SanomaWSOY Corp. Stock Exchange Release 7 Feb 2008 at 11:40
SanomaWSOY Group's net sales increased by 6.7%, totalling EUR 2,926.3
(2,742.1) million. Operating profit was up to EUR 343.8 (292.5)
million. Operating profit included major non-recurring capital gains
of EUR 40.3 (4.3) million, most of which were accrued during the
second quarter. Earnings per share were EUR 1.47 (1.32). A dividend
of EUR 1.00 is proposed. In the fourth quarter, Group net sales were
EUR 799.6 (742.2) million and operating profit was EUR 68.3 (73.9)
million.
KEY INDICATORS 10-12/ 10-12/ Change 1-12/ 1-12/ Change
EUR million 2007 2006 % 2007 2006 %
Net sales 799.6 742.2 7.7 2,926.3 2,742.1 6.7
Operating profit before
depreciation
and impairment losses 108.9 111.2 -2.1 493.4 428.2 15.2
% of net sales 13.6 15.0 16.9 15.6
Operating profit 68.3 73.9 -7.7 343.8 292.5 17.5
% of net sales 8.5 10.0 11.7 10.7
Operating profit
excluding major
non-recurring capital 63.4 73.9 -14.3 303.5 288.2 5.3
gains
% of net sales 7.9 10.0 10.4 10.5
Result before taxes 63.8 70.1 -8.9 320.4 276.3 16.0
% of net sales 8.0 9.4 11.0 10.1
Result for the period 54.1 58.0 -6.7 246.1 208.4 18.1
% of net sales 6.8 7.8 8.4 7.6
Balance sheet total 3,192.3 3,132.2 1.9
Capital expenditure 90.5 81.9 10.5
% of net sales 3.1 3.0
Return on equity (ROE), % 18.6 17.7
Return on investment 15.9 14.3
(ROI), %
Equity ratio, % 45.4 45.0
Gearing, % 58.2 59.2
Interest-bearing 881.4 863.9 2.0
liabilities
Interest-free liabilities 946.7 945.5 0.1
Net debt 793.3 782.4 1.4
Average number of 19,587 18,434 6.3
employees
Average number of
employees
(full-time equivalents) 16,701 15,732 6.2
Earnings/share, EUR 0.32 0.36 -11.5 1.47 1.32 11.9
Earnings/share, diluted, 0.31 0.35 -11.3 1.46 1.31 12.0
EUR
Cash flow from
operations/share,
EUR 0.67 0.84 -20.0 1.38 1.63 -15.3
Equity/share, EUR 8.27 7.92 4.4
Dividend/share, EUR * 1.00 0.95 5.3
Dividend/result, % * 67.9 72.2
Market capitalisation, 3,196.2 3,521.8 -9.2
EUR million
* Year 2007 proposal of the Board of Directors
Hannu Syrjänen, President and CEO"The year 2007 went according to our plans. Operating profit
excluding capital gains increased by 5.3%, and SanomaWSOY made a
record result. We both developed our existing businesses and created
new openings in our growth areas. We managed to take advantage of the
favourable market situation in many of our media markets, and
increased our market shares.
The diversified development of our product and service portfolio that
continued actively throughout the year has meant a lot of new
opportunities for the Group. In Finland, broadcast operations saw
strong expansion during the past year: Instead of one television
channel, we now operate five TV channels and two radio networks.
Educational publishing further expanded its international operations,
and kiosk operations and press distribution made strides in Russia.
Most of the new magazines were launched in Central Eastern Europe.
Over the year, we added a considerable number of new online services,
and we also launched some new businesses, such as online casual
gaming. The digital business, including television operations,
accounted for 9.5% of our net sales at year end.
In the last quarter, our portfolio expanded with five new magazines
and nine new online services. The largest digital project involved
focusing Taloussanomat's resources online.
The diversified development of our business will continue in 2008,
and we have already announced several new print and digital launches
in January. In the future, our objective is to be one of the leading
media companies with focus on sustainable growth and profitability.
We also believe in value-adding market leadership in our chosen
businesses.
In Finland, we continue to operate widely in different areas of the
media industry, while in Europe, we are one of the leading magazine
and educational publishers. We are also one of Europe's most
profitable and actively expanding distribution companies in growth
markets. At the same time as we are investing to further develop our
digital expertise, we will continue to take good care of our core
business."
