SanomaWSOY Corp. Stock Exchange Release Feb. 8, 2007 at 11:05
SANOMAWSOY'S YEAR-END STATEMENT 2006
In 2006, the SanomaWSOY Groups net sales increased by 4.6%,
totalling EUR 2,742.1 (2,622.3) million. Operating profit was EUR
292.5 (301.3) million. Operating profit excluding major non-
recurring capital gains was all-time high, EUR 288.2 (269.1)
million. Earnings per share were EUR 1.32 (1.45). The proposed
dividend is EUR 0.95 (0.90) per share. In 2007, SanomaWSOY's net
sales are estimated to increase more than in the previous year and
operating profit excluding major non-recurring capital gains is
expected to improve.
KEY INDICATORS 10-12/ 10-12/ Change 1-12/ 1-12/ Change
EUR million 2006 2005 % 2006 2005 %
Net sales 742.2 735.0 1.0 2,742.1 2,622.3 4.6
Operating profit 111.2 119.0 -6.6 428.2 431.9 -0.8
before depreciation
and impairment
losses
% of net sales 15.0 16.2 15.6 16.5
Operating profit 73.9 79.6 -7.2 292.5 301.3 -2.9
% of net sales 10.0 10.8 10.7 11.5
Operating profit 73.9 68.8 7.4 288.2 269.1 7.1
excluding major non-
recurring capital
gains
% of net sales 10.0 9.4 10.5 10.3
Result before taxes 70.1 74.7 -6.2 276.3 286.0 -3.4
% of net sales 9.4 10.2 10.1 10.9
Result for the 58.0 73.6 -21.2 208.4 228.4 -8.8
period
% of net sales 7.8 10.0 7.6 8.7
Balance sheet total 3,132.2 2,972.5 5.4
Capital expenditure 81.9 93.8 -12.7
*
% of net sales 3.0 3.6
Return on equity 17.7 22.3
(ROE), %
Return on investment 14.3 15.4
(ROI), %
Equity ratio, % 45.0 41.3
Gearing, % 59.2 72.9
Interest-bearing 863.9 928.7 -7.0
liabilities
Interest-free 945.5 886.1 6.7
liabilities
Net debt 782.4 843.8 -7.3
Personnel under 18,434 16,885 9.2
employment contract,
average
Personnel, average 15,732 14,256 10.4
(full-time
equivalents)
Earnings/share, EUR 0.36 0.46 -21.6 1.32 1.45 -9.3
Earnings/share, 0.35 0.44 -20.2 1.31 1.42 -8.0
diluted, EUR
Cash flow from 0.84 0.80 5.7 1.63 1.69 -3.5
operations/share,
EUR
Equity/share, EUR 7.92 7.27 8.8
Dividend/share, EUR 0.95 0.90 5.6
**
Dividend/result, % 72.2 62.0
**
Market 3,521.8 3,121.5 12.8
capitalisation, EUR
million
* Definition of capital expenditure has been changed in 2006.
Comparative data has been adjusted accordingly.
** Year 2006 proposal of the Board of Directors
Hannu Syrjänen, President and CEO:
"I am very pleased with SanomaWSOY's performance in 2006. Our
operating profit excluding major non-recurring capital gains
increased in all divisions and reached an all-time high of EUR
288.2 million.
"We completed several acquisitions during the year, the most
significant of which was the acquisition of a majority share in
the Hungarian educational publishing and training company
Láng Kiadó és Holding. This transaction was an important step in
our strategy to become a leading educational publisher in Europe.
"The past year has confirmed that our strategy of focusing
primarily on fast growing Central Eastern European markets has
been right. The share of Central Eastern Europe and Russia of the
Group's total net sales increased to 15%.
"We have also invested heavily in digital media. In the
Netherlands, we acquired Kieskeurig.nl, a major product and price
comparison website, and in Finland we formed a new company called
Sanoma Digital, the task of which is to develop online consumer
products and services in Finland and the Baltic countries.
Television channel Nelonen further strengthened its market share
and Welho's broadband and pay TV services did well. Our electronic
media operations in Finland will be augmented over the course of
spring 2007, as our two new commercial radio stations took to the
air in January and our new commercial TV channel JIM launches in
February.
"Year 2006 was a good one for Rautakirja as well. Kiosk
operations, press distribution, bookstores, and movie theatres all
performed well.
"In 2007, we will continue expanding our magazine, educational
publishing, and press distribution operations, particularly in
Russia and Central Eastern Europe. We will also actively seek
growth in digital media, where we have already established a
strong position in Finland, Hungary, and the Netherlands.
"We strive to be the market leader in the areas in which we
operate, and our financial target is to increase our net sales at
a rate faster than GDP growth in our primary market areas. We will
also work to increase the profitability of our current businesses.
The Group's strategic target for the operating profit margin is
12%."
Operating environment
According to research institute estimates, the Finnish GDP
increased by 5.9% in 2006, the Dutch GDP by 2.9%, and Belgian GDP
by 2.6%. Growth was faster in CEE countries with the estimated GDP
growth in Hungary at 3.9%, in the Czech Republic 6.2%, and in
Russia 6.6%.
According to research institute estimates, private consumption
increased by 4.0% in Finland and by 2.4% in Belgium in 2006. In
the Netherlands and Hungary the growth rate was 1.9% and in the
Czech Republic 3.7%. In Russia, private consumption surged by 14%.
In 2006, media advertising in Finland grew by about 3% according
to TNS Gallup Adex. Advertising in newspapers increased by 2.5%
and in free sheets by 2%. Job advertising increased by almost 18%,
while magazine advertising grew by 3% and television advertising
by 5%. According to ZenithOptimedia estimates, magazine
advertising in the Netherlands by 3% and Belgium increased by 2%
in 2006. In Hungary, the growth rate was 9% and in the Czech
Republic 10%. Expenditure on print media advertising in Russia is
estimated to have increased by 18%. The share of magazine
advertising of all advertising declined somewhat in the
Netherlands and Belgium.
According to preliminary information from the Finnish Book
Publishers Association, the sales of books in 2006 grew by 1% and
educational materials by 2%. The educational books market is also
estimated to have grown slightly in the Netherlands and Belgium.
According to the Finnish Food Marketing Association, Finnish sales
of daily consumer goods were up by 4% in 2006.
Net sales
In 2006, SanomaWSOY's net sales increased by 4.6%, totalling EUR
2,742.1 (2,622.3) million. Net sales increased in all divisions
with particularly strong growth in the Russian magazine operations
and educational publishing business. Net sales adjusted for
changes in the Group structure increased by 2.8%.
Advertising sales accounted for 23% (22%) of the Group's total net
sales. In geographical terms, Finland accounted for 49% (51%) of
net sales with the other EU countries accounting for 45% (45%),
and other countries for 6% (4%).
Result
In 2006, the Group's operating profit was EUR 292.5 (301.3)
million or 10.7% (11.5%) of net sales. The operating profit
included major non-recurring capital gains of EUR 4.3 (32.2)
million. Operating profit excluding the non-recurring capital
gains was an all-time high, EUR 288.2 (269.1) million. The growth
from the previous year was 7%. The greatest result improvements
were recorded by SanomaWSOY Education and Books, Rautakirja, and
SWelcom.
SanomaWSOY's result for 2006 was affected by the realisation of
real estate investments in 2005. The result for the comparable
period included a total of EUR 5.8 million in major non-recurring
capital gains from the sale of real estate. Divesting the real
estate investments has decreased the Parent Company's other
earnings due to the loss of rental revenue.
SanomaWSOY's net financial items totalled EUR -24.5 (-25.1)
million. Financial income amounted to EUR 12.5 (10.6) million.
Financial expenses amounted to EUR 37.0 (35.7) million and
comprised primarily interest costs of EUR 32.3 (30.3) million on
interest-bearing liabilities.
The result before taxes was EUR 276.3 (286.0) million and earnings
per share were EUR 1.32 (1.45).
Balance sheet and financial position
Acquisitions strengthened the consolidated balance sheet, which
amounted to EUR 3,132.2 (2,972.5) million on December 31, 2006.
Cash flow from operations was EUR 259.9 (260.9) million. Cash flow
from operations per share was EUR 1.63 (1.69).
SanomaWSOY's equity ratio improved during the review period,
rising to 45.0% (41.3%), while gearing was reduced to 59.2%
(72.9%). Equity increased to EUR 1,322.7 (1,157.7) million. Return
on equity (ROE) was 17.7% (22.3%) and return on investment (ROI)
14.3% (15.4%). The conversion of stock options and convertible
capital notes into shares, for example, has served to increase
shareholders' equity and the equity ratio. Interest-bearing
liabilities decreased to EUR 863.9 (928.7) million and net debt to
EUR 782.4 (843.8) million. Net debt to EBITDA ratio was 1.8 (2.0).
