steadily both in use and revenues. The need for new digital growth and restructuring of our media houses also governs the direction of our organizational development. In order to meet our ambitions, we must be able to attract new talent as well as providing new competencies to our existing workforce. To ensure the transfer of knowledge and best practice, we encourage internal mobility of labor between Schibsted companies. Schibsted Media Group is an international media group headquartered in Oslo. The Group has approximately 7,800 employees and operations in 29 countries. Our vision is Shaping the media of tomorrow. Today. 70 Highlights in 2012 has produced solid results in 2012 and at the same time made steady progress to fulfill our long term strategy. Our Online classifieds operations grew well and expanded its footprint, whereas our media houses continued to strengthen the online activities and adapt the cost level in the print operations. The Online classifieds growth was broad based, coming from increased level of monetization and strengthened market shares in our core European markets, as well as expansion into new geographies. Innovation and product improvements, together with our ability to utilize our experience and know how in new markets are key elements in our growth strategy. In order to capture positions in interesting markets and act on opportunities, rolling out online classified sites in new markets was intensified in All costs related to launching new websites are expensed, and these investments adversely affect profits. For our media houses 2012 was a year of significant structural market changes. The ambition is to build world-class digital media houses, and we have allocated more resources to the online activities. Examples are more focus on building products for online platforms, strengthened web TV offerings, recruitment of digital expertizes implementation of digital subscription models, improved CRM-systems and development of new systems for digital payment. The declining trend in print advertising is expected to endure, and continued online growth and innovation will be crucial to secure the future for high-quality editorial products producing positive financial results. Cost levels in the print newspaper operations are being adapted as the migration of readers and advertising revenues continues. A cost efficiency program was concluded towards the end of the year, aiming at reducing costs with a full-year effect of approximately NOK 500 million over the next two years in the subscription-based newspapers in Norway and Sweden, as well as Spain. Schibsted s media houses have been awarded several prizes for their outstanding, editorial content. Especially noteworthy is the fact that Svenska Dagbladet and Aftonbladet won three of the four Grand Journalism Prizes (Stora Journalistpriset) in Sweden. SPiD (Schibsted Payment) was introduced as a payment and single sign-on solution with Finn and several of the Scandinavian newspapers as customers. The aim of Schibsted Payment is to have one easy and secure payment solution for all Schibsted products. The Board proposes allocating a dividend of NOK 3.50 (3.50) per share for the 2012 financial year SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT 71 D 36

340 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT Analysis of the 2012 financial statements Schibsted Media Group presents its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) that are approved by the EU. SCHIBSTED MEDIA GROUP (NOK million) Operating revenues 14,763 14,378 Operating expenses (12,769) (12,232) Gross operating profit (EBITDA) before share 1,994 2,146 profit (loss) from associated companies Share of profit(loss) from associated companies Gross operating profit (EBITDA) 2,028 2,185 Depreciation and amortisation (479) (505) Impairment loss (548) (191) Other income and expenses (257) (50) Operating profit 744 1,439 SCHIBSTED MEDIA GROUP (NOK million) Operating revenues 14,763 14,378 Gross operating profit (EBITDA) 2,028 2,185 EBITDA margin 14 % 15 % Gross operating profit (EBITDA) ex. SCM Investment phase 2,558 2,597 EBITDA margin ex. SCM Investment phase 17 % 18 % SCM Investment phase (530) (412) Operating revenues and operating margins (EBITDA) 2009 to 2012: 16,000 Revenues MNOK EBITDA margin 12,000 10,000 8,000 6,000 2, Operating revenues reported for the group increased by three percent from 2011 to The underlying growth (adjusted for acquisitions and disposals of enterprises and currency fluctuations) is also three percent. The increase in income stems from good growth within the Group s online classifieds as well as digital media within the media houses. The Online classifieds segment had underlying growth in operating revenues from 2011 to 2012 of 16 percent. This growth was mainly driven by Leboncoin, Finn and Blocket. The established operations within Schibsted Classified Media had an underlying growth of 16 percent from 2011 to Underlying growth in advertising revenues from 2011 to 2012 was four percent (including online classifieds). The structural migration from print to online caused the advertising revenues from print to decrease by an underlying nine percent. Online newspaper advertising had underlying growth of a considerable decline in the circulation volumes of the single-copy newspapers VG and Aftonbladet. The decline in volumes was partly compensated by price increases, and total single-copy newspaper circulation revenues fell by an underlying six percent. The subscription newspapers are facing the same challenges with declines in circulation, though on a smaller scale. The circulation revenues from subscription-based newspapers increased by an underlying one percent. The Group s total operating expenses experienced an underlying increase of four percent. In order to capture opportunities in the market and build number-one positions, Schibsted is investing significant amounts in the launch of online classifieds in new markets based on Blocket technology, and the roll-out rate increased in The projects are characterized by a short development phase and active marketing in order to build market positions and future growth. In 2012, the consolidated million) from the portfolio of classified websites in the investment phase. In addition, Schibsted has invested in digital competence and technology. Schibsted Payment (SPiD), CRM systems, mobile platforms and web TV are examples. At the same time, costs in the print newspapers have been reduced. The number of full-time employees in the online businesses is 38 (33) percent of total full-time employees in the Schibsted Media Group. For print operations, the number of full-time employees is 56 (62) percent of the total. in certain markets. The losses are related to the Group s online classifieds operations in Spain and the Group s 35 percent ownership interest in Metro Nordic Sweden AB. Other income and expenses in 2012 of net NOK 257 million (NOK 50 million) consist mainly of restructuring costs of NOK 283 million, relating mainly to the announced cost efficiency program for the subscription newspapers in Norway, Sweden and the free newspaper in Spain. A write-down of inventories was carried out in Schibsted Forlag with NOK 23 million. Gains from remeasurement of previously held equity interests in business combinations achieved in stages relate to Aspiro and Let s Deal with NOK 57 million. SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT 73 D 37

341 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT EVENTS AFTER THE REPORTING PERIOD There are no events to report. THE BALANCE SHEET At year-end 2012, 16.3 billion). Non-current assets constitute the largest component at NOK 11.8 billion (NOK 12.5 billion). The carrying amount of the Group s goodwill and other intangible assets was NOK 9.1 billion (NOK 9.6 billion). The carrying amount of the goodwill and intangible assets with indefinite lives was tested as at 31 December In 2012 goodwill was impaired by NOK 350 million (NOK 120 million) and intangible assets by NOK 7 million (NOK 65 million). Schibsted s holding of treasury shares, acquired under current authorization from the Annual General Meeting to increase the number of treasury shares to 10,800,361 during a period of 12 months, is reduced from 1,061,958 shares to 899,155 shares during The decrease is a result of shares sold and transferred to employees in connection with various incentive programs. LIQUIDITY Schibsted s from NOK 1.6 billion at 31 December Schibsted issued bonds both in March and December At the end of 2012, Schibsted has a diversified loan portfolio in relation to both lenders and terms to maturity. The revolving credit facilities mature in 2013 and The facility with maturity in 2013 was refinanced first quarter of Schibsted s revolving credit facilities and bank loans are subject to financial covenants linked to the ratio of net interest-bearing debt to gross operating profit (EBITDA). This ratio was 0.71 at the end of 2012 and is well within the financial covenant. The Group s liquidity reserve consisted of long-term unutilized revolving credit facilities reserve of 23 percent of annual revenues. 74 CASH FLOWS Net cash flows from operating activities in 2012 were NOK 1,275 million compared to NOK 1,616 million in Reduced EBITDA and an increase in payment of income tax are the main reasons for the reduction from the previous period. The net cash flows from financing activities were NOK -591 million in 2012 (NOK -1,158 million). Dividends paid to shareholders of Schibsted ASA and non-controlling interests NOK 183 million (NOK 39 million) and net cash payments from changes in ownership interests amount to NOK 39 million (NOK 596 million). COST REDUCTION MEASURES The structural changes in the media landscape are happening faster than ever before. Tablets and smartphones are accelerating the shift to digital platforms. In this context Schibsted s media houses need to invest substantially in digital competence and at the same time reduce the cost base. In August 2012 Schibsted Media Group announced an ambition to reduce costs with a full-year effect of approximately NOK 500 million over the next two years in the subscription-based newspapers of Norway and Sweden, in addition subscription-based media houses Aftenposten, Bergens Tidende, Stavanger Aftenblad and Fædrelandsvennen. Around SEK 50 million of cost reduction measures are planned in the Swedish media houses, mainly Svenska Dagbladet, and measures totaling a full-year effect A substantial part of the cost reductions will be realized through headcount reductions. Restructuring charges of NOK 260 million are charged to the operating profit in the second half of 2012, on the Other income and expenses line. RESEARCH AND DEVELOPMENT ACTIVITIES Schibsted s vision is Shaping the media of tomorrow. Today.. To achieve this, we have to constantly innovate and improve. This is done systematically across business areas, whether it is media houses or online classifieds. Schibsted Media Group invests substantial resources in improving as well as developing products for new platforms and markets. SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT 75 D 38

342 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT We Are Innovative is one of our four behavioral values. Schibsted has therefore established awards for Innovation of the Year and Best Improvement. The Innovation Award is awarded for launches of new products or services, both for editorial and commercial products. The Improvement Award concentrates on how we have developed our employees or organizations. The Schibsted Innovation Award 2012 was awarded to Fædrelandsvennen for its user paymentproject. Fædrelandsvennen was the first media house in Schibsted to implement user payment on a broad basis for digital content. They have changed their product offering from print subscription to a subscription that includes print and all their digital platforms. The other finalists of the Schibsted Innovation Award in 2012 were 701 Search Group (Singapore) and Schibsted Payment (SPiD) (Norway). Finn Bil won the Improvement Award 2012 for their price optimization project. The case is replicable in the rest of Finn and the methodology used is of interest for all Schibsted subsidiaries. The other finalists were Aftonbladet and Willhaben. A special tribute must be paid to Finn.no. The company reached the final of the internationally renowned competition Management Innovation exchange (MIX) for best innovation. MIX is a collaborative project between the Harvard Business Review and McKinsey Quarterly that aims to spotlight and share the experiences of the world s leading companies in management, innovation, finance and technology. The finalists are companies that have taken steps within from all over the world entered the first round of the competition before the jury nominated All the Group s companies are making continuous efforts to further develop existing products and to develop products that will provide new revenue flows. Expenditure related to the development of intangible assets will normally be charged to the income statement as the requirement from an accounting standpoint to demonstrate probable future economic value normally will not be met. 76 Analysis of market risk Schibsted s advertising revenues are to a certain extent affected by developments in real economy figures such as GDP growth and unemployment. Advertising revenues amounted to 59 percent (59 percent) of total revenues in Advertising revenues from the recruitment markets, and to some extent real estate, are the segments most subject to cyclical fluctuations. The print newspapers in Schibsted Norge, InfoJobs Spain, Anuntis Spain and parts of Finn.no in particular have advertising revenues from these segments. The Spanish companies in particular are struggling in a tough economy. Future growth is expected to a large extent to come from consumer-oriented classifieds services such as Blocket and Leboncoin. These revenues are not considered to be very cyclical. Although Schibsted has Norwegian krone (NOK) as its basic currency, its operations outside Norway mean that it is also exposed to fluctuations in the exchange rates of other currencies, mainly the Euro (EUR) and the Swedish krona (SEK). Schibsted has exchange rate risks linked to both balance sheet monetary items and the translation of investments in foreign operations. The Group makes use of loans in foreign currencies, forward contracts and an interest-rate and currency swap to reduce its foreign exchange exposure. The loans in foreign currencies and forward contracts are managed actively in accordance with the Group s strategy in order to reduce the currency risk. Exchange rate fluctuations may affect the ratio of net interest-bearing debt to gross operating profit (EBITDA). A general 10 percent deterioration in NOK will increase the Group s net interest-bearing debt by around NOK 60 million as at 31 December 2012 and would cause a change in the ratio of net interest-bearing debt to EBITDA of around Virtually all of the Group s debt as at 31 December 2012 was subject to a variable interest rate. The Group s debt is affected by changes in the interest rate market. A change of one percentage point in the variable interest rate changes Schibsted s interest expenses by Schibsted uses newsprint and is therefore exposed to price fluctuations in the paper market. A one-percent change in price alters the Group s raw material costs by around NOK 8 million per year. The price of newsprint in Norway, Sweden, the Baltics and Spain is negotiated with suppliers each year and is already fixed for At the end of 2012, the Group had limited exposure to the stock market and therefore less risk of losses. Since many of the Group s products are sold on the basis of advance payment (subscription sales), there is little credit risk associated with the Group s circulation revenues. Deposit schemes and credit insurance policies have been established for parts of the Group s advertising revenues. A lot of the private online ads are paid for by credit card when advertisements are ordered. SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT 77 D 39

343 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT In 2009, the Ministry of Culture nominated the Mediestøtteutvalget (Media Support Committee), with the mandate of carrying out a comprehensive assessment of the use of financial instruments in the media sector, including the direct press subsidy schemes and exemption from VAT. The committee delivered its report in December The committee was divided on the question of continuing the zero-vat rate for print newspapers. The majority believed that the zero rate for newspapers should be continued, combined with a low VAT rate (8 percent) for digital services, while a small minority suggested that the low rate (8 percent) should be introduced for all types of media. The recommendation was distributed for consultation during the first half of The case has since been frequently debated in Norwegian media circles and in the cultural policy community. However, the Ministry has still not concluded its deliberations and it is still not clear when a proposal will be presented to the Norwegian Parliament. 16 May 2011, the Norwegian Government appointed an expert group to examine the rules concerning media ownership. The dramatic changes in the media sphere, particularly within technology and ownership structures, have meant that the time is ripe for a full review of the media ownership rules. Schibsted has submitted its opinions in the consultation process to the expert committee, and participated in an oral hearing. The Group has actively participated in the public debate on the matter. Schibsted continues to follow the ongoing process and debate on media ownership. 78 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT 79 D 40

344 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT Operating segment analysis ONLINE CLASSIFIEDS ONLINE CLASSIFIEDS ONLINE CLASSIFIEDS (NOK million) Operating revenues 3,647 3,198 Gross operating profit (EBITDA) 1, Gross operating profit (EBITDA) ex investment phase 1,628 1,405 Gross operating profit (EBITDA) investment phase (530) (412) Schibsted has strong, profitable positions in the online classifieds markets in Norway, Sweden, France, Spain, Italy, Ireland and Austria. This business area also includes a portfolio of classified ad websites in an investment phase in a number of different markets. Main features in 2012: focusing on creating further growth through innovation and product improvement alongside continued roll-out the concept in interesting markets. (after adjusting for exchange rate fluctuations and acquisitions and disposals). on the margin. 80 ESTABLISHED OPERATIONS NORWAY - FINN.NO Finn.no is clearly the number-one website for online classified ads in Norway. The company is the market leader in the field of car, real estate, recruitment and generalist ads. FINN.NO (NOK million) Operating revenues 1,266 1,135 Gross operating profit (EBITDA) before share of profit (loss) from associated companies Main features in 2012 growth of 12 percent and a record profit. increased by 15 percent and travel by 11 percent. The growth was due to a combination of price and volume. higher level of activity in Finn.no maintains status as the largest website in Norway, measured by number of page views. SWEDEN BLOCKET.SE/BYTBIL.SE Blocket.se is the number-one website for online classified ads in Sweden as well as one of the country s strongest brands. Bytbil.se is the leading classified site for cars in Sweden. BLOCKET.SE/BYTBIL.SE (SEK million) Operating revenues Gross operating profit (EBITDA) before share of profit (loss) from associated companies Main features in 2012 affected by a weak car sales market in Sweden, with fewer second-hand transactions. Blocket saw a marked increase in traffic volumes in 2012, with a strong contribution from mobile. Blocket Jobb and Blocket Eiendom were launched in August/September 2011 and have shown positive trends in 2012 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT 81 D 41

345 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT FRANCE LEBONCOIN.FR Leboncoin er det klart ledende nettstedet for online rubrikk (bil og eiendom) i Frankrike. Nettstedet er blant Frankrikes fem største når det gjelder trafikk målt i antall sidevisninger (kilde: Comscore desember 2012) LEBONCOIN.FR (EUR million) Operating revenues Gross operating profit (EBITDA) before share of profit (loss) from associated companies Main features in 2012 marketing and establishing a support organization. OTHER ESTABLISHED OPERATIONS Anuntis (Spain) consists of the leading generalist site, Segundamano.es, the leading classified site for cars, Coches.net, and the Spanish real estate site, Fotocasa.es. Anuntis has managed to increase revenues from 2011 by two percent in a difficult Spanish market. Infojobs (Spain). Unemployment has risen to 26 percent in Spain, and in a very demanding year InfoJobs.net revenues fell 12 percent compared to 2011 but has healthy margins. The site has retained its position as the preferred job portal, both for companies and jobseekers. Donedeal.ie (Ireland) is the leading generalist website in Ireland. It maintains a leading position in Ireland in brand recognition and has reported strong revenue trends in Subito.it (Italy) is the leading generalist classified site in Italy. Subito.it reports as an established operation from 2012 and has strengthened both its competitive position and its financial performance through continued growth in traffic and advertisements in Willhaben.at (Austria) is the largest and best-known classified site in Austria. In 2012 Willhaben strengthened its leading positions in the real estate and generalist segments, while still growing its car and job verticals. 82 INVESTMENT PHASE Schibsted Classified Media has a clear goal of laying the foundations for future growth by establishing in new markets. This is done by establishing operations that are primarily based on the successful Swedish Blocket.se concept. Experiences from successful establishments in core markets form the basis for investments in online classifieds in new markets. 32 countries. The online concept was launched in 17 of these countries without a local organization. and as a result of increased marketing in previously established markets. Main features in 2012 Investments in new operations (investment phase) in 2012 amount to a total of NOK -530 costs. SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT 83 D 42

346 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT SCHIBSTED NORGE MEDIA HOUSE The media houses in Schibsted Norge comprise single-copy print and online newspapers in VG, the subscription-based newspapers; Aftenposten, Bergens Tidende, Stavanger Aftenblad and Fædrelandsvennen, printing plant operations, the book publishing company Schibsted Forlag and the online growth company Schibsted Vekst. SCHIBSTED NORGE MEDIA HOUSE (NOK million) Operating revenues 6,485 6,529 Gross operating profit (EBITDA) Main features in 2012 Subscription revenues increased by one percent, single-copy revenues decreased by two percent. decreased by nine percent. online. Print newspapers are losing market shares both in the readership and advertising markets, and must adapt and transform rapidly in order to be relevant and profitable in the digital future. and ongoing efficiency measures that are progressing as planned. At the same time, more resources are allocated to digital activities. The ambition is to create world-class digital media houses. The declining trend in print advertising is expected to continue, and continued online growth and innovation will be crucial to secure the future with a basis of high-quality editorial products combined with healthy financial results. 84 SUBSCRIPTION-BASED NEWSPAPERS (the former Media Norge newspapers) Schibsted Norge owns leading subscription-based newspapers in four of Norway s largest cities: Oslo, Bergen, Stavanger and Kristiansand. Each newspaper also has online editions which are leaders in their markets. SCHIBSTED NORGE SUBSCRIPTIONBASED NEWSPAPERS (the former Media Norge newspapers) (NOK million) Operating revenues 4,109 4,178 of which print 3,759 3,895 of which online Gross operating profit (EBITDA) before share of profit (loss) from associated companies of which print of which online Circulation weekdays (copies) 1) 399, ,148 1)Total of Aftenposten, Bergens Tidende, Stavanger Aftenblad and Fædrelandsvennen Adv. volume (column meters) 130, ,762 Main features in 2012 percent as a result of price increases. The regional newspaper Fædrelandsvennen launched a paid print/digital bundle subscription product. The market response has been positive and the other three subscription-based newspapers in Norway will introduce similar products during This process is on track. SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT 85 D 43

347 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT SINGLE-COPY NEWSPAPERS - VERDENS GANG (VG) Verdens Gang publishes Norway s clear leader in single-copy newspapers. The online edition, VG.no, is the largest online newspaper in Norway and among the absolute biggest websites, irrespective of category. VERDENS GANG (NOK million) Operating revenues 1,920 1,906 of which print 1,429 1,498 of which online of which other Gross operating profit (EBITDA) before share of profit (loss) from associated companies of which print of which online of which other 4 8 Circulation weekdays (copies) 188, ,588 Adv. volume (column meters) 10,713 11,529 Main features in 2012 advertising and web TV. The increase more than compensated for the shortfall in print advertising revenues. fell by 11 percent and Sunday circulation by 9 percent. With effect from 1 January 2012, the single-copy sales price for the Monday to Thursday edition was increased from NOK 12 to NOK 13 and from NOK 15 to NOK 20 for the Sunday newspaper sold in newsstands. This contributed to curb the decrease in circulation volumes. of good cost control and lower circulation volumes. and content, particularly linked to web TV. tained during the year. traffic records. 86 SCHIBSTED SVERIGE MEDIA HOUSE Schibsted Sverige consists of three key business areas: Aftonbladet (print-based singlecopy sales and online newspaper), Svenska Dagbladet (print-based subscription and online SCHIBSTED SVERIGE MEDIA HOUSE (NOK million) Operating revenues 3,538 3,611 Gross operating profit (EBITDA) Main features in 2012 Subscription revenues decreased by four percent and single-copy revenues decreased by eight percent. decreased by 10 percent. The increase in online advertising revenues more than compensated for the shortfall in print advertising revenues. like Schibsted Norge media house. Print newspapers are losing market shares both in the reader- and advertising markets and must adapt and transform rapidly in order to be relevant and profitable in the digital future. and on-going efficiency measures that are progressing as planned. At the same time more resources are allocated to the digital activities. The ambition is to create world class digital media houses. The declining trend in print advertising is expected to continue, and continued online growth and innovation will be crucial to secure the future with a fundament of high quality editorial products combined with healthy financial results SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT 87 D 44

348 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT SINGLE-COPY NEWSPAPER - AFTONBLADET Aftonbladet is a newspaper house with number-one positions in both the print and online sectors. Aftonbladet is Sweden s leading news media in all channels: print, online, mobile and web TV. AFTONBLADET (SEK million) Operating revenues 2,168 2,239 of which print newspaper 1,621 1,776 of which online newspaper Gross operating profit (EBITDA) before share of profit (loss) from associated companies of which print newspaper of which online newspaper Adv. volume (column meters) 17,725 18,328 Main features in 2012 to Online advertising increased by 18 percent and more than compensated for the short in print advertising. Mobile advertising is contributing strongly to the growth. from Monday to Saturday from SEK 11 to SEK 12 from 16 May 2011 and an increase from SEK 12 to SEK 13 from July 2012 made positive contributions. result of good cost control and lower circulation volumes. especially in web TV. which means that total reach has increased by 20 percent. 88 SUBSCRIPTION BASED NEWSPAPER - SVENSKA DAGBLADET (SvD) Svenska Dagbladet is the third-largest subscription-based newspaper in Sweden and has a particularly strong position in the Stockholm region. SVENSKA DAGBLADET (SEK million) Operating revenues 1,087 1,148 of which print newspaper 1,020 1,102 of which online newspaper Gross operating profit (EBITDA) before share of profit (loss) from associated companies of which print newspaper of which online newspaper 17 8 Circulation weekdays (copies) 174, ,600 Adv. volume (column meters) 22,780 24,796 Main features in 2012 Circulation revenue increased by four percent. Price increases curbed the effect of the decline in volume. decreased by four percent in to implement cost measures of around SEK 50 million during the coming two years for Svenska Dagbladet. This process is on track SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT 89 D 45

349 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT SCHIBSTED TILLVÄXTMEDIER companies benefit greatly from the strong traffic positions and brands of Schibsted s established operations in Sweden. SCHIBSTED TILLVÄXTMEDIER (SEK million) Operating revenues 1, of which Hitta Gross operating profit (EBITDA) before share of profit (loss) from associated companies of which Hitta Main features in 2012 Suredo.se, Kundkraft.se and Mobilio.se) and shows a good underlying growth in proving the product and the sales organization during 2012, which affects the total result. results, and overall this made a positive contribution to the operating profit, but the personal finance operations were the most important growth drivers. The operating expenses are charged with high marketing costs in order to build future positions. 90 MEDIA HOUSES INTERNATIONAL Media House International consists of the Group s free newspapers, 20 Minutes in France and 20 Minutos in Spain and the media house operations (newspapers, magazines and TV channels) in the Baltics. MEDIA HOUSES INTERNATIONAL (NOK million) Operating revenues 939 1,004 of which Eesti Meedia (Baltics) of which 20 Minutes Gross operating profit (EBITDA) (3) 38 of which Eesti Meedia (Baltics) of which 20 Minutes (48) (20) Main features in 2012: Spain, but also France and Eesti Meedia experienced decreased revenues and EBITDA. part of Schibsted s ongoing transition program, and cost measures with an annual effect expenses for the Spanish operations decreased by six percent from 2011 to SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT 91 D 46

