TALENTUM OYJ STOCK EXCHANGE RELEASE FEBRUARY 9, 2007 AT 8.30 AM A YEAR OF RESTRUCTURING AT TALENTUM - DIVIDEND PROPOSAL OF EUR 0.18 TALENTUM'S OCTOBER-DECEMBER AND YEAR 2006 (IFRS) October-December 2006 - Net sales: EUR 36.6 million (EUR 34.3 million) - Operating profit (EBIT): EUR 1.6 million (EUR 3.9 million) - A goodwill impairment charge of EUR 1.8 million in Talentum Premedia was booked on the fourth quarter of 2006. - The personnel arrangements generated costs of EUR 1.6 million which were booked on the fourth quarter of 2006. - Earnings per share: EUR 0.01 (EUR 0.08) 2006 - Net sales: EUR 121.1 million (EUR 103.3 million) - Operating profit (EBIT): EUR 4.3 million (EUR 20.5 million) - Profit for the financial year: EUR 2.7 million (EUR 18.7 million) - Profit from ongoing operations: EUR 2.7 million (EUR 7.2 million) - Earnings per share: EUR 0.05 (EUR 0.42) - Earnings per share (ongoing operations): EUR 0.05 (EUR 0.16) - Proposed dividend: EUR 0.18 per share (EUR 0.30 per share) - Equity ratio 36.0% (48.8%) Consolidated net sales reached EUR 121.1 million (EUR 103.3 million) in 2006, an increase of 17% on the previous year. The operating profit (EBIT) fell to EUR 4.3 million (EUR 20.5 million), a 79% decrease on the previous year. Of the EUR 17.8 million increase in net sales on 2005, EUR 15.9 million is accounted for by the publishing business in Sweden being part of the Talentum Group for the final quarter of 2005 only. The 2006 and 2005 income statements include several significant differences. As announced in a stock exchange release on December 18, 2006, on the basis of a test the Board of Talentum decided to make an impairment charge of EUR 1.8 million on the goodwill in Talentum Premedia in the final quarter of 2006. As announced in a stock exchange release on December 15, 2006, personnel arrangements in the publishing activities of Talentum Finland and in corporate administration generated non-recurring costs of approximately EUR 1.6 million, which were recorded for the fourth quarter of 2006. Unrealized projects resulted in non-recurring costs of approximately EUR 1.0 million in the first half of 2006, increasing Group items in particular. In comparison, in 2005 the profit of EUR 10 million on the sale of the Satama Interactive shares was recorded as income in the third quarter of the year. CEO JUHA BLOMSTER REPORTS ON FINANCIAL STATEMENTS: SCOPE FOR GOOD DEVELOPMENT IN IMPROVED COST STRUCTURE AND SALES "We will focus more clearly on publishing in the sphere of economic and professional media. During the final quarter the organizational structure was streamlined, responsibilities clarified and operations made more efficient. The matrix organization was replaced by a line management organization." "The publishing business in Finland has improved sales and brought costs down. The restructuring during the final quarter has reduced personnel expenditure by about EUR 2.5 million at the annual level. The development of growth and profitability at Talentum Sweden remained strong: the year's net sales grew by about 20% and amounted to about EUR 21 million, with an operating profit percentage of about 7%." "The final quarter of the year was split in two: in Sweden, the publishing business grew and in Finland it contracted until the very end of the year, when net sales increased again, mainly because of the strong development in recruitment advertising. In the fourth quarter the net sales of the publishing in Finland went up by 3% over the previous year, and the comparable net sales figure for the entire publishing operations for the quarter rose by 8% over the previous year." "The operating profit of Direct Marketing has continued to remain around the level of the previous year. A charge of about EUR 1.8 million based on a goodwill impairment test was recorded in Premedia's financial performance in the final quarter of 2006. A steady improvement in TV operations since the autumn of 2005 has continued and the operating profit of TV Content Production has shown further good development." "With the major restructuring carried out in the final quarter of the year Talentum's business operations moved into 2007 from a situation where there is scope for good development in the improved cost structure and sales," says CEO Juha Blomster. IAS/IFRS reporting Talentum transferred to financial reporting in accordance with the International Financial Reporting Standards (IFRS) on January 1, 2005. In accordance with IFRS terminology, discontinued business operations refer to Internet Consulting. In a transaction announced on September 16, 2005, Talentum Oyj sold all its Satama Interactive shares. TALENTUM GROUP OCTOBER-DECEMBER 2006 Business areas Publishing Net sales for Publishing in the October-December period amounted to EUR 23.5 million (EUR 21.6 million), an increase of 8% on the previous year. The operating profit (EBIT) was EUR 2.9 million (EUR 4.5 million). The final quarter of the publishing business in Finland was characterized by extensive