On December 31, 2006, the Group's cash and cash equivalents
totalled EUR 81.5 (84.9) million.
Investments and acquisitions
In 2006, investments in tangible and intangible assets amounted to
EUR 81.9 (93.8) million, and were focused on, e.g. website
development, IT systems, and the replacement of existing assets.
R&D expenditure was recorded at EUR 11.3 (16.2) million.
The most significant acquisition in 2006 was the purchase of the
Hungarian Láng Kiadó és Holding. The most significant acquisition
in the comparable year was Independent Media, a magazine publisher
operating in Russia and the Ukraine.
Administration
The AGM of April 3, 2006 confirmed the number of SanomaWSOY's
Board members at ten. Those who had reached the end of their term
of office were re-elected, and the Board of Directors of
SanomaWSOY consists of: Jaakko Rauramo (Chairman), Sari Baldauf
(Vice Chairman), and Robert Castrén, Jane Erkko, Paavo Hohti,
Sirkka Hämäläinen-Lindfors, Seppo Kievari, Robin Langenskiöld,
Hannu Syrjänen, and Sakari Tamminen.
The Executive Management Group in 2006 comprised Hannu Syrjänen
(Chairman), Eija Ailasmaa, Jacques Eijkens (from October 1, 2006),
Nils Ittonen, Erkki Järvinen, Jorma Kaimio (until September 30,
2006), Tapio Kallioja, Mikael Pentikäinen, Kerstin Rinne, and
Matti Salmi.
Prior to the AGM of April 3, 2006, SanomaWSOY was audited by
chartered accountants PricewaterhouseCoopers Oy with Johanna
Perälä, Authorised Public Accountant, as the Auditor in Charge,
and Pekka Nikula, Authorised Public Accountant. The Annual General
Meeting elected Pekka Pajamo, Authorised Public Accountant, and
Sixten Nyman, Authorised Public Accountant, as his deputy and KPMG
Oy Ab with Kai Salli, Authorised Public Accountant, as Auditor in
Charge as the auditors of the Company.
Personnel
In 2006, the average number of personnel in the SanomaWSOY Group
was 18,434 (16,885) employees. In full-time equivalents, the
number of Group employees averaged 15,732 (14,256). Sanoma
Magazines had an average of 5,584 (5,275) employees, Sanoma 2,672
(2,782), SanomaWSOY Education and Books 2,455 (2,311), SWelcom 437
(425), and Rautakirja 7,214 (6,023). The average number of
employees in the Parent Company was 72 (70). Sanoma Magazines,
SanomaWSOY Education and Books, and Rautakirja reported an
increase in the number of employees as a result of acquisitions.
The total wages, salaries, and fees paid to SanomaWSOY employees
in 2006, including expenses related to granted options, amounted
to EUR 482.9 (461.8) million.
Board authorisations
The AGM of April 3, 2006 authorised the Board to decide, within
one year of the AGM, on an increase in share capital by one or
more rights issues, issuance of one or more convertible capital
notes and/or option rights. The new shares issued shall be Series
B or similar, and their aggregate number may not exceed 31,397,736
shares. The total increase in SanomaWSOY's share capital may not
exceed EUR 13,501,026.48. According to the Board's proposal, this
authorisation excludes the employee incentives.
Authorisation was not exercised in 2006.
Combination of share series and directed issue of shares
The AGM of April 3, 2006 decided on the combination of
SanomaWSOY's share series, on a related directed issue to the
holders of Series A shares, and on amendments to the Articles of
Association.
The combination of share series was facilitated through amending
the Articles of Association to remove i.e. the differences between
share classes. The new Articles of Association were entered into
the Trade Register on April 7, 2006, with SanomaWSOY's Series A
and B shares being combined into one share series in the book-
entry securities system on April 7, 2006, and trading with the new
share began on the Helsinki Stock Exchange on April 10, 2006.
In order to compensate for the decrease in the voting rights of
Series A shareholders, the AGM decided to increase the Company's
share capital by directing a share issue at holders of Series A
shares. A holder of Series A shares could subscribe for one new
share for each ten Series A shares held. A total of 2,311,461 new
shares were issued at a book counter-value of EUR 0.43 per share.
As a result, the Company's share capital increased by EUR
993,928.23.
The new shares were combined with ordinary shares in the book-
entry securities system on May 17, 2006 and trading with the
combined share began on the Helsinki Stock Exchange on May 18,
2006 under the code SWS1V.
Shares and holdings
Trading in SanomaWSOY's shares was active in 2006. SanomaWSOY's
total stock exchange turnover was EUR 1,474.5 (1,591.7) million.
The volume for the comparable period includes the stock exchange
turnover of the old Series A and B shares. The 2006 volume
includes the stock exchange turnover of the interim shares
subscribed for in the share issue, old Series A and B shares, as
well as the turnover of the new combined SanomaWSOY share that
replaced them on April 10, 2006.
On December 31, 2006, SanomaWSOY's market capitalisation was EUR
3,521.8 (3,121.5) million. The year-end closing price was EUR
21.35 (19.67) per share. The share price averaged EUR 20.19 over
the year with a low of EUR 17.80 and a high of EUR 22.45. On
December 31, 2006, the Company had a total of 16,782 shareholders.
At the same time, foreign holdings accounted for 10.89% (8.97%) of
the shares and votes. The Company did not hold any of its own
shares (treasury shares) at the end of 2006.
In 2006, 8,792 convertible capital notes were converted into
5,525,988 shares. On December 31, 2006, the outstanding loan
capital totalled EUR 2.4 million. In 2007, the conversion period
of the notes ends on June 20, 2007. The conversion price is EUR
15.91. A fixed annual interest of 5.25% is payable on the notes
and the last interest payment will be made on the maturity date,
i.e. July 4, 2007. The new shares issued upon conversion of
convertible capital notes entitle their holders to dividend as of
the beginning of the financial year in which the conversion is
effected. Other shareholder rights shall commence when the
increase in share capital has been entered into the Trade
Register.
At the end of 2006, SanomaWSOY's registered share capital was EUR
70,931,532.79 and the number of shares on the market was
164,957,053.
During the review period, one of SanomaWSOY's largest
shareholders, the estate of Patricia Seppälä, was dissolved. The
estate's shareholdings were equally distributed between the
parties to the estate, Robin Langenskiöld and Rafaela Seppälä,
resulting in their shares of the Company's share capital and votes
exceeding one twentieth (1/20). SanomaWSOY also issued a flagging
announcement with regard to changes in the proportional holdings
of Aatos Erkko and the companies he controls, as well as the
Alfred Kordelin Foundation, and the Finnish Cultural Foundation
due to the combination of share series and the directed issue of
shares. Aatos Erkko's combined share of SanomaWSOY's votes
decreased below one fourth (1/4), and his personal share of votes
decreased below one fifth (1/5). The Alfred Kordelin Foundation's
and the Finnish Cultural Foundation's share of the Company votes
decreased below one twentieth (1/20).
Stock options
SanomaWSOY has two stock option plans in place covering all of its
divisions. On December 31, 2006, a total of 2,531,028 stock
options were outstanding under Warrant Scheme 2001. 163 senior
managers in the Group held these options. A total of 3,491,400
stock options were outstanding under Stock Option Scheme 2004. 277
senior managers in the Group held these options.
All three tranches of Warrant Scheme 2001 are listed on the
Helsinki Stock Exchange. In 2006, a total of 192,022 shares were
subscribed with 122,046 2001A stock options and 69,976 2001B stock
options. New shares subscribed with stock options entitle their
subscribers to all shareholder rights from the date the increase
in share capital has been entered into the Trade Register.
On December 31, 2006, the shares to be subscribed on the basis of
issued and unissued stock options and convertible capital notes
would account for 4.2% of SanomaWSOY shares and votes after the
conversion.
Dividend
In accordance with the AGM's decision, SanomaWSOY paid out a per-
share dividend of EUR 0.90 (0.80) for 2005. The record date for
dividend payment was April 6, 2006 and the dividend payment date
was April 19, 2006. The Board of Directors propose a dividend of
EUR 0.95 (0.90) per share for 2006.
SanomaWSOY conducts an active dividend policy and primarily
distributes over half of the Group result after taxes in
dividends.
Risks and risk management
The Group is prepared to take controlled risks in order to take
full advantage of business opportunities.
Normal business risks associated with the media industry relate to
developments in media advertising and private consumption. Media
advertising is sensitive to economic fluctuations. However, only
about one-fifth of SanomaWSOY's net sales come from media
advertising. In addition, SanomaWSOY's extensive operations in
versatile fields of media in over 20 European countries balance
the effects of market fluctuations. SanomaWSOY's international
business areas (magazine publishing, educational publishing,
digital media, and press distribution) are not primarily exposed
to any political risk.