350 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT OUTLOOK ONLINE CLASSIFIEDS A good rate of growth is expected for Online classifieds. This type of business is less exposed to economic cycles than traditional advertisement-based revenue models. Continued migration from print to online is expected. The Group expects to see a good growth in the traffic for online classifieds businesses in a number of markets, and this business segment is expected to continue to report good growth combined with high margins. Leboncoin.fr has the potential to increase penetration and broaden its revenue base. Leboncoin.fr therefore has a good basis for continued strong development. Our established operations in earlier stages of development in Italy (Subito.it), Austria (Willhaben.at) and Ireland (DoneDeal.ie) are expected to see good traffic increases and strengthened rates of monetization going forward. Schibsted is continuing to invest for future growth in the online classifieds operations. Operations in the established phase focus on innovation and product improvements. The portfolio of operations in the investment phase, mainly roll-outs of the Blocket concept, is showing positive results in terms of strong traffic growth. This has led to increased confidence in the strategy. The activity and investments will increase in 2013, and our aim is to concentrate on our core markets and expand into selected new geographical areas. Our clear goal is to win the number-one positions in the markets in which we are present. MEDIA HOUSES Our media houses will be affected by the ongoing structural migration from print to online. Print newspapers are likely to lose market shares both in the readership and advertising markets going forward. Online advertising is likely to take market shares. This particularly applies to mobile platforms, where Schibsted has strong positions. In the consumer finance segment, Schibsted has seen strong progress in This is expected to continue. WORLD-CLASS DIGITAL MEDIA HOUSES As a consequence of the structural shift, Schibsted Media Group must adapt and transform its media houses rapidly in order to remain relevant and profitable in the digital future. The aim is to create world-class digital media houses. This implies substantial investments in digital competence and technology. Payment solutions (SPiD), CRM systems, mobile platforms, web TV and strengthened national sales units are examples. At the same time we will adjust the cost base. Strong editorial products will continue to be the basis for healthy and profitable media house businesses also in the digital future. The new profitability measures will reduce cost by approximately NOK 500 million over the coming two years. The structural shift and our transformation process are expected to lead to softer margins for the media houses than we have seen in the past couple of years. 92 GOING CONCERN ASSUMPTION In accordance with Section 3-3a of the Norwegian Accounting Act, the Board confirms that the Group is a going concern. The 2012 financial statements have been prepared on this assumption. The assumption is based on the Group s long-term strategy and forecasts. The Group s economic and financial position is good. STATEMENT ON CORPORATE GOVERNANCE In accordance with Section 3-3b of the Norwegian Accounting Act, a statement on corporate governance has been prepared. The statement is included as a separate document in the annual report. SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT 93 D 47

351 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT Information on the environment WORKING ENVIRONMENT Schibsted aims to be a leading company in Europe in terms of developing talent, managers and employees. The work on attracting talented people, developing good managers and creating competent organizations is given high priority by the senior management of the Group and its subsidiaries. Offering competitive terms of employment and a stimulating working environment with good opportunities for personal and professional development form part of this strategy. Of the Group s companies, the operations of the printing plants in particular involve a certain risk of injury. At year-end, Schibsted owned six newspaper printing plants: Schibsted Norge s printing plants in Oslo, Bergen (2), Stavanger and Kristiansand in Norway and EXTERNAL ENVIRONMENT Schibsted Media Group is a large player in the market for reuse of products through our online classifieds sites. Our marketplaces extend the useful life of a range of products and contribute to reducing the need for manufacturing new products The production of the Group s newspapers is a digital process up to the printing stage, and has little impact on the external environment. A newspaper printing works has a relatively neutral effect on the environment, and the chemicals used to produce the newspapers are dealt with as special waste and recycled as far as possible. Agreements with approved transport companies ensure that special waste is collected safely. Normal operations do not involve any danger of emissions from the printing plants. To increase environmental credibility, Kroonpress launched the Greenline Print ecolabel and online platform ( for life cycle carbon footprinting of printed products. It is targeted at publishers, printers and the general public, and caters for environmentally-conscious decision-making in the printing industry. The printing plants used 118 thousand (121 thousand tons) tons of paper, 2.7 thousand The Group s newspaper companies in Norway and Sweden arrange for unsold newspapers to be returned and resold for recycling. The Group s other operations only pollute the environment to a minor extent. 94 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT 95 D 48

352 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT Organizational development While our business strategies focus on what to deliver and produce, our organizational strategies focus on how this should be done. The overall goal for organizational development in Schibsted Media Group is to enable our employees and organizations to deliver on their business goals. Efficient processes, the right competence, clear goals, disciplined collaboration, feedback and follow-up are some of the key words for focus areas within organizational development. Schibsted Media Group s vision is Shaping the Media of Tomorrow. Today. Our mission is Empowering people in their daily life, and our four behavioral values are: We have integrity. We are innovative. We are a team. We are here to win. We want the values to live and be used both as a guide for individual behavior and when major decisions are being taken. Since the launch of our new values, we have worked to communicate them to the organizations, with our top 300 leaders as the main target group. We expect these managers to behave in line with the values and we focus on this in development dialogues, 360 degree leadership evaluations and employer surveys. The need for new digital growth and restructuring of our media houses governs the direction of our priorities in the organizational development area, both at corporate level and in the subsidiaries. The Schibsted companies have a strong culture for innovation, and we are now working on fueling all this enthusiasm with new knowledge and suitable structures. Restructuring requires a lot of methods and tools from HR, Lean and other disciplines within the organizational development area. Schibsted Media Group is increasingly becoming a technology-driven business. This means that we have to make ourselves attractive to technically skilled employees and at the same time work in a structured way to enhance the competencies of current employees. Digital talents are attractive to companies in many industries. We have entered this arena and have to compete for the brightest ones. The same goes for our best managers. We have to work hard to recruit them and to give them opportunities for development. Internal mobility is a particularly important area where we look at Schibsted as one labor market with a whole range of opportunities. This is one feature that makes us attractive to talented managers. Gender equality has been an important focus area for the group for some years. We know that a good gender balance at all management levels is good for the business and for the working environment. Our focus is on gender equality, both within corporate management and in the subsidiaries. Half of our customers and readers are women. This fact should be reflected in the composition of our management teams, thus benefiting the working environment and the companies products. As the Group is becoming increasingly internationalized, it will be important to ensure a gender balance in all relevant management groups. Thorough recruitment processes, mentor programs and appointment as project leaders are some of the efforts we use to improve the gender balance. DISCRIMINATION The companies working environment committees are continuously striving to promote a good working environment and thus minimize the chance of discrimination taking place among employees in the workplace. Further measures to promote this objective as stated in the Norwegian Anti-Discrimination Act are not regarded as being necessary. 96 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT 97 D 49

353 SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT Dividend and capital structure Schibsted is a listed company that aims to provide a competitive rate of return based on healthy finances. Schibsted s Board believes it is essential that the company s shares are perceived to be an interesting investment option. It is therefore one of the Board s goals to maximize the shareholders return through long-term growth in the share price and dividend. The Board will attempt to ensure that the price of the company s shares reflects, as far as possible, the group s long-term earnings capacity. Schibsted has strong positions in the Scandinavian media markets. The media houses strong brands and market-leading positions help to ensure a good cash flow, even with continuing structural changes and lower profitability for print newspapers. Online classified operations both in Scandinavia and internationally contribute with strong, profitable growth was a good year for Schibsted, with strong revenues and improvements in many of the markets in which the Group operates. The Group s financial flexibility has been stable during the year. At the end of 2012, the Group had a strong balance sheet, good cash flow and healthy liquidity position. Schibsted s capital structure shall be sufficiently robust to maintain the desired scope of action and exploit growth opportunities based on strict assessment of our allocation of capital. Schibsted will place emphasis on having a fixed dividend payout ratio which, over time, is an economic slowdown, the company will aim to pay a dividend at the upper part of the target range provided the Group s capital structure allows this. Schibsted is currently in a phase of investments in online activities which forms a fundament for future growth in profitability. The Board has taken a balanced approach to the dividend proposal, and taken into consideration the fact that the group to an increasing degree strengthens its growth profile. On this background, the Board will recommend to the General Meeting that a dividend of NOK 3.50 per share be distributed for the 2012 financial year. This is unchanged compared to The total number of shares is 108 million, and a dividend of NOK 3.50 per share means a payout of around NOK 375 million (adjusted percent of the normalized cash flow for Schibsted ASA Schibsted ASA is the parent company of the Group. The company s accounts have been presented in accordance with the Norwegian Accounting Act and generally accepted accounting practices in Norway (NGAAP). of NOK 258 million (NOK 260 million) relate to Group administration services. The operating loss in 2012 was NOK -203 million (NOK -213 million). Net financial items include distributions (dividends and group contributions) from subsidiaries of NOK 621 million and gains of NOK 2,062 million recognized, related to intragroup sales of shares in subsidiaries (Verdens Gang AS and Schibsted Forlag AS). The pre-tax profit on ordinary operations Schibsted ASA had distributable equity of NOK 7,863 million (NOK 5,788 million) at the end of assigned to the Group s companies. The Group s CEO is Schibsted ASA s President and CEO. THE BOARD OF SCHIBSTED ASA OLE JACOB SUNDE CHAIRMAN OF THE BOARD KARL-CHRISTIAN AGERUP MARIE EHRLING JONAS FRÖBERG ANNE LISE VON DER FEHR ARNAUD DE PUYFONTAINE EUGENIE VAN WIECHEN ROLV ERIK RYSSDAL, CEO SCHIBSTED ANNUAL REPORT 2012 BOARD OF DIRECTORS REPORT Oslo, 20 March 2013 The Board of Schibsted ASA proposes allocating the profit for the year as follows: PROFIT FOR THE YEAR NOK 2,405 million PROPOSED ALLOCATION: Allocated to dividend, NOK 3.50 per share NOK 375 million Transferred to other equity NOK 2,030 million Group contributions to subsidiaries total NOK 491 million. EVA BERNEKE GUNNAR KAGGE CHRISTIAN RINGNES 99 D 50

354 SCHIBSTED ANNUAL REPORT 2012 DECLARATION OF MANAGEMENT REMUNERATION Declaration on management remuneration Declaration regarding the determination of salary and other remuneration to the management of Schibsted ASA 1. THE STARTING POINT FOR THE COMPANY S MANAGEMENT REMUNERATION POLICY The Group Board of Schibsted ASA ( Schibsted ) considers the employees as the Group s most important resource. Having a thorough remuneration policy in order to attract and retain skilled employees is therefore crucial to our business. The company s human resource policy covers several factors, including terms related to pay and pension, working environment, various development programs and more traditional employee benefits. The management remuneration policy is part of the company s human resource policy. 2. WHO IS COVERED BY THE GUIDELINES? The guidelines regarding management remuneration is determined by the Group Board. Schibsted s Group CEO and Group management are directly covered by the guidelines. The guidelines are also normative for the remuneration of other senior managers and management groups in core businesses. 3. THE PERIOD FOR WHICH THE DECLARATION APPLIES The declaration applies for the coming financial year, cf section 6-16 a) (2) of the Norwegian Public Limited Companies Act. The Group Board will base its work on this declaration, following discussions at the Annual General Meeting on 30 April THE MAIN PRINCIPLES OF THE COMPANY S MANAGEMENT REMUNERATION POLICY The Group Board regularly assesses the Group s remuneration policy, to ensure that the remunerations offered are reasonable, well balanced and competitive. The fixed salary of the Group s managers is moderate and forms the basis for the assessment of various additional benefits as parts of the managers total remuneration, annual variable pay, long-term incentive program, pension schemes and other benefits. The Group s further growth and profitability depend on the employees efforts to ensure 100 the continuous development of the operations and improvement in profitability. To motivate managers to make such efforts, variable pay and other incentive schemes are linked to factors that the managers can influence. These schemes must be reasonable in relation to the Group s results and value creation for the shareholders that year FIXED SALARY The fixed salary (the gross annual salary before tax and before variable pay and other additional benefits have been calculated) shall be an important part of the manager s salary. The increase in fixed salaries is expected to be moderate in DIRECTORS FEES Employees do not receive directors fees for Board appointments they accept as part of their work for the Group. Employee representatives are exempted from this rule BENEFITS IN KIND AND OTHER SPECIAL SCHEMES Senior executives will normally be given the benefits in kind that are common market practice, i.e., telephone expenses, a laptop, free broadband connection and use, newspapers, a company car or car allowance and free parking. There are no special restrictions on the type of other benefits that can be agreed on. The Group s manager-loan scheme was wound up in 2006 and has not been offered to 800,000 in return for a charge on the borrower s home. Schibsted ASA has posted an unconditional guarantee of NOK 5 million for the total loan portfolio, which currently represents approximately NOK 12 million VARIABLE PAY AND OTHER INCENTIVE SCHEMES Guidelines have been established for the use of variable pay and other incentive schemes in the Group. The Group Board believes there is a need to be able to offer various incentive schemes in order to ensure long-term value creation and entrepreneurship. Such incentive schemes may consist of short-term incentives (normally annual) and long-term incentives (normally three-year) SHORT-TERM INCENTIVES Senior executives take part in an annual variable pay program which is linked to the attainment of targets each year. Other Group employees may also take part in such schemes. The variable pay is limited to a maximum of six months salary for the Group CEO and varies from four to six months salary for other members of the Group management. For the top manager/editor in chief of larger units, the payment in one year is normally limited to four months salary. For other employees that take part in short-term incentive schemes, the limit is normally three months salary. The variable pay is two-parted. One part is linked to financial criteria, the other to strategic, operational and organizational criteria. These criteria form part of an overall assessment. SCHIBSTED ANNUAL REPORT 2012 DECLARATION OF MANAGEMENT REMUNERATION 101 D 51

355 SCHIBSTED ANNUAL REPORT 2012 DECLARATION OF MANAGEMENT REMUNERATION The payment of variable pay to senior executives for the 2012 financial year is shown in note 27 to the financial statements LONG-TERM INCENTIVE SCHEMES The objective of having long term incentive schemes is to promote long-term value creation. By receiving a minor portion of the shareholding in the company, the managers interests are aligned with the shareholders interests. In 2010, Schibsted s options program was replaced by an annually rolling three-year performance-based share purchase program (the LTI program ) in The program was expanded in 2012 to include several Online classifieds companies and management groups. The introduction of an LTI program for a large group of managers means that we have common rules for the use of incentive schemes in large parts of the Group. This in turn, leads to administrative savings and creates greater predictability and equal treatment throughout the Group. The LTI program provides settlement in Schibsted shares, mainly based on the performance and target achievement of the participant s employer company during the three-year period. The ownership of Schibsted shares promotes common goals and contributes to greater cooperation between the companies. Specialized incentive programs may still be introduced for selected companies, especially in growth and start-up companies. Such programs will also be long-term, but may contain elements of cash settlements in addition to settlements in Schibsted shares. Per today there are four such local programs running in selected classifieds companies. Two of the programs will be terminated early 2013 and the remaining two programs will run through 2013.The main elements of Schibsted s LTI program are: Schibsted s LTI program is divided into four participation levels. Level 1 is for the Group selected key personnel in the Group, as well as the managers/management groups in key Classifieds. For each level, the participants are given a defined Basic Amount, calculated as a percentage of their fixed salary. The Group Board has stipulated guidelines for the percentage to be allocated to the various participant levels in order to ensure flexibility and mobility, while also taking into account individual pay differences and variations in the compensation schemes. when the program starts in the form of Schibsted shares, and has a lock-in period until the program expires (3 years). If a Level 1 or Level 2 participant leaves the company during the lock-in period, shares that were bought for the Share Purchase Amount are to be handed 102 linked to three-year performance criteria. At the end of the three-year period, the participants receive settlement in Schibsted shares based on their goal achievement, and the number of shares is calculated based on the average price during the program s three-year period. Level 1, 2 and 3 participants receive the full Performance Amount after three years. Level 2/3 after a one year lock-up period. The maximum settlement in each program will depend on the target achievement during the period. If the minimum target is not achieved during the three-year period, only the Share Purchase Amount will be paid at the end of the three-year program. The Group Board determines the allocation to the CEO. Other allocations are determined by the CEO within the program s frameworks and in compliance with the Board s allocation guidelines. The CEO s allocations are reported to the Board. Allocations under the program take place subject to the approval of the Annual General Meeting that year and thus normally by the end of the first half of each start-up year. Guidelines apply to the adjustment of the targets during the measurement period. The final outcome of the LTI program is determined by the Group Board. There is normally not any partial accrual if a participant leaves the company during the accrual period. An exception applies to the Share Purchase Amount for Level 3 and Level early retirement, normal retirement or other special reasons. In such cases, the right to partial accrual is granted. Level 1 and Level 2 participants will not be able to sell their shares in the market until further defined requirements as to the minimum ownership of Schibsted shares are met. The minimum ownership requirements vary depending on the allocation level. The mini- The final cost of the 2013 LTI program measured as the cost over the program s cycle, depends, among others on the number of participants, the individual participant s salary on the allocation date, share price developments and the target achievement during the three-year period. The cost of the LTI program in 2013, with 112 participants, is estimated to be around NOK 76 million if the expected target achievement takes place, excluding employers contributions. If the maximum outcome is achieved, the cost is estimated to be around NOK 133 million (excluding employers contributions). If the goal attainment is below the minimum requirement, the cost of the program will only relate to the Share Purchase Payment and equal around NOK 17 million (excluding employers contributions). SCHIBSTED ANNUAL REPORT 2012 DECLARATION OF MANAGEMENT REMUNERATION 103 D 52

356 SCHIBSTED ANNUAL REPORT 2012 DECLARATION OF MANAGEMENT REMUNERATION 5. PENSION SCHEMES The Group CEO and other senior executives in Norway are, like other employees, members of the Group s company pension schemes, see note 27 to Schibsted s consolidated financial statements. The Group CEO and other senior executives in the Group have individual pension contracts which mainly entitle them to an early retirement pension from the age of 62 (early retirement pension) and thereafter a lifelong retirement pension as well as a disability pension, child pension and spouse/cohabitant pension in addition to those in the national insurance scheme. The pension costs linked to senior executives in Schibsted ASA are stated in note 27 to the financial statements. As from 2012, the Group s pension scheme for new managers in Norway is a defined-contribution scheme. This is considered to be in line with market developments and will over time contribute to reducing the Group s pension costs. The Group s senior executives who are based in Sweden mainly have defined contribution pension insurances which ensure them benefits in line with those of Norwegian senior executives as from the age of 62 years. The Group Board is of the opinion that the current schemes for senior executives based in Sweden are adapted to the market and these schemes will be continued in 2013 without any major changes. The pension level and solution for senior executives outside Norway and Sweden are to be viewed in connection with the individual manager s overall salary and employment conditions and are intended to be comparable to the overall solution for managers in Norway and Sweden. Local rules linked to pension legislation, social security rights, tax, etc., are taken into account when shaping the individual pension contracts. 6. TERMINATION PAYMENT SCHEMES The Group CEO is entitled to a termination payment equal to 18 months salary in addition to the six-month period of notice. The other Group management and senior executives are normally entitled to termination payments equal to 6-18 months salary, depending on their job level. A prohibition against competition and scaling down provisions normally apply during the termination payment period. 7. THE EFFECTS ON THE COMPANY AND SHARE- HOLDERS OF AGREEMENTS ENTERED INTO OR AMENDED IN 2012 The Group Board believes that the guidelines for share-based remuneration promote value creation in the company/group and that the effects on the company and shareholders are positive. 104 Oslo, 20 March 2013 THE BOARD OF SCHIBSTED ASA SCHIBSTED ANNUAL REPORT 2012 DECLARATION OF MANAGEMENT REMUNERATION 105 D 53

357 SCHIBSTED ANNUAL REPORT 2012 FINANCIAL STATEMENTS / GROUP CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note Operating revenues 7 14,763 14,378 Raw materials and finished goods 26 (1,057) (1,159) Personnel expenses 27 (5,241) (4,960) Other operating expenses 28 (6,471) (6,113) Share of profit (loss) of associated companies Gross operating profit (loss) 2,028 2,185 Depreciation and amortisation 11, 12 (479) (505) Gross operating profit (loss) after depreciation and amortisation 1,549 1,680 Impairment loss 11, 12, 13 (548) (191) Other income and expenses 8 (257) (50) Operating profit (loss) 744 1,439 Financial income Financial expenses 29 (176) (190) Profit (loss) before taxes 683 1,331 Taxes 30 (443) (499) Profit (loss) Profit (loss) attributable to non-controlling interests Profit (loss) attributable to owners of the parent Earnings per share (NOK) Diluted earnings per share (NOK) Earnings per share adjusted (NOK) Diluted earnings per share adjusted (NOK) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note Profit (loss) Change in fair value of investments available for sale 14 (80) 94 Translation differences (328) (46) Hedging of net investment in foreign operations 26 7 Tax effect hedging of net investment in foreign operations 30 (7) (2) Other comprehensive income (389) 53 Comprehensive income (149) 885 Comprehensive income attributable to non-controlling interests Comprehensive income attributable to owners of the parent (199) SCHIBSTED ANNUAL REPORT 2012 FINANCIAL STATEMENTS / GROUP CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER (NOK million) Note ASSETS Intangible assets 11 9,113 9,611 Investment property Property, plant and equipment 12 1,777 1,929 Investments in associated companies Non-current financial assets Deferred tax assets Other non-current assets Non-current assets 11,752 12,509 Inventories Trade and other receivables 17 2,447 2,406 Current financial assets Cash and cash equivalents 18 1, Current assets 3,598 3,827 Total assets 15,350 16,336 EQUITY AND LIABILITIES Share capital Treasury shares 19 (1) (1) Other paid-in equity 1,464 1,440 Other equity 3,921 4,955 Equity attributable to owners of the parent 5,492 6,502 Non-controlling interests Equity 5,740 6,659 Deferred tax liabilities Pension liabilities 21 1,422 1,455 Non-current interest-bearing borrowings 22 2,124 1,907 Other non-current liabilities Non-current liabilities 4,605 4,499 Current interest-bearing borrowings Income tax payable Other current liabilities 24 4,293 4,227 Current liabilities 5,005 5,178 Total equity and liabilities 15,350 16,336 Oslo, 20 March 2013 Schibsted ASA s Board of Directors Ole Jacob Sunde Chairman of the Board Karl-Christian Agerup Marie Ehrling Eva Berneke Christian Ringnes Arnaud de Puyfontaine Eugénie van Wiechen Gunnar Kagge Anne Lise von der Fehr Jonas Fröberg Rolv Erik Ryssdal CEO 107 D 54

358 SCHIBSTED ANNUAL REPORT 2012 FINANCIAL STATEMENTS / GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note CASH FLOW FROM OPERATING ACTIVITIES Profit (loss) before taxes 683 1,331 Gain from remeasurement of previously held equity interest in business combination achieved in stages (57) - Share of profit (loss) of associated companies 13 (34) (39) Dividends received from associated companies Taxes paid (628) (346) Sales loss (gain) non-current assets (65) (63) Amortisation and impairment loss intangible assets Depreciation and impairment loss property, plant and equipment Impairment loss associated companies Write-down of inventories Impairment losses financial instruments Change in working capital Net cash flow from operating activities 1,275 1,616 CASH FLOW FROM INVESTING ACTIVITIES Purchase of intangible assets and property, plant and equipment 11, 12 (366) (354) Acquisition of subsidiaries and joint ventures, net of cash acquired 33 (94) (108) Proceeds from sale of intangible assets and property, plant and equipment Proceeds from sale of subsidiaries and joint ventures, net of cash sold 33 9 (1) Investments in / sale of non-current financial assets 2 92 Other investments / sales 23 (1) Net cash flow from investing activities (400) (330) Net cash flow before financing activities 875 1,286 CASH FLOW FROM FINANCING ACTIVITIES New interest-bearing loans and borrowings 1, Repayment of interest-bearing loans and borrowings (1,403) (841) Payment due to increase in ownership interests in subsidiaries (39) (596) Capital increase Purchase / sale of treasury shares 16 (159) Dividends paid to owners of the parent 20 (375) (324) Dividends paid to non-controlling interests (54) (61) Net cash flow from financing activities (591) (1,158) Effects of exchange rate changes on cash and cash equivalents (31) - Net increase (decrease) in cash and cash equivalents Cash and cash equivalents as at Cash and cash equivalents as at , SCHIBSTED ANNUAL REPORT 2012 FINANCIAL STATEMENTS / GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Foreign Net Share Other currency unrealised Non- Share Treasury premium paid-in Retained transl. gains controlling (NOK million) capital shares reserve equity earnings reserve reserve Total interests Total As at (4) 1, ,482 (466) 131 6, ,006 Profit (loss) Change in fair value of investments available for sale (Note 14) Translation differences (48) - (48) 2 (46) Hedging of net investment in foreign operations Tax effect hedging of net investment in foreign operations (2) - (2) - (2) Comprehensive income (43) Capital increase Share-based payment (Note 27) Dividends paid to owners of the parent (Note 20) (324) - - (324) - (324) Dividends to non-controlling interests (61) (61) Change in treasury shares (Note 19) Business combinations (Note 5) Loss of control of subsidiaries Changes in ownership of subsidiaries that do not result in a loss of control (1,187) - - (1,187) (254) (1,441) Total transactions with the owners (985) - - (968) (264) (1,232) As at (1) 1, ,239 (509) 225 6, ,659 Profit (loss) Change in fair value of investments available for sale (Note 14) (80) (80) - (80) Translation differences (323) - (323) (5) (328) Hedging of net investment in foreign operations Tax effect hedging of net investment in foreign operations (7) - (7) - (7) Comprehensive income (304) (80) (199) 50 (149) Capital increase Share-based payment (Note 27) Dividends paid to owners of the parent (Note 20) (375) - - (375) - (375) Dividends to non-controlling interests (54) (54) Change in treasury shares (Note 19) Business combinations (Note 5) Loss of control of subsidiaries (3) (3) Changes in ownership of subsidiaries that do not result in a loss of control (331) - - (331) 43 (288) Other changes in the composition of the Group (Note 14) (145) (145) - (145) Total transactions with the owners (690) - (145) (811) 41 (770) As at (1) 1, ,734 (813) - 5, , D 55

