2011-05-02 14:00:00 CEST
2011-05-02 14:00:07 CEST
REGULATED INFORMATION
Ilkka-Yhtymä Oyj - Interim report (Q1 and Q3)
Ilkka-Yhtymä Oyj's Interim Report for Q1/2011
Ilkka-Yhtymä Oyj Interim Report 2 May 2011, at 3:00pm
ILKKA-YHTYMÄ OYJ'S INTERIM REPORT FOR Q1/2011
- Net sales: EUR 12.1 million (EUR 11.1 million), up 9.4%
- Operating profit: EUR 4.2 million (EUR 2.5 million), up 65.6%
- Operating profit excluding Alma Media Corporation and the other associated
companies amounted to EUR 2.1 million (EUR 1.3 million), up 69.3%
- Operating profit totalled 34.4% of net sales, or 17.6% excluding Alma Media
and other associated companies (11.4%)
- Pre-tax profits: EUR 4.2 million (EUR 2.6 million), up 62.3%
- Earnings per share: EUR 0.14 (EUR 0.09)
- Increase in financial assets: EUR 17.1 million (EUR 8.6 million)
NET SALES AND PROFIT PERFORMANCE
The Group's consolidated net sales for January-March showed a 9.4% increase.
Net sales came to EUR 12.1 million (EUR 11.1 million in the corresponding
period of the previous year). External net sales from the publishing business
grew by 5.6%. Advertising revenues grew by 6.8% and circulation revenues grew
by 1.6%. External net sales from the printing business grew by 38.9%. The
higher net sales from publishing resulted from a recovery in advertising
volumes, due to, for example, election advertising. The growth in net sales for
the printing business was caused by new customers, recovering volumes and price
increases due to printing materials. Circulation income accounted for 39% of
consolidated net sales, while advertising income and printing income
represented 44% and 15%, respectively. Other operating income in January-March
totalled EUR 0.1 million (EUR 0.1 million).
Operating expenses for January-March amounted to EUR 10.1 million (EUR 10.0
million). Expenses remained at the previous year's level. Expenses arising from
materials and services increased by 11.2%, particularly because of growth in
printing volumes. The full cost impact of the price increases seen for printing
materials and distribution had not yet materialised in the first quarter.
Personnel expenses contracted by 1.2%. Collective agreements for the sector
expired at the end of April 2011, but a final settlement has not yet been
reached in the collective bargaining. Depreciation remained at the previous
year's level.
The share of the associated companies' result was EUR 2.0 million (EUR 1.3
million). Consolidated operating profit amounted to EUR 4.2 million (EUR 2.5
million), up by 65.6 per cent year-on-year. The Group's operating margin was
34.4 per cent (22.7%). Operating profit excluding Alma Media Corporation and
the other associated companies amounted to EUR 2.1 million (EUR 1.3 million),
representing 17.6% (11.4%) of net sales. Operating profit from publishing grew
by EUR 0.3 million, and operating profit from printing grew by EUR 0.5 million.
The considerable rise in operating profit from printing was due to higher
volumes, a modest rise in costs early in the year and the fact that the
reference period last year included costs for ceasing operation of the Vaasa
printing unit.
Net financial income for January-March amounted to EUR 0.1 million (EUR 0.1
million). Net gain/loss on shares held for trading was EUR -0.1 million (EUR
0.1 million). Interest expenses excluding the fair value change in derivatives
hedging them totalled EUR 0.6 million (EUR 0.2 million). In order to hedge
against interest rate risk, on 21 December 2010 the company transformed some of
its floating-rate liabilities into fixed-rate liabilities, by means of interest
rate swaps. Given that the Group does not apply hedge accounting, changes in
the market value of the interest rate swap are recognised through profit or
loss. In January-March, the change in the interest rate swap's market value was
EUR 0.8 million to the positive.
Pre-tax profits totalled EUR 4.2 million (EUR 2.6 million). Direct taxes
amounted to EUR 0.6 million (EUR 0.3 million), and the Group's net profit for
the period totalled EUR 3.7 million (EUR 2.3 million).