Fast technological development and changes in consumer preferences
have an impact on the development of media sector. SanomaWSOY
actively monitors technological development and changes in
consumer preferences and develops new products and services to
meet these changes for both its consumer and advertising
customers. The Group's extensive product and service range
diminishes the risks arising from technological development and
changes in consumer preferences.
In recent years, SanomaWSOY has grown vigorously through
acquisitions. As a result of acquisitions, the consolidated
balance sheet on December 31, 2006 includes about EUR 1.7 billion
in goodwill, publishing rights, and other intangible assets
related to acquired businesses most of which is related to
magazine operations. In accordance with the International
Financial Reporting Standards (IFRS), instead of regularly
amortising goodwill, it is tested for impairment on an annual
basis, or whenever there is any indication of impairment.
Impairment losses for 2006 totalled EUR 0.1 (1.8) million and
there was no indication of other impairment losses.
With regard to SanomaWSOY's business operations, the functioning
and reliability of several different information systems are
essential. SanomaWSOY has carried out an assessment on the risks
related to information systems and determined the protection
levels for the systems. It has also drawn up separate continuity
plans for the systems critical to the Group.
SanomaWSOY's business is based on work performed primarily in an
office setting with no known significant environmental hazards. As
is typical in the graphics industry, SanomaWSOY's environmental
impact is low with no known significant environmental risks.
Seasonal fluctuation
Developments in media advertising have an impact on the net sales
and results of Sanoma Magazines, Sanoma, and SWelcom. Advertising
sales are influenced, e.g., by the number of newspaper and
magazine issues published during each quarter, which varies
yearly. Television advertising in Finland is usually strongest in
the second and fourth quarters.
A major portion of the net sales and results in publishing and
retail, for example, is generated in the last quarter,
particularly from Christmas sales, while educational publishing
accrues most of its net sales and results during the second and
third quarters.
Seasonal fluctuations in the Group businesses influence net sales
and operating profit with the first quarter traditionally showing
the weakest and the second and fourth quarter the strongest
performance.
Outlook for 2007
In 2007, SanomaWSOY's net sales are estimated to increase more
than in the previous year, and operating profit excluding major
non-recurring capital gains is expected to improve. In 2006,
operating profit excluding major non-recurring capital gains
totalled EUR 288.2 million.
The forecast of the development of SanomaWSOY's net sales and
operating profit in 2007 is based on both organic growth and
growth based on minor acquisitions. During 2007, SanomaWSOY will
continue to invest strongly in digital media and strengthening its
market positions. In addition to the Group's own business
activities and development projects, the growth of net sales and
operating profit are also affected e.g. by growth in media markets
and private consumption in the Group's operating countries.
European economies are estimated to grow in 2007, albeit at a
slower rate than in 2006. Research firms predict that GDP will
grow by 2.6% in the Netherlands, 2.2% in Belgium and 3.0% in
Finland. The growth rate is expected to be 2.6% in Hungary, 5.0%
in the Czech Republic and 5.9% in Russia. According to
ZenithOptimedia estimates, media advertising in SanomaWSOY's
primary market areas in 2007 will grow at a rate faster than that
of GDP. In 2007, private consumption is estimated to increase by
3.3% in Finland, 2.3% in the Netherlands, 2.2% in Belgium, 3.9% in
the Czech Republic and 13.6% in Russia. In Hungary, private
consumption is expected to decrease by 0.5%.
Sanoma Magazines
Sanoma Magazines is one of Europe's largest consumer magazine
publishers, operating in 13 countries. In addition to publishing
its strong portfolio of magazine brands for various reader
communities, Sanoma Magazines is expanding its business to other
media platforms, with a strong focus on interactivity.
- Net sales grew by 3.1% mainly due to the success of Russian and
Finnish operations as well as the fast growing online
operations in the Netherlands
- Sanoma Magazines' online advertising grew in the Netherlands by
55% in 2006
- Significant investments were made in magazine launches,
restyling of existing magazines, and developing online
operations.
KEY INDICATORS 10-12/ 10-12/ Change 1-12/ 1-12/ Change
EUR million 2006 2005 % 2006 2005 %
Net sales 340.1 351.6 -3.3 1,218.9 1,181.9 3.1
Operating profit 42.3 39.4 7.2 132.2 129.1 2.4
% of net sales 12.4 11.2 10.8 10.9
Operating profit 42.3 39.4 7.2 129.6 129.1 0.4
excluding major non-
recurring capital
gains
% of net sales 12.4 11.2 10.6 10.9
Balance sheet total 1,984.8 1,752.9 13.2
Capital expenditure 17.5 36.6 -52.1
Return on investment 10.9 11.8
(ROI), %
Personnel under 5,584 5,275 5.9
employment contract,
average
Personnel, average 5,095 4,716 8.0
(full-time
equivalents)
OPERATIONAL INDICATORS * 1-12/2006 1-12/2005
Number of copies sold (press distribution 101,683 116,106
/ Aldipress), thousands
Number of magazines published ** 307 236
Magazine copies sold, thousands 433,526 442,632
Number of advertising pages sold 57,700 53,474
* Including joint ventures.
** Method of calculating number of magazines published has changed
after beginning of 2006. Comparative data has been adjusted
accordingly.
In 2006, Sanoma Magazines' net sales increased to EUR 1,218.9
(1,181.9) million mainly due to growth in Russia, Finland, and
online operations. The Division's net sales grew by 0.8%, when
adjusted for changes in the Group structure. Of the Division's net
sales, 16% (15%) came from Finland.
Advertising sales, representing 26% (24%) of Sanoma Magazines' net
sales, increased by 11% compared to the previous year, mainly due
to new operations in Russia as well as the increased online sales
in the Netherlands.
Circulation sales increased by 1%, despite the challenging single
copy market in the Netherlands, and accounted for 55% (56%) of the
Division's total net sales.
Net sales in Sanoma Magazines Netherlands decreased to EUR 531.2
(541.2) million mainly due to a trend in declining single copy
sales and discontinuation of some titles. Subscription sales
decreased slightly, and thus the total circulation sales in Sanoma
Magazines Netherlands decreased, even though the restyling of e.g.
women's weekly magazines Libelle and Margriet were well received
on the readers market. Advertising sales, representing 22% (20%)
of the Business' net sales, increased due to the strong growth of
online advertising. In 2006, online advertising grew by 55%, and
represents almost one third of Sanoma Magazines Netherlands'
advertising sales.
Net sales at Sanoma Magazines International grew in all operating
countries and increased to EUR 247.6 (212.4) million, mainly as a
result of new operations in Russia and the Ukraine: the net sales
of Independent Media grew by some 20% in 2006 and totalled EUR
90.2 million. Advertising sales increased significantly and
totalled 48% (45%) of Sanoma Magazines International's net sales.
Most growth came from the Russian operations, which were
consolidated with the Group as of March 2005. Advertising sales
also developed well in Bulgaria, Hungary, the Ukraine, and the
Adriatic region (Croatia, Serbia, and Slovenia), where the joint
venture between Sanoma Magazines International, Gruner + Jahr, and
Styria began in August. Circulation sales also increased, mainly
due to the positive development in Russia, Bulgaria, Romania, and
the Adriatic region. Sanoma Magazines International launched a
total of five major magazines during the year, the most important
being the launch of the Russian women's weekly Gloria in May.
Sanoma Magazines Belgium's net sales increased to EUR 188.6
(184.4) million due to growth in niche publishing, partly
attributable to the acquisition of EPN International, focusing on
home and decoration titles, in September. In Belgium, the
advertising market continues to experience pressure, but the
advertising sales of Sanoma Magazines Belgium, representing 30%
(29%) of net sales, increased due to growth in the niche
publishing segment. Circulation sales increased due to
the acquisition of EPN. Single copy sales remained stable and
subscription sales increased. The distribution problems at the
beginning of 2006 are now solved.
Sanoma Magazines Finland's net sales grew to EUR 193.2 (184.3)
million, due to increased circulation and advertising sales.
Especially women's and juvenile magazines developed strongly and
the weekly Aku Ankka (Donald Duck) reached a record circulation.
Single copy sales decreased slightly, but subscription sales
continued their strong performance. Advertising sales totalled 15%
(16%) of the Business' net sales. Sanoma Magazines Finland
launched one major magazine in 2006; Sara, a new 40+ magazine was
introduced to the market in October.
Net sales at Aldipress amounted to EUR 115.6 (118.6) million
following the continuous challenging situation in the Dutch single
copy market. As part of centralising the press distribution
operations in SanomaWSOY, Aldipress was transferred to Rautakirja
as of January 1, 2007.
Sanoma Magazines' operating profit was EUR 132.2 (129.1) million.
