2012-08-01 07:30:00 CEST
2012-08-01 07:30:50 CEST
REGULATED INFORMATION
Sanoma Oyj - Interim report (Q1 and Q3)
Sanoma's Interim Report 1 January - 30 June 2012: Solid second quarter in challenging market conditions
Interim Report 1/8/2012 8:30
Second quarter
- Net sales amounted to EUR 646.5 million (2011: EUR 592.6 million). Adjusted
for changes in the Group structure, Sanoma's net sales decreased by 1.7%.
- Operating profit excluding non-recurring items was EUR 104.2 million (2011:
EUR 65.6 million).
- The non-recurring items amounted to EUR -5.7 million (2011: EUR 51.1 million).
- Earnings per share were EUR 0.83 (2011: EUR 0.60). Earnings per share
excluding non-recurring items were EUR 0.40 (2011: EUR 0.29).
- Cash flow from operations was EUR 18.8 million (2011: EUR 3.5 million).
- Full year outlook revised: net sales to be at the previous year's level or
grow slightly (previously 'to grow slightly'). Operating profit margin,
excluding non-recurring items, to be around 10% of net sales (no change). EPS
excluding non-recurring items to be somewhat below previous year (previously 'to
grow').
First half
- Net sales amounted to EUR 1,190.1 million (2011: EUR 1,122.8 million).
Adjusted for changes in the Group structure, Sanoma's net sales decreased by
1.1%.
- Operating profit excluding non-recurring items was EUR 120.1 million (2011:
EUR 91.9 million).
- The non-recurring items amounted to EUR -5.7 million (2011: EUR 52.0 million).
- Earnings per share were EUR 0.72 (2011: EUR 0.71). Earnings per share
excluding non-recurring items were EUR 0.39 (2011: EUR 0.40).
- Cash flow from operations was EUR -3.1 million (2011: EUR 22.2 million).
KEY INDICATORS * 4-6/ 4-6/ Change 1-6/ 1-6/ Change 1-12/
EUR million 2012 2011 % 2012 2011 % 2011
Net sales 646.5 592.6 9.1 1,190.1 1,122.8 6.0 2,378.1
Operating profit excluding 104.2 65.6 58.9 120.1 91.9 30.7 224.1
non-recurring items
% of net sales 16.1 11.1 10.1 8.2 9.4
Operating profit 98.5 116.7 -15.6 114.4 143.9 -20.5 172.6
Result for the period from 59.0 92.9 -36.5 41.3 111.3 -62.9 78.6
continuing operations
Result for the period *** 137.6 97.5 41.1 121.0 116.0 4.3 86.0
Capital expenditure ** 25.3 45.6 -44.6 76.2
% of net sales 2.1 4.1 3.2
Equity ratio, % *** 40.1 44.1 37.0
Net gearing, % *** 93.3 74.7 105.7
Number of employees at the end of the period 10,799 11,383 -5.1 10,960
(FTE)
Average number of employees (FTE) 11,020 11,893 -7.3 11,607
Earnings/share, EUR, 0.35 0.57 -39.4 0.23 0.68 -66.4 0.47
continuing operations
Earnings/share, EUR *** 0.83 0.60 38.4 0.72 0.71 0.9 0.52
Cash flow from 0.12 0.02 -0.02 0.14 1.68
operations/share, EUR ***
* 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, Estonia and Lithuania 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.
** Including finance leases.
*** Includes continuing and discontinued operations.
Harri-Pekka Kaukonen, President and CEO"We are encouraged that our operational performance was solid in the second
quarter despite challenging market conditions. The learning business unit
delivered better than expected results, although mainly due to the timing shift
between quarters. All other operations performed broadly in line with our
expectations.
Advertising markets are weakening and consumer confidence levels are declining
in our largest operating countries. This has forced us to take a more cautious
view for the remainder of the year and we have therefore revised our outlook for
2012.
We will speed up the transformation of our business in accordance with our set
priorities. Furthermore, we will continue to address our cost base and ways of
working. These actions will strategically reposition Sanoma for the future and
counteract the impact of the challenging economic climate and depressed
advertising markets and ensure better profitability.
During the last months we have continued to invest and made multiple
acquisitions and divestments that strengthen our focus on consumer media and
learning, enabling new consumer revenues, advertising solutions and learning
solutions.
In addition, we are pleased that we successfully syndicated and signed in early
July a new five year EUR 600 million syndicated revolving credit facility
replacing the existing EUR 802 million facility. This new facility together with
the successful inaugural EUR 400 million bond issue earlier this year secures
the base of our funding for the coming years."
Outlook for 2012 (revised)
For 2012, Sanoma expects its net sales to be at the previous year's level or
grow slightly (previously 'to grow slightly'). The operating profit margin,
excluding non-recurring items, is estimated to be around 10% of net sales (no
change). Earnings per share excluding non-recurring items are estimated to be
somewhat below previous year (previously '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 slightly to
somewhat decreasing (previously 'from stable to slightly decreasing'), as
the economic uncertainty continues.
Net sales
Second quarter
In April-June, Sanoma's net sales increased by 9.1% and amounted to
EUR 646.5 million (2011: EUR 592.6 million). The growth came mainly from the
acquired TV and print operations in the Netherlands and Belgium as well as the
learning business unit. Currency translations did not have a material effect on
the second quarter sales. When adjusted for changes in the Group structure, net
sales decreased by 1.7%.
Circulation sales grew by 0.4%. Subscription sales increased by 5.7%, mainly as
a result of the consolidation of Dutch print operations, while single copy sales
decreased by 6.4%.
Advertising sales increased by 34.0%, mostly due to acquired TV operations in
the Netherlands and Belgium as well and the Group's online operations. Online
advertising sales increased by 9.5%.
The TV acquisitions also impacted Sanoma's digital sales, which grew by 95.5% to
EUR 154.7 million (2011: EUR 79.1 million) in the second quarter and accounted
for 23.9% (2011: 13.4%) of the Group's net sales. Sanoma's online sales,
excluding linear TV and radio, grew by 17.8% to EUR 59.6 million (2011: EUR
50.6 million) and accounted for 9.2% (2011: 8.5%) of the Group's net sales.
By country, the Netherlands accounted for 41.3% (2011: 30.2%), Finland for
35.9% (2011: 45.1%) and Belgium for 10.3% (2011: 10.0%) of the cumulativeGroup's net sales. Net sales from other EU countries totalled 9.0% (2011:
11.0%) and non-EU countries accounted for 3.5% (2011: 3.8%).
By type of sales, advertising sales accounted for 36.3% (2011: 29.5%),
subscription sales for 18.5% (2011: 19.1%), single copy sales for 12.9% (2011:
15.0%), learning for 16.9% (2011: 14.8%) and other sales for 15.4% (2011:
21.6%) of the cumulative Group's net sales. Other sales include mainly Finnish
press distribution and marketing services, language and translation services,
custom publishing, event marketing, and other literature and print sales as well
as two months of business information services (Esmerk).
First half
In January-June, Sanoma's net sales increased by 6.0% and amounted to
EUR 1,190.1 million (2011: EUR 1,122.8 million). The growth came mainly from the
acquired TV and print operations in the Netherlands and Belgium as well as
learning business unit. Currency translations did not have a material effect on
the first half sales. When adjusted for changes in the Group structure, net
sales decreased by 1.1%.