359 SCHIBSTED ANNUAL REPORT 2012 FINANCIAL STATEMENTS / GROUP TABLE OF CONTENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2012 All amounts are in NOK million unless otherwise stated. NOTE 1: COMPANY INFORMATION NOTE 2: SIGNIFICANT ACCOUNTING POLICIES NOTE 3: USE OF ESTIMATES NOTE 4: CHANGES IN THE COMPOSITION OF THE GROUP NOTE 5: BUSINESS COMBINATIONS NOTE 6: EVENTS AFTER THE REPORTING PERIOD NOTE 7: DISCLOSURE OF OPERATING SEGMENTS NOTE 8: OTHER INCOME AND EXPENSES NOTE 9: FINANCIAL RISK MANAGEMENT NOTE 10: FINANCIAL INSTRUMENTS BY CATEGORY NOTE 11: INTANGIBLE ASSETS NOTE 12: PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY NOTE 13: INVESTMENTS IN ASSOCIATED COMPANIES NOTE 14: FINANCIAL ASSETS NOTE 15: OTHER NON-CURRENT ASSETS NOTE 16: INVENTORIES NOTE 17: TRADE AND OTHER RECEIVABLES NOTE 18: CASH AND CASH EQUIVALENTS NOTE 19: NUMBER OF SHARES NOTE 20: DIVIDENDS NOTE 21: PENSION PLANS NOTE 22: INTEREST-BEARING BORROWINGS NOTE 23: OTHER NON-CURRENT LIABILITIES NOTE 24: OTHER CURRENT LIABILITIES NOTE 25: FINANCIAL LIABILITIES RELATED TO NON- CONTROLLING INTERESTS PUT OPTIONS NOTE 26: RAW MATERIALS, WORK IN PROGRESS AND FINISHED GOODS NOTE 27: PERSONNEL EXPENSES AND SHARE-BASED PAYMENT NOTE 28: OTHER OPERATING EXPENSES NOTE 29: FINANCIAL ITEMS NOTE 30: TAXES NOTE 31: EARNINGS PER SHARE NOTE 32: JOINT VENTURES NOTE 33: SUPPLEMENTAL INFORMATION TO THE CONSOLIDATED STATEMENT OF CASH FLOWS NOTE 34: TRANSACTIONS WITH RELATED PARTIES NOTE 35: SUBSIDIARIES 110 NOTE 1 COMPANY INFORMATION Schibsted ASA is domiciled in Norway. The company s head office is located at Apotekergaten 10, Oslo. The company s postal address is P.O. Box 490 Sentrum, 0105 Oslo. The company is a public limited company that is listed on the Oslo Stock Exchange under ticker SCH. Schibsted Media Group is one of Scandinavia s leading media groups. The major businesses are in Norway, Sweden, France, Spain and Estonia, but the Group also has operations in other countries in Europe, Asia and Latin America. Schibsted s operations are divided in four operating segments: Online classifieds, Schibsted Norge media house, Schibsted Sverige media house and Media Houses International. Schibsted has a presence in printed newspapers, online newspapers, classifieds, directories and live pictures. The financial statements were approved by the Board of Directors on 20 March 2013 and will be proposed to the General Meeting 30 April NOTE 2 SIGNIFICANT ACCOUNTING POLICIES BASIS FOR THE PREPARATION OF THE FINANCIAL STATEMENTS The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), issued by International Accounting Standards Board (IASB), EU-approved and in accordance with the Norwegian Accounting Act 3-9. The consolidated financial statements have been prepared based on a historical cost basis, with the exception of financial instruments in the categories Financial assets or financial liabilities at fair value through profit or loss and Financial assets available for sale which are measured at fair value and Loans and receivables and Other financial liabilities which are measured at amortised cost. In the consolidated income statement, expenses are presented using a classification based on the nature of the expenses. Determining the carrying amounts of some assets and liabilities requires management to estimate the effects of uncertain future effects on those assets and liabilities at the balance sheet date. Key sources of estimation uncertainty at the balance sheet date having a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed in note 3. CHANGE IN ACCOUNTING POLICIES The accounting policies adopted are consistent with those of the financial year CONSOLIDATION PRINCIPLES The consolidated financial statements include the parent Schibsted ASA and all subsidiaries, presented as the financial statements of a single economic entity. Intragroup balances, transactions, income and expenses are eliminated. SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Subsidiaries are all entities that are controlled, directly or indirectly by Schibsted ASA. Control is the power to govern the financial and operational policies of an entity and is normally achieved through ownership of more than half of the voting power of an entity or by virtue of an agreement with other investors. The existence and effect of potential voting rights that are currently exercisable or convertible, are considered when assessing whether control exists. Subsidiaries are included in the consolidated financial statements from the date Schibsted ASA effectively obtains control of the subsidiary (acquisition date) and until the date Schibsted ASA ceases to control the subsidiary. Non-controlling interests is the equity in a subsidiary not attributable, directly or indirectly, to the parent Schibsted ASA. Non-controlling interests are presented in the consolidated balance sheet within equity, separately from the equity of the owners of the parent. Profit or loss and comprehensive income attributable to non-controlling interests are disclosed as allocations for the period of profit or loss and comprehensive income attributable to non-controlling interests and owners of the parent, respectively. All business combinations in which Schibsted ASA or a subsidiary is the acquirer, i.e. the entity that obtains control of an other entity or business, are accounted for by applying the acquisition method. The identifiable assets acquired and the liabilities assumed are measured at their acquisition-date fair values. Any non-controlling interest in the acquiree is measured either at fair value or at the proportionate share of the acquiree s identifiable net assets. The consideration transferred is measured at fair value. Any excess of the aggregate of the consideration transferred, the amount recognised for non-controlling interests and the fair value of any previously held equity interest in the acquiree over the net of identifiable assets acquired and liabilities assumed, is recognised as goodwill. Acquisition-related costs incurred, except those related to debt or equity, are expensed. The acquisition-date fair value of contingent consideration is recognised as part of the consideration transferred in exchange for the acquiree. Subsequent changes in the fair value of contingent consideration deemed to be a liability is recognised in profit or loss. In business combinations achieved in stages, the previously held equity interest is remeasured at its acquisition-date fair value with the resulting gain or loss recognised in profit or loss. Changes in ownership interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of noncontrolling interests is adjusted to reflect the change in their relative share in the subsidiary. Any difference between the amount by which the non-controlling interests is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the parent. When control of a subsidiary is lost, the assets and liabilities of the subsidiary and the carrying amount of any non-controlling interests are derecognised. Any consideration received and any investment retained in the former subsidiary is recognised at their fair values. The difference between amounts recognised and derecognised is recognised as gain or loss in profit or loss. Amounts recognised in other comprehensive income related to the subsidiary are reclassified to profit or loss or transferred to equity similarly as if the parent had disposed of the 111 D 56

360 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP assets and liabilities directly. Amounts reclassified to profit or loss (including accumulated translation differences and accumulated fair value adjustments to financial assets available for sale) are included in gain or loss on loss of control of subsidiary in profit or loss. Interests in joint ventures A joint venture is an economic activity which, based on a contractual agreement, is subject to joint control by two or more parties. A jointly controlled entity is an entity in which Schibsted holds an ownership interest, and where the entity is subject to joint control based on a contractual agreement between Schibsted and one or more other parties. Schibsted recognises its share in jointly controlled entities using proportionate consolidation. Schibsted combines its share of each of the assets, liabilities, income and expenses of jointly controlled entities with similar items in the consolidated financial statements on a line-by-line basis. When joint control is lost, the difference between the fair value of proceeds received and any retained investment and the carrying amount of the investment is recognised as gain or loss in profit or loss. Investments in associates Associated companies are defined as companies in which Schibsted ASA, directly or indirectly through subsidiaries, does not have a controlling interest but exercises significant management influence. Significant influence is normally presumed to exist when Schibsted controls 20% or more of the voting power of the investee. Associated companies are accounted for applying the equity method of accounting and are initially recognised at cost. The Group s investments in associates include goodwill identified on acquisition, net of any accumulated impairment loss. Schibsted recognises its share of the company s profit (loss) and gains or losses on sale in a separate line in the income statement within operating profit (loss). When the Group s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses. In the balance sheet, the investment is carried at cost adjusted for the share of profit (loss), changes in equity not recognised in profit or loss and dividends received. ACCRUAL, CLASSIFICATION AND VALUATION PRINCIPLES Classification current / non-current distinction Cash and cash equivalents, assets included in the normal operating cycle and other financial assets expected to be realised within twelve months after the reporting period are classified as current assets. Liabilities included in the normal operating cycle and liabilities due to be settled within twelve months after the reporting period are classified as current liabilities. Other assets and liabilities are classified as non-current. Operating segments The division into operating segments is based on the organisation of the Group and corresponds to the internal management reporting to the chief operating decision maker, defined as the CEO. Revenue recognition Revenue from sale of goods is recognised when delivery has occurred and the significant risks and rewards of ownership have been transferred to the 112 buyer. Revenue from the rendering of services is recognised by reference to the stage of completion of the transaction (the percentage of completion method) provided that the outcome of the transaction can be estimated reliably. Discounts are recognised as a revenue reduction. Advertising revenue in printed media is recognised when inserted. Subscription revenues for printed media are invoiced in advance and recognised upon delivery over the subscription period. Revenue from other sales of goods, including casual sales, are recognised upon delivery, taking into account estimated future returns. Online advertising revenue is recognised when displayed. Other revenues from the internet, including subscription based revenues, are recognised in the periods in which the service is rendered. Commissions related to sales of ads and casual sales are recognised as operating expenses. When goods are sold or services rendered in exchange for dissimilar goods or services, revenue is recognised in accordance with the recognition policy related to relevant goods or services. Revenue is measured at the fair value of the goods or services delivered or received, depending on which item that can be measured reliably. Interest income is recognised using the effective interest method and dividends are recognised when the right to receive payment is established. Government grants Government grants are recognised when there is reasonable assurance that the conditions attaching to them will be complied with, and that the grants will be received. Government grants, including press subsidies, are recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate. Financial instruments The Group initially recognises loans, receivables and deposits on the date that they are originated. All other financial assets and financial liabilities (including financial assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. The Group classifies at initial recognition its financial instruments in one of the following categories: Financial assets or financial liabilities at fair value through profit or loss, Loans and receivables, Financial assets available for sale and Other financial liabilities. The classification depends on the purpose for which the financial instruments were acquired. Financial assets or financial liabilities at fair value through profit or loss are financial assets held for trading and acquired primarily with a view of selling in the near term. The category consists of financial derivatives unless they are designated and effective hedging instruments. Financial derivatives are included in the balance sheet items Trade and other receivables and Other current liabilities. These financial assets and liabilities are measured at fair value when recognised initially, and transaction costs are charged to expense as incurred. Subsequently, the instruments are measured at fair value, with changes in fair value, including interest income, recognised in profit or loss as financial income or financial expenses. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The category is included in the balance sheet items Other non-current assets, Trade and other receivables and Cash and cash equivalents. Loans and receivables are recognised initially at fair value plus directly attributable transaction costs. Subsequently, loans and receivables are measured at amortised cost using the effective interest method, reduced by any impairment loss. Short-term loans and receivables are for practical reasons not amortised. Effective interest related to loans and receivables is recognised in profit or loss as Financial income. Financial assets available for sale are non-derivative financial assets that are designated as available for sale or which are not classified in any other category. Carrying amount of financial assets available for sale is included in the balance sheet items Non-current financial assets and Current financial assets. These financial assets are measured initially at fair value plus directly attributable transaction costs. Changes in fair value are recognised in other comprehensive income, except for impairment losses that are recognised in profit or loss. When an investment is derecognised, the cumulative gain or loss is transferred to profit or loss under financial income or expenses. Dividends are recognised when the right to receive payment is established. Financial liabilities not included in any of the above categories are classified as other financial liabilities. The category other financial liabilities is included in the balance sheet items Non-current interest-bearing borrowings, Other non-current liabilities, Current interest-bearing borrowings and Other current liabilities. Other financial liabilities are recognised initially at fair value. Subsequently, other financial liabilities are measured at amortised cost using the effective interest method. Effective interest is recognised in income as financial expenses. Shortterm financial liabilities are for practical reasons not amortised. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire and the Group has transferred substantially all the risks and rewards of ownership. Financial liabilities are derecognised when the obligation is discharged, cancelled or expires. Any rights and obligations created or retained in such a transfer are recognised separately as assets or liabilities. Financial assets and liabilities are offset and the net amount presented in the balance sheet when the Group has a legal right to offset the amounts and intends to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the securities are impaired. Indications of impairment is evaluated separately for each investment, but normally decline in value of more than 20% SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP compared to cost will be considered to be significant, and normally a decline in value below cost lasting for more than 12 months will be considered to be prolonged. For Trade and other receivables, default in payments, significant financial difficulties of the debtor or probability that the debtor will enter bankruptcy or debt settlement negotiations are considered to be indicators that the Group will not be able to collect all amounts due according to the original terms of the receivables. The carrying amount of the trade receivables is reduced through the use of an allowance account, and the loss is recognised as other operating expenses in the income statement, while impairment of other financial assets are recognised as financial expenses. Fair value of financial instruments is based on quoted prices in an active market if such markets exist. If an active market does not exist, fair value is established by using valuation techniques that are expected to provide a reliable estimate of the fair value. The fair value of listed securities is based on current bid prices. The fair value of unlisted securities is based on cash flows discounted using an applicable risk-free market interest rate and a risk premium specific to the unlisted securities. Fair value of forward contracts is estimated based on the difference between the spot forward price of the contracts and the closing rate at the date of the balance sheet. The forward rate addition and deduction is recognised as interest income or interest expense. Fair value of interest and currency swaps is estimated based on discounted cash flows, where future interest rates are derived from market-based future rates. Treasury shares and transaction costs of equity transactions Own equity instruments which are reacquired (treasury shares) are deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. Consideration paid or received is recognised directly in equity. The transaction costs of issuing or acquiring own equity instruments are accounted for as a deduction from equity, net of any related income tax benefit. Foreign currency translation Each individual entity included in the consolidated financial statements measures its results and financial position using the currency of the primary economic environment in which it operates (the functional currency). The consolidated financial statements are presented in NOK which is Schibsted ASA s functional and presentation currency. Foreign currency transactions are translated into the entity s functional currency on initial recognition by using the spot exchange rate at the date of the transaction. At the balance sheet date, assets and liabilities are translated from foreign currency to the entity s functional currency by translating monetary items using the exchange rate at the balance sheet date translating non-monetary items that are measured in terms of historical cost in a foreign currency using the exchange rate at the transaction date, and translating non-monetary items that are measured at fair value in a foreign currency using the exchange rate at the date when the fair value was determined. Exchange differences arising on the settlement of, or on translating monetary items not designated as hedging instruments, are recognised in profit or loss in the period in which they arise. When a gain or loss on a non-monetary item is recognised in other comprehensive income, any exchange component of that gain or loss is also recognised in other comprehensive income. When a gain 113 D 57

361 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is also recognised in profit or loss. On initial designation of a hedge, the Group formally documents the relationship between the hedging instrument(s) and the hedged item(s), including risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be highly effective in offsetting the changes in the fair value or cash flows for the respective hedged items during the period for which the hedge is designated. Gains or losses related to loans or currency derivatives in foreign currencies, designated as hedging instruments in a hedge of a net investment in a foreign operation, are recognised in other comprehensive income until disposal of the operation. Upon incorporation of a foreign operation into the consolidated financial statements by consolidation, proportionate consolidation or the equity method, the results and financial position is translated from the functional currency of the foreign operation into NOK (the presentation currency) by using the stepby-step method of consolidation. Assets and liabilities are translated at the closing rate at the balance sheet date and income and expenses are translated at average rates for the period. Resulting exchange differences are recognised in other comprehensive income until the disposal of the foreign operation. Goodwill and fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation, are treated as assets and liabilities of that foreign operation. They are therefore expressed in the functional currency of the foreign operation and translated at the closing rate at the balance sheet date. Property, plant and equipment Property, plant and equipment are measured at its cost less accumulated depreciation and accumulated impairment losses. The depreciable amount (cost less residual value) of property, plant and equipment is allocated on a systematic basis over its useful life. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item, is depreciated separately. Costs of repairs and maintenance are recognised in profit or loss as incurred. Cost of replacements and improvements are recognised in the carrying amount of the asset. The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no economic benefits are expected from its use or disposal. Gain or loss arising from derecognition is included in profit or loss when the item is derecognised. Investment property Property that is not owner-occupied, but held to earn rentals or for capital appreciation, is classified as investment property. Investment property is measured at cost less accumulated depreciation and accumulated impairment losses. 114 Intangible assets Intangible assets are measured at its cost less accumulated amortisations and accumulated impairment losses. Amortisation of intangible assets with a finite useful life is allocated on a systematic basis over its useful life. Intangible assets with an indefinite useful life are not amortised. Costs of developing software and other intangible assets are recognised as an expense until all requirements for recognition as an asset is met. The requirements for recognition as an asset include, among other requirements, the requirement to demonstrate probable future economic benefits and the requirement that the cost of the asset can be measured reliably. Costs incurred after the time that all the requirements for recognition as an asset are met are recognised as an asset. The cost of an internally generated intangible asset is the sum of expenditure incurred from the time all requirements for recognition as an asset are met and until the time the asset is capable of operating in the manner intended by management. Expenditure related to development of technology-based intangible assets to be used in new markets will normally be charged to expense as the requirement to demonstrate probable future economic benefits will normally not be met. Subsequent expenditure incurred in the operating stage to enhance or maintain an intangible asset are normally recognised as an expense as the requirement to demonstrate probable increased economic benefits will normally not be met. Impairment of non-financial assets Property, plant, equipment, intangible assets and goodwill are reviewed for impairment whenever an indication that the carrying amount may not be recoverable is identified. Goodwill and other intangible assets that have an indefinite useful life are tested annually for impairment. Impairment indicators will typically be changes in market developments, the competitive situation or technological developments. An impairment loss is recognised in the Income statement if the carrying amount of an asset (cash generating unit) exceeds its recoverable amount. The recoverable amount is the higher of value in use and fair value less cost to sell. Value in use is assessed by discounting estimated future cash flows. Estimated cash flows are based on management s experience and market knowledge for the given period, normally five years. For subsequent periods growth factors are used that do not exceed the long-term average rate of growth for the relevant market. Expected cash flows are discounted using an after tax discount rate that takes into account the expected long-term interest rate with the addition of a risk margin appropriate for the assets being tested. For the purpose of impairment testing, assets, except goodwill, are grouped together into the smallest group of assets that generates independent cash flows (cash-generating units). Goodwill acquired in a business combination is, from the acquisition date, allocated to the cash-generating units, or groups of cash-generating units, that is expected to benefit from the synergies of the combination. Testing for impairment of goodwill is done by comparing recoverable amount and carrying amount of the same groups of cash-generating units as to which goodwill is allocated. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill. Any remaining amount is then allocated to reduce the carrying amounts of the other assets in the unit on a pro rata basis. Impairment losses are reversed if the loss no longer exists for all property, plant and equipment and intangible assets with the exception of goodwill where impairment losses are not reversed. Leases Leases are classified as either finance leases or as operating leases. Leases that transfers substantially all the risks and rewards incidental to the asset are classified as finance leases. Other leases are classified as operating leases. When Schibsted is lessee in a finance lease, the leased asset and the liability related to the lease is recognised in the balance sheet. Depreciable leased assets are depreciated systematically over the useful life of the asset. Lease payments are apportioned between interest expense and reduction of the liability. Lease payments related to operating leases are recognised as an expense over the lease term. Borrowing Costs Borrowing costs are generally recognised as an expense in the period in which they are incurred. Borrowing costs that are directly attributable to the acquisition, construction or production of an asset, that necessarily takes a substantial period of time to get ready for its intended use or sale ( qualifying asset ), are capitalised as part of the cost of that asset. Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories are assigned by using the first-in, first-out (FIFO) cost formula and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Post-employment benefits Pension plans, including multi-employer plans, are classified as defined contribution plans or defined benefit plans depending on the economic substance of the plan. Pension plans in which Schibsted s obligation is limited to the payment of agreed contributions and in which the actuarial risk and the investment risk fall on the employee, are classified as defined contribution plans. Other plans are classified as defined benefit plans. As pension liabilities are recognised as the present value of the benefit obligation at the balance sheet date, less fair value of plan assets, adjusted for unrecognised actuarial gains or losses and unrecognised past service cost. Net pension expense related to defined benefit plans include current service cost, interest cost, expected return on plan assets, actuarial gains or losses recognised and past service cost. The present value of defined benefit obligations, current service cost and past service cost is determined using the Projected Unit Credit Method and actuarial assumptions regarding demographic variables and financial variables. Net cumulative actuarial gains or losses exceeding the higher of either 10% of the present value of the defined benefit obligation or 10% of the fair value of plan assets, are recognised in profit or loss over the expected average remaining working lives of the employees participating in the plan. SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Past service cost is recognised in profit or loss over the average period until the benefits become vested. Past service cost is recognised immediately to the extent the benefits are already vested immediately after the introduction of, or changes to, a defined benefit plan. Gain or loss on the curtailment or settlement of a defined benefit plan is recognised when the curtailment or settlement occurs. The gain or loss comprise any resulting change in the present value of the defined benefit obligation and any resulting change in the fair value of the plan assets, as well as any related actuarial gains and losses not previously recognised. The contribution payable to a defined contribution plan attributable to the reporting period is recognised in profit or loss. Multi-employer plans classified as defined benefit plans, but for which sufficient information is not available to enable recognition as a defined benefit plan, are accounted for as if they were defined contribution plans. Social security taxes are included in the determination of defined benefit obligations and net pension expense. Share-based payment In equity settled share-based payment transactions with employees, the employee services and the corresponding equity increase is measured by reference to the fair value of the equity instruments granted. The fair value of the equity instruments are measured at grant date, and is recognised as personnel expenses and equity increase immediately or over the vesting period when performance vesting conditions require an employee to serve over a specified time period. At each reporting date the companies remeasure the estimated number of equity instruments that is expected to vest. The amount recognised as an expense is adjusted to reflect the number of equity instruments which is expected to be, or actually become vested. In cash settled share-based payment transactions with employees, the employee services and the incurred liability is measured at the fair value of the liability. The employee services and the liability are recognised immediately or over the vesting period when performance vesting conditions require an employee to serve over a specified time period. Until the liability is settled, the fair value of the liability is revised at each balance sheet date and at settlement date, with changes in fair value recognised in profit or loss. Income taxes Current tax, which is the amount of income taxes payable in respect of taxable profit for a period, is, to the extent unpaid, recognised as a liability. If the amount paid exceeds the amount due, the excess is recognised as an asset. A deferred tax liability is recognised for all taxable temporary differences, except for liabilities arising from the initial recognition of goodwill. A deferred tax asset is recognised for deductible temporary differences, the carryforward of unused tax losses and the carryforward of unused tax credits to the extent that it is probable that future taxable profit will be available against which these benefits can be utilised. 115 D 58