An adjustment of EUR 2.4 million related to the acquisition in
2001 and the terms and conditions of the agreement improved
the result. Operating profit also includes major non-recurring
capital gains of EUR 2.6 million from Sanoma Magazines Finland's
divestment of the shares in Suomen Asiakastieto.
Sanoma Magazines Netherlands' operating profit decreased mainly
due to pressure in single copy sales. Sanoma Magazines
International's results decreased due to heavy investments in new
magazine launches. In 2006, the effect of new launches on Sanoma
Magazines International's result was over EUR 6 million. Sanoma
Magazines Finland's operating profit increased as a result of good
sales development and the capital gain. Distribution problems at
the beginning of the year and the pressure on the advertising
market decreased Sanoma Magazines Belgium's results. Sanoma
Magazines Belgium has changed distribution partner, and both
Sanoma Magazines Belgium and the ex-distributor have filed a claim
related to the partner change to the court of arbitration.
The potential indemnifications are not estimated to have a
material effect on SanomaWSOY's result. Aldipress' results
improved.
Sanoma Magazines' investments in tangible and intangible assets
totalled EUR 17.5 (36.6) million in 2006, and were mainly related
to ICT systems and replacement investments. The most significant
acquisitions in 2006 were the acquisitions of Kieskeurig.nl, EPN
International, and Wegener Golf. The most significant acquisition
in 2005 was the acquisition of Russian Independent Media.
In 2006, Sanoma Magazines continued to invest in online
businesses: ilse media acquired a leading Dutch product and price
comparison website Kieskeurig.nl and other acquisitions were made
e.g. in the Czech Republic. Other activities of the Division
included e.g. the launch of websites dedicated to health and well-
being in Finland, Belgium, and Hungary.
Sanoma Magazines continues to develop its online businesses and
invest in growth, which is expected to be fastest in Russia and
CEE countries. Intense competition both in advertising and readers
markets in the Netherlands is expected to continue, with growth
being strongest in the online market, where Sanoma Magazines
already has a strong position.
In 2007, Sanoma Magazines' net sales are estimated to grow, and
operating profit excluding major non-recurring capital gains is
expected to improve.
Sanoma
Sanoma is the leading newspaper publisher in Finland. In addition
to Helsingin Sanomat, the largest subscription-based daily in the
Nordic region, the Division publishes national and regional daily
newspapers, local papers, and free sheets, and provides digital
services.
- Sanoma's net sales increased by 2.4% due to growth in the
advertising sales of Sanoma Kaupunkilehdet and Helsingin
Sanomat, and the positive development of the online business
- Online advertising sales increased by 42% in 2006
- Operating profit improved by 6% from previous year with
Helsingin Sanomat improving its performance significantly.
KEY INDICATORS 10-12/ 10-12/ Change 1-12/ 1-12/ Change
EUR million 2006 2005 % 2006 2005 %
Net sales 122.4 115.6 5.9 457.1 446.4 2.4
Operating profit 16.5 12.2 35.1 62.7 59.1 6.0
% of net sales 13.5 10.6 13.7 13.2
Operating profit 16.5 12.2 35.1 61.0 58.1 4.9
excluding major non-
recurring capital
gains
% of net sales 13.5 10.6 13.3 13.0
Balance sheet total 526.6 471.6 11.7
Capital expenditure 16.5 21.9 -24.7
Return on investment 17.9 17.8
(ROI), %
Personnel under 2,672 2,782 -4.0
employment contract,
average
Personnel, average 2,378 2,388 -0.4
(full-time
equivalents)
OPERATIONAL INDICATORS 1-12/2006 1-12/2005
Circulation of papers, copies
Helsingin Sanomat * 426,117 430,785
Ilta-Sanomat 186,516 195,673
Taloussanomat 35,857 38,505
Other daily papers * 86,884 88,450
Local newspapers 31,769 32,518
Distribution total, million copies
Free sheets 101.8 52.7
Advertising volume (column km)
Helsingin Sanomat 42.5 41.5
Ilta-Sanomat 6.8 7.1
Taloussanomat 2.6 2.3
Other daily papers 22.0 22.2
Local newspapers 8.4 9.2
Free sheets 35.6 16.6
* Audited circulation figures.
In 2006, Sanoma's net sales increased to EUR 457.1 (446.4)
million. The net sales were particularly strengthened by the
increase in the advertising sales of Sanoma Kaupunkilehdet and
Helsingin Sanomat, and the good development of the online
business.
Sanoma's advertising sales increased by 5% during the year, and
accounted for 52% (51%) of net sales. The main sources of growth
were the Sanoma Kaupunkilehdet and Helsingin Sanomat business
units. Online advertising sales increased significantly during the
year, with a total growth of 42%.
The Division's circulation sales decreased by 1.5%, and accounted
for 41% (42%) of net sales. Subscription sales were slightly up,
but the weak demand for quality tabloids and the declining
circulation of Ilta-Sanomat affected newsstand sales. Despite a
slight decrease in circulation, the readership of Sanoma's
newspapers remained at the previous year's level. However, strong
growth in the number of online users has substantially increased
the overall readership of the papers.
The Helsingin Sanomat business unit increased its net sales to EUR
267.3 (261.1) million, resulting from growth in both advertising
and circulation sales. Online advertising sales growth was
particularly strong. Job advertising increased by 14%. Despite a
slight decrease in circulation, the circulation sales of Helsingin
Sanomat increased slightly.
The Ilta-Sanomat business unit posted net sales of EUR 92.2 (93.7)
million. Advertising sales have grown considerably. The decline of
newsstand sales decreased circulation sales, although the cover
price increase in October boosted the circulation sales in the
fourth quarter from the comparable period. The Finnish quality
tabloid market declined by 2%. Ilta-Sanomat commanded a 58.6%
(60.3%) share of the tabloid market.
Sanoma Lehtimedia's net sales decreased to EUR 45.9 (48.0) million
with the divestment of the business operations of Etelä-Karjalan
Jakelu to Finland Post on September 1, 2005, and the transfer of
the Kaupunkilehti Seiska and Lappeenrantalainen free sheets to the
Sanoma Kaupunkilehdet business unit at the beginning of 2006. The
transfer of the sheets decreased the advertising sales of the
business unit. Circulation sales increased.
Sanoma's operating profit was EUR 62.7 (59.1) million. Major non-
recurring capital gains amounted to EUR 1.7 (1.0) million,
comprising the gain from the sale of Aina Group Oyj shares
divested by Sanoma Lehtimedia in February 2006. Both Helsingin
Sanomat and Sanoma Lehtimedia significantly improved their
operating profits, while the earnings of Ilta-Sanomat were eroded
by a decline in newsstand sales. Sanoma's other business units,
Sanoma Business Services and the Sanomapaino printing plant,
developed positively. The Division invested substantially in the
development of free sheets.
In 2006, Sanoma's investments in tangible and intangible assets
totalled EUR 16.5 (21.9) million, and consisted mainly of
replacement investments and investments on website development.
The year's most important acquisition was the purchase of the
Finnish operations of the Metro free sheet. The most significant
acquisition in 2005 had been the purchase of the Huuto.Net online
auction site.
During the year, Sanoma invested heavily in the development of its
online business, and strengthened its market position. In
November, the Division announced the launch of a new company,
Sanoma Digital, as of January 1, 2007. The company will focus on
online business in Finland and the Baltic countries. The company
is jointly owned by Sanoma, Sanoma Magazines Finland, and SWelcom.
The majority of the shares are owned by Sanoma. Meanwhile, the
financial daily Taloussanomat re-designed its online services in
October, and managed to increase its visitor numbers
significantly. Taloussanomat also increased its share of the media
markets of financial dailies.
Sanoma also continued to develop its free sheet portfolio with the
acquisition of the Finnish business of the Metro newspaper in
September. In addition, several free sheets were revamped during
the year.
Sanoma looks for growth e.g. from new businesses. Also the
favourable development of media advertising is expected to
continue and the single copy sales are expected to increase.
In 2007, Sanoma's net sales are estimated to increase, and
operating profit excluding major non-recurring capital gains is
expected to improve.
SanomaWSOY Education and Books
SanomaWSOY Education and Books is a significant European
educational publisher with operations in the Netherlands, Finland,
Hungary, Belgium, and Poland. The Division is also Finland's
leading book publisher and is active in business information and
services.
- Net sales grew by 5.0 % and operating profit excluding major
non-recurring capital gains increased markedly, mainly due to
the good performance of educational publishing as well as
acquisitions in Hungary, the Netherlands, and Finland
- Career and study orientation and consultancy services as well
as language services were added as new businesses.