The TV acquisitions also impacted Sanoma's digital sales, which grew by 94.4% to
EUR 287.5 million (2011: EUR 147.9 million) and accounted for 24.2% (2011:
13.2%) of the Group's net sales. Sanoma's online sales, excluding linear TV and
radio, grew by 20.9% to EUR 115.8 million (2011: EUR 95.8 million) and accounted
for 9.7% (2011: 8.5%) of the Group's net sales.
By country, the Netherlands accounted for 38.8% (2011: 28.1%), Finland for
37.6% (2011: 46.5%) and Belgium for 10.5% (2011: 9.9%) of the cumulative Group's
net sales. Net sales from other EU countries totalled 9.2% (2011: 11.5%) and
non-EU countries accounted for 3.9% (2011: 4.0%).
Result
Second quarter
Sanoma's operating profit excluding non-recurring items in April-June increased
by 58.9% and totalled EUR 104.2 million (2011: EUR 65.6 million). The increase
is due to acquired operations in Media and timing shift in the learning
business. The net effect from structural changes is about EUR 21 million.
Operating profit excluding non-recurring items amounted to 16.1% (2011: 11.1%)
of net sales. Currency translations did not have a material effect on the second
quarter result.
The Group's total operating expenses, excluding non-recurring items and
investments in TV programming and prepublication rights, decreased by 3.8%,
mainly as a result of declined fixed expenses. Paper costs decreased by 4.1%,
whereas employee benefit expenses increased by 2.8% and advertising and
marketing expenses decreased by 1.3%. At the end of June the Group had 161 fewer
employees than at the end of 2011, corresponding to a decrease of 1.5%. The
decrease in the number of personnel is mostly attributable to divestments.
In April-June, the non-recurring items from continuing operations were EUR -5.7
million (2011: EUR 51.1 million) and including discontinued operations EUR 72.4
million (2011: EUR 48.7 million).
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 4-6/ 4-6/ 1-6/ 1-6/ 1-12/
EUR million 2012 2011 2012 2011 2011
Media
Gain on sale (Humo and Desert Fishes) 9.1 9.1 9.1
Impairment of goodwill and intangible assets (Russia & CEE) -53.4
Write down of Jok Foe Group (Belgium) -1.6
Restructuring expenses -2.6 -2.6 -9.8
Impairment of intangible assets (The Netherlands) -3.4
News
Restructuring expenses -9.2
Learning
Gain on sale (Esmerk) 5.7 5.7
Impairment of goodwill (Language services) -7.5 -7.5 -24.1
Sale of LDC 0.9 0.9
Impairment of intangible assets -2.9
Restructuring expenses -2.6 -1.7 -2.6 -1.7 -2.8
Trade
Gains on sales (real estates) 1.3 1.3
Loss on sale (Suomalainen Kirjakauppa) -10.8
Write-down of real estates -1.2
Impairment (Bookstores) -0.8
Gain on sale (movie operations) 51.5 51.5 51.4
Loss on sale (Romanian operations) -8.0 -8.0 -8.0
Loss on sale (Russian operations) -0.8 -0.8 -0.8
Gain on sale (Narvesen) 5.3
Other companies
Gains on sales (real estates) 1.0 1.0 12.1
Restructuring expenses -1.5
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NON-RECURRING ITEMS IN OPERATING PROFIT -5.7 51.1 -5.7 52.0 -51.5
Loss on sales (DNA) -2.0 -19.3
Impairment of share in Hungarian associated company -1.2 -1.2
Impairment of share in associated company Hansaprint -4.0
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NON-RECURRING ITEMS IN RESULTS -3.2 -20.5 -4.0
IN ASSOCIATED COMPANIES
Gain on sales (Kiosk operations and Baltic 78.1 78.1
bookstores and press distribution)
Write-down of real estates -1.9
Restructuring expenses -2.4 -2.4 -2.8
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NON-RECURRING ITEMS IN DISCONTINUED OPERATIONS 78.1 -2.4 78.1 -2.4 -4.7
Sanoma's second quarter result included EUR -3.4 million (2011: EUR -0.1
million) loss from associated companies. The loss includes an impairment of an
associated company in Hungary of EUR -1.2 million and a non-recurring
transaction cost of EUR -2.0 million related to the divestment of DNA (2011: EUR
0.0 million).
Sanoma's net financial items totalled EUR -14.3 million (2011: EUR -5.2
million). Financial income amounted to EUR 4.9 million (2011: EUR 1.4 million),
of which EUR 2.7 million were exchange rate gains (2011: EUR 0.8 million).
Financial expenses amounted to EUR -19.1 million (2011: EUR -6.6 million), of
which EUR -2.4 million were exchange rate losses (2011: EUR -1.0 million).
Following the increased leverage, interest expenses amounted to EUR -13.5
million (2011: EUR -4.3 million).
Profit before taxes amounted to EUR 80.8 million (2011: EUR 111.3 million) in
the second quarter. In the comparable quarter the profit includes capital gains
from sales of operations.
Earnings per share were EUR 0.83 (2011: EUR 0.60) of which EUR 0.35 (2011: EUR
0.57) relates to continuing operations and EUR 0.48 (2011: EUR 0.03) to
discontinued operations. Earnings per share excluding non-recurring items were
EUR 0.40 (2011: EUR 0.29).
First half
Sanoma's operating profit excluding non-recurring items in January-June
increased by 30.7% and totalled EUR 120.1 million (2011: EUR 91.9 million). The
increase is mainly due to structural changes. The net effect from structural
changes is about EUR 27 million. Operating profit excluding non-recurring items
amounted to 10.1% (2011: 8.2%) of net sales. Currency translations did not have
a material effect on the result of the first half of 2012.
Sanoma's net financial items totalled EUR -28.0 million (2011: EUR -7.6
million). Financial income amounted to EUR 11.9 million (2011: EUR 3.6 million),
of which EUR 8.7 million were exchange rate gains (2011: EUR 1.7 million).
Financial expenses amounted to EUR -39.8 million (2011: EUR -11.3 million), of
which EUR -9.8 million were exchange rate losses (2011: EUR -1.9 million).
Following the increased leverage, interest expenses amounted to EUR -25.2
million (2011: EUR -7.7 million).
Profit before taxes amounted to EUR 66.7 million (2011: EUR 138.0 million). In
the comparable period the profit includes capital gains from the sales of
operations.
Earnings per share were EUR 0.72 (2011: EUR 0.71) of which EUR 0.23 (2011: EUR
0.68) relates to continuing operations and EUR 0.49 (2011: EUR 0.03) to
discontinued operations. Earnings per share excluding non-recurring items were
EUR 0.39 (2011: EUR 0.40).
Balance sheet and financial position
At the end of June 2012, Sanoma's consolidated balance sheet totalled EUR
4,079.5 million (2011: EUR 3,186.7 million). In the first half of 2012, the
Group's cash flow from operations was EUR -3.1 million (2011: EUR 22.2 million).
Cash flow from operations per share was EUR -0.02 (2011: EUR 0.14). Cash flow
was weakened by, higher paid interest and volatility of net working capital
between quarters.
