2009-11-06 07:00:00 CET
2009-11-06 07:02:01 CET
REGULATED INFORMATION
Sanoma Oyj - Interim report (Q1 and Q3)
Sanoma's Interim Report 1 Jan-30 Sept 2009: Reshaping for the Future
Interim Report 6/11/2009 8:00
- Sanoma Group's net sales totalled EUR 2,034.4 (2,231.4) million in
the first nine months, 8.8% less than in the comparable period. Net
sales in the third quarter were EUR 701.1 (778.6) million.
- Operating profit excluding non-recurring items was EUR 180.2
(246.6) million. Non-recurring items totalled
EUR -17.1 (18.5) million. The third quarter EBIT excluding
non-recurring items was EUR 84.5 (100.5) million.
- Earnings per share were EUR 0.62 (1.10) in January-September. The
third quarter EPS amounted to EUR 0.30 (0.37).
- Sanoma's outlook for 2009 is unchanged, but divisional outlooks for
Entertainment and Trade have been adjusted.
KEY INDICATORS 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
EUR million 2009 2008 % 2009 2008 % 2008
Net sales 701.1 778.6 -9.9 2,034.4 2,231.4 -8.8 3,030.1
Operating profit 84.5 100.5 -15.9 180.2 246.6 -26.9 295.7
excluding
non-recurring items
% of net sales 12.0 12.9 8.9 11.1 9.8
Operating profit 77.1 94.0 -18.0 163.1 265.2 -38.5 236.3
Result for the 47.2 61.1 -22.7 98.5 180.7 -45.5 120.8
period
Capital expenditure 61.2 77.6 -21.1 109.9
% of net sales 3.0 3.5 3.6
Equity ratio, % 39.4 39.0 40.0
Net gearing, % 90.3 75.9 78.5
Number of employees at the end of the 16,998 18,693 -9.1 18,453
period FTE
Average number of employees FTE 17,507 18,031 -2.9 18,168
Earnings/share, EUR 0.30 0.37 -19.7 0.62 1.10 -44.2 0.72
Cash flow from 0.70 0.74 -5.5 0.74 0.97 -23.0 1.56
operations/share,
EUR
Hannu Syrjänen, President and CEO"Our focus this year has been on improving efficiency and I am
pleased that we have cut our operating expenses by 6.7% so far. New
efficiency improvement initiatives were launched in the third quarter
and efficiency will continue to be the focus of all our operations in
the fourth quarter and 2010 as well.
As the operating environment continues to change, we are preparing
ourselves for the future and are ready to invest further in
developing our operations: renewing our products and services,
developing our concepts and creating new initiatives. At the same
time, we are reshaping our operations by closing down businesses,
which are no longer meeting our set targets. These actions, together
with other restructuring expenses, are having a visible impact on our
result for the second half of 2009.
In parallel, we are putting a strong emphasis on our online
operations, one of Sanoma's focus areas. By using the experience of
experts across our five divisions, we are continuously developing our
transactional services, such as comparison and classified sites, as
well as gaming platforms and verticals. All these efforts are being
driven by enhanced innovation as well as a clearly up-scaled merger
and acquisition ambition."
Outlook for 2009
In 2009, Sanoma's net sales are expected to decrease. It is estimated
that the Group's operating profit excluding non-recurring items will
clearly decline from the previous year. In the comparable year of
2008, operating profit excluding non-recurring items was EUR 295.7
million. The Group's interest expenses are expected to decrease
markedly, and as a result, Sanoma's net result for 2009 is expected
to decrease less than its operating profit. The Group will strongly
increase the efficiency of its operations in all markets.
The outlook for Sanoma's net sales and operating profit in 2009 is
affected by the development of advertising and private consumption in
the Group's countries of operation. In 2009, advertising and private
consumption are expected to decrease from 2008 levels in all of
Sanoma's markets.
Net sales
In January-September Sanoma's net sales were EUR 2,034.4 (2,231.4)
million, 8.8% below the comparable period. Excluding the effect of
exchange rate changes, net sales would have been 7.0% lower than in
the comparable period. Adjusted for changes in the Group structure,
January-September net sales decreased by 9.5%. Net sales were at the
comparable year's level in Sanoma Entertainment. Net sales were down
in other divisions, with advertising sales in particular being
affected by the general economic situation.
Advertising sales decreased clearly and accounted for 21% (24%) of
the Group's total net sales. Online advertising sales, however,
remained stable with Sanoma Magazines Netherlands and Sanoma
Entertainment even reporting growth. The Group's subscription sales
remained stable. Single copy sales across the Group fell somewhat,
mostly in magazines in Russia and CEE countries. In geographical
terms, Finland accounted for 51% (49%) of net sales, with other EU
countries accounting for 46% (46%) and non-EU countries for 3% (5%).
Result
Sanoma's operating profit excluding non-recurring items was EUR 180.2
(246.6) million in January-September, 26.9% less than in the
comparable period. The operating profit included a total of EUR -17.1
(18.5) million in non-recurring items. These non-recurring expenses
are related to restructuring of operations in several divisions and
include, for example, voluntary severance packages offered to
employees. In the comparable period, non-recurring items consisted of
capital gains from divestments, and restructuring costs and inventory
write-downs in multi-volume book publishing.
NON-RECURRING ITEMS 7-9/ 7-9/ 1-9/ 1-9/ 1-12/
EUR million 2009 2008 2009 2008 2008
Magazines
Restructuring expenses (Magazines Belgium) -0.2 -1.5
Restructuring expenses (Magazines -4.6 -4.6
Netherlands)
A gain on sale of R.C.V. Entertainment 23.5 23.5
A gain on sale of Payback Kft 7.0
Expenses on closing down a youth site and
related impairment loss -5.1
Impairment loss of immaterial
rights and goodwill -78.6
News
Expenses related to the efficiency -8.4
programme
Learning & Literature
Restructuring expenses -1.5 -1.5
Expense related to the sale of children's -1.1 -1.1
magazines
Inventory write-downs and
restructuring expenses -6.5 -6.5 -7.6
Other companies
A gain on sale of a land area 1.5 1.5
NON-RECURRING ITEMS TOTAL -7.4 -6.5 -17.1 18.5 -59.3
The Group's operating profit was EUR 163.1 (265.2) million or 8.0%
(11.9%) of net sales. Operating profit grew in Sanoma Entertainment,
where all business units developed favourably. In other divisions,
operating profit decreased mainly as a result of lower sales and
restructuring expenses.
Sanoma's net financial items totalled EUR -21.7 (-29.8) million.
Financial income amounted to EUR 19.6 (12.7) million, of which
exchange rate gains were EUR 13.1 (3.4) million. Financial expenses
amounted to EUR 41.3 (42.5) million and consisted mainly of interest
expenses, which amounted to EUR 21.5 (38.5) million. The refined
financing structure and lower reference rates have clearly decreased
the Group's interest expenses. Exchange rate losses amounted to EUR
13.2 (2.9) million. Financial expenses also included a write-down of
the shares in the e-commerce company Fruugo, amounting to EUR 5
million.
The result before taxes was EUR 139.2 (240.4) million. Sanoma's
effective tax rate was higher than in the comparable period, mainly
because of a non-taxable capital gain in the first quarter of 2008.
Earnings per share were EUR 0.62 (1.10). The result for the period
totalled EUR 98.5 (180.7) million.
Efficiency improvements
In 2009, Sanoma has initiated a large number of efficiency
improvement programmes to strengthen its competitive position as well
as safeguard profitability and cash flows.
Structural changes initiated by Sanoma so far include an extensive
programme in Sanoma News, where editorial and marketing processes
have been redesigned to increase co-operation between print and
online operations. In addition, Sanoma News will cut costs by EUR 30
million in 2009 through diminished personnel expenses, among others.
Sanoma Magazines Belgium will in the future focus more on its key
titles and strengthening relationships with its readers. This renewed
strategy will also lead to annual cost savings of EUR 12 million and
a reduced number of personnel. In Estonia, Sanoma Trade has decided
to reorganise its businesses. This reorganisation aims to ensure its
ability to compete also in the future, improve the efficiency of
operations, and more importantly, enhance co-operation in marketing
and business development. Sanoma Magazines Netherlands will
strengthen the two pillars of its operations by gathering all print
operations under Sanoma Uitgevers and all online operations under
Sanoma Digital Netherlands. The Dutch direct marketing organisation
has been closed down since direct marketing has become less important
as a marketing channel. In Sanoma Learning & Literature,
restructuring continues in multi-volume books and integration of
operations in language services.