KEY INDICATORS 10-12/ 10-12/ Change 1-12/ 1-12/ Change
EUR million 2006 2005 % 2006 2005 %
Net sales 63.4 65.2 -2.8 309.2 294.4 5.0
Operating profit -7.1 4.7 48.0 55.8 -13.9
% of net sales -11.2 7.2 15.5 19.0
Operating profit -7.1 -1.2 477.6 48.0 39.3 22.2
excluding major non-
recurring capital
gains
% of net sales -11.2 -1.9 15.5 13.4
Balance sheet total 598.2 485.1 23.3
Capital expenditure 8.9 8.1 9.4
Return on investment 12.7 15.1
(ROI), %
Personnel under 2,455 2,311 6.2
employment contract,
average
Personnel, average 2,106 2,123 -0.8
(full-time
equivalents)
OPERATIONAL INDICATORS 1-12/2006 1-12/2005
Educational
Number of new titles published, books 1,162 1,214
Number of new titles published, 202 357
electronic products
Publishing
Number of new titles published, books 565 577
Number of new titles published, 93 77
electronic products
Number of copies sold, published books 24.2 14.7
In 2006, SanomaWSOY Education and Books (formerly WSOY) recorded
net sales of EUR 309.2 (294.4) million. The growth came from
increased sales of educational publishing and acquisitions in
Hungary, the Netherlands, and Finland. In late 2005, the calendar
business and part of printing operations were divested. Net sales
adjusted for changes in the Group structure increased by 3.8%. 62%
(55%) of the Division's net sales came from outside Finland.
Educational publishing performed well in 2006. Net sales grew in
all operating countries and increased to EUR 187.7 (151.2)
million. In June, the Hungarian competition authorities approved
the acquisition of educational publisher Láng Kiadó és Holding. In
the Netherlands, sales increased, most notably in primary
education. Malmberg expanded into career and study orientation and
consultancy through the acquisitions of Aromedia Educatief in
August and LDC Publicaties in September, and became the leading
operator in this field in the Netherlands. Net sales of Van In in
Belgium grew in both the Flemish and Walloon markets. In Finland,
sales of upper secondary school materials grew, boosted by the
curricula reforms. Net sales of Young Digital Planet (YDP),
focusing on eLearning products, increased.
In publishing, net sales grew to EUR 95.9 (87.2) million. The main
contributor to growth was the acquisition of language services
provider AAC Global in February, which increased the net sales
WSOYpro, focusing on business information and services. Although
Finnish fiction sold well in 2006, the Christmas sales important
to publishers did not reach the previous year's figures, and sales
to bookstores and other retail outlets decreased by 5%. Sales
through WSOY book clubs decreased slightly.
Net sales from other operations were EUR 43.4 (73.0) million and
derived mainly from book printing, which developed favourably. The
net sales of 2005 include the divested printing operations and the
calendar business.
The Division's operating profit for 2006 was EUR 48.0 (55.8)
million. Operating profit excluding major non-recurring capital
gains developed well and increased by 22%, due to the good
performance of educational publishing as well as to acquisitions
in Hungary, the Netherlands, and Finland. In 2005, the operating
profit included major non-recurring capital gains of EUR 16.5
million.
The Division's investments in tangible and intangible assets in
2006 totalled EUR 8.9 (8.1) million and consisted of replacement
investments, the renovation of the office building in Helsinki,
and ICT investments. The most significant acquisitions in 2006
included publisher Láng Kiadó és Holding and AAC Global. There
were no significant acquisitions in 2005.
The Division's structure was refined in September. SanomaWSOY
Education and Books now comprises three main businesses:
educational publishing, general literature publishing, as well as
business information and services. As of October 1, 2006, the
Division is headed by Jacques Eijkens with Veli-Pekka Elonen as
his deputy. Eijkens is a member of SanomaWSOY's Executive
Management Group and also continues as CEO of the educational
publishing business, SanomaWSOY Education. As President of WSOY
since October 1, 2006, Elonen is responsible for publishing and
other operations. Jorma Kaimio, the former head of the Division,
retired on September 30, 2006.
In 2007, net sales of SanomaWSOY Education and Books are estimated
to increase, and operating profit excluding major non-recurring
capital gains is expected to improve.
SWelcom
The television channel Nelonen is Finland's third largest medium
in terms of advertising sales, while Welho is the country's
largest cable TV company and a major provider of broadband
services. In addition, SWelcom has entered the radio business with
two commercial radio channels.
- Net sales increased by 7.6% due to the strong growth of TV
channel Nelonen as well as cable TV and broadband operator
Welho
- Operating profit improved significantly given strong growth in
sales
- Investments in the radio channels and a new commercial
television channel due to launch in early 2007.
KEY INDICATORS 10-12/ 10-12/ Change 1-12/ 1-12/ Change
EUR million 2006 2005 % 2006 2005 %
Net sales 37.2 35.3 5.5 131.8 122.5 7.6
Operating profit 4.8 3.8 26.8 12.5 9.6 30.2
% of net sales 12.9 10.7 9.5 7.8
Operating profit 4.8 3.8 26.8 12.5 9.6 30.2
excluding major non-
recurring capital
gains
% of net sales 12.9 10.7 9.5 7.8
Balance sheet total 158.6 143.5 10.5
Capital expenditure 15.2 10.1 50.9
Return on investment 12.3 9.7
(ROI), %
Personnel under 437 425 3.0
employment contract,
average
Personnel, average 398 385 3.6
(full-time
equivalents)
OPERATIONAL INDICATORS 1-12/2006 1-12/2005
Nelonen's share of Finnish TV 31.4% 31.0%
advertising
Nelonen's daily coverage 42% 41%
Nelonen's commercial viewing share 25.0% 23.8%
Nelonen's national viewing share 12.1% 11.5%
Number of connected households, 305 293
thousands (31.12)
Number of pay TV subscriptions, 58 44
thousands (31.12)
Number of broadband internet 86 67
connections, thousands (31.12)
In 2006, SWelcom's net sales increased substantially to EUR 131.8
(122.5) million due to the growth of Nelonen and Welho. SWelcom
divested Werne, a company specialised in providing technical
production services for TV and audio content delivery, in
September 2006. Net sales adjusted for changes in the Group
structure increased by 9.3%. Advertising sales represented 58%
(58%) of SWelcom's net sales.
Nelonen's net sales increased significantly to EUR 76.5 (71.5)
million. The channel's share of the television advertising market
increased to 31.4% (31.0%). In 2006, Nelonen focused particularly
on high-quality foreign series. The channel's commercial viewing
share increased in all age groups.
Nelonen expanded its Web TV services by being the first TV channel
in Finland to offer its viewers the opportunity to watch episodes
in advance. Nelonen also offered its viewers the opportunity to
participate in content production: viewer-produced video clips
were featured in Web TV, and also an entertainment programme shown
on regular television.
Welho's net sales increased given strong growth in pay TV,
broadband subscriptions, and the sale of digital set-top boxes. In
2006, Welho's broadband and pay TV subscriptions increased by
about 30%, and the number of households connected to the cable
network passed the 300,000 mark. In the second half of the year,
the number of digital television channels available on the Welho
network exceeded 100, and Welho was the first service provider in
Finland to launch a High-Definition Television or HDTV service.
Welho opened the first ten wireless LAN access points, or Welho
HotSpots, in the Helsinki city centre, and in 2007, the number of
Welho HotSpots in the Helsinki metropolitan area is expected to
reach 100. HotSpots enable wireless broadband internet access
within the coverage area. Welho also launched a PCTV service,
which will assist companies and public authorities in the
transition to digital television.
SWelcom's operating profit improved significantly to EUR 12.5
(9.6) million due to strong growth in sales. Both Nelonen and
Welho improved their operating profits.
In 2006, SWelcom's investments in tangible and intangible assets
totalled EUR 15.2 (10.1) million, most of which was allocated to
the development of Welho's cable network and services. There were
no major acquisitions in 2006 or 2005.
After the review period, in January 2007, SWelcom entered the
radio business. Radio Aalto is a channel targeting early adaptors
in larger cities, while Radio Rock focuses on rock music and its
associated phenomena. The coverage areas of the two new radio
channels include most of Finland. Meanwhile, the new commercial
television channel JIM is due to launch in February 2007.
SWelcom will increasingly focus on providing a wider variety of
programming. The Finnish Government granted SWelcom a license for
a nationwide digital pay TV channel that would focus on television
series and movies. This channel will be launched in autumn 2007.
SWelcom's net sales are estimated to increase further in 2007, and
its operating profit excluding major non-recurring capital gains
is expected to increase slightly despite substantial development
investments.
Rautakirja
Rautakirja is the market leader in kiosk operations, press
distribution, and movie theatres in Finland and the Baltic
countries. Additionally, it leads the Finnish and Estonian markets
for bookstores, and, from the beginning of 2007, also the Dutch
market for press distribution. The press distribution business has
also expanded into the Russian and Romanian markets.
