ILKKA-YHTYMÄ OYJ'S INTERIM REPORT FOR Q1/2007 During the first quarter, the Group's consolidated net sales amounted to EUR 13.5 million (EUR 12.9 million), up by 4.4 per cent year-on-year. Consolidated operating profit grew by 50.6 per cent, attaining EUR 3.1 million (EUR 2.1 million). Pre-tax profits amounted to EUR 8.5 million (EUR 2.9 million). Earnings per share were EUR 0.47 (EUR 0.17) and shareholders' equity per share EUR 4.50 (EUR 3.40). The Group's Interim Report has been prepared in compliance with the International Financial Reporting Standards (IFRS). The Group transferred to IFRS reporting on 1 January 2005 and prepared its first financial statements in line with IFRS for the financial year 2005. Net Sales and Profit Performance The Group's consolidated net sales increased during January-March by 4.4 per cent year-on-year, amounting to EUR 13.5 million (EUR 12.9 million in 2006). External net sales from publishing increased by 5.5 per cent and those from the printing business decreased by 1.3 per cent. The growth in net sales from publishing was influenced by advertising for the parliamentary election. Other operating income for January-March totalled EUR 0.1 million (EUR 0.1 million). Operating expenses for January-March amounted to EUR 10.5 million (EUR 10.9 million), down by 4.0 per cent year-on-year. This decrease mainly occurred in other operating expenses which, in the comparison year 2006, included non-recurring centenary expenses. Depreciation included in the operating expenses for the period amounted to EUR 0.8 million (EUR 0.8 million). Consolidated operating profit came to EUR 3.1 million (EUR 2.1 million), accounting for 23.1 per cent (16.0 per cent) of net sales. Operating profit from publishing increased by EUR 0.8 million due to the increase in net sales and decrease in expenses. Operating profit from printing also saw a slight increase. Net financial income for the first quarter came to EUR 5.3 million (EUR 0.6 million), of which financial assets at fair value through profit or loss contributed EUR 0.3 million (EUR 0.3 million) and available-for-sale assets EUR 4.9 million (EUR 0.3 million). The Group divested part of its holding in Alma Media Oyj in February, and the capital gains (EUR 3.2 million) are included in gains from available-for-sale financial assets. Dividends from available-for-sale financial assets amounted to EUR 1.6 million (EUR 0.3 million). The share of associated companies' profit totalled EUR 0.02 million (EUR 0.3 million). Pre-tax profits amounted to EUR 8.5 million (EUR 2.9 million). Tax totals EUR 1.5 million (EUR 0.5 million) and the profit for the report period EUR 6.9 million (EUR 2.5 million). Balance Sheet and Financial Position The consolidated balance sheet total was EUR 90.9 million (EUR 69.8 million) and shareholders' equity EUR 66.0 million (EUR 49.8 million). The fair value reserve has grown by EUR 2.4 million year-on-year. Since the beginning of 2007, the fair value reserve has diminished by EUR 1.8 million. Interest-bearing liabilities totalled EUR 6.1 million (EUR 4.2 million). Equity ratio stood at 78.0 per cent (78.6 per cent) and liquid assets were EUR 27.3 million (EUR 5.3 million). Reported cash flow from business operations totalled EUR 1.6 million (EUR 2.1 million), while that from investments was EUR 11.1 million (EUR -8.2 million). Share Performance The Series I shares of Ilkka-Yhtymä Oyj have been listed on the Helsinki Stock Exchange since 1981. The Series II shares have been listed since their issue in 1988 and, on 10 June 2002, they were listed on the Main List of the Helsinki Stock Exchange. On 2 October 2006, the quotation of Series II shares was transferred to the OMX Nordic List, to the Nordic Mid Cap group and Consumer Discretionary sector, and that of Series I shares was moved to the Pre List. The number of Series I shares of Ilkka-Yhtymä Oyj traded in January-March was 12,168, which is 0.3 per cent of series share stock. The trading value of shares was EUR 0.2 million. The number of Series II shares traded totalled 715,525, which equals 6.9 per cent of the series share stock. Their trading value was EUR 8.4 million. During the report period, the lowest quotation for Ilkka-Yhtymä Oyj's Series I share was EUR 11.51 and the highest EUR 13.00, while the lowest quotation for a Series II share was EUR 11.00 and the highest EUR 12.29. At the period-end closing price, the share capital market value was EUR 179.4 million. Events after the Report Period The Annual General Meeting (AGM) of 16 April 2007 approved the financial statements, discharged the members of the Supervisory Board and the Board of Directors as well as the CEO of any liability, and decided to distribute a per share dividend of EUR 0.60 for 2006, together with an additional payment of EUR 0.30 per share due to capital gains from the sale of Savon Mediat Oy's shares, i.e. a total dividend payment of EUR 0.90 per share. The AGM authorised the Board of Directors to decide upon a share issue and/or granting stock options and/or other special rights and upon their conditions. The maximum number of Series II shares issued is 4,300,000, corresponding to 29.32 per cent of the company's current shares. The