Operating environment
According to research institute estimates, the Finnish GDP increased
by 4.1%, the Dutch GDP by 3.1% and the Belgian GDP by 2.7% during
2007. In Hungary, the growth rate was 2.0%, in the Czech Republic
5.7% and in Russia 7.2%.
According to research institute estimates, private consumption
increased by 3.5% in Finland, 2.0% in the Netherlands and 2.2% in
Belgium in 2007. In the Czech Republic, the growth rate was 6.1% and
in Russia 12.2%. In Hungary, private consumption was down by 1.9%.
In 2007, media advertising in Finland grew by 6% according to TNS
Media Intelligence. Advertising in newspapers increased by 5%, but
decreased in free sheets by 1%. Job advertising increased by 18%.
Magazine advertising grew by 4% and television advertising by 8%.
According to ZenithOptimedia estimates, magazine advertising sales
were up by 4% in the Netherlands, but down by 10% in Belgium in 2007.
In Hungary, the growth rate was 1% and in the Czech Republic 7%.
Expenditure on print media advertising in Russia is estimated to have
increased by 24%. The share of magazine advertising sales of all
advertising declined somewhat in the Netherlands and Belgium.
According to preliminary information from the Finnish Book
Publishers' Association, the sale of books decreased by 1%, while the
sale of educational materials remained stable in 2007. The
educational material market in Europe is also estimated to have grown
by between 1-2%.
According to the Finnish Grocery Trade Association, Finnish grocery
sales grew by 4% in January-December 2007.
Net sales
In 2007, SanomaWSOY's net sales increased by 6.7%, totalling EUR
2.926.3 million (2006: EUR 2,742.1 million; 2005: EUR 2,622.3
million). Net sales increased across all divisions due to e.g.,
strong media sales. Net sales adjusted for changes in the Group
structure increased by a total of 5.2%.
Advertising sales accounted for 24% (23%) of the Group's total net
sales, with online advertising sales showing particularly strong
growth over the year. They accounted for 11% of the Group's total
advertising sales. In geographical terms, Finland accounted for 49%
(49%) of net sales, with other EU countries accounting for 46% (45%)
and other countries for 5% (6%).
Result
In 2007, SanomaWSOY's operating profit increased by 17.5%, totalling
EUR 343.8 million (2006: EUR 292.5 million; 2005: EUR 301.3 million)
or 11.7% (2006: 10.7%; 2005: 11.5%) of net sales. Operating profit
included major non-recurring capital gains of EUR 40.3 (4.3) million
mostly from the sale of puzzle magazines and a land area during the
second quarter. Operating profit excluding these major non-recurring
capital gains was a record EUR 303.5 (288.2) million, a 5.3% growth
on the previous year. Sanoma Magazines, Sanoma and SWelcom improved
their results. The result of the fourth quarter lagged behind the
comparable period of 2006 due to issues such as the timing of
marketing investments and costs incurred in connection with
reorganisations.
SanomaWSOY's net financial items totalled EUR -35.7 (-24.5) million.
Financial income amounted to EUR 9.2 (12.5) million. Financial
expenses amounted to EUR 44.9 (37.0) million and primarily comprised
of interest costs of EUR 41.4 (32.3) million on interest-bearing
liabilities. The general increase in interest rates has increased the
Group's interest expenses.
The result before taxes was EUR 320.4 (276.3) million and earnings
per share were EUR 1.47 (1.32).
Balance sheet and financial position
On 31 December 2007, the consolidated balance sheet totalled EUR
3,192.3 (3,123.2) million. Cash flow from operations was EUR 227.9
(259.9) million and cash flow per share was EUR 1.38 (1.63). The
development of cash flow from operations was impacted by strong
fluctuations in working capital due to the timing of the accounts of
commission sales, as well as higher taxes and interest expenses in
comparison to the comparable year, and the growth of receivables and
inventories due to expansion of operations.
SanomaWSOY's equity ratio continued to improve, reaching 45.4% (2006:
45.0%; 2005: 41.3%) at the end of the year, while gearing was reduced
to 58.2% (59.2%). Equity increased to EUR 1,364.2 (1,322.7) million.
A total of EUR 51.6 million of unrestricted equity was spent on the
purchase of treasury shares. Return on equity (ROE) was 18.6% (2006:
17.7%; 2005: 22.3%), and the return on investment (ROI) was 15.9%
(14.3%). Interest-bearing liabilities increased to EUR 881.4 (863.9)
million and net debt to EUR 793.3 (782.4) million. The net
debt/EBITDA ratio was 1.6 (1.8). On 31 December 2007, the Group's
cash and cash equivalents totalled EUR 88.1 (81.5) million.
