2011-08-05 07:30:00 CEST
2011-08-05 07:30:56 CEST
REGULATED INFORMATION
Sanoma Oyj - Interim report (Q1 and Q3)
Sanoma's Interim Report 1 January-30 June 2011: New structure for speeding up the digital transition and growth
Interim Report 5/8/2011 8:30
Second quarter
- Net sales in the second quarter amounted to EUR 689.7 million (2010: EUR
715.4 million). Adjusted for changes in the Group structure, Sanoma's net sales
grew by 2%.
- Operating profit excluding non-recurring items was EUR 72.6 million (2010: EUR
80.3 million). The non-recurring items in the second quarter amounted to EUR
48.7 million (2010: EUR 180.7 million).
- Earnings per share were EUR 0.60 (2010: EUR 1.45). EPS excluding the non-
recurring items was EUR 0.29 (2010: EUR 0.34)
First half of 2011
- Sanoma Group's net sales were EUR 1,299.9 million (2010: EUR 1.353.3 million).
- Operating profit excluding non-recurring items totalled EUR 98.9 million
(2010: EUR 115.9 million)
- Cash flow from operations was EUR 22.2 million (2010: EUR 60.0 million).
- The net sales of the Group are expected to be at the previous year's level and
operating profit excluding non-recurring items is expected to decrease somewhat
in 2011.
KEY INDICATORS 4-6/ 4-6/ Change 1-6/ 1-6/ Change 1-12/
EUR million 2011 2010 % 2011 2010 % 2010
Net sales 689.7 715.4 -3.6 1,299.9 1,353.3 -3.9 2,761.2
Operating profit excluding 72.6 80.3 -9.6 98.9 115.9 -14.6 245.4
non-recurring items
% of net sales 10.5 11.2 7.6 8.6 8.9
Operating profit 121.3 261.0 -53.5 148.5 301.4 -50.7 392.7
Result for the period 97.5 235.1 -58.6 116.0 259.2 -55.3 297.3
Capital expenditure * 49.5 44.1 12.1 85.7
% of net sales 3.8 3.3 3.1
Equity ratio, % 44.1 42.3 45.7
Net gearing, % 74.7 79.1 63.8
Number of employees at the end of the period 14,233 16,332 -12.9 15,405
(FTE)
Average number of employees (FTE) 14,773 16,289 -9.3 16,016
Earnings/share, EUR 0.60 1.45 -58.8 0.71 1.61 -55.9 1.85
Cash flow from 0.02 0.14 -84.1 0.14 0.37 -63.1 1.69
operations/share, EUR
* Including finance leases
Harri-Pekka Kaukonen, President and CEO"Sanoma's strength lies in our diversified media assets, our leading position in
key markets both in media and learning, and our strong local brands and
excellent content. These will be keys to success also in the rapidly changing
media environment we are facing at the moment.
We have been successful in growing our digital business and consumer reach, but
this does not fully offset the underlying negative development of classical
media. Therefore we cannot be satisfied with our second quarter results. Our
response to the changing media landscape is to further deepen our consumer and
customer understanding, to accelerate the speed of the digital transition, to
foster innovation across Sanoma and to improve the efficiency of our operations.
In the future, we want to see clearly faster growth than we have seen in the
recent years.
In the beginning of the second quarter, we made a number of changes in our
portfolio. The most important one, the SBS TV transaction, is now closed and we
move into the integration phase. The new TV operations are an important building
block in our effort to offer new services and solutions across different media
channels. We are the only European magazine company which has the combination of
TV and magazines in all our present main markets. In the future, our goal is to
focus on media and learning, and we are looking into the possibility of
divesting assets in our Trade division.
As another key building block in the transformation, Sanoma will adopt a new
organisation model. Our new management team, operational as of 1 September, will
comprise the heads of six strategic business units and four corporate functions.
The business responsibility for Sanoma Media will be divided, and Eija Ailasmaa,
current President & CEO of Sanoma Media, will retire according to her contract
and hand over her tasks by the end of the year.
The new structure will help us to step up our efforts in digital operations and
customer insight. It will also enable better utilisation of cross-border
business opportunities and improvement of our efficiency."
Outlook for 2011
Sanoma Group's net sales are expected to be at the previous year's level and
operating profit excluding non-recurring items is expected to decrease somewhat
in 2011. In 2010, operating profit excluding non-recurring items was EUR 245.4
million.
The change in guidance on 29 July is based on the month later than estimated
closing of the SBS acquisition, investments in the Group's development
programmes during the spring and the weakened outlook of the magazine business
in Finland. Previously, Sanoma estimated that its net sales would increase
somewhat and its operating profit, excluding non-recurring items, would improve
slightly.
Sanoma's net sales and operating profit in 2011 are affected by the development
of advertising and private consumption in the Group's countries of operation.
The current outlook is based on the assumption that the advertising markets in
the Group's main operating countries will grow somewhat in 2011.
Net sales
Second quarter
In the second quarter of 2011, Sanoma's net sales decreased by 4% and amounted
to EUR 689.7 million (2010: EUR 715.4 million). Net sales grew in the Sanoma
News and Sanoma Learning and Literature divisions. Structural changes affected
sales in Sanoma Media and Sanoma Trade. Currency translations did not have a
material effect on second quarter sales. When adjusted for changes in the Group
structure, net sales grew by 2%.
Print circulation sales were almost at the comparable quarter's level. Both
subscription sales and single copy sales were slightly down. The long-term
trends of slowly decreasing circulation volumes are visible in many of Sanoma's
markets. In Finland, this development may accelerate with the government's
decision to impose a VAT rate of 9 % on subscriptions of printed newspapers and
magazines.
Advertising sales continued their positive development and showed a growth of
7% in the second quarter. Online advertising sales increased clearly, by 11%. In
total, advertising sales accounted for 25% (2010: 23%) of the Group's net sales.
Sanoma's digital sales, including both advertising and content revenues, grew by
19% in the second quarter and accounted for 11% (2010: 10%) of the Group's net
sales. Broadband access services, which were divested in 2010, are not included
in the digital sales of the comparable period.
First half of 2011
In January-June, Sanoma's net sales decreased by 4% due to divestments made in
2010 and 2011 and lower sales of Finnish kiosk and magazine operations.
Sanoma has a target to double the 2008 level of its consumer media online
revenues to EUR 240 million, consisting mostly of online advertising, by 2012.
In the first half of 2011, these sales grew by 4% to EUR 78.6 million. Total
digital sales, including also e.g. e-learning, grew by 13%, and amounted to 11%
(2010: 10%) of net sales.
By country, Finland accounted for 52% (2010: 52%) of the cumulative net sales
and the Netherlands 24% (2010: 23%). Net sales from other EU countries totalled
21% (2010: 22%) and non-EU countries accounted for 3% (2010: 3%).
Result
Second quarter
Sanoma's operating profit excluding non-recurring items in April-June, decreased
by 10% and totalled EUR 72.6 million (2010: EUR 80.3 million). Structural
changes related to divestments in 2010 and 2011 explain some EUR 5 million of
the decrease. Profits visibly improved in the Sanoma News and Sanoma Learning &
Literature divisions due to increased sales. Restructuring and efficiency
improvements increased the result of Sanoma Trade significantly. Sanoma Media's
result was lower due to structural changes and decreased circulation revenues.
Costs related to the Group's development programmes weakened the result.
Operating profit excluding non-recurring items amounted to 10.5% (2010: 11.2%)
of net sales. Currency translations did not have a material effect on the second
quarter result.
In the second quarter, the Group's total expenses were reduced by 1%, but fixed
costs grew by 1% driven by increased consultancy expenses. Paper costs increased
by 3% compared to last year's second quarter. Employee benefit expenses
decreased by 2%. The Group had some 1,800 fewer employees than at the end of
June 2010, corresponding to a decrease of 9%. From the year-end, the number of
personnel has decreased by 8%. The decrease in the number of personnel is mostly
attributable to divestment of operations and the closing down of kiosks in the
Sanoma Trade division.
