2013-02-18 14:00:00 CET
2013-02-18 14:00:05 CET
REGULATED INFORMATION
Ilkka-Yhtymä Oyj - Financial Statement Release
The Ilkka-Yhtymä Group's Financial Statements for 2012
Ilkka-Yhtymä Oyj Financial Statements Bulletin, 18 February 2013, at 3 p.m.
THE ILKKA-YHTYMÄ GROUP'S FINANCIAL STATEMENTS FOR 2012
FINANCIAL YEAR 2012
- Net sales: EUR 46.2 million (EUR 50.0 million), down 7.6%
- The holding in the associated company Alma Media Corporation was written down
by EUR 22 million. The write-down has no impact on cash flow.
- Operating profit excluding the EUR 22 million Alma Media write-down was EUR
11.1 million (EUR 17.6 million) and the reported operating loss EUR 10.9
million (operating profit EUR 17.6 million for the financial year 2011)
- Operating profit from the Group's own operations, excluding Alma Media
Corporation and the other associated companies, amounted to EUR 5.9 million
(EUR 8.9 million), down 33.9%
- Operating margin excluding the write-down was 24.1 (35.2) and the reported
margin -23.5 (35.2). Operating margin of the Group's own operations, excluding
Alma Media Corporation and the other associated companies, was 12.8 (17.9).
- Earnings per share excluding the write-down were EUR 0.31 (EUR 0.49) and the
reported earnings per share EUR -0.55 (EUR 0.49)
- Equity ratio (50.7%) remained good (55.5% in 2011)
- The Board of Directors proposes a per share dividend of EUR 0.15
Q4/2012
- Net sales: EUR 11.9 million (EUR 13.0 million), down 8.5%
- Operating profit excluding the EUR 22 million write-down was EUR 1.4 million
(EUR 2.6 million) and the reported operating loss EUR 20.6 million (operating
profit EUR 2.6 million for October-December 2011)
- Operating profit from the Group's own operations, excluding Alma Media
Corporation and the other associated companies, amounted to EUR 1.6 million
(EUR 2.1 million), down 25.0%
- Operating margin excluding the write-down was 12.0 (20.0) and the reported
margin -173.2 (20.0). Operating margin of the Group's own operations, excluding
Alma Media Corporation and the other associated companies, was 13.5 (16.5)
- Earnings per share excluding the write-down were EUR 0.03 (0.05) and the
reported earnings per share EUR -0.83 (EUR 0.05)
MATTI KORKIATUPA, MANAGING DIRECTOR:"The business environment in the media sector was challenging in 2012. The
positive outlook of the first half of the year turned increasingly negative as
the financial crisis progressed. Economic growth slowed, leading to a 3% fall
in advertising in Finland. The 9% value-added tax imposed on subscription
newspapers at the same time also contributed to a decline in circulation
volumes, and to readers and advertisers moving to the use of advertiser-funded
online and mobile services. The future will show how fast consumers and
advertisers will switch to using facsimile editions subject to a charge.
High-quality newspapers have played and will continue to play an important role
in the success story of Finnish society and civilisation, regardless of how
they are used.
Global players, whose business environment differs from that of Finnish media
companies in terms of taxation, for example, have entered the Finnish
advertising market, challenging the traditional domestic media. Meanwhile, the
new tax-based financing model of Yle, the Finnish Broadcasting Company, has
enabled it to invest in new delivery channels, thereby limiting the
opportunities of domestic media to generate revenue.
With the increasing competition and the declining circulation, advertising and
printing revenues, media companies have been forced to adjust their operations
and cut their workforce. For example, the financial statements of the
associated company Alma Media include EUR 11.9 million of restructuring
expenses and write-downs. Our own net sales and profitability have also
weakened. Thanks to development measures implemented in recent years, our
operational profitability has remained satisfactory.
In preparation for slowing economic growth in the strategy period 2013-2015, we
have been analysing our operational processes during the year and looking at
where improvements could be made. The greatest operational overhaul will be the
gradual change of our provincial newspapers' editorial partner over the course
of 2013, with Alma Regional Media replacing Väli-Suomen Media. This change is
based on our strategy regarding the long-term development of our operations in
cooperation with the regional newspapers of Alma Media, a company operating in
the neighbouring regions that is partially owned by us. The collaboration
concerns both traditional newspaper journalism and content published in digital
format, as well as the related development and training projects.
We have prepared for the rising personnel expenses for 2013 by implementing
voluntary personnel arrangements and a strict personnel budget. We will be
developing our working methods and employee skills, in order to improve
employee productivity and working atmosphere. We have renewed our newspaper
delivery contracts with Itella to cover the entire strategy period. Our
investments and other development projects have been prioritised to offer the
shortest possible payback period."
BUSINESS ENVIRONMENT
In its Economic Bulletin of 20 December 2012, the Ministry of Finance projects
GDP contraction of approximately 0.1% in 2012. In 2013, GDP growth is expected
to come in at 0.5%. According to Statistics Finland, the inflation rate reached
2.4% in December, while the average inflation rate for 2012 stood at 2.8%.
The latest consumer survey of Statistics Finland, published in January, shows
that consumer confidence in the economy is slightly higher than a year ago, but
clearly below the long-term average. Private consumption is estimated to have
grown by 1.5% in 2012. The projected growth for private consumption in 2013 is
in the region of 0.6%.
According to a survey conducted by TNS Gallup Oy and commissioned by the
Finnish Advertising Council, media advertising decreased by 2.9% in 2012.
Advertising in newspapers fell by 8.1%, while advertising in free sheets
decreased by 1.3%. Newspapers and free sheets accounted for 34.1% and 5.6% of
media advertising, respectively. Web media advertising saw an increase of 10%,
representing a 17.8% share of media advertising.
