2012-05-03 10:00:00 CEST
2012-05-03 10:00:40 CEST
REGULATED INFORMATION
Sanoma Oyj - Interim report (Q1 and Q3)
Sanoma's Interim Report 1 January - 31 March 2012: Portfolio change well executed including strengthening balance sheet - outlook unchanged
- Net sales in the first quarter amounted to EUR 543.6 million (2011: EUR 530.2
million). Adjusted for changes in the Group structure, Sanoma's net sales
decreased by 0.4%.
- Operating profit excluding non-recurring items was EUR 15.9 million (2011: EUR
26.3 million).
- The operating profit did not include any non-recurring items (2011: EUR 0.9
million).
- The result for the period included a EUR 17.3 million non-tax-deductible non-
recurring capital loss on sale of Sanoma's stake in a Finnish telecommunications
operator (2011: EUR 0.0 million).
- Earnings per share were EUR -0.11 (2011: EUR 0.11). Earnings per share
excluding non-recurring items were EUR 0.00 (2011: EUR 0.11).
- Cash flow from operations was EUR -21.9 million (2011: EUR 18.7 million).
KEY INDICATORS * 1-3/ 1-3/ Change 1-12/
EUR million 2012 2011 % 2011
Net sales 543.6 530.2 2.5 2,378.1
Operating profit excluding non-recurring items 15.9 26.3 -39.4 224.1
% of net sales 2.9 5.0 9.4
Operating profit 15.9 27.2 -41.4 172.6
Result for the period from continuing operations -17.8 18.4 78.6
Result for the period *** -16.6 18.5 86.0
Capital expenditure ** 12.4 30.6 -59.6 76.2
% of net sales 2.3 5.8 3.2
Equity ratio, % *** 38.8 46.5 37.0
Net gearing, % *** 96.2 63.0 105.7
Number of employees at the end of the period 11,114 12,317 -9.8 10,960
(FTE)
Average number of employees (FTE) 11,090 12,223 -9.3 11,607
Earnings per share, EUR, continuing operations -0.12 0.11 0.47
Earnings per share, EUR *** -0.11 0.11 0.52
Cash flow from operations per share, EUR *** -0.13 0.12 1.68
* Key indicators contain only continuing operations. On 5 March 2012 Sanoma
announced that it had signed an agreement to sell its kiosk operations in
Finland, Lithuania and Estonia as well as its press distribution operations in
Estonia and Lithuania. According to International Financial Reporting Standards
(IFRS), any material divestment that represents a separate major line of
business shall be classified as a discontinued operation. Hence, Sanoma
classified these operations to be divested as discontinued operations for the
2012 reporting. The discontinued operations are eliminated from the Consolidated
Income Statement and only the result for the period of these discontinued
operations is presented as a separate item after the result for the continuing
operations. Accordingly, the Consolidated Income Statement for 2011 has been
restated. The restated 2011 figures are unaudited. In addition, assets and
liabilities related to discontinued operations have been presented in the
Consolidated Balance Sheet as separate line items as of 31 March 2012.
** Including finance leases.
*** Includes continuing and discontinued operations.
Harri-Pekka Kaukonen, President and CEO"We are very satisfied that we have strengthened our balance sheet. During the
quarter we divested our stake in the Finnish telecommunications operator and
announced the sale of our kiosks operations in Finland as well as kiosks and
press distribution operations in the remaining Baltic countries. Moreover, we
successfully issued our inaugural corporate bond, a EUR 400 million 5-year
Eurobond.
Our operating performance reflects changes, and additional investments, in our
businesses in a difficult economic environment.
Advertising sales grew significantly compared to the comparable period. The
decline in print advertising was offset by growth in TV and online. Our TV
operations in Finland and Belgium had a solid quarter and we strengthened our
market positions. The underlying operational trends in our Dutch TV continued
and our share of viewing has stabilised to just above 20%. The improvement of
our Dutch TV operations is proceeding according to plan with the new management
now in place. We believe that the evidence of the measures taken, and to be
taken, will materialise during the next 12 months.
In print, the circulation sales grew slightly due to acquired operations.
Underlying subscription sales were stable, as price increases were able to
offset for the decline in subscription volumes, with the exception of Russia and
CEE, and Finland, where the impact of the VAT introduction was evident. Single
copy sales declined in all markets, except Finland, where in particular the
tabloid Ilta-Sanomat had a strong quarter.
The operating profit in the first quarter was weaker than in the previous year,
driven by the pressure on print sales, increased marketing activities and
investments in digital operations. In addition, the timing differences between
quarters in Learning lowered our reported earnings.
Sanoma is transforming in accordance with our set priorities. During the quarter
we continued to invest into new innovations and transforming our classical
business into digital, building on our strong multiplatform presence.
We continue to improve the efficiency of our operations. Measures have been
taken in all markets to enhance sales of our key titles and adjust cost
structures in print.
We strongly believe that our continued focus on consumer media and learning as
well as the strict cost control throughout our operations will improve the
Group's EBIT margin excluding non-recurring items. Hence, we reiterate the
outlook for 2012."
Outlook for 2012 (unchanged)
In 2012, Sanoma expects its net sales to grow slightly, mostly due to the
acquired SBS operations in the Netherlands and Belgium. Operating profit margin,
excluding non-recurring items, is estimated to be around 10% of net sales.
Earnings per share excluding non-recurring items are estimated to grow.
Sanoma's net sales and result are affected by the underlying environment,
particularly by the development of advertising markets in the Group's countries
of operation. The 2012 outlook is based on the assumption that the advertising
markets in the Group's main operating countries will vary from stable to
slightly decreasing, as the economic uncertainty continues.
Net sales
First quarter
In the first quarter of 2012, Sanoma's net sales increased by 2.5% and amounted
to EUR 543.6 million (2011: EUR 530.2 million). The growth came mainly from the
acquired TV and print operations in the Netherlands and Belgium. In addition,
Nelonen Media broadcasting operations in Finland, the News segment and the other
Dutch Media operations contributed positively. Currency translations did not
have a material effect on the first quarter sales. When adjusted for changes in
the Group structure, net sales decreased by 0.4%.
Print circulation sales grew by 2.2%. Subscription sales increased by 7.5%,
mainly as a result of the consolidation of Dutch print operations, while single
copy sales decreased by 4.9%.
Advertising sales increased by 36.1%, mostly due to acquired TV operations in
the Netherlands and Belgium as well as the good performance of Nelonen Media
broadcasting operations in Finland and the Group's online operations. Online
advertising sales increased by 8.7%.
The TV acquisitions also impacted Sanoma's digital sales, which grew by 93.2% to
EUR 132.8 million (2011: EUR 68.8 million) in the first quarter and accounted
for 24.4% (2011: 13.0%) of the Group's net sales. Sanoma's online sales,
excluding linear TV and radio, grew by 24.3% to EUR 56.2 million (2011: EUR
45.2 million) and accounted for 10.3% (2011: 8.5%) of the Group's net sales.
By country, the Netherlands accounted for 35.9% (2011: 25.8%), Finland for
39.7% (2011: 48.0%) and Belgium for 10.8% (2011: 9.8%) of the cumulative Group's
net sales. Net sales from other EU countries totalled 9.3% (2011: 12.1%) and
non-EU countries accounted for 4.3% (2011: 4.3%).
By type of sales, advertising sales accounted for 38.6% (2011: 29.0%),
subscription sales for 22.8% (2011: 21.7%), single copy sales for 15.0% (2011:
16.2%), learning for 6.3% (2011: 6.5%) and other sales for 17.4% (2011: 26.6%)
of the cumulative Group's net sales. Other sales include mainly Finnish press
distribution and marketing services, language and translation services, customer
publishing, event marketing, and other literature and print sales.
