Alma Media - Half Year financial report

Alma Media’s Interim Report January–June 2017: Good development of profitability in the second quarter driven by the recruitment business

Alma Media Corporation  Interim Report   21 July 2017 at 9:00 a.m. (EEST)

Alma Media’s Interim Report January–June 2017:

GOOD DEVELOPMENT OF PROFITABILITY IN THE SECOND QUARTER DRIVEN BY THE
RECRUITMENT BUSINESS

Financial performance April–June 2017:

  · Revenue MEUR 93.7 (92.0), up 1.9%.
  · Adjusted operating profit MEUR 13.2 (9.9), or 14.1% (10.8%) of revenue, up
33.8%.
  · Operating profit MEUR 15.0 (9.1), or 16.0% (9.9%) of revenue, up 64.9%.
  · Earnings per share EUR 0.13 (0.07).
  · Alma Markets: Strong and profitable growth in the Czech Republic lifted the
segment’s profit to a new record.
  · Alma Talent: Profitability was on a par with the previous year.
  · Alma News & Life: The share of digital business grew to exceed 50% of
revenue.
  · Alma Regions: Profitability was weighed down by the decline of print media
advertising.

Financial performance January–June 2017:

  · Revenue MEUR 184.2 (178.7), up 3.1%.
  · Adjusted operating profit MEUR 25.8 (15.4), or 14.0% (8.6%) of revenue, up
67.6%.
  · Operating profit MEUR 26.4 (11.6), or 14.3% (6.5%) of revenue, up 127.7%.
  · Earnings per share EUR 0.23 (0.08).

KEY FIGURES       2017   2016   Change   2017    2016    Change   2016
MEUR              Q2     Q2     %        Q1–Q2   Q1–Q2   %        Q1–Q4
Revenue           93.7   92.0   1.9      184.2   178.7   3.1      353.2
Content revenue   31.3   32.6   -3.7     63.4    65.0    -2.4     128.3
Content revenue,
print             27.3   28.9   -5.6     55.3    57.9    -4.6     113.5
Content revenue,
online             4.1    3.7    10.9     8.2     7.0     15.8     14.8
Advertising revenue *)
                  48.0   45.3   6.0      91.8    85.7    7.2      169.7
Advertising
revenue,print     17.0   19.3   -12.2    32.7    35.8    -8.6     68.5
Advertising
revenue, online   30.5   26.0   17.4     58.4    50.0    16.9     101.3
Service revenue *)14.4   14.1   1.8      29.0    28.0    3.3      55.2
Adjusted total    80.5   82.2   -2.1     158.5   163.6   -3.1     318.9
expenses
Adjusted EBITDA   17.2   14.4   19.0     33.8    24.3    38.7     53.3
EBITDA            19.0   13.6   39.2     34.4    20.5    67.3     47.9
Adjusted
operating profit  13.2   9.9    33.8     25.8    15.4    67.6     35.2
 % of revenue     14.1   10.8            14.0    8.6              10.0
Operating
profit/loss       15.0   9.1    64.9     26.4    11.6    127.7    26.8
% of revenue      16.0   9.9             14.3    6.5              7.6
Profit for the
period            12.2   6.9    77.1     21.1    8.5     148.0    19.9
Earnings per share,
EUR               0.13   0.07   89.7     0.23    0.08    189.1    0.20
(undiluted and basic)

Online sales      39.2   34.0   15.4     76.3    65.3    16.7     133.5
Online sales, %
of revenue        41.9   37.0            41.4    36.6             37.8

*) Comparison data has been adjusted between advertising revenue and service
revenue.

Outlook for 2017 (revised on 13 July 2017)

On 13 July 2017, Alma Media revised its guidance and outlook for 2017. Contrary
to its previous guidance, the company expects its adjusted operating profit to
increase clearly from the 2016 level. The company expects its revenue to remain
unchanged from the previous year. In its previous guidance, issued on 28 April
2017, the company expected its revenue to remain unchanged and its adjusted
operating profit to increase from the 2016 level.

The revised outlook and expected improvement in operating profit are the result
of the continued strong sales in the Alma Markets business segment, especially
in the international recruitment business. Thanks to the restructuring and
efficiency improvement measures, the profitability of the Group’s Finnish
operations has also improved.

Outlook for 2017:

The Finnish economy is expected to grow by 1–3% in 2017. Alma Media’s
significant operating countries in Eastern Central Europe, such as the Czech
Republic and Slovakia, are expected to see economic growth of 2–4%.
Macroeconomic development affects both consumer demand and advertising volume.
The structural transformation of advertising will continue in 2017; online
advertising will grow, while print media advertising will decline.

In 2017, Alma Media expects its full-year revenue to remain at the previous
year’s level and its adjusted operating profit to clearly increase from the 2016
level. The full-year revenue for 2016 was MEUR 353.2, and the adjusted operating
profit was MEUR 35.2.

Kai Telanne, President and CEO:

Alma Media achieved a strong financial result in the second quarter. The Group’s
adjusted operating profit grew by 34 per cent to MEUR 13.2. Profitability was
improved by the continued excellent development of sales in the Alma Markets
segment as well as cost savings generated by previously implemented
restructuring measures in Alma Talent, Alma Regions and shared operations. Alma
Media’s revenue grew by 2 per cent in April–June and amounted to MEUR 93.7.