authorisation includes the right to issue shares and/or stock options and/or other special rights as distinct from the shareholders' pre-emptive rights, under conditions prescribed by law, and the right to decide upon a free issue to the company itself. The authorisation is valid for three years from the date of the decision of the AGM. Of the members of the Supervisory Board whose term of service had come to an end, the AGM re-elected the following, for the term ending in 2011: Timo Aukia, Tampere; Mauri Hietala, Seinäjoki; Mikko Koskinen, Seinäjoki; Heikki Kuoppamäki, Ähtäri; Perttu Rinta, Helsinki; Ari Rinta-Jouppi, Vähäkyrö; Jaakko Rintala, Lapua; Raija Tikkala, Jurva. Additionally, Petri Latva-Rasku, Tampere, was elected as a new member for the term ending in 2009. Ernst & Young Oy, Authorised Public Accountants, with Tomi Englund, Authorised Public Accountant and Pekka Kiljunen, Authorised Public Accountant, were elected as principal auditors. Päivi Virtanen, Authorised Public Accountant, and Johanna Winqvist-Ilkka, Authorised Public Accountant, were elected as deputy auditors. Ilkka-Yhtymä Oyj published a stock exchange release on 24 April 2007, according to which Ilkka-Yhtymä Oyj will make a tender offer for the shares of Vaasan Läänin Puhelin Oy (VLP). The offer price amounts to a minimum of EUR 1,000 per share. The tender offer period will begin on Tuesday 15 May 2007, after VLP's Annual General Meeting and will expire on Friday 25 May 2007. The objective of the tender offer is to develop co-operation between the companies and to strengthen the position of Ilkka-Yhtymä Oyj as an Ostrobothnian public limited company publishing multi-channel newspapers. Since the significance of online distribution channels will increase in the future, Ilkka-Yhtymä Oyj considers it important that the main shareholder of Vaasan Läänin Puhelin Oy remain in the province. Outlook for the Year-End Growth in media advertising is expected to decelerate in Finland in comparison to the figures for the first quarter since, to a marked extent, these included election advertising. Printing business volumes are likely to remain almost unchanged and competition will remain tough throughout the year. Ilkka-Yhtymä Group expects slight growth in its consolidated net sales for the year as net sales for publishing improve. Operating profit and operating profit as a percentage of net sales are expected to increase from the levels of 2006, regardless of the forthcoming growth of expenses in the last two quarters of 2007. The profit for the entire financial year will presumably fall, since the financial income of the comparison year 2006 includes significant non-recurring capital gains from the sale of an associated company and the proportion of the sold associated company's result entered in the books for that year. Profit for the remainder of the year will be affected by securities trading volumes and the price performance of securities investments as well as potential capital gains or losses from available-for-sale assets. -------------------------------------------------------------------------------- | GROUP INCOME STATEMENT (EUR | 1-3/ | 1-3/ | Change | 1-12/ | | 1,000) | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- | NET SALES | 13 456 | 12 894 | 4 % | 52 670 | -------------------------------------------------------------------------------- | Change in inventories of | 8 | 7 | 14 % | 2 | | finished and unfinished | | | | | | products | | | | | -------------------------------------------------------------------------------- | Other operating income | 127 | 87 | 45 % | 448 | -------------------------------------------------------------------------------- | Materials and services | -3 932 | -3 933 | -0 % | -15 834 | -------------------------------------------------------------------------------- | Employee benefits | -4 248 | -4 323 | -2 % | -17 494 | -------------------------------------------------------------------------------- | Depreciation | -807 | -814 | -1 % | -3 265 | -------------------------------------------------------------------------------- | Other operating costs | -1 503 | -1 859 | -19 % | -6 825 | -------------------------------------------------------------------------------- | OPERATING PROFIT | 3 102 | 2 060 | 51 % | 9 703 | -------------------------------------------------------------------------------- | Financial income and expenses | 5 341 | 583 | 816 % | 8 002 | -------------------------------------------------------------------------------- | Share of associated companies' | 15 | 302 | -95 % | 1 831 | | profit | | | | | -------------------------------------------------------------------------------- | PROFIT BEFORE TAXES | 8 458 | 2 945 | 187 % | 19 535 | -------------------------------------------------------------------------------- | Income tax | -1 508 | -465 | -224 % | -2 431 | -------------------------------------------------------------------------------- | PROFIT FOR THE PERIOD UNDER | 6 950 | 2 480 | 180 % | 17 104 | | REVIEW | | | | | -------------------------------------------------------------------------------- SEGMENT INFORMATION -------------------------------------------------------------------------------- | Group net sales (EUR 1,000) | 1-3/ | 1-3/ | Change | 1-12/ | | | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- | Publishing | 10 968 | 10 394 | 6 % | 42 614 | -------------------------------------------------------------------------------- | Printing | 5 138 | 5 207 | -1 % | 20 569 | -------------------------------------------------------------------------------- | Non-allocated | 543 | 516 | 5 % | 2 072 | -------------------------------------------------------------------------------- | Net sales between segments | -3 193 | -3 223 | -1 % | -12 586 | -------------------------------------------------------------------------------- | Total | 13 456 | 12 894 | 4 % | 52 670 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Group operating profit (EUR | 1-3/ | 1-3/ | Change | 1-12/ | | 1,000) | 2007 | 2006 | | 2006 | -------------------------------------------------------------------------------- | Publishing | 2 400 | 1 600 | 50 % | 8 100 | -------------------------------------------------------------------------------- | Printing | 864 | 795 | 9 % | 2 819 | -------------------------------------------------------------------------------- | Non-allocated | -162 | -334 | -51 % | -1 215 | -------------------------------------------------------------------------------- | Operating profit between | | | | -1 | | segments | | | | | -------------------------------------------------------------------------------- | Total | 3 102 | 2 060 | 51 % | 9 703 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | GROUP BALANCE SHEET (EUR 1,000) | | -------------------------------------------------------------------------------- | | 3/2007 | 3/2006 | Change | 12/2006 | -------------------------------------------------------------------------------- | ASSETS | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NON-CURRENT ASSETS | | | | | -------------------------------------------------------------------------------- | Intangible assets | 466 | 394 | 18 % | 500 | -------------------------------------------------------------------------------- | Investment property | 723 | 821 | -12 % | 749 | -------------------------------------------------------------------------------- | Tangible assets | 19 159 | 20 855 | -8 % | 19 706 | -------------------------------------------------------------------------------- | Shares in associated companies | 473 | 10 348 | -95 % | 458 | -------------------------------------------------------------------------------- | Available-for-sale assets | 26 777 | 18 858 | 42 % | 35 558 | -------------------------------------------------------------------------------- | Long-term trade receivables and | 39 | 39 | | 39 | | other receivables | | | | | -------------------------------------------------------------------------------- | Other tangible assets | 214 | 227 | -6 % | 214 | -------------------------------------------------------------------------------- | TOTAL NON-CURRENT ASSETS | 47 851 | 51 541 | -7 % | 57 224 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current assets | | | | | -------------------------------------------------------------------------------- | Inventories | 875 | 760 | 15 % | 890 | -------------------------------------------------------------------------------- | Trade and other receivables | 11 897 | 7 777 | 53 % | 3 602 | -------------------------------------------------------------------------------- | Income tax assets | 3 | 866 | -100 % | 435 | -------------------------------------------------------------------------------- | Financial assets at fair value | | | | | -------------------------------------------------------------------------------- | through profit or loss | 2 977 | 3 556 | -16 % | 1 687 | -------------------------------------------------------------------------------- | Cash and bank deposits | 27 332 | 5 256 | 420 % | 14 626 | -------------------------------------------------------------------------------- | TOTAL Current assets | 43 084 | 18 215 | 137 % | 21 240 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets | 90 935 | 69 756 | 30 % | 78 463 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY AND | | | | | | LIABILITIES | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDER'S EQUITY | | | | | -------------------------------------------------------------------------------- | Shareholders' equity | 3 666 | 3 259 | 13 % | 3 666 | -------------------------------------------------------------------------------- | Issue premium fund | | 166 | -100 % | | -------------------------------------------------------------------------------- | Fair value reserve and other | 16 646 | 14 472 | 15 % | 18 402 | | reserves | | | | | -------------------------------------------------------------------------------- | Retained earnings | 45 650 | 31 898 | 43 % | 38 700 | -------------------------------------------------------------------------------- | SHAREHOLDER'S EQUITY | 65 962 | 49 795 | 32 % | 60 768 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NON-CURRENT LIABILITIES | | | | | -------------------------------------------------------------------------------- | Deferred tax liability | 3 404 | 3 048 | 12 % | 4 101 | -------------------------------------------------------------------------------- | Non-current