- Net sales increased by 7.6%, with all businesses improving
their net sales
- Operating profit excluding major non-recurring capital gains
increased by 21.3%, with all businesses improving their
earnings
- For movie theatres, 2006 was the best year to date.
KEY INDICATORS 10-12/ 10-12/ Change 1-12/ 1-12/ Change
EUR million 2006 2005 % 2006 2005 %
Net sales 203.4 184.4 10.3 684.3 635.9 7.6
Operating profit 22.2 23.0 -3.6 51.3 51.2 0.2
% of net sales 10.9 12.5 7.5 8.0
Operating profit 22.2 18.1 22.5 51.3 42.3 21.3
excluding major non-
recurring capital
gains
% of net sales 10.9 9.8 7.5 6.6
Balance sheet total 474.4 397.0 19.5
Capital expenditure 22.1 16.6 33.4
Return on investment 20.7 20.9
(ROI), %
Personnel under 7,214 6,023 19.8
employment contract,
average
Personnel, average 5,684 4,577 24.2
(full-time
equivalents)
OPERATIONAL INDICATORS 1-12/2006 1-12/2005
Number of customers in kiosks, thousands* 111,492 110,492
Number of customers in bookstores, 6,678 6,400
thousands *
Number of customers in movie theatres, 8,163 6,195
thousands
Number of copies sold (press 273,155 244,377
distribution), thousands
* Units in Finland
Rautakirja's net sales grew to EUR 684.3 (635.9) million in 2006,
with all businesses improving their net sales. Net sales increased
in all countries of operation. About 23% (18%) of Rautakirja's net
sales came from outside Finland. Net sales adjusted for changes in
the Group structure increased by 5.7%.
The net sales of kiosk operations increased in all countries of
operation, rising to EUR 369.1 (345.8) million. The net sales in
the comparable period included kiosk operations in the Czech
Republic, which were divested in late 2005. Lietuvos Spauda's
chain of over 500 kiosks was consolidated with Rautakirja's kiosk
operations at the beginning of 2006, and the Pizza Hut restaurant
chain was divested in June. The sales of traditional kiosk
products in particular have grown. In 2006, customer volume
increased in all countries of operation with the exception of
Lithuania. The introduction of a new point-of-sale system to the
Finnish R-kiosks has enabled them to add new kinds of products,
such as the sale and collection of various transportation and
event tickets, to their inventory.
The net sales of press distribution rose to EUR 108.0 (98.5)
million. Net sales increased in the Baltic countries, Romania and
Russia, but decreased slightly in Finland. The Finnish quality
tabloid cover price increase in October-November had a positive
impact on press distribution. In spring 2006, Rautakirja
restructured its operations in the Baltic countries by
transferring the kiosk chain's Lithuanian press distribution
customers to its Lithuanian press distribution subsidiary, and by
transferring the wholesale operations and logistics of its
Estonian bookstore chain to a press distributor. The Dutch press
distribution company Aldipress, formerly part of the Sanoma
Magazines division, was transferred to Rautakirja's press
distribution business on January 1, 2007.
In 2006, bookstore net sales increased to EUR 138.9 (135.3)
million. Net sales grew in both Estonia and Finland. Both Finnish
Suomalainen Kirjakauppa and the Estonian Apollo Raamatud chain
opened two new outlets. In Finland, particularly the sales of
educational books and consumer stationery products have grown
well. The increase in net sales was also due to, e.g. the
increased number of outlets and successful marketing initiatives
that increased the company's market share in both of its operating
countries. Sales during the Christmas season sales, always an
important time for bookstores, increased both in Finland and
Estonia. The online bookstore increased its sales substantially.
The entertainment business comprises movie theatres in Finland and
the Baltic countries, and a multi-purpose arena in Hamburg. The
Business' net sales increased in all countries of operation,
rising to EUR 81.7 (65.0) million. For movie theatres, 2006 was
the best year to date. Blockbuster films attracted record
audiences and customer volumes were up significantly. Movie
theatre operations expanded in Finland: Finnkino acquired the
movie theatres of Sandrew Metronome Finland, opened two new
multiplexes, and signed a distribution agreement with United
International Pictures for the theatrical distribution rights of
UIP films. In Estonia, a new movie theatre was opened in Narva.
In 2006, Rautakirja's investments in tangible and intangible
assets totalled EUR 22.1 (16.6) million, and focused mainly on
business ICT projects, as well as the acquisition of new retail
premises, and the renovation of existing ones. There were no major
acquisitions during the review period. The most important
acquisitions in 2005 were the purchases of press distribution
companies in Romania and Russia, and the purchase of a kiosk chain
in Lithuania.
Rautakirja's operating profit was EUR 51.3 (51.2) million.
Operating profit excluding major non-recurring capital gains
increased significantly as profits of the comparable year included
EUR 8.9 million in capital gains from the divestment of restaurant
operations and the Czech kiosk operations. Net sales grew across
all businesses. The operating profit of kiosk operations was
improved due to increased sales and customer numbers. Good results
reported by Baltic press distributors bolstered the operating
profit in press distribution. Bookstores also improved their
earnings. The strong growth of movie audiences in all countries of
operation substantially improved the result of the entertainment
business.
Rautakirja will continue to ensure its expansion and success
through continuous development, internationalisation, and
acquisitions, with Russia and the emerging CEE economies serving
as the target countries for expansion. The transfer of the Dutch
press distribution company Aldipress to Rautakirja will clearly
increase the importance of international business within
Rautakirja, and enable more effective dissemination of best
practices.
In 2007, Rautakirja's net sales are estimated to grow, and
operating profit excluding major non-recurring capital gains is
expected to be at the previous year's level. These estimates
incorporate the effect of Aldipress transferred from Sanoma
Magazines to Rautakirja on January 1, 2007.
Helsinki
Board of Directors
SanomaWSOY Corporation
CONSOLIDATED INCOME STATEMENT
EUR million 1-12/2006 1-12/2005 Change, %
NET SALES 2,742.1 2,622.3 4.6
Other operating income 57.2 80.7 -29.1
Materials and services 1,243.3 1,177.8 5.6
Personnel expenses 595.5 574.7 3.6
Other operating expenses 532.2 518.6 2.6
Depreciation and 135.8 130.6 3.9