Sanoma's equity ratio was 40.1% (2011: 44.1%) at the end of June 2012. Equity
totalled EUR 1,561.5 million (2011: EUR 1,328.9 million). The book value per
share was EUR 7.91 (2011: EUR 8.13). Following the acquisition of SBS operations
in the Netherlands and Belgium, interest-bearing liabilities increased and at
the end of the June 2012 totalled EUR 1,540.7 million (2011: EUR 1,046.2
million). Interest-bearing net debt was EUR 1,456.6 million (2011: EUR 993.0
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%.
Investments, acquisitions and divestments in 2012
In January-June, investments in tangible and intangible assets, including
finance leases, amounted to EUR 25.3 million (2011: EUR 45.6 million).
Investments were mainly related to ICT, systems as well as replacements and
renovation. In the comparable period, the renewal of the long-term rental
agreements of the divested movie operations accounted for about one third of the
total investments. Sanoma's business acquisitions totalled EUR 7.8 million
(2011: EUR 16.6 million).
In 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 -19.3 million
in the first half of 2012.
In April, Sanoma divested its book logistics company Porvoon Kirjakeskus.
In May, Sanoma sold its kiosk operations in Finland, Estonia and Lithuania as
well as its press distribution operations in Estonia and Lithuania, including
the Rautakirja trade mark, as well as its bookstore operations in Estonia. As a
result, Sanoma recognised a non-taxable non-recurring capital gain of EUR 78.1
million in the second quarter of 2012. 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 May, Sanoma Media acquired online retail group Read & View in the
Netherlands. The result of the company has been consolidated to Sanoma from the
beginning of May 2012.
In June, Sanoma sold its business information services company Esmerk Oy. As a
result of the transaction, Sanoma recognised in the second quarter of 2012 a
non-taxable non-recurring capital gain of EUR 5.7 million.
In June, Sanoma Learning acquired and closed the acquisition of the testing and
examination company Bureau ICE. The result of the company will be consolidated
to Sanoma from the beginning of Q3 2012.
In June, Sanoma sold its total ownership in Esan Kirjapaino Oy to
Keskisuomalainen Oyj. Shares represent 14.7% of the total voting shares of Esan
Kirjapaino Oy and 19.2% of the total number of shares. The transaction is
conditional upon Esan Kirjapaino or its shareholders not using their redemption
right stipulated in the Articles of Association of Esan Kirjapaino and upon the
consent of the Board of Directors of Esan Kirjapaino to the transfer of
shares. Redemption and consent procedures are expected to be completed by the
end of August 2012.
Significant events after the end of second quarter 2012
On 2 July, Nelonen Media, part of Sanoma Media Finland, extended its portfolio
of radio stations, currently based on Radio Aalto and Radio Rock, by purchasing
Radio SuomiPOP, Groove FM and Metro FM. The results of the acquired operations
will be consolidated to Sanoma from the beginning of Q3 2012.
On 4 July, Sanoma Media Belgium acquired and closed the acquisition of
Communication Agency HeadOffice. HeadOffice is a relationship marketing agency
that is specialised in (online) direct marketing, customer magazines, brand
activation, content marketing and loyalty. The result of the new company will be
consolidated to Sanoma from the beginning of Q3 2012.
On 6 July, Sanoma announced a new EUR 600 million Revolving Credit Facility with
a five-year maturity. The margin depends on the leverage of the borrower, the
initial margin being 1.5% over Euribor. The new facility is replacing the
existing EUR 802 million syndicated revolving credit facility.
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.
- Underlying macro-economic uncertainty impacts overall advertising markets that
adversely affect the Media segment.
- Sanoma signed a five-year agreement covering the TV rights to the Finnish top
professional ice hockey league from the 2013-2014 season onwards. The new
agreement is a great example of multi-channel offering that Sanoma is able to
provide. The deal will give the company an access to a wealth of unique
additional content, aiming to leverage Sanoma's extensive range of media and
services to make the most of this material.
- In May, Sanoma Media acquired online retail group Read & View in the
Netherlands.
Key indicators 4-6/ 4-6/ Change 1-6/ 1-6/ Change 1-12/
EUR million 2012 2011 % 2012 2011 % 2011
Net sales 402.7 323.7 24.4 768.5 614.8 25.0 1,415.8
The Netherlands 208.1 130.6 59.3 379.7 235.9 60.9 642.0
Finland 76.7 79.4 -3.4 154.1 153.5 0.3 309.7
Russia & CEE 50.1 54.3 -7.8 99.1 105.7 -6.3 213.1
Belgium 54.6 48.7 12.0 111.4 98.8 12.7 209.1
Other businesses and 13.3 10.7 24.8 24.3 20.9 16.4 41.8
eliminations
Operating profit excluding non- 55.0 37.9 45.4 81.8 60.6 35.0 151.1
recurring items *
% of net sales 13.7 11.7 10.7 9.9 10.7
Operating profit 52.4 47.0 11.7 79.2 69.7 13.7 92.0
Capital expenditure 12.8 11.3 12.9 22.7
Number of employees at the end of the period (FTE) 5,978 5,449 9.7 5,844
Average number of employees (FTE) 5,996 5,394 11.2 5,624
* In 2012, the non-recurring items included in the second quarter EUR -2.6
million restructuring expenses. 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 * 1-6/ 1-6/
Magazines 2012 2011
Number of magazines published 278 280
Magazine copies sold, thousands 168,509 161,075
Advertising pages sold 23,667 23,260
Finnish TV operations
TV channels' share of TV advertising 34.2% 33.3%
TV channels' national commercial viewing share (10-44 years) 33.5% 35.2%
TV channels' national viewing share 15.2% 14.8%
Dutch TV operations
TV channels' share of TV advertising 27.5% 30.2%
TV channels' national viewing share (20-49 years) 20.0% 23.1%
* Including joint ventures
Second quarter
Net sales in Media grew by 24.4% to EUR 402.7 million (2011: EUR 323.7 million)
in April-June following the consolidation of acquired SBS TV and print
operations. Adjusted for structural changes, net sales declined by 4.6%.
The segment's advertising sales grew by 55.3% and represented 45.2% (2011:
36.2%) of the second quarter net sales. Online advertising sales increased by
11.6%.
The segment's print circulation sales increased by 1.5% and represented 39.3%
(2011: 48.2%) of the second 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 123.9%
compared to the comparable quarter and represented 31.5% (2011: 17.5%) of the
segment's total net sales.
In Media Netherlands, net sales grew by 59.3%. Most of this growth came from the
acquired TV and print operations, part of Sanoma Media Netherlands since 1
August 2011. In total, advertising sales grew significantly following the
consolidation of the TV operations, and represented 48.4% (2011: 29.5%) of the
Dutch net sales. Sanoma estimates that the TV advertising market in the
Netherlands decreased around 5% in April-June. The football European
Championship broadcasted by public TV channels adversely affected viewing shares
of SBS in June, which resulted in a lower viewing share compared to Q1 2012.
Online advertising sales, excluding acquired operations, continued to increase
clearly. Sanoma estimates that the Dutch market for consumer magazine
advertising decreased around 19% in April-June, while Sanoma Media Netherlands'
print advertising net sales declined significantly in the second quarter.
Magazine operations' sales, including the acquired operation, increased somewhat
driven by subscription sales. Single copy sales decreased slightly compared to
the comparable quarter. Circulation sales represented 39.7% (2011: 58.1%) of the
Dutch net sales. The declining trends in the readers market continued.