GROUP STRUCTURE
The Ilkka-Yhtymä Group is a media group that consists of the parent company
Ilkka-Yhtymä Oyj, the publishing company I-Mediat Oy, as well as the printing
company I-print Oy. The Group also includes two property companies, Kiinteistö
Oy Seinäjoen Koulukatu 10 and Seinäjoen Kassatalo Osakeyhtiö, as well as
Pohjalaismediat Oy. Our main products are the regional newspapers Ilkka and
Pohjalainen, five local newspapers (Viiskunta, Komiat, Järviseutu, Suupohjan
Sanomat and Jurvan Sanomat), two free sheets (Vaasan Ikkuna and
Etelä-Pohjanmaa), including the online and mobile services of these papers, and
I-print Oy's printing and communications services.
The associated companies included in our consolidated financial statements are
Alma Media Corporation, Arena Partners Oy, Väli-Suomen Media Oy and Yrittävä
Suupohja Oy.
CONSOLIDATED NET SALES AND PROFIT PERFORMANCE
Consolidated net sales decreased by 7.6%, amounting to EUR 46,158 thousand (EUR
49,952 thousand in 2011). External net sales from publishing operations
decreased by 6.5%. Advertising revenues fell by 11.2%, and circulation revenues
decreased by 0.9%. External net sales from the printing business decreased by
14.7%. Circulation income accounted for 42% of consolidated net sales, while
advertising income and printing income represented 45% and 12%, respectively.
Other operating income totalled EUR 437 thousand (EUR 435 thousand).
The Group operating expenses for the financial year amounted to EUR 40,689
thousand (EUR 41,468 thousand), down by 1.9% year-on-year. Expenses arising
from materials and services fell by 5.7% and other operating costs by 4.8%.
Personnel expenses grew by 3.2%. Depreciation decreased by 5.8%.
The share of the associated companies' result was EUR -16,774 thousand (EUR
8,659 thousand). The most significant item affecting this share was the EUR 22
million write-down on the holding in the associated company Alma Media,
recorded as a result of an impairment test. The write-down has no impact on
cash flow. The share of the associated companies' result was also affected by
non-recurring expense items recorded in Alma Media's results (EUR 11.9 million)
as well as changes in the fair value of a conditional purchase price provision
arising from the corporate restructuring of Arena Partners Oy.
Group operating profit excluding the EUR 22 million write-down was EUR 11,132
thousand (EUR 17,590 thousand) and the reported operating loss EUR 10,868
thousand (operating profit EUR 17,590 thousand in 2011), down 162%. Operating
profit from the Group's own operations, excluding Alma Media Corporation and
the other associated companies, amounted to EUR 5,906 thousand (EUR 8,931
thousand), representing 12.8% (17.9%) of net sales. Operating margin excluding
the write-down was 24.1 (35.2) and the reported margin -23.5 (35.2).
Net financial expenses amounted to EUR 2,550 thousand (EUR 3,817 thousand). Net
gain/loss on shares held for trading was EUR -99 thousand (EUR -949 thousand).
Interest expenses excluding the fair value change in derivatives hedging them
totalled EUR 2,184 thousand (EUR 2,544 thousand). In order to hedge against
interest rate risk, in 2010 the company transformed some of its floating-rate
liabilities into fixed-rate liabilities, by means of interest rate swaps. Given
that the Group does not apply hedge accounting, unrealised changes in the
market value of the interest rate swaps are recognised through profit or loss.
For the 2012 financial year, the market value of these interest rate swaps fell
by EUR 920 thousand (EUR 1,398 thousand in 2011).
Pre-tax profit excluding the write-down totalled EUR 8,582 thousand (EUR 13,773
thousand) and the reported pre-tax loss EUR 13,418 thousand (pre-tax profit EUR
13,773 thousand in 2011). Direct taxes amounted to EUR 669 thousand (EUR 1,098
thousand). Group profit for the year excluding the write-down was EUR 7,913
thousand (EUR 12,675 thousand) and the reported loss EUR 14,087 thousand
(profit EUR 12,675 thousand in 2011). Earnings per share excluding the
write-down were EUR 0.31 (EUR 0.49) and the reported earnings per share EUR
-0.55 (EUR 0.49).
Q4 NET SALES AND PROFIT PERFORMANCE
In Q4/2012, consolidated net sales totalled EUR 11,877 thousand (EUR 12,979
thousand), down by 8.5%. External net sales from publishing operations
decreased by 7.6%. Advertising revenues decreased by 9.9% and circulation
revenues decreased by 5.4%. External net sales from the printing business fell
by 14.2%. Circulation income accounted for 40% of consolidated net sales in
October-December, while advertising income and printing income represented 47%
and 13%, respectively. Other operating income in October-December totalled EUR
95 thousand (EUR 92 thousand).
In Q4, the Group's expenses totalled EUR 10,362 thousand (EUR 10,925 thousand),
down by 5.1%. The associated companies' impact on profit and loss totalled EUR
-22,180 thousand (EUR 462 thousand). The most significant item affecting the
share of the associated companies' result in Q4 was the EUR 22 million
write-down recorded as a result of an impairment test. The write-down has no
impact on cash flow. In Q4/2012, the share of the associated companies' result
was also affected by non-recurring expense items recorded in Alma Media's
results (EUR 5.8 million) as well as changes in the fair value of a conditional
purchase price provision arising from the corporate restructuring of Arena
Partners Oy.
Q4 operating profit excluding the EUR 22 million write-down was EUR 1,424
thousand (EUR 2,599 thousand) and the reported operating loss EUR 20,576
thousand (operating profit EUR 2,599 thousand in October-December 2011), down
892%. Operating profit from the Group's own operations, excluding Alma Media
Corporation and the other associated companies, amounted to EUR 1,604 thousand
(EUR 2,137 thousand), representing 13.5% (16.5%) of net sales. Operating margin
excluding the write-down was 12.0 (20.0) and the reported margin -173.2 (20.0).