Result
First quarter
Sanoma's operating profit excluding non-recurring items in January-March
decreased by 39.4% and totalled EUR 15.9 million (2011: EUR 26.3 million). The
decrease is due to increased investments in marketing and digital operations,
timing differences between quarters in Learning and to overall weaker
performance of our main print operations during the first quarter. The net
effect from structural changes is about EUR 6.0 million. Operating profit
excluding non-recurring items amounted to 2.9% (2011: 5.0%) of net sales.
Currency translations did not have a material effect on the first quarter
result.
In the first quarter, the Group's total operating expenses, excluding non-
recurring items and investments in TV programming and prepublication rights,
decreased by 0.8% mainly as the somewhat declined cost of sales offset the
slightly increased fixed expenses. Paper costs decreased by 0.5%, whereas
employee benefit expenses as well as advertising and marketing increased by
5.5% and 9.3%, respectively. The Group had 154 more employees than at the end of
2011, corresponding to an increase of 1.4%. The increase in the number of
personnel is mostly attributable to the Dutch operations.
In January-March, the operating profit did not include any (2011: EUR 0.9
million) non-recurring items. In the comparable period, non-recurring items
related to divestment of non-core operations in Learning.
As a part of streamlining operations and ensuring competitive cost levels,
pension and severance packages were offered to employees during the second half
of 2011. As a result of these measures 225 employees will leave the company
during 2012 in addition to the 33 employees that already left the company in
2011. Related to this, EUR 21.4 million of non-recurring restructuring expenses
were recorded in 2011.
NON-RECURRING ITEMS 1-3/ 1-3/ 1-12/
EUR million 2012 2011 2011
Media
Gain on sale (Humo and Desert Fishes) 9.1
Impairment of goodwill and intangible assets (Russia & CEE) -53.4
Write down of Jok Foe Group (Belgium) -1.6
Restructuring expenses -9.8
Impairment of intangible assets (The Netherlands) -3.4
News
Restructuring expenses -9.2
Learning
Impairment of goodwill (Language services) -24.1
Sale of LDC 0.9 0.9
Impairment of intangible assets -2.9
Restructuring expenses -2.8
Trade
Loss on sale (Suomalainen Kirjakauppa) -10.8
Write-down of real estates -1.2
Impairment (Bookstores) -0.8
Gain on sale (movie operations) 51.4
Loss on sale (Romanian operations) -8.0
Loss on sale (Russian operations) -0.8
Gain on sale (Narvesen) 5.3
Other companies
Gains on sales (real estates) 12.1
Restructuring expenses -1.5
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NON-RECURRING ITEMS IN OPERATING PROFIT 0.9 -51.5
Loss on sales (DNA) -17.3
Impairment of share in associated company Hansaprint -4.0
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NON-RECURRING ITEMS IN RESULTS -17.3 -4.0
IN ASSOCIATED COMPANIES
Sanoma's first quarter result included EUR -16.4 million (2011: EUR 1.9 million
of profit) of loss from associated companies, of which EUR -17.3 million relates
to a non-recurring capital loss from the sale of DNA in March. The most
important associated companies included in this line are Hansaprint, Stratosfèra
and Helsinki Halli (former Jokerit HC).
Sanoma's net financial items totalled EUR -13.7 million (2011: EUR -2.4
million). Financial income amounted to EUR 7.0 million (2011: EUR 2.3 million),
of which EUR 5.7 million were exchange rate gains (2011: EUR 0.9 million).
Financial expenses amounted to EUR -20.7 million (2011: EUR -4.7 million), of
which EUR -5.5 million were exchange rate losses (2011: EUR -0.9 million).
Following the increased leverage, interest expenses amounted to EUR -11.8
million (2011: EUR -3.3 million).
On 13 March, 2012, Sanoma Corporation issued its first ever corporate bond, a
EUR 400 million five-year Senior Unsecured Eurobond, under investment grade
documentation without any financial covenants. The bond pays a fixed coupon of
5.000% and had an issue price of 99.413, equivalent to a yield of 5.136%.
Profit before taxes amounted to EUR -14.1 million (2011: EUR 26.7 million) in
the first quarter, of which EUR -17.3 million relates to a non-tax-deductible
non-recurring capital loss on sale of DNA in March. Earnings per share were EUR
-0.11 (2011: EUR 0.11), of which EUR -0.12 (2011: EUR 0.11) relates to
continuing operations and EUR 0.01 (2011: EUR 0.00) to discontinued operations.
Earnings per share excluding non-recurring items were EUR 0.00 (2011: EUR 0.11).
Balance sheet and financial position
At the end of March 2012, Sanoma's consolidated balance sheet totalled EUR
4,152.8 million (2011: EUR 3,220.2 million). In the first quarter 2012, the
Group's cash flow from operations was EUR -21.9 million (2011: EUR 18.7
million). Cash flow from operations per share was EUR -0.13 (2011: EUR 0.12). In
addition to significantly lower result for the period, cash flow was weakened by
timing of tax payments, higher paid interest and volatility of net working
capital between quarters.
Sanoma's equity ratio was 38.8% (2011: 46.5%) at the end of March 2012. Equity
totalled EUR 1,528.9 million (2011: EUR 1,402.9 million). Following the
acquisition of SBS operations in the Netherlands and Belgium, interest-bearing
liabilities increased and totalled at the end of the first quarter 2012 EUR
1,586.1 million (2011: EUR 949.4 million). Interest-bearing net debt was EUR
1,471.4 million (2011: EUR 884.4 million).
Investments, acquisitions and divestments in 2012
In January-March, investments in tangible and intangible assets, including
finance leases, amounted to EUR 12.4 million (2011: EUR 30.6 million).
Investments were mainly related to ICT, systems as well as replacements and
renovation. In the comparable quarter, the renewal of the long-term rental
agreements of the divested movie operations accounted for more than half of the
total investments. Sanoma's business acquisitions totalled EUR 3.0 million
(2011: EUR 0.5 million).
On 16 March, Sanoma sold its entire 21.11% shareholding in Finnish
telecommunications group DNA Ltd and received a EUR 181.5 million cash
consideration for the shareholding. As a result of the transaction, Sanoma
recognised a non-tax-deductible non-recurring capital loss of EUR -17.3 million
in the first quarter of 2012.
On 5 March, Sanoma announced that it had signed an agreement to sell its kiosk
operations in Finland, Lithuania and Estonia as well as its press distribution
operations in Estonia and Lithuania to the Norwegian Reitan Servicehandel AS for
an enterprise value of EUR 130.7 million, including the Rautakirja trade mark.
The transaction is subject to EU merger control filing and the approval is
expected to be received during the second quarter of 2012. Sanoma expects to
recognise a non-taxable non-recurring capital gain of some EUR 80 million at the
closing of this transaction. According to International Financial Reporting
Standards (IFRS), any material divestment that represents a separate major line
of business shall be classified as a discontinued operation. Hence, Sanoma
classified these operations to be divested as discontinued operations for the
2012 reporting. The discontinued operations are eliminated from the Consolidated
Income Statement and only the result for the period of these discontinued
operations is presented as a separate item after the result for the continuing
operations. Accordingly, the Consolidated Income Statement for 2011 has been
restated. The restated 2011 figures are unaudited. In addition, assets and
liabilities related to discontinued operations have been presented in the
Consolidated Balance Sheet as separate line items as of 31 March 2012.
MEDIA
The Media segment includes magazine, TV, radio and online businesses in 12
European countries and comprises four strategic business units: Sanoma Media
Netherlands, Sanoma Media Finland, Sanoma Media Belgium and Sanoma Media Russia& CEE.
- Nelonen Media broadcasting and Belgium TV operations had good performance and
strengthened their market positions in the first quarter.