362 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP No deferred tax liability is recognised for taxable temporary differences associated with investments in subsidiaries and interests in joint ventures when Schibsted is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Tax expense (tax income) comprises current tax expense (current tax income) and deferred tax expense (deferred tax income). Any amount recognised as current tax assets or liabilities and deferred tax assets or liabilities are recognised in profit or loss, except to the extent that the tax arises from a transaction or event recognised in other comprehensive income or directly in equity or arises from a business combination. Provisions, contingent liabilities and contingent assets A provision is recognised when an obligation exists (legal or constructive) as a result of a past event, it is probable that an economic settlement will be required as a consequence of the obligation, and a reliable estimate can be made of the amount of the obligation. The best estimate of the expenditure required to settle the obligation is recognised as a provision. When the effect is material, the provision is discounted using a market based pre-tax discount rate. A provision for restructuring costs is recognised when a constructive obligation arises. Such an obligation is assumed to have arisen when the restructuring plan is approved and the implementation of the plan has begun or its main features are announced to those affected by it. Contingent liabilities and contingent assets are not recognised. Contingent liabilities are disclosed unless the possibility of an economic settlement as a consequence of the obligation is remote. Contingent assets are disclosed where an economic settlement as a consequence of the asset is probable. Other income and expenses Income and expenses included in operating profit, but being of a non-recurring nature and material in relation to operating segments, are reported on a separate line in the income statement. Other income and expenses will normally include restructuring costs, material gains and losses on sale of property, plant and equipment or intangible assets, as well as gains or losses relating to sale of subsidiaries, joint ventures and associated companies. Non-current assets held for sale A non-current asset (or disposal group) is classified as held for sale if its carrying amount will be recovered principally through a sales transaction rather than through continuing use. A disposal group includes assets to be disposed of, by sale or otherwise, together in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction. A non-current asset or a disposal group classified as held for sale is measured at the lower of carrying amount and fair value less costs to sell. Non-current assets classified as held for sale and non-current assets that are part of a disposal group classified as held for sale, are not depreciated. 116 Non-current assets and assets of a disposal group classified as held for sale are presented separately from other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet. Discontinued operations The results of discontinued operations are presented separately in the income statement. A component of the Group that either has been disposed of or is classified as held for sale, and represents a separate major line of business, is classified as discontinued operations. The results of discontinued operations are presented separately from the period the operation is disposed of or classified as held for sale. Previous periods are reclassified so that all items related to discontinued operations are presented separately from continuing operations for all periods presented. Statement of cash flows The statement of cash flows is prepared under the indirect method. Cash and cash equivalents include cash, bank deposits and other monetary instruments with a maturity of less than three months at the date of purchase. Earnings per share Earnings per share and diluted earnings per share are presented for ordinary shares. Earnings per share are calculated by dividing profit (loss) attributable to owners of the parent by the weighted average number of shares outstanding. Diluted earnings per share is calculated by dividing net income attributable to owners of the parent by the weighted average number of shares outstanding, adjusted for all dilutive potential shares. Dividends Dividends are recognised as a liability at the date such dividends are appropriately approved by the company s shareholders meeting. IFRS AND IFRIC INTERPRETATIONS NOT YET EFFECTIVE IASB has published certain new standards and interpretations and amendments to existing standards and interpretations that are not effective for the annual period ending and that are not applied when preparing these financial statements. Changes with effect for the annual period beginning Amendments to IAS 19 Employee benefits introduce major changes to the accounting for defined benefit pension plans, including the removal of the option for deferred recognition of changes in pension plan assets and liabilities ( the corridor approach ). The result will be greater balance sheet volatility than by applying the corridor method. In addition, these amendments will limit the changes in the net pension liability recognised in profit or loss to service cost and net interest expense. Expected return on plan assets will be replaced by a credit to income based on the discount rate. Remeasurements of the net defined benefit liability will be recognised in other comprehensive income. The effect of plan amendments will be recognised when the amendment occurs and no longer be amortised over the vesting period. The amendments are applied retrospectively. Comparable figures for 2012 will be restated. Restated figures for 2012 are expected to deviate as follows from figures presented in these consolidated financial statements: Pension liabilities, as recognised in the balance sheet, increases by NOK 236 million at and decreases by NOK 513 million at following the removal of the corridor approach and changes to the timing of recognition of the effect of plan amendments. Including the effect on deferred taxes, equity is reduced by NOK 170 million and increased by NOK 369 million, respectively. Profit (loss) before taxes for 2012 decreases by NOK 63 million due to reduced income from plan assets, elimination of amortisation of actuarial gains or losses and changes to the timing of recognition of the effect of plan amendments. Comprehensive income for 2012 increases by NOK 539 million due to changes in income before taxes and related tax effects, as well as recognition of remeasurements of the net pension liability. The presentation of benefit cost will also be changed as interest on the net pension liability will be reported as financial expenses. This implies that the reduction in profit (loss) before taxes of NOK 63 million appears as an increase in gross operating profit of NOK 15 million, an increase in other expenses of NOK 30 million and an increase in financial expenses of NOK 48 million. The estimated effects of restatement disclosed above do not include any potential effects related to share of changes in associated companies. IFRS 13 Fair Value Measurement establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when fair value is required to be used, but rather provides guidance on how to measure fair value when fair value is required or permitted. As Schibsted has limited assets and liabilities measured at fair value, no material impact on the financial position or performance is expected from implementing the standard. Amendments to IAS 1 Presentation of Financial statements changes the grouping of items presented in other comprehensive income. Items that will be reclassified subsequently to profit or loss will be presented separately from items that will not be reclassified. All items currently presented by Schibsted in other comprehensive income will be in the group of items that are reclassified. Remeasurements of the net pension liabilities that, with effect from 2013, will be recognised in other comprehensive income will be in the group of items that are not reclassified. Changes with effect for the annual period beginning IFRS 10 Consolidated financial statements replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the principles for the presentation and preparation of consolidated financial statements. In addition it also includes the issues raised in SIC-12 Consolidation Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. IFRS 10 is not expected to have significant effect on the determination of whether an investee must be consolidated in the financial statements of Schibsted. IFRS 11 Joint Arrangements replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities Non-monetary contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities using proportionate consolidation. Instead, jointly controlled entities must be accounted for using the equity method. IFRS 11 will affect the presentation of jointly controlled entities in profit or loss and in the balance sheet, but will not affect net profit or shareholders equity. IFRS 11 is expected to affect the SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP presentation of all investments currently accounted for as joint ventures by using proportionate consolidation. The significant operations and their effect on the consolidated financial statements are presented in note 32 Joint Ventures. The standard will be applied retrospectively and comparable figures will be restated. IFRS 12 Disclosure of Interests in Other Entities includes all of the disclosures of IAS 27 related to consolidated financial statements, as well as all of the disclosures included of IAS 31 and IAS 28. These disclosures relate to an entity s interests in subsidiaries, joint ventures, associate companies and structured entities. A number of new disclosures are also required, but have no impact on the Group s financial position or performance. Changes with effect for annual periods beginning IFRS 9 Financial Instruments: Classification and Measurement, as issued, reflects the first phase of the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 may have an effect on the classification and measurement of the Group s financial assets, but is not expected to have any material effect in the Group s financial position or performance. NOTE 3 USE OF ESTIMATES In many areas the consolidated financial statements are affected by estimates. Important areas in which the use of estimates has significant effect on carrying amounts, and thus involve a risk of changes that could affect results in future periods, are described below. The valuation of intangible assets in connection with business combinations and the testing of property, plant and equipment and intangible assets for impairment (see note 11 Intangible assets and note 12 Property, plant and equipment and investment property) will to a large extent be based on estimated future cash flows. Correspondingly, the expected useful lives and residual values included in the calculation of depreciation and amortisation will be based on estimates. The Group has activities within established media, but is also active in establishing positions at an early point in time in new media channels both through business combinations and its own start-ups. Estimates related to future cash flows and the determination of discount rates to calculate present values are based on management s expectations on market developments, the competitive situation, technological development, the ability to realise synergies, interest rate levels and other relevant factors. Such estimates involve uncertainty, and management s view on, and the actual development in the matters referred to, may change over time. Changes in management s opinion and actual development may lead to impairment losses in future periods. Intangible assets that are not amortised are tested annually for impairment. Other assets are tested for impairment if there are indications that an asset is impaired. Such indications will typically be changes in market development, 117 D 59

363 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP the competitive situation and technological development. In the same way, depreciation and amortisation schedules and any residual values are reviewed periodically. The risk of changes in expected cash flows that affect the financial statements will naturally be higher in markets in an early phase and be more limited in established markets. Further, the risk of changes will be significantly higher in periods with uncertain macroeconomic prognosis. In the present situation management considers the macroeconomic situation in Spain to be particularly affected by uncertainty. Valuation of the Group s assets in SCM Spain is based on cash flows where growth compared to the present cash flows is expected. Lack of improvement in the macroeconomic situation in Spain can consequently lead to a necessary negative adjustment to the cash flows. Goodwill and intangible assets recognised is specified by cash-generating unit in note 11 Intangible assets. In 2011, Schibsted recognised impairment losses related to goodwill of NOK 120 million. The most significant impairment loss (NOK 111 million) was related to the free newspaper operations in Spain (20 Minutos Spain) and was a consequence of market situation and uncertainty related to macroeconomic prognosis. In 2012, Schibsted has recognised impairment losses related to goodwill of NOK 350 million of which NOK 345 million is related to SCM Spain. The impairment is mainly a consequence of poor macroeconomic development in Spain. In 2008, an impairment loss of NOK 1,291 million related to goodwill of SCM Spain was recognised. Value in use for SCM Spain is in 2012 calculated using a pre-tax discount rate (WACC) of 10.5% and a sustained growth of 1.5%. Changes in significant assumptions used would have increased (decreased) recoverable amount (NOK million) at for SCM Spain as follows: SCM Spain WACC +1% (269) (1%) 338 Sustained growth year 6 and forward +1% 334 (1%) (246) An increase in WACC and a decrease in sustained growth year 6 and forward of one percentage point would have resulted in an additional impairment loss corresponding to the amounts indicated above. A decrease in WACC and an increase in sustained growth year 6 and forward of one percentage point would have resulted in a reduced impairment loss corresponding to the amounts indicated above. As described above, the estimated recoverable amount is also affected by the assumptions used for future cash flows. These estimates are uncertain. A reduction in the expected future net cash flows related to SCM Spain of 10% compared to the estimates actually used, would have resulted in a change in recoverable amount of NOK 250 million with a corresponding effect for impairment loss recognised. An impairment loss of NOK 179 million is recognised in 2012 related to the investment in the associated company Metro Nordic Sweden AB. The impairment loss is calculated using a pre-tax discount rate of 11% and a sustained growth of 0%. A decrease / increase in the discount rate by 118 one percentage point would have reduced / increased the impairment loss by approximately NOK 10 million. An increase in sustained growth of one percentage point would have reduced the impairment loss by approximately NOK 10 million. Accounting for pension obligations requires that financial assumptions relating among others to the discount rate, expected salary increases and expected increases in pensions and National Insurance basic amount are determined. Changes in assumptions affect the fair value of pension obligations, but affect, under the accounting policies applied in these financial statements, the consolidated income statement through amortisation only when accumulated actuarial gains or losses exceed 10% of the higher of pension obligations and plan assets. Following change in accounting policy with effect from , remeasurements of pension obligations will be recognised in other comprehensive income. See note 2 Significant accounting policies. An increase of the discount rate by 1% will, including changes resulting from other assumptions that changes accordingly, reduce the present value of defined benefit obligations by approximately 6%. The assumption regarding pension increases varies in line with the discount rate and reduces the effect of a change in the discount rate. As expected pension increases is low, a reduction in the discount rate will have a significantly larger effect than a corresponding increase, and a reduction of the discount rate by 1% will increase the present value of defined benefit obligations by approximately 15-20%. Financial instruments are measured at fair value. When no quoted market price is available, fair value is estimated using different valuation techniques. The Group s financial instruments and valuation techniques are presented in note 10 Financial instruments by category. The present value of future consideration to be paid related to non-controlling interests put options over shares in subsidiaries are recognised as financial liabilities, see note 25 Financial liabilities related to non-controlling interests put options. The liabilities are recognised using estimated value, and the estimate can be changed in future periods as the pricing is dependent upon future fair value and / or future results. Schibsted could potentially at any time be involved in litigations as a result of the Group s ordinary operations. The financial implications of litigations are constantly monitored and a liability is recognised when it is probable that the litigation will result in a future payment and a reliable estimate of the liability can be made. NOTE 4 CHANGES IN THE COMPOSITION OF THE GROUP Schibsted has in 2012 invested NOK 87 million (net NOK 35 million adjusted for cash in acquired companies) related to acquisition of subsidiaries (business combinations). See note 5 Business combinations for further information related to the business combinations. Schibsted has in 2012 invested NOK 98 million related to increased ownership interests in subsidiaries. The most significant investments are the increase of ownership interest in Aspiro AB from 64.4% to 75.9% and the increase of ownership interest from 70% to 96% in Prisjakt Sverige AB. When ownership interest in subsidiaries increases, the carrying amount of non-controlling interests is adjusted to reflect the change in their relative interest in the subsidiary. The difference between the amount by which the non-controlling interests is adjusted and the fair value of the consideration paid, in excess of any amount already recognised as a liability related to non-controlling interests put options, is recognised directly in equity and attributed to the owners of the parent. Schibsted has in 2012 sold shares for NOK 59 million related to decreased ownership interests in subsidiaries. The sale is related to reduced ownership interest from 100% to 73.4% in Streaming Media AS, the company controlling 75.9% of the shares of Aspiro AB. When ownership interest in subsidiaries decreases, the carrying amount of non-controlling interests is adjusted to reflect the change in their relative interest in the subsidiary. The difference between the amount by which the non-controlling interests is adjusted and the fair value of the consideration received, is recognised directly in equity and attributed to the owners of the parent. Schibsted has in 2012 sold certain minor businesses, including the business of Tasteline Sweden AB and 100% of the shares of Flytteportalen AS. Net loss on sale of subsidiaries amounts to NOK 7 million and is recognised in Other income and expenses. See note 8 Other income and expenses. In November 2012, Schibsted acquired 50% of the shares of Használtautó Informatikai Kft, the company operating Hungary s leading car classifieds portal. The investment is recognised as a joint venture using proportionate consolidation. The acquisition has resulted in recognition of goodwill of NOK 58 million. In 2012, Schibsted reduced its financial interest in Polaris Media ASA from 43.4% to 29.0% but simultaneously increased its share of voting rights from 7.1% to 29.0%. Consequently, the classification for accounting purposes of the investment i Polaris Media ASA is changed from an available-for-sale financial asset to an investment in an associated company. A gain of NOK 69 million is recognised in financial income as a consequence of the reduced financial interest. See note 14 Financial assets. Flytteportalen AS and Használtautó Informatikai Kft are included in operating segment Online classifieds. Polaris Media ASA is included in operating segment Schibsted Norge media house. Prisjakt Sverige AB and Tasteline Sweden AB are included in operating segment Schibsted Sverige media house. Aspiro AB and Streaming Media AS are included in Other. SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Schibsted has in 2011 invested NOK 146 million (net NOK 123 million adjusted for cash in acquired companies) related to acquisition of subsidiaries (business combinations). See note 5 Business combinations for further information related to the business combinations. Schibsted has in 2011 invested NOK 1,265 million related to increased ownership interests in subsidiaries, mainly related to Media Norge ASA. NOK 688 million of the consideration is settled by using treasury shares. In January 2011, Schibsted increased its ownership interest in Media Norge ASA by 3.6% to 85.9% through acquisition of shares. In May 2011 the merger between Schibsted ASA and Media Norge ASA was closed. The exchange rate built on a value of NOK per Media Norge ASA share and NOK per Schibsted ASA share. This valued the equity of Media Norge at NOK 7.25 billion. For the minority shareholders of Media Norge, the settlement of the merger was through two thirds shares in Schibsted ASA and one third cash. One share in Media Norge ASA gave shares in Schibsted ASA. In addition, the minority shareholders received NOK in cash per Media Norge ASA share. The cash amount was in total NOK 344 million including interest from 10 January 2011 until the merger was closed. Schibsted used treasury shares in the settlement, and no shares were thus issued in the merger. In the consolidated financial statements of Schibsted, the merger is accounted for as an equity transaction (increase in ownership interest in subsidiary). Schibsted has in 2011 sold certain minor subsidiaries, including 100% of the shares of Sandrew Metronome Norge AS and 100% of the shares of Sandrew Metronome Distribution Finland OY. Net gain on the sale of subsidiaries amounts to NOK 16 million and is recognised in Other income and expenses, see note 8 Other income and expenses. Media Norge is included in the operating segment Schibsted Norge media house. Sandrew Metronome Norge AS and Sandrew Metronome Distribution Finland OY were included in Other. NOTE 5 BUSINESS COMBINATIONS BUSINESS COMBINATIONS IN 2012: Schibsted has in 2012 invested NOK 87 million (net NOK 35 million adjusted for cash in acquired companies) related to acquisition of subsidiaries (business combinations). In February, Schibsted increased its ownership interest in Aspiro AB to 64.4% through acquisition of shares based on an offer to acquire all the shares in the company. Aspiro AB is a leading provider of music and TV streaming services. Before the business combination, Schibsted held 18.3% of the shares in Aspiro AB and had the financial interest in 21.3% of the shares through a TRS agreement. These equity interests were accounted for as available-for-sale financial assets. The business combination is accounted for as a step acquisition. The previously held equity interest is measured at fair value at the acquisition date, and a gain from remeasurement of NOK 48 million is recognised in profit or loss in the line 119 D 60

364 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP item Other income and expenses. Acquisition-related costs of NOK 7 million are recognised in profit or loss in the line item Other income and expenses. In April, Schibsted increased its ownership interest in Economy OK AB from 37.9% to 51.5% through acquisition of shares. Economy OK AB operates the online coupon service Let s deal in Sweden. The previously held equity interest was accounted for as an associated company and the business combination is accounted for as a step acquisition. The previously held equity interest is measured at fair value at the acquisition date, and a gain from remeasurement of NOK 9 million is recognised in profit or loss in the line item Other income and expenses. The acquisition of Economy OK AB is a result of the strategy to develop webbased growth companies benefiting from strong traffic positions and brands of established operations in Norway and Sweden. The acquisition of Aspiro AB was based on Schibsted s existing financial exposure in the company and Schibsted s ability to develop web-based operations. Schibsted has also been involved in some other minor business combinations. The business combinations have resulted in recognition of goodwill of NOK 158 million attributable to inseparable non-contractual customer relationships, the assembled workforce of the companies and synergies. None of the goodwill recognised is expected to be deductible for income tax purposes. The following tables summarise the consideration transferred and the amounts for assets and liabilities recognised after the business combinations: Total business combinations Consideration: Cash 87 Consideration transferred 87 Fair value of previously held equity interest 134 Total 221 Amounts for assets and liabilities recognised: Trademarks (indefinite useful life) 5 Customer relations 5 Data systems and licenses 36 Property, plant and equipment 11 Other non-current assets 5 Trade receivables and other receivables 90 Cash and cash equivalents 52 Deferred tax liabilities (10) Current liabilities (96) Total identifiable net assets 98 Non-controlling interests (35) Goodwill 158 Total Non-controlling interests are measured at the proportionate share of the acquiree s identifiable net assets. When Schibsted is obligated to acquire ownership interests from non-controlling interests, a financial liability is recognised with a corresponding adjustment to equity, see note 25 Financial liabilities related to non-controlling interests put options. The fair value of acquired receivables is NOK 90 million, of which NOK 45 million are trade receivables. There is no material difference between the gross contractual amounts receivable and the fair value of the receivables. The companies acquired in the business combinations have since the acquisition dates contributed NOK 235 million to operating revenues and contributed negatively NOK 79 million to consolidated profit (loss). If the acquisition date of all business combinations was as of , the operating revenues of the Group would have increased by NOK 75 million and profit (loss) would have decreased by NOK 13 million. BUSINESS COMBINATIONS IN 2011: Schibsted has in 2011 invested NOK 146 million (net NOK 123 million adjusted for cash in acquired companies) related to acquisition of subsidiaries (business combinations). In March 2011, Schibsted acquired the Swedish online weather service Klart.se. In April 2011, Schibsted acquired 100% of the shares of Tvnet SIA in Latvia that operates the online newspaper tvnet.lv. In June 2011, Schibsted acquired 55% of the shares of Sibmedia Interactive S.R.L. in Romania that operates the online classifieds site tocmai.ro. In July 2011, Schibsted acquired 69.95% of the shares of Service Response Europe AB in Sweden that operates servicefinder.se, a market place for services. In September 2011, Schibsted acquired 50.09% of the shares of Done Deal Ltd in Ireland that operates the online classifieds site donedeal.ie. Schibsted has also been involved in some other minor business combinations. The investments are carried out as a part of Schibsted s growth strategy. The investments are partly related to focusing on online classifieds in new markets and partly to developing web-based growth companies benefiting from strong traffic positions and brands of established operations in Norway and Sweden. The business combinations have resulted in recognition of goodwill of NOK 115 million attributable to inseparable non-contractual customer relationships, the assembled workforce of the companies and synergies. Of the goodwill recognised, NOK 19 million is expected to be deductible for income tax purposes. The following tables summarise the consideration transferred and the amounts for assets and liabilities recognised after the business combinations: Total business combinations Consideration: Cash 126 Other assets 20 Contingent consideration 3 Consideration transferred 149 Amounts for assets and liabilities recognised: Trademarks (indefinite useful life) 54 Data systems and licenses 14 Property, plant and equipment 1 Trade receivables 8 Other current assets 29 Deferred tax liabilities (8) Current liabilities (24) Total identifiable net assets 74 Non-controlling interests (40) Goodwill 115 Total 149 Non-controlling interests are measured at the proportionate share of the acquiree s identifiable net assets. When Schibsted is obligated to acquire ownership interests from non-controlling interests, a financial liability is recognised with a corresponding adjustment to equity, see note 25 Financial liabilities related to non-controlling interests put options. The fair value of acquired receivables is NOK 9 million, of which NOK 8 million are trade receivables. There is no material difference between the gross contractual amounts receivable and the fair value of the receivables. The companies acquired in the business combinations have since acquisition date contributed NOK 40 million to operating revenues and contributed negatively NOK 3 million to profit (loss). If the acquisition date of all business combinations was as of , the operating revenues and profit (loss) of the Group would have increased by NOK 35 million and NOK 3 million, respectively. Schibsted has not incurred significant acquisition-related costs in connection with the business combinations. NOTE 6 EVENTS AFTER THE REPORTING PERIOD There are no material events after the reporting period. SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP NOTE 7 DISCLOSURE OF OPERATING SEGMENTS With effect from 2012, the Group s division into operating segments is changed. Comparable figures for previous periods are restated. The change is a consequence of changes in the organisation of the Group, including the establishing of Schibsted Norge in the first quarter of Schibsted reports four operating segments: Online classifieds, Schibsted Norge media house, Schibsted Sverige media house and Media Houses International. Operating segment Online classifieds comprises the Norwegian online marketplace Finn and Schibsted Classified Media comprising all the Group s online classifieds operations outside Norway. Operating segment Schibsted Norge media house comprises VG media house, the four media houses (Aftenposten, Bergens Tidende, Stavanger Aftenblad and Fædrelandsvennen) previously constituting Media Norge, printing operations, and the publishing house Schibsted Forlag. Operating segment Schibsted Sverige media house comprises the media houses Aftonbladet and Svenska Dagbladet and a portfolio of internet based growth companies (including the online directory service Hitta). Media Houses International comprises the concept for free newspapers 20 Minutes in Spain and France and Eesti Meedia Group comprising the Group s operations in the Baltic States. Other comprises operations not included in the four reported operating segments, including Sandrew Metronome, Aspiro and Møteplassen. Headquarters comprise the Group s headquarters Schibsted ASA and centralised functions within finance, real estate and IT. Eliminations comprise intersegment sales. Transactions between operating segments are conducted on normal commercial terms. Headquarters has the majority of its operating revenues from other operating segments. The reported operating segments have only insignificant shares of intragroup operating revenues. The division into operating segments corresponds to the management structure and the internal reporting to the Group s chief operating decision maker, defined as the CEO. The division reflects an allocation based partly on the type of operation and partly on geographical location. In the operating segment information presented, Gross operating profit (loss) after depreciation and amortisation is used as measure of operating segment profit or loss. For internal control and monitoring, Gross operating profit (loss) is also used as measure of operating segment profit or loss. 121 D 61

365 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Information about operating rvenues and profit (loss) by operating segments is as follows: Schibsted Schibsted Media Norge Sverige Houses Online media media Inter- Head- Elimi classifieds house house national Other quarters nations Total Subscription revenues - 1, ,744 Casual sales revenues 12 1,350 1, ,478 Advertising revenues 3,478 2,974 1, ,654 Other operating revenues ,887 Operating revenues from external customers 3,535 6,475 3, ,763 Operating revenues from other segments (510) - Operating revenues 3,647 6,485 3, (510) 14,763 Operating expenses (2,549) (5,717) (3,139) (942) (356) (576) 510 (12,769) Share of profit (loss) of associated companies Gross operating profit (loss) 1, (3) (39) (228) - 2,028 Depreciation and amortisation (144) (207) (45) (32) (15) (36) - (479) Gross operating profit (loss) after depreciation and amortisation (35) (54) (264) - 1,549 Schibsted Schibsted Media Norge Sverige Houses media media Inter- Online Head- Elimi- classifieds house house national quarters nations 2011 Other Total Subscription revenues - 1, ,742 Casual sales revenues 13 1,398 1, ,641 Advertising revenues 3,040 3,056 1, ,428 Other operating revenues ,567 Operating revenues from external customers 3,123 6,477 3, ,378 Operating revenues from other segments (450) - Operating revenues 3,198 6,529 3,611 1, (450) 14,378 Operating expenses (2,202) (5,606) (3,204) (967) (169) (534) 450 (12,232) Share of profit (loss) of associated companies (3) Gross operating profit (loss) (238) - 2,185 Depreciation and amortisation (172) (218) (47) (35) (3) (30) - (505) Gross operating profit (loss) after depreciation and amortisation (268) - 1, Information about operating revenues by products and services are as follows: Operating revenues Online classifieds 3,661 3,222 Printed newspapers 8,415 9,001 Online newspapers / directories 2,255 1,923 Live pictures Other Eliminations (566) (616) Total 14,763 14,378 Operating revenues include government grants at NOK 57 million in 2012 and NOK 56 million in In addition barter agreements are included with NOK 67 million in 2012 and NOK 48 million in Information about operating revenues and non-current assets by geographical areas In presenting geographical information, attribution of operating revenues is based on the location of group companies. There are no significant differences between the attribution of operating revenues based on the location of group companies and an attribution based on the customers location. Non-current assets are attributed based on the geographical location of the assets. Operating revenues Norway 7,842 7,637 Sweden 4,206 4,224 France Spain Baltics Other Europe Other countries Total 14,763 14,378 Non-current assets Norway 3,608 3,333 Sweden 1,412 1,619 France 3,100 3,293 Spain 2,372 2,902 Baltics Other Europe Other countries Total 11,459 12,112 Non-current assets comprise assets excluding deferred tax assets and financial instruments, expected to be recovered more than twelve months after the reporting period. SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP NOTE 8 OTHER INCOME AND EXPENSES Operating income and operating expenses that are of a non-recurring nature and are of material importance to the operating segments are separated from other ordinary operating revenues and expenses and reported in a separate line in the income statement. Other income and expenses consist of: Restructuring costs (283) (231) Write-down of inventories (23) - Gain (loss) on sale of subsidiaries, joint ventures and associated companies (note 4) (13) 16 Gain on sale of intangible assets, property, plant and equipment and investment property 4 33 Gain on amendment of pension plans 8 99 Gain from remeasurement of previously held equity interest in business combination achieved in stages 57 - Acquisition-related costs (7) - Other - 33 Total (257) (50) 2012 Restructuring costs of NOK 283 million are mainly related to measures implemented in connection with the cost reduction programmes introduced to meet the structural changes facing print media. Schibsted Norge and Schibsted Sverige media houses account for NOK 192 million and NOK 55 million respectively. The costs are mainly related to reduction in headcount, but also include certain printing contract termination costs. The remaining restructuring costs are related to restructuring of the free newspapers 20 Minutes, changes in management structure in the Norwegian online classifieds operations Finn, restructuring of Aspiro and the ongoing downscaling of Sandrew Metronome. Write-down of inventories is carried out in Schibsted Forlag. Gain from remeasurement of previously held equity interest in business combination achieved in stages and acquisition related costs relate to Aspiro AB and Economy OK AB Restructuring costs of NOK 202 million are recognised as a consequence of implementation of measures to reduce the cost base in Schibsted Norge and Schibsted Sverige media houses. The costs are mainly related to reduction in headcount in Media Norge, VG and Schibsted Sverige. The measures are implemented and will take effect in the period where the cost base will be reduced by approximately NOK 200 million and headcount will be reduced by Restructuring costs related to the ongoing downscaling of the operations in Sandrew Metronome amount to NOK 28 million D 62