Net financial expenses amounted to EUR 424 thousand (EUR 964 thousand). Net
gain/loss on shares held for trading was EUR 102 thousand (EUR -5 thousand). In
Q4, interest expenses excluding the fair value change in derivatives hedging
them totalled EUR 482 thousand (EUR 641 thousand). The market value of these
interest rate swaps fell by EUR 65 thousand in October-December 2012 (EUR 352
thousand in October-December 2011).
Q4 pre-tax profit excluding the EUR 22 million write-down totalled EUR 1,000
thousand (EUR 1,636 thousand) and the reported pre-tax loss EUR 21,000 thousand
(pre-tax profit EUR 1,636 thousand in October-December 2011).
CONSOLIDATED BALANCE SHEET AND FINANCING
The consolidated balance sheet total came to EUR 160,823 thousand (EUR 196,998
thousand), with EUR 80,567 thousand (EUR 104,440 thousand) of equity. A EUR 22
million write-down has been recorded on the holding in the associated company
Alma Media as a result of an impairment test. The write-down has no impact on
cash flow. On the reporting date of 31 December 2012, the balance sheet value
of the holding in the associated company, Alma Media Corporation, was EUR 127.6
million following the write-down and the market value of the shares was EUR
102.3 million.
At the end of the financial year, interest-bearing liabilities totalled EUR
70,587 thousand (EUR 76,467 thousand on 31 December 2011). Loan maturities of
the company's interest-bearing liabilities range from 1 to 8 years. During the
2012 financial year, accelerated repayments of the TyEL (Employees' Pensions
Act) loan for 2013-2015 amounted to EUR 2.0 million.
In order to hedge against interest rate risk, in 2010, the company transformed
some of its floating-rate liabilities to a fixed rate, by means of interest
rate swaps. Presently, some 44% of the loans in the company's total loan
portfolio have a fixed rate and some 56% a floating rate. These hedging
measures included, the average interest rate for interest-bearing liabilities
on 31 December 2012 came to 2.45%. The loan providers of the loans taken out at
the end of the 2010 financial year have the opportunity to adjust the loan
margin five years after the loans have been drawn. At the end of the 2012
financial year, these loans amounted to EUR 28.2 million.
As at 31 December 2012, the impact of floating-rate interest-bearing
liabilities on profit before taxes would have amounted to -/+ EUR 397 thousand
over the next 12 months, if the interest level increases or decreases by one
percentage point. Of interest-bearing liabilities existing during the 12 months
following the financial year, a total of EUR 6,602 thousand will fall due for
payment.
With regard to liquidity, the year-end current ratio stood at 0.47 (0.86).
Group gearing was at 82.7% (60.9%) at the end of the financial period. Equity
ratio was at 50.7% (55.5%) and shareholders' equity per share stood at EUR 3.14
(EUR 4.07). Cash and cash equivalents amounted to EUR 2,263 thousand (EUR
10,926 thousand). Cash flow from operations totalled EUR 7,976 thousand (EUR
31,171 thousand). This includes EUR -1.0 million (EUR 15.4 million) from the
Group's own operations as well as EUR 9.0 million (EUR 15.7 million) of
dividend income from Alma Media Corporation. Cash flow from operations in 2011
includes subscriptions of provincial newspapers invoiced in advance in 2011,
which would normally have been invoiced in January-March 2012. Approximately
EUR 6.6 million of the value of these advance invoices was recognised as income
in December 2011, which is why cash flow from operations in 2011 was about EUR
6.6 million higher in this respect and, correspondingly, cash flow from
operations in 2012 about EUR 6.6 million lower. Taking account of this
adjustment, cash flow from the Group's own operations amounted to EUR 5.6
million (EUR 8.8 million). Cash flow from investments totalled EUR -570
thousand (EUR -3,633 thousand).
PUBLISHING
The Group's publishing segment comprises the publishing company I-Mediat Oy.
During the year, net sales from publishing totalled EUR 40,528 thousand (EUR
43,318 thousand). Net sales from the publishing business decreased by 6.4%.
This fall was caused by increased media competition, a weaker advertising
market and the income from parliamentary election advertisements included in
the comparative figure for 2011. Advertising revenues fell by 11.2% and
circulation revenues decreased by 0.9%. Net sales for both provincial papers
belonging to the publishing segment, Ilkka and Pohjalainen, decreased. Net
sales for local newspapers and free sheets grew slightly. Operating profit from
publishing decreased by 34.4% year-on-year, to EUR 5,046 thousand (EUR 7,697
thousand).
I-Mediat Oy has signed a three-year follow-up agreement with Itella Posti Oy
for the delivery of subscription newspapers and the development of
distribution. In addition, the delivery of free sheets published by I-Mediat Oy
was transferred to Itella Posti Oy from 1 January 2013.
Due to Finland's weak and uncertain economic situation, it is difficult to
forecast media income in 2013. Media advertising is projected to remain almost
unchanged from the previous year, and newspaper circulation income is expected
to fall, as a result of digitalisation and the imposition of VAT. Net sales of
I-Mediat Oy are expected to remain almost at the same level as before.
PRINTING
The printing segment comprises the printing house I-print Oy. The segment's net
sales amounted to EUR 13,710 thousand (EUR 15,235 thousand). Net sales fell by
10% year-on-year due to the decline in volumes. External net sales from the
printing business decreased by EUR 991 thousand (14.7%). Operating profit from
printing decreased by 29.4% year-on-year, to EUR 1,379 thousand (EUR 1,953
thousand).
In 2012, I-print Oy received the Nordic Ecolabel certification (the Swan) for
its printing operations.
Within the printing business, the 2013 market situation is expected to remain
difficult. General economic uncertainty will continue to influence corporate
customers' media investments. In newspaper printing, capacity in Finland will
increase in 2013, with the start-up of a couple of new printing presses.
Meanwhile, the domestic market is shrinking. The rise in raw material and
energy costs is expected to be moderate. Nevertheless, I-print Oy's net sales
are projected to remain roughly the same as in the previous year.