- Extra effort to restore viewing and advertising shares in the Dutch TV market.
Key indicators 1-3/ 1-3/ Change 1-12/
EUR million 2012 2011 % 2011
Net sales 365.8 291.1 25.6 1,415.8
The Netherlands 171.6 105.3 63.0 642.0
Finland 77.4 74.2 4.3 309.7
Russia & CEE 49.0 51.4 -4.6 213.1
Belgium 56.8 50.1 13.4 209.1
Other businesses and eliminations 11.0 10.2 7.7 41.8
Operating profit excluding non-recurring items * 26.8 22.7 17.8 151.1
% of net sales 7.3 7.8 10.7
Operating profit 26.8 22.7 17.8 92.0
Capital expenditure 5.8 6.3 -7.3 22.7
Number of employees at the end of the period (FTE) 5,993 5,384 11.3 5,844
Average number of employees (FTE) 5,978 5,353 11.7 5,624
* In 2012, the operating profit did not include any non-recurring items. In
2011, the non-recurring items included in the second quarter a EUR 9.1 million
gain on sale of Humo and Desert Fishes, in the third quarter a EUR -3.4 million
impairment of intangible assets in the Netherlands and a EUR -53.4 million
impairment of goodwill and intangible assets in Russia & CEE, and in the fourth
quarter EUR -9.8 million restructuring expenses and a EUR -1.6 million write-
down of Jok Foe Group.
Operational indicators * 1-3/ 1-3/
Magazines 2012 2011
Number of magazines published 275 273
Magazine copies sold, thousands 97,821 81,623
Advertising pages sold 11,167 10,221
Finnish TV operations
TV channels' share of TV advertising 34.2% 32.2%
TV channels' national commercial viewing share (10-44 years) 34.8% 35.3%
TV channels' national viewing share (10+ years) 15.3% 14.7%
Dutch TV operations
TV channels' share of TV advertising 27.7% 28.0%
TV channels' national viewing share (20-49 years) 20.2% 22.5%
* Including joint ventures
First quarter
Net sales in Media grew by 25.6% in January-March following the consolidation of
acquired SBS TV and print operations. Adjusted for structural changes, net sales
declined by 0.1%.
The segment's advertising sales grew by 55.8% and represented 42.5% (2011:
34.3%) of the first quarter net sales. Online advertising sales increased by
6.4%.
The segment's print circulation sales increased by 2.7% and represented 43.6%
(2011: 53.3%) of the first quarter net sales. The increase in subscription
sales, mainly as a result of the consolidated Dutch print operations, more than
offset the decrease in single copy sales.
The consolidation of TV operations and growing online advertising sales
increased the segment's digital sales. In total, digital sales grew by 114.9%
compared to the comparable quarter and represented 28.6% (2011: 16.7%) of the
segment's total net sales.
In Media Netherlands, net sales grew by 63.0%. Most of this growth came from the
new TV and print operations, part of Sanoma Media Netherlands since 1 August
2011. Magazine operations' sales, including the acquired operation, increased
significantly driven by subscription and advertising sales. Single copy sales
were at the comparable period's level. Circulation sales represented 46.7%
(2011: 65.7%) of the Dutch net sales. The declining trends in the readers market
continued and Sanoma Media Netherlands' market share declined slightly. The
Dutch market for consumer magazine gross advertising, excluding TV guides, was
at the comparable period's level in January-February, while Sanoma Media
Netherlands' print advertising net sales declined slightly in the first quarter.
Online advertising sales, excluding acquired operations, continued to grow
slightly. In total, advertising sales grew significantly following the
consolidation of the TV operations, and represented 44.5% (2011: 28.2%) of the
Dutch net sales. The TV advertising market in the Netherlands was at comparable
quarter's level in January-March. Sanoma's TV advertising market share declined
slightly following lower viewing shares.
In Media Finland, net sales increased by 4.3%, driven by a clear increase from
Nelonen Media, which includes free-to-air TV, pay TV, radio and online. The net
sales in magazine publishing were at the comparable quarter's level. According
to TNS Gallup Adex, the TV advertising market in Finland increased by 4.5% in
the first quarter. Nelonen Media advertising sales outperformed the market. The
magazine advertising market decreased by 1.7% in the first quarter. Sanoma Media
Finland's advertising sales grew somewhat, driven mainly by increased sales in
Nelonen Media. In total, advertising sales of the Finnish operations represented
44.2% (2011: 42.3%) of net sales. Circulation sales were slightly below the
comparable quarter's level, as subscription sales decreased somewhat and single
copy sales increased slightly, and represented 43.0% (2011: 47.1%) of the
Finnish net sales.
Net sales in Media Belgium increased by 13.4% due to acquired operations.
Magazine operations' sales decreased clearly, as both advertising and
circulation sales declined, partly due to structural changes but also related to
negative consumer confidence and advertising spending. Sanoma Media Belgium
retained its market position in a decreasing readers market. In the first
quarter, the TV advertising market in Belgium declined by 4.3%. Sanoma's TV
operations in Belgium continued to grow and its advertising market share
improved to 30.7% (2011: 27.2%). In total, advertising sales represented 33.7%
(2011: 26.4%) and circulation sales 50.1% (2011: 61.2%) of the net sales in
Belgium, respectively.
There have been a number of structural changes in Sanoma Media Belgium. The
reported figures include 51% of the weekly magazine Humo until May 2011. In
connection with the SBS acquisition, the remaining holding in Humo was
transferred to De Vijver.
Since the Belgian competition authorities approved a joint control structure of
De Vijver on 1 September 2011, Sanoma's 33% share in De Vijver Media (which
includes 100% of Humo, the acquired TV operations as well as the TV productions
operations of Woestijnvis) is proportionally consolidated line-by-line as of
this approval.
In Media Russia and the CEE countries, net sales decreased by 4.6%, of which
more than half is explained by negative currency translation effects. The
advertising markets continue to be adversely affected by the Euro area economic
uncertainty in all markets, especially in Hungary and Czech Republic. However,
advertising markets in Russia and the Ukraine showed favourable developments.
Advertising sales in the Russia and CEE business unit were slightly better than
the comparable quarter's level. In total, advertising sales represented 52.6%
(2011: 49.5%) of net sales in the Russia and CEE strategic business unit.
Following the declining market trends and the regional pressure on consumer
purchasing power, single copy and subscription sales came down in most
countries. Circulation sales decreased therefore clearly, and represented 36.0%
(2011: 39.8%) of the strategic business unit's net sales. The magazine
portfolio, internet services and local organisations are continuously optimised
according to the market situation.
Operating profit excluding non-recurring items in the Media segment in January-
March increased by 17.8%, mainly due to acquired operations. In the Netherlands,
the consolidation of the new operations offset the weakened underlying print
results in the first quarter. In Finland, the result was at the comparable
quarter's level, as the good performance of Nelonen Media more than offset the
decrease in the result of magazine operations. In Belgium, the result improved
clearly, mainly due to timing differences in marketing expenditure between
quarters. In Russia and CEE countries, the operational result improved
significantly, as a result of continued strict cost control and portfolio
optimisation. The operating profit did not include any (2011: EUR 0.0 million)
non-recurring items.
Media's investments in tangible and intangible assets totalled EUR 5.8 million
(2011: EUR 6.3 million) and consisted mainly of ICT investments.
NEWS
The News segment includes the Sanoma News strategic business unit, Finland's
leading player in newspaper publishing and online media.
- The tabloid Ilta-Sanomat had a good first quarter and increased its market
share.
- All main brands now have online and mobile applications and the use of the
products in tablet and smart phone devices shows significant growth.