restructuring; non- recurring expenditure on personnel arrangements of about EUR 1.5 million was recorded in this quarter. In Finland net sales grew by 3% in the final quarter and in Sweden they continued to develop strongly, rising by more than 20% over the previous year. TV Content Production Net sales for TV Content Production were EUR 7.8 million (EUR 6.2 million) in the October-December period and the operating profit (EBIT) came to EUR 0.8 million (EUR 0.3 million). TV Content Production´s net sales went up 25% in the final quarter compared with corresponding period in the previous year. TV Content Production continued to make inputs in the production of TV programmes, with growth and profitability of both TV programmes and commercials developing well. Premedia Net sales in the Premedia business area came to EUR 4.5 million (5.3 million) in the October-December period and the operating profit (EBIT) was EUR -1.8 million (EUR -0.4 million). Net sales went down by 17% in the final quarter compared with the corresponding period in the previous year. On December 18, 2006 Talentum's Board of Directors decided to monitor the Group's Premedia business area separately because of its poor profitability. For this reason the performance of a separate impairment test on Premedia's goodwill was thought justified. On the basis of the test the Board decided to make in the final quarter of 2006 an impairment charge of EUR 1.8 million on the goodwill in the Premedia operations. Measures will continue in order to improve the business's processes, efficiency and profitability. Direct Marketing Net sales by Direct Marketing totalled EUR 2.0 million (EUR 1.8 million) in the October-December period and the operating profit (EBIT) was EUR 0.3 million (EUR 0.3 million). Direct Marketing did well in the final quarter of 2006. Timo Niemi was appointed Managing Director of Suoramarkkinointi Mega Oy, a Talentum subsidiary, as of November 1, 2006. Previously he had been the company's Deputy Managing Director. His predecessor, Mikko Saarela, transferred to Talentum to become the director responsible for circulation, book and training sales and content sales and also a member of the Executive Management Team. FINANCIAL STATEMENTS JANUARY 1 - DECEMBER 31, 2006 PROSPECTS FOR SECTOR AND TALENTUM IN 2007 The growth in the media market continued in the final quarter of 2006. In particular the continued good trend in recruitment advertising gives cause to assume that the fairly favourable market situation will continue during the beginning of 2007. CONSOLIDATED NET SALES AND GROUP TARGETS Talentum's consolidated net sales for 2006 came to EUR 121.1 million (EUR 103.3 million), an increase of 17.2%. The comparability of figures for the entire year is adversely affected by the publishing business in Sweden being part of the Talentum Group only during the final quarter of 2005. The comparable final- quarter growth was 6.6%. The 30% increase by Publishing, 15% by TV Content Production and 14% by Direct Marketing had the most favourable impact on the growth in the consolidated net sales for the entire year. Premedia's growth in net sales was -14%. Publishing accounted for 61% of the consolidated net sales for the entire year, TV Content Production for 20%, Premedia for 16%, Direct Marketing for 7% and inter-group business for 4%. The advertising revenue from Talentum's magazines for the year remained almost at the level of the previous year in spite of a slight dip in the third quarter in Finland, the most important factor being the more than 30 per cent increase in job advertising. The trend in advertising sales is a significant variable in terms of Publishing's financial performance. Magazines and online activities account for about 85% of Publishing's net sales. Of this, advertising sales account for about 60% and content sales around 40%. Internet advertising accounts for a good 10% of the advertising net sales. Books and training bring in the remaining 15% of Publishing's net sales. Talentum has integrated its business operations portfolio with resolute development work and the implementation of synergy. Talentum's objective is to continue refining its business operations and synergy potential and to divest non- core assets and operations in a way that will create economic value added for the owners and support profitability and growth in the company's core business. GROUP FINANCIAL PERFORMANCE The consolidated operating profit was EUR 4.3 million (EUR 20.5 million). The figure includes an impairment charge of EUR 1.8 million on the goodwill in Premedia operations, non-recurring expenditure of about EUR 1.6 million on personnel arrangements in the publishing business and corporate administration in Finland and non-recurring expenses of some EUR 1.0 million arising from unrealized projects. The operating profit for the comparative year of 2005 includes the recording of a profit of EUR 10.5 million from the sale of the shares in Satama Interactive Oy. Of the business areas Publishing, Direct