366 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP In relation to the ongoing downscaling of the operations in Sandrew Metronome, gains on the sale of subsidiaries and gains on sale of intangible assets are recognised in 2011 by NOK 10 million and NOK 33 million, respectively. Amendments to pension plans in certain subsidiaries have resulted in a gain of NOK 99 million. The amendments comprise amendments to benefits in existing plans and change from unfunded benefit plans to insurance of disability benefits. Other includes positive effect from recognising in income a provision related to a legal dispute settled in Sweden. NOTE 9 FINANCIAL RISK MANAGEMENT Capital management Schibsted is a listed company that aims to provide a competitive rate of return based on healthy finances. Schibsted aims to maximise the shareholders return through long-term growth in the share price and dividend. The Group s strategy and vision imply a high rate of change and development of the Group s operations. Schibsted s capital structure must be sufficiently robust in order to maintain the desired freedom of action and utilise growth opportunities based on strict assessments relating to allocation of capital. The Group s capital consists of net interest-bearing borrowings and equity: Non-current interest-bearing borrowings 2,124 1,907 Current interest-bearing borrowings Current interest-bearing securities 3 10 Cash and cash equivalents 1, Net interest-bearing borrowings 1,437 1,642 Group equity 5,740 6,659 Net gearing (net interest-bearing borrowings/equity) Undrawn long-term bank facilities 2,386 3,260 Schibsted will emphasise having a fixed dividend payout ratio which, over time, is to be 25-40% of the Group s normalised cash flow per share. In years when there is an economic slowdown, the company will try to pay dividend at the upper part of the target interval provided that the Group s capital structure allows this. Financing and control of refinancing risk is handled on the parent company level. Schibsted has a diversified loan portfolio both in terms of sourcing and maturity profile. The most important financing sources are the Norwegian commercial paper market and banks. Schibsted does not have an external credit rating. The financial flexibility is considered to be good and the Group s ratio of net interestbearing debt to gross operating profit was 0.7 at the end of This is on a level with the pronounced goal of 1-2. Available liquidity should at all times be equal to at least 10% of expected annual revenues. Available liquidity refers to the Group s cash and cash equivalents and available long-term bank facilities. 124 Schibsted has a conservative placement policy where excess liquidity is used for loan repayments. Until due date the excess liquidity is temporarily placed in the Group s cash pool, and at times in the short-term money market with banks the Group has credit facilities in. Financial risk Schibsted ASA has a treasury department responsible for financing and controlling of financial risks, such as interest and foreign exchange risk, liquidity risk and credit risk for the Group. Foreign exchange risk Norwegian kroner (NOK) are Schibsted s base currency, but the Group is through its business outside Norway also exposed to changes in other countries exchange rates, mainly Euro (EUR) and Swedish kronor (SEK). Schibsted has foreign exchange exposure relating to both balance sheet monetary items and to net assets in foreign operations. Schibsted uses loans in foreign currencies, forward contracts and swap agreements to reduce the foreign exchange exposure. The Group s monetary items exposure appears in note 22 Interestbearing borrowings and in note 18 Cash and cash equivalents. As at the Group had entered into several forward contracts involving the purchase and sale of currencies and one interest rate and currency swap agreement for this purpose. Currency gains and losses relating to borrowings and forward contracts which hedge net investments in foreign operations are recognised in Other comprehensive income until the foreign operation is disposed of. Other currency gains and losses are recognised in the income statement on an ongoing basis as other financial income or expense. As at Schibsted has the following forward contracts, which all mature in 2013: Currency Amount NOK Forward contracts, sale EUR Forward contracts, sale CHF Forward contracts, sale SEK Forward contracts, purchase SEK As at forward contracts for the sale of SEK 805 million are related to hedging of net investments in foreign operations. Fair value of the contracts accounted for as hedges was NOK -2 million as at Fair value of other forward contracts was NOK 2 million as at Cash flows in foreign currencies relating to considerable investments or significant individual transactions are hedged by using financial instruments. At year-end the Group had no such contracts. The Group s foreign exchange exposure relating to operations is low, since most of the cash flows take place in the individual businesses local currency. As at Schibsted has the following interest rate and currency swap, which mature in 2013: Currency Amount NOK Interest rate and currency swap EUR The interest rate and currency swap agreement is linked to the bond of NOK 300 million issued in December 2010 (ISIN NO ), where all payments of interests during the loan period and the final repayment of the loan at maturity in 2013 are fully matched. The agreement is accounted for as a hedge. The fair value of the agreement was NOK 22 million as at Schibsted follows a currency hedging strategy where parts of net investments in foreign operations are hedged. The degree to which hedging is carried out has been slightly reduced during As at % of the Group s net interest-bearing borrowings was in EUR, including forward contracts and the interest rate and currency swap. The remaining interest-bearing borrowings, including forward contracts, is denominated in NOK. The sensitivity of exchange rate fluctuations is as follows: if NOK changes by 10% compared to the actual rate as at for SEK and EUR, the Group s net interest-bearing borrowing (including currency derivatives) will change by approximately NOK 110 million. Currency effects will have a limited effect on Group profits since any change in value will be tied to instruments hedging the net foreign investments, but will change the net interest-bearing debt to gross operating profit ratio by approximately A change in exchange rates also affects the translation of net foreign assets to NOK. The equity effect of these changes is limited by the Group s currency hedging, where changes in the value of net foreign assets are mitigated by changes in the value of the Group s foreign-denominated interest-bearing borrowings and currency derivatives. Interest rate risk Schibsted has floating interest rates on most of its interest-bearing borrowings, see note 22 Interest-bearing borrowings and is thereby influenced by changes in the interest market. A change of 1 percentage point in the floating interest rate means a change in Schibsted s interest expenses of approximately NOK 24 million. This will partly be compensated by a change in interest income of approximately NOK 10 million. Interest rate swap agreements have been entered into to swap the bonds issued in 2012 from fixed interest rates to floating interest rates based on Nibor 6 months with addition of a margin. An interest rate swap has also been entered into to swap from Nibor 3 months with addition of a margin to Nibor 6 months with addition of a margin for the floating rate note issued in December As at Schibsted has the following interest rate swap agreements in NOK: Amount Pay Receive Interest rate swap 150 Nibor 6 months + margin 5.9% Interest rate swap 150 Nibor 6 months + margin 5.9% Interest rate swap 250 Nibor 6 months + margin 5.4% Nibor 3 months Interest rate swap 150 Nibor 6 months + margin + margin The fair value of the interest rate swap agreements was NOK 15 million as at SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Raw materials risk Schibsted is a consumer of newsprint and is therefore exposed to price changes. A change in the price of 1% has an impact on raw materials costs for the Group of approximately NOK 8 million per year. Newsprint prices in Norway, Sweden and Spain are negotiated annually with suppliers and have already been settled for Credit risk The Group has recorded a low level of losses relating to trade receivables, see Note 17 Trade and other receivables. There is a limited credit risk relating to the Group s circulation revenues since many of the Group s products are sold on the basis of prepayment (newspaper subscriptions). For parts of the Group s advertising revenues, deposit schemes and credit insurance have been established. For private online advertising payment is to a large extent made by charging the customer s credit card or phone at the time the advertisement is ordered. Net carrying amount of the Group s financial assets, except for equity instruments, represents maximum credit exposure, and the exposure as at is disclosed in note 10 Financial instruments by category. Exposure related to the Group s trade receivables is disclosed in note 17 Trade and other receivables. Liquidity risk At year-end the Group s portfolio of loans and loan facilities is well diversified both regarding maturity profile and lenders. At the end of 2012 Schibsted has a long-term liquidity reserve of NOK 3.4 billion and net interest-bearing borrowing is NOK 1,437 million. The liquidity reserve corresponds to 23% of the Group s turnover. The Group has as target that the aggregate liquidity reserve should be at least 10% of the next 12 months expected turnover. Schibsted s loan agreements contain financial covenants regarding the ratio of net interest-bearing borrowing to gross operating profit. The ratio shall normally not exceed 3, but can be reported at higher levels up to three quarters during the loan period, as long the ratio stays below D 63

367 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP NOTE 10 FINANCIAL INSTRUMENTS BY CATEGORY Carrying amount of assets and liabilities are divided into categories as follows: Financial assets and Financial Balance liabilities at fair assets Other Other as at value through Loans and available financial assets and Note profit or loss receivables for sale liabilities liabilities Intangible assets 11 9, ,113 Property, plant and equipment and investment property 12 1, ,845 Investments in associated companies Non-current financial assets Deferred tax assets Other non-current assets Inventories Trade and other receivables 17 2, , Current financial assets Cash and cash equivalents 18 1,031-1, Total assets 15, , ,973 Deferred tax liabilities Pension liabilities 21 1, ,422 Non-current interest-bearing borrowings 22 2, ,124 - Other non-current liabilities Current interest-bearing borrowings Income tax payable Other current liabilities 24 4, , Total liabilities 9, ,336 3,274 Financial assets and Financial Balance liabilities at fair assets Other Other as at value through Loans and available financial assets and Note profit or loss receivables for sale liabilities liabilities Intangible assets 11 9, ,611 Property, plant and equipment and investment property 12 1, ,992 Investments in associated companies Non-current financial assets Deferred tax assets Other non-current assets Inventories Trade and other receivables 17 2, , Current financial assets Cash and cash equivalents Total assets 16, , ,680 Deferred tax liabilities Pension liabilities 21 1, ,455 Non-current interest-bearing borrowings 22 1, ,907 - Other non-current liabilities Current interest-bearing borrowings Income tax payable Other current liabilities 24 4, ,223 - Total liabilities 9, ,958 2, The fair value of the Group s financial assets and liabilities at fair value through profit or loss is as follows: Assets Liabilities Forward contracts Interest rate and currency swap Total The Group s financial assets and liabilities measured at fair value, analysed by valuation method, are as follows: : Level 1 Level 2 Level 3 Total Financial assets available for sale Financial assets at fair value through profit or loss : Level 1 Level 2 Level 3 Total Financial assets available for sale Financial assets at fair value through profit or loss Financial liabilities at fair value through profit or loss - (4) - (4) The different valuation methods have been defined as follows: Level 1: Valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Valuation based on inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). Level 3: Valuation based on inputs for the asset or liability that are unobservable market data. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and these prices represent actual and regularly occurring market transactions on an arm s length basis. These instruments are included in level 1, and comprise primarily equity instruments quoted on the Oslo Stock Exchange and on Nasdaq OMX in Stockholm. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs are not based on observable market data, the instrument is included in level 3. SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Changes in level 3 instruments: Net carrying amount Additions 3 1 Disposals (1) (26) Changes in fair value recognised in comprehensive income - 1 Changes in fair value recognised in profit or loss (1) - Net carrying amount NOTE 11 INTANGIBLE ASSETS Other intangible Goodwill assets Total Net carrying amount ,878 2,733 9,611 Additions Additions on purchase of businesses Disposals on sale of businesses (12) (1) (13) Reclassification Amortisation - (196) (196) Impairment loss (350) (7) (357) Translation differences (280) (109) (389) Net carrying amount ,452 2,661 9,113 As at Cost 8,203 3,401 11,604 Accumulated amortisation and impairment losses (1,751) (740) (2,491) Net carrying amount 6,452 2,661 9, Net carrying amount ,919 2,809 9,728 Additions Additions on purchase of businesses Disposals - (6) (6) Disposals on sale of businesses (1) (19) (20) Reclassification Amortisation - (211) (211) Impairment loss (120) (65) (185) Translation differences (40) (19) (59) Net carrying amount ,878 2,733 9,611 As at Cost 8,436 3,754 12,190 Accumulated amortisation and impairment losses (1,558) (1,021) (2,579) Net carrying amount 6,878 2,733 9, D 64

368 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Other intangible assets include: Carrying amount Expected useful life Trademarks Indefinite 2,201 2,295 Trademarks Finite Software and licenses Finite Customer relations Finite Total 2,661 2,733 Trademarks with indefinite expected useful lives can be specified on cash-generating units as follows: Operating segment Schibsted Norge Schibsted Norge media house Schibsted Sverige Schibsted Sverige media house SCM Spain Online classifieds SCM France Online classifieds SCM Italy Online classifieds SCM Belgium Online classifieds SCM Ireland Online classifieds SCM Romania Online classifieds 4 5 Total 2,201 2,295 Trademarks with an indefinite expected useful life have been acquired through acquisitions and are expected to generate cash flows over an indefinite period of time. Intangible assets with a finite expected useful life are as a general rule amortised on a straight line basis over the expected useful life. The amortisation period of intangible assets are years. The amortisation method, expected useful life and any residual value are assessed annually. Schibsted has a clear goal of building a foundation for future growth by establishing in new markets. This is done to a large extent within Schibsted Classified Media through establishing operations that are primarily based on the successful Swedish Blocket.se concept. For successful establishments; technology, trademarks and goodwill that may have a significant value, is developed through the expenditure incurred. Such expenditure do not meet the requirements for recognition as intangible assets, and all the expenditure related to such roll-outs, mainly marketing expenditure, are thus recognised as an expense when it is incurred. Such investments reduced Gross operating profit by NOK 530 million in 2012 and NOK 412 million in Goodwill can be specified on cash-generating units as follows: Operating segment Schibsted Forlag Schibsted Norge media house VG Group Schibsted Norge media house Schibsted Vekst Schibsted Norge media house 7 5 Other Schibsted Norge Schibsted Norge media house Schibsted Sverige Schibsted Sverige media house Hitta Schibsted Sverige media house Eesti Meedia Media Houses International Finn.no Online classifieds SCM France Online classifieds 2,366 2,499 SCM Spain Online classifieds 1,589 2,043 SCM Sweden Online classifieds SCM Belgium Online classifieds SCM Ireland Online classifieds SCM Hungary Online classifieds 56 - Other online classifieds Online classifieds Aspiro Other Møteplassen Other Total 6,452 6,878 As a result of negative development in certain markets Schibsted has in 2012 recognised impairment losses of NOK 357 million related to goodwill and other intangible assets. Impairment loss goodwill is mainly related to the Group s Online classifieds operations in Spain and is included in the amount with NOK 345 million. Schibsted has in 2011 recognised impairment losses of NOK 185 million related to goodwill and other intangible assets. As a consequence of adverse development in profitability, impairment losses of NOK 111 million related to 20 Minutos Spain and NOK 9 million related to Tasteline Sweden AB (in operating segment Schibsted Sverige media house) has been recognised. Impairment loss other intangible assets is mainly related to intangible assets in Schibsted Classified Media (NOK 54 million) in connection with adjustment to the classification of expenditure incurred in ongoing development and upgrading of web sites. Recoverable amounts of the cash-generating units were estimated based on value in use. Expected cash flows in 2012 are discounted using a pre-tax discount rate (WACC) from 10.5% to 12.5% (10.5% to 13.4%). When WACC is determined, consideration is given to the risk-free interest rate with risk premium for the relevant country as well as business specific risk. SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP NOTE 12 PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY Equipment, Additions Disposals (13) (4) (17) Reclassification (28) 5 (27) - 33 (17) Depreciation (32) - - (112) (139) (283) furniture and Buildings Investment Construction Plant and and land properties in progress machinery similar assets Total Net carrying amount ,992 Additions on purchase of businesses Impairment loss (12) (12) Translation differences (5) - - (6) (7) (18) Net carrying amount ,845 As at Cost ,653 1,086 3,787 Accumulated depreciation and impairment loss (157) - - (1,069) (716) (1,942) Net carrying amount , Additions Reclassification 18 - (2) - (16) - Depreciation (36) - - (116) (142) (294) Net carrying amount ,112 Disposals (6) (6) Disposals on sale of businesses (1) (1) Impairment loss (6) (6) Translation differences (3) (3) Net carrying amount ,992 As at Cost 1, , ,727 Accumulated depreciation and impairment loss (149) - - (963) (623) (1,735) Net carrying amount , D 65

369 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Investment properties and property, plant and equipment, excluding land, are depreciated on a straight line basis over their estimated useful lives. Depreciation schedules reflect the assets residual value. Items of property, plant and equipment where material components can be identified with different useful lives are depreciated over the individual component s expected useful life. Depreciation is calculated over the estimated useful lives: Buildings (25-50 years), Plant and machinery (5-20 years), Equipment, furniture and similar assets (3-10 years). The depreciation method, expected useful life and any residual value are reviewed annually. Investment property Schibsted has two properties classified as investment properties as at The properties are an unused property reserve in Stavanger with a carrying amount of NOK 63 million and a commercial building in Farsund with a book value of NOK 5 million. Valuations from real estate agents are obtained and the fair values as at are not expected to deviate significantly from the carrying amount. Lease agreements Property, plant and equipment include assets owned under financial lease agreements. These assets have a cost of NOK 23 million in 2012 and NOK 24 million in 2011, and a carrying amount of NOK 11 million in 2012 and NOK 13 million in Depreciation amounts to NOK 2 million for 2012 and NOK 2 million for Schibsted has lease obligations related to off-balance sheet operating assets, mainly office buildings. Rental expenses were NOK 404 million in 2012 and NOK 384 million in The most significant leases relate to the leases of Aftenposten s premises at Biskop Gunnerus gate 14A in Oslo (the agreement expires in 2013), Schibsted Sverige s premises in Västra Järnvägsgatan 21 in Stockholm (the agreement expires 2020), VG s premises at Akersgata 55 (the agreement expires in 2023) and Schibsted Norge s premises in Sandakerveien 121 (the agreement expires in 2025). The most significant of the Group s leases contains a right to an extension. Future minimum payments under non-cancellable operational leases where Schibsted is the lessee are as follows: Within one year Between one and five years 1,214 1,094 More than five years 1,306 1,383 NOK 30 million is recognised as sub lease payments related to the Group s operating leases in 2012 and NOK 29 million in Expected future minimum lease payments for non-cancellable subleases are NOK 21 million as at and NOK 57 million as at Schibsted s rental income related to operating leases for office premises was NOK 15 million in 2012 and NOK 16 million in Within one year Between one and five years More than five years NOTE 13 INVESTMENTS IN ASSOCIATED COMPANIES The development in the carrying amount of investments in associated companies is as follows: Carrying amount Reclassification from financial assets Additions 9 16 Disposals (21) - Share of profit (loss) of associated companies Gain (loss) (5) - Impairment loss (179) - Dividends received (44) (25) Translation differences (8) - Other - (3) Carrying amount Impairment loss in associated companies is related to Metro Nordic Sweden AB. It is a result of negative market development. The Group s share of assets, liabilities, operating revenues and share of profit (loss) of associated companies are as follows: Assets Liabilities (494) (156) Carrying amount Operating revenues Share of profit (loss) SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Share of profit (loss) of associated companies and carrying amount of investments in associated companies are as follows: Ownership % Share of profit (loss) Carrying amount 2012 Location Metro Nordic Sweden AB Stockholm Polaris Media ASA Trondheim Other Total Until October 2012, Polaris Media ASA was a financial asset to Schibsted, see note 14 Financial assets. Price quotations are available for shares in Polaris Media ASA. The fair value of the investment in Polaris Media ASA is NOK 347 million based on quoted prices at NOTE 14 FINANCIAL ASSETS The development in carrying amount of investments categorised as financial assets available for sale is as follows: As at Additions 4 2 Disposals (114) (29) Reclassification to associated companies (210) - Reclassification to subsidiaries (67) - Changes in fair value Change recognised in comprehensive income Change recognised in profit or loss (1) - Reclassification adjustment from comprehensive income to profit (loss) by derecognition (109) (1) Reclassification adjustment from comprehensive income to equity by derecognition (145) - Translation differences (11) 1 As at Of which non-current financial assets Of which current financial assets Financial assets consist of: Shares Listed Scandinavia (Aspiro AB and Polaris Media ASA) Listed Scandinavia (Aspiro AB and Polaris Media ASA) TRS agreements and agreements with continuing financial involvement Unlisted Current interest-bearing securities 3 10 Total financial assets D 66

370 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Until February 2012, Schibsted held 18.3% of the shares in Aspiro AB and had the financial interest in an additional 21.3% of the shares through a Total Return Swap. In February 2012, Schibsted increased its ownership interest in Aspiro AB to 64.4% in a business combination achieved in stages. Changes in fair value of the previously held equity interest of 39.6% previously recognised in other comprehensive income was reclassified to profit or loss. A gain from remeasurement of those 39.6% of NOK 48 million is recognised in the line Other income and expenses. Until October 2012, Schibsted held 7.1% of the shares in Polaris Media ASA. From September 2011, Schibsted had a continuing involvement in an additional 36.3% of the shares from an agreement under which Schibsted had transferred those shares to other owners, but where those other owners had a right, but not an obligation, expiring in October 2012, to sell those shares back to Schibsted. Until September 2011, Schibsted had a financial interest in those 36.3% of the shares through a Total Return Swap. In October 2012, 21.9% of the shares were sold back to Schibsted, and Schibsted s equity interest of 29.0% is from then on accounted for as an investment in an associated company. Changes in fair value previously recognised in comprehensive income related to the 29.0% interest was charged to equity with NOK 145 million. Changes in fair value previously recognised in comprehensive income related to the 14.4% of the shares not sold back and consequently derecognised, were reclassified to profit or loss. A gain from derecognition of NOK 69 million is recognised in the line Financial income. The Total Return Swaps and the agreement with continuing involvement implied that Schibsted had financial assets and financial liabilities representing the rights and obligations Schibsted had towards the counterparties. The assets were recognised at NOK 490 million and the liabilities were recognised at NOK 475 million in 2011, see note 24 Other current liabilities. 132 NOTE 15 OTHER NON- CURRENT ASSETS Other non-current assets consist of: Loans to associated companies 1 1 Prepaid expenses Other receivables Total There are no significant differences between the fair value and the carrying value of loans to associated companies and other receivables as the interest calculation is based on a market rate. NOTE 16 INVENTORIES Inventories consist of: Books Newsprint purchased DVDs and publication rights Total Write-down of inventories to net realisable value was NOK 28 million in 2012 and NOK 1 million in Inventories carried at fair value less cost of sales were NOK 32 million as at and NOK 3 million as at NOTE 17 TRADE AND OTHER RECEIVABLES Trade receivables and other receivables consist of: Trade receivables 1,856 1,881 Less provision for impairment of trade receivables (80) (79) Trade receivables (net) 1,776 1,802 Prepaid expenses and accrued revenue Income tax receivables Financial assets at fair value through profit or loss (note 10) 2 11 Other receivables Total 2,447 2,406 The carrying amount of trade and other receivables are considered to represent a reasonable approximation of fair value. The maximum exposure to credit risk at the reporting date for trade and other receivables is the carrying value of the receivables. In some group entities credit insurance and other agreements are obtained. Carrying value of trade receivables with security is NOK 262 million as at Movements in the Group s provision for impairment of trade receivables are as follows: As at 1.1 (79) (71) Provision for impairment (52) (48) Receivables written off as uncollectible Unused amounts reversed Disposal on sale of group companies - 1 Translation differences 2 1 As at (80) (79) As at trade receivables of NOK 174 million were impaired. The amount of the provision was NOK 80 million. As at trade receivables of NOK 180 million were impaired and the provision was NOK 79 million. The aging of impaired trade receivables is as follows: Not due* Up to 45 days More than 45 days Total * Also includes provisions not individualised As at trade receivables of NOK 478 million were past due but not impaired, compared to NOK 480 million as at These receivables relate to a number of independent customers in different locations. SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP The aging of the past due, not impaired trade receivables, is as follows: Up to 45 days More than 45 days Total NOTE 18 CASH AND CASH EQUIVALENTS Cash and cash equivalents 1, The carrying amounts of the Group s cash and cash equivalents are denominated in the following currencies: NOK (228) 88 SEK EUR Other Total 1, Carrying amount of cash and bank deposits are considered to represent a reasonable approximation of fair value. Schibsted has a multi-currency cash pool with Danske Bank in which almost all the Nordic subsidiaries are included. The cash pool has been established to optimise liquidity management for Schibsted. The Group has an overdraft facility under the cash pool system of NOK 400 million. At the end of 2012 this facility was not drawn. Excess liquidity is mainly placed in the cash pool or in the short-term money market. The bank deposits of subsidiaries outside the Nordic countries are deposited at local banks. The deposit and borrowing interest rates in Danske Bank are based on Ibor rates for each currency with a subtraction or addition of a margin. The Ibor rates are fixed daily in the market. A cross-currency netting of margins is established for the currencies in the cash pool. Other bank deposits are credited interests based on the bank s daily deposit rates in each country. Of the Group s cash and cash equivalents, NOK 16 million are considered to be restricted as at Payroll withholding tax is not included in restricted cash as the Group has provided a tax guarantee instead D 67

