2010-08-06 07:30:00 CEST
2010-08-06 07:31:01 CEST
REGULATED INFORMATION
Sanoma Oyj - Interim report (Q1 and Q3)
Sanoma's Interim Report 1 Jan-30 June 2010: Growing Sales And Operational Efficiency - Advertising Markets Picking Up
Stock Exchange Release 6/8/2010 8:30
Second quarter
- Sanoma Group's net sales grew by 3%, amounting to EUR 715.4 million (2009: EUR
697.2 million).
- Operating profit excluding non-recurring items improved by 11% to EUR 80.3
million (2009: EUR 72.5 million).
- The transaction regarding the cable TV operator Welho was closed as of 30
June, leading to a non-recurring capital gain of EUR 179.4 million.
- Earnings per share were EUR 1.45 (2009: EUR 0.27).
First half
- Sanoma Group's net sales grew by 2%, amounting to EUR 1,353.3 million (2009:
EUR 1,333.2 million).
- Operating profit excluding non-recurring items improved by 21% and totalled
EUR 115.9 million (2009: EUR 95.8 million).
- Cash flow from operations improved to EUR 60.0 million (2009: EUR 7.5
million).
- Earnings per share were EUR 1.61 (2009: EUR 0.32).
- The outlook for the Group is unchanged, even though the Welho and Humo
magazine transactions have a negative effect on the full-year operating profit
excluding non-recurring items. Divisional outlooks have been adjusted for
Magazines and Entertainment.
KEY INDICATORS 4‑6/ 4‑6/ Change 1‑6/ 1‑6/ Change 1‑12/
EUR million 2010 2009 % 2010 2009 % 2009
Net sales 715.4 697.2 2.6 1,353.3 1,333.2 1.5 2,767.9
Operating profit excluding 80.3 72.5 10.7 115.9 95.8 21.0 229.5
non-recurring items
% of net sales 11.2 10.4 8.6 7.2 8.3
Operating profit 261.0 65.1 300.7 301.4 86.1 250.2 195.4
Result for the period 235.1 43.7 438.6 259.2 51.3 404.9 107.1
Capital expenditure 44.1 41.8 5.5 83.4
% of net sales 3.3 3.1 3.0
Equity ratio, % 42.3 37.3 41.4
Net gearing, % 79.1 103.0 79.4
Number of employees at the end of the period 16,332 17,309 -5.6 16,723
(FTE)
Average number of employees (FTE) 16,289 17,725 -8.1 17,343
Earnings/share, EUR 1.45 0.27 440.2 1.61 0.32 403.1 0.66
Cash flow from 0.14 0.10 36.9 0.37 0.05 700.0 1.50
operations/share, EUR
Hannu Syrjänen, President and CEO"In the second quarter of 2010, the advertising market continued to recover in
the Western European countries and Russia.
Due to growing sales and operational efficiency, our operating profit excluding
non-recurring items improved clearly in the second quarter. Especially our Dutch
magazine and online operations excelled. However, the economic recovery in most
of the Central Eastern European countries will take time. We will continue to
focus on maintaining a strong cash flow and improving our efficiency.
A key element of Sanoma's strategy is to focus our operations and balance our
portfolio. In June, we divested the cable TV operator Welho and got a 21% share
of the DNA telecommunication group. We gained a share in a very profitable and
competitive company with great growth potential. Welho and DNA form a strong
national telecommunication player that has the muscle for further development.
This is a long-term strategic ownership for us as we believe that media and
telecommunication businesses are converging further. Through this transaction we
are able to participate in developing the industry.
The future playing field of media companies will be fundamentally different to
the one we compete in today. Media products and services will be much more
customised and personal. Media consumption will increasingly be an active
experience and services will play a much bigger role. This future demands an
even higher and faster degree of innovation. It offers a lot of possibilities
for us."
Outlook for 2010
Sanoma Group's outlook is unchanged. In 2010, Sanoma's net sales are expected to
grow. The operating profit excluding non-recurring items is estimated to improve
slightly. This outlook takes into account the effect of the weekly magazine Humo
and the cable TV operator Welho transactions on 2010 figures. The estimated
negative impact of these transactions on 2010 operating profit excluding
non-recurring items is some EUR 12 million. In the comparable year 2009,
operating profit excluding non-recurring items was EUR 229.5 million.
The outlook of Sanoma's net sales and operating profit in 2010 is affected by
the development of advertising and private consumption in the Group's countries
of operation. The current outlook is based on the assumption that the
advertising markets in the Group's main operating countries grow slightly in
2010.
Net sales
Second quarter
In the second quarter of 2010, Sanoma's net sales grew by 3% and amounted to
EUR 715.4 million (2009: EUR 697.2 million). Net sales increased in all
divisions.
The Group's advertising sales showed positive signs in March and the good
development continued in the second quarter, even though variations between
months were high. In April-June, the Group's advertising sales grew by 9% and
accounted for 23% (2009: 22%) of the Group's total net sales. Online advertising
sales increased significantly, by 23%, with the biggest contributors, Sanoma
Magazines Netherlands and Sanoma News, both showing clear growth.
The circulation sales were slightly below the comparable quarter. The Group's
subscription sales remained stable, but single copy sales decreased slightly in
most of the operating countries.
First half
In January-June, Sanoma's net sales grew by 2% and amounted to
EUR 1,353.3 million (2009: EUR 1,333.2 million). Net sales increased in News,
Entertainment as well as in Trade and were at the comparable period's level in
Magazines as well as in Learning & Literature.
Sanoma has a target to double its consumer online sales by 2012 from 2008. In
the first half of 2010, such sales grew by 17% to EUR 74 million (2009: EUR 63
million). Total digital sales, which also include items such as e-learning and
access services, increased by 8% and amounted to 13% (2009: 12%) of net sales.
By country, Finland accounted for 52% (2009: 52%) of the cumulative net sales
and the Netherlands 23% (2009: 23%). Net sales from other EU countries totalled
22% (2009: 22%) and non-EU countries accounted for 3% (2009: 3%).
Result
Second quarter
Sanoma's operating profit excluding non-recurring items in April-June improved
by 11% and totalled EUR 80.3 million (2009: EUR 72.5 million). The result
improved in Magazines, Entertainment and Learning & Literature. Operating profit
excluding non-recurring items was 11.2% (2009: 10.4%) of net sales. The Group's
result increased in particular due to improved efficiency of operations in all
divisions and good performance of the Dutch magazine and online businesses.
Additionally, advertising markets in the most important operating countries were
recovering.
Sanoma initiated numerous efficiency improvement measures and structural changes
in 2009. The effects of these can also be seen in 2010. In the second quarter,
the Group's total expenses were at the comparable quarter's level, with employee
benefit expenses decreasing by 1%. Also materials and services, particularly
paper costs, continued to decrease. The Group had 391 employees less than at the
year-end 2009, corresponding to a decrease of 2%. From the comparable quarter,
the number of personnel has decreased by 6%. Sanoma continues to focus on
improving its efficiency and in 2010 is paying special attention to its fixed
cost base.
In April-June, the operating profit included a total of EUR 180.7 million (2009:
EUR -7.4 million) in non-recurring items. These non-recurring items were related
to the Welho and Humo transactions as well as the restructuring of general
literature. In the comparable period, non-recurring expenses were related to the
efficiency improvement programmes in magazine and newspaper operations.
NON-RECURRING ITEMS 4‑6/ 4‑6/ 1‑6/ 1‑6/ 1‑12/
EUR million 2010 2009 2010 2009 2009
Magazines
Restructuring expenses (Magazines Belgium) -1.3 -1.3 -12.4
Gain on sale of Humo 2.6 2.6
Restructuring expenses (Magazines Netherlands) -4.7
News
Gain on sale of Lehtikuva 6.0
Expenses related to the efficiency programme -6.1 -8.4 -8.4
Entertainment
Gain on sale of Welho 179.4 179.4
Learning & Literature
Loss on sale of Bertmark Norge -1.2
Restructuring expenses -1.3 -1.3 -3.9
Expense related to the sale of children's magazines -1.1
Trade
Restructuring expenses -3.6
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NON-RECURRING ITEMS IN OPERATING PROFIT 180.7 -7.4 185.5 -9.7 -34.1
Impairment losses on loans and other receivables
and available-for-sale investments -8.7
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NON-RECURRING ITEMS IN FINANCIAL ITEMS -8.7
First half
In January-June, Sanoma's operating profit excluding non-recurring items
improved by 21% and totalled EUR 115.9 million (2009: EUR 95.8 million).