In Media Finland, net sales decreased by 3.4% in the second quarter, due to
somewhat decreasing advertising sales. According to TNS Gallup Adex, the TV
advertising market in Finland decreased by 3.4% in the second quarter compared
to the comparable quarter. The magazine advertising market decreased by 6.0%. In
total, advertising sales of the Finnish operations represented 45.8% (2011:
47.3%) of net sales in the second quarter. Circulation sales were at the
comparable quarter's level, as subscription sales were at the comparable
period's level and single copy sales increased slightly, and represented 41.6%
(2011: 40.1%) of the Finnish net sales.
Net sales in Media Belgium increased by 12.0% due to acquired operations.
Magazine operations' sales decreased significantly, as both advertising and
circulation sales declined, due to negative consumer confidence and decline in
print advertising spending. Sanoma estimates that the magazine advertising
market in Belgium decreased around 8% in April-June. Sanoma Media Belgium
retained its market position in a decreasing readers market. Sanoma estimates
that, the TV advertising market in Belgium declined by around 11% in April-June.
Sanoma's TV operations in Belgium continued to grow and its net advertising
market share improved to 33.0% (2011: 31.1%). In total, advertising sales
represented 34.4% (2011: 26.3%) and circulation sales 49.1% (2011: 58.7%) 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 7.8%, 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 decreased slightly
compared to the comparable quarter. In total, advertising sales represented
54.4% (2011: 52.2%) 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 continued to come down in
most countries. Circulation sales decreased therefore clearly, and represented
33.9% (2011: 36.1%) 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 April-
June increased by 45.4% to EUR 55.0 million (2011: EUR 37.9 million), mainly due
to acquired operations. In the Netherlands, the consolidation of the new
operations offset the weakened underlying print results in the second quarter.
In Finland, the operating profit increased as the magazine operations improved
its profitability. In Belgium, the operating profit improved somewhat due to
structural changes. In Russia and CEE countries, the operating profit declined
significantly, mainly as a result of lower net sales. Non-recurring items
included in the operating profit totalled EUR -2.6 (2011: EUR 9.1 million)
related to restructuring. In the comparable year, non-recurring items included a
gain on the sale of assets.
Media's investments in tangible and intangible assets totalled EUR 7.0 million
(2011: EUR 5.1 million) and consisted partly of ICT investments.
NEWS
The News segment includes the Sanoma News strategic business unit, Finland's
leading player in newspaper publishing and online media.
- Underlying macro-economic uncertainty impacts the advertising market,
particularly printed recruitment advertising, which adversely affects the News
segment.
- Subscription sales continued to decrease driven by the VAT introduction from
the beginning of the year. - The effects of the on-going efficiency improvements
are not yet offsetting the negative impact from lower net sales.
- Daily newspaper Helsingin Sanomat will fundamentally renew its format
including the change from broadsheet to tabloid as of 8 January 2013.
Key indicators 4-6/ 4-6/ Change 1-6/ 1-6/ Change 1-12/
EUR million 2012 2011 % 2012 2011 % 2011
Net sales 106.8 112.2 -4.8 216.8 220.6 -1.7 435.8
Helsingin Sanomat 56.2 61.2 -8.1 115.5 122.4 -5.6 238.5
Ilta-Sanomat 22.0 22.2 -0.6 43.2 41.2 4.9 84.4
Other publishing 24.3 25.0 -2.5 49.5 48.7 1.7 97.0
Other businesses and eliminations 4.3 3.9 8.5 8.5 8.3 2.9 15.9
Operating profit excluding non- 5.1 9.9 -48.8 14.0 22.8 -38.8 49.4
recurring items *
% of net sales 4.8 8.8 6.4 10.3 11.3
Operating profit 5.1 9.9 -48.8 14.0 22.8 -38.8 40.2
Capital expenditure 5.2 8.6 -39.6 16.9
Number of employees at the end of the period (FTE) 2,213 2,199 0.6 2,025
Average number of employees (FTE) 2,069 2,052 0.8 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 4-6/ 4-6/
Online services, unique visitors, weekly 2012 2011
Iltasanomat.fi 2,300,487 2,057,019
HS.fi 1,450,810 1,386,682
Huuto.net 466,305 458,303
Oikotie.fi 529,057 397,674
Taloussanomat.fi 656,190 576,076
1-12/ 1-12/
Circulation 2011 2010
Helsingin Sanomat 365,994 383,361
Ilta-Sanomat 143,321 150,351
Second quarter
In April-June, net sales in News decreased by 4.8% to EUR 106.8 (2011: EUR
112.2 million) of which one fourth can be explained by the parliamentary
elections. Adjusted for structural changes, sales decreased by 5.4%.
Print circulation sales decreased slightly, as single copy sales were at the
comparable quarter's level and subscription sales decreased slightly driven by
the VAT introduction from the beginning of the year. Circulation sales accounted
for 41.8% (2011: 40.9%) of the segment's net sales.
Advertising sales decreased clearly due to adverse market conditions. The slight
growth in online advertising sales was not able to offset the decline in print
advertising. Advertising sales represented 49.6% (2011: 52.2%) of the net sales
in News in the second quarter.
According to TNS Gallup Adex, newspaper advertising in the Finnish market
decreased by 13.4% in the second quarter compared to the comparable quarter.
Online advertising sales included in the statistics was up by 1.4%.
Total online sales increased by 6.7%. Online sales consisting mostly of
advertising, but also increasingly services and content, represented 13.2%
(2011: 11.8%) of the segment's net sales.
The net sales of the Helsingin Sanomat business unit decreased by 8.1%. The
underlying macro-economic uncertainty affected recruitment advertising sales in
particular. In addition, the parliamentary elections of 2011 impacted positively
on the comparable quarter's sales. Accordingly, advertising sales decreased
clearly and represented 52.6% (2011: 56.1%) of the business unit's net sales.
Subscription sales decreased slightly driven by the VAT introduction from the
beginning of the year. The multichannel use of Helsingin Sanomat continued to
grow, expanding the reach of the Helsingin Sanomat product family.
The Ilta-Sanomat business unit's net sales decreased by 0.6%. Advertising sales
were at comparable quarter's level and represented 31.6% (2011: 31.7%) of the
business unit's net sales. Circulation sales were at the comparable period's
level. The total volume of the Finnish print tabloid market has decreased
somewhat in the last 12 months. Ilta-Sanomat continued to strengthen its market
leadership and the market share is 58.6% (2011: 58.2%) of the tabloid newsstand
market for the rolling 12-month period.
Net sales from other publishing operations decreased by 2.5%, as net sales of
free sheets and regional newspapers continued to decline.
In April-June, News' operating profit excluding non-recurring items decreased by
48.8% to EUR 5.1 million. The effects of the on-going efficiency improvements
did not offset lower net sales. News' operating profit did not include any
(2011: EUR 0.0 million) non-recurring items.
News' investments in tangible and intangible assets totalled EUR 2.6 million
(2011: EUR 5.1 million), and consisted mainly of investments in online business,
ICT and replacement investment in printing.
LEARNING
The Learning segment consists of Sanoma's learning business and other
businesses, which includes language services and book printing 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 fully integrated into the Finnish operations
and the Swedish educational publisher Sanoma Utbildning (formerly Bonnier
Utbildning). Finnish general literature publisher WSOY was divested early
October 2011.
- In April 2012, Sanoma divested its book logistics company Porvoon Kirjakeskus.