In April-June, the operating profit included EUR 48.7 million (2010: EUR 180.7
million) in non-recurring items consisting mostly of capital gains from sales of
operations.
NON-RECURRING ITEMS 4-6/ 4-6/ 1-6/ 1-6/ 1-12/
EUR million 2011 2010 2011 2010 2010
Media
Gain on sale of Humo and Desert Fishes 9.1 9.1
Restructuring expenses (The Netherlands) -3.3
Impairment of intangible assets (The Netherlands) -6.3
Impairment of intangible assets (The CEE countries) -1.0
Gain on sale of Humo 2.6 2.6 2.6
Gain on sale of Welho (Finland) 179.4 179.4 179.0
Impairment of goodwill in the Dutch press -28.9
distribution
News
Gain on sale of Lehtikuva 6.0 6.0
Gain on sale of Sanoma Lehtimedia's local papers 2.9
Learning & Literature
Sale of LDC 0.9
Loss on sale of Bertmark Norge -1.2 -1.1
Restructuring expenses -1.7 -1.3 -1.7 -1.3 -2.3
Impairment of a Dutch non-core entity -2.1
Trade
Gain on sale of movie operations 51.5 51.5
Loss on sale of Romanian kiosk operations -1.8 -1.8
Loss on sale of Romanian press distribution -6.2 -6.2
operations
Loss on sale of Russian operations -0.8 -0.8 -2.6
Restructuring expenses -2.4 -2.4 -1.0
Sanoma Corporation
Gains on the sale of real estates 1.0 1.0 5.4
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NON-RECURRING ITEMS IN OPERATING PROFIT 48.7 180.7 49.6 185.5 147.3
Impairment of share in associated company Hansaprint -22.1
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NON-RECURRING ITEMS IN RESULTS -22.1
IN ASSOCIATED COMPANIES
Sanoma's second quarter result included EUR -0.1 million (2010: EUR 1.7 million)
of profits from associated companies. The decrease in the share of result in
associated companies is fully attributable to structural changes: In connection
with the divestment of movie operations in April, a sales loss was recorded on
one of the associated companies. In addition, shares in the associated company
Desert Fishes were transferred to the new company responsible for the Belgian TV
operations and as of beginning of June, its result is reported as part of Sanoma
Media's EBIT.
First half of 2011
In January-June, Sanoma's operating profit excluding non-recurring items
decreased by 15% and totalled EUR 98.9 million (2010: EUR 115.9 million).
Operating profit excluding non-recurring items improved in Sanoma News, Sanoma
Learning & Literature and Sanoma Trade, but this could not fully compensate for
the effects of structural changes in Sanoma Media and increased costs in the
Parent Company.
Sanoma's net financial items totalled EUR -7.8 million (2010: EUR -7.6 million).
Financial income amounted to EUR 3.6 million (2010: EUR 4.6 million), EUR 1.7
million of which were exchange rate gains (2010: EUR 2.6 million). Financial
expenses amounted to EUR 11.3 million (2010: EUR 12.3 million). Following the
increase in interest rates, interest expenses amounted to EUR 7.7 million (2010:
EUR 6.0 million). Exchange rate losses totalled EUR 2.0 million (2010: EUR 4.8
million).
The result before taxes amounted to EUR 142.5 million in the first six months
(2010: EUR 293.1 million). The effective tax rate was 18.6% (2010: 11.5%).
Earnings per share were EUR 0.71 (2010: EUR 1.61). The comparable figures were
affected by the tax-free non-recurring gain on the sale of the cable TV operator
Welho. In the reporting period, the result included non-recurring items related
to e.g. divestment of movie operations.
Balance sheet and financial position
At the end of June, Sanoma's consolidated balance sheet totalled EUR 3,186.7
million (2010: EUR 3,345.4 million). In the first six months, the Group's cash
flow from operations was EUR 22.2 million (2010: EUR 60.0 million). Cash flow
from operations per share was EUR 0.14 (2010: EUR 0.37). In addition to the
lower result, cash flow was weakened by higher investments in broadcasting
rights, higher financial costs and taxes and volatility in net working capital
between quarters in the learning business.
Sanoma's equity ratio was 44.1% (2010: 42.3%) at the end of June. Equity
totalled EUR 1,328.9 million (2010: EUR 1,340.1 million). Interest-bearing
liabilities continued to decrease and totalled EUR 1,046.2 million (2010: EUR
1,136.8 million), while interest-bearing net debt was EUR 993.0 million (2010:
EUR 1,060.0 million). Sanoma's net debt/EBITDA ratio was 2.3 at the end of June.
In order to finance the SBS acquisition Sanoma entered into the following
financing facilities: EUR 522 million syndicated term loan for five years, EUR
250 million short term bridge-to-bond facility and EUR 132 million syndicated
term loan and revolving credit facility for five years. The latter facility is
for the Dutch Sanoma Image B.V., owned by Sanoma and Talpa as a minority
shareholder. The bridge-to-bond facility will be converted to a bond or other
long-term financing depending on the market conditions in the international
capital markets in the near future.
As a result of the SBS acquisition, the consolidated net debt of Sanoma is
estimated to increase by some EUR 900 million to EUR 1.9 billion. The
transaction did not affect the financing terms of Sanoma's previous credit
facilities.
Investments, acquisitions and divestments
Investments in tangible and intangible assets, including finance leases,
amounted to EUR 49.5 million (2010: EUR 44.1 million) in January-June 2011.
Investments were mainly related to ICT systems as well as replacements and
renovations. Sanoma has a policy of keeping annual capital expenditure,
excluding mergers and acquisitions, below EUR 100 million. Sanoma's business
acquisitions totalled EUR 16.6 million (2010: EUR 17.3 million).
In March, Sanoma sold its movie operations in Finland and the Baltic countries
to the Swedish private equity company Ratos AB. In 2010, net sales of movie
operations were EUR 88.6 million and operating profit stood at EUR 8.4 million.
The enterprise value of the transaction was EUR 116.0 million, and the
transaction was finalised at the end of April. Sanoma recorded a EUR 51.5
million non-recurring capital gain in its second quarter result.
In April, Sanoma sold its press distribution and kiosk operations in Romania. In
2010, net sales of these operations amounted to some EUR 23 million. The
remaining kiosk operations in Russia were also divested at the beginning of
April.
In April, Sanoma agreed to acquire the SBS free-to-air TV assets in the
Netherlands and Belgium from ProSiebenSat.1 together with Talpa Media in the
Netherlands and Corelio and Wouter Vandenhaute & Eric Watté in Belgium. The
enterprise value of the transaction is EUR 1,225 million. The net sales of the
acquired companies totalled EUR 404 million in 2010 and their operating profit
was some EUR 110 million (pro forma, unaudited). The acquisition in Belgium was
finalised on 8 June and the Dutch acquisition on 29 July after the necessary
approvals were received from the competition authorities.
In April, Sanoma announced that it will acquire the Finnish educational
publisher Tammi Learning and the Swedish educational publisher Bonnier
Utbildning, both from the Swedish media company Bonnier. At the same time,
Sanoma will divest its Finnish general literature publisher WSOY to Bonnier. The
Finnish competition authorities have approved the divestment and the transaction
is expected to be finalised during the third quarter.
SANOMA MEDIA
Sanoma Media, operating in twelve European countries, is a leading publisher of
magazines and has a strong presence in the digital media sector. The company
actively reaches out to an audience of 290 million consumers at every life
stage, and aims to strengthen its market leader position in each of the markets
it operates in.
- The acquisition of the Belgian TV operations was finalised on 8 June and that
of the Dutch operations after the review period, on 29 July.
- Advertising sales continued to grow, particularly in Finland and Russia.
- The outlook for the Division was downgraded following the later than estimated
closing of the SBS acquisition and the weakening outlook of magazine operations
in Finland. Net sales are now estimated to increase somewhat and operating
profit excluding non-recurring items is expected to decrease clearly.