impairment losses
OPERATING PROFIT 292.5 301.3 -2.9
Share of result of 8.4 9.8 -14.5
associated companies
Financial income 12.5 10.6 17.5
Financial expenses 37.0 35.7 3.7
RESULT BEFORE TAXES 276.3 286.0 -3.4
Income taxes -68.0 -57.6 17.9
RESULT FOR THE PERIOD 208.4 228.4 -8.8
Attributable to:
Equity holders of the 209.5 224.0 -6.5
Parent company
Minority interest -1.1 4.4
Earnings per share for
result attributable to the
equity holders of the
Parent company:
Earnings per share, EUR 1.32 1.45 -9.3
Diluted earnings per 1.31 1.42 -8.0
share, EUR
CONSOLIDATED BALANCE SHEET
EUR million 31.12.2006 31.12.2005 Change, %
ASSETS
NON-CURRENT ASSETS
Tangible assets 572.3 566.5 1.0
Investment property 10.0 12.1 -17.4
Goodwill 1,392.7 1,329.3 4.8
Other intangible assets 368.1 313.0 17.6
Interest in associated 68.2 61.0 11.8
companies
Available-for-sale financial 16.4 22.8 -27.8
assets
Deferred tax receivables 45.2 53.8 -15.9
Other receivables 38.4 37.7 1.8
NON-CURRENT ASSETS, TOTAL 2,511.3 2,396.1 4.8
CURRENT ASSETS
Inventories 150.1 144.0 4.3
Income tax receivables 20.1 16.8 19.4
Trade and other receivables 369.2 330.2 11.8
Available-for-sale financial 0.0 0.5 -100.0
assets
Cash and cash equivalents 81.5 84.9 -4.0
CURRENT ASSETS, TOTAL 620.9 576.4 7.7
ASSETS, TOTAL 3,132.2 2,972.5 5.4
EQUITY AND LIABILITIES
EQUITY
Equity attributable to the equity holders of
the Parent Company
Share capital 70.9 67.5 5.1
Premium fund 181.0 93.7 93.0
Other reserves 6.9 363.8 -98.1
Translation differences 17.6 15.9 10.8
Retained earnings 1,029.3 600.5 71.4
1,305.7 1,141.5 14.4
Minority interest 17.0 16.3 4.2
EQUITY, TOTAL 1,322.7 1,157.7 14.3
NON-CURRENT LIABILITIES
Deferred taxes 96.2 90.4 6.4
Pension obligations 57.6 64.8 -11.1
Provisions 7.8 12.3 -36.8
Interest-bearing liabilities 44.2 132.0 -66.5
Trade and other payables 36.0 26.0 38.4
CURRENT LIABILITIES
Provisions 7.9 9.9 -19.7
Interest-bearing liabilities 819.7 796.8 2.9
Income tax liabilities 28.8 37.5 -23.2
Trade and other payables 711.2 645.2 10.2
LIABILITIES, TOTAL 1,809.5 1,814.8 -0.3
EQUITY AND LIABILITIES, TOTAL 3,132.2 2,972.5 5.4
CHANGES IN CONSOLIDATED EQUITY
Equity attributable to the equity holders
of the Parent Company
EUR million Share Premiu Other Trans Retained Total Minori Equity
capita m fund reserves lation earnings ty total
l differ intere
ences st
Equity at 65.8 34.9 369.4 5.8 494.8 970.7 15.3 986.0
Dec. 31,
2004
Impact of -1.2 -1.2 -1.2
implementing
IAS 32 and
39,
derivatives
Impact of 10.1 -11.0 -0.9 -0.9
implementing
IAS 32 and
39,
convertible
capital note
Jubilee -1.3 -1.3 -1.3
provisions *
Equity at 65.8 34.9 379.5 5.8 481.4 967.3 15.3 982.6
Jan. 1,
2005,
adjusted
Translation -1.3 -1.3 -1.3
differences
recognised
in income
statement on
disposal of
operations
Change in 11.4 11.4 0.3 11.7
translation
differences
Other items 0.0 0.0 0.0 0.0 -0.6 -0.6 -0.6
Items 0.0 0.0 0.0 10.1 -0.6 9.5 0.3 9.7
recognised
directly in
equity,
total
Result for 224.0 224.0 4.4 228.4
the period
Total 0.0 0.0 0.0 10.1 223.3 233.4 4.7 238.1
recognised
income and
expenses
Conversion 1.6 58.6 -2.0 58.3 0.0 58.3
of capital
notes
Usage of 0.0 0.3 0.0 0.0 0.0 0.3 0.0 0.3
share
options
Expense 0.0 4.6 4.6 0.0 4.6
recognition
of granted
options
Dividends -122.5 -122.5 -0.2 -122.7
paid
Change in -3.4 -3.4
minority
interests
Other 0.0 0.0 -13.7 0.0 13.7 0.0 0.0 0.0
changes
Equity at 67.5 93.7 363.8 15.9 600.5 1,141.5 16.3 1,157.7
Dec. 31,
2005
Equity at 67.5 93.7 363.8 15.9 600.5 1,141.5 16.3 1,157.7
Jan. 1, 2006
Translation 0.0 0.0 0.0
differences
recognised
in income
statement on
disposal of
operations
Change in 1.7 1.7 0.3 2.0
translation
differences
Other items 0.0 0.0 0.0 0.0 -0.5 -0.5 -0.5
Items 0.0 0.0 0.0 1.7 -0.5 1.2 0.3 1.5
recognised
directly in
equity,
total
Result for 209.5 209.5 -1.1 208.4
the period
Total 0.0 0.0 0.0 1.7 209.0 210.7 -0.8 209.9
recognised
income and
expenses
Directed 1.0 1.0 1.0
issue of
shares
Conversion 2.4 85.5 -1.2 86.7 0.0 86.7
of capital
notes
Usage of 0.1 1.7 0.0 0.0 0.0 1.8 0.0 1.8
share
options
Expense 0.0 5.4 5.4 0.0 5.4
recognition
of granted
options
Dividends -141.3 -141.3 -1.4 -142.7
paid
Change in 3.0 3.0
minority
interests
Other 0.0 0.0 -355.6 0.0 355.6 0.0 0.0
changes
Equity at 70.9 181.0 6.9 17.6 1,029.3 1,305.7 17.0 1,322.7
Dec. 31,
2006
* Accounting practice related to jubilee provisions has been specified
in two operating countries.
CONSOLIDATED CASH FLOW STATEMENT
EUR million 1-12/2006 1-12/2005 Change, %
OPERATIONS
Result for the period 208.4 228.4 -8.8
Adjustments
Income taxes 68.0 57.6 17.9
Financial expenses 37.0 35.7 3.7
Financial income -12.5 -10.6 17.5
Share of result of -8.4 -9.8 -14.5
associated companies
Depreciation and 135.8 130.6 3.9
impairment losses
Profit on sales of non- -8.2 -37.6 -78.2
current assets
Other adjustments -53.6 -44.7 19.8
Change in working capital
Change in trade and other -27.9 -13.2 111.9
receivables
Change in inventories 2.3 -7.4
Change in trade and other 30.5 22.5 35.5
payables, and provisions
Interest paid -34.9 -30.3 15.1
Other financial items 1.3 -1.0
Taxes paid -77.9 -59.3 31.4
CASH FLOW FROM OPERATIONS 259.9 260.9 -0.4
INVESTMENTS
Acquisition of tangible -81.2 -90.0 -9.8
and intangible assets
Operations acquired -88.5 -154.8 -42.8
Associated companies -2.5 -1.3 84.7
acquired
Acquisition of other -0.2 -1.1 -84.4
holdings
Sales of tangible and 11.9 29.3 -59.4
intangible assets
Operations sold 11.5 37.6 -69.4
Associated companies sold 0.3 0.0
Sales of other companies 11.9 0.7
Loans granted -9.5 -11.0 -13.3
Repayments of loan 3.4 19.3 -82.1
receivables
Sales of short-term 0.5 0.0
investments
Interest received 4.8 3.6 33.0
Dividends received 4.6 3.0 53.9
CASH FLOW FROM -132.9 -164.7 -19.3
INVESTMENTS
CASH FLOW BEFORE 127.0 96.2 32.1
FINANCING
FINANCING
Proceeds from share 2.8 0.3 895.2
subscriptions
Minority capital 0.2 -8.5
investment/repayment of
equity
Change in loans with 7.1 135.4 -94.7
short maturity
Drawings of other loans 328.3 367.3 -10.6
Repayments of other loans -329.1 -463.7 -29.0
Payment of finance lease -2.2 -1.5 47.9
liabilities
Dividends paid -142.7 -122.7 16.3
Donations/other profit -0.4 -0.4 7.1
sharing
CASH FLOW FROM FINANCING -136.0 -93.8 45.0
Change in cash and cash -8.9 2.4
equivalents according to
the cash flow statement
Exchange rate differences 1.1 -1.1
under cash and cash
equivalents
Net increase(+)/decrease(- -7.8 1.3
) in cash and cash
equivalents
Cash and cash equivalents 84.9 83.6 1.6
at Jan. 1
Cash and cash equivalents 77.1 84.9 -9.2
at Dec. 31
Cash and cash equivalents in cash flow statement include cash and
cash equivalents less bank overdrafts.