371 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP NOTE 19 NUMBER OF SHARES The development in share capital and other paid-in equity is set out in the Consolidated statement of changes in equity. The development in the number of issued and outstanding shares is as follows: Number of shares Number of shares Outstanding Treasury shares Issued Outstanding Treasury shares Issued As at ,941,657 1,061, ,003, ,773,175 4,230, ,003,615 Increase in treasury shares (1,129,301) 1,129,301 - Decrease in treasury shares 162,803 (162,803) - 4,297,783 (4,297,783) - As at ,104, , ,003, ,941,657 1,061, ,003,615 The Group s share capital consists of 108,003,615 shares of NOK 1 par value. No shareholder may own or vote at a shareholders meeting for more than 30% of the shares. The Annual Shareholders Meeting has given the Board authorisation to acquire treasury shares up to 10,800,361 shares (10%). The authorisation was renewed at the Annual Shareholders Meeting on 11 May 2012 for a period until the Annual Shareholders Meeting in At the Annual Shareholders Meeting on 30 April 2013 the Board will present a resolution to extend the authorisation for the Board to purchase and dispose of up to 10% of the share capital in Schibsted ASA according to the Norwegian public limited liability companies act under the conditions evident from the notice of the Annual Shareholders Meeting. During 2012 Schibsted has sold 91,060 treasury shares to key personnel at NOK per share in connection with exercise of 72,500 options with the right to acquire 91,060 shares. The total value consideration was NOK 12 million. Schibsted has in July and December 2012 transferred respectively 28,475 treasury shares at NOK and 23,468 treasury shares at NOK to key managers in connection with performance-based share purchase programme. The total value consideration was NOK 11 million. In 2011 Schibsted acquired 1,129,301 treasury shares at a total purchase price of NOK 164 million. In January 2011, Schibsted used 247,603 treasury shares at NOK as part payment when acquiring shares in Media Norge AS. In connection with the merger of Schibsted and Media Norge AS in May 2011, 3,981,184 treasury shares at NOK were transferred to the former minority holders of Media Norge. In July 2011, Schibsted transferred 32,388 treasury shares at NOK to key managers in connection with the performance-based share purchase programme. The total value of treasury shares used for the purposes above is NOK 693 million. In November 2011, 36,608 treasury shares at NOK were sold in connection with an offer to employees to purchase shares at a discounted price. The total value consideration was NOK 5 million. As at Schibsted held 899,155 treasury shares. The background to the purchases previous years is that the Board of Directors has considered the repurchase of shares as advantageous compared to alternative investments and in order to optimise the capital structure of the Group. In addition shares are acquired in order to be used in connection with the employee share programmes and in connection with acquisitions. In November 2012, 19,800 treasury shares at NOK were sold in connection with an offer to employees to purchase shares at a discounted price of The total consideration was NOK 4 million. During the first quarter of 2013 the company has reduced its number of treasury shares by 113,040 in connection with exercised options in the Group option scheme for key personnel. The holding as at 20 March 2013 was 786,115 shares. 134 NOTE 20 DIVIDENDS At Schibsted s Annual Shareholders Meeting on 30 April 2013 a dividend of NOK 3.50 per share will be proposed (total NOK 375 million). No provision for this dividend has been recognised in the Group s balance sheet as at In 2012 dividends of NOK 3.50 per share were paid (total NOK 375 million). NOTE 21 PENSION PLANS Schibsted has occupational pension plans for its employees in Norwegian companies, mainly with Storebrand Livsforsikring AS. These pension plans meet the requirements of the Act on Mandatory occupational pensions applicable to Norwegian companies. Schibsted is entitled to make changes to the pension plans. The occupational pension plans are partly established as defined benefit plans and partly as defined contribution plans. A significant part of the existing funded defined benefit plans are closed. The terms of the funded defined benefit plans are mainly uniform. The benefits are mainly dependent upon number of years of employment, salary level at retirement age and the amount of benefits from the National Insurance pension. The majority of the funded defined benefit plans comprise retirement pension for life from 67 years and full retirement pension amounts to approximately 66% of the basis (limited to 12G (National Insurance basic amount)) including assumed pension from the National Insurance pension (based on calculated National Insurance pension). Several of the plans include spouse pension, child pension and disability pension. As at the funded defined benefit plans in Norway covered approximately 2,350 working members and approximately 1,700 retirees. Estimated contributions in 2013 to the above mentioned funded defined benefit plans amount to approximately NOK 120 million. The terms related to annual contributions to the defined contribution plans are mainly uniform, and for most companies the contribution amounts to 5% of salaries within the interval from 1G to 6G and 8% in the interval from 6G to 12G. The plans include disability pension. In addition to the pension obligations that arises from the funded defined benefit plans, the Group s Norwegian companies have unfunded defined benefit obligations related to disability pensions (if not covered by other pension plans or insurances), supplementary pensions for salaries above 12G, Agreementbased pension (AFP) and early retirement pensions. Some Norwegian subsidiaries made certain amendments to their pension plans in 2012 and The amendments comprise change from unfunded defined benefit plans to insurance of disability benefits as well as other changes in benefits in existing plans. A gain of NOK 8 million and NOK 99 million respectively, related to these changes is recognised in Other income and expenses (see note 8 Other income and expenses). A significant share of SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP the restructuring costs related to operating segment Schibsted Norge media house (see note 8 Other income and expenses) is related to pensions and is included in Past service cost in the specification of Net pension expense below. A new pension plan was introduced by a Norwegian subsidiary in Changes in the liability resulting from the introduction of the plan are recognised in profit or loss as past service cost over the average period until the benefits become vested. Unrecognised past service cost is disclosed as a separate component in the specification of pension liabilities. The Group s companies outside Norway have pension plans, mainly defined contribution plans, in accordance with local practice and local legislation. The Group has certain pension schemes in Norway and Sweden established in multi-employer plans. These multi-employer plans are defined benefit plans, but the Group does not have access to the necessary information for the accounting years 2012 and 2011 required to account for these plans as defined benefit plans, and the plans are therefore accounted for as defined contribution plans. 135 D 68

372 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP The amounts recognised in profit or loss are as follows: Changes in present value of defined benefit obligations are as follows: Current service cost Interest cost Expected return on plan assets (122) (140) Actuarial gain (loss) recognised 1 (9) Past service cost The effect of curtailment or settlement (68) (147) Net pension expense defined benefit plans Pension expense defined contribution plans Pension expense multi-employer defined benefit plans accounted for as defined contribution plans Net pension expense Of which included in Personnel expenses (note 27) Of which included in Other income and expenses 11 8 The amounts recognised in the balance sheet are as follows: Present value of funded defined benefit obligations 3,015 3,755 Fair value of plan assets (2,947) (2,926) Present value (net of plan assets) of funded defined benefit obligations Present value of unfunded defined benefit obligations Unrecognised actuarial gains or losses 539 (236) Unrecognised past service cost (26) - Pension liabilities 1,422 1,455 Social security tax included in present value of defined benefit obligations Present value of defined benefit obligations as at 1.1 4,617 4,131 Current service cost Interest cost Actuarial gains or losses (887) 424 Benefits paid (212) (170) Past service cost Curtailments and settlement (90) (251) Present value of defined benefit obligations as at ,856 4,617 Changes in fair value of plan assets are as follows: Fair value of plan assets as at 1.1 2,926 2,835 Expected return on plan assets Actuarial gains or losses (112) (31) Contributions by employer Benefits paid (102) (95) Curtailments and settlement (18) (58) Fair value of plan assets as at ,947 2,926 Amounts of defined benefit obligations, plan assets, deficit and experience adjustments are as follows: Present value of defined benefit obligations as at ,856 4,617 4,131 4,072 3,108 Fair value of plan assets as at ,947 2,926 2,835 2,798 2,007 Deficit (surplus) 909 1,691 1,296 1,274 1,101 Experience adjustments defined benefit obligations (86) 66 (165) (282) 110 Experience adjustments plan assets (87) Experience adjustments are the effects of differences between previous actuarial assumptions and what has actually occured. The principal assumptions presented below are used in calculating net pension expense and the net benefit obligation for the Group s defined benefit plans: Pension expense Pension obligation Discount rate 3.00% 4.00% 3.80% 3.00% Expected return on plan assets 4.50% 5.25% - - Expected salary increases 4.00% 4.00% 3.50% 4.00% Expected adjustment National Insurance basic amount 3.75% 3.75% 3.25% 3.75% Expected pension increases 0.40% 1.25% 0.20% 0.40% Demographic assumption mortality rate K2005 K2005 K2005 K The assumption regarding expected pension increases is used for pensions being increased in accordance with the Act on company pensions. For pension agreements containing specific clauses on increases in pension, those clauses are applied. Schibsted has in 2012 changed the reference for determination of discount rate for Norwegian pension plans. Previously, this rate has been determined by reference to Norwegian government bonds. With effect from 2012, the rate is determined with reference to high quality corporate bonds. Schibsted has concluded that, at the end of 2012, a deep market exists for covered bonds ( OMF-obligasjoner ) in Norway and that this interest rate therefore shall be used as reference under IAS 19 Employee benefits. The resulting increase in the discount rate significantly reduces the present value of defined benefit obligations at Changes in actuarial assumptions reduce defined benefit obligations by NOK 801 million in 2012, and the change to the reference for determining the discount rate is the major contributing factor to this decrease. The Group s plan assets as at consist of: Shares 14% 19% Short-term bonds 11% 33% Money market investments 38% 2% Real estate 14% 16% Long-term bonds 0% 7% Credit 19% 20% Other 4% 3% Total 100% 100% The actual return on plan assets (value-adjusted return in relevant portfolio of assets) was approximately 6.8% in 2012 and approximately 3.0% in SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP NOTE 22 INTEREST-BEARING BORROWINGS The Group has the following composition and maturity structure on its interest-bearing borrowings: Current Non-current Commercial Paper issues Bond issues 300-1, Bank loans ,199 Financial lease agreements Other loans Total ,124 1,907 Maturity within 3 months Maturity between 3 months and 1 year Maturity between 1 and 2 years Maturity between 2 and 5 years - - 1, Maturity beyond 5 years Total ,124 1, Almost all of the Group s long term interest-bearing borrowings are at floating interest rates. For information on interest rate risk, see note 9 Financial risk management. The interest rate periods relating to the Group s borrowings are between one and six months. Schibsted issued bonds in both March and December 2012 and has a loan portfolio with a diversified maturity profile. The current terms of the Group s interest-bearing borrowings as at has been reviewed and compared to the market pricing at year-end, and the carrying value is considered to represent a reasonable approximation to fair value. Carrying amount in NOK million of interest-bearing borrowings break down as follows by currency: NOK 2,076 1,053 SEK EUR Total 2,471 2,430 The Group has a EUR bank loan of EUR 4 million. The loan, from 2004, follows a repayment schedule with installments twice a year and final maturity in The interest term on the loan is six month Euribor with the addition of a margin. The Group has a bank loan of NOK 175 million. The loan has a term of 12 years from 2007 and the interest terms are six month Nibor with the addition of a margin. The loan has a repayment schedule with installments twice a year. The loan facility that was entered into in August 2010 is a multi-currency loan facility totalling EUR 500 million, and the lenders consists of seven Nordic and international banks. The facility has two tranches, where EUR 175 million matures in 2013 and EUR 325 million matures in The facility was not drawn as of year-end The facility has interest terms based on Euribor plus a margin. Schibsted must pay a commitment fee to maintain the facility s D 69

373 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP availability. The commitment fee is calculated as a percentage of the loan margin, on the undrawn part of the facility. The Group has two bank loans of EUR 25 million each. These loans were entered into in January 2011 and expire in January 2014 and January There are no installments before maturity date. The interest terms on these loans are three month Euribor with the addition of a margin. Schibsted ASA issued four unsecured bonds in the Norwegian bond market at a total of NOK 1,100 million in March and December 2012 and together with bonds issued in 2010 the total amount of bonds issued are NOK 1,900 million as at : Loan Amount Interest rate ISIN NO ( ) 300 FRN: Nibor 3 months bps ISIN NO ( ) 400 FRN: Nibor 3 months bps ISIN NO ( ) 500 FRN: Nibor 3 months bps ISIN NO ( ) % ISIN NO ( ) % ISIN NO ( ) 150 FRN: Nibor 3 months bps The bonds with fixed interest rate, and the FRN maturing in 2022 have been swapped to floating interest rate, Nibor 6 months plus a margin. The FNR maturing in 2013 has been swapped to EUR through an interest and currency swap. Schibsted makes use of the Norwegian Commercial Paper Market to fund shortterm liquidity, but has no outstanding loans as at Other loans consist mainly of loans from non-controlling interests of some subsidiaries. Schibsted has no such loans as at Schibsted s loan agreements contain financial covenants regarding the ratio of net interest-bearing debt (NIBD) to gross operating profit (EBITDA). The reported ratio was well within the financial covenants as at See note 9 Financial risk management Liquidity risk. The Group has provided guarantees of NOK 95 million. The Group has no mortgage debt. Schibsted has available long-term credit facilities totalling NOK 2,386 million through the unutilised drawing right on the loan facility of EUR 325 million. In addition, Schibsted has short-term credit facilities of NOK 1,285 million through the unutilised drawing right on the loan facility of EUR 175 million and NOK 400 million in the form of unutilised overdraft limits through the Group s cash pool with Danske Bank, see note 18 Cash and cash equivalents. 138 NOTE 23 OTHER NON- CURRENT LIABILITIES Other non-current liabilities consist of: Financial liabilities related to non-controlling interests put options (note 25) Provision for other obligations 12 6 Contingent considerations business combinations - 74 Other non-current employment benefits Deferred revenue recognition 5 7 Provision for restructuring costs 40 7 Other non-current liabilities 6 12 Total other non-current liabilities Some business combination agreements include contingent consideration requirements based on future events, usually financial development. The estimated future consideration is recognised as liabilities. As at the total liability of NOK 74 million relates to the business combination involving Schibsted France SAS (former SCM France SAS). Schibsted has received claims from Swedish tax authorities for repayment of value added tax for previous years. The basis for those claims is a decision in the EU-court in 2010 stating that certain printing services shall have a VAT-rate of 6%, not 25%. Schibsted is, with support from legal expertise, of the opinion that the claims are not valid and no liability is therefore recognised in the 2012 financial statements. If the claims should have to be settled, the financial exposure for Schibsted is limited. NOTE 24 OTHER CURRENT LIABILITIES Other current liabilities consist of: Financial liabilities related to non-controlling interests put options (note 25) Financial liabilities related to TRS agreements and agreements with continuing financial involvement (note 14) Contingent considerations business combinations 71 3 Trade payables Prepaid revenues Public duties payable Accrued salaries and other current employment benefits Accrued expenses Financial liabilities at fair value through profit or loss (note 10) - 4 Provision for restructuring costs Other Total other current liabilities 4,293 4,227 The Group has no other significant liabilities with an uncertain payment date. Some business combination agreements include contingent consideration requirements based on future events, usually financial development. The estimated future consideration is recognised as liabilities. As at the total liability of NOK 71 million relates to the business combination involving Schibsted France SAS (former SCM France SAS). Provision for restructuring costs as at is pertaining to accrued restructuring cost in the Scandinavian companies. SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP NOTE 25 FINANCIAL LIABILITIES RELATED TO NON-CONTROLLING INTERESTS PUT OPTIONS Development in financial liabilities recognised related to non-controlling interests put options is as follows: As at Additions Settlement (57) - Disposals - (16) Change in fair value 217 (9) Interest expenses Translation differences (35) (3) As at Of which non-current (note 23) Of which current (note 24) When non-controlling interests have put options related to shares in subsidiaries and Schibsted is recquired to acquire such shares, a financial liability is recognised. The liabilities are measured at fair value which is based on the best estimate of future considerations. The estimates takes into account the principles for determination of the consideration in the existing agreements. The estimates take further into account, when relevant, management s expectations regarding future economic development used in determining recoverable amount in impairment tests. The liability is initially recognised directly in equity. Change in fair value of the liability, except for interest expenses, is also recognised directly in equity. In the consolidated statement of changes in equity, such amounts are included in the line item Changes in ownership interests in subsidiaries without a loss of control. Liabilities recognised as at are related to non-controlling interests shareholdings in Schibsted España S.L., InfoJobs S.A., Done Deal Ltd and Sibmedia Interactive S.R.L. within the operating segment Online classifieds, Duplo Media AS within the operating segment Schibsted Norge media house and Lendo AB, Prisjakt Sverige AB, ServiceFinder Sverige AB and Lets Deal AB within the operating segment Schibsted Sverige media house. Of the non-current share of the liability as at , NOK 14 million are related to options exercisable in 2014 and NOK 191 million are related to options exercisable in D 70

374 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP NOTE 26 RAW MATERIALS AND FINISHED GOODS Raw materials and finished goods consist of: Newsprint, raw materials and purchased goods 971 1,032 TV / Film production expenses Changes in inventories 3 (4) Total 1,057 1,159 NOTE 27 PERSONNEL EXPENSES AND SHARE-BASED PAYMENT Personnel expenses consist of: Salaries and wages 3,842 3,681 Social security costs Net pension expense (note 21) Share-based payment Other personnel expenses Total 5,241 4,960 Number of man-years 7,951 7,839 Details of salary, variable pay and other benefits provided to group management in 2012 (in NOK 1,000): Salary incl. Variable pay Members of Group management: holiday pay (paid 2012) LTI programme Other benefits Pension expense Loan outstanding Rolv Erik Ryssdal 3,263 1,041 1, ,116 - Trond Berger 2, , Camilla Jarlsby 1, Sverre Munck 2, , Terje Seljeseth 2, , Gunnar Strömblad 1, , Raoul Grünthal 2, Didrik Munch 2, ,776 - Loans to group management have no installments, and the interest rate is 1% lower than the government set benchmark interest rate. 140 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Details of salary, variable pay and other benefits provided to group management in 2011 (in NOK 1,000): Salary incl. Variable pay Members of Group management: holiday pay (paid 2011) LTI programme Other benefits Pension expense Loan outstanding Rolv Erik Ryssdal 3,048 1, ,486 - Trond Berger 2,427 1, , Camilla Jarlsby 1, Sverre Munck 2, , Terje Seljeseth 2, , Gunnar Strömblad 2,332 1, ,638 - Raoul Grünthal 2, Didrik Munch 2,594 1, ,727 - Loans to group management have no installments, and the interest rate is 1% lower than the government set benchmark interest rate. Variable pay Schibsted s CEO and other executive management participate in an annual variable pay programme that is linked to annual achievements of targets. The targets are twofold and related to financial and non-financial targets. The criteria are part of a total evaluation. For the CEO the variable pay is limited to a maximum of six months salary. For other executive management, the variable portion of salary varies from a maximum of four to six months salary. The CEO and other executive directors also participate in Schibsted s three-year performance based share programme (LTI), linked to the three-year performance criteria. Termination payment schemes The CEO has termination payment equal to eighteen months salary in addition to the six-month period of notice. The other Group management and managers are normally entitled to termination payments equal to 6-18 months salary, depending on the level of their position. Competition restrictions and curtailments will normally apply during the termination-pay period. The Chairman of the Board has no special remuneration scheme that applies if he resigns. Pension schemes The Group s CEO is entitled and, if Schibsted so requires, obliged to retire at the age of 62. His full annual early retirement pension is 66% of his pensionable earnings. The retirement pension solution means that, when he reaches 67 years of age, the CEO will receive a retirement pension for life which equals 66% of his fixed salary. He is entitled to a disability pension of 66% of his fixed salary. The spouse/cohabitant pension is 50% of his fixed salary and the child pension is 15% of his fixed salary. The Norwegian executive directors are entitled and, if Schibsted so requires, obliged to retire at the age of 62 years. During the period leading up to the ordinary retirement age (67 years), they will receive a pension that is 66% of their fixed salary. Full annual retirement/disability pension for the Norwegian executive directors is 66% of their fixed salary. Other members of the group management have different pension schemes within the limit of benefits to the Norwegian executive directors. The executive directors based in Sweden have a defined benefit pension insurance on level with the Norwegian executive directors. 141 D 71

375 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Remuneration to the Board of Directors in 2012 (in NOK 1,000): Board remuneration Commitee from Board remunerationneration remu- other group Salary incl. Other Pension Total remu- companies holiday pay benefits cost neration Members of the Board and Committees: Ole Jacob Sunde, chairman of the Board and the Compensation Committee Karl-Christian Agerup, member of the Board and the Audit Committee until and member of the Compensation Committee from Monica Caneman, member of the Board and Chairman of the Audit Committee until Marie Ehrling, member of the Board and the Compensation Committee until and Chairman of the Audit Committee from Christian Ringnes, member of the Board and the Audit Committee Eva Berneke, member of the Audit Committee from and member of the Board Arnaud de Puyfontaine, member of the Board from Eugenie van Wiechen, member of the Board from Jonas Fröberg, employee representative of the Board and Compensation Committee from ** Anne-Lise Mørch von der Fehr, member of the Compensation Commitee until and employee representative of the Board ** ,513 Gunnar Kagge, employee representative of the Board ** ,066 Frank Johan Johansen, deputy employee representative of the Board ** Arve Jakobsen, deputy employee representative of the Board ** Hege Lyngved Odinsen, deputy employee representative of the Board ** Øystein Simensen, deputy employee representative of the Board ** Torbjörn Harald Ek, employee representative of the Board from ** John A. Rein, chairman of the Election Committee Gunn Wærsted, member of the Election Committee Nils Bastiansen, member of the Election Committee Total 2, , ,466 * Board remunerations include compensation for travelling hours to directors who do not live in Oslo. ** For employee representatives total remuneration includes salary and other benefits in their ordinary position. At the General Meeting 2012 the Board was expanded from eight to ten members. See the Statement on Corporate Governance chapter 8 for further information about the Board. Auditor Fees to the Group s auditors for the fiscal year 2012 were as follows: Other attestation Tax advisory Other non- (NOK 1,000 excl. VAT) Audit services services services audit services Total Schibsted group Ernst & Young 12, ,705 20,662 Other auditors , ,619 Total 13, ,893 7,316 24,281 Schibsted ASA Ernst & Young ,489 3, Share-based payment (included in personnel expenses) consists of: Expense option programme 1 2 Expense LTI programme Total Of which is equity settled Of which is cash settled Option programme Until 2010, Schibsted had an option programme for group management and key personnel. The programme was terminated in 2010 by the introduction of a new share-based programme (LTI programme), but the individual outstanding option schemes are still valid. The programme is accounted for as a share-based payment transaction settled in equity. Expenses and increase in equity are recognised over the service period of 3 years. The development in the number of options outstanding has been as follows: Outstanding , ,500 Exercised (72,500) - Expired and forfeited - (127,500) Outstanding , ,000 Of which fully vested 202, ,500 Outstanding options as at have the following terms: Exercise Number Expiry date price (NOK) of options 24 June ,000 7 October ,500 The maximum gain per share that a manager can achieve when exercising the options is equal to multiplied with the exercise price per share. Each option entails the right to acquire shares. Schibsted has during 2012 sold 91,060 treasury shares to key personnel at NOK per share in connection with exercise of 72,500 options with the right to acquire 91,060 shares. Total exercise price for options exercised in 2012 was NOK 12 million. The fair value of the shares at the time of exercise was NOK 17 million. No options were exercised during Options outstanding for managers included in the option programme are presented below: Opening Closing balance Exercised balance Average during maturity Rolv Erik Ryssdal 37,500-37, Gunnar Strömblad 30,000 (15,000) 15, Trond Berger 30,000-30, Sverre Munck 30,000-30, Raoul Grünthal 15,000-15, Camilla Jarlsby 7,500-7, Others 125,000 (57,500) 67,500 Total 275,000 (72,500) 202,500 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Long-term incentive programme (LTI programme) In 2010, Schibsted introduced an annual rolling three-year performancebased share programme (LTI programme) for key managers in the Group. The programme was expanded in 2012 to include Online classified companies and management groups. The scheme includes a total of 43 participants in the 2010 programme, 58 participants in the 2011 programme and 91 participants in the 2012 programme. The LTI programme is divided into four participating levels. Level 1 is for the CEO, level 2 for members of Group Management and level 3 and level 4 for key personnel in the Group, as well as the managers/management groups in key subsidiaries. For each level, participants are given a defined Basic Amount which is calculated as a percentage of salary. The Group Board has stipulated guidelines for the percentage to be allocated to the various participant levels in order to ensure flexibility and mobility, while also taking into account individual pay differences and variations in the compensation schemes. Between 11% and 33% of the Basic amount (the Share Amount ) is awarded at start in form of shares in Schibsted which cannot be sold during the three-year period. If a participant at level 1 or 2 leaves during the three years, the Share Amount shall be refunded. A similar restriction does not apply to participants in level 3 and level 4. The rest, i.e. between 67% and 89% of the Basic amount ( Performance Amount ), is linked to three-year performance criteria. Performance criteria are performance measures that are compared to the three-year EBITA for the Group or participant s operations for level 1, 2 and 3. For level 4 the performance criteria are connected to the development of the market value of the companies during the vesting period compared to a predetermined hurdle. At the end of the three-year period, the participants receive settlement in Schibsted shares based on their goal achievement, and the number of shares is calculated based on the average price during the programme s three-year period. Level 1, 2 and 3 participants receive the full Performance Amount after three years. Level 4 participants receive 1/3 of the Performance Amount after three years and the remaining 2/3 after a one year lock-up period. The maximum settlement in each programme will depend on the target achievement during the period. If the minimum target is not achieved during the three-year period, only the Share Amount will be paid at the end of the three-year programme. Upon payment of the Share Amount and Performance Amount, Schibsted is responsible for tax deduction on behalf of the participant so that only the net amount after tax is paid in Schibsted shares. The programme is therefore treated partly as a share-based payment transactions settled in cash (tax) and partly as share-based payment transactions settled in equity (net payment in form of shares). The expense related to the portion that is recognised as a share-based payment transaction settled in equity is recognised in equity, while the expense related to the portion that is treated as a share-based payment transaction settled in cash is recognised as a liability. The expense and the increase in equity or liability are recognised over the vesting period of 3 or 4 years for the parts of the total compensation that contains a service condition throughout the three or four-year period. This applies to the Performance Amount and the part of Share Amount for level 1 and 2 that is recognised as a share-based payment transactions settled in equity. The remaining expense and increase in equity or liability are recognised immediately upon the start of the programme D 72