Operating profit excluding non-recurring items improved in Magazines, News,
Entertainment and Learning & Literature.
In January-June, Sanoma's net financial items totalled EUR -7.6 million (2009:
EUR -13.8 million). Lower reference rates than in the comparable period
decreased the Group's interest expenses clearly. Financial income amounted to
EUR 4.6 million (2009: EUR 15.5 million), of which exchange rate gains were EUR
2.6 million (2009: EUR 10.4 million). Financial expenses amounted to EUR 12.3
million (2009: EUR 29.3 million). Interest expenses amounted to EUR 6.0 million
(2009: EUR 16.9 million) and exchange rate losses to EUR 4.8 million (2009: EUR
11.2 million). The positive effects of lower interest rates will even out during
2010, since the reference rates came down in the second quarter of 2009.
The result before taxes amounted to EUR 293.1 million (EUR 72.0 million) and the
effective tax rate was 11.5% (2009: 28.7%). Both the result and the effective
tax rate were significantly affected by the divestment of Welho.
Balance sheet and financial position
At the end of June, Sanoma's consolidated balance sheet totalled EUR 3,345.4
million (2009: EUR 3,211.1 million). Efficient cash flow management continued to
be a focus area, and in January-June, the Group's cash flow from operations
amounted to EUR 60.0 million (2009: EUR 7.5 million). Cash flow from operations
per share was EUR 0.37 (2009: EUR 0.05). In addition to a significantly better
operational result, also lower interest costs and positive development of net
working capital improved the cash flow.
Sanoma's financial position remained strong in the first half of 2010. Sanoma's
equity ratio strengthened and was 42.3% (2009: 37.3%) at the end of June. Equity
totalled EUR 1,340.1 million (2009: EUR 1,127.6 million). Interest-bearing
liabilities continued to decrease and totalled EUR 1,136.8 million (2009: EUR
1,220.3 million) and interest-bearing net debt was EUR 1,060.0 million (2009:
EUR 1,161.0 million). Sanoma's net debt/EBITDA ratio was 1.8 at the end of June.
Investments, acquisitions and divestments
Investments in tangible and intangible assets amounted to EUR 44.1 million
(2009: EUR 41.8 million) in January-June. Investments were mainly related to ICT
systems as well as replacements and renovations. Sanoma has a policy to keep
annual capital expenditure, excluding M&A, below EUR 100 million. Sanoma's
business acquisitions totalled EUR 17.3 million (2009: EUR 4.3 million).
In May, Sanoma Magazines Belgium sold 49% of its Humo magazine to Belgian De
Vijver NV. As part of the transaction, Sanoma Magazines Belgium acquired 25% of
Belgium's largest TV production company Woestijnvis, which is owned by De
Vijver.
In June, Sanoma Entertainment divested its cable TV operator Welho to the DNA
telecommunication group. The enterprise value of the Welho business was EUR 200
million, which Sanoma invested into DNA in a directed share issue and became
DNA's second largest owner with an ownership share of 21% as of 30 June 2010.
Sanoma recorded a non-recurring capital gain of EUR 179.4 million from the
transaction, which will improve Sanoma's earnings per share by some EUR 1.11 in
2010.
As a part of the transaction, Sanoma acquired the remaining 4.73% share of
Sanoma Television Ltd from TS-Yhtymä. The purchase price was EUR 7.3 million.
As a result of these transactions, Welho became part of DNA, which became an
associated company, and Humo became a joint venture of Sanoma. Associated
companies are accounted for using the equity method, that is, by consolidating
one line only and are presented separately after the operating profit. Joint
ventures are accounted for using the line-by-line proportionate consolidation
method. Thus the transactions will have a negative effect on the Group's
reported net sales and EBIT excluding non-recurring items in 2010.
SANOMA MAGAZINES
Sanoma Magazines, operating in 12 European countries, is a leading publisher of
magazines and has a strong presence in digital media. The company actively
reaches out to an audience of 290 million consumers at every life stage, and
aims to strengthen its market leader positions in each of the markets it
operates in.
- Sanoma Magazines improved its result in the second quarter significantly,
thanks to improved operational efficiency.
- The Division outperformed the advertising market development in the
Netherlands and Finland.
- Online advertising sales in the Netherlands grew clearly in the second
quarter.
- Sanoma Magazines' outlook for operating profit excluding non-recurring items
has been upgraded and it is now estimated to improve somewhat in 2010.
Key indicators 4‑6/ 4‑6/ Change 1‑6/ 1‑6/ Change 1‑12/
EUR million 2010 2009 % 2010 2009 % 2009
Net sales 280.6 275.9 1.7 540.5 538.1 0.5 1,111.2
Sanoma Magazines Netherlands 128.0 123.2 3.9 235.4 233.9 0.7 493.2
Sanoma Magazines International 54.3 53.2 2.2 103.0 104.0 -1.0 211.3
Sanoma Magazines Belgium 52.3 52.6 -0.6 105.9 104.0 1.8 212.3
Sanoma Magazines Finland 47.1 48.0 -2.0 98.3 98.3 0.0 198.8
Eliminations -1.2 -1.2 -1.2 -2.1 -2.1 -0.4 -4.3
Operating profit excluding 38.4 31.5 21.9 64.2 47.1 36.5 113.4
non-recurring items *
% of net sales 13.7 11.4 11.9 8.7 10.2
Operating profit 41.0 30.2 35.8 66.8 45.8 46.0 96.3
Capital expenditure 9.3 12.3 -24.2 24.4
Number of employees at the end of the period (FTE) 5,037 5,419 -7.1 5,191
Average number of employees (FTE) 5,099 5,611 -9.1 5,452
* In 2010, the non-recurring items included in the second quarter a EUR 2.6
million gain on the sale of Humo. In 2009, the non-recurring items included in
the second quarter EUR 1.3 million, in the third quarter EUR 0.2 million and in
the fourth quarter EUR 10.9 million of Sanoma Magazines Belgium's restructuring
expenses and in the third quarter EUR 4.6 million and in the fourth quarter EUR
0.1 million of Sanoma Magazines Netherlands' restructuring expenses.
Operational indicators * 1‑6/ 1‑6/
2010 2009
Number of magazines published 287 306
Magazine copies sold, thousands 171,815 187,066
Advertising pages sold 24,977 26,284
* Including joint ventures
Second quarter
Sanoma Magazines' net sales in April-June grew by 2%. Net sales increased in the
Netherlands and were at the comparable quarter's level in Finland and Belgium.
Net sales grew also in Sanoma Magazines International due to a favourable
currency translation effect. Adjusted for changes in the Division structure,
sales grew by 4%.
The Division's advertising sales grew by 8% and represented 31% (2009: 30%) of
the second quarter net sales. Advertising sales grew in Sanoma Magazines
International and Belgium, and especially in the Netherlands. Finnish
advertising sales were at the comparable quarter's level. Sanoma Magazines'
online advertising sales grew significantly, in particular due to the good
development in the Netherlands.
Sanoma Magazines' circulation sales decreased slightly and represented 57%
(2009: 59%) of the Division's net sales. Subscription sales were at the
comparable quarter's level and single copy sales decreased slightly.
Sanoma Magazines Netherlands' net sales were up by 4%, with both online
operations and print activities developing positively. Especially advertising
sales developed strongly. Online advertising sales grew clearly, by 18%.
Advertising sales represented 31% (2009: 28%) of Sanoma Magazines Netherlands'
net sales. Its circulation revenues were flat, with both subscription and single
copy sales being at the comparable quarter's level. Sanoma Magazines Netherlands
launched two new magazines and two online services in the second quarter.
Sanoma Magazines International's net sales grew by 2% due to a favourable
currency translation effect. The economic downturn in the CEE countries
continued to have a clear effect on sales in all of Sanoma Magazines
International's markets, especially in Hungary and Bulgaria. Russia, however, is
showing signs of recovery. Advertising sales, representing 50% (2009: 50%) of
Sanoma Magazines International's net sales, grew in Russia. Circulation sales
decreased, with both single copy and subscription sales slightly declining.
Sanoma Magazines International launched two new magazines and discontinued one.
After the review period, Sanoma Magazines International divested its Slovak
magazine operations. Slovak online operations will be managed from the Czech
Republic by Sanoma Magazines Praha.