In August 2007, SanomaWSOY replaced the existing short-term bilateral
loan agreements with a long-term facility that can be also flexibly
utilised to finance possible acquisitions. The new loan facility is a
EUR 802 million syndicated five-year credit facility with a group of
12 banks. If necessary, the facility may be renewed for an additional
two-year option period. The loan interest rate is Euribor plus a
variable margin dependent on the Company's financial status. The
initial margin is 0.175%.
SanomaWSOY Corporation does not have any other significant agreements
covered by the statutory obligation to disclose. In addition, the
Group has, within the scope of normal business operations, agreements
containing a standard change-of-control clause.
Investments and acquisitions
In 2007, investments in tangible and intangible assets amounted to
EUR 90.5 (81.9) million, and were focused on e.g., website
development, ICT systems and the replacement investments. R&D
expenditure was recorded at EUR 18.3 million (2006: EUR 11.3 million;
2005: EUR 16.2 million), or 0.6% (2006: 0.4%; 2005: 0.6%) of the net
sales.
There were no single major acquisitions in 2007. The Group completed
a number of smaller acquisitions discussed in more detail in the
division sections of this document. The most significant acquisition
in 2006 was the purchase of the Hungarian company Láng Kiadó és
Holding.
Events after the review period
On 10 January 2008, Sanoma Magazines sold its Dutch film
entertainment distribution company, R.C.V. Entertainment. In 2007,
R.C.V. Entertainment had net sales of EUR 34.2 million and made an
operating profit of some EUR 5 million. As a result of the sale, the
company will record a capital gain amounting to some EUR 23 million
in the first quarter of 2008.
Dividend and other profit distributions
On 31 December 2007, SanomaWSOY Corporation's distributable funds
were EUR 503.3 million, of which profit for the year made up EUR
266.8 million.
The Board of Directors will propose to the Annual General Meeting
that:
- A dividend of EUR 1.00 per share, or in total an estimated EUR
165.7 million, shall be paid
- A sum of EUR 0.5 million shall be transferred to the donation
reserve and used at the Board's discretion
- The amount left in shareholders' equity shall be EUR 337.1 million
In accordance with the AGM's decision, SanomaWSOY paid out a
per-share dividend of EUR 0.95 for 2006. The record date for dividend
payment was 11 April 2007 and the dividend payment date was 18 April
2007.
SanomaWSOY conducts an active dividend policy and primarily
distributes over half of the Group result after taxes in dividends.
Shares and holdings
In 2007, trading with SanomaWSOY shares accounted for 56% (46%) of
the average number of shares in issue during the period, or about
92.6 million shares. SanomaWSOY's total stock exchange turnover was
EUR 2,014.5 (1,474.5) million.
In 2007, the volume-weighted average price of a SanomaWSOY share was
EUR 21.70 with a low of EUR 18.32 and a high of EUR 24.51. At the end
of the year, SanomaWSOY's market capitalisation, including treasury
shares held by the Company, was EUR 3,246.8 (3,521.8) million and the
closing price of the share was EUR 19.63 (21.35). On 31 December
2007, the company had a total of 16,503 shareholders. Foreign
holdings accounted for 11.4% (10.9%) of the shares and votes.
There were no major changes in share ownership in 2007 and SanomaWSOY
did not issue any flagging announcements. At the end of December,
SanomaWSOY's registered share capital was EUR 71,121,910.56 and the
number of shares on the market was 165,399,792.
Under the 2007 AGM authorisation, SanomaWSOY began acquiring its
shares on 10 August. At the end of the year, the Company held a total
of 2,576,903 treasury shares, representing 1.6% of the Company's
shares and votes. The total book-counter value of the shares owned by
the Company was EUR 1,108,068.29. The share buybacks continued after
the end of the accounting period, and on 7 February 2008 the Company
owned 3,136,000 shares, representing 1.9% of the shares and votes. On
7 February 2008, the Board of Directors of SanomaWSOY decided to
cancel all treasury shares held by the Company. The cancellation does
not affect the Company's share capital. The cancellation of treasury
shares is estimated to be entered into the Trade Register on 18
February 2008.