BALANCE SHEET AND FINANCING
The consolidated balance sheet total came to EUR 206.7 million (EUR 154.6
million), with EUR 108.6 million (EUR 102.6 million) of equity. On the
reporting date of 31 March 2011, the balance sheet value of the holding in the
associated company Alma Media Corporation was EUR 147.0 million and the market
value of the shares was EUR 183.1 million.
Interest-bearing liabilities totalled EUR 83.0 million (EUR 37.7 million). The
equity ratio was 54.3 per cent (69.3%), and shareholders' equity per share
stood at EUR 4.23 (EUR 4.00). The increase in financial assets for the period
totalled EUR 17.1 million (EUR 8.6 million), with liquid assets at the end of
the period totalling EUR 20.1 million (EUR 15.3 million).
Cash flow from operations for the period came to EUR 20.3 million (EUR 8.9
million). Cash flow from operations includes EUR 15.7 million (EUR 6.1 million)
in dividend income from Alma Media Corporation. Cash flow from investments
totalled EUR -3.2 million (EUR -0.3 million).
SHARE PERFORMANCE
The series-I shares of Ilkka-Yhtymä Oyj were listed on the Helsinki Stock
Exchange in 1981 and have remained listed ever since. The series-II shares have
been listed since their issue in 1988, and on 10 June 2002 they were listed on
the Main List of the Helsinki Stock Exchange. At present, the series-II shares
of Ilkka-Yhtymä Oyj are listed on the NASDAQ OMX Helsinki List, in the Consumer
Discretionary sector, the company's market value being classified as Mid Cap.
The series-I shares are listed on the Pre List.
In January-March, 18,976 series-I shares of Ilkka-Yhtymä Oyj were traded,
accounting for 0.4 per cent of the total number of series-I shares. The total
value of the shares exchanged was EUR 0.2 million. In total, 583,426 series-II
shares were traded, corresponding to 2.7 per cent of the total number of series
II shares. The total value of the shares traded was EUR 5.0 million. The lowest
price at which series-I shares of Ilkka-Yhtymä Oyj were traded during the
period under review was EUR 9.56, and the highest per-share price was EUR
10.80. The lowest price at which series-II shares were traded was EUR 8.15 and
the highest EUR 8.98. The market value of the share capital at the closing rate
for the reporting period was EUR 232.7 million.
RISKS AND RISK MANAGEMENT
It is still difficult to predict how the economic recovery will affect media
advertising and the circulation and printing volumes in 2011. Ilkka-Yhtymä's
most significant short-term risks are related to the development of media
advertising as well as circulation and printing volumes, which affect the
industry in general. Other business risks are discussed in more detail in the
2010 Annual Report.
The Group's major financial risks include credit risk, the risk associated with
the price of shares held for trading, liquidity risk and the risk of changes in
market interest rates applied to the loan portfolio. In order to hedge against
interest rate risk, on 21 December 2010 the company transformed some of its
floating-rate liabilities to a fixed rate, by means of interest rate swaps.
Given that the Group does not apply hedge accounting, changes in the market
value of the interest rate swap are recognised through profit and loss. Other
financial risks are discussed in more detail in the 2010 Annual Report.
EVENTS AFTER THE REPORT PERIOD
ANNUAL GENERAL MEETING DECISIONS
On 14 April 2011, the Annual General Meeting (AGM) of Ilkka-Yhtymä Oyj approved
the financial statements, discharged the members of the Supervisory Board and
the Board of Directors and the Managing Director from liability and decided
that a per-share dividend of EUR 0.50 be paid for the year 2010. The dividend
will be paid on 28 April 2011, and the record date of dividend payment is 19
April 2011.
The number of members on the Supervisory Board for 2011 was confirmed to be 25.
Of the Supervisory Board members whose term had come to an end, the following
were re-elected for the term ending in 2015: Lasse Hautala (Kauhajoki), Perttu
Rinta (Mikkeli), Satu Heikkilä (Helsinki), Ari Rinta-Jouppi (Vähäkyrö) and
Raija Tikkala (Jurva). Minna Sillanpää of Seinäjoki and Jorma Vierula of
Seinäjoki were elected as new members of the Supervisory Board for the term
ending in 2015.
The AGM decided to raise the remuneration of the Chairman and members of the
Supervisory Board. The Chairman of the Supervisory Board will be paid a monthly
fee of EUR 1,500 and meeting fee of EUR 400, while other members will be paid
EUR 400 per meeting. The board members' travel expenses are reimbursed in
accordance with the current maximum level specified by the tax authorities.