Key indicators 4-6/ 4-6/ Change 1-6/ 1-6/ Change 1-12/
EUR million 2011 2010 % 2011 2010 % 2010
Net sales 323.7 339.4 -4.6 614.8 651.5 -5.6 1,299.6
The Netherlands 130.6 128.0 2.0 235.9 235.4 0.2 490.4
Finland 79.4 91.7 -13.5 153.5 184.3 -16.7 339.3
The CEE countries 54.3 54.3 -0.1 105.7 103.0 2.6 214.9
Belgium 48.7 52.3 -6.8 98.8 105.9 -6.6 208.3
Other businesses and 10.7 13.0 -17.9 20.9 22.9 -8.7 46.7
eliminations
Operating profit excluding non- 37.9 47.3 -19.9 60.6 78.5 -22.8 145.8
recurring items *
% of net sales 11.7 13.9 9.9 12.0 11.2
Operating profit 47.0 229.3 -79.5 69.7 260.5 -73.2 287.9
Capital expenditure 11.3 14.3 -20.6 25.2
Number of employees at the end of the period (FTE) 5,449 5,711 -4.6 5,419
Average number of employees (FTE) 5,394 5,771 -6.5 5,602
* 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 2010, the non-recurring items
included in the second quarter a EUR 2.6 million gain from selling 49% of the
Humo magazine and a EUR 179.0 million gain on the sale of the cable TV operator
Welho, in the third quarter a EUR 28.9 million impairment of goodwill in the
Dutch press distribution and a EUR 6.3 million impairment of intangible assets
in the Dutch media business and in the fourth quarter EUR 3.3 million
restructuring expenses in the Netherlands and a EUR 1.0 impairment of intangible
assets in the CEE countries.
Operational indicators * 1-6/ 1-6/
2011 2010
Number of magazines published 280 287
Magazine copies sold, thousands 161,075 171,815
Advertising pages sold 23,260 24,977
TV channels' share of Finnish TV advertising ** 33.3% 34.1%
TV channels' national commercial viewing share (10-44 years) ** 35.2% 36.1%
TV channels' national viewing share ** 14.8% 14.5%
* Including joint ventures
** In Finland
Second quarter net sales
Sanoma Media's net sales in April-June decreased by 5%. Adjusted for changes in
the Division structure, net sales grew by 1%.
The Division's advertising sales grew by 4% and represented 36% (2010: 33%) of
the second quarter net sales. Advertising sales grew in Finland and Central and
Eastern European (CEE) countries. Sanoma Media's online advertising sales
increased by 7% with all business units showing growth.
Sanoma Media's print circulation sales decreased by 2% and represented 48%
(2010: 47%) of the Division's net sales. Subscription sales were stable, but
single copy sales decreased.
The growing online advertising sales and the increased digital content sales
increased the Division's digital sales. In total, these sales grew by 14% in the
second quarter and represented 17% (2010: 15%) of the Division's net sales.
Developments in the businesses
In the Netherlands, net sales grew by 2%. Both circulation and advertising sales
were at the comparable quarter's level. Sales of single copies decreased
slightly, but subscription sales increased. Readers market continued to decline
slightly in the first months of 2011, but Sanoma Media Netherlands' market share
remained stable. The market for consumer magazine advertising in the Netherlands
grew by 3% in April-May and Sanoma Media Netherlands strengthened its market
position. Advertising sales represented 29% (2010: 31%) of the Dutch net sales.
During the second quarter, Sanoma Media Netherlands expanded its magazine
portfolio through acquisitions of equestrian sports magazines and custom
publishing operations.
In Finland, net sales decreased clearly due to divestment of the cable TV
business in 2010. Net sales in broadcasting continued to grow markedly in the
second quarter. In total, advertising sales of the Finnish operations grew
significantly and represented 47% (2010: 34%) of Finnish net sales. During the
second quarter, the TV advertising market in Finland increased by 16% and the
magazine advertising market by 10%. Net sales in magazine publishing were at
comparable quarter's level. Advertising sales grew in the second quarter,
following the improved market situation, but magazine subscription sales
decreased. This was mainly due to weaker consumer purchasing power.
In the CEE countries, Sanoma Media's net sales remained stable. Digital sales
grew significantly, but the recovery of print advertising sales in Russia slowed
down and the general economic environment and the outlook for advertising sales
remained weak in other CEE countries. In total, advertising sales increased
slightly and represented 52% (2010: 50%) of the second quarter sales in the CEE
countries. The single copy markets continued to decline in the CEE countries and
due to a clear decrease in its single copy sales, Sanoma Media's circulation
sales decreased.
Net sales in Belgium decreased by 7%. This is due in totality to the divestment
of 49% of Humo in May 2010, which affected both advertising and circulation
sales. When adjusted to take the structural changes into account, net sales were
at the comparable quarter's level. Slightly decreasing trends continued in the
Belgian readers market, but Sanoma Media Belgium improved its market position.
Advertising sales represented 26% (2010: 28%) of net sales in Belgium.
On 8 June, Sanoma completed the acquisition of Belgian SBS TV operations. The
share of the profits is reported in Sanoma Media Belgium's operating profit. As
a part of the transaction, the shares of the weekly magazine Humo and those of
TV production company Desert Fishes were transferred to the new company, which
also controls the acquired TV operations. The acquisition of the Dutch TV
operations was finalised on 29 July, after the necessary approvals from the
competition authorities were received.
Second quarter operating profit
Sanoma Media's operating profit excluding non-recurring items in April-June
decreased by 20%, partly due to structural changes. In the Netherlands, the
result was slightly lower than in the comparable quarter due to increased costs.
Operating profit decreased in Belgium. In Finland, the TV operations continued
to perform well, but the result was affected by the cable TV divestment in 2010
and clearly lower operating profit in magazine operations, caused by decreased
net sales and increased fixed costs. In the CEE countries, the result improved.
The second quarter result included EUR 9.1 million (2010: EUR 182.0 million) of
non-recurring capital gains related to the rearrangement of Belgian assets in
connection with the SBS acquisition.
First half of 2011
In January-June, Sanoma Media's net sales decreased by 6%. Net sales reduced in
Finland and Belgium, where operations were divested in 2010. The Division's
operating profit excluding non-recurring items decreased by 23%, due to the
structural changes and weakened result of the Finnish magazine operations. In
the first six months, operating profit included EUR 9.1 million (2010: EUR 182
million) of non-recurring capital gains.
Sanoma Media's outlook
Sanoma Media has a strong portfolio of media brands in magazines, online and
mobile media, and on radio and television. With its versatile portfolio and
market leading positions, Sanoma Media is able to generate new revenues by
bringing a new kind of offering to consumers and advertisers. In 2011, the new
operations will increase Sanoma Media's net sales, but its operating profit will
be heavily burdened by costs related to the SBS transaction.
Following the later than estimated closing of the SBS acquisition and the
weakening outlook of magazine operations in Finland, Sanoma Media's outlook has
changed. It is now estimated that Sanoma Media's net sales will increase
somewhat and operating profit excluding non-recurring items will decrease
clearly.
SANOMA NEWS
Sanoma News is the leading newspaper publisher in Finland and its printed and
digital products have a strong presence in the lives of Finns. In addition to
Helsingin Sanomat, the largest daily in the Nordic region, Sanoma News publishes
other national and regional newspapers. It is also one of the most significant
digital media players in Finland.
- Sanoma News' result continued to grow markedly.
- Growth in print advertising revenues accelerated in the second quarter with
all business units increasing their advertising sales.
- The tabloid Ilta-Sanomat improved its market position, and its online service
IS.fi saw an increase of 38 % in the number of visitors in the second quarter.