Marketing and TV Content Production were very successful; Premedia posted a loss. The profit for the financial year was EUR 2.7 million (EUR 18.7 million). Earnings per share were EUR 0.05 (EUR 0.42) and EUR 0.05 (EUR 0.16) for ongoing operations. The consolidated return on investment (ROI) was 9.4% (37.6%) and return on equity (ROE) 7.2% (49.0%). CASH FLOW, FINANCIAL POSITION AND BALANCE SHEET The balance sheet total stood at EUR 89.7 million at the end of December (EUR 90.5 million on December 31, 2005). Talentum Group's financial position was good and the equity ratio was 36.0% at the end of the year (48.8% on December 31, 2005) and equity per share was EUR 0.69 (EUR 0.94 on December 31, 2005). The cash flow from business operations was EUR 9.1 million (EUR 8.2 million). Talentum Oyj distributed a dividend of EUR 13.2 million, i.e. EUR 0.30 per share. Consolidated interest-bearing liabilities totalled EUR 25.5 million (EUR 15.6 million). The consolidated interest-bearing debts are denominated in euros and thus not hedged against exchange-rate fluctuations. Net financial expenses came to EUR 0.5 million (EUR 0.7 million). The Group's liquid assets have been invested primarily in financial instruments and a small amount in equities. There was a decrease of EUR 2.2 million (EUR 5.7 million) in cash assets in the January-December period. As part of its overall financing scheme, Talentum has a EUR 30 million domestic commercial paper programme issuing commercial papers for maturities under twelve months. The purpose of the programme is to diversify Talentum's financing structure. Commercial papers issued totalled EUR 20.0 million on December 31, 2006. The parent company handled the financial arrangements of the Group companies centrally. DEPRECIATION, AMORTIZATION AND IMPAIRMENT Consolidated depreciation, amortization and impairment amounted to 3.0% (3.6%) of net sales i.e. EUR 3.4 million (EUR 3.7 million). In addition, an impairment of EUR 1.8 million, i.e. 2% of net sales was recorded in 2006. PERSONNEL The Group employed an average of 1,064 persons during the year (1,202). Of the employees, 304 (236) worked abroad. The average number of staff broken down by business area is as follows: 1-12/ 2006 1-12/2005 Publishing 405 308 TV Content Production 98 102 Premedia 199 228 Direct Marketing 346 326 Internet Consulting * 0 222 Group Administration 16 16 Total 1,064 1,202 *) discontinued business operations Of the personnel, 44% were men and 56% women. The biggest age group among the personnel was the 31-40 year bracket (29%). The personnel was divided as follows in terms of age: Age distribution: < 20 y 10% 21-30 18% 31-40 29% 41-50 22% 51-60 18% 60> 3% MANAGEMENT Talentum Oyj's CEO Harri Roschier resigned on July 28, 2006. General Counsel Lasse Rosengren acted as CEO between July 28, 2006 and September 30, 2006. CEO Juha Blomster started in his new post on October 1, 2006. Juha Blomster resigned from Talentum's Board of Directors on September 30, 2006. A new Executive Management Team effective as of November 1, 2006 was appointed for Talentum and at the same time the organization and management system were reformed. The aim was to streamline the organization, clarify responsibilities and increase efficiency. The Executive Management Team comprises CEO Juha Blomster, Group General Counsel and Deputy CEO Lasse Rosengren, CFO Kai Järvikare, Editor-in-Chief Pekka Seppänen, Director Jarl Michelsson, Director Mikko Saarela and Director Mika Malin. The new line organization replaced the previous matrix organization. The responsibilities in the new organization are the following: Lasse Rosengren is responsible for legal affairs as well as for the TV Content Production and Premedia business areas; Kai Järvikare is responsible for financial management and IT management; Editor-in-Chief Pekka Seppänen is the responsible chief for journals in the business field; Editor-in-Chief Kauko Ollila is the responsible chief for journals in the industry and IT fields; Jarl Michelsson is responsible for media sales and marketing in magazine publishing; Mikko Saarela is responsible for sales in circulation, book publishing, training and media content sales; and Mika Malin is responsible for book publishing, training, events and online business operations. Talentum's Swedish subsidiary Talentum Sweden AB has its own Management Team and its CEO Christer Björkin reports directly to CEO Juha Blomster. INVESTMENT Gross investment in fixed assets in January-December totalled EUR 3.6 million, i.e. 3.0% of net sales. Gross investment comprised mainly normal replacement and maintenance investment, such as procuring equipment, software and fixtures. Long- term investment in shares totalled EUR 1.5 million. STRUCTURAL CHANGES The comparison figures for 2005 show Satama Interactive's figures under the heading 'Discontinued operations' in the income statement. As announced on September 16, 2005, Talentum sold for EUR 23.2 million its 60% majority holding in Satama Interactive, a company