interest-bearing | 6 000 | 63 | 9413 % | 6 000 | | liabilities | | | | | -------------------------------------------------------------------------------- | NON-CURRENT LIABILITIES | 9 404 | 3 111 | 202 % | 10 101 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CURRENT LIABILITIES | | | | | -------------------------------------------------------------------------------- | Current interest-bearing | 63 | 4 126 | -98 % | 63 | | liabilities | | | | | -------------------------------------------------------------------------------- | Accounts payable and other | 14 676 | 12 198 | 20 % | 7 528 | | payables | | | | | -------------------------------------------------------------------------------- | Income tax liabilities | 829 | 526 | 58 % | 2 | -------------------------------------------------------------------------------- | CURRENT LIABILITIES | 15 569 | 16 850 | -8 % | 7 594 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY AND | 90 935 | 69 756 | 30 % | 78 463 | | LIABILITIES TOTAL | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | GROUP CASH FLOW STATEMENT (EUR 1,000) | -------------------------------------------------------------------------------- | | 1-3/ | 1-3/ | 1-12/ | | | 2007 | 2006 | 2006 | -------------------------------------------------------------------------------- | CASH FLOW FROM OPERATIONS | | | | -------------------------------------------------------------------------------- | Profit for the period under review | 6 950 | 2 480 | 17 104 | -------------------------------------------------------------------------------- | Adjustments | -3 041 | 394 | -4 174 | -------------------------------------------------------------------------------- | Change in working capital | 4 315 | 3 992 | 132 | -------------------------------------------------------------------------------- | CASH FLOW FROM OPERATIONS | | | | -------------------------------------------------------------------------------- | BEFORE FINANCE AND TAXES | 8 223 | 6 866 | 13 062 | -------------------------------------------------------------------------------- | Financial income and expenses | -6 301 | -3 679 | 1 263 | -------------------------------------------------------------------------------- | Direct taxes paid | -330 | -1 058 | -3 528 | -------------------------------------------------------------------------------- | CASH FLOW FROM OPERATIONS | 1 593 | 2 129 | 10 797 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CASH FLOW FROM INVESTMENTS | | | | -------------------------------------------------------------------------------- | Investments in tangible and | | | | -------------------------------------------------------------------------------- | intangible assets, net | -200 | -514 | -1 795 | -------------------------------------------------------------------------------- | Sold and acquired associated | | | 18 198 | | companies | | | | -------------------------------------------------------------------------------- | Other investments, net | 9 715 | -7 916 | -18 983 | -------------------------------------------------------------------------------- | Dividends received from investments | 1 602 | 228 | 968 | -------------------------------------------------------------------------------- | CASH FLOW FROM INVESTMENTS | 11 118 | -8 202 | -1 612 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CASH FLOW BEFORE FINANCING ITEMS | 12 710 | -6 072 | 9 185 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CASH FLOW FROM FINANCING | | | | -------------------------------------------------------------------------------- | Change in current loans | | 4 000 | | -------------------------------------------------------------------------------- | Change in non-current loans | | | 5 874 | -------------------------------------------------------------------------------- | Dividends paid and other profit | -4 | -3 | -7 764 | | distribution | | | | -------------------------------------------------------------------------------- | CASH FLOW FROM FINANCING | -4 | 3 997 | -1 890 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | INCREASE (+) OR DECREASE (-) | | | | -------------------------------------------------------------------------------- | IN FINANCIAL ASSETS | 12 706 | -2 075 | 7 295 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liquid assets at the beginning of the | | | | -------------------------------------------------------------------------------- | financial period | 14 626 | 7 331 | 7 331 | -------------------------------------------------------------------------------- | Liquid assets at the end of the | | | | -------------------------------------------------------------------------------- | financial period | 27 332 | 5 256 | 14 626 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | GROUP KEY FIGURES | | -------------------------------------------------------------------------------- | | 3/2007 | 3/2006 | 12/2006 | -------------------------------------------------------------------------------- | Earnings/share (EUR) | 0.47 | 0.17 | 1.17 | -------------------------------------------------------------------------------- | Shareholders' equity/share | 4.50 | 3.40 | 4.14 | | (EUR) | | | | -------------------------------------------------------------------------------- | Average number of personnel | 373 | 386 | 399 | -------------------------------------------------------------------------------- | Investments (EUR 1 000) *) | 652 | 8 430 | 22 529 | -------------------------------------------------------------------------------- | Interest-bearing debt (EUR 1 | 6 063 | 4 189 | 6 063 | | 000) | | | | -------------------------------------------------------------------------------- | Equity ratio, % | 78.0 | 78.6 | 79.0 | -------------------------------------------------------------------------------- *) Investment in tangible and intangible assets and available-for-sale assets (shares). Taxes included in the income statement are taxes corresponding to the result for the period under review. -------------------------------------------------------------------------------- | STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (EUR 1,000) | -------------------------------------------------------------------------------- | Change in | Share | Share | Fair | Other | Retained | Total | | shareholders' | capita | issue | value | reserves | earnings | | | equity 1-3/2006 | l | premium | reserve | | | | -------------------------------------------------------------------------------- | SHAREHOLDERS' | 3 259 | 166 | 1 057 | 13 103 | 29 418 | 47 003 | | EQUITY 1.1.2006 | | | | | | | -------------------------------------------------------------------------------- | Available-for-sale | | | | | | | financial assets: | | | | | | -------------------------------------------------------------------------------- | Net fair | | | 421 | | | 421 | | value gains | | | | | | | | and | | | | | | | | reclassified | | | | | | | | and reported | | | | | | | | in net | | | | | | | | profit | | | | | | | -------------------------------------------------------------------------------- | Share of | | | -109 | | | -109 | | deferred | | | | | | | | taxes | | | | | | | -------------------------------------------------------------------------------- | Net fair | | | 312 | | | 312 | | value gains | | | | | | | | added to | | | | | | | | shareholders | | | | | | | | ' equity | | | | | | | -------------------------------------------------------------------------------- | Net | | | | | 2 480 | 2 480 | | profit/loss | | | | | | | -------------------------------------------------------------------------------- | SHAREHOLDERS | 3 259 | 166 | 1 369 | 13 103 | 31 898 | 49 795 | | ' EQUITY | | | | | | | | TOTAL 3/ | | | | | | | | 2006 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Change in | Share | Share | Fair | Other | Retained | Total | | shareholders' | capita | issue | value | reserves | earnings | | | equity | l | premium | reserve | | | | | 1-3/2007 | | | | | | | -------------------------------------------------------------------------------- | SHAREHOLDERS' | 3 666 | | 5 540 | 12 862 | 38 700 | 60 768 | | EQUITY 1.1. | | | | | | | -------------------------------------------------------------------------------- | Available-for | | | | | | | | -sale | | | | | | | | financial | | | | | | | | assets: | | | | | | | -------------------------------------------------------------------------------- | Net fair | | | -2 373 | | | -2 373 | | value gains | | | | | | | | and | | | | | | | | reclassified | | | | | | | | and reported | | | | | | | | in net profit | | | | | | | -------------------------------------------------------------------------------- | Share of | | | 616 | | | 616 | | deferred | | | | | | | | taxes | | | | | | | -------------------------------------------------------------------------------- | Net fair | | | -1 756 | | | -1 756 | | value gains | | | | | | | | added to | | | | | | | | shareholders' | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Net | | | | | 6 950 | 6 950 | | profit/loss | | | | | | | -------------------------------------------------------------------------------- | SHAREHOLDERS' | 3 666 | | 3 784 | 12 862 | 45 650 | 65 962 | | EQUITY TOTAL | | | | | | | | 3/ 2007 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | GROUP CONTINGENT LIABILITIES (EUR 1,000) | | -------------------------------------------------------------------------------- | | 3/2007 | 3/2006 | 12/2006 | -------------------------------------------------------------------------------- | Collateral pledged for own | | | | | commitments | | | | -------------------------------------------------------------------------------- | Mortgages on company assets | 168 | 168 | 168 | -------------------------------------------------------------------------------- | Mortgages on real estate | 4 017 | 2 017 | 4 017 | -------------------------------------------------------------------------------- | On behalf of others | | | | -------------------------------------------------------------------------------- | Guarantees | 16 | 16 | 16 | -------------------------------------------------------------------------------- The figures have not been audited. Seinäjoki, 2 May 2007 ILKKA-YHTYMÄ OYJ Board of Directors Matti Korkiatupa Managing Director For more information: Matti Korkiatupa, Managing Director, Ilkka-Yhtymä Oyj Tel. +358 (0)500-162 015 DISTRIBUTION Helsinki Stock Exchange The main media www.ilkka-yhtyma.fi