In 2011, Kirjakeskus' net sales were EUR 10.1 million and EBIT excluding non-
recurring items was EUR 1.9 million.
- In June 2012, Sanoma divested the Esmerk business information services
operations. In 2011, Esmerk's net sales were EUR 10.6 million and EBIT excluding
non-recurring items was EUR 1.0 million.
- In June 2012, Sanoma acquired the testing and examination company Bureau ICE.
The result of the company will be consolidated to Sanoma from the beginning of
Q3 2012.
Key indicators 4-6/ 4-6/ Change 1-6/ 1-6/ Change 1-12/
EUR million 2012 2011 % 2012 2011 % 2011
Net sales 120.8 108.6 11.3 174.2 169.2 2.9 343.1
Learning 109.3 87.4 25.1 143.5 121.7 17.9 256.6
Other businesses 12.5 22.6 -44.8 33.5 50.7 -33.9 91.7
Eliminations -1.0 -1.5 30.0 -2.8 -3.1 11.7 -5.3
Operating profit excluding non- 45.9 29.0 58.2 32.0 22.9 39.5 45.5
recurring items *
% of net sales 38.0 26.7 18.3 13.5 13.3
Operating profit 41.5 27.3 52.0 27.6 22.1 24.7 16.6
Capital expenditure 3.9 4.4 -12.4 11.5
Number of employees at the end of the period (FTE) 2,139 2,627 -18.6 2,489
Average number of employees (FTE) 2,363 2,636 -10.3 2,583
* In 2012, the non-recurring items included in the second quarter EUR 5.7
million gain on sales of Esmerk, EUR -7.5 million impairment of goodwill and EUR
-2.6 million restructuring expenses. 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, the non-recurring items included
EUR -2.9 million write-down of intangible assets.
Second quarter
In April-June, net sales in the Learning segment increased by 11.3% to EUR
120.8 million (2011: EUR 108.6 million), mainly related to timing between
quarters and structural changes. Adjusted for structural changes, net sales
increased by 12.4%.
The learning business has, by nature, an annual cycle and strong seasonality. It
accrues 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 increased by 25.1%, mainly as a result of
timing differences between quarters and acquisitions made in October 2011. In
all countries the market conditions remained stable.
Net sales in other businesses, which included language services and business
information operations, declined by 44.8% mainly as a result of structural
changes.
Book logistics company Porvoon Kirjakeskus was divested in April 2012 and it is
no longer included in Learning's figures from the beginning of April 2012.
Business information service provider Esmerk was divested in June 2012 and it is
no longer included in Learning's figures from the beginning of June 2012.
Finnish general literature publisher WSOY was divested in 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 increased
by 58.2% to EUR 45.9 million (2011: EUR 29.0 million). The increase is mainly
due to timing differences between quarters of which approximately EUR 8 million
relates to a timing shift from the first quarter to the second quarter and some
EUR 6 million relates to an estimated shift from the second half of the year to
the second quarter. Non-recurring items included in the operating profit
totalled EUR -4.4 million (2011: EUR -1.7 million) related to impairment,
restructuring and the gain on the sale of Esmerk. In the comparable period, non-
recurring items related to restructuring expenses.
Learning's investments in tangible and intangible assets totalled EUR 1.5
million (2011: EUR 2.4 million). They comprised mainly investment in ICT.
TRADE
The Trade segment includes Sanoma's press distribution and marketing services in
Finland.
- In May, Sanoma sold its kiosk operations in Finland, Estonia and Lithuania,
its press distribution operations in Estonia and Lithuania, including the
Rautakirja trade mark, as well as its bookstore operations in Estonia. As a
result, Sanoma recognised a non-taxable non-recurring capital gain of EUR 78.1
million in the second quarter of 2012.
- 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.
Key indicators 4-6/ 4-6/ Change 1-6/ 1-6/ Change 1-12/
EUR million 2012 2011 % 2012 2011 % 2011
Net sales 23.7 59.1 -60.0 47.3 140.9 -66.4 228.7
Kiosk operations 6.9 13.6 20.9
Trade services 23.0 27.3 -15.6 44.2 56.1 -21.1 103.6
Bookstores 0.6 18.8 -96.6 3.1 43.6 -92.9 77.0
Movie operations 6.5 28.4 28.4
Eliminations 0.0 -0.5 0.0 -0.8 -1.2
Operating profit excluding non- 1.9 -2.9 1.6 0.4 3.8
recurring items *
% of net sales 8.1 -4.9 3.4 0.3 1.7
Operating profit 3.2 39.8 -91.9 2.9 43.1 -93.3 38.9
Capital expenditure 2.2 20.4 -89.4 23.1
Number of employees at the end of the period (FTE) 244 921 -73.6 424
Average number of employees (FTE) 381 1,633 -76.7 1,158
* In 2012, the non-recurring items included in the second quarter a EUR 1.3
million gain on sale of real estates. 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 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, the non-recurring items included a EUR 5.3 million gain on
sale of Narvesen.
Operational indicators 1-6/ 1-6/
2012 2011
Customer volume in bookstores, thousands 275 2,972
Number of copies sold (press distribution), thousands 47,548 71,603
Second quarter
In April-June, Trade's net sales decreased by 60.0%, due to divestments of
operations. Net sales adjusted for structural changes decreased by 14.4%.
Kiosk operations in Finland, Estonia and Lithuania as well as Trade's press
distribution operations in Estonia and Lithuania divested in May 2012, are
treated as discontinued operations for the 2012 reporting and they are not
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 increased to EUR 1.9
million in April-June mainly due to structural changes. Non-recurring items
included in the operating profit totalled EUR 1.3 million (2011: EUR 42.7
million) related to divestments. In the comparable year, non-recurring items
included gains and losses on the sale of assets.
Trade's investments in tangible and intangible assets totalled EUR -1.1 million
(2011: EUR -2.1 million) related to general maintenance.
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-June, 68,801,434 (2011: 44,082,703) Sanoma shares were traded on the
NASDAQ OMX Helsinki. Traded shares accounted for some 42% (2011: 27%) of the
average number of shares. Sanoma's NASDAQ OMX Helsinki stock exchange turnover
was EUR 584.5 million (2011: EUR 653.5 million).
During the first six months, the volume-weighted average price of a Sanoma share
was EUR 8.48, with a low of EUR 5.79 and a high of EUR 11.70. At the end of June
2012, Sanoma's market capitalisation was EUR 1.1 billion (2011: EUR 2.1
billion), with Sanoma's share closing at EUR 6.95 (2011: EUR 12.78). Sanoma had
30,967 shareholders at the end of June, with foreign holdings accounting for
7.7% (2011: 7.2%) of all shares and votes. At the end of June 2012, Sanoma had
162,812,093 shares.
On 29 May 2012, Sanoma received flagging notifications pursuant to Chapter 2
Section 9 of the Finnish Securities Markets Act concerning shares in Sanoma
Corporation. Aatos Erkko's estate has announced that the ownership of shares in
Sanoma Corporation held by the estate (directly and indirectly via Asipex Oy) on
29 May 2012 will transfer to the Jane and Aatos Erkko Foundation after the
estate inventory has been concluded and the testamentary disposition has been
executed. Following this, the shares held by the estate in Sanoma Corporation
will decrease from the current 37,483,619 shares, to zero, i.e. 0.0000 per cent
of all shares and votes in Sanoma Corporation. The holding of Jane and Aatos
Erkko Foundation of the shares and voting rights of Sanoma Corporation will
increase by the corresponding amount, thus exceeding 20 per cent of all shares
and votes in Sanoma Corporation.