Net sales at Sanoma Magazines Belgium were at the comparable quarter's level,
with advertising sales developing favourably and circulation sales being
slightly down. The main reason for the decline was the selling of 49% of Humo,
one of Sanoma Magazines Belgium's key titles, to De Vijver NV. As a part of the
transaction Sanoma Magazines Belgium acquired 25% of Belgium's largest TV
production company, Woestijnvis, which is owned by De Vijver. The transaction is
in line with Sanoma Magazines Belgium's strategy to develop into a stronger
multimedia player. This transaction affects Sanoma Magazines Belgium's figures
from May onwards. Sanoma Magazines Belgium's advertising sales grew slightly and
represented 28% (2009: 27%) of net sales.
Sanoma Magazines Finland's net sales were slightly below the comparable
quarter's level. Advertising sales were at the comparable quarter's level and
represented 15% (2009: 15%) of net sales. Sanoma Magazines Finland's circulation
sales decreased with both single copy and subscription sales declining due to
timing differences in the publication schedule, which will even out during the
coming months. Key titles continued to perform well.
Sanoma Magazines' operating profit excluding non-recurring items in April-June
improved significantly, by 22%, due to growth in sales, lower paper costs and
efficiency improvements. In 2009, the efficiency improvements started to have an
impact in the second half of the year. The number of personnel has reduced
clearly from the comparable period, and even from the year-end. Operating profit
improved in Sanoma Magazines International and especially in Sanoma Magazines
Netherlands. Operating profit declined in Sanoma Magazines Belgium and Sanoma
Magazines Finland. The non-recurring items included in the operating profit
totalled EUR 2.6 million (2009: EUR -1.3 million) and consisted of capital gain
on the Humo transaction.
First half
In January-June, Sanoma Magazines' net sales were at the comparable period's
level. Adjusted for changes in the Division structure, the growth was 2%.
Operating profit excluding non-recurring items increased by 37%.
According to Nielsen Media Research, the consumer magazine advertising market in
the Netherlands was at the comparable period's level in January-May. Sanoma
Magazines Netherlands' sales clearly outperformed the market development.
According to TNS Gallup Adex, advertising in consumer magazines in Finland
decreased by 5% in January-June. Sanoma Magazines Finland's advertising sales
outperformed the market development.
Sanoma Magazines continues to develop its magazine portfolio with a special
focus on its key titles in each operating country. Sanoma Magazines is investing
in strengthening its market positions, and wants to become stronger in digital
media. The growth in digital operations will mainly be achieved by leveraging
existing assets. E-reading devices also offer interesting opportunities for
combining magazines with digital media.
In 2010, Sanoma Magazines' net sales are expected to grow slightly. It is
estimated that operating profit excluding non-recurring items will improve
somewhat.
SANOMA NEWS
Sanoma News is the leading newspaper publisher in Finland and its printed and
digital products have a strong presence in the lives of Finns. In addition to
Helsingin Sanomat, the largest daily in the Nordic region, Sanoma News publishes
other national and regional newspapers and it is also one of the most
significant digital media players in Finland.
- Strong focus on media sales enabled Sanoma News to improve its market share in
the Finnish advertising market.
- The tabloid Ilta-Sanomat continued its good performance and increased its
market share.
- Online advertising sales developed strongly also during the second quarter.
-. The withheld holiday pay in 2009 and an equal-size extra bonus paid in May
2010 burdened the first half results.
Key indicators 4‑6/ 4‑6/ Change 1‑6/ 1‑6/ Change 1‑12/
EUR million 2010 2009 % 2010 2009 % 2009
Net sales 108.5 107.1 1.4 217.9 214.8 1.5 428.9
Helsingin Sanomat 56.7 55.4 2.4 115.8 114.0 1.6 228.4
Ilta-Sanomat 20.7 19.8 4.1 40.5 38.3 5.9 78.2
Other publishing 25.6 26.8 -4.4 51.0 52.7 -3.3 103.8
Other businesses 33.1 35.9 -7.9 67.5 72.2 -6.6 143.7
Eliminations -27.6 -30.9 10.7 -56.9 -62.4 8.9 -125.2
Operating profit excluding 8.9 9.6 -8.1 18.5 18.0 2.8 40.6
non-recurring items *
% of net sales 8.2 9.0 8.5 8.4 9.5
Operating profit 8.9 3.5 150.2 24.5 9.6 155.3 32.2
Capital expenditure 5.8 5.6 2.9 10.6
Number of employees at the end of the period (FTE) 2,360 2,520 -6.3 2,306
Average number of employees (FTE) 2,231 2,421 -7.8 2,399
* In 2010, the non-recurring items included in the first quarter a EUR 6.0
million gain on the sale of Lehtikuva. In 2009, the non-recurring items included
in the first quarter EUR 2.3 million and in the second quarter EUR 6.1 million
of expenses related to the efficiency programme.
Operational indicators 1‑6/ 1‑6/
2010 2009
Distribution of free sheets, millions 37.6 37.5
1‑12/ 1‑12/
Audited circulation 2009 2008
Helsingin Sanomat 397,838 412,421
Ilta-Sanomat 152,948 161,615
4‑6/ 4‑6/
Online services, unique visitors, weekly 2010 2009
Iltasanomat.fi 1,840,361 1,628,730
HS.fi 1,264,358 1,075,308
Huuto.net 438,136 420,069
Oikotie.fi 395,766 325,617
Taloussanomat.fi 543,936 413,964
Second quarter
Sanoma News' net sales in April-June increased by 1%. Adjusted for changes in
the Division structure, sales grew by 2%.
Sanoma News' advertising sales outperformed the market and grew by 6%.
Especially online advertising sales performed well and grew by 28%. In total,
advertising sales represented 48% (2009: 46%) of the Division's net sales. One
of Sanoma News' aims has been to strengthen its market share in the media
market, and its strong brands and active media sales have led to improved market
position.
The Division's circulation sales grew by 0.7% due to increased subscription
sales. Circulation sales accounted for 42% (2009: 43%) of the Division's
net sales. Even though the trend in circulation volumes is decreasing, Sanoma
News' total reach improved further in the second quarter due to the continued
growth in the number of online visitors.
The net sales of the Helsingin Sanomat business unit grew by 2%. Both
circulation and advertising sales developed positively and Helsingin Sanomat was
able to improve its market share. Recruitment classified advertising in the
daily print edition of Helsingin Sanomat increased by 50%. In total, advertising
sales represented 54% (2009: 53%) of the business unit's net sales.
The Ilta-Sanomat business unit's net sales grew by 4%, following the good
development of advertising sales. Online advertising sales of the business unit
increased by almost 60% from the comparable quarter. In total, advertising sales
represented 29% (2009: 25%) of the business unit's net sales. Circulation sales
decreased slightly.
Net sales from other publishing operations decreased by 4% mainly due to the
divestment of picture agency Lehtikuva in March 2010. Circulation and
advertising sales in regional papers were at the comparable period's level.
Advertising sales in free sheets were almost at the comparable quarter's level.
Online advertising sales in the Sanoma Digital Finland business unit continued
their excellent performance. Oikotie.fi, Sanoma Digital Finland's classifieds
portal, has improved its market position in the online job advertising market.
Net sales from other businesses, mainly comprising internal billing, decreased
by 8%.
In April-June, Sanoma News' operating profit excluding non-recurring items
decreased by 8%. The decline was due to the withheld holiday pay in 2009 and an
equal-size extra bonus paid in May 2010, because Division's profitability
development turned positive. These actions were burdening the second quarter of
2010 and improving the comparable quarter's result. The withheld holiday pay in
2009 will also have some effect on the comparability of Sanoma News' result in
the second half of 2010. Without the holiday pay effect, Sanoma News' result in
April-June would have improved by some 30%. Operating profit improved
significantly in the Helsingin Sanomat and Ilta-Sanomat business units.
Operating profit in other publishing operations decreased clearly due to the
divestment of Lehtikuva and holiday pay effect. The operating profit did not
include any non-recurring items.
First half
In January-June, Sanoma News' net sales grew by 2%. Adjusted for changes in the
Division structure, the growth was 2%. Sanoma News's operating profit excluding
non-recurring items grew by 3%. Excluding the holiday pay effect, the increase
would have been some 40%.