Ernst & Young Oy, Authorised Public Accountants, was elected as the auditor,
with Authorised Public Accountant Tomi Englund as the principal auditor. It was
decided that the auditors would be reimbursed per the invoice.
The AGM approved the Board of Directors proposal on amending the Articles of
Association. The amendments include the following:
(i) that Section 5(2), concerning the retirement age of a Supervisory Board
member, be removed;
(ii) that Section 8(1) be amended by removing the regulations concerning the
retirement age of a member of the Board of Directors and by increasing the
maximum number of Board members to six (6), and Section 8(3), concerning the
quorum for the Board of Directors, be removed and
(iii) that Section 11(2), concerning shareholders' initiatives to the General
Meeting, be removed.
The AGM authorised the Board of Directors to decide upon a donation to be put
toward charitable causes or similar, totalling, at maximum, EUR 50,000, as well
as to decide upon the recipients, purposes of use, schedules and other terms of
these donations.
The proposal by Osakesäästäjien Keskusliitto ry (Shareholders Association) and
Kari Karpoff to eliminate the Supervisory Board was not approved.
OUTLOOK FOR 2011
It is difficult to predict how the slow recovery of the global economy will
affect media advertising, as well as circulation and printing volumes, in 2011.
Media advertising is forecast to grow in Finland. Due to consumer caution and
media competition, newspapers' circulation income is predicted to remain at the
previous year's level. Printing business volumes have decreased permanently in
Finland, but there are tentative signs of growth in the sector.
Some growth is forecast for the net sales of Ilkka-Yhtymä's printing and
publishing business.
Group operating profit from Ilkka-Yhtymä's operations, and operating profit as
a percentage of net sales, excluding the share of Alma Media's and other
associated companies' results, are expected to increase from the 2010 level. In
addition, the year's results will be influenced by upward trends in interest
rates, changes in the market value of interest rate swaps, any trading in
securities and the price performance of securities investments.
The associated company Alma Media Corporation (29.93%) will have a significant
impact on Group operating profit and profit.
In the current economic climate, several uncertainty factors remain, related to
the predictability of both net sales and operating profit.
SUMMARY OF FINANCIAL STATEMENTS AND NOTES
DRAFTING PRINCIPLES
Ilkka-Yhtymä Group's interim report has been prepared in compliance with the
recognition and measurement principles of IFRS, but not in compliance with all
IAS 34 requirements.
Since 1 January 2011, the Group has complied with the following new or updated
standards and interpretations:
- IAS 24 Related Party Disclosures - the revised standard. This revision
clarifies and simplifies the definition of a related party, in particular with
regard to the parties' significant influence and joint control. The revision
has no impact on the interim report.
- IFRS 32 Financial instruments: Presentation - Classification of Rights
Issues. The amendment concerns the classification of share issues, options and
subscription rights denominated in foreign currencies. In the future, share
issues, options and subscription rights may, under certain conditions, be
classified as equity rather than derivative instruments, as previously. This
amendment has no impact on the interim report.
- IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments. The
interpretation addresses certain situations (sometimes referred to as ‘debt for
equity swaps') where an entity renegotiates the terms of a financial liability
and issues an equity instrument to a creditor of the entity to extinguish all
or part of the financial liability. Such swaps are primarily considered as
repayment of debt. The fair value of the financial liability's carrying amount
and of the equity instrument is recognised in profit or loss. This
interpretation has no impact on the interim report.
- Annual improvements to IFRS and IFRIC (5/2010). These improvements will
chiefly enter into force in 2011. Several minor changes made have no bearing on
the interim report.
In other respects, the interim report was compiled in compliance with the same
accounting principles as the previous financial reports. The principles and
formulae for the calculation of the indicators, presented on page 53 of the
2010 annual report, remain unchanged.
The figures in the interim report have been presented unaudited.