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 of 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. From the end
of June 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 second 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 second 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 process. 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 the availability of capital. On the 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 30 June 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
4-6/ 4-6/ 1-6/ 1-6/ 1-12/
CONTINUING OPERATIONS 2012 2011 2012 2011 2011
NET SALES 646.5 592.6 1,190.1 1,122.8 2,378.1
Other operating income 19.4 70.0 28.0 77.0 116.5
Materials and services 212.2 217.3 402.1 422.8 858.2
Employee benefit expenses 156.4 152.1 312.6 300.2 611.7
Other operating expenses 118.2 136.6 240.6 255.2 541.3
Share of results in associated companies -0.1 -0.1 -1.2
Depreciation, amortisation and impairment 80.6 39.8 148.3 77.5 309.5
losses
-------------------------------------------------------------------------------
OPERATING PROFIT 98.5 116.7 114.4 143.9 172.6
Share of results in associated companies -3.4 -0.1 -19.8 1.8 -3.7
Financial income 4.9 1.4 11.9 3.6 13.9
Financial expenses 19.1 6.6 39.8 11.3 46.6
-------------------------------------------------------------------------------
RESULT BEFORE TAXES 80.8 111.3 66.7 138.0 136.3
Income taxes -21.8 -18.4 -25.4 -26.7 -57.7
-------------------------------------------------------------------------------
RESULT FOR THE PERIOD FROM CONTINUING 59.0 92.9 41.3 111.3 78.6
OPERATIONS
DISCONTINUED OPERATIONS
Result for the period from discontinued 78.6 4.6 79.7 4.7 7.4
operations
-------------------------------------------------------------------------------
RESULT FOR THE PERIOD 137.6 97.5 121.0 116.0 86.0
Result from continuing operations attributable to:
Equity holders of the Parent Company 56.3 92.9 37.4 111.4 77.0
Non-controlling interests 2.7 -0.1 3.9 -0.1 1.5
Result attributable to:
Equity holders of the Parent Company 135.0 97.5 117.2 116.1 84.5
Non-controlling interests 2.6 -0.1 3.8 -0.1 1.5
Earnings per share for result attributable
to the equity holders of the Parent company:
Earnings per share, EUR, continuing 0.35 0.57 0.23 0.68 0.47
operations
Diluted earnings per share, EUR, 0.35 0.57 0.23 0.68 0.47
continuing operations
Earnings per share, EUR, discontinued 0.48 0.03 0.49 0.03 0.05
operations
Diluted earnings per share, EUR, 0.48 0.03 0.49 0.03 0.05 discontinued operations
Earnings per share, EUR 0.83 0.60 0.72 0.71 0.52
Diluted earnings per share, EUR 0.83 0.60 0.72 0.71 0.52
STATEMENT OF COMPREHENSIVE INCOME
EUR million 4-6/ 4-6/ 1-6/ 1-6/ 1-12/
2012 2011 2012 2011 2011
Result for the period 137.6 97.5 121.0 116.0 86.0
Other comprehensive income:
Change in translation differences -6.8 0.5 15.7 6.5 -25.6
Cash flow hedges -1.1 -0.9 -2.3 0.8 -11.7
Income tax related to cash flow hedges 0.3 0.2 0.6 -0.2 2.9
Other comprehensive income for the period, -7.7 -0.2 13.9 7.1 -34.4
net of tax
-------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 129.9 97.2 134.9 123.1 51.6
Total comprehensive income attributable to:
Equity holders of the Parent Company 127.3 97.3 131.1 123.2 50.1
Non-controlling interests 2.6 -0.1 3.8 -0.1 1.5
CONSOLIDATED BALANCE SHEET
EUR million 30.6.2012 30.6.2011 31.12.2011
ASSETS
NON-CURRENT ASSETS
Tangible assets 288.7 363.7 343.6
Investment property 4.8 8.6 5.8
Goodwill 2,303.8 1,418.5 2,316.2
Other intangible assets 709.3 417.2 709.8
Interests in associated companies 17.4 290.6 219.3
Available-for-sale financial assets 15.4 15.9 15.4
Deferred tax receivables 39.1 37.6 29.9
Trade and other receivables 61.0 38.2 44.3
---------------------------------------------------------------------
NON-CURRENT ASSETS, TOTAL 3,439.6 2,590.3 3,684.3
CURRENT ASSETS
Inventories 81.7 128.1 96.8
Income tax receivables 25.9 19.7 12.5
Trade and other receivables 447.9 394.8 418.4
Available-for-sale financial assets 0.3 0.6 0.3
Cash and cash equivalents 84.1 53.2 116.0
---------------------------------------------------------------------
CURRENT ASSETS, TOTAL 640.0 596.4 644.0
ASSETS, TOTAL 4,079.5 3,186.7 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 -10.4 0.8 -8.7
Other equity 1,024.0 1,048.7 988.0
---------------------------------------------------------------------
1,288.1 1,324.0 1,253.9
Non-controlling interests 273.3 4.9 270.3
---------------------------------------------------------------------
EQUITY, TOTAL 1,561.5 1,328.9 1,524.2
NON-CURRENT LIABILITIES
Deferred tax liabilities 146.2 93.2 146.1
Pension obligations 16.8 25.1 17.2
Provisions 6.3 9.0 6.3
Interest-bearing liabilities 1,218.4 600.4 1,101.2
Trade and other payables 41.8 17.4 38.9
---------------------------------------------------------------------
NON-CURRENT LIABILITIES, TOTAL 1,429.5 745.0 1,309.7
CURRENT LIABILITIES
Provisions 12.7 12.3 15.3
Interest-bearing liabilities 322.3 445.9 626.0
Income tax liabilities 33.6 28.1 27.4
Trade and other payables 719.9 626.5 825.8
---------------------------------------------------------------------
CURRENT LIABILITIES, TOTAL 1,088.5 1,112.8 1,494.5
---------------------------------------------------------------------
LIABILITIES, TOTAL 2,518.1 1,857.8 2,804.1
EQUITY AND LIABILITIES, TOTAL 4,079.5 3,186.7 4,328.3
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 2.1 2.1 2.1
-------------------------------------------------------------------------------
Dividends paid -179.1 -179.1 -0.3 -179.4
-------------------------------------------------------------------------------
Change in non-
controlling
interests 6.6 6.6 0.5 7.2
-------------------------------------------------------------------------------
Comprehensive
income for the 0.6 122.5 123.2 -0.1 123.1
period
-------------------------------------------------------------------------------
Equity at
30 June 2011 71.3 203.3 0.8 1,048.7 1,324.0 4.9 1,328.9
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 1.4 1.4 1.4
-------------------------------------------------------------------------------