Key indicators 1-3/ 1-3/ Change 1-12/
EUR million 2012 2011 % 2011
Net sales 110.0 108.4 1.5 435.8
Helsingin Sanomat 59.3 61.2 -3.0 238.5
Ilta-Sanomat 21.2 19.1 11.3 84.4
Other publishing 25.2 23.7 6.2 97.0
Other businesses and eliminations 4.3 4.4 -2.1 15.9
Operating profit excluding non-recurring items * 8.9 12.9 -31.0 49.4
% of net sales 8.1 11.9 11.3
Operating profit 8.9 12.9 -31.0 40.2
Capital expenditure 2.5 3.5 -27.6 16.9
Number of employees at the end of the period (FTE) 2,033 2,003 1.5 2,025
Average number of employees (FTE) 2,027 1,993 1.7 2,061
* In 2012, the operating profit did not include any non-recurring items. In
2011, the non-recurring items included in the fourth quarter EUR -9.2 million
restructuring expenses.
Operational indicators 1-3/ 1-3/
Online services, unique visitors, weekly 2012 2011
Iltasanomat.fi 2,384,026 1,957,740
HS.fi 1,523,565 1,360,404
Huuto.net 504,776 518,631
Oikotie.fi 557,388 437,796
Taloussanomat.fi 683,887 595,955
1-12/ 1-12/
Circulation 2011 2010
Helsingin Sanomat 365,994 383,361
Ilta-Sanomat 143,321 150,351
First quarter
In January-March, net sales in News increased by 1.5%. Adjusted for structural
changes, sales increased by 0.9%.
Print circulation sales were at the comparable quarter's level, as slightly
increased single copy sales offset the slightly declined subscription sales.
Circulation sales accounted for 41.7% (2011: 42.3%) of the segment's net sales.
Advertising sales were at the comparable quarter's level. The 14.4% growth in
online advertising sales offset slightly decreasing sales of print advertising.
This was broadly in line with the Finnish advertising market development.
According to TNS Gallup Adex, newspaper advertising in the Finnish market
decreased by 2.3% in the first quarter. Online advertising sales included in the
statistics continued to grow and was up by 13.7%. Advertising sales represented
49.8% (2011: 50.1%) of the net sales in News in the first quarter.
Total online sales increased by 19.0%, boosted by the growth of advertising and
other online sales. Online sales consisting mostly of advertising, but also to
larger extent services and content, represented 13.5% (2011: 11.5%) of the
segment's net sales.
The net sales of the Helsingin Sanomat business unit decreased by 3.0%. The
underlying macro-economic uncertainty affected recruitment advertising sales in
particular. Accordingly, advertising sales decreased and represented 53.8%
(2011: 54.7%) of the business unit's net sales. Subscription sales decreased
slightly as the decrease in the circulation volume was not offset by price
adjustments. The multichannel use of Helsingin Sanomat continued to grow in the
first quarter and the reach of the Helsingin Sanomat product family is at an
all-time high.
The Ilta-Sanomat business unit's net sales increased by 11.3%, driven by
favourable sales development in both circulation and advertising. Advertising
sales represented 30.3% (2011: 26.7%) of the business unit's net sales.
Circulation sales grew somewhat. The total volume of the Finnish print tabloid
market has decreased by around 4% in the last 12 months. Ilta-Sanomat's market
share increased to 58.5% (2011: 58.0%) of the tabloid newsstand market.
Net sales from other publishing operations increased by 6.2%, as the good sales
development in Sanoma Digital Finland continued and partly due to the transfer
of Sanoma Games operations from Nelonen Media to Sanoma Digital Finland in
January.
In January-March, News' operating profit excluding non-recurring items decreased
by 31.0% as the effects from the on-going efficiency improvements did not
compensate for the heavy investments in online operations and an overall weak
performance of Helsingin Sanomat. The News' operating profit did not include any
(2011: EUR 0.0 million) non-recurring items.
News' investments in tangible and intangible assets totalled EUR 2.5 million
(2011: EUR 3.5 million), and consisted mainly of investments in online business,
ICT and replacement investment in printing.
LEARNING
The Learning segment includes Sanoma's learning as well as language service and
business information operations. Sanoma Learning is a leading European provider
of learning materials and solutions in print and digital format.
- In October 2011, Sanoma completed the acquisition of the Finnish educational
publisher Tammi Learning, which is now fully integrated into the Finnish
operations and the Swedish educational publisher Sanoma Utbildning (formerly
Bonnier Utbildning).
Key indicators 1-3/ 1-3/ Change 1-12/
EUR million 2012 2011 % 2011
Net sales 53.4 60.7 -11.9 343.1
Learning 34.2 34.3 -0.4 256.6
Other businesses 21.0 28.0 -25.0 91.7
Eliminations -1.7 -1.7 -4.2 -5.3
Operating profit excluding non-recurring items * -13.9 -6.1 45.5
% of net sales -26.1 -10.0 13.3
Operating profit -13.9 -5.2 16.6
Capital expenditure 2.4 2.0 16.6 11.5
Number of employees at the end of the period (FTE) 2,454 2,623 -6.5 2,489
Average number of employees (FTE) 2,468 2,628 -6.1 2,583
* In 2012, the operating profit did not include any non-recurring items. In
2011, the non-recurring items included in the first quarter a EUR 0.9 million
non-recurring income related to sale of LDC, in the second quarter EUR -1.7
million restructuring expenses and in the third quarter EUR -1.0 million
restructuring expenses and a EUR -24.1 million impairment of goodwill. In the
fourth quarter 2011, the non-recurring items included EUR -2.9 million write-
down of intangible assets.
First quarter
In January-March, net sales in the Learning segment decreased by 11.9%, mainly
related to the divested operations and timing differences between quarters.
Adjusted for structural changes, net sales decreased by 9.3%.
The learning business has, by nature, an annual cycle and strong seasonality. Itaccrues most of its net sales and results during the second and third quarters.
Changes between quarters can be significant and often explain most of the
changes from the comparable period.
Net sales in the learning business were only at the comparable quarter's level,
mainly as a result of timing differences between quarters related to the
Netherlands. In all countries the market conditions remained stable.
Net sales in other businesses, which include language services and business
information operations, declined by 25.0% mainly as a result of structural
changes. Finnish general literature publisher WSOY was divested early October
2011 and it is no longer included in Learning's figures from the fourth quarter
of 2011.
The learning business has strong seasonality within the year and timing
differences between quarters, the first and fourth quarter being typically loss-
making.
Operating profit excluding non-recurring items in the Learning segment decreased
by 128.6% to EUR -13.9 million, due to timing differences between quarters
mainly related to the Netherlands corresponding to approximately EUR 8 million.
Learning's operating profit did not include any (2011: EUR 0.9 million) non-
recurring items. In the comparable period, non-recurring items related to a
divestment of non-core operations in Learning.
Learning's investments in tangible and intangible assets totalled EUR 2.4
million (2011: EUR 2.0 million). They comprised mainly investment in ICT.
TRADE
The Trade segment includes Sanoma's Finnish press distribution and marketing
services as well as the Estonian bookstore operations.
- On 5 March, Sanoma announced that it had signed an agreement to sell its kiosk
operations in Finland, Lithuania and Estonia as well as its press distribution
operations in Estonia and Lithuania to the Norwegian Reitan Servicehandel AS for
an enterprise value of EUR 130.7 million, including the Rautakirja trade mark.
The transaction is subject to EU merger control filing and the approval is
expected to be received during the second quarter of 2012. Sanoma expects to
book a non-taxable non-recurring capital gain of some EUR 80 million at the
closing of this transaction.