that engages in Internet consulting and was listed on the Helsinki Stock Exchange NM List in 2000. Satama Interactive's net sales in accordance with IFRS came to EUR 23.6 million and the operating profit to EUR 0.6 million in 2004. Talentum recorded a profit of about EUR 10.5 million on the sale of its holding in Satama in the third quarter of 2005. On October 6, 2005, Talentum purchased the entire stock of the Swedish magazine publishing company Ekonomi & Teknik Förlag AB, and on December 15, 2005 the company was renamed Talentum Sweden. The total purchase price was EUR 17.4 million (SEK 162 million), of which EUR 11.0 million (SEK 102 million) was in cash and EUR 6.4 million (SEK 60 million) in Talentum Oyj shares. Talentum Sweden had net sales of some EUR 18 million in 2005, of which EUR 5.8 million went to Talentum in the final quarter of 2005. BUSINESS OPERATIONS AND SEASONAL VARIATION IN THE MEDIA MARKET The general economic situation remained fairly good during the year. There is a seasonal fluctuation in the media and media services markets, and business is at its briskest during the final quarter of the year. Not all Talentum's personnel resources are available during the summer holidays, and generally no magazines or books are put out in the summer. Customers typically make a considerable part of their purchases in the final quarter of the year. These characteristics of the business may cause considerable variation in Talentum's quarterly net sales and particularly in the profit: the figures are at their highest in the final quarter, and correspondingly lower in the third quarter than in the first and second quarters. As a result of the heavy seasonal fluctuation in publishing and particularly in the book business, the main part of net sales and an even greater part of the profit in publishing accrue in the latter half of the year. This is the most significant reason for most of Talentum's profit being made in the latter half of the year and the profit trend looking better towards the end of the year. The annual quarterly-based seasonal fluctuation in Publishing's operating profit is increased from earlier periods by the seasonal fluctuation in Sweden being greater than in Finland because of the one-dimensional structure of the operations and the predominance of magazines. ORDER BACKLOG The order backlog is not detailed here, since this information is not relevant due to the nature of the business of the Talentum Group. As none of the Talentum business areas have orders extending forward for further than about one month, an order backlog in the conventional sense does not really exist. While customers and the company have signed commercial agreements for periods of several years ahead, the company management does not consider that these agreements constitute an order backlog as such. BUSINESS RISKS Talentum takes controlled risks that are integrally linked with its corporate strategy and objectives. Risks relating to strategy and objectives are controlled and reduced in various ways. 40% of the consolidated net sales are linked with advertising, specifically with the b-to-b sector, which is susceptible to cyclical fluctuation. We try to control this market risk by increasing revenue from circulation sales and content-sales services. All our products and services aim at being market leaders in their own field, which makes it possible to succeed even during a low cycle. The company is not prepared to take risks that jeopardize the continuation of operations or are difficult to control and cause substantial harm to the company's operations. Risk management does not have a separate organization of its own; its responsibilities follow the division of responsibilities in business operations and the organization. The most important perceived risks are reported to the Board of Directors annually when operations are being planned, and the Board then analyses risks from the shareholder value perspective. In addition, internal auditing is outsourced by a Board decision to Tuokko Tilintarkastus Oy (PKF International), a professional and independent external service provider with sufficient resources. The aim of internal auditing is to promote and improve risk management in Talentum's various operating areas. Talentum keeps an active eye on the market situation in order to be able to prepare for changes in the competition situation in advance. Competition has remained unchanged for a long time, but it is possible that the major media companies will increase their input in Talentum's product areas significantly. The Talentum Group's currency risks comprise risks concerning foreign currency flows and, in the case of Talentum Sweden, risks involved with translating shareholders' equity denominated in foreign currency. The majority of the Group's direct income and costs are generated in the euro zone. The basic principle for controlling risks concerning foreign currency flows is by matching income and costs. The basic principle for risks associated with