Sanoma has also reduced personnel and carried out short-term cost
saving programmes in several other business units either as a result
of the weakened economic outlook or related to restructuring
initiated by changing business needs in, for example, Russia, the
Czech Republic and Finland. In the first nine months, the Group has
cut back its operating expenses by 6.7% with both cost of sales and
other operating expenses decreasing in line with the net sales
development. At the end of September, Sanoma had over 1,400 employees
(FTE) less than at the year-end, corresponding to a reduction of 7.9%
in work force. Compared to the end of September 2008, the reduction
is nearly 1,700 or 9.1%. The effects of personnel reductions are
becoming more visible in personnel expenses towards the end of the
year and at the beginning of 2010.
The non-recurring costs of the restructuring measures in the first
nine months amount to EUR 17.1 (6.5) million. Since the efficiency
improvements will continue in the fourth quarter as well, more
restructuring costs will be incurred.
Balance sheet and financial position
At the end of September, the consolidated balance sheet totalled EUR
3,186.0 (3,649.1) million. Cash flow from operations was EUR 119.6
(155.4) million and cash flow per share was EUR 0.74 (0.97). Cash
flow from operations was down as a result of a weaker operational
result in January-September. The development of cash flow from
operations was balanced by a decrease in working capital, lower
financial items and taxes paid.
There were no significant changes in the Group's financial position
in January-September. Sanoma's equity ratio at the end of September
was 39.4% (39.0%). Net gearing increased to 90.3% (75.9%). Equity
totalled EUR 1,181.7 (1,346.2) million. Interest-bearing liabilities
were EUR 1,133.4 (1,326.7) million and interest-bearing net debt EUR
1,067.0 (1,021.5) million. At the end of September, the Group's cash
and cash equivalents totalled EUR 66.4 (305.1) million. In the
comparable period, the Group prepared for the instability of the
financial markets by increasing its cash balance. The cash balance
was normalised by the end of 2008.
Sanoma's financial position is stable. The existing credit
facilities, such as the syndicated, long-term credit facility of EUR
802 million, cover all Sanoma's financing needs and Sanoma has no
need for material refinance in the near future. Net debt/EBITDA ratio
at the end of September was 2.8, in line with the Group's target to
keep the ratio below 3.5.
Investments, acquisitions and divestments
Investments in tangible and intangible assets totalled EUR 61.2
(77.6) million in January-September, and consisted mainly of ICT
systems as well as replacement investments and renovations. Sanoma
has a policy to keep the annual capital expenditure below EUR 100
million. In 2009 the Group's expenditure is expected to be well below
that level.
There were no significant transactions during the review period. In
the comparable period, Sanoma Magazines divested the Dutch movie
distribution company R.C.V. Entertainment and a capital gain of EUR
23.5 million was recorded for the transaction. On 11 March 2008,
Sanoma Learning & Literature completed its acquisition of the Polish
educational publisher Nowa Era.
SANOMA MAGAZINES
Sanoma Magazines, operating in 13 European countries, is a leading
publisher of magazines and has a strong presence in digital media.
The company actively reaches out to an audience of 290 million
consumers at every life stage, and aims to strengthen its market
leader positions in each of the markets it operates in.
- Sanoma Magazines' strong brands have been able to outperform market
development in its key markets.
- Efficiency improvements are becoming visible: Sanoma Magazines'
EBIT excluding non-recurring items developed clearly better in the
third quarter than in the two previous quarters.
- Sanoma Magazines prepares for the future by reorganising its Dutch
print and online operations.
Key indicators 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
EUR million 2009 2008 % 2009 2008 % 2008
Net sales 266.1 304.0 -12.5 804.2 907.9 -11.4 1,246.8
Operating profit 27.9 31.6 -11.6 75.0 102.8 -27.1 138.9
excluding non-recurring
items
% of net sales 10.5 10.4 9.3 11.3 11.1
Operating profit 23.1 31.6 -26.8 68.9 126.3 -45.5 85.7
Capital expenditure 17.8 19.9 -10.7 26.8
Number of employees at the end of the 5,355 5,911 -9.4 5,900
period FTE
Average number of employees FTE 5,521 5,668 -2.6 5,731
* In 2009, the non-recurring items included in the second quarter EUR
1.3 million and in the third quarter EUR 0.2 million Sanoma Magazines
Belgium's restructuring expenses and in the third quarter EUR 4.6
million Sanoma Magazines Netherlands' restructuring expenses. In
2008, the non-recurring items included EUR 23.5 million capital gain
from the divestment of movie distributor R.C.V. Entertainment in the
first quarter.
Operational indicators * 1-9/ 1-9/
2009 2008
Number of magazines published 298 333
Magazine copies sold, thousands 280,874 312,835
Advertising pages sold 37,788 49,123
* Including joint ventures
Sanoma Magazines' net sales in January-September amounted to EUR
804.2 (907.9) million, 11.4% less than in the comparable period. The
general economic situation affected advertising sales in all
operating countries with Sanoma Magazines International's net sales
being impacted the most. The Division's net sales adjusted for
changes in the Group structure were down by 12.2%. Of the Division's
net sales, 18% (17%) came from Finland. In July-September, the
Division's net sales decreased by 12.5% to EUR 266.1 (304.0) million
due mainly to weakening sales in Sanoma Magazines International.
The Division's advertising sales decreased by 24% in
January-September and represented 28% (32%) of net sales. The
economic downturn has hit Sanoma Magazines International's
advertising revenues in particular. The Division's online advertising
sales were on the comparable period's level.
Sanoma Magazines' circulation sales decreased by 4% and represented
61% (57%) of the Division's net sales. Subscription sales remained
stable during the first nine months and even increased slightly in
the Netherlands, Belgium and Finland. Single copy sales declined,
mostly in the CEE countries.
In January-September Sanoma Magazines Netherlands' net sales amounted
to EUR 354.5 (371.7) million, due to weaker print advertising sales
than in the comparable period. According to Nielsen Media Research,
the consumer magazine advertising market in the Netherlands decreased
by 17% in January-August 2009. However, Sanoma Magazines Netherlands'
strong brands outperformed advertising market development both in
print and online. New assets contributed to Sanoma Magazines
Netherlands' online advertising growth of over 7%. In total,
advertising sales represented 26% (27%) of Sanoma Magazines
Netherlands' net sales. Sanoma Magazines Netherlands also improved
its market position in the readers' market. Its circulation revenues
were almost at the comparable period's level, even though some titles
have been discontinued during the year. Subscription sales in
particular developed positively. Managing the Division's key titles
is important in all markets and in the Netherlands, one of the most
popular women's weeklies, Margriet, was renewed in July to further
strengthen its position in the readers' and advertising markets.
Sanoma Magazines Netherlands has decided to simplify its
organisational structure and will combine all printed products under
Sanoma Uitgevers and all online operations under Sanoma Digital
Netherlands. This enables Sanoma Magazines Netherlands to better
respond to the needs of the consumers and advertisers, share
knowledge internally and improve efficiency.
Sanoma Magazines International's net sales in January-September were
EUR 152.8 (224.3) million. The economic downturn has affected Sanoma
Magazines International's sales strongly. The reported net sales were
also clearly affected by the negative translation effects of
especially Russian Rouble and Hungarian Forint. Advertising sales
decreased in all countries, especially in Russia, Hungary and
Ukraine. Sanoma Magazines International reacted quickly to changing
market conditions at the beginning of the year and discontinued a
number of unprofitable magazine titles, which also lowered
advertising sales, in particular in the Czech Republic. In total,
advertising sales represented 48% (55%) of Sanoma Magazines
International's net sales. Circulation sales were clearly below the
comparable period. This is also partly attributable to the reduced
number of magazines published and, in some cases, the number of
issues. The publication frequency of various titles has been adjusted
in order to save costs. Sanoma Magazines International has improved
its market share in Romania and is now the leading magazine publisher
in the country. In Hungary, the company's leading position in the
online market was further strengthened through the acquisition of the
comparison site Olcsobbat.hu in September.
Net sales at Sanoma Magazines Belgium totalled EUR 154.8 (163.3)
million. In the readers' market, Sanoma Magazines Belgium
outperformed the market development. Its circulation sales remained
stable, with subscription sales even growing. In line with the market
development, advertising sales were below the comparable period and
represented 25% (27%) of net sales. Sanoma Magazines Belgium's
renewed strategy builds on its portfolio of strong brands, the high
quality of its magazines and its strong relationships with readers.
Sanoma Magazines Belgium is redesigning its organisation to be able
to better use the opportunities in the changing media environment.
Sanoma Magazines Finland's net sales amounted to EUR 145.3 (151.7)
million. Circulation sales in Finland held up well but advertising
sales were down from the comparable period. According to TNS Gallup
Adex, advertising in consumer magazines in Finland decreased by 21%
in January-September and the magazine single copy market decreased in
volume by 9%. Advertising sales represented 13% (16%) of Sanoma
Magazines Finland's net sales. Sanoma Magazines Finland outperformed
the market development both in advertising and the readers' market
and has increased its market shares. In particular the key titles,
like the women's weekly Me Naiset and the glossy Gloria together with
its brand extensions have increased their readership. In addition,
the custom publishing operations of Sanoma Magazines Finland have
gained new customers and improved their market share.