- According to International Financial Reporting Standards (IFRS), any material
divestment that represents a separate major line of business shall be classified
as a discontinued operation. Hence, Sanoma classified these operations to be
divested as discontinued operations for the 2012 reporting. The discontinued
operations are eliminated from the Consolidated Income Statement and only the
result for the period of these discontinued operations is presented as a
separate item after the result for the continuing operations. Accordingly, the
Consolidated Income Statement for 2011 has been restated. The restated 2011
figures are unaudited. In addition, assets and liabilities related to
discontinued operations have been presented in the Consolidated Balance Sheet as
separate line items as of 31 March 2012.
Key indicators 1-3/ 1-3/ Change 1-12/
EUR million 2012 2011 % 2011
Net sales 23.7 81.8 -71.0 228.7
Kiosk operations 6.7 -100.0 20.9
Trade services 21.2 28.8 -26.3 103.6
Bookstores 2.5 24.8 -90.1 77.0
Movie operations 21.9 -100.0 28.4
Eliminations 0.0 -0.3 100.2 -1.2
Operating profit excluding non-recurring items * -0.3 3.3 3.8
% of net sales -1.3 4.0 1.7
Operating profit -0.3 3.3 38.9
Capital expenditure 1.1 18.3 -94.0 23.1
Number of employees at the end of the period (FTE) 417 2,128 -80.4 424
Average number of employees (FTE) 419 2,074 -79.8 1,158
* In 2012, the operating profit did not include any non-recurring items. In
2011, the non-recurring items included in the second quarter a EUR -0.8 million
loss on sale of Russian operations, a EUR -8.0 million loss on sale of Romanian
operations and a EUR 51.4 million gain on sale of movie operations. In the third
quarter the non-recurring items included a EUR -10.8 million loss on sale of
Suomalainen Kirjakauppa, a EUR -1.2 million write-down of real estates and a EUR
-0.8 million impairment in bookstores. In the fourth quarter 2011, the non-
recurring items included a EUR 5.3 million gain on sale of Narvesen.
Operational indicators 1-3/ 1-3/
2012 2011
Customer volume in bookstores, thousands 222 1,859
Number of copies sold (press distribution), thousands 23,924 41,068
First quarter
In January-March, Trade's net sales decreased by 71.0%, due to the divestment of
operations. Net sales adjusted for structural changes decreased by 0.8%.
The Finnish press distribution and marketing services net sales decreased by
1.9%.
Kiosk operations in Finland, Lithuania and Estonia as well as Trade's press
distribution operations in Estonia and Lithuania are treated as discontinued
operations for the 2012 reporting and they are no longer included in Trade's
2012 figures. Consequently, the 2011 figures have been restated accordingly.
Bookstore operations in Finland were divested at the end of September 2011 and
they are no longer included in Trade's figures from the fourth quarter of 2011.
Movie operations were divested at the end of April 2011 and they are no longer
included in Trade's figures from May 2011.
Trade's operating profit excluding non-recurring items decreased by 109.5% in
January-March mainly due to structural changes. The operational result in the
Finnish press distribution and marketing services did not fully offset the
administrative costs of the Trade segment. Trade's operating profit did not
include any (2011: EUR 0.0 million) non-recurring items.
Trade's investments in tangible and intangible assets, including finance leases,
totalled EUR 1.1 million (2011: EUR 18.3 million) and related to general
maintenance. In the comparable quarter, investments mainly related to the
renewal of the long-term rental agreements of the divested movie operations.
THE GROUP
Dividend
The Annual General Meeting on 3 April 2012 decided to pay a dividend of EUR
0.60 (2011: EUR 1.10) per share. The dividends were paid on 17 April 2012 in
Finland.
Shares and holdings
In January-March, 27,506,324 (2011: 19,248,278) Sanoma shares were traded on the
NASDAQ OMX Helsinki. Traded shares accounted for some 17% (2011: 9%) of the
average number of shares. Sanoma's total stock exchange turnover was EUR 282.3
million (2010: EUR 314.5 million).
During the first three months, the volume-weighted average price of a Sanoma
share was EUR 10.26, with a low of EUR 8.82 and a high of EUR 11.70. At the end
of March 2012, Sanoma's market capitalisation was EUR 1.6 billion (2011: EUR
2.6 billion), with Sanoma's share closing at EUR 9.60 (2011: EUR 15.97). Sanoma
had 29,588 shareholders at the end of March, with foreign holdings accounting
for 10.3% (2011: 9.1%) of all shares and votes. There were no major changes in
share ownership during the first quarter and Sanoma did not issue any flagging
announcements. At the end of March 2012, Sanoma had 162,812,093 shares.
Board of Directors, auditors and management
The AGM held on 3 April 2012 confirmed the number of Sanoma's Board members as
10. Board members Annet Aris, Jaakko Rauramo and Sakari Tamminen were re-elected
as members to the Board. The Board of Directors of Sanoma consists of Jaakko
Rauramo (Chairman), Sakari Tamminen (Vice Chairman), and Annet Aris, Jane Erkko,
Antti Herlin, Sirkka Hämäläinen-Lindfors, Seppo Kievari, Nancy McKinstry,
Rafaela Seppälä and Kai Öistämö as members.
The AGM appointed chartered accountants KPMG Oy Ab as the auditor of the
Company, with Virpi Halonen, Authorised Public Accountant, as Auditor in Charge.
Sanoma's new organisational model was announced on 5 August 2011. As of the end
of March 2012, the Executive Management Group (EMG) comprises: Harri-Pekka
Kaukonen (President and CEO of the Sanoma Group, chairman of the EMG),
Jacqueline Cuthbert (CHRO), Jacques Eijkens (CEO, Sanoma Learning), Heike
Rosener (CEO, Sanoma Media Russia & CEE; acting member), Kim Ignatius (CFO),
John Martin (Chief Digital Officer, CDO), Dick Molman (CEO, Sanoma Media
Netherlands), Anu Nissinen (CEO, Sanoma Media Finland), Pekka Soini (CEO, Sanoma
News) and Aimé Van Hecke (CEO, Sanoma Media Belgium).
Board authorisations
The AGM held on 3 April 2012 authorised the Board to decide on the repurchase of
a maximum of 16,000,000 of the Company's own shares, accounting for 9.8% of
total voting rights that the maximum number of own shares covered by the
authorisation would provide entitlement to. This authorisation is effective
until 30 June 2013 and terminates the corresponding authorisation granted by the
AGM on 5 April 2011. The Board of Directors did not exercise its right under
this authorisation during the first quarter.
The Board also has a valid authorisation from the AGM held on 8 April 2010 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, together accounting for 35.5% of the total
voting rights that the maximum number of own shares covered by the authorisation
would provide entitlement to. The authorisation will be valid until 30 June
2013. Under this authorisation, the Board decided on 20 December 2011 on the
issuance of Stock Option Scheme 2011 and on 22 December 2010 on the issuance of
Stock Option Scheme 2010.
Seasonal fluctuation
The net sales and results of media businesses 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 the Netherlands, Finland and Belgium is
usually strongest in the second and fourth quarters.
Learning accrues most of its net sales and results during the second and third
quarters.
Seasonal business fluctuations influence the Group's net sales and operating
profit, 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. The driving force
behind these changes is the on-going digitisation. Sanoma has prepared action
plans in all its strategic business units on how to respond to this challenge.
With regard to changing customer preferences and digitisation, new entrants
might be able to better utilise these changes and therefore gain market share
from Sanoma's established businesses.
Normal business risks associated with the industry relate to developments in
media advertising and consumer spending. Media advertising is sensitive to
economic fluctuations. Therefore, general economic conditions and economic
trends of the industry influence Sanoma's business activities and operational
performance.
Sanoma's financial risks include interest rate and currency risks, liquidity
risk and credit risk. Other risks include risks related to equity, impairment
and availability of capital. On Group level, the most significant risks relate
to liquidity risk and changes in exchange rates and interest rates.