Key indicators 4-6/ 4-6/ Change 1-6/ 1-6/ Change 1-12/
EUR million 2011 2010 % 2011 2010 % 2010
Net sales 112.2 108.5 3.4 220.6 217.9 1.2 437.6
Helsingin Sanomat 61.2 56.7 7.8 122.4 115.8 5.6 235.4
Ilta-Sanomat 22.2 20.7 7.4 41.2 40.5 1.8 83.3
Other publishing 25.0 25.6 -2.7 48.7 51.0 -4.5 99.5
Other businesses and eliminations 3.9 5.5 -28.8 8.3 10.6 -21.4 19.4
Operating profit excluding non- 9.9 8.9 12.0 22.8 18.5 23.3 47.2
recurring items *
% of net sales 8.8 8.2 10.3 8.5 10.8
Operating profit 9.9 8.9 12.0 22.8 24.5 -6.8 56.1
Capital expenditure 8.6 5.8 48.6 14.0
Number of employees at the end of the period (FTE) 2,199 2,360 -6.8 2,016
Average number of employees (FTE) 2,052 2,231 -8.0 2,176
* In 2011, the operating profit did not include any non-recurring items. In
2010, the non-recurring items included in the first quarter a EUR 6.0 million
gain on the sale of Lehtikuva and in the fourth quarter a EUR 2.9 million gain
on the sale of Sanoma Lehtimedia's local papers.
Operational indicators 4-6/ 4-6/
Online services, unique visitors, weekly 2011 2010
Iltasanomat.fi 2,057,019 1,492,533
HS.fi 1,386,682 965,211
Huuto.net 458,303 385,998
Oikotie.fi 397,674 345,424
Taloussanomat.fi 576,076 500,641
1-12/ 1-12/
Audited circulation 2010 2009
Helsingin Sanomat 383,361 397,838
Ilta-Sanomat 150,351 152,948
Second quarter net sales
Sanoma News' net sales in April-June grew by 3%. Adjusted for changes in the
Division's structure, sales grew by 6%.
The Division's print circulation sales were at the comparable period's level.
Single copy sales increased slightly and subscription sales remained stable.
Circulation sales accounted for 41% (2010: 42%) of the Division's net sales.
Sanoma News' advertising sales grew by 12%, driven by the positive development
of print advertising in the daily newspaper Helsingin Sanomat. In total, the
Division's print advertising sales grew by 10% and online advertising by 23%.
According to TNS Gallup Adex, newspaper advertising in the Finnish market grew
by 13% in the second quarter, while online advertising included in the
statistics grew by 29%. Advertising sales represented 52% (2010: 48%) of the
Division's net sales in the second quarter.
Despite the transfer of Esmerk to Sanoma Learning & Literature, the total
digital sales of the Division were at the comparable quarter's level with both
online advertising and online services showing significant growth. Digital sales
represented 12% (2010: 12%) of the Division's net sales.
Developments in the businesses
The net sales of the Helsingin Sanomat business unit grew by 8% in April-June,
due to the healthy development of advertising sales. Advertising sales
represented 56% (2010: 54%) of the business unit's net sales. Subscription sales
were at the previous year's level despite the volume decrease. The online news
site HS.fi hit a new record readership level in April.
The Ilta-Sanomat business unit's net sales grew by 7%. Print and online
advertising developed particularly favourably. Advertising sales represented
32% (2010: 29%) of the business unit's net sales. Circulation sales also grew.
The total volume of the Finnish tabloid market has decreased by 4% in the last
12 months. In the second quarter, the market contracted by 5%. Ilta-Sanomat
commands a 58.2% (2010: 57.7%) share of the tabloid newsstand market.
Net sales from other publishing operations decreased by 3% following the
transfer of Esmerk. Free sheets improved their market positions, and net sales
increased significantly. In addition, the strong development of digital
operations continued.
Second quarter operating profit
In April-June, Sanoma News' operating profit excluding non-recurring items
improved by 12%. The positive development of advertising sales improved the
result significantly in both the Helsingin Sanomat and Ilta-Sanomat business
units. Despite the structural changes, the result improved significantly in
other publishing, thanks to increased advertising sales, especially in free
sheets. The operating profit did not include any non-recurring items in the
second quarter or in the same period in 2010.
First half of 2011
In January-June, net sales in Sanoma News were at the level of the comparable
period with the healthy development of advertising sales offsetting the impact
of structural changes. Improved advertising sales and lower costs enabled Sanoma
News to significantly improve its operating profit excluding non-recurring
items, by 23%, in the first six months. In the comparable period last year, the
operating profit included EUR 6.0 million of non-recurring capital gains.
Sanoma News' outlook
Sanoma News aims to strengthen its multichannel approach when creating
journalistic content as well as when serving its advertisers. The Division will
increase its share of digital operations and create new sources of revenue
through the development of the product and service portfolio both in print and
online. Strengthening the market share in both the media market and in the
readers market remains a key priority for Sanoma News.
In 2011, Sanoma News' net sales are estimated to be at the previous year's level
due to the divestments made in 2010. Operating profit excluding non-recurring
items is expected to improve slightly.
SANOMA LEARNING & LITERATURE
Sanoma Learning & Literature, operating in 14 countries, is a leading European
provider of learning materials and solutions in print and digital format. The
Division also has expanding international business information and language
service operations.
- Good development of learning operations continued in the second quarter.
- Sanoma Learning & Literature saw a clear improvement in its result.
- The competition authorities accepted the divestment of Finnish general
literature operations in June, and the transaction, which also comprises the
acquisition Bonnier's Finnish and Swedish learning operations, is expected to be
finalised during the third quarter.
Key indicators 4-6/ 4-6/ Change 1-6/ 1-6/ Change 1-12/
EUR million 2011 2010 % 2011 2010 % 2010
Net sales 108.6 105.5 2.9 169.2 163.7 3.4 350.1
Learning 87.4 85.0 2.8 121.7 114.9 5.9 249.3
Language services 8.1 6.2 31.5 16.8 13.1 28.3 27.1
Literature and other businesses 15.1 17.2 -12.3 35.2 40.8 -13.9 83.6
Eliminations -2.1 -2.9 28.8 -4.5 -5.2 13.4 -9.9
Operating profit excluding non- 29.0 26.4 9.7 22.9 21.2 8.0 52.6
recurring items *
% of net sales 26.7 25.0 13.5 13.0 15.0
Operating profit 27.3 25.1 8.6 22.1 18.7 18.1 47.1
Capital expenditure 4.4 8.1 -45.3 14.9
Number of employees at the end of the period (FTE) 2,627 2,583 1.7 2,656
Average number of employees (FTE) 2,636 2,640 -0.2 2,629
* In 2011, the non-recurring items included in the first quarter a EUR 0.9
million non-recurring income related to sale of LDC and in the second quarter
EUR 1.7 million restructuring expenses. In 2010, the non-recurring items
included in the first quarter a EUR 1.1 million loss on the sale of Bertmark
Norge and in the second quarter EUR 1.3 million, in the third quarter EUR 0.2
million and in the fourth quarter EUR 0.8 million restructuring expenses and in
the fourth quarter a EUR 2.1 million impairment of a Dutch non-core entity.
Second quarter net sales
Sanoma Learning & Literature's net sales in April-June increased by 3%. Adjusted
for changes in the Division structure, net sales were stable.
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.
Developments in the businesses
Net sales in learning continued to grow and increased by 3%. Net sales grew in
all countries, except Hungary. In the second quarter, sales of learning
materials and solutions were particularly good in Poland and Finland, where
digital solutions boosted the sales in particular. The market conditions remain
stable except in Hungary, where the difficult economic and political situation
has led to the postponement of tenders.
Net sales in language services increased significantly due to new operations:
the business information and media monitoring service provider Esmerk has been
included in the figures since September 2010. In addition, Esmerk operations
have developed positively, and its net sales continued to grow in the second
quarter. Net sales of AAC Global were behind the comparable quarter due to
sluggish market conditions in all Scandinavian countries.
Net sales in literature and other businesses decreased by 12%. Sales of general
literature and printing were lower than in the comparable quarter.
In April, Sanoma announced that it will acquire the Finnish educational
publisher Tammi Learning and the Swedish educational publisher Bonnier
Utbildning from the Swedish media company Bonnier. At the same time, Sanoma will
divest its Finnish general literature publisher WSOY to Bonnier. The necessary
approvals from the Finnish competition authorities have been received and the
transaction is expected to be finalised during the autumn.