In January-September, Sanoma Magazines' operating profit excluding
non-recurring items was EUR 75.0 (102.8) million, a decrease of 27.1%
from the comparable period. Decreasing advertising sales affected
results in all businesses, in particular in Sanoma Magazines
International and also in Sanoma Magazines Netherlands. Operating
profit improved slightly in Finland. Non-recurring items totalled EUR
-6.1 (23.5) million and were related to restructuring in Sanoma
Magazines Belgium and the direct marketing organisation in the
Netherlands. In the comparable period, operating profit was improved
by a EUR 23.5 million non-recurring gain from the divestment of movie
distributor R.C.V. Entertainment. Operating profit for the first nine
months amounted to EUR 68.9 (126.3) million. The Division has
initiated several programmes to improve the profitability of its
business units. These contingency plans executed in all markets are
becoming more visible and in July-September, the Division's operating
profit excluding non-recurring items developed clearly better than in
the two previous quarters and totalled EUR 27.9 (31.6) million, 11.6%
less than in the comparable period.
Sanoma Magazines continues to develop its magazine portfolio and
invest in strengthening its market positions, with a special focus on
its key titles in each operating country. Sanoma Magazines wants to
become stronger in digital media, and can do so by leveraging its
existing assets. The growth in digital operations will be speeded up
by organisational changes. At the same time Sanoma Magazines
continues to strongly focus on improving efficiency and saving
costs.
In 2009, Sanoma Magazines' net sales are expected to decrease and it
is estimated that operating profit excluding non-recurring items will
be clearly below the previous year's level.
SANOMA NEWS
Sanoma News is the leading newspaper publisher in Finland, and its
products, both in print and digital format, have a strong presence in
the lives of their readers. In addition to Helsingin Sanomat, the
largest daily in the Nordic region, Sanoma News publishes other
national and regional newspapers and is also a significant digital
player in Finland.
- Sanoma News reshapes its organisation to better respond to changing
needs of its customers and improve efficiency. The total savings goal
of EUR 30 million will be achieved during 2009. The efficiency
improvements are visible in Sanoma News' third quarter results.
- The daily newspaper Helsingin Sanomat prepares to celebrate its
120th anniversary by launching revamped content supported by renewed
editorial processes.
- The circulation development of the tabloid Ilta-Sanomat continued
to show encouraging signs in the third quarter. Online advertising of
the Ilta-Sanomat business unit increased in the third quarter by 45%.
- Online display advertising performed well, partly boosted by Sanoma
Outlet, a performance based online advertising sales system launched
in the summer with very promising results.
Key indicators 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
EUR million 2009 2008 % 2009 2008 % 2008
Net sales 101.2 113.5 -10.8 316.0 355.5 -11.1 474.7
Operating profit 11.8 15.2 -22.7 29.8 47.9 -37.8 57.3
excluding non-recurring
items
% of net sales 11.6 13.4 9.4 13.5 12.1
Operating profit 11.8 15.2 -22.7 21.4 47.9 -55.4 57.3
Capital expenditure 8.0 13.5 -40.5 19.6
Number of employees at the end of the period 2,322 2,433 -4.6 2,449
FTE
Average number of employees FTE 2,431 2,504 -2.9 2,491
* In 2009, the non-recurring items included in the first quarter EUR
2.3 million and in the second quarter EUR 6.1 million expenses
related to the efficiency programme.
Operational indicators 1-9/ 1-9/
2009 2008
Distribution of free sheets, millions 56.0 70.2
1-12/ 1-12/
Audited circulation 2008 2007
Helsingin Sanomat 412,421 419,791
Ilta-Sanomat 161,615 176,531
7-9/ 7-9/
Online services, unique visitors, weekly 2009 2008
Iltasanomat.fi 1,603,731 1,364,050
HS.fi 1,094,630 939,063
Huuto.net 429,449 437,834
Oikotie.fi 347,121 317,769
Taloussanomat.fi 444,694 286,012
Keltainenporssi.fi 184,658 196,560
Sanoma News' net sales in January-September totalled EUR 316.0
(355.5) million, a decrease of 11.1% from the comparable period. Most
of the decrease came from the Helsingin Sanomat business unit, where
advertising sales declined significantly. Net sales in other business
units were also lower than in the comparable period. Adjusted for
changes in the Group structure, net sales decreased by 11.7%. In
July-September, the advertising market continued to be weak and the
Division's net sales were down by 10.8%, to EUR 101.2 (113.5)
million.
Although the advertising market contraction seems to have stabilised
in Finland in the past few months, the market is significantly below
the comparable period. According to TNS Gallup Adex, newspaper
advertising in Finland decreased by 24% in January-September. Job
advertising in Finland decreased by 55% and real estate advertising
by 38%. Advertising in free sheets was down by 18%. Online
advertising included in statistics also decreased by 7%. Following
the general advertising environment, the advertising sales of Sanoma
News decreased by 25% from the comparable period, with the classified
advertising development affecting the sales the most. Online
advertising sales, especially display advertising, performed clearly
better than the market and were almost at the comparable period's
level. Advertising sales represented 45% (53%) of the Division's net
sales in January-September.
The Finnish printed tabloid market is affected by the structural
migration to online and declined by 8% in January-September. However,
the circulation development over the summer showed positive signs.
The amount of online visitors is increasing constantly, improving the
reach of Sanoma News. The Division's circulation sales grew by 3%
with both subscription and single copy sales increasing. Circulation
sales accounted for 44% (38%) of the Division's net sales.
The Helsingin Sanomat business unit's net sales totalled EUR 176.3
(210.9) million. Circulation sales increased from the comparable
period due to new hybrid subscription models combining print and
digital products and increases in subscription prices. Advertising
sales were down markedly, and Helsingin Sanomat's job and real estate
print advertising, in particular, continued to be strongly affected
by the overall economic situation. Job advertising in the Helsingin
Sanomat daily paper was 56% behind the comparable period and real
estate advertising by 55%. In total, advertising sales represented
53% (62%) of business unit's net sales. According to the latest
National Readership Survey, Helsingin Sanomat daily newspaper
increased the number of its readers. Together with its growing online
audience, the reach of Helsingin Sanomat is at an all-time high.
Helsingin Sanomat has restructured its operations to develop its
multichannel news publishing further in order to better respond to
the changing needs of readers, as well as strengthen its media sales
and improve the efficiency.
Net sales of the Ilta-Sanomat business unit amounted to EUR 57.9
(63.0) million. Ilta-Sanomat had a 56.9% (57.1%) share of the tabloid
market. The positive development of the newsstand market together
with the content revamp in 2008, price increase at the end of 2008
and successful campaigning during 2009 raised Ilta-Sanomat's single
copy sales to the comparable period's level. The overall readership
was further strengthened by the continuous growth of online readers.
The unit's advertising sales decreased due to declining print
advertising revenues. Online advertising sales of the Iltasanomat.fi
site developed positively in the second and third quarters. In total,
advertising sales represented 22% (28%) of the business unit's net
sales in January-September.
Net sales from other publishing decreased to EUR 68.0 (72.8) million
due to lower advertising revenues in the regional papers in
particular. However, the circulation sales in the regional papers
grew slightly. Sanoma Lehtimedia has streamlined its organisation and
is now building a joint multilocal virtual newsroom for all its
regional papers. In the Sanoma Kaupunkilehdet business unit for free
sheets net sales decreased due to the merging of the Metro and
Uutislehti 100 titles last autumn. During the year, Sanoma
Kaupunkilehdet has improved its efficiency and gained market share
within the free sheet market. The Sanoma Digital business unit's net
sales increased and its advertising sales developed positively in
particular during the third quarter.
Net sales from other businesses, mainly comprising internal billing,
were EUR 107.1 (111.8) million. Net sales decreased due to fewer
internal printing jobs. External printing services developed well and
grew by 26% from the comparable period.
In January-September, Sanoma News' operating profit excluding
non-recurring items was EUR 29.8 (47.9) million, 37.8% less than in
the comparable period. The non-recurring items included in the
operating profit totalled EUR -8.4 (0.0) million and consisted of
expenses related to the efficiency programme, including such items as
voluntary severance packages to employees. The non-recurring costs
were incurred in the first and second quarters. Operating profit
including the non-recurring items totalled EUR 21.4 (47.9) million in
the first nine months. Efficiency improvements and cost-savings
offset only partly the effects of decreased advertising sales and
operating profits were below the comparable period in all reported
businesses. In July-September, the Division's operating profit
excluding non-recurring items decreased by 22.7% and was at EUR 11.8
(15.2) million. A number of cost-saving measures helped Sanoma News
to improve its efficiency compared to the previous quarters.