ASSOCIATED COMPANIES
Ilkka-Yhtymä Group's associated companies are Alma Media Corporation (29.79%),
Arena Partners Oy (37.82%), Väli-Suomen Media Oy (40%) and Yrittävä Suupohja Oy
(38.46%).
Alma Media focuses on publishing operations and digital consumer and corporate
services. Its high-profile newspapers are Aamulehti, Iltalehti and Kauppalehti.
Ilkka-Yhtymä's provincial newspapers Ilkka and Pohjalainen and Alma Media's
regional and local newspaper division Alma Regional Media will initiate
extensive operational collaboration on content and development. Ilkka-Yhtymä's
publishing company I-Mediat Oy and Alma Media Kustannus Oy (Alma Media
Publishing Ltd) signed a cooperation agreement on 18 December 2012.
The collaboration will be implemented gradually from the beginning of 2013. The
objectives include improving the editorial quality of the newspapers,
increasing operational efficiency, accelerating the implementation of
development measures, and developing editorial reciprocity among the papers.
The collaboration will be in full swing from early 2014. The agreement does not
include any issues related to the ownership of Ilkka-Yhtymä Oyj and Alma Media
Corporation.
The collaboration will cover the Helsinki-based editorial unit and other
nationwide news operations, weekend pages and supplements, special supplements,
radio and TV pages, utility journalism, world news, and cultural, sports and
online journalism. The agreement also includes large-scale collaboration in
training and development activities, covering journalism as well as the product
development of both printed papers and online content.
The parties have held discussions on extending the cooperation to newspapers
published by Keski-Pohjanmaan Kirjapaino Oy, Kaleva Oy and TS-Yhtymä Oy, the
scope of which will be agreed separately.
Arena Partners Oy is a digital business development and production company
jointly owned by five provincial newspaper companies. Arena Partners owns a 35%
share of Alma Mediapartners Oy, which is Alma Media's housing sales, vehicle
and consumer advertising marketplace company operating in Finland. The Arena
Partners Group includes the subsidiary Arena Interactive Oy (65%), focusing on
mobile services, the recruitment agency Uranus Oy (35%) and Adfore Technologies
Oy (11.8%).
Väli-Suomen Media Oy produces a joint Sunday magazine (Sunnuntaisuomalainen)
for the region's newspapers. Ilkka-Yhtymä Group's aim is to withdraw from the
services and ownership of Väli-Suomen Media at the end of 2013. Yrittävä
Suupohja Oy publishes Suupohjan Seutu, a free sheet distributed in the Suupohja
region.
RESEARCH AND DEVELOPMENT EXPENSES
In the Group's publishing business, product development for multiple channels
has been carried out with Arena Partners Oy, its shareholding newspapers, the
Next Media programme of Finnmedia (Federation of the Finnish Media Industry),
and STT. Product development has been focused on customer-oriented services
relating to news reporting, transactions and communities. With regard to the
Group's printing business, the focus was on the development of value-added
services and products for digital services.
CAPITAL EXPENDITURE
Reported capital expenditure for the year totalled EUR 1,311 thousand, with
printing accounting for EUR 866 thousand and publishing for EUR 170 thousand.
In 2012, a total of EUR 186 thousand was invested in available-for-sale shares.
ANNUAL GENERAL MEETING, SUPERVISORY BOARD AND BOARD OF DIRECTORS
On 19 April 2012, the Annual General Meeting (AGM) of Ilkka-Yhtymä Oyj approved
the financial statements, discharged the members of the Supervisory Board, the
Board of Directors and the Managing Director from liability and decided that a
per-share dividend of EUR 0.40 be paid for the year 2011.
The number of members on the Supervisory Board for 2012 was confirmed to be 25.
Of the Supervisory Board members whose term had come to an end, the following
were re-elected for the term ending in 2016: Vesa-Pekka Kangaskorpi
(Jyväskylä), Jarmo Rinta-Jouppi (Seinäjoki), Kimmo Simberg (Seinäjoki) and
Jyrki Viitala (Seinäjoki). Timo Mäkinen (Seinäjoki) was elected to the
Supervisory Board to replace an employee representative who resigned from her
position during the term of office. Mäkinen's term will end in 2013.
At the Annual General Meeting, it was decided to maintain the payments made to
the Chairman of the Supervisory Board and the board members at their current
level: the Chairman will receive a retainer of EUR 1,500 per month and a fee of
EUR 400 per meeting, and the board members will be paid a fee of EUR 400 per
meeting attended. The board members' travel expenses are reimbursed in
accordance with the current maximum level specified by the tax authorities.
Ernst & Young Oy, Authorised Public Accountants, was elected as the auditor,
with Authorised Public Accountant Tomi Englund as the principal auditor. It was
decided that the auditors would be reimbursed as per the invoice.
The AGM authorised the Board of Directors to decide upon a donation to be put
toward charitable causes or similar, totalling, at maximum, EUR 50,000, as well
as to decide upon the recipients, purposes of use, schedules and other terms of
these donations.
On 7 May 2012, the Supervisory Board re-elected Timo Aukia, whose term had come
to an end, to the Board of Directors of Ilkka-Yhtymä Oyj. Lasse Hautala will
continue as chairman of the Supervisory Board, while Perttu Rinta will continue
as vice-chairman. At its membership meeting, the Board of Directors re-elected
Seppo Paatelainen as its chairman, while Timo Aukia will continue as
vice-chairman.
SHARE PERFORMANCE
At the end of 2012, the company's share capital totalled EUR 6,416,302. The
number of shares was 25,665,208, of which 4,304,061 were Series I shares (20
votes per share) and 21,361,147 were Series II shares (1 vote per share).
Shares of both series entitle the holders to the same dividend.
According to the Articles of Association, a single shareholder at a General
Meeting may not use more than one twentieth (1/20) of the entire number of
votes represented in a meeting.