The advertising market in Finland turned slightly positive in February, and
continued its good development in the first half of the year. However, the
development between months varied to a large extent. According to TNS Gallup
Adex, newspaper advertising in Finland decreased by 1% in January-June. Job
advertising in Finland increased by 18%, but real estate advertising decreased
by 6%. Job advertising in the daily print edition of Helsingin Sanomat was 13%
above the comparable period, and real estate advertising was almost at the
comparable period's level. Advertising in free sheets was up by 7%, partly due
to changes in reporting. Online advertising included in the statistics grew by
25%, much faster than other media segments.
In January-June, the total volume of the Finnish tabloid market decreased by
4%. However, Ilta-Sanomat was able to improve its market position in the tabloid
newsstand market and now has a market share of 58.1% (2009: 56.8%).
Sanoma News is looking for new sources of revenues through development of the
product and service portfolio. In particular, paid content services and creating
content for e-reading devices are being focused on. Strengthening market share
both in the media market and in the readers' market remains a key priority for
Sanoma News.
In 2010, Sanoma News' net sales are expected to be at the previous year's level
and operating profit excluding non-recurring items is estimated to improve
slightly.
SANOMA ENTERTAINMENT
Sanoma Entertainment offers entertaining experiences on television, radio and
online. Sanoma Entertainment consists of Nelonen Media, which focuses on
broadcast operations as well as online TV and Sanoma Games, operating on online
casual gaming.
- Sanoma Entertainment divested its cable TV operator Welho to the DNA
telecommunication group.
- Nelonen Media's viewing shares continued to develop positively.
- Nelonen Media's advertising sales in May were at an all-time high and Nelonen
Media continued to gain market share.
- Due to the divestment of Welho, Sanoma Entertainment's net sales and operating
profit excluding non-recurring items are expected to decrease significantly in
2010.
Key indicators 4‑6/ 4‑6/ Change 1‑6/ 1‑6/ Change 1‑12/
EUR million 2010 2009 % 2010 2009 % 2009
Net sales 44.6 40.6 9.8 86.2 81.0 6.4 157.1
TV and radio 26.5 23.6 12.1 50.0 47.1 6.1 88.1
Other businesses 18.5 17.4 6.6 36.7 34.7 6.0 70.4
Eliminations -0.3 -0.3 -2.7 -0.5 -0.8 31.8 -1.4
Operating profit excluding 8.2 6.9 19.0 14.4 13.0 10.5 20.7
non-recurring items *
% of net sales 18.3 16.9 16.7 16.1 13.2
Operating profit 187.6 6.9 2,632.7 193.8 13.0 1,389.7 20.7
Capital expenditure 4.9 4.1 18.0 9.3
Number of employees at the end of the period (FTE) 447 473 -5.5 458
Average number of employees (FTE) 446 481 -7.3 469
* In 2010, the non-recurring items included in the second quarter a EUR 179.4
million gain on the sale of Welho. In 2009, the operating profit did not include
any non-recurring items.
Operational indicators 1‑6/ 1‑6/
Thousands 2010 2009
TV channels' share of Finnish TV advertising 34.1% 33.5%
TV channels' national commercial viewing share 30.4% 29.6%
TV channels' national viewing share 14.5% 14.7%
Number of connected households (30 June) 322 324
Number of Welho customers (30 June) 163 157
Number of fixed broadband connections (30 June) 117 108
Second quarter
Sanoma Entertainment's net sales in April-June grew by 10%, with advertising
sales accounting for 54% (2009: 49%) of the Division's net sales. All growth was
organic.
The broadcast operation's net sales grew by 12%. In May, Nelonen Media's
advertising sales were at an all-time high. Targeted niche channels Jim and Liv
performed particularly well. Interest in online TV has remained very high and
advertising sales of the online TV service Ruutu.fi continued to grow fast.
Nelonen Media's terrestrial TV licenses were renewed by the Government of
Finland and are now valid until 2016.
Net sales from other operations increased by 7%. Broadband sales performed well,
despite the increased competition. Cable TV operator Welho continued to be at
the forefront of technology development by distributing the French Open tennis
tournament in 3D format in its network.
Sanoma Entertainment's operating profit excluding non-recurring items in
April-June grew by 19% from the comparable period, especially due to good sales
development of Nelonen Media. Operating profit in other operations decreased due
to actions carried out to increase the customer base of broadband services. The
non-recurring items included in the operating profit totalled EUR 179.4 million
and consisted of capital gain on the divestment of Welho. The deal was closed on
30 June after receiving the necessary approvals from the competition authorities
and the Government of Finland.
From 1 July, Sanoma Entertainment comprises Nelonen Media's TV and radio
broadcast and online TV operations as well as Sanoma Games' online casual gaming
services. The Division will be reported as a single entity.
First half
In January-June, Sanoma Entertainment's net sales grew by 6%. Sanoma
Entertainment's operating profit excluding non-recurring items grew by 11%.
The Finnish TV advertising market grew by 6% in January-June according to TNS
Gallup Adex. Nelonen Media was able to further increase its market share to
34.1%, thanks to its improved viewing share and efficient multichannel strategy
in broadcast operations.
Nelonen Media's commercial viewing share also improved to 36.1% (2009: 33.6%) in
its main target group, viewers between 10 and 44 years of age. The viewing
shares were boosted by the success of the smaller channels, Liv and Jim, which
earned their highest viewing shares ever in May. National radio advertising grew
slightly in January-June and Nelonen Media's radio channels developed in line
with the market.
Due to the divestment of Welho as of 30 June 2010, Sanoma Entertainment's net
sales and operating profit excluding non-recurring items are expected to
decrease significantly in 2010.
SANOMA LEARNING & LITERATURE
Sanoma Learning & Literature, operating in 11 countries, is a leading European
provider of learning materials and solutions in print and digital format. The
Division has growing international language service operations and is also the
leading general literature publisher in Finland.
- In the second quarter, Sanoma Learning & Literature reported higher net sales
and operating profit than in the comparable quarter.
- In language services, the recovery is still slow.
- In June, Sanoma Learning & Literature agreed to acquire the remaining 44.9% of
the shares of Young Digital Planet.
Key indicators 4‑6/ 4‑6/ Change 1‑6/ 1‑6/ Change 1‑12/
EUR million 2010 2009 % 2010 2009 % 2009
Net sales 105.5 101.9 3.5 163.7 162.8 0.6 345.1
Learning 85.0 81.6 4.2 114.9 112.2 2.5 239.1
Language services 6.2 6.2 0.0 13.1 14.5 -9.4 27.5
Literature and other businesses 17.2 17.0 1.4 40.8 41.6 -1.8 88.9
Eliminations -2.9 -2.8 -2.9 -5.2 -5.4 4.6 -10.4
Operating profit excluding 26.4 25.1 5.4 21.2 18.2 16.7 43.5
non-recurring items *
% of net sales 25.0 24.6 13.0 11.2 12.6
Operating profit 25.1 25.1 0.2 18.7 18.2 2.9 38.5
Capital expenditure 8.1 4.4 82.7 13.1
Number of employees at the end of the period (FTE) 2,583 2,755 -6.2 2,745
Average number of employees (FTE) 2,640 2,847 -7.3 2,780
* In 2010, the non-recurring items included in the first quarter a EUR 1.2
million loss on the sale of Bertmark Norge and in the second quarter EUR 1.3
million restructuring expenses. In 2009, the non-recurring items included in the
third quarter EUR 1.5 million and in the fourth quarter EUR 2.4 million
restructuring expenses and in the third quarter EUR 1.1 million of expenses
related to the sale of children's magazines.
Operational indicators 1‑6/ 1‑6/
2010 2009
Learning
Number of new titles published, books 515 756
Number of new titles published, digital products 219 228
Literature and other businesses
Number of new titles published, books 188 181
Number of new titles published, digital products 100 42
Books sold, millions 12.3 12.9
Second quarter
Sanoma Learning & Literature's net sales in April-June grew by 4%. Due to the
nature of the learning business, which forms the majority of Sanoma Learning &
Literature's operations, changes between quarters can be significant. The
learning business has an annual cycle and shifts between quarters often explain
most of the changes from the comparable period.
Net sales in learning were up by 4%, partly due to a favourable currency
translation effect. Sales in the Netherlands were at the comparable quarter's
level mainly due to good performance in primary education. Sales in Finland were
slightly better than in the comparable quarter. The earlier signs of cost
pressure in the learning material markets in the Netherlands and Finland, where
most of the material is funded by the government, have not had an impact yet.
Net sales grew in Belgium, as new products in the Flemish market were very well
received. In Hungary, NTK-Perfekt suffered from the delays in tenders caused by
the change in government after the elections in April. In Poland, Nowa Era
continued its good sales development. The sales of e-learning provider YDP were
unchanged from the comparable quarter.