Second quarter operating profit
The Division's operating result excluding non-recurring items in April-June
improved by 10%. Thanks to higher sales, the operating profit of learning
increased clearly. The result in language services and literature and other
businesses was weaker than in the comparable quarter. In the second quarter, the
operating profit included EUR 1.7 million (2010: EUR 1.3 million) of non-
recurring costs related to efficiency improvement programme initiated in the
Dutch operations.
First half of 2011
In January-June, Sanoma Learning & Literature's net sales increased by 3% with
learning and language services increasing their sales. The Division's operating
profit excluding non-recurring items improved by 8% following the good
development of learning operations. Operating profit included EUR -0.8 million
(2010: EUR -2.5 million) of non-recurring items.
Sanoma Learning & Literature's outlook
Sanoma Learning & Literature's customers are increasingly looking for
comprehensive solutions both in learning and language services. The Division
will continue its transformation in order to offer the most appealing solutions,
create value for the customer by applying new technologies and gain efficiency
through developing concepts and platforms to be used in several markets. At the
same time, the Division is looking for growth through further
internationalisation of its learning businesses.
Following the transaction with Bonnier, it is estimated that the net sales of
Sanoma Learning & Literature in 2011 will be at the previous year's level and
operating profit excluding non-recurring items will decrease somewhat. The
learning business has a strong seasonality within the year, the first and fourth
quarters being typically loss making. For general literature, on the other hand,
the fourth quarter is typically the strongest. Due to this seasonality, this
transaction with Bonnier will lower Sanoma Learning & Literature's fourth
quarter result in 2011.
SANOMA TRADE
Operating in four countries, retail specialist Sanoma Trade's strengths lie in
its solid concepts and thorough understanding of customers' needs. Sanoma Trade
serves its customers in 180 million annual sales contacts at kiosks and
bookstores. Sanoma Trade's trade services business unit is a strong link between
publishers and retailers.
- Sanoma Trade improved its result significantly, by 71%, in the second quarter.
- Sanoma Trade divested and closed down its kiosk operations and trade services
in Russia and Romania. This affected sales negatively, but improved the
Division's results.
- The divestment of movie operations was finalised at the end of April.
Key indicators 4-6/ 4-6/ Change 1-6/ 1-6/ Change 1-12/
EUR million 2011 2010 % 2011 2010 % 2010
Net sales 156.3 174.4 -10.4 318.0 344.6 -7.7 726.3
Kiosk operations 102.3 104.9 -2.5 187.6 196.8 -4.7 398.4
Trade services 31.1 33.8 -8.0 63.5 64.1 -0.9 131.3
Bookstores 18.8 19.9 -5.1 43.6 45.8 -4.9 120.6
Movie operations 6.5 19.9 -67.2 28.4 45.3 -37.3 90.0
Eliminations -2.4 -4.0 39.0 -5.1 -7.4 31.4 -14.0
Operating profit excluding non- 4.1 2.4 70.7 7.4 6.1 22.4 19.1
recurring items *
% of net sales 2.6 1.4 2.3 1.8 2.6
Operating profit 44.4 2.4 1742.4 47.7 6.1 685.0 15.5
Capital expenditure 24.3 15.4 58.1 29.7
Number of employees at the end of the period (FTE) 3,771 5,527 -31.8 5,149
Average number of employees (FTE) 4,513 5,555 -18.8 5,486
* In 2011, the non-recurring items included in the second quarter a EUR 0.8
million loss on sale of Russian operations, a EUR 6.2 million loss on the sale
of Romanian press distribution operations, a EUR 1.8 million loss on the sale of
Romanian kiosk operations, a 51.5 million gain on the sale of movie operations
and EUR 2.4 million of restructuring expenses. In 2010, the non-recurring items
included in the third quarter EUR 1.0 million of restructuring expenses and in
the fourth quarter a EUR 2.6 million loss on the sale of Russian operations.
Operational indicators 1-6/ 1-6/
2011 2010
Number of kiosk outlets 1,203 1,409
Customer volume in kiosk operations, thousands 84,678 90,554
Customer volume in bookstores, thousands 2,972 3,063
Number of copies sold (press distribution), thousands 96,675 131,770
Second quarter net sales
Sanoma Trade's net sales in April-June decreased by 10% due to several
divestments in April. Net sales adjusted for changes in the Division structure
increased by 2%.
Developments in the businesses
Net sales from kiosk operations were down by 2% in the second quarter due to the
divestment of operations. The kiosk network was optimised in all countries. In
Finland, special emphasis was put on customer volumes, and Sanoma Trade
succeeded in stopping the downward trend, which begun in the first quarter of
2010. Net sales grew in all Baltic countries. The Russian and Romanian kiosk
operations were divested in the beginning of April.
Net sales from trade services decreased by 8% due to the divestment of
operations. In Finland, sales improved clearly due to the positive development
of in-store merchandising and logistics services as well as successful sales of
paperbacks. Net sales were stable in Latvia, but decreased in Estonia and
Lithuania.
Net sales in bookstores decreased by 5%. Sales were stable in Finland in the
second quarter, outperforming the slightly declining market trend. The Finnish
book market is estimated to have shrunk by 5% in the first six months of 2011.
The new concept stores showed clearly improved sales. Net sales decreased in
Estonia. Online sales to consumers showed a significant increase, but total
online sales were down from the comparable period.
Movie operations were included in Sanoma Trade's figures until the closing of
the divestment on 29 April. For this reason, net sales from movie operations
decreased by 67% from the comparable period.
Second quarter operating profit
Sanoma Trade's operating profit excluding non-recurring items in April-June
improved by 71%. Most of the improvement in trade services and kiosk operations
resulted from the divestment of loss-making Russian and Romanian operations. The
result in kiosk operations was also positively affected by successful marketing
campaigns, the optimisation of pricing and kiosk network as well as efficiency
improvements. In order to improve its efficiency, Sanoma Trade concluded
statutory employer-employee negotiations in its Finnish operations.
Sanoma Trade's operating profit in the second quarter included EUR 40.3 million
of non-recurring items, consisting of restructuring costs from the
discontinuation of different operations in Russia, Romania, Ukraine and the
Baltic countries, as well as a capital gain from the divestment of movie
operations.
First half of 2011
In January-June, Sanoma Trade's net sales decreased by 8%. Operating profit
excluding non-recurring items improved by 22%, mostly due to the divestment of
loss-making operations.
Sanoma Trade's outlook
Continuous development of its product and service offering, based on the
consumer insight gained from its 180 million annual customer contacts, is a key
success factor for Sanoma Trade. Sanoma Trade continues to focus its resources
on improving its kiosk and bookstore concepts and catering better to the needs
of its customers. The experience gained so far will be implemented in the roll-
out continuously. The service offering of trade services will continue to be
expanded.
Following the divestment of the movie operations and the Romanian operations, it
is estimated that Sanoma Trade's net sales in 2011 will decrease, but operating
profit excluding non-recurring items will be at the previous year's level.
THE GROUP
Dividend
The Annual General Meeting on 5 April 2011 decided to pay a dividend of EUR
1.10 (2010: EUR 0.80) per share. The dividends were paid on 15 April 2011 in
Finland. Sanoma conducts an active dividend policy and primarily distributes
over half of the Group result for the period in dividends.
Shares and holdings
In January-June, 44,082,703 (2010: 28,003,041) Sanoma shares were traded on the
NASDAQ OMX Helsinki. Traded shares accounted for 27% (2010: 17%) of the average
number of shares. Sanoma's total stock exchange turnover was EUR 653.5 million
(2010: EUR 427.7 million).