translating shareholders' equity is to try to hedge against large currency movements. Talentum tries to hedge against finance risks relating to its business operations by ensuring that stable financial conditions are created for developing them. Customers' payment behaviour is monitored constantly. Attempts are made to invest liquid funds in liquid money market instruments that have good credit standing. Liquid funds do not contain a major interest rate risk because of the short duration of the investments. BUSINESS AREAS Publishing Publishing's net sales increased by 30% to EUR 74.7 million (EUR 57.5 million). Most of the growth is explained by the publishing business in Sweden being part of the Talentum Group only during the final quarter of 2005. The comparable net sales in the final quarter of 2006 went up by 8% compared with the corresponding quarter in the previous year. The operating profit (EBIT) for the entire year 2006 was EUR 7.1 million (EUR 9.8 million). Personnel arrangements in publishing in Finland generated non-recurring costs of approximately EUR 1.5 million, which were recorded for the fourth quarter of 2006. The effect of these arrangements will be to reduce personnel costs by about EUR 2.5 million annually. Magazine publishing's net sales in 2006 totalled EUR 62.3 million, book publishing's net sales were EUR 10.0 million and the net sales for training activities were EUR 2.4 million. Advertising revenue accounted for about 60% of all the magazine revenue. Talentum, together with its subsidiaries and associated companies publishes 15 magazines aimed at those working in a professional capacity, ten in Finland and five in Sweden. The advertising revenue from Talentum's magazines rose by 6%. The most significant factor in the development of advertising sales was the strong annual growth of over 30% in recruitment advertising. Circulation revenue from Talentum's magazines grew by 6%. Cooperation between Talentum's magazines and professional organizations continued to work well. The Finnish organizations of engineers and economists have made group subscription agreements for the magazines Tekniikka & Talous and Talouselämä, and the Finnish Marketing Association has a similar agreement for Markkinointi & Mainonta. The Swedish Association of Graduate Engineers and the Swedish Society of Engineers have group subscription agreements for Ny Teknik, Affärsvärlden also has a group subscription agreement covering some 20,000 members in supervisory and management positions in Sweden's private sector trade union (Sif). Talentum's publishing in the legal field is a firmly based profitable and long- term business resting on a solid foundation and not as susceptible to cyclical fluctuation as magazine publishing. Talentum has also consolidated its status as a publisher of business books. TV Content Production The net sales in January-September of Varesvuo Partners Oy, which concentrates on TV content production, increased by 15% to EUR 24.6 million (EUR 21.5 million). The operating profit rose to EUR 1.8 million (EUR 0.6 million). TV Content Production's production companies invested in TV programme production, with growth and profitability improving for both TV programmes and commercials. The group's companies produced programmes for all the Finnish TV channels and two full-length feature films. Premedia Premedia's net sales decreased by 14% to EUR 18.0 million (EUR 21.0 million). The operating profit went down and was EUR -2.5 million (EUR 0.0 million). The business area's operating profit included an impairment charge of EUR 1.8 million on the goodwill contained in Premedia's operations. Measures will continue in order to improve the business's processes, efficiency and profitability. Direct Marketing Direct Marketing's net sales increased by 14% to EUR 8.2 million (EUR 7.2 million). The operating profit (EBIT) was EUR 1.1 million (EUR 1.2 million). Direct Marketing succeeded as planned in Finland and the Baltic States. AGM, BOARD AND AUDITOR Talentum's Annual General Meeting was held on March 28, 2006. The AGM re-elected Manne Airaksinen and Juha Blomster as members of the Board of Directors. Harri Kainulainen, Eero Lehti, Kai Mäkelä and Tuomo Saarinen were elected new members of the Board. Tuomo Saarinen was elected Chairman of the Board and Manne Airaksinen continued as Vice Chairman. Juha Blomster resigned from Talentum's Board of Directors on September 30, 2006, taking up the position of Talentum Oyj's CEO on October 1, 2006. Authorized Public Accountants PricewaterhouseCoopers Oy with APA Kari Miettinen as the accountable auditor were re-elected auditors. APA Juha Wahlroos started as the accountable auditor on June 22, 2006 with the departure of his predecessor, APA Kari Miettinen, from the employ of PriceWaterhouseCoopers Oy. The Board met altogether 16 times during the financial period. The average participation by Board members was 91%. SHARES AND SHARE CAPITAL At the end of the period under review, Talentum Oyj's share capital totalled