Sanoma News will continue the planned development of its printed
products and digital services. Renewal projects are ongoing in all
units to develop the products so that they will meet the changing
customer needs. The company has also decided to invest in a new
reader-customer management system to support, among other actions,
product development opportunities for newspapers in the multimedia
environment. However, in 2009 the media advertising market continues
to be challenging. Sanoma News will therefore continue its programme
to reshape its organisation and to adapt its operations to the lower
revenue level.
In 2009, net sales of Sanoma News are estimated to decrease clearly
and operating profit excluding non-recurring items will lessen
markedly from the previous year due to the decline in the advertising
market.
SANOMA ENTERTAINMENT
Sanoma Entertainment offers entertaining experiences on television,
radio, online and mobile. Sanoma Entertainment's business units
include Nelonen Media, which focuses on broadcast operations, and
Welho, Finland's largest cable television operator. The Division's
latest business unit is Sanoma Games, which is focused on online
casual gaming.
- Sanoma Entertainment continues to perform very well. The Division's
operating profit continued to grow significantly also in the third
quarter, with all businesses improving from 2008.
- Welho launched a new pick-and-mix pay TV service, Welho Mix,
enabling customised channel choices.
- In August, Nelonen Media reached its all-time high market share of
Finnish TV advertising, 36.7%.
Key indicators 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
EUR million 2009 2008 % 2009 2008 % 2008
Net sales 35.0 34.7 0.9 115.9 116.1 -0.1 157.1
Operating profit excluding 3.8 2.8 33.9 16.8 13.2 27.1 17.3
non-recurring items
% of net sales 10.8 8.2 14.5 11.4 11.0
Operating profit 3.8 2.8 33.9 16.8 13.2 27.1 17.3
Capital expenditure 6.1 9.4 -35.1 13.5
Number of employees at the end of the period 445 487 -8.6 488
FTE
Average number of employees FTE 474 478 -0.9 482
Operational indicators 1-9/ 1-9/
Thousands 2009 2008
TV channels' share of Finnish TV advertising 33.6% 29.8%
TV channels' national commercial viewing share 29.8% 30.2%
TV channels' national viewing share 14.7% 14.2%
Number of connected households (30 Sept) 326 322
Number of pay TV customers (30 Sept) 67 68
Number of broadband internet connections (30 Sept) 112 103
Sanoma Entertainment's net sales in January-September were at the
comparable period's level and amounted to EUR 115.9 (116.1) million.
In addition, net sales adjusted for changes in the Group structure
remained stable. Advertising sales accounted for 49% (50%) of Sanoma
Entertainment's net sales. In July-September, net sales were EUR 35.0
(34.7) million.
Broadcast operations' net sales totalled EUR 64.5 (65.1) million in
January-September, while the Finnish TV advertising market shrank by
13% according to TNS Gallup Adex. Nelonen Media's advertising sales
outperformed the market, in particular due to the successful
implementation of the multichannel strategy. New targeted TV
channels, national radio stations and WebTV all increased their
advertising sales. Nelonen Media has increased its market share of
Finnish TV advertising significantly in January-September, to 33.6%
(29.8%).
Nelonen Media's new WebTV service, Ruutu.fi, launched in June 2009
has rapidly become very popular. Ruutu.fi offers streaming broadcasts
of TV series as a free catch-up service, extra materials for popular
programmes, and podcasts. The lifestyle channel Liv was granted a
one-year licence on the terrestrial network and the broadcasts will
begin in December, which will further improve the good viewing shares
the channel has achieved in its first year of operations.
According to the Association of Finnish Broadcasters, national radio
advertising decreased by 1% in January-September. Nelonen Media
increased its share of the national radio advertising to 12.7%
(11.3%). Nelonen Media repositioned Radio Aalto in August to focus on
soft rock. Weekly audiences of both Radio Aalto and Radio Rock have
developed positively.
Net sales from other operations were EUR 52.4 (51.5) million and
include cable and broadband operator Welho and Sanoma Games, the
Division's emerging online gaming business unit. Welho's fast and
easy-to use broadband services together with rewarded customer
service have been the key in increasing the number of fixed broadband
subscribers while the market has been declining. For the fourth year
in row, Welho scored the highest points in the customer satisfaction
survey for the Finnish broadband operators. In line with the Finnish
pay TV market development, Welho's pay TV operations were stable.
Welho Mix, a pay TV channel package offering extensive customisation,
was launched successfully in September. Sanoma Games launched new
versions of its main products as well as a new service, Gamer.fi, in
September.
Sanoma Entertainment's operating profit increased markedly in
January-September, by 27.1%, and totalled EUR 16.8 (13.2) million.
The operating profit did not include any non-recurring items.
Operating profit improved in all operations. The increase was driven
by lower expenses in general and effective cost-saving measures. The
good development of both broadcasting and other operations continued
in July-September, and operating profit grew by 33.9% amounting to
EUR 3.8 (2.8) million.
In line with its strategy, Sanoma Entertainment focuses on its core
businesses: television, broadband services, online gaming and online
video. Sanoma Entertainment continues to develop its digital content
and media solutions business, invest resources in the development of
its online services and in its viewing and listening shares. In
addition, Sanoma Entertainment is refining its processes and service
offering to better meet the needs of its customers and to improve its
efficiency.
In 2009, Sanoma Entertainment's net sales are expected to be at the
previous year's level but operating profit excluding non-recurring
items is expected to increase clearly.
SANOMA LEARNING & LITERATURE
Sanoma Learning & Literature is a leading European educational
publisher offering learning materials in print and digital format.
With operations in nine countries, the Division has growing
international language service operations and is also the leading
general literature publisher in Finland.
- Learning performed well.
- Economic environment impacted language services, which are focusing
on building a strong player in the Nordic countries.
- Restructuring in multi-volume books continued in Finland and in
non-core activities in the Netherlands.
Key indicators 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
EUR million 2009 2008 % 2009 2008 % 2008
Net sales 117.6 133.2 -11.7 280.4 302.0 -7.1 390.0
Operating profit 35.7 42.8 -16.6 53.8 64.8 -16.9 53.2
excluding non-recurring
items
% of net sales 30.3 32.1 19.2 21.5 13.6
Operating profit 33.1 36.3 -8.9 51.2 58.3 -12.1 45.6
Capital expenditure 9.8 10.9 -9.9 15.6
Number of employees at the end of the period 2,683 2,854 -6.0 2,908
FTE
Average number of employees FTE 2,801 2,684 4.3 2,737
* In 2009, the non-recurring items included EUR 1.5 million
restructuring expenses and EUR 1.1 million expenses related to the
sale of children's magazines. In 2008, the non-recurring items
included EUR 6.5 million of write-downs and restructuring costs in
the multi-volume and year book publishing in the third quarter.
Operational indicators 1-9/ 1-9/
2009 2008
Learning
Number of new titles published, books 1,199 1,191
Number of new titles published, digital products 332 357
Literature and other businesses
Number of new titles published, books 342 383
Number of new titles published, digital products 46 47
Books sold, millions 31.6 32.1
In January-September Sanoma Learning & Literature's net sales
amounted to EUR 280.4 (302.0) million, a decrease of 7.1% from the
comparable period, coming mainly from exchange rates and decreasing
net sales of literature and printing and lower sales in the business
training markets in Finland and Hungary. Net sales adjusted for
changes in the Group structure decreased by 9.7%. A total of 65%
(63%) of the Division's net sales came from outside Finland. In
July-September, the Division's net sales were EUR 117.6 (133.2)
million, a decrease of 11.7% due to decreasing sales in literature as
well as learning sales in the Netherlands occurring already in the
second quarter. In addition, the reported net sales were affected by
the negative translation effect of the Polish zloty and the Hungarian
forint.
Net sales in learning totalled EUR 206.4 (221.1) million. In the
Netherlands net sales were at the comparable period's level. Malmberg
increased its market share in the primary education market and has
divested unprofitable adjacent businesses like educational magazines
and student event organising. In Finland net sales were largely
affected by the decrease in sales of training and business books. The
upper secondary sales were under pressure because of increasing
re-use of textbooks. Net sales grew clearly in Belgium, where Van
In's learning solutions have been successful in all segments. Nowa
Era in Poland has also increased its market share. In Hungary, the
sales of learning materials are stable, but net sales were impacted
by a severe decrease of sales in the business training segment. The
government spending for e-learning initiatives has been delayed in
Poland, which has lowered YDP's sales from the comparable period,
when a lot of tenders were opened already during the second quarter.
Net sales in language services grew to EUR 21.2 (19.5) million. The
increase is attributable to the new operations acquired in 2008.