During the first six months, the volume-weighted average price of a Sanoma share
was EUR 14.81, with a low of EUR 11.64 and a high of EUR 17.79. At the end of
June, Sanoma's market capitalisation was EUR 2.1 billion (2010: EUR 2.3
billion), with Sanoma's share closing at EUR 12.78 (2010: EUR 14.17). The
Company had 26,848 shareholders at the end of June, with foreign holdings
accounting for 7.2% (2010: 11.3%) of all shares and votes. There were no major
changes in share ownership during the first quarter and Sanoma did not issue any
flagging announcements. At the end of June, Sanoma had 162,810,593 shares.
Board of Directors, auditors and management
The AGM held on 5 April 2011 confirmed the number of Sanoma's Board members at
ten. Board members Jane Erkko and Rafaela Seppälä were re-elected, and Nancy
McKinstry and Kai Öistämö were elected as new members to the Board. The Board of
Directors of Sanoma consists of Jaakko Rauramo (chairman), Sakari Tamminen (vice
chairman), and Annet Aris, Jane Erkko, Antti Herlin, Sirkka Hämäläinen-Lindfors,
Seppo Kievari, Nancy McKinstry, Rafaela Seppälä and Kai Öistämö as members.
The AGM appointed chartered accountants KPMG Oy Ab as the auditor of the
Company, with Pekka Pajamo, Authorised Public Accountant, as Auditor in Charge.
After the review period, the Board decided on a new organisational model. As of
1 September, the Executive Management Group (EMG) will comprise: Harri-Pekka
Kaukonen (President and CEO of the Sanoma Group, chairman of the EMG),
Jacqueline Cuthbert (CHRO), Jacques Eijkens (head of Sanoma Learning), Koos Guis
(head of Sanoma Media Russia & CEE; acting member), Kim Ignatius (CFO), John
Martin (Chief Digital Officer, CDO), Dick Molman (head of Sanoma Media
Netherlands), Anu Nissinen (head of Sanoma Media Finland), Pekka Soini (head of
Sanoma News), Aimé Van Hecke (head of Sanoma Media Belgium), and Customer Market
Officer, CMO, which will be appointed later.
Board authorisations
The AGM held on 5 April 2011 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 2012 and terminates the corresponding authorisation granted by the
AGM on 8 April 2010. The Board of Directors did not exercise its right under
this authorisation during the first quarter.
The Board also has a valid authorisation from the AGM held on 8 April 2010 to
decide on an issuance of a maximum of 82,000,000 new shares and a transfer of a
maximum of 5,000,000 treasury shares, together accounting for 35.5% of 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. The Board did not use this authorisation during the second quarter.
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 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, however, generated
in the last quarter, particularly due to Christmas sales. Of course, the number
of shopping days and, for example, the distribution of public holidays over
different quarters has an impact on 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 one for
both.
Significant risks and uncertainty factors
The most significant risks and uncertainty factors Sanoma currently faces are
described in the Financial Statements of 2010 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 ongoing digitisation. Sanoma has identified
action plans in all its divisions 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, the general economic conditions of the
countries in which the Group operates and the economic trends of the industry
influence Sanoma's business activities and operational performance.
Sanoma's financial risks include interest rate and currency risks as well as
those related to liquidity, counterparties, impairment and availability of
capital. At a Group level, the most significant risks are changes to interest
rates and refinancing risks.
As a result SBS acquisition, Sanoma's consolidated balance sheet will include
about EUR 2.9 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 2011. 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.
CONSOLIDATED INCOME STATEMENT
EUR million 4-6/ 4-6/ 1-6/ 1-6/ 1-12/
2011 2010 2011 2010 2010
NET SALES 689.7 715.4 1,299.9 1,353.3 2,761.2
Other operating income 77.0 197.3 89.8 217.7 258.8
Materials and services 287.7 307.3 551.2 586.4 1,207.4
Employee benefit expenses 168.5 172.3 332.6 341.4 668.6
Other operating expenses 147.2 132.4 275.6 261.3 554.2
Share of results in associated companies -0.1 -0.1
Depreciation, amortisation and impairment 41.9 39.6 81.7 80.4 197.1
losses
--------------------------------------------------------------------------------
OPERATING PROFIT 121.3 261.0 148.5 301.4 392.7
Share of results in associated companies -0.1 1.7 1.8 -0.7 -23.9
Financial income 1.3 2.5 3.6 4.6 11.1
Financial expenses 6.6 6.2 11.3 12.3 23.8
--------------------------------------------------------------------------------
RESULT BEFORE TAXES 115.8 259.0 142.5 293.1 356.0
Income taxes -18.3 -23.8 -26.6 -33.8 -58.6
--------------------------------------------------------------------------------
RESULT FOR THE PERIOD 97.5 235.1 116.0 259.2 297.3
Result attributable to:
Equity holders of the Parent Company 97.5 235.4 116.1 261.3 299.6
Non-controlling interests -0.1 -0.2 -0.1 -2.1 -2.3
Earnings per share for result attributable
to the equity holders of the Parent company:
Earnings per share, EUR 0.60 1.45 0.71 1.61 1.85
Diluted earnings per share, EUR 0.60 1.45 0.71 1.61 1.85
STATEMENT OF COMPREHENSIVE INCOME
EUR million 4-6/ 4-6/ 1-6/ 1-6/ 1-12/
2011 2010 2011 2010 2010
Result for the period 97.5 235.1 116.0 259.2 297.3
Other comprehensive income:
Change in translation differences 0.5 -8.2 6.5 12.1 9.8
Cash flow hedges -0.9 0.8 0.2
Income tax related to cash flow hedges 0.2 -0.2 -0.1
Other comprehensive income for the period, net of -0.2 -8.2 7.1 12.1 10.0
tax
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 97.2 226.9 123.1 271.3 307.3
Total comprehensive income attributable to:
Equity holders of the Parent Company 97.3 227.6 123.2 273.4 309.6
Non-controlling interests -0.1 -0.6 -0.1 -2.0 -2.3
CONSOLIDATED BALANCE SHEET
EUR million 30.6.2011 30.6.2010 31.12.2010
ASSETS
NON-CURRENT ASSETS
Tangible assets 363.7 439.4 429.3
Investment property 8.6 8.8 8.7
Goodwill 1,418.5 1,481.4 1,447.5
Other intangible assets 417.2 411.8 403.2
Interests in associated companies 290.6 271.1 248.7
Available-for-sale financial assets 15.9 15.7 15.8
Deferred tax receivables 37.6 36.3 34.8
Trade and other receivables 38.2 31.4 28.3
--------------------------------------------------------------------