EUR 18,593,518.79, and the company has 44,220,817 fully paid-up shares. The shares are listed on the OMX Nordic List (on the Helsinki Stock Exchange Main List until October 2, 2006) At the end of the period under review, the company held 181,000 company shares, 0.41% of Talentum's total stock and votes. A total of 26,957,486 shares were traded during the financial period, 61.2% of the total average stock during the financial period. Shareholdings of the Board of Directors and Managing Director On December 31, 2006, the number of Talentum Oyj shares and options owned by members of the Board of Directors and the CEO personally and through companies in which they have a controlling interest was 4,470,162, representing 10.1% of the company's total shares and votes. Board of Directors' authorizations An Annual General Meeting on March 28, 2006 authorized the Board of Directors to decide, within one year of the meeting, on taking out one or several convertible bonds and/or issuing options and/or on increasing the share capital by a rights issue in one or several instalments, provided that the increase is no more than EUR 1,859,351.88 and that no more than 4,422,081 new shares are subscribed. The maximum increase in the share capital and the combined number of votes of the shares issued correspond to less than 10% of the company's registered share capital and of the combined number of votes conferred by the shares. The Board of Directors has the right to decide on the subscription price, the grounds for determining the subscription price, other terms and conditions of the subscription, and the other terms and factors relating to the rights issue, issuing of options and taking out of a convertible loan. The authorization includes the right to overrule the shareholders' right of pre-emption. The authorization can be exercised only for financing mergers and acquisitions. As of December 31, 2006, the authorization had not been exercised. The Annual General Meeting on March 28, 2006 authorized the Board of Directors to decide, within one year of the meeting, on the acquisition of the company's own shares using the company's disposable funds in one or several instalments, but placed a limit of 4,422,081 on the maximum number of shares to be acquired, including the 181,000 shares acquired on the basis of previous acquisition authorizations. The limit is equivalent to less than 10% of the company's registered share capital and combined votes conferred by the shares. The authorization includes the right to acquire shares in a manner other than in proportion to the shareholders' holdings. As of December 31, 2006, the authorization had not been exercised. The Annual General Meeting on March 28, 2006 authorized the Board of Directors to decide, within one year of the meeting, on the relinquishment in one or several instalments of the company's own shares acquired for the company, but placed a limit of 4,422,081 on the maximum number of shares to be relinquished. The limit is equivalent to less than 10% of the company's registered share capital and combined votes conferred by the shares. The authorization includes the right to relinquish shares in a manner other than in the proportion to the shareholders' pre-emptive rights to acquire the company's own shares. As of December 31, 2006, the authorization had not been exercised. Notifications On January 4, 2006 Nordea Bank AB reported that its subsidiary, Nordea Bank Plc, had acquired 600,000 Talentum shares on January 3, 2006, as a result of which the Nordea Group's share of Talentum's ownership and votes exceeded 1/20. At the same time, Nordea Bank AB reported that, as a result of derivative deals made on January 3, 2006, the Nordea Group's and Nordea Bank Finland Plc's share of Talentum's ownership and shares would fall below 1/20 when the forwards matured on March 17, 2006. On January 4, 2006 Oy Herttakuutonen Ab reported that its share of Talentum's ownership and votes would reach 1/10 through a forward trade made on January 4, 2006 and maturing on March 17, 2006. On February 13, 2006 Franklin Resources Inc. informed Talentum Oyj that the holding by Franklin Mutual Advisers, LLC had exceeded the 5% proportion of the ownership and voting rights and was 5.57%. On March 10, 2006 Oy Herttakuutonen Ab informed Talentum Oyj that its proportion of votes and share capital in Talentum Oyj (10.04%) had reached one tenth (1/10) on trades that settled the forward trades of Oy Herttakuutonen Ab maturing on March 17, 2006, announced by a stock exchange release on January 4, 2006, resulting in the purchase of the linked shares. Nordea Bank AB (publ.) informed Talentum Oyj on March 13, 2006 that on March 10, 2006 its Finnish subsidiary Nordea Bank Finland Plc had sold 1,692,700 Talentum Oyj shares, due to which its proportion of Talentum's share capital and voting rights as of March 10, 2006 was 0.00%. The Finnish subsidiary Nordea Life Assurance Finland Ltd of the Nordea Bank AB (publ.) Group, owned in addition 1,049,050 Talentum Oyj