As a result of the SBS acquisition, Sanoma's consolidated balance sheet includes
about EUR 3.0 billion in goodwill, publishing rights and other intangible
assets. Most of this is related to magazine and TV operations. In accordance
with IFRS, instead of goodwill being amortised regularly, it is tested for
impairment on an annual basis, or whenever there is any indication of
impairment. Major changes in business fundamentals could lead to impairment.
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 31 March 2012. 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. This Interim Report is unaudited.
CONSOLIDATED INCOME STATEMENT
EUR million
1-3/ 1-3/ 1-12/
CONTINUING OPERATIONS 2012 2011 2011
NET SALES 543.6 530.2 2,378.1
Other operating income 8.6 7.0 116.5
Materials and services 190.0 205.5 858.2
Employee benefit expenses 156.2 148.1 611.7
Other operating expenses 122.4 118.7 541.3
Share of results in associated companies -1.2
Depreciation, amortisation and impairment losses 67.6 37.7 309.5
-----------------------------------------------------------------------------
OPERATING PROFIT 15.9 27.2 172.6
Share of results in associated companies -16.4 1.9 -3.7
Financial income 7.0 2.3 13.9
Financial expenses 20.7 4.7 46.6
-----------------------------------------------------------------------------
RESULT BEFORE TAXES -14.1 26.7 136.3
Income taxes -3.6 -8.3 -57.7
-----------------------------------------------------------------------------
RESULT FOR THE PERIOD FROM CONTINUING OPERATIONS -17.8 18.4 78.6
DISCONTINUED OPERATIONS
Result for the period from discontinued operations 1.2 0.1 7.4
-----------------------------------------------------------------------------
RESULT FOR THE PERIOD -16.6 18.5 86.0
Result from continuing operations attributable to:
Equity holders of the Parent Company -19.0 18.4 77.0
Non-controlling interests 1.2 0.0 1.5
Result attributable to:
Equity holders of the Parent Company -17.8 18.5 84.5
Non-controlling interests 1.2 0.0 1.5
Earnings per share for result attributable
to the equity holders of the Parent company:
Earnings per share, EUR, continuing operations -0.12 0.11 0.47
Diluted earnings per share, EUR, continuing operations -0.12 0.11 0.47
Earnings per share, EUR, discontinued operations 0.01 0.00 0.05
Diluted earnings per share, EUR, discontinued operations 0.01 0.00 0.05
Earnings per share, EUR -0.11 0.11 0.52
Diluted earnings per share, EUR -0.11 0.11 0.52
STATEMENT OF COMPREHENSIVE INCOME
EUR million 1-3/ 1-3/ 1-12/
2012 2011 2011
Result for the period -16.6 18.5 86.0
Other comprehensive income:
Change in translation differences 22.5 6.0 -25.6
Cash flow hedges -1.2 1.8 -11.7
Income tax related to cash flow hedges 0.3 -0.5 2.9
Other comprehensive income for the period, net of tax 21.6 7.3 -34.4
-----------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 5.0 25.8 51.6
Total comprehensive income attributable to:
Equity holders of the Parent Company 3.8 25.9 50.1
Non-controlling interests 1.2 0.0 1.5
CONSOLIDATED BALANCE SHEET
EUR million 31.3.2012 31.3.2011 31.12.2011
ASSETS
NON-CURRENT ASSETS
Tangible assets 293.5 367.7 343.6
Investment property 4.8 8.6 5.8
Goodwill 2,308.5 1,438.2 2,316.2
Other intangible assets 725.1 406.2 709.8
Interests in associated companies 21.2 238.6 219.3
Available-for-sale financial assets 15.6 15.9 15.4
Deferred tax receivables 32.1 34.3 29.9
Trade and other receivables 47.9 28.4 44.3
---------------------------------------------------------------------------
NON-CURRENT ASSETS, TOTAL 3,448.8 2,537.9 3,684.3
CURRENT ASSETS
Inventories 79.9 118.7 96.8
Income tax receivables 26.9 19.5 12.5
Trade and other receivables 372.0 370.6 418.4
Available-for-sale financial assets 0.4 0.3 0.3
Cash and cash equivalents 98.5 61.2 116.0
---------------------------------------------------------------------------
CURRENT ASSETS, TOTAL 577.7 570.5 644.0
Assets classified as held for sale 126.2 111.9
ASSETS, TOTAL 4,152.8 3,220.2 4,328.3
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 equity 203.3 203.3 203.3
Other reserves -9.6 1.5 -8.7
Other equity 992.7 1,122.1 988.0
---------------------------------------------------------------------------
1,257.6 1,398.1 1,253.9
Non-controlling interests 271.3 4.8 270.3
---------------------------------------------------------------------------
EQUITY, TOTAL 1,528.9 1,402.9 1,524.2
NON-CURRENT LIABILITIES
Deferred tax liabilities 146.3 92.0 146.1
Pension obligations 16.9 26.1 17.2
Provisions 6.6 7.1 6.3
Interest-bearing liabilities 1,269.9 412.8 1,101.2
Trade and other payables 39.6 20.0 38.9
---------------------------------------------------------------------------
NON-CURRENT LIABILITIES, TOTAL 1,479.4 557.9 1,309.7
CURRENT LIABILITIES
Provisions 13.7 10.8 15.3
Interest-bearing liabilities 316.2 499.2 626.0
Income tax liabilities 17.5 29.5 27.4
Trade and other payables 728.7 651.2 825.8
---------------------------------------------------------------------------
CURRENT LIABILITIES, TOTAL 1,076.0 1,190.7 1,494.5
Liabilities related to assets held for sale 68.5 68.7
---------------------------------------------------------------------------
LIABILITIES, TOTAL 2,623.9 1,817.3 2,804.1
EQUITY AND LIABILITIES, TOTAL 4,152.8 3,220.2 4,328.3
The assets and liabilities of a discontinued operation or a disposal group
classified as held for sale are presented separately from other assets and
liabilities in the balance sheet.
In 2012, kiosk operations in Finland, Lithuania and Estonia as well as its press
distribution operations in Estonia and Lithuania were classified as a
discontinued operation. In 2011, the disposal group consists of Movie
operations, Romanian press distribution and kiosk operations and the Russian
kiosk company KP Roznitsa. These operations are part of the Sanoma Trade
segment.