Sales of language services have been strongly affected by the general
economic situation. The language service business unit is now
focusing on integrating its six country organisations and processes
in order to build an efficient and distinctive language service
provider in the Nordic market.
Net sales in literature and other businesses were EUR 60.9 (71.5)
million. WSOY General Literature's net sales are under pressure since
bookstores are purchasing less to avoid high inventory risks. In
Finland, the general literature market has slowed down considerably,
but WSOY General Literature has performed relatively well in the
market. Net sales in multi-volume and year-book publishing are
clearly lower than in the comparable period and the restructuring of
these operations continues in Finland. Printing sales were down.
The Division's operating profit excluding non-recurring items in
January-September amounted to EUR 53.8 (64.8) million, 16.9% less
than in the comparable period. The decrease came mainly from the
language service operations, where the economic downturn has affected
sales considerably. Operating profit also weakened in learning,
mainly due to negative exchange rate developments, but also from the
negative impact of the consolidation of Nowa Era's seasonal losses in
the first quarter and lower profits in Finland. Operating profit in
literature and other businesses improved. Cost-savings have partly
offset the effect lower sales have had on profits. The non-recurring
items totalled EUR -2.6 (-6.5) million and were related to the
restructuring of unprofitable units both during the period under the
review and the comparable period. Operating profit including
non-recurring items totalled EUR 51.2 (58.3) in the first nine
months. In July-September, the Division's operating profit excluding
non-recurring items decreased by 16.6% to EUR 35.7 (42.8) million due
to lower net sales. In learning, sales and profits in some countries
were accrued already in the second quarter whereas in 2008 they were
more focused on the third quarter. The Division's business is very
seasonal. Profit in learning is mainly accrued in the second and
third quarters.
Sanoma Learning & Literature continues to focus on further
internationalising its learning business, expanding language services
and maintaining market leadership in Finnish general literature
publishing. Customers are increasingly looking at customised
solutions both in learning and language services. Sanoma Learning &
Literature is well positioned to offer these and can gain efficiency
from developing platforms to be used in several markets.
In 2009, it is estimated that the net sales and operating profit
excluding non-recurring items of Sanoma Learning & Literature will
decrease from the previous year's level. The development of net sales
and operating profit is significantly affected by the exchange rate
developments in Sanoma Learning & Literature's operating countries.
SANOMA TRADE
Retail specialist Sanoma Trade's strengths are a thorough
understanding of customers' needs and solid concepts. Sanoma Trade
serves its customers in 230 million annual sales contacts at kiosks,
bookstores and movie theatres. Operating in seven countries, press
distribution is a strong link between publishers and retailers.
- Kiosk operations performed relatively well; sales growth in
Lithuania, for example.
- Good content and concept filled the seats in the movie theatres. In
Finland, movie admissions have grown 7% in 2009 and box-office
revenues reached all-time high figures in the third quarter.
- The recession in the Baltic countries affects sales in all
businesses, but cost-savings partly offset its impact on profits.
Key indicators 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
EUR million 2009 2008 % 2009 2008 % 2008
Net sales 209.2 221.4 -5.5 592.6 627.3 -5.5 866.6
Operating profit 9.7 13.0 -25.4 17.3 30.4 -42.9 45.1
excluding non-recurring
items
% of net sales 4.7 5.9 2.9 4.8 5.2
Operating profit 9.7 13.0 -25.4 17.3 30.4 -42.9 45.1
Capital expenditure 19.3 23.2 -16.7 33.8
Number of employees at the end of the period 6,118 6,930 -11.7 6,626
FTE
Average number of employees FTE 6,201 6,598 -6.0 6,633
Operational indicators 1-9/ 1-9/
Thousands 2009 2008
Customer volume in kiosk operations 147,117 159,173
Customer volume in bookstores 4,857 5,082
Customer volume in movie theatres 7,061 7,487
Number of copies sold (press distribution) 263,205 292,288
Sanoma Trade's net sales in January-September totalled EUR 592.6
(627.3) million, 5.5% less than in the comparable period. Net sales
of kiosk operations were at the comparable period's level. Most of
the decrease in the Division's net sales came from press
distribution. Net sales adjusted for changes in the Group structure
decreased by 5.3%. Of Sanoma Trade's net sales, 32% (34%) came from
outside Finland. In July-September, the Division's net sales were
down by 5.5% and totalled EUR 209.2 (221.4) million.
Net sales from kiosk operations amounted to EUR 298.3 (300.9)
million. Kiosk sales in Finland were in line with the comparable
period's level. Net sales increased by 5% in Lithuania. There was an
increase also in the new operations of Romania. In Latvia and Russia,
kiosk sales were down. Sanoma Trade has closed down over 100
loss-making kiosks, mostly in Latvia and Lithuania. The R-kiosk
concept will be renewed in the coming years and the first pilots of
the new concept in Finland will be launched from November onwards. In
Romania, the entry phase, which started in 2008 when the first 18
kiosks in the country were opened, was finalised.
Net sales from press distribution were EUR 163.1 (180.2) million. In
Finland, the sales of tabloids have developed positively since the
summer, and also in the Netherlands, the newsstand volumes have shown
signs of recovery in the last couple of months. Cumulatively,
however, press distribution volumes were down everywhere. In the
Baltic markets, cover prices rose due to VAT increases, which also
affected volumes.
Net sales from bookstores were EUR 78.8 (91.9) million. Net sales of
the comparable period included the subscription business divested in
May 2008. In line with the sluggish literature market development,
net sales from bookstores decreased both in Finland and Estonia.
September saw the launch of new titles from many popular Finnish
authors, which is expected to contribute positively to sales.
Net sales from movie operations totalled EUR 64.4 (67.6) million.
Movie admissions in Finland have grown steadily during the first nine
months from the record year in 2008 and net sales increased in
Finland. Operations also developed positively in Estonia where,
however, the competition is expected to increase when a new player
will begin operations in the fourth quarter. Alternative content and
3D movies clearly attract customers. The economic downturn and lower
private consumption affected movie sales in the Baltic countries and
net sales decreased in Latvia in particular, where also competition
has increased.
In January-September, Sanoma Trade's operating profit amounted to EUR
17.3 (30.4) million, a decrease of 42.9% mainly coming from the
foreign operations. The operating profit did not include any
non-recurring items. The operating profit of kiosk operations
decreased due to declining sales and the earlier investments in
Russia and Romania. In press distribution, the operating profit also
declined in all markets. The operating profit was below the
comparable period in bookstores and movie operations. However, the
Finnish and Estonian movie theatres performed well. In
July-September, the Division's operating profit was down by 25.4% and
totalled EUR 9.7 (13.0) million. The third quarter's development is
the result of Sanoma Trade's intensive cost-saving programmes in all
businesses. Sanoma Trade is aiming to save some EUR 20 million in
2009. Sanoma Trade has also initiated restructuring measures. In
Estonia, the Division will consolidate all its operations in the
country to ensure its ability to compete also in the future and to
bring added value to the consumers. The target is to seek growth
opportunities, improve the efficiency of marketing and concept
development, as well as to reduce costs. Press distribution and movie
operations performed well in Finland, but the weak results of foreign
operations in general decreased the Division's result in the third
quarter.
Sanoma Trade continues to develop concepts in all its businesses,
particularly its kiosk and bookstore concepts. Efficient chain
management as well as the product and service offering catering to
the needs of customers are key success factors in all markets and
will ensure the competitiveness of Sanoma Trade. With its 230 million
annual customer contacts, Sanoma Trade gains valuable consumer
insight and has good possibilities to develop its product and service
offering.
In 2009, Sanoma Trade's net sales are expected to decrease somewhat
and operating profit excluding non-recurring items to decrease
markedly.
THE SANOMA GROUP
Dividend
In line with the Board's proposal, the Annual General Meeting decided
to pay out a dividend of EUR 0.90 (1.00) per share for the year 2008.
The dividend was paid in the second quarter. Sanoma conducts an
active dividend policy and primarily distributes over half of the
Group result after taxes in dividends.
Shares and holdings
In January-September, a total of 57,269,565 (80,877,526) Sanoma
shares were traded on the NASDAQ OMX Helsinki. Traded shares
accounted for 36% (50%) of the average number of shares for
the period. Sanoma's total stock exchange turnover was EUR 609.7
(1,285.1) million.
In January-September, the volume-weighted average price of a Sanoma
share was EUR 10.61, with a low of EUR 8.02 and a high of EUR 15.65.
At the end of the review period, Sanoma's market capitalisation was
EUR 2,428.6 (2,128.7) million and the closing price of the share was
EUR 15.09 (13.29). At the end of September 2009, Sanoma had 20,922
shareholders, with foreign holdings accounting for 10.1% (10.9%) of
all shares and votes. There were no major changes in share ownership
during the review period and Sanoma did not issue any flagging
announcements.