The transfer of Series I shares is restricted by an approval clause. According
to this clause, Series I shares cannot be transferred to another holder without
the approval of the Board of Directors.
The Series I shares of Ilkka-Yhtymä Oyj were listed on the Helsinki Stock
Exchange in 1981 and have remained listed ever since. The Series II shares have
been listed since their issue in 1988, and on 10 June 2002 they were
transferred from the I List of the Helsinki Stock Exchange to the Main List. At
present, the Series II shares of Ilkka-Yhtymä Oyj are listed on the NASDAQ OMX
Helsinki List, in the Consumer Services sector, the company's market value
being classified as Mid Cap. The Series I shares are listed on the Pre List.
The number of Series I shares of Ilkka-Yhtymä Oyj traded in 2012 was 41,148,
which represents 1% of the series share stock. The trading value of shares was
EUR 0.3 million. The number of Series II shares traded totalled 947,266, which
equals 4.4% of the series share stock. Their trading value was EUR 5.5 million.
During the report period, the lowest quotation for Ilkka-Yhtymä Oyj's Series I
share was EUR 6.40 and the highest EUR 11.29, while the lowest quotation for a
Series II share was EUR 4.56 and the highest EUR 7.67. At the period-end
closing price, the share capital market value was EUR 133.1 million.
The Board of Directors has an effective authorisation to decide upon a share
issue and/or granting stock options and/or other special rights and upon their
conditions. On 4 November 2010, Ilkka-Yhtymä Oyj purchased 7,250,000 shares in
Alma Media Corporation from Oy Herttaässä Ab. From the share purchase price,
EUR 30 million was paid in cash. In addition, Ilkka-Yhtymä decided to issue
freely negotiable convertible bonds, with a value of EUR 20.0 million, to the
seller. The bond issue decision taken by Ilkka-Yhtymä's Board of Directors is
based on the authorisation granted to it by the AGM on 19 April 2010.
In addition to this, the company has not issued any option rights or other
special rights.
The Board of Directors is not authorised to acquire or sell the company's own
shares.
PERSONNEL
The average number of employees (full-time equivalents) was 336 (341 in 2011).
In the year under review, the Group had, on average, 379 (382) employees with
employment contracts. On 31 December 2012, the Group had 332 full-time
employees (333).
Ilkka-Yhtymä Group's entire personnel has been covered by an incentive scheme
since 2000. According to the Articles of Association, Ilkka-Yhtymä Oyj's
Supervisory Board must include two employee representatives.
On 1 August 2012, Satu Takala (Master of Arts) assumed her position as Chief
Editor of provincial paper Ilkka. Takala was previously Managing Editor of the
shared editorial unit of Ilkka and Pohjalainen.
In September 2012, retirement arrangements were implemented for eight people.
The cost savings from these arrangements will be realised in full after the
first quarter of 2013.
ESTIMATED OPERATING RISKS AND UNCERTAINTIES
Ilkka-Yhtymä's most significant short-term risks are related to the development
of media advertising, as well as circulation and printing volumes. In a weak
economic climate, these risks affect the entire sector. A long-term risk in the
sector lies in the potential decrease in circulation and advertising volumes,
if consumers transfer to using electronic devices for reading newspapers. It is
as yet difficult to estimate the impact of the 9% VAT imposed on newspaper
subscription fees from the beginning of 2012 on circulation and printing
volumes. Through its holding in Alma Media stock, the company is also exposed
to risks related to Alma Media's profit-making capacity, dividend policy and
the price development of its shares.
Communications industry
The company estimates that the Group's core operations only involve risks
normally associated with the industry, which are increasing due to the changes
taking place in the business environment. Such industry risks are mainly
related to the development of media advertising and content consumption, since
more and more alternatives are being offered to consumers and advertisers. A
prolonged weak economic situation and a slow recovery may have a negative
impact on the consumption of media products and services. Competition in the
industry is being affected by the digitalisation of content and advertising,
the emergence of new distribution channels, growth in advertiser-funded
content, changes in media use and ways of spending time, as well as by the new
operating methods and the actors these are enabling.
Publishing
In the long term, regional demographic and economic developments will have an
impact on provincial and local newspapers' circulation and advertising income.
On the other hand, the current reduction underway in the average number of
individuals in households will maintain circulation figures. A healthy
circulation coverage percentage, a competitive contact price and strong
relationships with readers are enhancing provincial and local newspapers'
competitiveness in the advertising market. Provincial papers' overall reach has
increased as a result of steep growth in the number of online media visitors.
In general, ordinary economic cycles have not had a major impact on local or
provincial newspapers' circulation income. On the other hand, media advertising
volumes reflect changes in economic cycles, competitive situations and the
outlook of advertisers' own industries. Media sales took an upward turn in the
spring of 2012.
The market entry and exit of new media, such as new free sheets, depends on
economic cycles, regional volumes of the advertisement market and the
competitive environment. Most newspaper groups, including Ilkka-Yhtymä Group,
have decades of experience with respect to their free sheets, whose high
quality and local customer relationships provide a competitive edge.
Due to the consumer behaviour enabled by new technology, some classified
advertisements, such as car, housing and job advertisements, have shifted
online. In response to this development, Ilkka and Pohjalainen are engaged in
collaboration with Arena Partners. Arena Partners Oy has acquired a 35% holding
in the Etuovi.com, Vuokraovi.com and Autotalli.com services displaying housing
and car advertisements. This will enable us to provide the sector's best
services to customers. New players in the market include international search
engine and other companies.
In order to face the challenges posed by changing reading habits among young
people and the growing volumes of online content available for consumers free
of charge, Ilkka-Yhtymä Group is providing its provincial newspapers' premium
online and mobile services for the benefit of the region's consumers. In line
with the allied Arena Partners' strategy, the aim is for these services to
become the leading place for digital news, services, transactions and commerce
for consumers, communities and companies in our operating provinces.
Graphics
The aggressive price competition in Finland's printing sector is continuing.