CHANGES IN CONSOLIDATED EQUITY
EUR million
Equity attributable to the equity holders of the Parent
Company
Fund for Non-
inves- cont-
ted rol-
unres- Other ling Equi-
Share tricted re- Other inte- ty,
capital equity serves equity Total rests total
Equity at
1 Jan 2011 71.3 203.3 0.2 1,096.5 1,371.2 4.8 1,376.0
Expense
recognition of
options granted 0.9 0.9 0.9
-------------------------------------------------------------------------------
Change in non-
controlling
interests 0.1 0.1 0.1
-------------------------------------------------------------------------------
Comprehensive
income for the period 1.3 24.6 25.9 0.0 25.8
-------------------------------------------------------------------------------
Equity at
31 March 2011 71.3 203.3 1.5 1,122.1 1,398.1 4.8 1,402.9
Equity at
1 Jan 2012 71.3 203.3 -8.7 988.0 1,253.9 270.3 1,524.2
Expense
recognition of
options granted 0.8 0.8 0.8
-------------------------------------------------------------------------------
Dividends paid 0.0 0.0
-------------------------------------------------------------------------------
Change in non-
controlling
interests -0.9 -0.9 -0.2 -1.1
-------------------------------------------------------------------------------
Comprehensive
income for the -0.9 4.7 3.8 1.2 5.0
period
-------------------------------------------------------------------------------
Equity at
31 March 2012 71.3 203.3 -9.6 992.7 1,257.6 271.3 1,528.9
INCOME STATEMENT BY QUARTER
EUR million
1-3/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
CONTINUING OPERATIONS 2012 2011 2011 2011 2011 2011
NET SALES 543.6 530.2 592.6 627.4 627.9 2,378.1
Other operating income 8.6 7.0 70.0 10.4 29.1 116.5
Materials and services 190.0 205.5 217.3 228.4 207.0 858.2
Employee benefit expenses 156.2 148.1 152.1 142.6 168.8 611.7
Other operating expenses 122.4 118.7 136.6 139.0 147.1 541.3
Share of results in associated companies -0.1 -1.1 -1.2
Depreciation, amortisation and 67.6 37.7 39.8 143.9 88.1 309.5
impairment losses
-------------------------------------------------------------------------------
OPERATING PROFIT 15.9 27.2 116.7 -17.2 46.0 172.6
Share of results in associated -16.4 1.9 -0.1 -3.2 -2.2 -3.7
companies
Financial income 7.0 2.3 1.4 1.0 9.3 13.9
Financial expenses 20.7 4.7 6.6 13.1 22.2 46.6
-------------------------------------------------------------------------------
RESULT BEFORE TAXES -14.1 26.7 111.3 -32.5 30.8 136.3
Income taxes -3.6 -8.3 -18.4 -21.3 -9.7 -57.7
-------------------------------------------------------------------------------
RESULT FOR THE PERIOD FROM CONTINUING -17.8 18.4 92.9 -53.8 21.1 78.6
OPERATIONS
DISCONTINUED OPERATIONS
Result for the period from discontinued 1.2 0.1 4.6 -0.5 3.3 7.4
operations
-------------------------------------------------------------------------------
RESULT FOR THE PERIOD -16.6 18.5 97.5 -54.4 24.4 86.0
Result from continuing operations attributable to:
Equity holders of the Parent Company -19.0 18.4 92.9 -49.2 14.9 77.0
Non-controlling interests 1.2 0.0 -0.1 -4.6 6.2 1.5
Result attributable to:
Equity holders of the Parent Company -17.8 18.5 97.5 -49.7 18.1 84.5
Non-controlling interests 1.2 0.0 -0.1 -4.6 6.2 1.5
Earnings per share for result attributable
to the equity holders of the Parent company:
Earnings per share, EUR, continuing -0.12 0.11 0.57 -0.30 0.09 0.47
operations
Diluted earnings per share, EUR, -0.12 0.11 0.57 -0.30 0.09 0.47
continuing operations
Earnings per share, EUR, discontinued 0.01 0.00 0.03 0.00 0.02 0.05
operations
Diluted earnings per share, EUR, 0.01 0.00 0.03 0.00 0.02 0.05
discontinued operations
Earnings per share, EUR -0.11 0.11 0.60 -0.31 0.11 0.52
Diluted earnings per share, EUR -0.11 0.11 0.60 -0.31 0.11 0.52
CONSOLIDATED CASH FLOW STATEMENT 1-3/ 1-3/ 1-12/
EUR million 2012 2011 2011
OPERATIONS
Result for the period -16.6 18.5 86.0
Adjustments
Income taxes 4.1 8.2 58.1
Financial expenses 20.7 4.7 49.1
Financial income -7.0 -2.2 -13.9
Share of results in associated companies 16.4 -1.9 4.9
Depreciation, amortisation and impairment losses 69.6 39.8 319.7
Gains/losses on sales of non-current assets 0.0 1.0 -56.8
Other adjustments -54.1 -19.6 -116.9
Change in working capital
Change in trade and other receivables 25.3 7.8 0.8
Change in inventories -7.7 0.3 0.4
Change in trade and other payables, and provisions -38.2 -20.7 49.0
Interest paid -7.7 -3.6 -23.6
Other financial items -3.4 0.9 -17.4
Taxes paid -23.2 -14.5 -65.5
-------------------------------------------------------------------------------
CASH FLOW FROM OPERATIONS -21.9 18.7 273.8
INVESTMENTS
Acquisition of tangible and intangible assets -16.3 -18.4 -70.8
Operations acquired -2.7 -3.8 -1,350.2
Sales of tangible and intangible assets 4.9 1.7 14.0
Operations sold 181.8 0.2 74.0
Loans granted -1.3 -1.8 -8.7
Repayments of loan receivables 1.1 0.8 246.3
Sales of short-term investments 0.0 0.0
Interest received 0.9 0.4 3.2
Dividends received 0.4 11.0 14.9
-------------------------------------------------------------------------------
CASH FLOW FROM INVESTMENTS 168.6 -9.9 -1,077.4
CASH FLOW BEFORE FINANCING 146.7 8.8 -803.6
FINANCING
Proceeds from share subscriptions 0.0
Minority capital investment/repayment of equity 264.0
Change in loans with short maturity -81.2 45.2 -183.5
Drawings of other loans 416.4 1.1 1,042.7
Repayments of other loans -476.0 -40.8 -84.5
Payment of finance lease liabilities -0.2 -0.9 -2.0
Dividends paid 0.0 -179.7
Donations/other profit sharing 0.0
-------------------------------------------------------------------------------
CASH FLOW FROM FINANCING -141.0 4.5 857.1
CHANGE IN CASH AND CASH EQUIVALENTS
ACCORDING TO CASH FLOW STATEMENT 5.7 13.4 53.6
Effect of exchange rate differences on cash and cash 1.1 0.5 -1.1
equivalents
NET CHANGE IN CASH AND CASH EQUIVALENTS 6.9 13.8 52.4
Cash and cash equivalents at the beginning of the period 93.5 41.1 41.1
Cash and cash equivalents at the end of the period 100.4 54.9 93.5
Cash and cash equivalents in cash flow statement include cash and cash
equivalents less bank overdrafts.
NET SALES BY BUSINESS UNIT
EUR million 1-3/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2012 2011 2011 2011 2011 2011
MEDIA
The Netherlands 171.6 105.3 130.6 174.0 232.2 642.0
Finland 77.4 74.2 79.4 70.0 86.2 309.7
Russia & CEE 49.0 51.4 54.3 50.8 56.7 213.1
Belgium 56.8 50.1 48.7 48.4 61.9 209.1
Other businesses and eliminations 11.0 10.2 10.7 12.3 8.6 41.8
-------------------------------------------------------------------------
TOTAL 365.8 291.1 323.7 355.5 445.6 1,415.8
NEWS
Helsingin Sanomat 59.3 61.2 61.2 55.3 60.8 238.5
Ilta-Sanomat 21.2 19.1 22.2 21.6 21.6 84.4
Other publishing 25.2 23.7 25.0 22.9 25.4 97.0
Other businesses and eliminations 4.3 4.4 3.9 3.4 4.2 15.9
-------------------------------------------------------------------------
TOTAL 110.0 108.4 112.2 103.2 112.0 435.8
LEARNING
Learning 34.2 34.3 87.4 100.2 34.7 256.6
Other businesses 21.0 28.0 22.6 22.4 18.7 91.7
Eliminations -1.7 -1.7 -1.5 -1.4 -0.8 -5.3
-------------------------------------------------------------------------
TOTAL 53.4 60.7 108.6 121.2 52.7 343.1
TRADE
Kiosk operations 6.7 6.9 7.3 0.0 20.9
Trade services 21.2 28.8 27.3 24.4 23.2 103.6
Bookstores 2.5 24.8 18.8 29.7 3.7 77.0
Movie operations 21.9 6.5 0.0 0.0 28.4
Eliminations 0.0 -0.3 -0.5 -0.4 0.0 -1.2
-------------------------------------------------------------------------
TOTAL 23.7 81.8 59.1 61.0 26.9 228.7
Other companies and eliminations -9.3 -11.7 -11.0 -13.5 -9.3 -45.4
-------------------------------------------------------------------------
CONTINUING OPERATIONS 543.6 530.2 592.6 627.4 627.9 2,378.1
OPERATING PROFIT BY SEGMENT
EUR million 1-3/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/ 2012 2011 2011 2011 2011 2011
Media 26.8 22.7 47.0 -31.0 53.2 92.0
News 8.9 12.9 9.9 12.5 4.9 40.2
Learning -13.9 -5.2 27.3 17.3 -22.7 16.6
Trade -0.3 3.3 39.8 -8.1 3.9 38.9
Other companies and eliminations -5.5 -6.5 -7.4 -7.9 6.7 -15.1
---------------------------------------------------------------------
CONTINUING OPERATIONS 15.9 27.2 116.7 -17.2 46.0 172.6
OPERATING PROFIT EXCLUDING NON-RECURRING ITEMS BY SEGMENT
EUR million 1-3/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2012 2011 2011 2011 2011 2011
Media 26.8 22.7 37.9 25.8 64.6 151.1
News 8.9 12.9 9.9 12.5 14.1 49.4
Learning -13.9 -6.1 29.0 42.4 -19.7 45.5
Trade -0.3 3.3 -2.9 4.8 -1.4 3.8
Other companies and eliminations -5.5 -6.5 -8.4 -7.9 -2.9 -25.7
-------------------------------------------------------------------
CONTINUING OPERATIONS 15.9 26.3 65.6 77.6 54.7 224.1
SEGMENT INFORMATION
The continuing operations of the Group include four reportable segments: Media,
News, Learning and Trade. The segmentation is based on business model and
product differences. Media, operating in 12 countries, is responsible for
magazines and TV operations. Sanoma News is responsible for newspapers in
Finland. Both segments also have a great variety of online and mobile services.