Net sales in language services were at the comparable quarter's level. Sales of
language services have been strongly affected by the general economic situation,
but in translation and localisation services, the positive development of the
first quarter continued. However, in language training sales prospects for this
year continue to remain weak.
Net sales in literature and other businesses were at the comparable quarter's
level. General literature sales remained sluggish, in line with the market
development. General literature's operations will be restructured to respond to
the ongoing transformation in the book publishing industry. An agreement on the
restructuring was reached and its implementation has started. Sales in printing
grew clearly due to the acquisition of Gummerus Printing made at the end of
2009.
The Division's operating profit excluding non-recurring items in April-June
increased by 5%, due to good results in the learning business. Language services
also improved their results due to the efficiency improvements. The
non-recurring costs included in the operating profit totalled EUR 1.3 million
(2009: EUR 0.0 million) and were related to the restructuring of Finnish general
literature operations.
First half
In January-June, Sanoma Learning & Literature's net sales were at the comparable
period's level. Operating profit excluding non-recurring items grew by 17%.
Sanoma Learning & Literature continues to focus on growth through further
internationalisation of its learning and language services businesses. At the
same time, the Division will continue to restructure its other operations.
Customers are increasingly looking for customised solutions both in learning and
language services. Sanoma Learning & Literature is well positioned to offer
these and can gain efficiency from developing platforms to be used in several
markets.
In 2010, it is estimated that the net sales and operating profit excluding
non-recurring items of Sanoma Learning & Literature will increase somewhat from
the previous year's level.
SANOMA TRADE
Operating in eight countries, retail specialist Sanoma Trade's strengths lie in
a thorough understanding of customers' needs and solid concepts. Sanoma Trade
serves its customers in 210 million annual sales contacts at kiosks, bookstores
and movie theatres. Sanoma Trade's trade services business unit (previously
press distribution) is a strong link between publishers and retailers.
- Movie operations continued their success: sales and movie admissions grew both
in Finland and in the Baltic countries.
- The Finnish kiosk operations developed positively due to record-high lottery
jackpots and high-profile campaigns.
- Economic conditions remained weak especially in the Baltic countries and
Romania.
Key indicators 4‑6/ 4‑6/ Change 1‑6/ 1‑6/ Change 1‑12/
EUR million 2010 2009 % 2010 2009 % 2009
Net sales 201.4 195.7 2.9 393.2 383.4 2.6 827.8
Kiosk operations 104.9 104.5 0.4 196.8 194.4 1.2 404.2
Trade services 60.8 57.4 6.0 112.7 107.9 4.5 227.9
Bookstores 19.9 19.7 1.0 45.8 46.9 -2.3 123.3
Movie operations 19.9 18.0 10.2 45.3 41.7 8.7 88.0
Eliminations -4.0 -3.9 -3.7 -7.4 -7.5 1.0 -15.6
Operating profit excluding 3.1 3.8 -17.8 6.0 7.6 -21.2 27.6
non-recurring items*
% of net sales 1.5 1.9 1.5 2.0 3.3
Operating profit 3.1 3.8 -17.8 6.0 7.6 -21.2 24.0
Capital expenditure 15.4 15.2 1.6 25.5
Number of employees at the end of the period (FTE) 5,754 6,062 -5.1 5,943
Average number of employees (FTE) 5,781 6,282 -8.0 6,164
* In 2010, the operating profit did not include any non-recurring items. In
2009, the non-recurring items included in the fourth quarter EUR 3.6 million of
restructuring expenses.
Operational indicators 1‑6/ 1‑6/
Thousands 2010 2009
Customer volume in kiosk operations 90,554 98,468
Customer volume in bookstores 3,063 3,083
Customer volume in movie theatres 5,002 4,515
Number of copies sold (press distribution) 173,006 171,302
Second quarter
Sanoma Trade's net sales in April-June grew by 3%, with all businesses
increasing their sales. Net sales adjusted for changes in the Group structure
grew by 4%.
Net sales from kiosk operations grew slightly. The change in legislation
regarding opening hours in Finland did not have a material effect on the second
quarter, and kiosk sales in Finland were slightly up from the comparable
quarter. Net sales grew also in Latvia and Romania. In Estonia, Lithuania and
Russia net sales decreased. The renewal of the R-kioski concept is currently
being piloted in Finland, Estonia and Lithuania in about 20 kiosks. The first
results are encouraging. The feedback from the pilot phase will be evaluated
during this summer.
Net sales from trade services grew by 6%. Net sales grew in Finland and in the
Netherlands. Press volumes showed some growth, especially in the Netherlands,
while the good development of other product groups, such as football collector
cards, also boosted Aldipress' sales. The weak economic situation, decreased
number of titles to sell and VAT increases continued to affect sales in most of
the Baltic countries. In Finland, Sanoma Trade acquired the marketing logistics
company Postituspojat. The acquisition supports Sanoma Trade's growth strategy
in the field of marketing logistics and strengthens the basis for the
development of these services.
Net sales from bookstores grew slightly. Net sales decreased slightly in
Finland, mainly due to the lack of bestsellers in books. Net sales grew in
Estonia due to the opening of two new bookstores. In Finland, the sales of
games, toys and other new product groups developed favourably.
Net sales from movie operations grew by 10%. Finnish operations continued their
excellent performance, even though there were only few big releases in the
quarter. Net sales grew also in most of the Baltic countries. Competition in the
Baltic countries is expected to increase in the second half of 2010 due to new
entrants. In all operating countries, 3D movies are increasing in popularity and
already form an important part of total sales.
Sanoma Trade's operating profit excluding non-recurring items in April-June
decreased by 18% and was burdened by the costs of merging the Estonian
operations. The operating profit improved in movie operations and in trade
services, but decreased in other businesses. The restructuring of the Russian
operations, which started in the second half of 2009, continues.
First half
In January-June, Sanoma Trade's net sales grew by 3%. Operating profit excluding
non-recurring items decreased by 21%. The new opening hours of other retailers
decreased customer volumes especially in the first quarter and shifted the kiosk
sales more towards tobacco and the lower margin commission sales.
Sanoma Trade continues to develop its kiosk and bookstore concepts in particular
to better cater for the needs of its customers. With its 210 million annual
customer contacts, Sanoma Trade gains valuable consumer insight and has good
possibilities to develop its product and service offering.
In 2010, Sanoma Trade's net sales are expected to increase slightly and
operating profit excluding non-recurring items to be at the previous year's
level.
THE GROUP
Dividend
The Annual General Meeting on 8 April 2010 decided to pay a dividend of EUR
0.80 (2009: EUR 0.90). The dividends were paid on 20 April 2010 in Finland.
Shares and holdings
In January-June, 28,003,041 (2009: 43,578,137) Sanoma shares were traded on the
NASDAQ OMX Helsinki. Traded shares accounted for 17% (2009: 27%) of the average
number of shares. Sanoma's total stock exchange turnover was EUR 427.7 million
(2009: EUR 428.2 million).
In January-June, the volume-weighted average price of a Sanoma share was EUR
15.27, with a low of EUR 13.41 and a high of EUR 17.07. At the end of June,
Sanoma's market capitalisation was EUR 2.3 billion (2009: EUR 1.8 billion), with
Sanoma's share closing at EUR 14.17 (2009: EUR 11.05). The Company had 21,750
shareholders at the end of June, with foreign holdings accounting for 11.3%
(2009: 9.7%) of all shares and votes. There were no major changes in share
ownership in the first half of 2010 and Sanoma did not issue any flagging
announcements. At the end of June, Sanoma had 161,816,894 shares.
Board of Directors, auditors and management
The AGM held on 8 April 2010 confirmed the number of Sanoma's Board members at
ten. Board members Sirkka Hämäläinen-Lindfors and Seppo Kievari were re-elected
and Antti Herlin was elected as a new member to the Board. The Board of
Directors of Sanoma consists of Jaakko Rauramo (Chairman), Sakari Tamminen (Vice
Chairman), and Annet Aris, Robert Castrén, Jane Erkko, Antti Herlin, Paavo
Hohti, Sirkka Hämäläinen-Lindfors, Seppo Kievari and Rafaela Seppälä as members.
The AGM re-appointed Pekka Pajamo, APA, and Sixten Nyman, APA, as his deputy,
and Authorised Public Accountants KPMG Oy Ab, with Kai Salli, APA, acting as the
Auditor in Charge, as the auditors of the Company.