SanomaWSOY Corporation issued a convertible capital note on 31 August
2001 and trading with the notes began on the Main List of the
Helsinki Stock Exchange on 6 September 2001. The imputed conversion
price of a share was EUR 15.91 and the nominal value of each note was
EUR 10,000.
The conversion period of the notes ended on 20 June 2007. During the
conversion period from 6 September 2001 to 20 June 2007, convertible
capital notes worth EUR 149,900,000 were converted into 9,421,615
SanomaWSOY shares. In addition, SanomaWSOY redeemed and invalidated
4,944 notes, worth EUR 49,440,000. The loan matured on 4 July 2007,
on which date the non-converted capital notes totalling EUR 660,000
were repaid.
Personnel
In 2007, the average number of persons employed by the SanomaWSOY
Group was 19,587 (2006: 18,434; 2005: 16,885). In full-time
equivalents, the number of Group employees averaged 16,701 (2006:
15,732; 2005: 14,256). Sanoma Magazines had an average of 5,623
(5,302) employees, Sanoma 2,716 (2,672), SanomaWSOY Education and
Books 2,769 (2,455), SWelcom 501 (437) and Rautakirja 7,886 (7,496).
The average number of employees in the Parent Company was 92 (72).
The number of employees increased, for example, as a result of
acquisitions and investments in new businesses.
The total wages, salaries and fees paid to SanomaWSOY employees in
2007, including the expense recognition of options granted, amounted
to EUR 533.0 million (2006: 482.9; 2005: 461.8).
Management
The AGM of 4 April 2007 confirmed the number of SanomaWSOY's Board
members at ten and re-elected those who had reached the end of their
term. 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 as members.
The Annual General Meeting re-appointed Pekka Pajamo, APA, and Sixten
Nyman, APA, as his deputy, and chartered accountants KPMG Oy Ab, with
Kai Salli, APA, acting as the Auditor in Charge, as the auditors of
the Company.
At the beginning of 2007, the Management Group comprised Hannu
Syrjänen (Chairman), Eija Ailasmaa, Jacques Eijkens, Nils Ittonen,
Erkki Järvinen, Tapio Kallioja, Mikael Pentikäinen, Kerstin Rinne and
Matti Salmi.
SanomaWSOY's management model was renewed in the spring, and since 5
April 2007 the Executive Management Group (EMG) consists of
SanomaWSOY's President and CEO Hannu Syrjänen, and the directors of
each division: Eija Ailasmaa, President and CEO of Sanoma Magazines;
Mikael Pentikäinen, President of Sanoma; Jacques Eijkens, CEO of
SanomaWSOY Education and Books; Tapio Kallioja, President of SWelcom;
and Erkki Järvinen, President and CEO of Rautakirja. The
authorisations and responsibilities of the EMG remained unchanged.
In connection with this change in management model, SanomaWSOY's
Board of Directors appointed deputies for SanomaWSOY's senior
management: deputy to Hannu Syrjänen is Eija Ailasmaa; deputy to
Mikael Pentikäinen is Pekka Soini, President of Helsingin Sanomat;
deputy to Jacques Eijkens is Veli-Pekka Elonen, President of WSOY;
and deputy to Erkki Järvinen is Hellevi Kekäläinen, CFO of
Rautakirja. At the same time, SanomaWSOY established the Corporate
Centre to support the Group's divisions.
After the review period on 7 February 2008, the Board of Directors
appointed Anu Nissinen as President of SWelcom and a member of the
EMG, effective 25 February 2008. SWelcom's long-term President
Tapio Kallioja will retire according to his contract of employment on
31 March 2008.
Board authorisations
The AGM of 4 April 2007 authorised the Board of SanomaWSOY to decide
on the acquisition of the Company's shares and an increase in share
capital.
Under the authorisation, the Board may decide on the acquisition of
own shares with distributable profits until the AGM of 2008. A
maximum of 8,200,000 shares may be acquired. These shares will not be
acquired in relation to the share holdings of existing shareholders.
They will be acquired with the Company's unrestricted equity at the
market price of the acquisition moment; however, in such a way that
the minimum price of a share is the lowest market price in public
trading and the maximum price is the highest price noted in public
trade during the authorisation period. On 2 August 2007, the Board
decided to implement an acquisition programme of own shares starting
on 10 August 2007.