376 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Performance Amounts will vary based on the degree of achievement of the performance criteria. Expenses to be recognised over the vesting period are estimated at the end of each reporting period based on the estimated fair value of the liability for transactions that are settled in cash and based on the number of equity instruments that is expected to vest for transactions settled in equity. Estimated total expense of the LTI programme s maturity (3 and 4 years): Programme Programme Programme Value Share Amount at grant date Value Performance Amount at grant date Adjustment to Performance Amount - (8) 6 Estimated total expense over the programme s maturity Programme Programme Programme Total Recognised in Personnel expense in Recognised in Personnel expense in Recognised in Personnel expense in To be recognised over the remaining vesting period If a minimum performance target is reached, the estimated total expense for Performance Amount will be increased or decreased in a range of 50%. If not, the Performance Amount will be NOK 0 million. Assumptions used for calculating the value of the LTI programme: Programme Programme Programme Dividends Closing price used for bonus shares level 1, 2 and 3 granted Closing price used for bonus shares level 4 granted Average price of the programme Closing price Risk-free interest rate 1.45% 1.46% 1.82% Model Monte Carlo Monte Carlo Monte Carlo Share programme Employees in the Group are given the opportunity each year to buy shares for NOK 7,500 at a 20% discount. 144 NOTE 28 OTHER OPERATING EXPENSES Other operating expenses consist of: Distribution 1,140 1,281 Commissions Rent, maintenance, office expenses and energy PR, advertising and campaigns 1,176 1,051 Printing contracts Editorial material Professional fees Travelling expenses IT expenses Other operating expenses Total 6,471 6,113 NOTE 29 FINANCIAL ITEMS Financial income and financial expenses consist of: Interest income Gain on sale of financial assets available for sale Dividends received 7 32 Other financial income 1 2 Total financial income Interest expenses (142) (156) Net foreign exchange loss (11) (11) Impairment loss financial assets available for sale (1) - Other financial expenses (22) (23) Total financial expenses (176) (190) Net foreign exchange loss consists of: Net foreign exchange gain (loss) currency derivatives 18 (2) Net foreign exchange gain (loss) other financial instruments (29) (9) Net foreign exchange loss (11) (11) In 2012 gain on sale of financial assets available for sale is mainly related to the sale of shares in Polaris Media ASA. Schibsted hedges its currency exposure in SEK and EUR by using loans and derivatives, see note 9 Financial risk management. As a result of this, foreign exchange gain (loss) effects in the income statement will normally be limited. Net foreign exchange losses in 2012 and 2011 are primarily related to currency effects in the Group s businesses outside the eurozone. Financial income and financial expenses include the following amounts of interest income and interest expenses related to financial assets and liabilities that are not included in the category financial assets or financial liabilities at fair value through profit or loss: Interest income Interest expenses (142) (156) SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP NOTE 30 TAXES The Group s income tax expense comprises the following: Current income taxes Deferred income taxes (54) 81 Taxes (including taxes recognised in comprehensive income) Of which recognised in profit or loss Of which recognised in comprehensive income 7 2 The Group s effective tax rate differs from the nominal tax rate in countries where the Group has operations. The relationship between tax expense and accounting profit (loss) before taxes is as follows: Profit (loss) before taxes 683 1,331 Estimated tax expense based on nominal tax rate in Norway Tax effect share of profit (loss) of associated companies (10) (11) Tax effect impairment loss goodwill Tax effect impairment loss investments in associated companies 50 - Tax effect gain from remeasurement of previously held equity interest in business combination achieved in stages (16) - Tax effect other permanent differences Change in unrecognised deferred tax assets Effect of tax rate differential abroad 22 2 Effect of changes in tax rates (16) - Effect of adjustments recognised related to prior periods - (8) Taxes recognised in profit or loss Permanent differences include, in addition to non-deductible operating expenses, tax-free dividends and gains (losses) on sale of shares as well as non-deductible impairment losses related to shares. Gain (loss) on sale of subsidiaries, joint ventures and associated companies is recognised as other income and expenses, while gain (loss) on sale and impairment losses of financial assets available for sale are recognised as financial income and expenses, respectively D 73

377 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP The Group s net deferred tax liabilities (assets) are made up as follows: Current items (32) (13) Pension liabilities (379) (385) Other non-current items 1,115 1,194 Unused tax losses (561) (442) Calculated net deferred tax liabilities (assets) Unrecognised deferred tax assets Net deferred tax liabilities (assets) recognised Of which deferred tax liabilities Of which deferred tax assets (96) (58) The Group s unused tax losses are related to operations in Norway, Sweden, France, Spain and Italy as well as other countries in which Schibsted Classified Media has established online classified operations. The majority of the tax losses can be carried forward for an unlimited period. Approximately 15% of the unused tax losses expire in the period until The development in the recognised net deferred tax liabilities (assets) is as follows: As at Change included in tax expenses (54) 81 Change from purchase and sale of subsidiaries 13 8 Translation differences (32) (4) As at Deferred tax assets are recognised when it is likely that the benefit can be realised through expected future taxable profits. The Group s deferred tax assets recognised are mainly related to operations in Norway and Spain. The Group s unrecognised deferred tax assets are mainly related to foreign operations with recent tax losses where future taxable profits may not be available before unused tax losses expire. Deferred tax liabilities and assets are offset for liabilities and assets in companies which are included in local tax groups. 146 NOTE 31 EARNINGS PER SHARE Average number of shares outstanding (diluted) is calculated as follows: Average number of shares outstanding 107,026, ,020,714 Adjustment for dilutive effect shares outstanding 92, ,628 Average number of shares outstanding (diluted) 107,119, ,154,342 The dilutive effect is calculated as the difference between the number of shares which can be acquired on exercise of outstanding options and the number of shares which could be acquired at fair value (calculated as the average price of the Schibsted share in the period) for the consideration which is to be paid for the shares which can be acquired based on outstanding options. Earnings per share is calculated as profit (loss) attributable to owners of the parent divided by the average number of shares outstanding Profit (loss) attributable to owners of the parent Average number of shares outstanding 107,026, ,020,714 Earnings per share (NOK) Diluted earnings per share is calculated as profit (loss) attributable to owners of the parent divided by the average number of shares outstanding, adjusted for the dilutive effect of all potential shares Profit (loss) attributable to owners of the parent Average number of shares outstanding (diluted) 107,119, ,154,342 Diluted earnings per share (NOK) Earnings per share adjusted is calculated as profit (loss) attributable to owners of the parent adjusted for items reported in the income statement as Other income and expenses and Impairment loss, adjusted for taxes and noncontrolling interests. The number of shares included in the calculation is the same as the number for earnings per share and diluted earnings per share, as described above. SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Profit (loss) attributable to owners of the parent Other income and expenses Impairment loss Tax and non-controlling effect of other income and expenses and impairment loss (90) (54) Profit (loss) attributable to owners of the parent adjusted Average number of shares outstanding 107,026, ,020,714 Earnings per share adjusted (NOK) Average number of shares outstanding (diluted) 107,119, ,154,342 Diluted earnings per share adjusted (NOK) NOTE 32 JOINT VENTURES Significant operations reported as joint ventures are specified below: Ownership Company Location Operating segments Business Romerike Mediadistribusjon AS 34% 34% Kjeller Schibsted Norge media house Distribution 20 Minutes France S.A.S 50% 50% Paris Media Houses International Free newspapers AS Ajakirjade Kirjastus 50% 50% Tallinn Media Houses International Magazines AS SL Õhtuleht 50% 50% Tallinn Media Houses International Newspapers Express Post AS 50% 50% Tallinn Media Houses International Distribution 701 Search Pte. Ltd. 50% 50% Singapore Online classifieds Classifieds on the Internet Willhaben Internet Service GmbH 50% 50% Vienna Online classifieds Classifieds on the Internet Használtautó Informatikai Kft 50% - Budapest Online classifieds Classifieds on the Internet These amounts are included in the Group s income statement and balance sheet from joint ventures subject to using proportionate consolidation: Operating revenues Operating expenses (476) (463) Gross operating profit (loss) (61) (34) Profit (loss) before taxes (77) (46) Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities Net assets In 2012 Schibsted Classified Media acquired 50% of the shares in the Hungarian car portal Használtautó Informatikai Kft. 147 D 74

378 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP NOTE 33 SUPPLEMENTAL INFORMATION TO THE CONSOLIDATED STATEMENT OF CASH FLOWS Interest and dividends included in the consolidated statement of cash flows are as follows: Cash flow from operating activities: Interest paid (118) (132) Interest received Dividends received (Note 13 and 29) Cash flow from financing activities: Dividends paid to owners of the parent (375) (324) Dividends paid to non-controlling interests (54) (61) Schibsted s consolidated statement of cash flows presents net payments and receipts on the acquisition and sale of subsidiaries and interests in joint ventures. The liquidity effect of acquisitions consists of: Cash in acquired companies Acquisition cost other current assets Acquisition cost non-current assets Aggregate acquisition cost assets Equity and liabilities assumed (142) (75) Gross purchase price Fair value of previously held equity interest (Note 5) (134) - Cash in acquired companies (55) (23) Purchase price settled in other than cash and cash equivalents - (20) Acquisition of subsidiaries and joint ventures, net of cash acquired The liquidity effect of sales consists of: Cash in sold companies 3 12 Carrying amount other current assets 1 19 Carrying amount non-current assets 17 3 Aggregate carrying amount assets Equity and liabilities transferred (2) (18) Gain (loss) (7) 5 Gross sales price Cash in sold companies (3) (12) Sales price settled in other than cash and cash equivalents - (10) Proceeds from sale of subsidiaries and joint ventures, net of cash sold 9 (1) 148 NOTE 34 TRANSACTIONS WITH RELATED PARTIES For remuneration to management, see note 27 Personnel expenses and sharebased payment. For loans to associated companies, see note 15 Other non-current assets. Christian Ringnes, member of the Board and the Audit Committee, controls the company from which Schibsted s subsidiary Eesti Meedia hires offices in Tallinn. In 2012, income from the office rental amounts to NOK 7 million. SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP NOTE 35 SUBSIDIARIES The following subsidiaries were directly and indirectly owned as at : Online classifieds Location Finn.no AS Oslo 89.88% 89.88% Eiendomsprofil AS Bergen 40.58% 40.58% Finn Bil AS Oslo 89.88% 89.88% Finn Eiendom AS Oslo 79.56% 79.56% Finn Foto AS Oslo 79.56% 79.56% Finn Jobb AS Oslo 89.88% 89.88% Finn Oppdrag AS Oslo 89.88% 89.88% Finn Reise AS Oslo 89.88% 89.88% Finn SMB AS (previously Finn Torget AS) Oslo 89.88% 89.88% Flytteportalen AS Oslo % Penger.no AS Oslo 92.92% 92.92% Schibsted Classified Media AS Oslo % % Anuntis Chile, S.A. Santiago de Chile 76.22% 76.22% Anuntis Perú, S.A.C Lima 76.22% 76.22% Anuntis Segundamano Argentina Holdings SA Buenos Aires 76.23% 76.23% Anuntis Segundamano Argentina S.A Buenos Aires 76.23% 76.23% Anuntis Segundamano España SL Barcelona 76.23% 76.23% ASM Classificados de México SA de CV Mexico City 76.22% 76.22% Blocket AB Stockholm % % Bom Negócio Atividades de Internet Ltda Rio de Janeiro % % Byt Bil Nordic AB Stockholm % % CustoJusto Unipessoal, Lda Lisbon % % DoneDeal Ltd Wexford 50.09% 50.09% Editora Anuntis Segundamano Online do Brazil Ltda Sao Paulo 76.22% 76.22% Editora Balcão Ltda Rio de Janeiro 99.99% 99.99% Editora Urbana Ltda Bogotá 76.23% 68.61% Hebdo Mag Brazil Holdings BV Amsterdam % % Hebdo Mag Brazil Holdings Ltda Rio de Janeiro 99.99% 99.99% InfoJobs Italia S.r.l Milan 72.89% 72.89% InfoJobs S.A. Barcelona 98.50% 98.50% IT Competence Center S.L Barcelona 76.23% 76.23% Kapaza BV Amsterdam % % Kapaza! Belgium NV Brussels % % Kapaza! Holding BV Amsterdam % % LBC France, SAS Paris % % Schibsted Chile, SpA Santiago de Chile % % Schibsted Classified Media Hungary Kft Budapest % % Schibsted Classified Media Ireland Ltd Dublin % % Schibsted Classified Media LLC Minsk % - Schibsted Classified Media Morocco SARL Casablanca % - Schibsted Classified Media NV Amsterdam % % Schibsted Classified Media Schweiz AG Zurich % % Schibsted Développement SASU Paris % - Schibsted España S.L. Barcelona % % Schibsted France SAS (previously SCM France, SAS) Paris % % Schibsted Ibérica S.L Madrid % % SCM Hellas MEPE Athens % % SCM Local, SARL Paris % % SCM Northern Europe AB Stockholm % % D 75

379 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP SCM Suomi Oy Helsinki % % SCM Ventures AB Stockholm % % SCM Ventures BV Amsterdam % % SFI Holding AS Oslo % 96.96% Sibmedia Interactive S.R.L. Sibiu 55.00% 55.00% Subito.it S.r.l Milan % % Schibsted Norge media house Location Schibsted Norge AS (previously Media Norge AS) Bergen % % Aftenbladet Distribusjon AS Sandnes % % Aftenbladet Eiendom AS Stavanger % % Aftenposten AS Oslo % % Aftenposten Distribusjon AS Oslo % % AS Farsund Aktiebogtrykkeri Farsund 86.20% 86.20% Askøyværingen AS Askøy % % Avisprodukter AS Bergen % % Avisretur AS Oslo 50.10% 50.10% Bergens Ringen DA Bergen % % Bergens Tidende AS Bergen % % Bergensopplevelser AS Bergen % % BT Beta AS (previously BTV AS) Bergen % % BT Respons AS Bergen % % Bygdanytt AS Bergen % % Din Mat AS Stavanger % Dine Penger AS Oslo % % Distribution Innovation AS Oslo 60.00% 60.00% Duplo Media AS Horten 70.00% 70.00% E24 Næringsliv AS Oslo % % Ebok.no AS Oslo 97.57% - Fanaposten AS Bergen % % Forlaget Strilen AS Lindås % % Fædrelandsvennen AS Kristiansand % % Fædrelandsvennen Distribusjon AS Kristiansand % % Infill Eiendom AS Stavanger % - Janaflaten 24 AS Stavanger % - Katapult Bøker AS Oslo % % Krinkelkroken 1 AS Bergen % - Kristiansand Avis AS Kristiansand % 49.00% Lendo AS Oslo 95.95% - Let s Deal AS Oslo 74.20% 48.94% Lindesnes AS Mandal % % Lokalavisene AS Bergen % % Media AS Kristiansand % % Mittanbud.no AS Oslo % % Nykirkebakken 2 AS Stavanger % - Nykirkebakken 7 AS Stavanger % - Radio Lindesnes AS Lindesnes % Radio Sør AS Kristiansand % % Riks AS Oslo % - Schibsted Eiendom Vest AS Stavanger % - Schibsted Forlag AS Oslo % % Schibsted Förlag AB Helsingborg % % Schibsted Magasiner AS Oslo % % Schibsted Tech Polska sp z.o.o Krakow % % Schibsted Trykk AS (previously Media Norge Trykk AS) Oslo % % Schibsted Trykk Bergen AS (previously BT Trykk AS) Godvik % % 150 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Schibsted Trykk Flesland AS (previously Mediatrykk AS) Bergen % % Schibsted Trykk Kristiansand AS ( previously FV Trykk AS) Kristiansand % % Schibsted Trykk Oslo AS (previously Media Norge Trykk Oslo AS) Oslo % % Schibsted Trykk Stavanger AS (previously Aftenbladet Trykk AS) Sandnes % % Schibsted Vekst AS Oslo 95.95% 95.95% Schibsted Vekst Hylleselskap 1 AS Oslo 95.95% - Stavanger Aftenblad AS Stavanger % % Stokkamyrveien 30 AS Stavanger % - Strandgaten og Eilertsbakken Eiendomsselskap AS Farsund 86.20% 86.20% Søgne og Songdalen Budstikke AS Søgne 57.62% 57.62% Sør Distribusjon AS * Mandal % Sørlandspakken Vest AS Kristiansand % % Sørlandssamkjøringen AS Mandal 62.00% 62.00% Trafikkfondet AS Oslo % % TV Sør AS Kristiansand % % Verdens Gang AS Oslo % % Vestnytt AS Fjell % % VG Mobil AS Oslo % % WebTraffic Norge AS Oslo % % WoldCam AS Stavanger % % Åsaneposten AS Bergen % % Schibsted Sverige media house Location Schibsted Sverige AB Stockholm % % Aftonbladet Hierta AB Stockholm 91.00% 91.00% Aftonbladet Kolportage AB Stockholm 91.00% 91.00% Destinationpunktse AB Stockholm % % E24 Näringsliv AB Stockholm % % HB Svenska Dagbladets AB & Co Stockholm 99.41% 99.41% Hittapunktse AB Stockholm % % Jobb 24 HB Stockholm % % K Lartpunktse Vädertjänster AB (previously K Lartpunktse Väderlekstjänst AB) Stockholm % % Kundkraft i Sverige AB Stockholm % % Lendo AB Stockholm 98.50% 97.00% Lets deal AB (previously Economy OK AB) Stockholm 51.55% - Mediateam Bemanning AB Stockholm 51.00% 51.00% Mini Media Sweden AB Stockholm 51.00% 51.00% MinTur AB Stockholm 99.41% 99.41% Mobilio Sweden AB Stockholm 50.10% - Personal Finance Sverige AB Stockholm % % PGME Sverige AB (previously Tasteline Sweden AB) Stockholm % % PriceSpy Media Ltd Manukau 96.00% 70.00% Prisjakt Polen Sp z.o.o Krakow 96.00% - Prisjakt Sverige AB Ängelholm 96.00% 70.00% Resdagboken AB Stockholm % % Rörlig Bild Sverige AB Stockholm % % Schibsted Centralen AB Stockholm % % Schibsted Media AB Stockholm % - Schibsted PersonalFinance Bolån AB Stockholm % - Schibsted Sales AB (previously WebTraffic Sverige AB) Stockholm % % Schibsted Sök AB Stockholm % % Schibsted Tillväxtmedier AB Stockholm % % Schibsted Tillväxtmedier Annonsförsäljning AB Stockholm % % Schibsted TM AB Stockholm % - ServiceFinder Sverige AB Stockholm 69.95% 69.95% Suredo AB Stockholm 98.50% 97.00% D 76

380 SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP Svenska Dagbladet Annons AB Stockholm 99.41% 99.41% Svenska Dagbladet Digitala Medier AB Stockholm 99.41% 99.41% Svenska Dagbladet Distribution AB Stockholm 99.41% 99.41% Svenska Dagbladet Holding AB Stockholm 99.41% 99.41% Svenska Dagbladets AB Stockholm 99.41% 99.41% TVNU Sweden AB Stockholm % % Media Houses International Location Min Holding AG Zurich % % 20 Min International B.V. Rotterdam % % 20 Minutes Online SL * Madrid % 20 Minutos España S.A. Madrid % % Carrie & Serena S.L. Madrid 63.92% 63.92% Diario 20 Minutos SL * Madrid % Grupo 20 Minutos SL (previously Multiprensa Y M@s S.L.) Madrid 99.87% 99.87% Linea 20 Revistas SL * Madrid % AS Eesti Meedia Tartu % % AS Kanal 2 Tallinn % % AS Kroonpress Tartu 99.90% 99.90% AS Postimees Tallinn % % AS Schibsted Baltics Tallinn % % AS Trio LSL Tallinn 99.75% - Kultuurinet OÜ Tartu 51.00% - OÜ Meediasüsteemid Tartu % % OÜ Webplanet Tallinn % % Reisiguru OÜ Tartu 51.00% - SIA Tvnet Riga % % Soov Kirjastus OU Tallinn % % UAB 15 Minuciu Vilnius 99.90% 99.90% UAB 15 Minuciu Online Vilnius 99.90% 99.90% UAB Plius Vilnius % % UAB Zurnalu Leidybos Grupe Vilnius % % Ühinenud Ajalehed AS Tartu 66.00% 66.00% Other Location Sandrew Metronome AB Stockholm % % AB Sandrew-Ateljéerna * Stockholm % Produktion S. Bauman AB * Stockholm % Sandrew Film 86 KB Stockholm % Sandrew Film 87 KB Stockholm % Sandrew Film 97 KB Stockholm % Sandrew Metronome Danmark A/S Copenhagen % % Sandrew Metronome Distribusjon Norge AS Oslo % % Sandrew Metronome Distribution Sverige AB Stockholm % % Sandrew Metronome International AB Stockholm % % Sandrew Metronome Video Finland OY Helsinki % % Selskabet af 2/ ApS Copenhagen % Streaming Media AS Oslo 73.40% - Aspiro AB Malmö 55.74% - Aspiro AS Oslo 55.74% - Aspiro Innovation AB Malmö 55.74% - Aspiro Inpoc AB Stockholm 55.74% - Aspiro Musik AB Malmö 55.74% - Aspiro Søk AS Oslo 55.74% - Aspiro TV AS Oslo 55.74% - Rubberduck Media Lab Inc Carlsbad 55.74% SCHIBSTED ANNUAL REPORT 2012 NOTES / GROUP SMS Opplysningen 1985 AS Oslo 55.74% - SMS Opplysningen 2100 AS Oslo 55.74% - WiMP ApS Copenhagen 55.74% - WiMP Music AS Oslo 55.74% - WiMP Music GmbH Berlin 55.74% - WiMP Music SP. Z O.O. Warsaw 55.74% - WiMP Norway AS Oslo 55.74% - Tesked AB Varberg 97.98% 97.98% Mötesplatsen i Norden AB Varberg 97.98% 97.98% 20 Min Holding AS Oslo % % E24 France SAS Paris % % E24 International AB Stockholm % % European Media Ventures AS Oslo % % Gratisavisen avis1 AS Oslo % % Scanpix Scandinavia AB Stockholm % % Schibsted AG Berlin % % Schibsted Movie AS Oslo % % Schibsted Multimedia AS Oslo % % Schibsted Print Media AS Oslo % % SI Företagstjänster AB Stockholm % % SI Företagstjänster Holding AB Stockholm % % Headquarters Location Schibsted Eiendom AS Oslo % % Schibsted Finans AS Oslo % % Schibsted IT AS Oslo % % Schibsted Payment AS Oslo % % * Merged with other companies in the Schibsted group D 77