During the period under review, the Board had an authorisation to
repurchase the Company's shares. No shares were repurchased in
January-September 2009 and the Company shares acquired in 2008 were
cancelled in the first quarter. During the first quarter, the number
of shares also changed because of shares registered with stock
options. There were no changes during the following quarters and at
the end of September, Sanoma had 160,943,658 shares and the
registered share capital totalled EUR 71,258,986.82.
Board of Directors and auditors
The AGM of 1 April 2009 confirmed the number of Sanoma's Board
members at ten. Board members Jaakko Rauramo and Sakari Tamminen were
re-elected, and Annet Aris was elected to the Board as a new member.
The Board of Directors of Sanoma consists of the following: Jaakko
Rauramo, Chairman; Sakari Tamminen, Vice Chairman; and Annet Aris,
Robert Castrén, Jane Erkko, Paavo Hohti, Sirkka Hämäläinen-Lindfors,
Seppo Kievari, Rafaela Seppälä and Hannu Syrjänen as members.
The AGM re-appointed Pekka Pajamo, APA, and Sixten Nyman, APA, as his
deputy, and chartered accountants KPMG Oy Ab, with Kai Salli, APA,
acting as the Auditor in Charge, as the auditors of the Company.
Board authorisations
The AGM held on 1 April 2009 authorised the Board of Sanoma to decide
on the repurchase of maximum 16,000,000 of the Company's own shares
with the Company's unrestricted shareholders' equity. The
authorisation is effective until 30 June 2010. The Board has not used
this authorisation.
In addition, the Board has a valid authorisation to increase the
share capital with a maximum of 82,000,000 new shares and the
transfer of a maximum of 5,000,000 treasury shares. Under this
authorisation, the Board decided on 19 December 2008 on the issuance
of Stock Option Scheme 2008.
During the review period, the authorisation by the AGM of 1 April
2008 for repurchasing the Company's own shares was in force. The
authorisation was not used during the review period and its validity
ended on 1 April 2009.
Seasonal fluctuation
The net sales and result of Sanoma Magazines, Sanoma News and Sanoma
Entertainment are particularly affected by the development of
advertising. Advertising sales are influenced, for example, by the
number of newspaper and magazine issues published during each
quarter, which varies annually. Television advertising in Finland is
usually strongest in the second and fourth quarters.
Learning accrues most of its net sales and results during the second
and third quarters.
A major portion of the net sales and results in retail are, on the
other hand, generated in the last quarter, particularly from
Christmas sales. Of course, the number of shopping days and, for
example, the distribution of holidays over different quarters also
impacts the retail sales between quarters.
Seasonal business fluctuations influence the Group's net sales and
operating profit, with the first quarter traditionally being clearly
the smallest.
Significant risks and uncertainty factors
Management of business risks and utilisation of the opportunities
associated with them is included in the daily responsibilities of
Sanoma's management. The management takes calculated risks in order
to ensure that the Company develops its business as successfully as
possible.
The most significant risks and uncertainty factors Sanoma is facing
are described in the Financial Statements, together with the main
principles of risk management. The most significant uncertainty
factors of the current year are related to the development of media
advertising and consumer spending. There is also uncertainty in the
development of currency exchange rates. Due to the uncertain general
economic situation, reliable estimates on, for example, the
development of media advertising in the Group's various markets are
not available. Sanoma expects media advertising to continue to
decrease in 2009. A rapid change in media advertising and consumer
confidence would affect the Group result.
Sanoma's relatively stable business and strong balance sheet, as well
as current loan agreements ensure the Group's financial position even
if the uncertainty in the financial markets continues.
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
September 2009.
The Group has applied the following new or revised standards as of 1
January 2009: IAS 1 'Presentation of Financial Statements' and IFRS 8
'Operating Segments'. The adoption of IAS 1 'Presentation of
Financial Statements' affected the terminology in the Interim Report
and the presentation of some financial statements. The adoption of
IFRS 8 had no material effect on Sanoma's Interim Report.
Sanoma Learning & Literature has started to capitalise prepublication
costs of learning material to intangible assets as of 1 January 2009.
Previously, the principle was to include prepublication expenses in
acquisition cost of inventory. The change in accounting policy does
not have any material impact on Sanoma's income statement or balance
sheet.
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.
CONSOLIDATED INCOME STATEMENT
EUR million 1-9/ 1-9/ 1-12/
2009 2008 2008
NET SALES 2,034.4 2,231.4 3,030.1
Other operating income 46.7 70.6 97.1
Materials and services 906.3 994.8 1,367.4
Employee benefit expenses 511.4 517.6 702.8
Other operating expenses 379.4 414.4 588.8
Depreciation and impairment losses 120.9 110.0 231.9
OPERATING PROFIT 163.1 265.2 236.3
Share of results in associated companies -2.3 5.0 4.9
Financial income 19.6 12.7 18.9
Financial expenses 41.3 42.5 69.9
RESULT BEFORE TAXES 139.2 240.4 190.3
Income taxes -40.6 -59.6 -69.4
RESULT FOR THE PERIOD 98.5 180.7 120.8
Result attributable to:
Equity holders of the Parent Company 99.2 177.9 115.7
Non-controlling interests -0.6 2.8 5.1
Earnings per share for result attributable to
the equity
holders of the Parent company
Earnings per share, EUR 0.62 1.10 0.72
Diluted earnings per share, EUR 0.62 1.10 0.72
STATEMENT OF COMPREHENSIVE INCOME
EUR million 1-9/ 1-9/ 1-12/
2009 2008 2008
Result for the period 98.5 180.7 120.8
Other comprehensive income:
Change in translation differences -8.7 8.7 -39.1
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 89.8 189.4 81.7
Total comprehensive income attributable to:
Equity holders of the Parent Company 90.6 186.4 77.5
Non-controlling interests -0.8 3.1 4.2
CONSOLIDATED BALANCE SHEET
EUR million 30.9.2009 30.9.2008 31.12.2008
ASSETS
NON-CURRENT ASSETS
Tangible assets 490.7 510.9 510.4
Investment property 9.4 10.0 10.2
Goodwill 1,494.2 1,567.6 1,491.6
Other intangible assets 402.3 400.3 379.7
Interests in associated companies 65.4 70.9 69.9
Available-for-sale financial assets 16.0 20.9 20.6
Deferred tax receivables 40.5 46.4 36.6
Trade and other receivables 38.5 38.9 41.0
NON-CURRENT ASSETS, TOTAL 2,557.0 2,665.9 2,560.0
CURRENT ASSETS
Inventories 150.5 180.1 173.2
Income tax receivables 15.6 45.2 24.9
Trade and other receivables 396.0 452.2 409.1
Available-for-sale financial assets 0.5 0.5 0.5
Cash and cash equivalents 66.4 305.1 110.9
CURRENT ASSETS, TOTAL 629.1 983.2 718.7
ASSETS, TOTAL 3,186.0 3,649.1 3,278.7
EQUITY AND LIABILITIES
EQUITY
Equity attributable to the equity holders of the Parent Company
Share capital 71.3 71.3 71.3
Treasury shares -37.5 -37.5
Fund for invested unrestricted equity 176.6 187.8 192.7
Other equity 920.5 1,103.3 993.7
1,168.3 1,324.9 1,220.1
Non-controlling interests 13.3 21.4 17.0
EQUITY, TOTAL 1,181.7 1,346.2 1,237.1
NON-CURRENT LIABILITIES
Deferred tax liabilities 102.8 110.3 106.2
Pension obligations 36.3 42.7 37.9
Provisions 6.9 7.3 6.0
Interest-bearing liabilities 640.3 613.0 449.0
Trade and other payables 32.8 34.9 34.6
CURRENT LIABILITIES
Provisions 19.5 12.2 10.9
Interest-bearing liabilities 493.1 713.7 633.6
Income tax liabilities 21.8 45.6 11.7
Trade and other payables 650.8 723.2 751.7
LIABILITIES, TOTAL 2,004.4 2,302.9 2,041.6
EQUITY AND LIABILITIES, TOTAL 3,186.0 3,649.1 3,278.7
CHANGES IN CONSOLIDATED EQUITY
EUR million
Equity attributable to the equity holders of the
Parent Company
Fund
for
inves- Non-
ted cont-
Share unre- rol-