The AGM also authorised the Board to decide, until the AGM of 2010,
on the issue of new shares, the transfer of treasury shares and the
granting of special rights entitling to shares. The authorisation
does not exclude the right of the Board of Directors to decide on a
directed share issue. With this authorisation, and as a result of the
use of special rights, the Board is authorised to decide on the
issuance of a maximum of 82,000,000 new shares and the disposal of a
maximum of 5,000,000 treasury shares. In a directed share issue, a
maximum of 41,000,000 shares can be issued or transferred. With this
authorisation, the Board is authorised to issue a maximum of
5,000,000 stock options as part of an incentive programme within the
Company. On 19 December 2007, the Board decided on the issuance of
Stock Option Scheme 2007.
Risks and risk management
The evaluation of business risks and the opportunities associated
with them is part of the daily routine of SanomaWSOY's management.
The management must take calculated risks in order to run the
Company's business as successfully as possible.
Normal business risks associated with the media industry relate to
developments in media advertising and consumer spending. Media
advertising is sensitive to economic fluctuations. A quarter of
SanomaWSOY's net sales are derived from media advertising.
SanomaWSOY's diversified operations in various fields of media in
over 20 European countries also balance the effects of market
fluctuations. SanomaWSOY's growth areas (magazine publishing,
educational publishing, digital media and press distribution) are not
primarily exposed to any political risk.
Rapid technological development, the diversifying use of the internet
and changes in consumer preferences affect the future of the media
business. At the same time, the supply of digital content services is
growing and becoming more focused. Technological development and
changes in consumer preferences may also affect the choices of
advertisers regarding the communication channels utilised. SanomaWSOY
closely monitors technological development and changes in consumer
preferences, and collaborates with technology companies to develop
new products and services to meet these changes for both its consumer
and advertising customers. The strong development of the digital
business has also been selected as one of the focus areas in
SanomaWSOY's growth strategy. The wide array of products and services
offered by the Group reduces the risks posed by technological
development and changes in consumer preferences.
In recent years, SanomaWSOY has grown vigorously through
acquisitions. As a result, the consolidated balance sheet on 31
December 2007 included about EUR 1.8 billion in goodwill, publishing
rights and other intangible assets, most of which resides in the
magazine publishing business. Following the adoption of International
Financial Reporting Standards (IFRS), goodwill is no longer amortised
over its useful life; instead, it is tested for impairment on an
annual basis and whenever indicators of impairment arise. Impairment
losses on goodwill and other intangible assets for the financial year
totalled EUR 1.3 (0.1) million, and there were no indicators of other
impairment losses.
The functioning and reliability of a number of ICT systems are
integral aspects of the Group's business. SanomaWSOY assessed the
severity of the risks associated with ICT systems, specified system
protection levels and the required backup systems, and established
continuity plans for the Group's critical systems.
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, for example, 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 business fluctuations influence the Group's net sales and
operating profit, with the first quarter traditionally being the
smallest.
Outlook for 2008
In 2008, SanomaWSOY's net sales are projected to grow in line with
the previous year. In 2007, Group net sales increased by 6.7%.
Operating profit excluding major non-recurring capital gains is
expected to continue to improve. In 2007, operating profit excluding
capital gains totalled EUR 303.5 million.
The forecast for the development of SanomaWSOY's net sales and
operating profit in 2008 is based on both organic growth, and growth
based on minor acquisitions. During 2008, SanomaWSOY will continue
its strong focus on investing 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 naturally also affected by the overall economic
development in the Group's operating countries. The most significant
short-term uncertainties are related to the growth rate of media
advertising and private consumption.
European economies are projected to continue to grow in 2008, but at
a slightly slower rate than in 2007. Research institutions predict
that GDP will grow by 3.2% in Finland, 1.8% in the Netherlands and
2.2% in Belgium. The growth rate is expected to be 3.0% in Hungary,
4.5% in the Czech Republic and 6.6% in Russia. According to
ZenithOptimedia estimates, media advertising in SanomaWSOY's primary
market areas in 2008 will grow at a rate faster than that of GDP. In
2008, private consumption is estimated to increase by 3.1% in
Finland, 2.2% in the Netherlands, 1.9% in Belgium, 4.4% in the Czech
Republic, 0.5% in Hungary and 12.2% in Russia.
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.