Dividends paid -97.7 -97.7 -0.3 -98.0
-------------------------------------------------------------------------------
Change in non-
controlling
interests -0.6 -0.6 -0.4 -1.0
-------------------------------------------------------------------------------
Comprehensive
income for the -1.8 132.8 131.1 3.8 134.9
period
-------------------------------------------------------------------------------
Equity at
30 June 2012 71.3 203.3 -10.4 1,024.0 1,288.1 273.3 1,561.5
INCOME STATEMENT BY QUARTER
EUR million
1-3/ 4-6/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
CONTINUING OPERATIONS 2012 2012 2011 2011 2011 2011 2011
NET SALES 543.6 646.5 530.2 592.6 627.4 627.9 2,378.1
Other operating income 8.6 19.4 7.0 70.0 10.4 29.1 116.5
Materials and services 190.0 212.2 205.5 217.3 228.4 207.0 858.2
Employee benefit expenses 156.2 156.4 148.1 152.1 142.6 168.8 611.7
Other operating expenses 122.4 118.2 118.7 136.6 139.0 147.1 541.3
Share of results in associated companies -0.1 -1.1 -1.2
Depreciation, amortisation and 67.6 80.6 37.7 39.8 143.9 88.1 309.5
impairment losses
-------------------------------------------------------------------------------
OPERATING PROFIT 15.9 98.5 27.2 116.7 -17.2 46.0 172.6
Share of results in associated -16.4 -3.4 1.9 -0.1 -3.2 -2.2 -3.7
companies
Financial income 7.0 4.9 2.3 1.4 1.0 9.3 13.9
Financial expenses 20.7 19.1 4.7 6.6 13.1 22.2 46.6
-------------------------------------------------------------------------------
RESULT BEFORE TAXES -14.1 80.8 26.7 111.3 -32.5 30.8 136.3
Income taxes -3.6 -21.8 -8.3 -18.4 -21.3 -9.7 -57.7
-------------------------------------------------------------------------------
RESULT FOR THE PERIOD FROM -17.8 59.0 18.4 92.9 -53.8 21.1 78.6
CONTINUING OPERATIONS
DISCONTINUED OPERATIONS
Result for the period from 1.2 78.6 0.1 4.6 -0.5 3.3 7.4
discontinued operations
-------------------------------------------------------------------------------
RESULT FOR THE PERIOD -16.6 137.6 18.5 97.5 -54.4 24.4 86.0
Result from continuing operations attributable to:
Equity holders of the Parent -19.0 56.3 18.4 92.9 -49.2 14.9 77.0
Company
Non-controlling interests 1.2 2.7 0.0 -0.1 -4.6 6.2 1.5
Result attributable to:
Equity holders of the Parent -17.8 135.0 18.5 97.5 -49.7 18.1 84.5
Company
Non-controlling interests 1.2 2.6 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, -0.12 0.35 0.11 0.57 -0.30 0.09 0.47
continuing operations
Diluted earnings per share, EUR, -0.12 0.35 0.11 0.57 -0.30 0.09 0.47
continuing operations
Earnings per share, EUR, 0.01 0.48 0.00 0.03 0.00 0.02 0.05
discontinued operations
Diluted earnings per share, EUR, 0.01 0.48 0.00 0.03 0.00 0.02 0.05
discontinued operations
Earnings per share, EUR -0.11 0.83 0.11 0.60 -0.31 0.11 0.52
Diluted earnings per share, EUR -0.11 0.83 0.11 0.60 -0.31 0.11 0.52
CONSOLIDATED CASH FLOW STATEMENT 1-6/ 1-6/ 1-12/
EUR million 2012 2011 2011
OPERATIONS
Result for the period 121.0 116.0 86.0
Adjustments
Income taxes 26.0 26.6 58.1
Financial expenses 39.8 11.3 49.1
Financial income -11.8 -3.6 -13.9
Share of results in associated companies 19.8 -1.8 4.9
Depreciation, amortisation and impairment losses 150.9 81.7 319.7
Gains/losses on sales of non-current assets -85.5 -52.5 -56.8
Other adjustments -103.2 -34.6 -116.9
Change in working capital
Change in trade and other receivables -52.1 -24.9 0.8
Change in inventories -12.3 -9.0 0.4
Change in trade and other payables, and provisions -36.3 -38.1 49.0
Interest paid -21.2 -6.6 -23.6
Other financial items -4.5 -5.3 -17.4
Taxes paid -33.7 -37.0 -65.5
-------------------------------------------------------------------------------
CASH FLOW FROM OPERATIONS -3.1 22.2 273.8
INVESTMENTS
Acquisition of tangible and intangible assets -29.7 -34.9 -70.8
Operations acquired -21.8 -41.0 -1,350.2
Sales of tangible and intangible assets 6.8 4.4 14.0
Operations sold 295.4 67.4 74.0
Loans granted -1.0 -7.8 -8.7
Repayments of loan receivables 8.7 17.8 246.3
Sales of short-term investments 0.0 -0.3 0.0
Interest received 1.8 0.8 3.2
Dividends received 5.0 13.3 14.9
-------------------------------------------------------------------------------
CASH FLOW FROM INVESTMENTS 265.1 19.7 -1,077.4
CASH FLOW BEFORE FINANCING 262.0 41.9 -803.6
FINANCING
Proceeds from share subscriptions 0.0
Minority capital investment/repayment of equity 264.0
Change in loans with short maturity -106.0 -28.5 -183.5
Drawings of other loans 507.3 210.1 1,042.7
Repayments of other loans -616.7 -66.0 -84.5
Payment of finance lease liabilities -0.4 -1.4 -2.0
Dividends paid -98.0 -179.4 -179.7
Donations/other profit sharing 0.0
-------------------------------------------------------------------------------
CASH FLOW FROM FINANCING -313.9 -65.2 857.1
CHANGE IN CASH AND CASH EQUIVALENTS
ACCORDING TO CASH FLOW STATEMENT -51.9 -23.3 53.6
Effect of exchange rate differences on cash and cash 0.9 0.0 -1.1
equivalents
NET CHANGE IN CASH AND CASH EQUIVALENTS -51.0 -23.4 52.4
Cash and cash equivalents at the beginning of the 93.5 41.1 41.1
period
Cash and cash equivalents at the end of the period 42.6 17.7 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/ 4-6/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2012 2012 2011 2011 2011 2011 2011
MEDIA
The Netherlands 171.6 208.1 105.3 130.6 174.0 232.2 642.0
Finland 77.4 76.7 74.2 79.4 70.0 86.2 309.7
Russia & CEE 49.0 50.1 51.4 54.3 50.8 56.7 213.1
Belgium 56.8 54.6 50.1 48.7 48.4 61.9 209.1
Other businesses and eliminations 11.0 13.3 10.2 10.7 12.3 8.6 41.8
-------------------------------------------------------------------------------
TOTAL 365.8 402.7 291.1 323.7 355.5 445.6 1,415.8
NEWS
Helsingin Sanomat 59.3 56.2 61.2 61.2 55.3 60.8 238.5
Ilta-Sanomat 21.2 22.0 19.1 22.2 21.6 21.6 84.4
Other publishing 25.2 24.3 23.7 25.0 22.9 25.4 97.0
Other businesses and eliminations 4.3 4.3 4.4 3.9 3.4 4.2 15.9
-------------------------------------------------------------------------------
TOTAL 110.0 106.8 108.4 112.2 103.2 112.0 435.8
LEARNING
Learning 34.2 109.3 34.3 87.4 100.2 34.7 256.6