CONSOLIDATED INCOME STATEMENT
(EUR 1,000) 1-3/ 1-3/ Change 1-12/
2011 2010 2010
NET SALES 12 143 11 100 9 % 46 530
Change in inventories of finished and 7 -1 698 % -5
unfinished products
Other operating income 113 123 -8 % 429
Materials and services -3 676 -3 307 11 % -13 108
Employee benefits -4 322 -4 376 -1 % -17 183
Depreciation -772 -777 -1 % -3 182
Other operating costs -1 353 -1 498 -10 % -6 341
Share of associated companies' profit 2 035 1 258 62 % 7 337
OPERATING PROFIT 4 174 2 521 66 % 14 479
Financial income and expenses 66 91 -28 % 192
PROFIT BEFORE TAXES 4 240 2 613 62 % 14 670
Income tax -567 -316 79 % -1 779
PROFIT FOR THE PERIOD UNDER REVIEW 3 673 2 297 60 % 12 892
Earnings per share, undiluted (EUR)*) 0.14 0.09 60 % 0.50
The undiluted share average, adjusted for the 25 665 25 665 25 665
share issue (to the nearest thousand)*)
*) There are no factor diluting the figure.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(EUR 1,000) 1-3/ 1-3/ Change 1-12/
2011 2010 2010
PROFIT FOR THE PERIOD UNDER REVIEW 3 673 2 297 60 % 12 892
OTHER COMPREHENSIVE INCOME:
Available-for-sale assets -47 682
Share of associated companies' other comprehensive -22 48 -146 % 344
income
Income tax related to components of other 12 -203
comprehensive income
Other comprehensive income, net of tax -57 48 -219 % 824
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 3 617 2 344 54 % 13 715
SEGMENT INFORMATION
Group net sales (EUR 1,000) 1-3/2011 1-3/2010 Change 1-12/2010
Publishing 10 396 9 873 5 % 41 386
Printing 3 852 3 162 22 % 13 052
Non-allocated 502 487 3 % 1 942
Net sales between segments -2 608 -2 423 8 % -9 850
Group net sales total 12 143 11 100 9 % 46 530
Group operating profit (EUR 1,000) 1-3/2011 1-3/2010 Change 1-12/2010
Publishing 1 708 1 369 25 % 6 786
Printing 550 44 1163 % 1 177
Associated companies 2 035 1 258 62 % 7 337
Non-allocated -119 -149 21 % -821
Group operating profit total 4 174 2 521 66 % 14 479
CONSOLIDATED BALANCE SHEET
(1000 eur) 3/2011 3/2010 Change 12/2010
ASSETS
NON-CURRENT ASSETS
Intangible rights 1 292 1 154 12 % 1 284
Goodwill 314 314 314
Investment property 366 470 -22 % 390
Property, plant and equipment 14 734 16 687 -12 % 15 150
Shares in associated companies 147 519 104 385 41 % 161 248
Available-for-sale assets 10 502 5 732 83 % 7 754
Non-current trade and other receivables 30 -100 %
Other tangible assets 214 214 214
TOTAL NON-CURRENT ASSETS 174 940 128 986 36 % 186 354
Current assets
Inventories 565 554 2 % 757
Trade and other receivables 7 337 6 196 18 % 3 322
Income tax assets 625 689 -9 % 144
Financial assets at fair value 3 097 2 856 8 % 3 412
through profit or loss
Cash and cash equivalents 20 111 15 296 31 % 3 047
TOTAL Current assets 31 734 25 590 24 % 10 681
Total assets 206 674 154 576 34 % 197 035
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDER'S EQUITY
Share capital 6 416 6 416 6 416
Fair value reserve and other reserves 48 967 48 522 1 % 49 002
Retained earnings 53 264 47 704 12 % 49 612
SHAREHOLDER'S EQUITY 108 647 102 642 6 % 105 030
NON-CURRENT LIABILITIES
Deferred tax liability 1 560 1 437 9 % 1 443
Non-current interest-bearing liabilities 78 475 33 204 136 % 78 465
NON-CURRENT LIABILITIES 80 035 34 641 131 % 79 909
CURRENT LIABILITIES
Current interest-bearing liabilities 4 545 4 545 4 545
Accounts payable and other payables 12 714 12 049 6 % 7 368
Income tax liability 733 698 5 % 183
CURRENT LIABILITIES 17 992 17 292 4 % 12 096
SHAREHOLDERS' EQUITY AND LIABILITIES TOTAL 206 674 154 576 34 % 197 035