Developments in circulation and advertising volumes are reflected in the
numbers of pages in newspapers, while general economic trends are affecting the
use of other advertising media. Exports to the Nordic countries are dependent
not only on market conditions, but also on the development of exchange rates.
The availability of newsprint has been good and price developments in recent
years have been moderate, even declining, in spite of large annual pricing
fluctuations and the fact that the paper industry has downsized its capacity.
Pricing pressures will increase in the future, since the paper industry's
capacity cuts were intended to safeguard future profitability. I-print Oy has
prepared for both availability and price risks by spreading purchases among
suppliers and through joint procurement with Alma Media Corporation's and
Keskisuomalainen Oyj's printing houses.
Newspaper distribution has been outsourced to Itella Oyj. The risks in delivery
operations mainly concern price developments. The price risk depends on the pay
development of deliverers, competition between delivery companies and the
reform of the Postal Services Act.
Financial risks
The Group is exposed to an interest-rate risk and a risk associated with share
prices. The Group's interest-rate risk consists of changes in market interest
rates applied in the loan portfolio. The company follows an interest-rate
management policy confirmed by the Board of Directors. With respect to
interest-rate risk management, the goal is to reduce the volatility of interest
expenses in order to keep interest expenses, and the associated risk that they
will grow, at an acceptable level. Interest-rate risk is managed by selecting
both fixed and floating interest rates in loans, and using interest-rate fixing
periods. If necessary, in order to hedge against interest-rate risk, the
company can rely on interest rate swaps, interest rate options and their
combinations. The Group's loan arrangements and hedging against interest-rate
risk have been described in further detail above, under ‘Consolidated balance
sheet and financing'. The company's loan arrangements involve ordinary
collaterals and no special covenants.
In its operations, the Group is exposed to price risks arising from the
volatility of market prices of quoted shares. In order to ensure the
availability and flexibility of financing, the Group has available credit
limits. On 31 December 2012, unused credit limits totalled EUR 13 million (On
31 December 2011, EUR 13 million).
THE BOARD'S PROPOSAL ON PROFIT SHARING
The Board of Directors proposes to the Annual General Meeting of 18 April 2013
that a per-share dividend of EUR 0.15 be paid for the financial year 2012,
representing a total dividend payment of EUR 3,849,781.20. Dividends will be
distributed to those who are listed on the matching day, 23 April 2013, as
shareholders in the Ilkka-Yhtymä Oyj's list of shareholders, maintained at
Euroclear Finland Oy. Dividend payments are issued on 30 April 2013. On 31
December 2012, the parent company's distributable funds amounted to EUR
97,690,764.51.
No substantial changes have taken place in the company's financial position
since the end of the financial year. In the view of the Board of Directors, the
proposed dividends do not jeopardise the company's liquidity.
Ilkka-Yhtymä Oyj practises an active dividend policy and aims to distribute at
least half of its consolidated annual income as dividend payments, taking into
consideration the financing required for profitable growth and the company's
future outlook.
PROSPECTS FOR 2013
In the current economic climate, forecasting net sales in the media sector and,
in particular, media advertising spending involves major uncertainties. Due to
consumer caution, VAT on circulation revenues and media competition,
newspapers' circulation revenues are predicted to decrease. Printing business
volumes have declined permanently in Finland and the prospects for growth in
the sector are weak.
The net sales of Ilkka-Yhtymä Group are estimated to remain almost at the 2012
level.
Group operating profit from Ilkka-Yhtymä's own operations, and operating profit
as a percentage of net sales, excluding the share of Alma Media's and other
associated companies' results, are expected to remain roughly the same as in
2012. In addition, the year's results will depend on interest-rate trends and
the price performance of securities investments.
The associated company Alma Media Corporation (Group ownership 29.79%) will
have a significant impact on Group operating profit and profit.
SUMMARY OF FINANCIAL STATEMENTS AND NOTES
CONSOLIDATED INCOME STATEMENT
(EUR 1,000) 10-12/ 10-12/ Change 1-12/ 1-12/ Change
2012 2011 % 2012 2011 %
NET SALES 11 877 12 979 -8 46 158 49 952 -8
Change in inventories of -6 -9 40 12 -98
finished and unfinished
products
Other operating income 95 92 3 437 435
Materials and services -3 454 -3 769 -8 -13 980 -14 830 -6
Employee benefits -4 608 -4 420 4 -17 824 -17 275 3
Depreciation -679 -771 -12 -2 918 -3 098 -6
Other operating costs -1 622 -1 965 -17 -5 966 -6 265 -5
Share of associated -22 180 462 -4897 -16 774 8 659 -294
companies' profit *)
OPERATING PROFIT/ LOSS -20 576 2 599 -892 -10 868 17 590 -162
Financial income and expenses -424 -964 56 -2 550 -3 817 33
PROFIT/ LOSS BEFORE TAX -21 000 1 636 -1384 -13 418 13 773 -197
Income tax -285 -273 4 -669 -1 098 -39
PROFIT/ LOSS FOR THE PERIOD -21 285 1 363 -1662 -14 087 12 675 -211
UNDER REVIEW
Earnings per share, undiluted -0.83 0.05 -1662 -0.55 0.49 -211
(EUR)**)
The undiluted share average 25 665 25 665 25 665 25 665
(to the nearest thousand)**)
*) Includes the EUR 22 million non-recurring write-down on the holding in the
associated company Alma Media Corporation.