NET SALES BY BUSINESS
EUR million 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
2006 2006 2006 2006 2005 2005 2005 2005
Sanoma Magazines
Sanoma Magazines 116.7 138.7 127.4 148.3 117.8 134.7 123.4 165.4
Netherlands
Sanoma Magazines 58.1 59.7 57.9 71.9 39.7 53.1 50.8 68.8
International
Sanoma Magazines 44.7 48.2 43.8 51.9 47.3 46.0 43.1 48.0
Belgium
Sanoma Magazines 45.8 47.1 47.3 53.1 41.4 46.5 43.9 52.6
Finland
Aldipress 26.4 29.8 30.0 29.4 28.0 29.8 29.0 31.7
Eliminations -13.4 -14.2 -15.1 -14.6 -14.7 -14.3 -15.2 -14.9
Total 278.2 309.2 291.4 340.1 259.5 295.8 275.0 351.6
Sanoma
Helsingin 66.8 66.2 62.9 71.4 64.6 66.2 61.6 68.6
Sanomat
Ilta-Sanomat 22.3 23.4 22.8 23.7 22.1 24.2 24.5 22.9
Sanoma 11.0 11.6 10.9 12.3 11.7 12.7 11.3 12.3
Lehtimedia
Others 47.4 46.4 44.2 49.4 42.2 44.1 42.0 47.0
Eliminations -34.9 -33.7 -32.6 -34.3 -32.0 -32.8 -31.6 -35.2
Total 112.6 113.8 108.2 122.4 108.6 114.4 107.8 115.6
SanomaWSOY
Education and
Books
Educational 15.3 69.7 77.3 25.4 12.8 61.3 47.8 29.3
publishing
Publishing 24.1 22.0 19.0 30.7 23.4 19.9 16.2 27.7
Others 10.3 9.7 11.3 12.1 16.0 17.4 27.4 12.3
Eliminations -4.4 -4.3 -4.3 -4.8 -3.9 -4.7 -4.3 -4.1
Total 45.4 97.2 103.3 63.4 48.3 93.9 87.0 65.2
SWelcom
Nelonen 19.2 21.0 13.4 22.8 17.2 18.9 13.9 21.6
Others 14.3 13.2 14.0 14.6 13.0 12.6 12.9 14.2
Eliminations -0.2 -0.1 -0.2 -0.1 -0.4 -0.3 -0.4 -0.5
Total 33.3 34.1 27.2 37.2 29.8 31.1 26.3 35.3
Rautakirja
Kiosk operations 82.3 94.4 91.4 101.0 81.9 86.7 85.6 91.7
Press 24.4 27.7 26.6 29.3 22.7 24.4 25.6 25.8
distribution
Bookstores 30.2 22.5 37.2 49.0 27.9 22.6 35.8 49.1
Entertainment 20.1 15.7 18.0 28.0 16.2 13.7 14.1 21.1
Others 0.0 0.0 0.0 0.0 2.5 0.0 0.0 0.0
Eliminations -2.6 -3.2 -3.6 -3.9 -2.6 -2.9 -2.5 -3.3
Total 154.3 157.0 169.6 203.4 148.6 144.5 158.5 184.4
Other companies -11.3 -12.2 -11.5 -24.3 -12.5 -12.2 -17.0 -17.1
and eliminations
Total 612.5 699.2 688.2 742.2 582.1 667.5 637.7 735.0
NET SALES BY BUSINESS
EUR million 1-12/ 1-12/
2006 2005
Sanoma Magazines
Sanoma Magazines Netherlands 531.2 541.2
Sanoma Magazines International 247.6 212.4
Sanoma Magazines Belgium 188.6 184.4
Sanoma Magazines Finland 193.2 184.3
Aldipress 115.6 118.6
Eliminations -57.3 -59.0
Total 1,218.9 1,181.9
Sanoma
Helsingin Sanomat 267.3 261.1
Ilta-Sanomat 92.2 93.7
Sanoma Lehtimedia 45.9 48.0
Others 187.3 175.2
Eliminations -135.6 -131.6
Total 457.1 446.4
SanomaWSOY Education and Books
Educational publishing 187.7 151.2
Publishing 95.9 87.2
Others 43.4 73.0
Eliminations -17.8 -17.1
Total 309.2 294.4
SWelcom
Nelonen 76.5 71.5
Others 56.0 52.6
Eliminations -0.6 -1.6
Total 131.8 122.5
Rautakirja
Kiosk operations 369.1 345.8
Press distribution 108.0 98.5
Bookstores 138.9 135.3
Entertainment 81.7 65.0
Others 0.0 2.6
Eliminations -13.4 -11.3
Total 684.3 635.9
Other companies and eliminations -59.3 -58.8
Total 2,742.1 2,622.3
OPERATING PROFIT BY DIVISION
EUR million 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
2006 2006 2006 2006 2005 2005 2005 2005
Sanoma Magazines 23.5 37.1 29.3 42.3 25.5 40.3 23.9 39.4
Sanoma 16.1 15.0 15.0 16.5 13.9 16.6 16.4 12.2
SanomaWSOY Education -4.3 33.8 25.6 -7.1 -7.1 28.1 30.1 4.7
and Books
SWelcom 3.2 4.0 0.4 4.8 2.7 2.1 1.0 3.8
Rautakirja 10.1 6.3 12.6 22.2 13.8 4.0 10.3 23.0
Other companies and -3.1 -3.4 -2.9 -4.7 0.0 -1.9 1.8 -3.5
eliminations
Total 45.6 92.8 80.1 73.9 48.9 89.2 83.5 79.6
OPERATING PROFIT BY DIVISION
EUR million 1-12/ 1-12/
2006 2005
Sanoma Magazines 132.2 129.1
Sanoma 62.7 59.1
SanomaWSOY Education and Books 48.0 55.8
SWelcom 12.5 9.6
Rautakirja 51.3 51.2
Other companies and eliminations -14.1 -3.5
Total 292.5 301.3
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 31.12.2006 31.12.2005 Change, %
Carrying amount at Jan. 1 566.5 496.7 14.1
Increases 59.4 67.6 -12.1
Acquisition of operations 15.5 81.7 -81.0
Decreases -5.3 -4.5 18.0
Disposals of operations -2.3 -18.6 -87.6
Depreciation for the period -62.9 -62.2 1.1
Impairment losses for the -0.2 -0.1 134.5
period
Exchange rate differences and 1.6 5.9 -73.5
other changes
Carrying amount at Dec. 31 572.3 566.5 1.0
In the end of the financial period the commitments for acquisitions
of tangible assets were EUR 6.3 million (2005: EUR 7.8 million).
CONTINGENT LIABILITIES
EUR million 31.12.2006 31.12.2005 Change, %
Contingencies for own commitments
Mortgages 10.5 7.3 43.4
Pledges 18.4 10.8 70.0
Other items 0.4 1.6 -72.7
Total 29.4 19.8 48.6
Contingencies given on behalf of
associated companies
Guarantees 7.9 7.9 0.0
Total 7.9 7.9 0.0
Contingencies given on behalf of
other companies
Guarantees 0.1 0.2 -15.5
Total 0.1 0.2 -15.5
Other commitments
Operating lease 249.1 225.6 10.4
liabilities
Royalties 15.9 19.2 -17.1
Other items 47.2 49.6 -4.9
Total 312.2 294.4 6.1
Total 349.6 322.2 8.5
DERIVATIVE INSTRUMENTS
Nominal values, EUR million 31.12.2006 31.12.2005 Change, %
Interest rate
derivatives
Options
Purchased 0.0 100.0 -100.0
Written 0.0 54.8 -100.0
Total 0.0 154.8 -100.0
Total 154.8 -100.0
Fair values, EUR million 31.12.2006 31.12.2005 Change, %
Interest rate
derivatives
Options
Purchased 0.0 0.0 -100.0
Written 0.0 -0.2 -100.0
Total 0.0 -0.2 -100.0
Total -0.2 -100.0
Fair values of derivative contracts are recorded to balance sheet.
The SanomaWSOY Group had no open derivative contracts at the end of
the financial year.
CONSOLIDATED INCOME STATEMENT BY QUARTER
EUR million 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
2006 2006 2006 2006 2005 2005 2005 2005
NET SALES 612.5 699.2 688.2 742.2 582.1 667.5 637.7 735.0
Other 15.4 12.8 13.8 15.2 14.5 12.5 28.1 25.6
operating
income
Materials and 280.9 306.6 322.0 333.8 263.6 284.7 292.2 337.4
services
Personnel 145.6 148.7 142.0 159.1 143.0 147.3 137.2 147.2
expenses
Other 124.8 129.8 124.3 153.3 111.7 125.8 124.1 157.0
operating
expenses
Depreciation 30.9 34.0 33.5 37.3 29.4 33.0 28.8 39.4
and
impairment
losses
OPERATING 45.6 92.8 80.1 73.9 48.9 89.2 83.5 79.6
PROFIT
Share of 1.9 2.3 3.4 0.8 3.3 2.5 3.2 0.8
result of
associated
companies
Financial -6.2 -7.5 -6.1 -4.7 -6.1 -8.6 -4.6 -5.8
items
RESULT BEFORE 41.3 87.6 77.4 70.1 46.0 83.1 82.2 74.7
TAXES
Income taxes -12.4 -25.3 -18.2 -12.1 -12.0 -28.7 -15.8 -1.1
RESULT FOR 28.9 62.3 59.2 58.0 34.0 54.4 66.4 73.6
THE PERIOD
Attributable
to:
Equity 32.5 62.2 57.2 57.6 34.4 52.2 66.3 71.1
holders of
the Parent
Company
Minority -3.6 0.1 2.0 0.4 -0.4 2.2 0.1 2.5
interest
Press and analyst meeting
Press and analyst meeting in Finnish will be held by Mr Hannu
Syrjänen, President and CEO of SanomaWSOY on Thursday, February 8,
2007 at 1:30 pm (Finnish time) at Sanomatalo, Töölönlahdenkatu 2,
Helsinki. Webcast of the event can be watched on the Group's
website at www.sanomawsoy.fi either live or after the event as on
demand.
The conference call in English for analysts and investors will be
arranged at 4 pm (Finnish time). Mr Hannu Syrjänen will present
the result. To join the conference, please dial +44 20 3003 2666
(UK) or +1 866 966 5335 (US). The code for the call is Sanoma.
Audiocast of the event can be listened on the Group's website at
www.sanomawsoy.fi either live or after the event as on demand.
The presentation material of the press and analyst meeting as well
as the slides used in the conference call will be available at
SanomaWSOY's website after the press and analyst meeting has
started.
Additional information: SanomaWSOY's Group Communications, tel.
+385 105 19 5062 or ir@sanomawsoy.fi
SANOMAWSOY CORPORATION
Matti Salmi
Senior Vice President
Finance and Administration
DISTRIBUTION
Helsinki Stock Exchange
Principal media