Board authorisations
The AGM held on 8 April 2010 authorised the Board of Directors to decide on an
issuance of a maximum of 82,000,000 new shares and a transfer of a maximum of
5,000,000 treasury shares. The authorisation will be valid until 30 June 2013.
The AGM also authorised the Board to decide on the repurchase of a maximum of
16,000,000 of the Company's own shares. This authorisation is effective until
30 June 2011 and terminates the corresponding authorisation granted by the AGM
on 1 April 2009.
Seasonal fluctuation
The net sales and result of Sanoma Magazines, Sanoma News and Sanoma
Entertainment are particularly affected by the development of advertising.
Advertising sales are influenced, for example, by the number of newspaper and
magazine issues published each quarter, which varies annually. Television
advertising in Finland is usually strongest in the second and fourth quarters.
Learning accrues most of its net sales and results during the second and third
quarters.
A major portion of the net sales and results in retail are, on the other hand,
generated in the last quarter, particularly from Christmas sales. Of course, the
number of shopping days and, for example, the distribution of holidays over
different quarters impacts the retail sales between quarters.
Seasonal business fluctuations influence the Group's net sales and operating
profit, with the first quarter traditionally being clearly the smallest one for
both.
Significant risks and uncertainty factors
The most significant risks and uncertainty factors Sanoma currently faces are
described in the Financial Statements and on the Group's website at Sanoma.com,
together with the Group's main principles of risk management. Many of the
identified risks relate to changes in customer preferences. Ongoing digitisation
has been the driving force behind these changes for some time, and Sanoma has
identified action plans in all its divisions on how to respond to this
challenge.
Normal business risks associated with the industry relate to developments in
media advertising and consumer spending. Media advertising is sensitive to
economic fluctuations. Therefore, the general economic conditions of the
countries in which the Group operates and the economic trends of the industry
influence Sanoma's business activities and operational performance.
INTERIM REPORT (UNAUDITED)
Accounting policies
The Sanoma Group has prepared its Interim Report in accordance with IAS 34
'Interim Financial Reporting' while adhering to related IFRS standards and
interpretations applicable within the EU on 30 June 2010.
The Group has applied e.g. the following revised and amended standards as of 1
January 2010: IFRS 3 (Revised 2008) Business Combinations and IAS 27 (Amended
2008) Consolidated and Separate Financial Statements.
The adoption of the revised IFRS 3 'Business Combinations' will have an impact
on the amount of goodwill from acquisitions and results on disposing businesses.
The standard is estimated to also have an impact on profit and loss in those
periods in which new business is acquired, the deferred purchase price is paid
or additional shares are acquired. According to the transitional provisions of
the standard, business combinations for which the acquisition date is before the
adoption of the standard, are not adjusted.
The amended IAS 27 'Consolidated and Separate Financial Statements' requires the
effects of all transactions with a non-controlling interest to be recorded in
equity if the control remains with the parent company. The amendment also
specifies that a share of the loss for period can also be allocated to
non-controlling interest when the losses exceed the amount of invested capital
by the non-controlling parties.
The accounting policies of the Interim Report and the definitions of key
indicators are presented on the Sanoma website at Sanoma.com. All figures have
been rounded and consequently the sum of individual figures can deviate from the
presented sum figure. Key figures have been calculated using exact figures. This
Interim Report is unaudited.
CONSOLIDATED INCOME STATEMENT
EUR million 1‑6/ 1‑6/ 1‑12/
2010 2009 2009
NET SALES 1,353.3 1,333.2 2,767.9
Other operating income 217.7 33.5 64.6
Materials and services 586.4 591.3 1,238.5
Employee benefit expenses 341.4 351.0 695.5
Other operating expenses 261.3 257.2 536.2
Depreciation, amortisation and impairment losses 80.4 81.2 167.0
--------------------------------------------------------------------------------
OPERATING PROFIT 301.4 86.1 195.4
Share of results in associated companies -0.7 -0.3 -3.9
Financial income 4.6 15.5 22.5
Financial expenses 12.3 29.3 52.6
--------------------------------------------------------------------------------
RESULT BEFORE TAXES 293.1 72.0 161.4
Income taxes -33.8 -20.7 -54.3
--------------------------------------------------------------------------------
RESULT FOR THE PERIOD 259.2 51.3 107.1
Result attributable to:
Equity holders of the Parent Company 261.3 51.6 105.6
Non-controlling interests -2.1 -0.3 1.6
Earnings per share for result attributable to the equity
holders of the Parent company:
Earnings per share, EUR 1.61 0.32 0.66
Diluted earnings per share, EUR 1.61 0.32 0.66
STATEMENT OF COMPREHENSIVE INCOME
EUR million 1‑6/ 1‑6/ 1‑12/
2010 2009 2009
Result for the period 259.2 51.3 107.1
Other comprehensive income:
Change in translation differences 12.1 -14.7 -5.0
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 271.3 36.7 102.1
Total comprehensive income attributable to:
Equity holders of the Parent Company 273.4 37.4 100.5
Non-controlling interests -2.0 -0.7 1.6
CONSOLIDATED BALANCE SHEET
EUR million 30.6.2010 30.6.2009 31.12.2009
ASSETS
NON-CURRENT ASSETS
Tangible assets 439.4 500.4 484.2
Investment property 8.8 9.4 9.4
Goodwill 1,481.4 1,487.7 1,488.9
Other intangible assets 411.8 397.1 399.3
Interests in associated companies 271.1 67.3 63.5
Available-for-sale financial 15.7 20.7 15.7
assets
Deferred tax receivables 36.3 39.4 30.1
Trade and other receivables 31.4 38.8 31.4
--------------------------------------------------------------------------------
NON-CURRENT ASSETS, TOTAL 2,695.9 2,560.8 2,522.3
CURRENT ASSETS
Inventories 136.6 152.7 141.6
Income tax receivables 21.3 28.2 19.3
Trade and other receivables 414.2 409.4 362.9
Available-for-sale financial 0.5 0.5 0.5
assets
Cash and cash equivalents 76.8 59.3 59.7
--------------------------------------------------------------------------------
CURRENT ASSETS, TOTAL 649.4 650.2 584.0
ASSETS, TOTAL 3,345.4 3,211.1 3,106.3
EQUITY AND LIABILITIES
EQUITY
Equity attributable to the equity holders of the Parent
Company
Share capital 71.3 71.3 71.3
Fund for invested unrestricted 188.8 192.7 188.8
equity
Other equity 1,072.4 850.2 931.1
--------------------------------------------------------------------------------
1,332.5 1,114.1 1,191.2
Non-controlling interests 7.6 13.4 15.4
--------------------------------------------------------------------------------
EQUITY, TOTAL 1,340.1 1,127.6 1,206.6
NON-CURRENT LIABILITIES
Deferred tax liabilities 99.4 105.0 101.2
Pension obligations 30.0 36.8 29.9
Provisions 8.4 6.2 10.7
Interest-bearing liabilities 752.8 713.1 541.6
Trade and other payables 22.2 35.9 28.2
CURRENT LIABILITIES
Provisions 16.2 10.2 23.8
Interest-bearing liabilities 384.0 507.2 476.1
Income tax liabilities 32.8 19.9 16.9
Trade and other payables 659.4 649.0 671.3
--------------------------------------------------------------------------------
LIABILITIES, TOTAL 2,005.2 2,083.5 1,899.7
EQUITY AND LIABILITIES, TOTAL 3,345.4 3,211.1 3,106.3
CHANGES IN CONSOLIDATED EQUITY
EUR million
Equity attributable to the equity holders of the Parent
Company
Fund
for Non-
inves- cont-
ted rol-
Trea- unres- ling Equi-
Share sury tricted Other inte- ty,
capital shares equity equity Total rests total
Equity at
1 Jan 2009 71.3 -37.5 192.7 993.7 1,220.1 17.0 1,237.1
Cancellation
of treasury shares 37.5 -37.5
--------------------------------------------------------------------------------
Expense
recognition of
options granted 2.0 2.0 2.0
--------------------------------------------------------------------------------
Dividends paid -144.9 -144.9 -0.9 -145.8
--------------------------------------------------------------------------------