NON-CURRENT ASSETS, TOTAL 2,590.3 2,695.9 2,616.3
CURRENT ASSETS
Inventories 128.1 136.6 122.8
Income tax receivables 19.7 21.3 8.6
Trade and other receivables 394.8 414.2 391.0
Available-for-sale financial assets 0.6 0.5 0.3
Cash and cash equivalents 53.2 76.8 64.0
--------------------------------------------------------------------
CURRENT ASSETS, TOTAL 596.4 649.4 586.8
ASSETS, TOTAL 3,186.7 3,345.4 3,203.0
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 203.3 188.8 203.3
Other reserves 0.8 0.2
Other equity 1,048.7 1,072.4 1,096.5
--------------------------------------------------------------------
1,324.0 1,332.5 1,371.2
Non-controlling interests 4.9 7.6 4.8
--------------------------------------------------------------------
EQUITY, TOTAL 1,328.9 1,340.1 1,376.0
NON-CURRENT LIABILITIES
Deferred tax liabilities 93.2 99.4 94.2
Pension obligations 25.1 30.0 26.7
Provisions 9.0 8.4 7.3
Interest-bearing liabilities 600.4 752.8 472.5
Trade and other payables 17.4 22.2 19.9
--------------------------------------------------------------------
NON-CURRENT LIABILITIES, TOTAL 745.0 912.9 620.5
CURRENT LIABILITIES
Provisions 12.3 16.2 15.6
Interest-bearing liabilities 445.9 384.0 469.4
Income tax liabilities 28.1 32.8 22.1
Trade and other payables 626.5 659.4 699.4
--------------------------------------------------------------------
CURRENT LIABILITIES, TOTAL 1,112.8 1,092.4 1,206.5
--------------------------------------------------------------------
LIABILITIES, TOTAL 1,857.8 2,005.2 1,827.0
EQUITY AND LIABILITIES, TOTAL 3,186.7 3,345.4 3,203.0
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 2010 71.3 188.8 931.1 1,191.2 15.4 1,206.6
Expense
recognition of
options granted 1.8 1.8 1.8
-----------------------------------------------------------------------------
Dividends paid -129.5 -129.5 -1.6 -131.1
-----------------------------------------------------------------------------
Change in non-
controlling
interests -3.9 -3.9 -4.2 -8.1
-----------------------------------------------------------------------------
Donations -0.5 -0.5 -0.5
-----------------------------------------------------------------------------
Comprehensive
income for the period 273.4 273.4 -2.0 271.3
-----------------------------------------------------------------------------
Equity at
30 June 2010 71.3 188.8 1,072.4 1,332.5 7.6 1,340.1
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 period 0.6 122.5 123.2 -0.1 123.1
-----------------------------------------------------------------------------
Equity at
30 June 2011 71.3 203.3 0.8 1,048.7 1,324.0 4.9 1,328.9
INCOME STATEMENT BY QUARTER
EUR million 1-3/ 4-6/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2011 2011 2010 2010 2010 2010 2010
NET SALES 610.2 689.7 637.9 715.4 690.6 717.3 2,761.2
Other operating income 12.8 77.0 20.4 197.3 20.9 20.3 258.8
Materials and services 263.5 287.7 279.0 307.3 300.7 320.4 1,207.4
Employee benefit expenses 164.0 168.5 169.1 172.3 151.9 175.3 668.6
Other operating expenses 128.4 147.2 128.9 132.4 124.2 168.7 554.2
Share of results in
associated companies -0.1
Depreciation, amortisation and 39.8 41.9 40.8 39.6 70.7 45.9 197.1
impairment losses
--------------------------------------------------------------------------------
OPERATING PROFIT 27.3 121.3 40.4 261.0 63.9 27.4 392.7
Share of results in
associated companies 1.9 -0.1 -2.4 1.7 0.8 -24.0 -23.9
Financial income 2.2 1.3 2.2 2.5 4.0 2.4 11.1
Financial expenses 4.7 6.6 6.0 6.2 5.0 6.6 23.8
--------------------------------------------------------------------------------
RESULT BEFORE TAXES 26.7 115.8 34.1 259.0 63.7 -0.8 356.0
Income taxes -8.2 -18.3 -10.0 -23.8 -24.6 -0.2 -58.6
--------------------------------------------------------------------------------
RESULT FOR THE PERIOD 18.5 97.5 24.1 235.1 39.1 -1.0 297.3
Result attributable to:
Equity holders of
the Parent Company 18.5 97.5 25.9 235.4 39.2 -0.9 299.6
Non-controlling interests 0.0 -0.1 -1.8 -0.2 -0.1 -0.1 -2.3
Earnings per share for result attributable
to the equity holders of the Parent company:
Earnings per share, EUR 0.11 0.60 0.16 1.45 0.24 -0.01 1.85
Diluted earnings per share, EUR 0.11 0.60 0.16 1.45 0.24 -0.01 1.85
CONSOLIDATED CASH FLOW STATEMENT 1-6/ 1-6/ 1-12/
EUR million 2011 2010 2010
OPERATIONS
Result for the period 116.0 259.2 297.3
Adjustments
Income taxes 26.6 33.8 58.6
Financial expenses 11.3 12.3 23.8
Financial income -3.6 -4.6 -11.1
Share of results in associated companies -1.8 0.7 23.9
Depreciation, amortisation and impairment losses 81.7 80.4 197.1
Gains/losses on sales of non-current assets -52.5 -188.5 -195.2
Other adjustments -34.6 -23.8 -55.1
Change in working capital
Change in trade and other receivables -24.9 -61.7 -41.1
Change in inventories -9.0 -3.8 9.5
Change in trade and other payables, and provisions -38.1 -7.3 36.8
Interest paid -6.6 -5.2 -13.7
Other financial items -5.3 -3.4 -3.2
Taxes paid -37.0 -28.2 -53.9
--------------------------------------------------------------------------------
CASH FLOW FROM OPERATIONS 22.2 60.0 273.8
INVESTMENTS
Acquisition of tangible and intangible assets -34.9 -40.3 -81.8
Operations acquired -41.0 -27.1 -49.5
Sales of tangible and intangible assets 4.4 5.2 17.8
Operations sold 67.4 26.1 30.8
Loans granted -7.8 -0.3 -0.8
Repayments of loan receivables 17.8 3.6 3.5
Sales of short-term investments -0.3 0.2
Interest received 0.8 1.0 2.7
Dividends received 13.3 3.0 3.9
--------------------------------------------------------------------------------
CASH FLOW FROM INVESTMENTS 19.7 -28.9 -73.1
CASH FLOW BEFORE FINANCING 41.9 31.1 200.8
FINANCING
Proceeds from share subscriptions 14.5
Minority capital investment/repayment of equity 1.6
Change in loans with short maturity -28.5 -72.8 4.2
Drawings of other loans 210.1 255.5 287.7
Repayments of other loans -66.0 -40.3 -355.8
Payment of finance lease liabilities -1.4 -1.7 -3.7
Dividends paid -179.4 -131.1 -131.3
Donations/other profit sharing -0.5 -0.5
--------------------------------------------------------------------------------
CASH FLOW FROM FINANCING -65.2 9.0 -183.3
CHANGE IN CASH AND CASH EQUIVALENTS
ACCORDING TO CASH FLOW STATEMENT -23.3 40.1 17.5
Effect of exchange rate differences on cash and cash 0.0 0.8 2.1
equivalents
NET CHANGE IN CASH AND CASH EQUIVALENTS -23.4 40.9 19.5
Cash and cash equivalents at the beginning of the period 41.1 21.6 21.6
Cash and cash equivalents at the end of the period 17.7 62.4 41.1
Cash and cash equivalents in cash flow statement include cash and cash
equivalents less bank overdrafts.