Other businesses 21.0 12.5 28.0 22.6 22.4 18.7 91.7
Eliminations -1.7 -1.0 -1.7 -1.5 -1.4 -0.8 -5.3
-------------------------------------------------------------------------------
TOTAL 53.4 120.8 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 23.0 28.8 27.3 24.4 23.2 103.6
Bookstores 2.5 0.6 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 0.0 -0.3 -0.5 -0.4 0.0 -1.2
-------------------------------------------------------------------------------
TOTAL 23.7 23.7 81.8 59.1 61.0 26.9 228.7
Other companies and eliminations -9.3 -7.5 -11.7 -11.0 -13.5 -9.3 -45.4
-------------------------------------------------------------------------------
CONTINUING OPERATIONS 543.6 646.5 530.2 592.6 627.4 627.9 2,378.1
OPERATING PROFIT BY SEGMENT
EUR million 1-3/ 4-6/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2012 2012 2011 2011 2011 2011 2011
Media 26.8 52.4 22.7 47.0 -31.0 53.2 92.0
News 8.9 5.1 12.9 9.9 12.5 4.9 40.2
Learning -13.9 41.5 -5.2 27.3 17.3 -22.7 16.6
Trade -0.3 3.2 3.3 39.8 -8.1 3.9 38.9
Other companies and eliminations -5.5 -3.8 -6.5 -7.4 -7.9 6.7 -15.1
--------------------------------------------------------------------------
CONTINUING OPERATIONS 15.9 98.5 27.2 116.7 -17.2 46.0 172.6
OPERATING PROFIT EXCLUDING NON-RECURRING ITEMS BY SEGMENT
EUR million 1-3/ 4-6/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2012 2012 2011 2011 2011 2011 2011
Media 26.8 55.0 22.7 37.9 25.8 64.6 151.1
News 8.9 5.1 12.9 9.9 12.5 14.1 49.4
Learning -13.9 45.9 -6.1 29.0 42.4 -19.7 45.5
Trade -0.3 1.9 3.3 -2.9 4.8 -1.4 3.8
Other companies and eliminations -5.5 -3.8 -6.5 -8.4 -7.9 -2.9 -25.7
-------------------------------------------------------------------------
CONTINUING OPERATIONS 15.9 104.2 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 1.1-30.6.2012
Unallo-
cated/
Lear- elimi- Continuing
EUR million Media News ning Trade nations operations
------------------------------------------------------------------
External net sales 767.1 216.3 173.0 33.3 -0.1 1,189.5
Internal net sales 1.3 0.6 1.2 14.1 -16.7 0.5
NET SALES, TOTAL 768.5 216.8 174.2 47.3 -16.8 1,190.1
OPERATING PROFIT 79.2 14.0 27.6 2.9 -9.3 114.4
Share of results in
associated companies -20.7 0.3 -0.1 0.8 -19.8
Financial income 11.9 11.9
Financial expenses 39.8 39.8
RESULT BEFORE TAXES 66.7
SEGMENT ASSETS 2,834.7 318.3 631.4 74.0 56.6 3,915.1
Sanoma segments 1.1-30.6.2011
Unallo-
cated/
Lear- elimi- Continuing
EUR million Media News ning Trade nations operations
------------------------------------------------------------------
External net sales 612.8 219.5 163.8 126.2 -0.1 1,122.3
Internal net sales 2.0 1.1 5.4 14.7 -22.7 0.5
NET SALES, TOTAL 614.8 220.6 169.2 140.9 -22.7 1,122.8
OPERATING PROFIT 69.7 22.8 22.1 43.1 -13.8 143.9
Share of results in
associated companies 2.6 0.5 0.0 -1.3 1.8
Financial income 3.6 3.6
Financial expenses 11.3 11.3
RESULT BEFORE TAXES 138.0
SEGMENT ASSETS 1,830.4 318.7 596.9 153.0 71.1 2,970.1
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 30.6.2012 30.6.2011 31.12.2011
Carrying amount at the beginning of the period 343.6 429.3 429.3
Increases 15.2 35.2 52.9
Acquisition of operations 0.1 0.1 7.0
Decreases -4.3 -1.7 -2.2
Disposal of operations -44.9 -72.1 -86.9
Depreciation for the period -21.7 -26.6 -50.5
Impairment losses for the period -0.1 0.1 -3.9
Exchange rate differences and other changes 0.8 -0.5 -2.1
------------------------------------------------------------------------------
Carrying amount at the end of the period 288.7 363.7 343.6
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.
At the end of the reporting period, the commitments for acquisitions of
intangible assets (film and TV broadcasting rights included) were EUR 239.9
million (2011: EUR 16.1 million).
EFFECT OF ACQUISITIONS ON THE CONSOLIDATED BALANCE SHEET
EUR million 1-6/ 1-12/
2012 2011
Acquisition costs 7.8 1,415.2
Fair value of acquired net assets -1.0 433.2
---------------------------------------------------------
Goodwill 8.8 982.0
CONTINGENT LIABILITIES
EUR million 30.6.2012 30.6.2011 31.12.2011
Contingencies for own commitments
Mortgages 9.7 20.5 9.7
Pledges 2.4 1.6 2.5
Other items 45.7 0.5 0.3
TOTAL 57.8 22.7 12.5
Contingencies incurred on behalf of other companies
Guarantees 0.0
TOTAL 0.0
Other contingencies
Operating lease liabilities 148.3 210.2 196.1
Royalties 18.0 18.9 19.8
Other items 48.9 30.9 51.3
TOTAL 215.2 260.0 267.2
-------------------------------------------------------------------------
TOTAL 273.0 282.7 279.7
DERIVATIVE INSTRUMENTS
EUR million
Fair values 30.6.2012 30.6.2011 31.12.2011
Interest rate derivatives
Interest rate swaps -15.0 0.6 -11.5
Currency derivatives
Forward contracts 2.6 0.6
KEY EXCHANGE RATES
1-6/ 1-6/ 1-12/
Average rate 2012 2011 2011
EUR/CZK (Czech Koruna) 25.25 24.47 24.64
EUR/HUF (Hungarian Forint) 295.47 269.39 280.46
EUR/PLN (Polish Zloty) 4.25 3.97 4.13
EUR/RUB (Russian Rouble) 40.20 40.45 41.02
EUR/SEK (Swedish Crown) 8.88 8.93 9.00
Closing rate 30.6.2012 30.6.2011 31.12.2011
EUR/CZK (Czech Koruna) 25.64 24.35 25.79
EUR/HUF (Hungarian Forint) 287.77 266.11 314.58
EUR/PLN (Polish Zloty) 4.25 3.99 4.46
EUR/RUB (Russian Rouble) 41.37 40.40 41.77
EUR/SEK (Swedish Crown) 8.77 9.17 8.91
Press Conference
A press and analyst meeting will be held in English by President and CEO Harri-
Pekka Kaukonen and CFO Kim Ignatius today at 11:00 Finnish time (CET+1) at
Nelonen studio, Pursimiehenkatu 26 C (third floor), Helsinki. A 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 0077 (Europe) or +1 334 323 6201 (US) and quote the
conference code 918916.
Sanoma's 3Q12 Interim Report will be published on Wednesday, 31October, at
approximately 8:30 Finnish time (CET+1).
Sanoma Corporation
Kim Ignatius
Chief Financial Officer
Additional information: Sanoma's Investor Relations, Martti Yrjö-Koskinen, tel.
+358 40 684 4643 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 some 20 countries throughout Europe. In 2011, the Group's
restated net sales totalled EUR 2.4 billion.
[HUG#1631000]
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