CONSOLIDATED CASH FLOW STATEMENT
(EUR 1,000) 1-3/ 1-3/ 1-12/
2011 2010 2010
CASH FLOW FROM OPERATIONS
Profit for the period under review 3 673 2 297 12 892
Adjustments -797 -261 -2 586
Change in working capital 1 947 1 650 -364
CASH FLOW FROM OPERATIONS 4 824 3 686 9 942
BEFORE FINANCE AND TAXES
Interest paid -209 -844
Interest received 13 12 63
Dividends received 15 772 6 197 6 368
Other financial items 283 -473 -750
Direct taxes paid -369 -498 -2 128
CASH FLOW FROM OPERATIONS 20 314 8 924 12 652
CASH FLOW FROM INVESTMENTS
Investments in tangible and -484 -170 -916
intangible assets, net
Acquisition of shares in associated companies -30 487
Other investments, net -2 795 -166 -1 509
Repayments of loan receivables 28 58
Dividends received from investments 30 32 247
CASH FLOW FROM INVESTMENTS -3 249 -277 -32 607
CASH FLOW BEFORE FINANCING ITEMS 17 065 8 648 -19 955
CASH FLOW FROM FINANCING
Change in non-current loans 25 261
Dividends paid and other profit distribution -1 -8 908
CASH FLOW FROM FINANCING -1 16 353
INCREASE (+) OR DECREASE (-)IN FINANCIAL ASSETS 17 064 8 647 -3 602
Liquid assets at the beginning of the financial period 3 047 6 648 6 648
Liquid assets at the end of the financial period 20 111 15 296 3 047
GROUP KEY FIGURES
3/2011 3/2010 12/2010
Earnings/share (EUR) 0.14 0.09 0.50
Shareholders' equity/share (EUR) 4.23 4.00 4.09
Average number of personnel 326 338 343
Investments (EUR 1,000) *) 3 135 745 53 522
Interest-bearing debt (EUR 1,000) 83 021 37 749 83 011
Equity ratio, % 54.3 69.3 53.8
Adjusted average number of shares during the 25 665 208 25 665 208 25 665 208
period
Adjusted number of shares on the balance 25 665 208 25 665 208 25 665 208
sheet date
*) Includes investments in tangible and intangible assets and shares in
associated companies and in available-for-sale financial assets.
Taxes included in the income statement are taxes corresponding to the profit
for the period under review.
STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY (EUR 1,000)
Change in Share Fair Invested Other Retain Total
shareholders' capita value unrestricted reserv ed
equity 1-3/2010 l reserv equity fund es earnin
e gs
SHAREHOLDERS' EQUITY 6 416 48 498 24 45 359 100 298
1.1.
Comprehensive income 2 344 2 344
for the period
TOTAL SHAREHOLDERS' 6 416 48 498 24 47 704 102 642
EQUITY 3/2010
Change in Share Fair Invested Other Retain Total
shareholders' capita value unrestricted reserv ed
equity 1-3/2011 l reserv equity fund es earnin
e gs
SHAREHOLDERS' EQUITY 6 416 480 48 498 24 49 612 105 030
1.1.
Comprehensive income -35 3 652 3 617
for the period
TOTAL SHAREHOLDERS' 6 416 445 48 498 24 53 264 108 647
EQUITY 3/2011
GROUP CONTINGENT LIABILITIES
(EUR 1,000) 3/2011 3/2010 12/2010
Collateral pledged for own commitments
Mortgages on company assets 1 245 1 245 1 245
Mortgages on real estate 8 801 8 801 8 801
Pledged shares 107 824 38 258 109 679
Contingent liabilities on behalf of associated company
Guarantees 2 458 2 458
General statement
This report contains certain statements that are estimates based on the
management's best knowledge at the time they were made. For this reason, they
involve a certain amount of inherent risk and uncertainty. The estimates may
change in the event of significant changes in general economic and business
conditions.
Seinäjoki, 2 May 2011
ILKKA-YHTYMÄ OYJ
Board of Directors
Matti Korkiatupa
Managing Director
For more information:
Matti Korkiatupa, Managing Director, Ilkka-Yhtymä Oyj
Tel. +358 (0)500 162 015
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