NET SALES BY BUSINESS 1-3/ 4-6/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
EUR million 2011 2011 2010 2010 2010 2010 2010
SANOMA MEDIA
The Netherlands 105.3 130.6 107.4 128.0 118.8 136.1 490.4
Finland 74.2 79.4 92.6 91.7 67.5 87.4 339.3
The CEE countries 51.4 54.3 48.7 54.3 51.0 60.9 214.9
Belgium 50.1 48.7 53.5 52.3 48.7 53.8 208.3
Other businesses and eliminations 10.2 10.7 9.9 13.0 11.5 12.4 46.7
------------------------------------------------------------------------------
TOTAL 291.1 323.7 312.1 339.4 297.5 350.6 1,299.6
SANOMA NEWS
Helsingin Sanomat 61.2 61.2 59.1 56.7 55.5 64.1 235.4
Ilta-Sanomat 19.1 22.2 19.9 20.7 21.1 21.6 83.3
Other publishing 23.7 25.0 25.3 25.6 23.5 25.0 99.5
Other businesses and eliminations 4.4 3.9 5.0 5.5 4.6 4.2 19.4
------------------------------------------------------------------------------
TOTAL 108.4 112.2 109.4 108.5 104.8 114.9 437.6
SANOMA LEARNING & LITERATURE
Learning 34.3 87.4 29.9 85.0 100.6 33.7 249.3
Language services 8.7 8.1 6.9 6.2 5.2 8.9 27.1
Literature and other businesses 20.1 15.1 23.6 17.2 18.0 24.8 83.6
Eliminations -2.4 -2.1 -2.3 -2.9 -2.5 -2.2 -9.9
------------------------------------------------------------------------------
TOTAL 60.7 108.6 58.2 105.5 121.2 65.1 350.1
SANOMA TRADE
Kiosk operations 85.3 102.3 91.9 104.9 99.2 102.4 398.4
Trade services 32.4 31.1 30.3 33.8 32.7 34.5 131.3
Bookstores 24.8 18.8 26.0 19.9 31.6 43.2 120.6
Movie operations 21.9 6.5 25.4 19.9 20.7 23.9 90.0
Eliminations -2.6 -2.4 -3.4 -4.0 -3.1 -3.5 -14.0
------------------------------------------------------------------------------
TOTAL 161.8 156.3 170.2 174.4 181.1 200.5 726.3
Other companies and eliminations -11.7 -11.0 -12.0 -12.5 -14.1 -13.8 -52.4
------------------------------------------------------------------------------
TOTAL 610.2 689.7 637.9 715.4 690.6 717.3 2,761.2
OPERATING PROFIT BY DIVISION
EUR million 1-3/ 4-6/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2011 2011 2010 2010 2010 2010 2010
Sanoma Media 22.7 47.0 31.2 229.3 -4.2 31.6 287.9
Sanoma News 12.9 9.9 15.6 8.9 15.7 15.9 56.1
Sanoma Learning & Literature -5.2 27.3 -6.4 25.1 45.5 -17.2 47.1
Sanoma Trade 3.3 44.4 3.7 2.4 6.4 3.0 15.5
Other companies and eliminations -6.5 -7.4 -3.7 -4.7 0.5 -6.1 -13.9
------------------------------------------------------------------------
TOTAL 27.3 121.3 40.4 261.0 63.9 27.4 392.7
OPERATING PROFIT EXCLUDING NON-RECURRING ITEMS BY DIVISION
EUR million 1-3/ 4-6/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2011 2011 2010 2010 2010 2010 2010
Sanoma Media 22.7 37.9 31.2 47.3 31.0 36.3 145.8
Sanoma News 12.9 9.9 9.6 8.9 15.7 13.0 47.2
Sanoma Learning & Literature -6.1 29.0 -5.2 26.4 45.7 -14.4 52.6
Sanoma Trade 3.3 4.1 3.7 2.4 7.4 5.6 19.1
Other companies and eliminations -6.5 -8.4 -3.7 -4.7 -4.9 -6.1 -19.3
----------------------------------------------------------------------
TOTAL 26.4 72.6 35.6 80.3 94.9 34.5 245.4
SEGMENT INFORMATION
Sanoma Group has four operating segments: Sanoma Media, Sanoma News, 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 two segments: Sanoma Media, operating in 12
countries, is responsible for magazines and TV operations and Sanoma News for
newspapers in Finland. Both divisions also have a great variety of online and
mobile services. Sanoma Learning & Literature's business is mainly B2B 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 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 Divisions 1.1-30.6.2011
Lear- Unallo-
ning & cated/ Con-
Lite- elimi- soli-
EUR million Media News rature Trade nations dated
---------------------------------------------------------------
External net sales 612.8 219.5 163.8 303.8 -0.1 1,299.9
Internal net sales 2.0 1.1 5.4 14.2 -22.7
NET SALES, TOTAL 614.8 220.6 169.2 318.0 -22.7 1,299.9
OPERATING PROFIT 69.7 22.8 22.1 47.7 -13.8 148.5
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 142.5
SEGMENT ASSETS 1,830.4 318.7 596.9 243.3 71.0 3,060.3
Sanoma Divisions 1.1-30.6.2010
Lear- Unallo-
ning & cated/ Con-
Lite- elimi- soli-
EUR million Media News rature Trade nations dated
---------------------------------------------------------------
External net sales 649.1 214.4 158.0 331.8 0.1 1,353.3
Internal net sales 2.4 3.5 5.7 12.9 -24.5
NET SALES, TOTAL 651.5 217.9 163.7 344.6 -24.5 1,353.3
OPERATING PROFIT 260.5 24.5 18.7 6.1 -8.4 301.4
Share of results in
associated companies -1.1 0.1 0.0 0.3 -0.7
Financial income 4.6 4.6
Financial expenses 12.3 12.3
RESULT BEFORE TAXES 293.1
SEGMENT ASSETS 1,892.2 330.0 592.4 347.4 37.1 3,199.0
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 30.6.2011 30.6.2010 31.12.2010
Carrying amount at the beginning of the period 429.3 484.2 484.2
Increases 35.2 27.4 50.7
Acquisition of operations 0.1 0.4 0.4
Decreases -1.7 -2.5 -5.4
Disposal of operations -72.1 -31.5 -31.8
Depreciation for the period -26.6 -33.3 -61.8
Impairment losses for the period 0.1 0.0 -1.0
Exchange rate differences and other changes -0.5 -5.3 -6.1
-----------------------------------------------------------------------------
Carrying amount at the end of the period 363.7 439.4 429.3
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 1-6/ 1-12/
2011 2010
Acquisition costs 16.6 37.1
Fair value of acquired net assets 14.7 14.5
Recognised in equity -18.7
Recognised in income statement 0.0 -0.5
---------------------------------------------------------
Goodwill 1.9 3.5
Negative goodwill in income statement
---------------------------------------------------------
Change in goodwill 1.9 3.5
CONTINGENT LIABILITIES
EUR million 30.6.2011 30.6.2010 31.12.2010
Contingencies for own commitments
Mortgages 20.5 22.7 20.6
Pledges 1.6 6.7 6.7
Other items 0.5 0.0 0.6
TOTAL 22.7 29.4 27.8
Contingencies incurred on behalf of associated companies
Guarantees 10.5 10.5
TOTAL 10.5 10.5
Contingencies incurred on behalf of other companies
Guarantees 0.0 0.3 0.0
TOTAL 0.0 0.3 0.0
Other contingencies
Operating lease liabilities 210.2 259.8 249.1
Royalties 18.9 16.4 23.5
Other items 30.9 23.6 26.9
TOTAL 260.0 299.9 299.5
----------------------------------------------------------
TOTAL 282.7 340.0 337.8
DERIVATIVE INSTRUMENTS
EUR million
Fair values 30.6.2011 30.6.2010 31.12.2010
Interest rate derivatives
Interest rate swaps 0.6 0.1
KEY EXCHANGE RATES
1-6/ 1-6/ 1-12/
Average rate 2011 2010 2010
EUR/CZK (Czech Koruna) 24.47 25.83 25.36
EUR/HUF (Hungarian Forint) 269.39 272.22 276.04
EUR/PLN (Polish Zloty) 3.97 4.02 4.01
EUR/RUB (Russian Rouble) 40.45 40.15 40.45
EUR/SEK (Swedish Crown) 8.93 9.81 9.55
Closing rate 30.6.2011 30.6.2010 31.12.2010
EUR/CZK (Czech Koruna) 24.35 25.69 25.06
EUR/HUF (Hungarian Forint) 266.11 286.00 277.95
EUR/PLN (Polish Zloty) 3.99 4.15 3.98
EUR/RUB (Russian Rouble) 40.40 38.28 40.82
EUR/SEK (Swedish Crown) 9.17 9.53 8.97
Press Conference
Press and analyst meeting will be held in English by President and CEO Harri-
Pekka Kaukonen and CFO Kim Ignatius at 11 am at Sanomatalo, Töölönlahdenkatu 2,
Helsinki. Webcast of the event can be viewed at Sanoma.com either live or later
on as on demand. Questions to the presenters can be asked also by phone during
the meeting. To join the conference call, please dial +44 (0)20 7162 0025
(Europe) or +1 334 323 6201 (US) and quote the conference code 900794. The
presentation material of the press and analyst meeting will be available on
Sanoma's website when the press and analyst meeting has started.
Sanoma's 3Q11 Interim Report will be published on 2 November 2011 at
approximately 8:30 am Finnish time.
Sanoma Corporation
Kim Ignatius
Chief Financial Officer
Additional information: Sanoma's Investor Relations, Kare Laukkanen, tel.
+358 105 19 5064 and Anna Tuominen, tel. +358 105 19 5066 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 nearly
20,000 people in over 20 countries throughout Europe. In 2010, the Group's net
sales totalled EUR 2.8 billion.
[HUG#1536461]
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