The economic climate in Finland is the brightest it has been for several years
and consumer confidence in economic development is the highest it has been since
its measurement began. Nevertheless, the advertising market mostly developed in
the opposite direction in the first half of the year. According to Kantar TNS,
media advertising volume declined by 7.1 per cent in April–June. One of the
bright spots in the subdued advertising market has been online advertising,
which grew by 1.3 per cent over the same period. Alma Media’s growth in digital
advertising sales has outpaced the market.

In the Alma Markets segment, the adjusted operating profit grew by 45 per cent
to reach the record-high level of MEUR 7.3. Our business in the Czech Republic
was particularly successful. The growth of our marketplaces in Finland was
attributable to active marketing efforts and online service development as well
as the favourable economic cycle. The segment’s result was also improved by
lower depreciation.

Alma Talent’s adjusted operating profit remained almost on a par with the
comparison period, at MEUR 3.3, thanks to cost savings achieved in the segment.
Revenue was reduced by discontinued operations in the service business as well
as the decline of print media subscription revenue and book sales. The new
entity created by the integration of Talentum has a comprehensive reach among
decision-makers, investors, entrepreneurs and other professionals in Finland and
Sweden and it provides opportunities for the development of new multi-channel
services.

The digital transformation of Alma News & Life has progressed rapidly and
digital revenue, which increased by 30 per cent year-on-year in the second
quarter, now accounts for more than 50 per cent of the segment’s total revenue.
Adjusted operating profit grew by 32 per cent to MEUR 2.4. The strong profit
performance was particularly attributable to programmatic ad buying and mobile
advertising. The single copy sales of afternoon papers continued to decline.

The second quarter was a challenging one for Alma Regions. The segment’s
advertising revenue declined in spite of advertising related to the municipal
elections in April. The retail sector, in particular, has reduced its spending
on print media advertising. Content revenue, on the other hand, grew thanks to
the good sales of online content. Service revenue was increased by growth in the
external revenue of printing operations. The segment’s adjusted operating profit
declined by 11 per cent to MEUR 2.0.

Alma Media’s strong cash flow improved the Group’s financial position further.
The equity ratio stood at 48.7 per cent at the end of June, while gearing was
31.0 per cent. The strong balance sheet provides us with a solid foundation for
accelerating our growth and building an even more competitive media and service
company.

It is unfortunate that the meeting of the EU’s finance ministers in June did not
yet reach a unanimous decision on lowering the value added tax rate of digital
publications to match that of print publications. The Finnish government has
confirmed it is prepared to make the corresponding decision in its autumn budget
session, provided that permission from the EU is obtained before that time. The
change, which could potentially enter into force at the beginning of 2018, would
be a step towards appropriate taxation that would support the development of
Finnish media companies, which are important for democracy, as well as the
creation of multi-channel media consumption experiences for customers. The
government’s supplementary budget decision on a narrowly targeted news subsidy,
on the other hand, is problematic. In practice, the subsidy would only be
directed at one media outlet.

For more information, please contact:
Kai Telanne, President and CEO, telephone +358 10 665 3500
Juha Nuutinen, CFO, telephone +358 10 665 3873

News conference and audio webcast:

A conference for Finnish media, investors and analysts will be held on the same
day at 11.00–12.00 EEST in the Alma House (address: Alvar Aallon katu 3 C,
Helsinki). In addition to the presentations held by President & CEO Kai Telanne
and CFO Juha Nuutinen, participants will have an opportunity to discuss with
other members of the company's management. Please note that the conference will
be held in Finnish. The presentation material in English will be available on
www.almamedia.fi/en/investors/reports-and-presentations/presentations at 11.00
EEST.

To participate in the conference, kindly register beforehand by e-mail,
kutsut@almamedia.fi.

A conference call and audio webcast concerning the financial result of January
-June 2017 will begin at 13.00 EEST and will be held in English. You can
participate in the conference by calling +44 (0)330 336 9105 (confirmation code:
6051348) or follow it at http://www.almamedia.fi/en/investors/reports-and
-presentations/presentations.

Alma Media’s financial calendar 2017

Alma Media will publish financial reports in 2017 as follows:

– Interim report for January–September 2017 on Friday, 27 October at
approximately 9:00 EEST

ALMA MEDIA CORPORATION

Board of Directors

Distribution: NASDAQ Helsinki, main media, www.almamedia.com

Alma Media in brief

Alma Media is a media company focusing on the service business and journalistic
content. The company’s best-known brands are Kauppalehti, Talouselämä,
Affärsvärlden, Iltalehti, Aamulehti, Etuovi.com and Monster. Alma Media builds
sustainable growth for its customers by utilising the opportunities of
digitality, including information services, system and expert services and
advertising solutions. Alma Media’s operations have expanded from Finland to the
Nordic countries, the Baltics and Central Europe. Alma Media employs
approximately 2,300 professionals (excluding delivery personnel), of whom
approximately 30% work outside Finland. Alma Media’s revenue in 2016 was EUR
353.2 million. Alma Media’s share is listed on NASDAQ Helsinki. Read more at
www.almamedia.com.

Attachments:

Alma Media Corporation_Interim Report Q2 2017_FINAL_ENG.pdf