- All businesses performing well; operating profit excluding the
sales gains was up by 10.7%
- Online advertising sales outperforming market growth; in total,
the Division's online advertising sales grew by 42%
- Continuous investments in magazine launches and developing online
operations: 22 new magazine titles and several online services added
to the portfolio during the year
- Movie distributor RCV divested after the review period
KEY INDICATORS, 10-12/ 10-12/ Change 1-12/ 1-12/ Change
EUR million 2007 2006 % 2007 2006 %
Net sales 352.4 324.3 8.7 1,238.1 1,155.9 7.1
Operating profit 37.2 41.9 -11.4 160.9 128.8 25.0
% of net sales 10.5 12.9 13.0 11.1
Operating profit
excluding major non-
recurring capital gains 37.2 41.9 -11.4 139.7 126.2 10.7
% of net sales 10.5 12.9 11.3 10.9
Balance sheet total 1,937.5 1,910.0 1.4
Capital expenditure 20.6 16.5 24.9
Return on investment 12.4 10.8
(ROI), %
Average number of 5,623 5,302 6.1
employees
Average number of
employees
(full-time equivalents) 5,169 4,848 6.6
OPERATIONAL INDICATORS * 1-12/2007 1-12/2006
Number of magazines published, copies 309 307
Magazine copies sold, thousand copies 429,378 433,526
Number of advertising pages sold 64,601 57,700
* Including joint ventures
In 2007, Sanoma Magazines' net sales grew by 7.1%, amounting to EUR
1,238.1 (1,155.9) million. All businesses increased their net sales,
with most growth coming from the Russian, Belgian and Hungarian
operations, as well as online sales in the Netherlands. Adjusted for
changes in the Group structure, the Division's net sales grew by
6.1%. Of the Division's net sales, 16% (16%) came from Finland. The
Dutch press distribution company Aldipress has been transferred to
Rautakirja as of 1 January 2007, and figures for the comparable year
have been adjusted accordingly.
The Division's advertising sales increased by 16% and represented 30%
(28%) of net sales. With all businesses developing favourably, most
advertising growth came from Sanoma Magazines International and
online advertising sales in the Netherlands.
Circulation sales grew by 2% and represented 55% (57%) of Sanoma
Magazines' net sales. The increase was mainly the result of improved
single copy sales in Belgium and the growth of subscription sales in
Finland and Belgium.
Net sales in Sanoma Magazines Netherlands amounted to EUR 539.8
(531.2) million. Both print and online advertising sales increased.
In 2007, Sanoma Magazines Netherlands' online advertising grew by
36%. Strong brands like Donald Duck, Libelle and Margriet performed
well on the readers' market. Subscription sales developed favourably,
but total circulation sales decreased due to decreased single copy
sales and partly due to the divestment of puzzle magazines. Sanoma
Magazines Netherlands continued to invest in both print and online
activities. During the fourth quarter, Sanoma Uitgevers launched a
new wellness title Get in Shape. The most significant launch of the
year was that of the glossy fashion weekly Grazia in September. In
total, Sanoma Magazines Netherlands made three launches during the
year. Online operations were mainly developed through acquisitions.
After the review period, Sanoma Magazines Netherlands divested its
movie distribution company R.C.V. Entertainment, the largest
independent distributor of films in the Benelux countries. The deal
was finalised on 10 January 2008. Sanoma Magazines Netherlands also
strengthened its core business by acquiring on 1 January 2008 the
shares of Mood for Magazines publishing company.
Sanoma Magazines International's net sales grew to EUR 283.4 (247.6)
million. Growth mainly came from increased advertising sales.
Advertising sales grew in all countries, except in the Czech Republic
where they remained at the previous year's level. Most growth came
from Russia and from Hungary, where online advertising continues to
develop positively. Net sales in Russia grew by 18% and were slightly
above EUR 100 million. Sanoma Magazines International's circulation
sales increased slightly, but competition in the single copy market
is intense in markets such as the Czech Republic and Hungary. Sanoma
Magazines International continues to actively develop its print and
online portfolio: in the fourth quarter, three new magazines were
launched and several online sites were launched or acquired. A total
of 17 titles were launched in 2007, among them Grazia, a new weekly
glossy for the Russian market together with Mondadori. Seven titles
were divested or discontinued.
Net sales in Sanoma Magazines Belgium grew to EUR 216.6 (188.6)
million, partly due to new niche publishing operations acquired in
September 2006, as well as increased circulation sales. Single copy
sales in particular grew. In the comparable year, net sales were
negatively influenced by single copy distribution problems at the
beginning of the year. Sanoma Magazines Belgium's major magazine
launch was Milo, a 40+ women's magazine, in January. Sanoma Magazines
also renewed its flagship title Humo and introduced its first mobile
content offering, focused on the readers of its women's titles.