**) There are no factor diluting the figure.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(EUR 1,000) 10-12/ 10-12/ Change 1-12/ 1-12/ Change
2012 2011 % 2012 2011 %
PROFIT/ LOSS FOR THE PERIOD -21 285 1 363 -1662 -14 087 12 675 -211
UNDER REVIEW
OTHER COMPREHENSIVE INCOME:
Available-for-sale assets -3 -517 99
Share of associated companies' -72 150 -148 100 -53 288
other comprehensive income
Income tax related to 4 -97 1 138 -99
components of other
comprehensive income
Other comprehensive income, -72 154 -147 98 -432 123
net of tax
TOTAL COMPREHENSIVE INCOME FOR -21 357 1 517 -1508 -13 989 12 243 -214
THE PERIOD
CONSOLIDATED BALANCE SHEET
(EUR 1,000) 12/2012 12/2011 Change
%
ASSETS
NON-CURRENT ASSETS
Intangible rights 1 008 1 120 -10
Goodwill 314 314
Investment properties 233 295 -21
Property, plant and equipment 11 862 13 481 -12
Shares in associated companies 128 796 154 097 -16
Available-for-sale assets 10 723 10 714
Other tangible assets 214 214
TOTAL NON-CURRENT ASSETS 153 151 180 236 -15
Current assets
Inventories 647 602 7
Trade and other receivables 2 950 3 079 -4
Income tax assets 118 254 -53
Financial assets at fair value 1 695 1 902 -11
through profit or loss
Cash and cash equivalents 2 263 10 926 -79
TOTAL Current assets 7 673 16 762 -54
Total assets 160 823 196 998 -18
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDER'S EQUITY
Share capital 6 416 6 416
Invested unrestricted equity fund and other reserves 48 621 48 623
Retained earnings 25 529 49 401 -48
SHAREHOLDER'S EQUITY 80 567 104 440 -23
NON-CURRENT LIABILITIES
Deferred tax liability 23 532 -96
Non-current interest-bearing liabilities 63 954 72 438 -12
Non-current interest-free liabilities 102 115 -12
NON-CURRENT LIABILITIES 64 079 73 085 -12
CURRENT LIABILITIES
Current interest-bearing liabilities 6 633 4 029 65
Accounts payable and other payables 9 390 15 383 -39
Income tax liability 155 61 155
CURRENT LIABILITIES 16 177 19 473 -17
SHAREHOLDERS' EQUITY AND LIABILITIES TOTAL 160 823 196 998 -18
CONSOLIDATED CASH FLOW STATEMENT
(EUR 1,000) 1-12/ 1-12/
2012 2011
CASH FLOW FROM OPERATIONS
Profit/ loss for the period under review -14 087 12 675
Adjustments 22 867 -683
Change in working capital -6 732 7 395
CASH FLOW FROM OPERATIONS 2 048 19 387
BEFORE FINANCE AND TAXES
Interest paid -2 235 -2 491
Interest received 46 102
Dividends received 9 117 15 955
Other financial items -53 322
Direct taxes paid -947 -2 104
CASH FLOW FROM OPERATIONS 7 976 31 171
CASH FLOW FROM INVESTMENTS
Investments in tangible and -1 083 -785
intangible assets, net
Other investments, net -16 -3 477
Dividends received from investments 529 628
CASH FLOW FROM INVESTMENTS -570 -3 633
CASH FLOW BEFORE FINANCING ITEMS 7 406 27 538
CASH FLOW FROM FINANCING
Change in current loans -3 925 -6 930
Change in non-current loans -1 964
Dividends paid and other profit distribution -10 180 -12 728
CASH FLOW FROM FINANCING -16 069 -19 658
INCREASE (+) OR DECREASE (-)IN FINANCIAL ASSETS -8 663 7 879
Liquid assets at the beginning of the financial period 10 926 3 047
Liquid assets at the end of the financial period 2 263 10 926
KEY FIGURES 2012 2011
Net sales, Meur 46.2 50.0
change % -7.6 7.4
Operating profit/ loss, Meur -10.9 17.6
% of net sales -23.5 35.2
Profit/ loss before tax, Meur -13.4 13.8
% of net sales -29.1 27.6
Profit/ loss for the financial period, Meur -14.1 12.7
% of net sales -30.5 25.4
Return on equity (ROE), % -15.2 12.1
Return on investment (ROI), % -6.2 9.6
Equity ratio, % 50.7 55.5
Gearing, % 82.7 60.9
Gross capital expenditure, Meur *) 1.3 4.4
% of net sales 2.8 8.8
Balance sheet total, Meur 160.8 197.0
Current ratio 0.47 0.86
Average no. of employees 336 341
Earnings per share (EPS), eur -0.55 0.49
Cash flow from operations per share, eur 0.31 1.21
Shareholders' equity per share, eur 3.14 4.07
Dividend per share (Series I), eur **) 0.15 0.40
Dividend per share (Series II), eur **) 0.15 0.40
Dividend per earnings (Series I), % -27.3 81.0
Dividend per earnings (Series II), % -27.3 81.0
Effective dividend yield (Series I), % 2.1 4.4
Effective dividend yield (Series II), % 3.1 6.1Price per earnings (P/E) (Series I) -12.8 18.2
Price per earnings (P/E) (Series II) -8.8 13.4
Market capitalisation, Meur 133.1 179.7
Average number of shares during the financial period 25 665 208 25 665 208
Number of shares at the end on the financial period 25 665 208 25 665 208
*) Includes investments in tangible and intangible assets and shares in
associated companies and in available-for-sale financial assets (shares).
**) 2012: Proposal of the Board of Directors
CONSOLIDATED NET SALES AND PROFIT BY QUARTER
(EUR 1,000) Q1/ 2012 Q2/ 2012 Q3/ 2012 Q4/ 2012
NET SALES 11 763 11 734 10 785 11 877
OPERATING PROFIT/ LOSS 3 385 2 566 3 757 -20 576
PROFIT/ LOSS FOR THE PERIOD UNDER REVIEW 2 449 1 852 2 897 -21 285
(EUR 1,000) Q1/ 2011 Q2/ 2011 Q3/ 2011 Q4/ 2011
NET SALES 12 143 13 180 11 650 12 979
OPERATING PROFIT 4 174 4 972 5 844 2 599
PROFIT FOR THE PERIOD UNDER REVIEW 3 673 4 247 3 391 1 363
STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY (EUR 1,000)
Change in Share Fair Invested Other Retaine Total
shareholders' capita value unrestricted reserv d
equity 1-12/2011 l reserv equity fund es earning
e s
SHAREHOLDERS' 6 416 480 48 498 24 49 612 105 030
EQUITY 1.1.