shares, corresponding to 2.37% of the share capital and voting rights. The holding of Nordea Bank AB (publ.) and its subsidiaries in Talentum Oyj's share capital and voting rights was consequently 2.37%, and had thus fallen below one-twentieth (1/20). On May 22, 2006, Oy Herttakuutonen Ab reported that its share of Talentum's share capital and voting rights had fallen below one tenth (1/10) through a transaction conducted on May 19, 2006. On May 22, 2006, Oy Herttaässä Ab reported that its share of Talentum's share capital and voting rights had reached one tenth (1/10) through a transaction conducted on May 19, 2006. Voting at shareholders' meetings Talentum Oyj's Articles of Association provide that no shareholder may exercise more than 1/6 of the total votes carried by the company shares at a shareholders' meeting. If subsidiaries or companies within the same group and/or pensions foundations or pension funds of such companies together own shares carrying more than 1/6 of the total votes, only 1/6 of the total votes can be exercised at shareholders' meetings on the basis of these shares. Shareholder agreements The company is not aware of any mutual shareholder agreements between its shareholders relating to the operations or ownership of the company. Redemption clause Talentum Oyj's Articles of Association include a clause stating that if the number of shares controlled by a single owner exceeds 1/3 or 1/2 of the total stock, the shareholder must make a redemption offer to all shareholders. Dividend for 2005 The Annual General Meeting held on March 28, 2006 decided that a dividend of EUR 0.30 per share (adjusted for share issues) be paid for the 2005 financial year. Market guarantee An agreement with Nordea Securities Oyj on a market guarantee for Talentum Oyj shares became effective on June 21, 2004. Under the agreement, Nordea Securities will submit a purchase and sale offer so that the maximum permitted differential between them is 3% of the purchase offer. The offers will include a minimum of 2,500 shares. Corporate governance Talentum Group observes the Companies Act, the legislation regulating the securities markets and all other legislation relating to the management of public limited companies. Talentum also observes the Corporate Governance Recommendation issued in December 2003 by the Helsinki Stock Exchange, the Central Chamber of Commerce and the Confederation of Finnish Industries, which became effective on July 1, 2004. Talentum's corporate governance principles are accessible on Talentum's web pages at www.talentum.fi. Insider instructions Talentum Group applies the Guidelines for Insiders by the Helsinki Stock Exchange. In the Group, the period during which insiders do not trade in company shares prior to the issue of financial information is 21 days. Pension Foundation Talentum's pension foundation began operations on April 1, 2004. It handles the pension liabilities of Talentum Oyj, Talentum Media Oy and Suoramarkkinointi Mega Oy, covering a total of some 600 employees. DIVIDEND PROPOSAL The Board of Directors has decided to propose to the Annual General Meeting on March 27, 2007, the payment of a dividend of EUR 0.18 per share for 2006. The dividend will be paid to shareholders registered in the shareholders' register on the dividend payment record date i.e. March 30, 2007. It will be proposed that the dividend be paid on April 11, 2007. INCOME STATEMENT 1000 EUR 10-12/ 10-12/ 1-12/ 1-12/ 2006 2005 2006 2005 Net sales 36 567 34 291 121 062 103 289 Operating profit (adjusted) *) 1 608 3 922 4 275 20 447 Financial income and expenses -175 -83 -524 -741 Share of profit of associates 169 108 464 239 Adjusted profit before tax *) 1 603 3 947 4 216 19 945 Operating profit on discontinued 0 0 0 -11 231 operations Profit before tax 1 603 3 947 4 216 8 715 Income tax expense -1 059 -293 -1 497 -1 556 Profit after tax - ongoing activities 543 3 654 2 718 7 158 Discontinued operations 0 0 0 11 500 Profit for the period 543 3 654 2 718 18 658 Attributable to: Equity holders of the parent 545 3 438 2 179 17 868 Minority interest -1 216 539 789 Earnings per share (EUR) 0.01 0.08 0.05 0.42 Earnings per share, ongoing operations 0.01 0.08 0.05 0.16 (EUR) Earnings per share, discontinued 0.00 0.00 0.00 0.26 operations (EUR) *) Including discontinued operations BALANCE SHEET 31.12.2006 31.12.2005 1000 EUR ASSETS Non-current assets Intangible assets 12 196 12 135 Goodwill 23 686 24 792 Tangible assets 7 854 7 754 Investments in associates 2 750 1 389 Deferred income taxes 3 514 3 458 Other long term receivables and 1 445 1 375 investments Total non-current assets 51 444 50 903 Current assets Inventories 3 326 3 469 Trade receivables and other receivables 14 448 13 407 Cash and cash equivalents 20 468 22 677 Total current assets 38 242 39 553 TOTAL ASSETS 89 686 90 456 SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity Share capital 18 594 18 594 Share premium reserve 5 896 5 896 Own shares -1 314 -1 314 Fair value reserve and other reserves 4 