Share pre- Trea- stric- ling Equi-
capi- mium sury ted Other inte- ty,
tal fund shares equity equity Total rests total
Equity at
1 Jan 2008 71.3 187.6 -51.6 1,138.6 1,345.9 18.3 1,364.2
Unregistered
usage of
share -0.1 -2.4 0.1 -2.4 -2.4
options
Acquisition
of treasury shares -47.6 -47.6 -47.6
Cancellation
of treasury shares 61.6 -61.6
Registration of
new shares 0.1 2.4 0.1 2.7 2.7
Expense
recognition of
options granted 3.9 3.9 3.9
Dividends paid -160.8 -160.8 -3.0 -163.9
Change in non-
controlling
interests -3.1 -3.1 3.0 -0.1
Transfer of
premium fund -187.6 187.6
Comprehensive
income for the period 186.4 186.4 3.1 189.4
Equity at
30 Sept 2008 71.3 -37.5 187.8 1,103.3 1,324.9 21.4 1,346.2
Equity at
1 Jan 2009 71.3 -37.5 192.7 993.7 1,220.1 17.0 1,237.1
Unregistered
usage of
share options -1.8 -1.8 -1.8
Cancellation
of treasury shares 37.5 -37.5
Registration of
new shares 1.8 1.8 1.8
Expense
recognition of
options granted 3.0 3.0 3.0
Dividends paid -144.9 -144.9 -0.9 -145.8
Change in non-
controlling
interests -2.0 -2.0
Donations -0.5 -0.5 -0.5
Transfer
from
fund -16.1 16.1
Comprehensive
income for the period 90.6 90.6 -0.8 89.8
Equity at
30 Sept 2009 71.3 176.6 920.5 1,168.3 13.3 1,181.7
INCOME STATEMENT BY QUARTER
EUR million 1-3/ 4-6/ 7-9/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2009 2009 2009 2008 2008 2008 2008 2008
NET SALES 636.0 697.2 701.1 683.1 769.8 778.6 798.7 3,030.1
Other operating 14.1 19.4 13.3 38.1 17.7 14.8 26.5 97.1
income
Materials and 286.4 304.8 315.0 309.4 333.4 352.0 372.6 1,367.4
services
Employee benefit 176.2 174.8 160.5 172.2 177.5 167.8 185.2 702.8
expenses
Other operating 128.2 129.0 122.1 131.1 141.5 141.9 174.3 588.8
expenses
Depreciation and 38.4 42.8 39.8 35.8 36.6 37.7 121.9 231.9
impairment
losses
OPERATING PROFIT 20.9 65.1 77.1 72.7 98.5 94.0 -28.8 236.3
Share of results 0.3 -0.6 -2.0 3.0 1.6 0.4 -0.1 4.9
in associated
companies
Financial income 6.7 8.8 4.1 3.5 3.1 6.1 6.2 18.9
Financial 17.0 12.3 12.0 12.7 14.5 15.3 27.4 69.9
expenses
RESULT BEFORE 10.9 61.1 67.2 66.5 88.7 85.2 -50.1 190.3
TAXES
Income taxes -3.2 -17.4 -20.0 -12.2 -23.4 -24.1 -9.8 -69.4
RESULT FOR THE 7.7 43.7 47.2 54.4 65.3 61.1 -59.9 120.8
PERIOD
Result attributable to:
Equity holders 8.3 43.3 47.6 54.5 64.4 59.0 -62.2 115.7
of the Parent
Company
Non-controlling -0.6 0.3 -0.3 -0.2 0.9 2.1 2.3 5.1
interests
Earnings per share for result attributable
to the equity holders of the Parent company
Earnings per share, 0.05 0.27 0.30 0.34 0.40 0.37 -0.39 0.72
EUR
Diluted earnings per 0.05 0.27 0.30 0.34 0.40 0.37 -0.39 0.72
share, EUR
CONSOLIDATED CASH FLOW STATEMENT 1-9/ 1-9/ 1-12/
EUR million 2009 2008 2008
OPERATIONS
Result for the period 98.5 180.7 120.8
Adjustments
Income taxes 40.6 59.6 69.4
Financial expenses 41.3 42.5 69.9
Financial income -19.6 -12.7 -18.9
Share of results in associated companies 2.3 -5.0 -4.9
Depreciation and impairment losses 120.9 110.0 231.9
Gains/losses on sales of non-current assets -1.9 -27.9 -34.2
Other adjustments -43.3 -28.2 -40.1
Change in working capital
Change in trade and other receivables 10.7 -40.1 -18.5
Change in inventories -3.7 -3.8 -0.5
Change in trade and other payables, and -67.6 -26.9 3.6
provisions
Interest paid -30.6 -42.4 -53.4
Other financial items 0.0 2.6 -4.5
Taxes paid -28.1 -53.0 -70.2
CASH FLOW FROM OPERATIONS 119.6 155.4 250.3
INVESTMENTS
Acquisition of tangible and intangible assets -61.5 -74.4 -113.3
Operations acquired -25.5 -139.9 -162.3
Sales of tangible and intangible assets 3.8 11.5 12.7
Operations sold 0.3 42.4 49.2
Loans granted -0.3 -18.7 -19.8
Repayments of loan receivables 3.9 8.0 8.8
Sales of short-term investments 0.5 0.5
Interest received 4.1 4.1 7.4
Dividends received 4.0 7.2 7.5
CASH FLOW FROM INVESTMENTS -71.1 -159.1 -209.3
CASH FLOW BEFORE FINANCING 48.5 -3.7 41.1
FINANCING
Proceeds from share subscriptions 0.2 5.1
Minority capital investment/repayment of equity 0.9 1.0
Purchase of treasury shares -48.2 -48.2
Change in loans with short maturity -22.4 8.5 -53.8
Drawings of other loans 402.5 521.3 525.1
Repayments of other loans -352.2 -96.2 -264.6
Payment of finance lease liabilities -2.7 -0.6 -2.8
Dividends paid -145.8 -163.9 -164.3
Donations/other profit sharing -0.5 -0.5 -0.5
CASH FLOW FROM FINANCING -121.1 221.7 -3.1
CHANGE IN CASH AND CASH EQUIVALENTS
ACCORDING TO CASH FLOW STATEMENT -72.6 218.0 38.0
Effect of exchange rate differences on cash and -0.6 1.2 0.1
cash equivalents
NET CHANGE IN CASH AND CASH EQUIVALENTS -73.2 219.2 38.1
Cash and cash equivalents at the beginning of 110.5 72.4 72.4
the period
Cash and cash equivalents at the end of the 37.2 291.6 110.5
period
Cash and cash equivalents in cash flow statement include cash and
cash equivalents less bank overdrafts.
NET SALES BY BUSINESS
EUR million 1-3/ 4-6/ 7-9/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2009 2009 2009 2008 2008 2008 2008 2008
SANOMA MAGAZINES
Sanoma Magazines 110.6 123.2 120.7 111.7 135.2 124.8 143.9 515.7
Netherlands
Sanoma Magazines 50.9 53.2 48.8 70.1 76.8 77.4 82.4 306.7
International
Sanoma Magazines 51.3 52.6 50.8 54.2 55.5 53.7 59.8 223.2
Belgium
Sanoma Magazines 50.3 48.0 46.9 50.7 51.9 49.1 53.9 205.6
Finland
Eliminations -1.0 -1.2 -1.2 -1.3 -0.9 -1.0 -1.1 -4.3
TOTAL 262.1 275.9 266.1 285.5 318.5 304.0 338.9 1,246.8
SANOMA NEWS
Helsingin Sanomat 61.7 58.3 56.2 74.1 71.2 65.6 68.6 279.5
Ilta-Sanomat 18.4 19.8 19.6 20.5 21.9 20.6 20.2 83.2
Other publishing 22.9 23.8 21.3 23.9 24.9 23.5 25.8 98.2
Other businesses 36.2 35.9 34.9 37.9 37.5 36.5 38.2 150.1
Eliminations -31.7 -30.8 -30.8 -35.5 -34.5 -32.7 -33.5 -136.2
TOTAL 107.7 107.1 101.2 120.8 121.1 113.5 119.2 474.7
SANOMA ENTERTAINMENT
TV and radio 23.5 23.6 17.4 22.6 24.5 18.0 23.8 88.9
Other businesses 17.3 17.4 17.8 18.0 16.7 16.8 17.9 69.4
Eliminations -0.5 -0.3 -0.2 -0.1 -0.3 -0.1 -0.6 -1.1
TOTAL 40.3 40.6 35.0 40.5 40.9 34.7 41.0 157.1
SANOMA LEARNING & LITERATURE
Learning 30.6 81.6 94.3 27.8 87.5 105.9 52.2 273.3
Language services 8.3 6.2 6.7 6.2 5.8 7.5 9.3 28.8
Literature and 24.6 17.0 19.3 27.8 20.4 23.3 29.7 101.2
other businesses
Eliminations -2.6 -2.8 -2.7 -3.4 -3.2 -3.5 -3.2 -13.3
TOTAL 60.8 101.9 117.6 58.3 110.5 133.2 88.0 390.0
SANOMA TRADE
Kiosk operations 91.1 106.6 100.7 94.6 102.5 103.8 108.6 409.4
Press distribution 49.6 55.5 58.1 58.2 60.2 61.8 61.3 241.5
Bookstores 27.3 19.7 31.8 31.0 24.0 36.9 47.3 139.2
Movie operations 23.6 18.0 22.7 24.4 19.4 23.8 26.7 94.3
Eliminations -3.8 -4.0 -4.1 -5.5 -3.0 -4.8 -4.5 -17.8
TOTAL 187.7 195.7 209.2 202.7 203.2 221.4 239.3 866.6
Other companies -22.7 -24.1 -28.0 -24.8 -24.4 -28.2 -27.9 -105.2
and eliminations
TOTAL 636.0 697.2 701.1 683.1 769.8 778.6 798.7 3,030.1
OPERATING PROFIT BY DIVISION
EUR million 1-3/ 4-6/ 7-9/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2009 2009 2009 2008 2008 2008 2008 2008
Sanoma Magazines 15.5 30.2 23.1 48.2 46.6 31.6 -40.6 85.7
Sanoma News 6.0 3.5 11.8 17.9 14.7 15.2 9.4 57.3
Sanoma Entertainment 6.1 6.9 3.8 4.0 6.3 2.8 4.1 17.3
Sanoma Learning & -6.9 25.1 33.1 -4.3 26.4 36.3 -12.7 45.6
Literature
Sanoma Trade 3.8 3.8 9.7 9.9 7.4 13.0 14.7 45.1
Other companies and -3.7 -4.3 -4.4 -3.0 -2.9 -5.0 -3.7 -14.6
eliminations
TOTAL 20.9 65.1 77.1 72.7 98.5 94.0 -28.8 236.3
SEGMENT INFORMATION
The operating segments of the Sanoma Group comprise the Group's five
divisions: Sanoma Magazines, Sanoma News, Sanoma Entertainment,
Sanoma Learning & Literature and Sanoma Trade. The segmentation is
based on business model and product differences. The media business,
based on advertising and circulation sales, is divided into three
segments: Sanoma Magazines is responsible for magazines, Sanoma News
for newspapers and Sanoma Entertainment for TV and broadband
business. Sanoma Learning & Literature business is mainly b-2-b
business. Sanoma Trade, on the other hand, operates on a retail
business model. In addition to the Group eliminations column,
unallocated/eliminations includes Sanoma Corporation and real estate
companies. More detailed description of operating segments can be
found in note 2 in Financial Statements for 2008.