Comprehensive -378 12 621 12 243
income for the
period
Dividend -12 833 -12 833
distribution
TOTAL SHAREHOLDERS' 6 416 101 48 498 24 49 401 104 440
EQUITY 12/2011
Change in Share Fair Invested Other Retaine Total
shareholders' capita value unrestricted reserv d
equity 1-12/2012 l reserv equity fund es earning
e s
SHAREHOLDERS' 6 416 101 48 498 24 49 401 104 440
EQUITY 1.1.
Comprehensive -2 -13 987 -13 989
income for the
period
Dividend -10 266 -10 266
distribution
Share of associated 382 382
company changes
TOTAL SHAREHOLDERS' 6 416 99 48 498 24 25 529 80 567
EQUITY 12/2012
GROUP CONTINGENT LIABILITIES
(EUR 1,000) 12/2012 12/2011
Collateral pledged for own commitments
Mortgages on company assets 1 245 1 245
Mortgages on real estate 8 801 8 801
Pledged shares 65 730 81 332
Contingent liabilities on behalf of associated company
Guarantees 4 096 2 767
SEGMENT INFORMATION
Group net sales (EUR 1,000) 10-12/ 10-12/ Change 1-12/ 1-12/ Change
2012 2011 % 2012 2011 %
Publishing 10 360 11 208 -8 40 528 43 318 -6
Printing 3 563 4 006 -11 13 710 15 235 -10
Non-allocated 538 497 8 2 139 2 002 7
Net sales between segments -2 585 -2 731 -5 -10 219 -10 603 -4
Total 11 877 12 979 -8 46 158 49 952 -8
Group operating profit/ loss 10-12/ 10-12/ Change 1-12/ 1-12/ Change
(EUR 1,000) 2012 2011 % 2012 2011 %
Publishing 1 440 1 867 -23 5 046 7 697 -34
Printing 367 492 -25 1 379 1 953 -29
Associated companies -22 180 462 -4897 -16 774 8 659 -294
Non-allocated -203 -222 8 -519 -719 28
Total -20 576 2 599 -892 -10 868 17 590 -162
AUDITED CIRCULATION OF NEWSPAPERS
Ilkka 50 527
Pohjalainen 23 282
Jurvan Sanomat 2 088
Järviseutu 5 167
Komiat 6 389
Suupohjan Sanomat 3 993
Viiskunta 5 773
Vaasan Ikkuna (delivery) 55 148
Etelä-Pohjanmaa (delivery) 46 800
Drafting principles
This financial statements bulletin, issued by Ilkka-Yhtymä Group, was prepared
in accordance with the recognition and measurement principles of the
International Financial Reporting Standards (IFRS), excluding some requirements
of IAS 34.
Since 1 January 2012, the Group has complied with the following new or updated
standards and interpretations:
- IFRS 7 Financial Instruments: Disclosures (annual periods beginning on or
after 1 July 2011). This amendment adds transparency to the disclosure of
transfer transactions of financial assets and will provide users with a better
understanding of the risks involved in these transfers, and of the effects of
such risks on the entity's financial position, particularly with regard to
securitisation of financial assets. The revision has no significant impact on
the financial statements.
- IAS 12 Income Taxes (annual periods beginning on or after 1 January 2012).
IAS 12 previously required an entity to assess what proportion of the carrying
amount of an asset measured at fair value can be recovered from continued use
(e.g. rental income) and what proportion through sale. According to the
amendment, it will be presumed that the carrying amount of certain assets
measured at fair value can be entirely recovered through the sale. This
presumption is applicable to deferred taxes on investment properties; property,
plant and equipment; and intangible assets measured using the fair value model
or the revaluation model. The revision has no impact on the financial
statements.- Annual improvements to IFRS and IFRIC. These improvements will
chiefly enter into force in 2012. Several minor changes made have no bearing on
the financial statements.
As regards other parts and issues, the same drafting principles have been
applied to the financial statements bulletin as used in the previous financial
statements on 31 December 2011. Moreover, the calculation formulas and
principles for indicators also remain unchanged.
The figures in the financial statements bulletin are unaudited.
PROPOSALS TO THE ANNUAL GENERAL MEETING
The Board of Directors proposes to the Annual General Meeting of 18 April 2013
that a per-share dividend of EUR 0.15 be paid for the financial year 2012,
representing a total dividend payment of EUR 3,849,781.20. Dividends will be
distributed to those listed on the matching day, 23 April 2013, as shareholders
in Ilkka-Yhtymä Oyj's list of shareholders, maintained at Euroclear Finland Oy.
Dividend payments will be issued on 30 April 2013. On 31 December 2012, the
parent company's distributable funds amounted to EUR 97,690,764.51.
AUTHORISATION TO DONATE
The Board of Directors proposes to the AGM that the Board of Directors be
authorised to decide upon a donation, totalling a maximum of EUR 50,000, to be
made towards charitable causes or similar, and that the Board of Directors be
authorised to decide upon the recipients, purposes of use, schedules and other
terms of these donations.
General statement
This report contains certain statements that are estimates based on the
management's best knowledge at the time they were made. For this reason, they
involve a certain amount of inherent risk and uncertainty. The estimates may
change in the event of significant changes in general economic and business
conditions.
ILKKA-YHTYMÄ OYJ
Board of Directors
Matti Korkiatupa
Managing Director
For more information, please contact:
Matti Korkiatupa, Managing Director, Ilkka-Yhtymä Oyj
Tel. +358 (0)500 162 015
DISTRIBUTION
NASDAQ OMX Helsinki
Main media
www.ilkka-yhtyma.fi
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