4 Exchange differences 543 -44 Retained earnings 4 562 254 Net income 2 179 17 868 Total 30 464 41 259 Minority interest 1 689 2 043 Total equity 32 153 43 302 Long term debt 8 224 8 522 Short term debt 49 310 38 632 SHAREHOLDERS' EQUITY AND LIABILITIES 89 686 90 456 Interest bearing debt 25 529 15 555 CASH FLOW STATEMENT 1-12/2006 1-12/2005 1000 EUR Profit for the period 2 718 18 658 Adjustments 6 893 -5 309 Change in working capital 999 -3 392 Net financial items and taxes -1 537 -1 727 Net cash from operating activities 9 073 8 230 Aquisitions of subsidiaries and associates -3 907 -11 903 Purchase of other non-current assets -3 615 -3 225 Other investments -29 -1 772 Sales of subsidiaries 0 17 770 Sales of other non-current assets 541 461 Net cash used in investing activities -7 010 1 331 Change in short term loans 12 000 -2 000 Change in long term loans -1 815 -4 710 Payment of finance lease liabilities -127 -174 Dividends paid -13 734 -6 620 Other financing items -596 -74 Share repurchases 0 -1 724 Net cash used in financing activities -4 272 -15 302 Net change in cash and cash equivalents -2 209 -5 741 Cash and cash equivalents at beginning of 22 677 28 418 period Cash and cash equivalents at end of period 20 468 22 677 Including discontinued operations: Cash flow from operating activities 628 Cash flow from investing activities 15 289 Cash flow from financing activities -1 400 INVESTMENTS 1-12/2006 1-12/2005 1000 EUR Investments in non-current assets, ongoing 5 087 25 672 activities Investments in non-current assets, 0 2 876 discontinued activities Total 5 087 28 548 % of net sales 4,2 23,3 AVERAGE NUMBER OF EMPLOYEES 1-12/2006 1-12/2005 Talentum Group **) 767 923 Part-time telemarketing staff 297 279 Total 1 064 1 202 **) Including employees of discontinued 222 operations CONTINGENT LIABILITIES 31.12.2006 31.12.2005 1000 EUR Given as security 5 903 5 903 loans with securities as collateral 3 107 3 801 Rental and other commitments ***) 17 083 18 845 Leasing commitments ***) 3 344 2 492 ***) Including the commitments of discontinued operations NUMBER OF SHARES Adjusted average number 44039817 42720075 Number at the end of period 44039817 44039817 KEY FIGURES Earnings per share, adjusted (EUR) 0.05 0.42 Earnings per share, ongoing activities 0.05 0.16 (EUR) Earnings per share, discontinued 0.00 0.26 operations (EUR) Equity per share (EUR) 0.69 0.94 Equity ratio, % 36.07 48.84 STATEMENT OF CHANGES IN EQUITY 1000 EUR Equity Share Fair Exch Retaine Minorit Total premiu value ange d y equity m reser diff earning interes reserv ve eren s t e and ces othe reser ves Equity 31.12.2006 18 594 5 896 4 543 5 427 1 689 32 153 TALENTUM GROUP / SUB-SEGMENTS 1000 EUR 10-12/ 10-12/ 1-12/ 1-12/ 2006 2005 2006 2005 Net sales Publishing 23 459 21 624 74 674 57 447 TV content production 7 783 6 158 24 641 21 499 Premedia 4 449 5 346 18 021 20 975 Direct marketing 2 014 1 794 8 177 7 163 Internet consulting ****) 0 0 0 19 717 Sales within group -1 138 -631 -4 451 -4 027 Total 36 567 34 291 121 062 122 774 -Discontinued operations 0 0 0 -19 717 Adjustments and eliminations 0 0 0 232 Total 36 567 34 291 121 062 103 289 Operating profit Publishing 2 876 4 518 7 143 9 823 TV content production 762 343 1 769 628 Premedia -1 813 -394 -2 510 31 Direct marketing 263 295 1 122 1 157 Internet consulting ****) 0 0 0 743 Parent company and group items -480 -840 -3 249 -2 422 Capital gain on discontinued 0 0 10 488 operations Total 1 608 3 922 4 275 20 447 PUBLISHING BY GEOGRAPHICAL AREA 1000 EUR 10-12/ 10-12/ 1-12/ 1-12/ 2006 2005 2006 2005 Net sales Finland 16 157 15 698 52 645 51 241 Other 7 302 5 926 22 029 6 206 Total 23 459 21 624 74 674 57 447 Operating profit Finland 1 637 3 591 5 525 8 888 Other 1 239 927 1 618 935 Total 2 876 4 518 7 143 9 823 AVERAGE NUMBER OF EMPLOYEES 1-12/2006 1-12/2005 Publishing 405 308 TV content production 98 102 Premedia 199 228 Direct marketing 346 326 Internet consulting ****) 0 222 Group administration 16 16 Total 1 064 1 202 ****) Discontinued operations, gross This interim report is unaudited The figures in this information have not been audited. The forecasts and estimates presented here are based on the management's current view of the trend in the economy, and the actual results may significantly differ from what is expected at the moment. - Talentum will issue an interim report for January-March on April 27, 2007; for April-June on Friday July 20, 2007 and for July-September on Friday October 26, 2007. - The Annual General Meeting will be held on Tuesday, March 27, 2007. TALENTUM OYJ Juha Blomster CEO FURTHER INFORMATION Juha Blomster, CEO, tel +358 (0)40 342 4444 Kai Järvikare, CFO, tel +358 (0)40 342 4210 www.talentum.com COPIES TO Helsinki Stock Exchange Key Media BRIEFING A briefing for analysts and the media will be held today February 9, 2007 at 9.30 a.m. at the Talentum head office in Annankatu 34-36 B, Kamppi, Helsinki. The financial performance will be presented by CEO Juha Blomster and CFO Kai Järvikare will also be present.