381 SCHIBSTED ANNUAL REPORT 2012 FINANCIAL STATEMENTS / ASA SCHIBSTED ASA INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note Operating revenues Personnel expenses 3 (134) (128) Depreciation and amortisation 4 (2) (1) Other operating expenses 5 (122) (131) Operating profit (loss) (203) (213) Financial income 6 2,916 1,631 Financial expenses 6 (175) (84) Net financial items 2,741 1,547 Profit (loss) before taxes 2,538 1,334 Taxes 7 (133) (220) Profit (loss) 2,405 1, SCHIBSTED ANNUAL REPORT 2012 FINANCIAL STATEMENTS / ASA SCHIBSTED ASA BALANCE SHEET AS AT 31 DECEMBER (NOK million) Note ASSETS Deferred tax assets Property, plant and equipment and licences Intangible assets and tangible assets Investments in subsidiaries 8 5,237 4,817 Investments in associated companies 8 1,541 1,414 Investments in other shares Non-current receivables 9 1, Financial assets 8,686 7,095 Non-current assets 8,750 7,148 Current receivables 10 4,381 2,306 Cash and cash equivalents Current assets 4,394 2,319 Total assets 13,144 9,467 EQUITY AND LIABILITIES Share capital Treasury shares (1) (1) Share premium reserve 1,289 1,289 Other paid-in capital Paid-in capital 1,529 1,521 Other equity 7,407 5,354 Retained earnings 7,407 5,354 Equity 13 8,936 6,875 Pension liabilities Provisions Non-current liabilities 9 3, Current liabilities ,732 Total equity and liabilities 13,144 9,467 Oslo, 20 March 2013 Schibsted ASA s Board of Directors Ole Jacob Sunde Chairman of the Board Karl-Christian Agerup Marie Ehrling Eva Berneke Christian Ringnes Arnaud de Puyfontaine Eugénie van Wiechen Gunnar Kagge Anne Lise von der Fehr Jonas Fröberg Rolv Erik Ryssdal CEO 155 D 78

382 SCHIBSTED ANNUAL REPORT 2012 FINANCIAL STATEMENTS / ASA SCHIBSTED ASA STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER (NOK million) Note CASH FLOW FROM OPERATING ACTIVITIES Profit (loss) before taxes 2,538 1,334 Depreciation and amortisation Impairment loss on shares Gain on sale of non-current assets (2,060) - Share-based payment 3 4 Group contributions included in financial income 6 (621) (1,482) Change in current receivables (28) 111 Change in current liabilities 21 (2) Difference between pension cost and cash flow related to pension plans Change in other accruals (3) - Net cash flow from operating activities (62) 9 CASH FLOW FROM INVESTING ACTIVITIES Purchase of intangible assets and property, plant and equipment 4 (9) - Change in non-current receivables 9 (439) - Acquisition of subsidiaries (579) (587) Payment of merger receivables Sale of shares 3,541 - Net cash flow from investing activities 2, CASH FLOW FROM FINANCING ACTIVITIES Change in current interest-bearing borrowings (2,760) (135) Group contributions received (net) Dividends paid 13 (375) (324) Purchase / sale of treasury shares 27 (160) Net cash flow from financing activities (2,452) (418) Net increase (decrease) in cash and cash equivalents - (7) Cash and cash equivalents as at Cash and cash equivalents as at TABLE OF CONTENTS NOTES TO THE SCHIBSTED ASA FINANCIAL STATEMENTS 2012 All amounts are in NOK million unless otherwise stated NOTE 1: ACCOUNTING POLICIES NOTE 2: OPERATING REVENUES NOTE 3: PERSONNEL EXPENSES AND MAN-YEARS NOTE 4: PROPERTY, PLANT AND EQUIPMENT AND LICENCES NOTE 5: OTHER OPERATING EXPENSES NOTE 6: FINANCIAL ITEMS NOTE 7: TAXES NOTE 8: INVESTMENTS IN SHARES NOTE 9: NON-CURRENT RECEIVABLES AND NON-CURRENT LIABILITIES NOTE 10: CURRENT RECEIVABLES NOTE 11: CASH AND CASH EQUIVALENTS NOTE 12: SHAREHOLDER STRUCTURE NOTE 13: EQUITY NOTE 14: PENSION PLANS NOTE 15: CURRENT LIABILITIES NOTE 16: GUARANTEES AND PROVISIONS OF SECURITY SCHIBSTED ANNUAL REPORT 2012 NOTES / ASA D 79

383 SCHIBSTED ANNUAL REPORT 2012 NOTES / ASA NOTE 1 ACCOUNTING POLICIES The financial statements of Schibsted ASA have been prepared in accordance with the provisions of the Norwegian Accounting Act and Generally Accepted Accounting Principles in Norway. Revenue recognition Operating revenues are recognised when the goods are delivered or the service rendered. Classification Assets and liabilities related to the normal operating cycle are classified as current assets and current liabilities. Receivables and liabilities not related to the normal operating cycle are classified as current if they are of a shortterm nature, normally due within one year. Shares and other investments not intended for continued use or ownership are classified as current assets. Other assets and liabilities are classified as non-current. Shares Shares are measured at cost and impairment loss is recognised if the carrying amount exceeds the recoverable amount. The impairment is reversed if the basis for the write-down is no longer present. Group contributions received are included in financial income provided that the Group contribution received does not represent a repayment of capital invested. Group contributions that represent a repayment of capital invested are accounted for as a reduction in the cost of investments in subsidiaries. Net Group contributions payable (gross Group contributions less the associated tax effect) are included in the cost of investments in subsidiaries. Dividends from subsidiaries and associated companies are included in financial income. Gain on intra-group sales of subsidiaries, in excess of retained earnings of the subsidiaries sold, is recognised as deferred income and classified as non-current liabilities. Property, plant and equipment and intangible assets Property, plant and equipment and intangible assets are measured at cost less accumulated depreciation, amortisation and impairment. Property, plant and equipment and intangible assets with limited economic lives are depreciated over the expected economic life. An impairment loss is recognised if the carrying amount exceeds the recoverable amount. The recoverable amount is the higher of net sales value and the present value of future cash flows expected to be generated. Impairment losses are reversed if the basis for the impairment is no longer present. Leases Leases are classified as either finance leases or as operating leases. Leases that transfers substantially all the risks and rewards incidental to the asset are classified as finance leases. Other leases are classified as operating leases. When Schibsted ASA is lessee in a finance lease, the leased asset and the liability related to the lease are recognised in the balance sheet. Depreciable leased assets are depreciated systematically over the useful life of the asset. 158 Lease payments are apportioned between interest expense and reduction of the liability. Lease payments related to operating leases are recognised as an expense over the lease term. Foreign currency Foreign currency monetary items are translated at the closing rate at the date of the balance sheet. Foreign currency gains and losses are reported in the income statement in the lines Financial income and Financial expenses respectively. Trade receivables Trade receivables are measured at fair value including allowance for bad debt. Treasury shares The cost of acquisition and proceeds from sale of treasury shares are offset against equity. Pension expense Pension liabilities related to defined benefit plans are measured at the net present value of future pension benefits earned at the balance sheet date and calculated on the basis of assumption for, among others, the discount rate, expected future salary increases and pension adjustments. Plan assets are measured at fair value. Net pension liabilities related to under-funded plans are recognised as provisions, while net pension assets related to over-funded plans are recognised as financial assets. Net pension expense, which is gross pension expense less the estimated return on plan assets adjusted for past service cost and the effects of changes in estimates, are included in personnel expenses. Changes in pension liabilities due to amendments in pension plans are included in net pension expenses during the vesting period or immediately if the benefits are immediately vested. Changes in pension liabilities and plan assets, due to changes in and deviations from the calculation assumptions, are included in net pension expense over the average remaining working lives of the participants for the part of the accumulated effect that exceeds 10% of the greater of plan assets or pension liabilities. In the case of pensions plans, defined for accounting purposes as defined contribution plans, the premiums are recognised as pension expenses for the period. Schibsted ASA uses, in accordance with the accepted solution under generally accepted accounting principles in Norway, the IFRS standard IAS 19 on accounting for pension liabilities. Share-based payment In equity settled share-based payment transactions with employees, the fair value of the employee services and the corresponding equity increase are measured by reference to the fair value of the equity instruments granted. The fair value of equity instruments granted is measured at grant date, and recognised as personnel expenses and equity increase immediately or over the vesting period when performance vesting conditions require an employee to serve over a specified time period. The estimated number of equity instruments expected to vest are remeasured at each reporting date. The amount recognised as an expense is adjusted to reflect the number of equity instruments which are expected to be, or actually become vested. In cash settled share-based payment transactions with employees, the employee services and the incurred liability are measured at the fair value of the liability. The employee services and the liability are recognised immediately or over the vesting period when performance vesting conditions require an employee to serve over a specified time period. Until the liability is settled, the fair value of the liability is revised at each balance sheet date and at settlement date, with changes in fair value recognised in profit or loss. Restructuring costs Restructuring costs are recognised in accordance with the matching principle and therefore expenses not related to revenues in future periods are charged to expense when incurred. Restructuring costs are incurred when a restructuring plan is approved and announced. Taxes Income taxes are calculated from the profit (loss) before tax and comprise taxes payable and the change in deferred taxes. Deferred tax assets and liabilities are calculated in accordance with the liability method without discounting and provided for all differences between the carrying amount in the balance sheet and the tax base of assets and liabilities, and for unused tax losses. Deferred tax assets are recognised only when it is expected that the benefit can be utilised through sufficient taxable profits from expected future earnings. Contingent liabilities Contingent liabilities are recognised when it is more probable than not that the liability will become effective. The best estimate of the amount to be paid is included in other provisions in the balance sheet. Other obligations, for which no liability is recognised, are disclosed in notes to the financial statements. Dividend The dividend for the financial year, as proposed by the Board of Directors, is recognised as a liability at Statement of cash flows The statement of cash flows is prepared using the indirect method. Cash and cash equivalents include cash, bank deposits and other monetary instruments with a maturity of less than three months at the date of purchase. NOTE 2 OPERATING REVENUES Operating revenues consist of: Operating revenues Total Operating revenues consist of consultant fees and income from lease of office premises, as well as fees for subsidiaries participation in programmes for management and organisational development. SCHIBSTED ANNUAL REPORT 2012 NOTES / ASA NOTE 3 PERSONNEL EXPENSES AND MAN-YEARS Personnel expenses consist of: Salaries and wages Social security costs Net pension expense (note 14) Other personnel expenses 4 3 Share-based payment 11 9 Total The company has 92 full-time equivalents, including trainees, in Note 27 Personnel expenses and share-based payment to the consolidated financial statements contains further information concerning auditor s fee and remuneration to management, including share-based payment. NOTE 4 PROPERTY, PLANT AND EQUIPMENT AND LICENCES Equipment, furniture, vehicles Licences Cost as at Additions 8 1 Disposals - - Cost as at Accumulated depreciation and amortisation (24) (4) Depreciation and amortisation for the year (2) - Accumulated depreciation and amortisation (26) (4) Carrying amount Depreciation method Straight line Straight line Depreciation period 3-10 years 3-5 years The depreciation and amortisation for the year include depreciation of leasehold improvements of NOK 0.6 million. Operating lease payments of NOK 25 million are expensed in 2012 and are mainly leased office premises with a remaining lease term of two years with an option to extend for another five years. 159 D 80

384 SCHIBSTED ANNUAL REPORT 2012 NOTES / ASA NOTE 5 OTHER OPERATING EXPENSES Other operating expenses consist of: Rent and maintenance (note 4) Office and administrative expenses Professional fees Travel, meetings and marketing Total NOTE 6 FINANCIAL ITEMS Financial income consists of: Interest income Group contributions received 621 1,482 Dividends from associated companies Dividends from other companies 7 24 Gain on sale of shares 2,089 - Total 2,916 1,631 Gain on sale of shares in 2012 is related to the derecognition of shares in Polaris Media ASA of NOK 26 million (note 8) and to the sale of the subsidiaries Verdens Gang AS and Schibsted Forlag AS to Schibsted Norge AS of NOK 2,062 million. Gain in excess of retained earnings in the subsidiaries sold is treated as deferred income and classified as non-current liabilities (note 9). Financial expenses consist of: Interest expenses Interest expenses cash pool system (note 11) 2 18 Impairment loss on shares Loss on sale of shares 29 - Other financial expenses 2 2 Total Impairment loss on shares in 2012 relates to Streaming Media AS. The impairment losses on shares in 2011 relate to 20 Min Holding AS and Trafikkfondet AS. Loss on sale of shares in 2012 relate to Trafikkfondet AS and Aspiro AB. Of interest expenses in 2012, NOK 65 million relates to bond issues. Other financial expenses relate to foreign exchange losses and bank charges in 2012 and NOTE 7 TAXES Set out below is a specification of the difference between the profit before taxes and taxable income of the year: Profit (loss) before taxes 2,538 1,334 Dividends and tax free group contributions received (84) (595) Group contributions payable (469) (803) Other permanent differences (1,980) 63 Change in temporary differences Taxable income Tax rate 28% 28% Taxes payable and taxes charged to expenses are calculated as: Calculated taxes payable 6 7 Change in net deferred tax asset (5) (7) Tax recognised in equity - (5) Tax related to Group contributions payable Taxes The net deferred tax asset consists of the following: Temporary differences related to: Property, plant and equipment (2) (2) Pension liabilities (169) (155) Other current liabilities (11) (10) Total basis for deferred tax asset (182) (167) Tax rate 28% 28% Net deferred tax liability (asset) (51) (47) Effective tax rate is a result of: Profit (loss) before taxes 2,538 1,334 Tax charged based on nominal rate Tax effect permanent differences (578) (149) Taxes recognised in equity - (5) Taxes SCHIBSTED ANNUAL REPORT 2012 NOTES / ASA NOTE 8 INVESTMENTS IN SHARES Carrying Carrying Ownership % amount amount Shares in subsidiaries Location Min Holding AS Oslo 2 - Schibsted Norge AS Bergen 1,349 1,349 Schibsted Eiendom AS Oslo Schibsted Finans AS Oslo Schibsted Movie AS Oslo Schibsted Multimedia AS Oslo 2,352 2,033 Schibsted Print Media AS Oslo Schibsted Sverige AB Stockholm Schibsted IT AS Oslo 2 2 Schibsted Payment AS Oslo 11 - Streaming Media AS Oslo Verdens Gang AS Oslo - 25 Schibsted Forlag AS Oslo - 46 Trafikkfondet AS Oslo - 1 Total 5,237 4,817 Group contributions payable to subsidiaries, NOK 354 million (net) is capitalised as part of investments in subsidiaries. Ownership % Carrying Shares in associated companies Location amount Equity Profit (loss) Finn.no AS Oslo 1, Polaris Media ASA Trondheim Svanedamsveien 10 AS Kristiansand Total 1,541 Other shares Scanpix Scandinavia AB Stockholm 2 Schibsted Vekst AS Oslo 1 Schibsted Tech Polska sp. z.o.o 1.00 Krakow - Total 3 Market prices are available for shares in Polaris Media ASA. The fair value of the shares in Polaris Media ASA is NOK 347 million based on the last market price. Until October 2012, Schibsted ASA held 7.1% of the shares in Polaris Media ASA. From September 2011, Schibsted ASA had a continuing involvement in an additional 25.2% of the shares from an agreement under which Schibsted ASA had transferred those shares to other owners, but where those other owners had a right, but not an obligation, expiring in October 2012, to sell those shares back to Schibsted ASA. In October 2012, 21.9% of the shares were sold back to Schibsted ASA, and Schibsted ASA s equity interest of 29.0% is from then on accounted for as an investment in an associated company. The 3.3% of the shares not sold back were consequently derecognised, and a gain from derecognition of NOK 26 million is recognised in the line item Financial income (note 6) D 81

385 SCHIBSTED ANNUAL REPORT 2012 NOTES / ASA NOTE 9 NON-CURRENT RECEIVABLES AND NON-CURRENT LIABILITIES Non-current receivables consist of: Receivables from Group companies 1, Other receivables 5 20 Total 1, Receivables from Group companies consist of loans to Schibsted Finans AS.The loan amounts and terms are identical to what Schibsted ASA has on the bond loans with Norsk Tillitsmann ASA. Non-current liabilities consist of: Liabilities Group companies 3 1 Bond issues 1, Deferred income from sale of subsidiaries 1,184 - Other liabilities 8 4 Total 3, Gain on intra-group sales of subsidiaries, in excess of retained earnings of the subsidiaries sold, is recognised as deferred income (note 6). Schibsted ASA has issued six unsecured bonds in the Norwegian bond market at a total of NOK 1,900 million as per December The loans have the following characteristics: Loan Issued Amount Maturity Interest ISIN NO Dec 2010 NOK 300 million Dec months Nibor plus 150 basis points ISIN NO Dec 2010 NOK 400 million Dec months Nibor plus 205 basis points ISIN NO March 2012 NOK 500 million March months Nibor plus 215 basis points ISIN NO March 2012 NOK 300 million March % ISIN NO Dec 2012 NOK 150 million Dec months Nibor plus 250 basis points ISIN NO Dec 2012 NOK 250 million Dec % 162 NOTE 10 CURRENT RECEIVABLES Current receivables consist of: Current receivables from Group companies 675 2,291 Current receivable related to the cash pool system (note 11) 3,688 - Other receivables Total 4,381 2,306 NOTE 11 CASH AND CASH EQUIVALENTS Total cash and cash equivalents of NOK 13 million include NOK 1.9 million pledged as security for trading on NASDAQ OMX Oslo ASA and StatNett SF. Schibsted ASA s bank account is included in the Schibsted Group s cash pool with Danske Bank. The cash pool system has been established to contribute to an optimal liquidity management for the Schibsted Group. As at Schibsted ASA had a deposit of NOK 3,688 million on sub-accounts in the cash pool system, which is managed and controlled by Schibsted Finans AS. The deposit is included as current receivables in the balance sheet. Note 9 Financial risk management and note 18 Cash and cash equivalents to the consolidated financial statements contain further information concerning financial market risk. SCHIBSTED ANNUAL REPORT 2012 NOTES / ASA NOTE 12 SHAREHOLDER STRUCTURE The 20 largest shareholders as at 31 December 2012: Number of shares Share in % Blommenholm Industrier 28,188, % Folketrygdfondet 7,909, % NWT Media AS 4,545, % Goldman Sachs & Co Equity, Security Client Segregation 4,031, % Bank Of New York Mellon 3,798, % JPMorgan Chase Bank, Nordea 3,744, % Deutsche Bank AG London 2,835, % State Street Bank and Trust Co. 2,616, % State Street Bank and Trust Co. 2,194, % JP Morgan Clearing Corp. 1,911, % Clearstream Banking S.A. 1,533, % JPMorgan Chase Bank 1,528, % SHB Institutional Sales Stockholm, C/O Handelsbanken Asset Mgn 1,096, % JPMorgan Chase Bank N.A. 1,090, % Skandinaviska Enskilda Banken 1,006, % Citibank NA London Branch 908, % Schibsted ASA 899, % Montague Place Custody Services 866, % State Street Bank and Trust Co. 779, % Odin Norge 776, % Total 20 largest shareholders 72,264, % The shareholderes are based on the public VPS list. For further information regarding the ownership, see the chapter Shareholder information in Schibsted s annual report. Number of shares owned by the Board of Directors and the Group Management: Number of shares Ole Jacob Sunde 121,244 Karl Christian Agerup 3,082 Eva Berneke 4,020 Christian Ringnes 81,991 Anne-Lise Mørch von Der Fehr 201 Gunnar Kagge 259 Frank Johan Johansen 312 Hege Lyngved Odinsen 469 Torbjörn Harald Ek 133 Rolv Erik Ryssdal 17,793 Trond Berger 11,323 Sverre Munck 17,893 Gunnar Strömblad 8,416 Camilla Jarlsby 4,998 Terje Seljeseth 9,265 Didrik Munch 3,832 Raoul Grünthal 4,225 Total Board of Directors and Group Management 289, D 82

386 SCHIBSTED ANNUAL REPORT 2012 NOTES / ASA The total number of issued shares in Schibsted ASA was 108,003,615 and the number of shareholders was 4,869, as at Foreign ownership was 56.6%. Schibsted ASA owned 899,155 treasury shares at The Annual Shareholders Meeting gave the Board of Directors authorisation to acquire treasury shares up to 10,800,361 shares (10%). The authorisation was renewed at the Annual Shareholders Meeting 11 May 2012 for a period until the Annual Shareholders Meeting in At the Annual Shareholders Meeting on 30 April 2013 the Board will present a resolution to extend the authorisation to the Board of Directors for the purchase and disposal of up to 10% of the share capital in Schibsted ASA in accordance with the Norwegian Public Limited Liability Companies Act based on the conditions presented in the notification to the Annual Shareholders Meeting. NOTE 13 EQUITY The development in the company s equity in 2012 is as follows: Share Other reserve paid-in capital Other equity Total Share capital Treasury shares premium Equity as at (1) 1, ,354 6,875 Change in treasury shares Share-based payment Profit (loss) ,405 2,405 Dividend (375) (375) Equity as at (1) 1, ,407 8,936 Schibsted ASA s share capital consists of 108,003,615 shares of NOK 1 par value. The par value of treasury shares is presented on a separate line within Other paidin capital with a negative amount. No shareholder may own or vote at the Annual Shareholders Meeting for more than 30% of the shares. 164 NOTE 14 PENSION PLANS The company is obliged to have an occupational pension scheme in accordance with the Act on Mandatory Company Pensions ( Lov om obligatorisk tjenestepensjon ). The company s pension scheme meets the requirements of the Act. As at the company s pension plan had 111 members. Note 21 Pension Plans to the consolidated financial statements contains further description of the pension plans and the principal assumptions applied. Amounts recognised in profit or loss: Current service cost Interest cost 9 9 Expected return on plan assets (3) (3) Actuarial gains or losses recognised 3 1 Net pension expense defined benefit plans Pension expense defined contribution plans 3 3 Net pension expense Amounts recognised in the balance sheet: Present value of funded defined benefit obligations Fair value of plan assets (56) (60) Present value (net of plan assets) of funded defined benefit obligations (1) 18 Present value of unfunded defined benefit obligations Unrecognised actuarial gains or losses (4) (62) Pension liabilities Social security tax included in present value of defined benefit obligations Changes in pension liabilities: As at Net pension expense Contributions / benefits paid (9) 6 As at Schibsted has in 2012 changed the reference for determination of the discount rate. Previously, this rate has been determined by reference to Norwegian government bonds. With effect from 2012, the rate is determined with reference to high quality corporate bonds. Schibsted has concluded that, at the end of 2012, a deep market exists for covered bonds ( OMF-obligasjoner ) in Norway and that this interest rate therefore shall be used as reference under IAS 19 Employee benefits. The resulting increase in the discount rate significantly reduces the present value of defined benefit obligations at Due to changes in accounting policy related to pension from 2013, the unrecognised actuarial gain (loss) will be recognised in equity. The resulting effect for Schibsted ASA will be a reduction in equity of NOK 3 million net of tax. SCHIBSTED ANNUAL REPORT 2012 NOTES / ASA NOTE 15 CURRENT LIABILITIES Current liabilities consist of: Trade creditors 7 9 Public duties payable Dividends accrued Current liabilities Group company (cash pool system) (note 11) Current liabilities to Group companies Taxes payable 6 7 Financial liabilities related to TRS-agreements and agreements with continuing financial involvement (note 8) Accrued interest 18 - Other current liabilities Total 944 1,732 NOTE 16 GUARANTEES AND PROVISIONS OF SECURITY Guarantees for loans and drawing facilities on behalf of Group companies 4,639 5,368 Other guarantees on behalf of Group companies Other guarantees Total 5,000 5,736 NOK 0.6 billion of the total of NOK 4.6 billion of guarantees for loans and credit facilities were drawn at the end of At the end of 2011 a total of NOK 2 billion was drawn. A guarantee of NOK 223 million to Danske Bank is included in Other guarantees on behalf of Group companies. The guarantee relates to guarantees for tax withholdings and other guarantees. In addition, guarantees regarding subsidiaries unsecured pension liabilities of NOK 35 million related to key management personnel, as well as a guarantee of NOK 8 million to Grensen 5-7 AS regarding office lease, is included. A Parent Company Guarantee (PCG) to Entra Eiendom AS was provided by Schibsted ASA. The guarantee covers security for payment of office lease. Other guarantees include a guarantee of NOK 87 million to Barclays regarding Primerama S.L s loan. Guarantees of loans to employees in the Group of NOK 2.5 million and unfunded pension liabilities of NOK 4 million are also included. Note 27 Personnel expenses and share-based payment in the consolidated financial statements contains further information regarding loans to members of the Group management D 83

387 SCHIBSTED ANNUAL REPORT 2012 DECLARATION DECLARATION BY THE BOARD OF DIRECTORS AND CEO We confirm that, to the best of our knowledge, the financial statements for the period from 1 January to 31 December 2012 has been prepared in accordance with applicable accounting standards and gives a true and fair view of the Group and the Company s consolidated assets, liabilities, financial position and results of operations, and that the Report of the Board of directors provides a true and fair view of the development and performance of the business and the position of the Group and the Company together with a description of the key risks and uncertainty factors that they are facing. Oslo, 20 March 2013 Schibsted ASA s Board of Directors Ole Jacob Sunde Chairman of the Board Karl-Christian Agerup Marie Ehrling Eva Berneke Christian Ringnes Arnaud de Puyfontaine Eugénie Van Wiechen Gunnar Kagge Anne Lise von der Fehr Jonas Fröberg Rolv Erik Ryssdal CEO 166 SCHIBSTED ANNUAL REPORT 2012 AUDITOR S REPORT 167 D 84

388 SCHIBSTED ANNUAL REPORT 2012 AUDITOR S REPORT 168 Schibsted ASA Apotekergaten 10 PO Box 490 Sentrum NO-0105 Oslo, Norway Phone Fax schibsted@schibsted.no D 85