Learning's business is mainly B2B business. In 2012, Trade segment includes the
Trade services in Finland, the bookstore operations in Estonia, and the real
estate and administration operations of the segment. The figures of Trade
segment in 2011 include also the operations that were divested during 2011. 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 segments 1.1-31.3.2012
Unallo-
cated/
Lear- elimi- Continuing
EUR million Media News ning Trade nations operations
------------------------------------------------------------------
External net sales 365.0 109.6 52.5 16.6 -0.5 543.1
Internal net sales 0.7 0.5 0.9 7.1 -8.8 0.4
NET SALES, TOTAL 365.8 110.0 53.4 23.7 -9.3 543.6
OPERATING PROFIT 26.8 8.9 -13.9 -0.3 -5.5 15.9
Share of results in
associated companies -17.2 0.1 -0.1 0.8 -16.4
Financial income 7.0 7.0
Financial expenses 20.7 20.7
RESULT BEFORE TAXES -14.1
SEGMENT ASSETS 2,831.6 326.5 563.4 81.1 53.5 3,856.2
Sanoma segments 1.1-31.3.2011
Unallo-
cated/
Lear- elimi- Continuing
EUR million Media News ning Trade nations operations
------------------------------------------------------------------
External net sales 290.1 107.7 57.7 74.7 -0.2 530.0
Internal net sales 1.0 0.6 3.0 7.1 -11.5 0.2
NET SALES, TOTAL 291.1 108.4 60.7 81.8 -11.7 530.2
OPERATING PROFIT 22.7 12.9 -5.2 3.3 -6.5 27.2
Share of results in
associated companies 1.7 0.0 0.0 0.2 1.9
Financial income 2.3 2.3
Financial expenses 4.7 4.7
RESULT BEFORE TAXES 26.7
SEGMENT ASSETS 1,808.1 320.8 569.8 258.9 40.3 2,997.9
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 31.3.2012 31.3.2011 31.12.2011
Carrying amount at the beginning of 343.6 429.3 429.3
the period
Increases 7.7 27.1 52.9
Acquisition of operations 0.1 7.0
Decreases -3.4 -1.3 -2.2
Disposal of operations 0.0 -86.9
Depreciation for the period -11.5 -14.0 -50.5
Impairment losses for the period 0.0 0.1 -3.9
Exchange rate differences and other 0.9 0.4 -2.1
changes
-------------------------------------------------------------------------------
Carrying amount at the end of the 337.4 441.6 343.6
period
The Group had no commitments for acquisition of tangible assets at the end of
the reporting period or in the comparative period.
Changes in property, plant and equipment include continued and discontinued
operations.
EFFECT OF ACQUISITIONS ON THE CONSOLIDATED BALANCE SHEET
EUR million 1-3/ 1-12/
2012 2011
Acquisition costs 3.0 1,415.2
Fair value of acquired 1.8 433.2
net assets
-------------------------------------------------------------------------------
Goodwill 1.3 982.0
CONTINGENT LIABILITIES
EUR million 31.3.2012 31.3.2011 31.12.2011
Contingencies for own commitments
Mortgages 9.7 20.5 9.7
Pledges 2.5 1.6 2.5
Other items 45.7 0.3 0.3
TOTAL 57.9 22.4 12.5
Contingencies incurred on behalf of associated companies
Guarantees 10.5
TOTAL 10.5
Contingencies incurred on behalf of other companies
Guarantees 0.0
TOTAL 0.0
Other contingencies
Operating lease liabilities 187.7 235.2 196.1
Royalties 20.5 19.6 19.8
Other items 50.7 28.4 51.3
TOTAL 258.9 283.2 267.2
-------------------------------------------------------------------------
TOTAL 316.8 316.0 279.7
DERIVATIVE INSTRUMENTS
EUR million
Fair values 31.3.2012 31.3.2011 31.12.2011
Interest rate derivatives
Interest rate swaps -12.7 1.5 -11.5
Currency derivatives
Forward contracts -0.8 0.6
KEY EXCHANGE RATES
1-3/ 1-3/ 1-12/
Average rate 2012 2011 2011
EUR/CZK (Czech Koruna) 25.14 24.55 24.64
EUR/HUF (Hungarian Forint) 298.03 272.06 280.46
EUR/PLN (Polish Zloty) 4.24 3.97 4.13
EUR/RUB (Russian Rouble) 39.97 40.45 41.02
EUR/SEK (Swedish Crown) 8.87 8.88 9.00
Closing rate 31.3.2012 31.3.2011 31.12.2011
EUR/CZK (Czech Koruna) 24.73 24.54 25.79
EUR/HUF (Hungarian Forint) 294.92 265.72 314.58
EUR/PLN (Polish Zloty) 4.15 4.01 4.46
EUR/RUB (Russian Rouble) 39.30 40.29 41.77
EUR/SEK (Swedish Crown) 8.85 8.93 8.91
Press Conference
Press and analyst meeting will be held in English by President and CEO Harri-
Pekka Kaukonen and CFO Kim Ignatius at 13:30 Finnish time (CET+1) at Nelonen
studio, Pursimiehenkatu 26 C (third floor), Helsinki. Webcast of the event can
be viewed at Sanoma.com either live or later on as on demand. If you want to ask
questions during the webcast, please join the conference call by dialling +44
(0)20 7162 0025 (Europe) or +1 334 323 6201 (US) and quote the conference code
915981.
Sanoma's 2Q12 Interim Report will be published on Wednesday, 1August, at
approximately 08:30 Finnish time (CET+1).
Sanoma Corporation
Kim Ignatius
Chief Financial Officer
Additional information: Sanoma's Investor Relations, Martti Yrjö-Koskinen, tel.
+358 105 19 5064 or ir@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 around
11,000 people in over 20 countries throughout Europe. In 2011, the Group's
restated net sales totalled EUR 2.4 billion.
[HUG#1608331]
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