Change in non-
controlling
interests -2.0 -2.0
--------------------------------------------------------------------------------
Donations -0.5 -0.5 -0.5
--------------------------------------------------------------------------------
Comprehensive
income for the period 37.4 37.4 -0.7 36.7
--------------------------------------------------------------------------------
Equity at
30 June 2009 71.3 192.7 850.2 1,114.1 13.4 1,127.6
Equity at
1 Jan 2010 71.3 188.8 931.1 1,191.2 15.4 1,206.6
Expense
recognition of
options granted 1.8 1.8 1.8
--------------------------------------------------------------------------------
Dividends paid -129.5 -129.5 -1.6 -131.1
--------------------------------------------------------------------------------
Change in non-
controlling
interests -3.9 -3.9 -4.2 -8.1
--------------------------------------------------------------------------------
Donations -0.5 -0.5 -0.5
--------------------------------------------------------------------------------
Comprehensive
income for the period 273.4 273.4 -2.0 271.3
--------------------------------------------------------------------------------
Equity at
30 June 2010 71.3 188.8 1,072.4 1,332.5 7.6 1,340.1
INCOME STATEMENT BY QUARTER
EUR million 1-3/ 4-6/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2010 2010 2009 2009 2009 2009 2009
NET SALES 637.9 715.4 636.0 697.2 701.1 733.6 2,767.9
Other operating income 20.4 197.3 14.1 19.4 13.3 17.9 64.6
Materials and services 279.0 307.3 286.4 304.8 315.0 332.2 1,238.5
Employee benefit expenses 169.1 172.3 176.2 174.8 160.5 184.0 695.5
Other operating expenses 128.9 132.4 128.2 129.0 122.1 156.8 536.2
Depreciation, amortisation and 40.8 39.6 38.4 42.8 39.8 46.0 167.0
impairment losses
--------------------------------------------------------------------------------
OPERATING PROFIT 40.4 261.0 20.9 65.1 77.1 32.3 195.4
Share of results in associated -2.4 1.7 0.3 -0.6 -2.0 -1.6 -3.9
companies
Financial income 2.2 2.5 6.7 8.8 4.1 2.8 22.5
Financial expenses 6.0 6.2 17.0 12.3 12.0 11.3 52.6
--------------------------------------------------------------------------------
RESULT BEFORE TAXES 34.1 259.0 10.9 61.1 67.2 22.3 161.4
Income taxes -10.0 -23.8 -3.2 -17.4 -20.0 -13.7 -54.3
--------------------------------------------------------------------------------
RESULT FOR THE PERIOD 24.1 235.1 7.7 43.7 47.2 8.6 107.1
Result attributable to:
Equity holders of the Parent 25.9 235.4 8.3 43.3 47.6 6.4 105.6
Company
Non-controlling interests -1.8 -0.2 -0.6 0.3 -0.3 2.2 1.6
Earnings per share for result attributable
to the equity holders of the Parent company:
Earnings per share, EUR 0.16 1.45 0.05 0.27 0.30 0.04 0.66
Diluted earnings per share, EUR 0.16 1.45 0.05 0.27 0.30 0.04 0.66
CONSOLIDATED CASH FLOW STATEMENT 1‑6/ 1‑6/ 1‑12/
EUR million 2010 2009 2009
OPERATIONS
Result for the period 259.2 51.3 107.1
Adjustments
Income taxes 33.8 20.7 54.3
Financial expenses 12.3 29.3 52.6
Financial income -4.6 -15.5 -22.5
Share of results in associated companies 0.7 0.3 3.9
Depreciation and impairment losses 80.4 81.2 167.0
Gains/losses on sales of non-current assets -188.5 -1.9 -2.4
Other adjustments -23.8 -28.7 -56.4
Change in working capital
Change in trade and other receivables -61.7 -0.5 47.4
Change in inventories -3.8 -6.4 5.6
Change in trade and other payables, and provisions -7.3 -78.4 -36.9
Interest paid -5.2 -24.6 -34.6
Other financial items -3.4 -0.2 -2.0
Taxes paid -28.2 -19.1 -41.4
--------------------------------------------------------------------------------
CASH FLOW FROM OPERATIONS 60.0 7.5 241.8
INVESTMENTS
Acquisition of tangible and intangible assets -40.3 -43.1 -80.2
Operations acquired -27.1 -17.8 -27.1
Sales of tangible and intangible assets 5.2 2.7 5.4
Operations sold 26.1 0.0 0.5
Loans granted -0.3 -2.1 -0.9
Repayments of loan receivables 3.6 1.6 3.3
Sales of short-term investments 0.0
Interest received 1.0 3.6 4.8
Dividends received 3.0 3.1 4.3
--------------------------------------------------------------------------------
CASH FLOW FROM INVESTMENTS -28.9 -51.9 -89.9
CASH FLOW BEFORE FINANCING 31.1 -44.4 151.9
FINANCING
Proceeds from share subscriptions 12.3
Change in loans with short maturity -72.8 0.0 -42.6
Drawings of other loans 255.5 366.5 399.7
Repayments of other loans -40.3 -245.1 -460.0
Payment of finance lease liabilities -1.7 -1.6 -3.5
Dividends paid -131.1 -145.8 -146.2
Donations/other profit sharing -0.5 -0.5 -0.5
--------------------------------------------------------------------------------
CASH FLOW FROM FINANCING 9.0 -26.6 -240.8
CHANGE IN CASH AND CASH EQUIVALENTS
ACCORDING TO CASH FLOW STATEMENT 40.1 -71.0 -88.9
Effect of exchange rate differences on cash and cash 0.8 -2.4 0.0
equivalents
NET CHANGE IN CASH AND CASH EQUIVALENTS 40.9 -73.4 -88.9
Cash and cash equivalents at the beginning of the period 21.6 110.5 110.5
Cash and cash equivalents at the end of the period 62.4 37.0 21.6
Cash and cash equivalents in cash flow statement include cash and cash
equivalents less bank overdrafts.
NET SALES BY BUSINESS
EUR million 1‑3/ 4‑6/ 1‑3/ 4‑6/ 7‑9/ 10‑12/ 1‑12/
2010 2010 2009 2009 2009 2009 2009
SANOMA MAGAZINES
Sanoma Magazines Netherlands 107.4 128.0 110.6 123.2 120.7 138.6 493.2
Sanoma Magazines International 48.7 54.3 50.9 53.2 48.8 58.5 211.3
Sanoma Magazines Belgium 53.5 52.3 51.3 52.6 50.8 57.5 212.3
Sanoma Magazines Finland 51.2 47.1 50.3 48.0 46.9 53.5 198.8
Eliminations -1.0 -1.2 -1.0 -1.2 -1.2 -1.0 -4.3
-----------------------------------------------------------------------------
TOTAL 259.9 280.6 262.1 275.9 266.1 307.1 1,111.2
SANOMA NEWS
Helsingin Sanomat 59.1 56.7 58.7 55.4 53.3 61.1 228.4
Ilta-Sanomat 19.9 20.7 18.4 19.8 19.6 20.3 78.2
Other publishing 25.3 25.6 25.9 26.8 24.2 26.9 103.8
Other businesses 34.4 33.1 36.2 35.9 34.9 36.6 143.7
Eliminations -29.3 -27.6 -31.6 -30.9 -30.8 -32.0 -125.2
-----------------------------------------------------------------------------
TOTAL 109.4 108.5 107.7 107.1 101.2 112.9 428.9
SANOMA ENTERTAINMENT
TV and radio 23.5 26.5 23.5 23.6 17.4 23.6 88.1
Other businesses 18.2 18.5 17.3 17.4 17.8 18.0 70.4
Eliminations -0.2 -0.3 -0.5 -0.3 -0.2 -0.4 -1.4
-----------------------------------------------------------------------------
TOTAL 41.5 44.6 40.3 40.6 35.0 41.1 157.1
SANOMA LEARNING & LITERATURE
Learning 29.9 85.0 30.6 81.6 94.3 32.7 239.1
Language services 6.9 6.2 8.3 6.2 6.7 6.3 27.5
Literature and other businesses 23.6 17.2 24.6 17.0 19.3 28.0 88.9
Eliminations -2.3 -2.9 -2.6 -2.8 -2.7 -2.3 -10.4
-----------------------------------------------------------------------------
TOTAL 58.2 105.5 60.8 101.9 117.6 64.7 345.1
SANOMA TRADE
Kiosk operations 91.9 104.9 89.9 104.5 99.3 110.5 404.2
Trade services 51.9 60.8 50.5 57.4 59.4 60.6 227.9
Bookstores 26.0 19.9 27.3 19.7 31.8 44.5 123.3
Movie operations 25.4 19.9 23.6 18.0 22.7 23.6 88.0
Eliminations -3.4 -4.0 -3.6 -3.9 -4.1 -4.0 -15.6
-----------------------------------------------------------------------------
TOTAL 191.8 201.4 187.7 195.7 209.2 235.3 827.8
Other companies and eliminations -23.0 -25.3 -22.7 -24.1 -28.0 -27.5 -102.3
-----------------------------------------------------------------------------
TOTAL 637.9 715.4 636.0 697.2 701.1 733.6 2,767.9
OPERATING PROFIT BY DIVISION
EUR million 1‑3/ 4‑6/ 1‑3/ 4‑6/ 7‑9/ 10‑12/ 1‑12/
2010 2010 2009 2009 2009 2009 2009
Sanoma Magazines 25.8 41.0 15.5 30.2 23.1 27.4 96.3
Sanoma News 15.6 8.9 6.0 3.5 11.8 10.8 32.2
Sanoma Entertainment 6.2 187.6 6.1 6.9 3.8 3.9 20.7
Sanoma Learning & Literature -6.4 25.1 -6.9 25.1 33.1 -12.8 38.5
Sanoma Trade 2.9 3.1 3.8 3.8 9.7 6.7 24.0
Other companies and eliminations -3.7 -4.7 -3.7 -4.3 -4.4 -3.7 -16.2
-----------------------------------------------------------------------
TOTAL 40.4 261.0 20.9 65.1 77.1 32.3 195.4
SEGMENT INFORMATION
The operating segments of the Sanoma Group comprise the Group's five divisions:
Sanoma Magazines, Sanoma News, Sanoma Entertainment, Sanoma Learning &
Literature and Sanoma Trade. The segmentation is based on business model and
product differences. The media business, based on advertising and circulation
sales, is divided into three segments: Sanoma Magazines is responsible for
magazines, Sanoma News for newspapers and Sanoma Entertainment for TV business.