The adoption of IFRS 8 has not changed reportable segments because
also the segment information the Group has presented earlier has been
based on internal management reporting.
The accounting policies for segment reporting do not differ from
Group's accounting policies and have not changed due to the adoption
of IFRS 8. The decisions concerning assessing the performance of
operating segments and allocating resources to the segments are based
on segments' operating profit. The chief operating decision maker is
Group's Executive Management Group. The Group has not aggregated
operating segments to form the above mentioned reportable segments.
Segment's total assets do not include cash and cash equivalents,
interest-bearing receivables and tax receivables. Transactions
between segments are based on market prices.
Sanoma Divisions 1.1-30.9.2009
Lear- Unallo-
Enter- ning & cated/ Con-
Maga- tain- Lite- elimi- soli-
EUR million zines News ment rature Trade nations dated
External net sales 802.6 310.1 115.1 269.8 537.5 -0.8 2,034.4
Internal net sales 1.5 5.9 0.9 10.6 55.1 -74.0
NET SALES, TOTAL 804.2 316.0 115.9 280.4 592.6 -74.8 2,034.4
OPERATING PROFIT 68.9 21.4 16.8 51.2 17.3 -12.5 163.1
Share of results in
associated -2.7 0.2 0.1 0.1 -2.3
companies
Financial income 19.6
Financial expense 41.3
RESULT BEFORE TAXES 139.2
ASSETS 1,528.0 351.4 131.3 593.7 438.8 6.9 3,050.0
Sanoma Divisions 1.1-30.9.2008
Lear- Unallo-
Enter- ning & cated/ Con-
Maga- tain- Lite- elimi- soli-
EUR million zines News ment rature Trade nations dated
External net sales 905.7 349.9 114.9 290.3 570.8 -0.2 2,231.4
Internal net sales 2.2 5.6 1.2 11.7 56.4 -77.1
NET SALES, TOTAL 907.9 355.5 116.1 302.0 627.3 -77.3 2,231.4
OPERATING PROFIT 126.3 47.9 13.2 58.3 30.4 -10.9 265.2
Share of results in
associated 4.3 0.1 -0.3 -0.1 0.4 0.6 5.0
companies
Financial income 12.7
Financial expense 42.5
RESULT BEFORE TAXES 240.4
ASSETS 1,675.3 376.6 126.6 609.3 434.7 13.3 3,235.8
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 30.9.2009 30.9.2008 31.12.2008
Carrying amount at the beginning of 510.4 498.7 498.7
the period
Increases 34.7 59.7 81.2
Acquisition of operations 0.0 7.7 7.3
Decreases -2.0 -5.9 -7.0
Disposals of operations -0.2 -0.2
Depreciation for the period -51.1 -48.9 -66.4
Impairment losses for the period -0.2 -0.7 -0.7
Exchange rate differences and other -1.0 0.5 -2.6
changes
Carrying amount at the end of the 490.7 510.9 510.4
period
The Group had no commitments for acquisition of tangible assets at
the end of the reporting period or in the comparative period.
EFFECT OF ACQUISITIONS ON THE CONSOLIDATED BALANCE SHEET
EUR million 1-9/2009
Acquisition costs 8.3
Fair value of acquired net assets 2.6
Goodwill 5.8
Negative goodwill in income statement -0.9
Change in goodwill 6.7
1-12/2008 1-12/2008
Nowa Era Other
Acquisition costs 62.5 128.2
Fair value of acquired net assets 7.8 39.4
Goodwill 54.6 88.8
CONTINGENT LIABILITIES
EUR million 30.9.2009 30.9.2008 31.12.2008
Contingencies for own commitments
Mortgages 26.7 23.4 23.7
Pledges 6.0 5.9 6.0
Other items 0.5 0.4 0.4
TOTAL 33.2 29.7 30.1
Contingencies incurred on behalf of
associated companies
Guarantees 10.5 10.5 10.5
TOTAL 10.5 10.5 10.5
Contingencies incurred on behalf of
other companies
Guarantees 0.1 0.2 0.2
TOTAL 0.1 0.2 0.2
Other contingencies
Operating lease liabilities 245.0 262.9 263.8
Royalties 16.4 23.9 23.6
Other items 29.0 36.1 38.1
TOTAL 290.5 322.9 325.5
TOTAL 334.3 363.3 366.2
The Sanoma Group had no derivative contracts during the reporting
period or during the previous year.
KEY EXCHANGE RATES
1-9/ 1-9/ 1-12/
Average rate 2009 2008 2008
EUR/CZK (Czech Koruna) 26.58 25.08 25.16
EUR/HUF (Hungarian Forint) 282.63 247.86 251.25
EUR/PLN (Polish Zloty) 4.38 3.44 3.53
EUR/RUB (Russian Rouble) 44.27 36.57 36.69
EUR/SEK (Swedish Crown) 10.68 9.46 9.66
Closing rate 30.9.2009 30.9.2008 31.12.2008
EUR/CZK (Czech Koruna) 25.16 24.66 26.88
EUR/HUF (Hungarian Forint) 269.70 242.83 266.70
EUR/PLN (Polish Zloty) 4.23 3.40 4.15
EUR/RUB (Russian Rouble) 43.98 36.41 41.28
EUR/SEK (Swedish Crown) 10.23 9.79 10.87
Helsinki
Board of Directors
Sanoma Corporation
Press Conference
Press and analyst meeting in Finnish will be held by Mr Hannu
Syrjänen, President and CEO of Sanoma at 9 am (Finnish time) at
Sanomatalo, Töölönlahdenkatu 2, Helsinki.
The conference call in English for analysts and investors will be
arranged at 3 pm (Finnish time). Mr Kim Ignatius, CFO of Sanoma, will
present the result. To join the conference, please dial +44 20 3003
2666 (Europe) or +1 866 966 5335 (US). The event can also be listened
to at Sanoma.com, either live or on demand at a later date.
The presentation material of the press and analyst meeting as well as
the slides used in the conference call will be available on Sanoma's
website after the press and analyst meeting has started.
Sanoma's Full-Year Result for 2009 will be published on 11 February
2010 at approximately 11 am (Finnish time).
Sanoma Corporation
Kim Ignatius
Chief Financial Officer
Additional information: Sanoma's Group Communications, tel +358 105
19 5062 or communications@sanoma.com
Sanoma.com
Sanoma inspires, informs and connects. 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 challenging and interesting
employment for over 20,000 people in 20 countries throughout Europe.
In 2008, the Group's net sales totalled EUR 3.0 billion.
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