Sanoma Learning & Literature's business is mainly b-2-b business. Sanoma Trade,
on the other hand, operates on a retail business model. In addition to the Group
eliminations column, unallocated/eliminations includes Sanoma Corporation and
real estate companies as well as items not allocated to segments.
Segment assets do not include cash and cash equivalents, interest-bearing
receivables and tax receivables. Transactions between segments are based on
market prices.
Sanoma Divisions 1.1-30.6.2010
Lear- Unallo-
Enter- ning & cated/ Con-
Maga- tain- Lite- elimi- soli-
EUR million zines News ment rature Trade nations dated
----------------------------------------------------------------------
External net sales 539.3 214.4 84.8 158.0 356.8 0.1 1,353.3
Internal net sales 1.2 3.5 1.4 5.7 36.5 -48.4
NET SALES, TOTAL 540.5 217.9 86.2 163.7 393.2 -48.3 1,353.3
OPERATING PROFIT 66.8 24.5 193.8 18.7 6.0 -8.4 301.4
Share of results in
associated companies -1.1 0.1 0.0 0.3 -0.7
Financial income 4.6 4.6
Financial expense 12.3 12.3
RESULT BEFORE TAXES 293.1
SEGMENT ASSETS 1,536.3 330.0 282.3 592.4 452.1 6.0 3,199.0
Sanoma Divisions 1.1-30.6.2009
Lear- Unallo-
Enter- ning & cated/ Con-
Maga- tain- Lite- elimi- soli-
EUR million zines News ment rature Trade nations dated
----------------------------------------------------------------------
External net sales 536.8 210.7 80.3 157.0 348.5 -0.2 1,333.2
Internal net sales 1.2 4.1 0.6 5.8 34.9 -46.6
NET SALES, TOTAL 538.1 214.8 81.0 162.8 383.4 -46.7 1,333.2
OPERATING PROFIT 45.8 9.6 13.0 18.2 7.6 -8.1 86.1
Share of results in
associated companies -0.5 0.0 0.1 0.1 -0.3
Financial income 15.5 15.5
Financial expense 29.3 29.3
RESULT BEFORE TAXES 72.0
SEGMENT ASSETS 1,542.2 349.4 128.9 599.4 433.0 14.0 3,066.9
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 30.6.2010 30.6.2009 31.12.2009
Carrying amount at the beginning of the period 484.2 510.4 510.4
Increases 27.4 26.2 46.0
Acquisition of operations 0.4 0.0 1.0
Decreases -2.5 -1.1 -2.9
Disposal of operations -31.5 0.0
Depreciation for the period -33.3 -34.1 -68.5
Impairment losses for the period 0.0 -0.2 -1.6
Exchange rate differences and other changes -5.3 -0.9 0.0
-----------------------------------------------------------------------------
Carrying amount at the end of the period 439.4 500.4 484.2
The Group had no commitments for acquisition of tangible assets at the end of
the reporting period or in the comparative period.
EFFECT OF ACQUISITIONS ON THE CONSOLIDATED BALANCE SHEET
EUR million 1‑6/ 1‑12/
2010 2009
Acquisition costs 17.3 6.7
Fair value of acquired net assets 10.3 2.8
Recognised in equity -3.9
---------------------------------------------------------------
Goodwill 3.2 3.9
Negative goodwill in income statement -0.9
---------------------------------------------------------------
Change in goodwill 3.2 4.8
CONTINGENT LIABILITIES
EUR million 30.6.2010 30.6.2009 31.12.2009
Contingencies for own commitments
Mortgages 22.7 26.4 22.8
Pledges 6.7 6.0 6.8
Other items 0.0 0.4 0.4
TOTAL 29.4 32.8 30.0
Contingencies incurred on behalf of associated companies
Guarantees 10.5 10.5 10.5
TOTAL 10.5 10.5 10.5
Contingencies incurred on behalf of other companies
Guarantees 0.3 0.1 0.1
TOTAL 0.3 0.1 0.1
Other contingencies
Operating lease liabilities 259.8 256.0 255.4
Royalties 16.4 18.3 18.9
Other items 23.6 35.3 27.7
TOTAL 299.9 309.6 302.0
----------------------------------------------------------------
TOTAL 340.0 353.1 342.5
The Sanoma Group had no derivative contracts during the reporting period or
during the previous year.
KEY EXCHANGE RATES
1‑6/ 1‑6/ 1‑12/
Average rate 2010 2009 2009
EUR/CZK (Czech Koruna) 25.83 27.09 26.52
EUR/HUF (Hungarian Forint) 272.22 288.31 280.30
EUR/PLN (Polish Zloty) 4.02 4.48 4.33
EUR/RUB (Russian Rouble) 40.15 44.11 44.07
EUR/SEK (Swedish Crown) 9.81 10.86 10.61
Closing rate 30.6.2010 30.6.2009 31.12.2009
EUR/CZK (Czech Koruna) 25.69 25.88 26.47
EUR/HUF (Hungarian Forint) 286.00 271.55 270.42
EUR/PLN (Polish Zloty) 4.15 4.45 4.10
EUR/RUB (Russian Rouble) 38.28 43.88 43.15
EUR/SEK (Swedish Crown) 9.53 10.81 10.25
Press Conference and Conference Call
Press and analyst meeting in Finnish will be held by Mr Hannu Syrjänen,
President and CEO of Sanoma at 11 am Finnish time (CET +1) at Sanomatalo,
Töölönlahdenkatu 2, Helsinki.
The conference call in English for analysts and investors will be arranged at 3
pm Finnish time. Mr Hannu Syrjänen will present the result. To join the
conference, please dial +44 (0)20 7806 1968 (Europe) or +1 718 247 0888 (US).
The event can also be listened at Sanoma.com either live or later on as on
demand.
The presentation material of the press and analyst meeting as well as the slides
used in the conference call will be available on Sanoma's website after the
press and analyst meeting has started.
Sanoma's third quarter 2010 results will be published on 3 November 2010 at
approximately 11 am Finnish time.
Sanoma Corporation
Kim Ignatius
Chief Financial Officer
Additional information: Sanoma's Group Communications, tel +358 105 19 5062 or
communications@sanoma.com
Sanoma.com
Sanoma inspires, informs and connects. As a diversified media group, we bring
information, experiences, education and entertainment to millions of people
every day. We make sure that quality content and interesting products and
services are easily available and meet the demands of our readers, viewers and
listeners. We offer a challenging and interesting working environment for
20,000 people in over 20 countries throughout Europe. In 2009, the Group's net
sales totalled EUR 2.8 billion.
[HUG#1436257]
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