Sanoma Magazines Finland's net sales increased to EUR 202.8 (193.2)
million, with both advertising and circulation sales contributing to
the growth. Subscription sales performed particularly well, thanks to
both established titles and the success of recent launches like
women's monthly Sara. Sanoma Magazines Finland's titles have
succeeded in continuously increasing their circulation, with family
and parenting magazines showing the biggest growth percentages.
Disney products are also performing well.
The Division's investments in tangible and intangible assets totalled
EUR 20.6 (16.5) million and consisted mainly of ICT systems and
replacement investments. The most significant acquisition in 2007 was
SchoolBANK.nl and its related online sites. In 2006, the Division's
most significant acquisitions were those of Kieskeurig.nl, EPN
International and Wegener Golf.
Sanoma Magazines' operating profit in 2007 improved significantly,
increasing by 25.0% and amounting to EUR 160.9 (128.8) million. The
result included EUR 21.2 (2.6) million in major non-recurring capital
gains related to the sale of puzzle magazines and other titles.
Excluding these sales gains, the Division's operating profit was up
by 10.7%, to EUR 139.7 (126.2) million. In the comparable period, an
adjustment of EUR 2.0 million related to the acquisition in 2001 and
the terms and conditions of the agreement also improved the result.
Sanoma Magazines Netherlands' operating profit improved
significantly, mainly due to sales gains. Moderate cost development
and the growing share of online operations also improved the result.
Sanoma Magazines International's operating profit increased, given
the strong sales development. Most growth came from Russia with
nearly all other countries improving their results as well. Sanoma
Magazines Belgium's result improved markedly due to the growth in
single copy sales and the niche publishing activities acquired in
September 2006. In the comparable period, single copy distribution
problems reduced the result. Sanoma Magazines Finland's result grew
mainly due to sales growth and moderate cost development.
Sanoma Magazines is continuing to develop its magazine portfolio and
online businesses and invest in growth, which is expected to be most
rapid in Russia and the CEE countries.
In 2008, Sanoma Magazines' net sales are estimated to grow and the
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 daily in the Nordic region, the
Division publishes national and regional daily newspapers, free
sheets and offers digital services.
- The development of the result over the year was good
- Advertising sales grew faster than the market in 2007
- Online advertising sales continued to develop strongly; financial
daily Taloussanomat focused its resources on online services
KEY INDICATORS 10-12/ 10-12/ Change 1-12/ 1-12/ Change
EUR million 2007 2006 % 2007 2006 %
Net sales 124.6 122.4 1.8 480.8 457.1 5.2
Operating profit 13.6 16.5 -17.9 67.6 62.7 8.0
% of net sales 10.9 13.5 14.1 13.7
Operating profit excluding
major
non-recurring capital gains 13.6 16.5 -17.9 67.6 61.0 10.9
% of net sales 10.9 13.5 14.1 13.3
Balance sheet total 445.0 526.6 -15.5
Capital expenditure 17.7 16.5 7.2
Return on investment (ROI), % 19.7 17.9
Average number of employees 2,716 2,672 1.6
Average number of employees
(full-time equivalents) 2,411 2,378 1.4
OPERATIONAL INDICATORS 1-12/2007 1-12/2006
ADVERTISING VOLUME, COLUMN KM
Helsingin Sanomat 41.4 42.5
Ilta-Sanomat 7.4 6.8
Free sheets 36.7 35.6
Distribution, free sheets, million copies 102.2 101.8
CIRCULATION 1-12/2007 1-12/2006
Helsingin Sanomat 419,762 426,117
Ilta-Sanomat 176,385 186,462
ONLINE SERVICES, UNIQUE VISITORS, WEEKLY 10-12/2007 10-12/2006
Iltasanomat.fi 1,200,705 770,209
HS.fi 882,531 565,157
Huuto.net 411,842 359,859
Oikotie.fi 290,887 242,383
Taloussanomat.fi 258,584 144,515
Keltainenpörssi.fi 145,883 88,553
In 2007, Sanoma's net sales grew by 5.2%, totalling EUR 480.8 (457.1)
million. All businesses improved their net sales particularly due to
the strong growth of advertising sales. The clearest growth was in
Helsingin Sanomat and other publishing. Net sales adjusted for
changes in the Group structure increased by 4.2%.
The good market situation enabled Sanoma to strengthen its positions:
during the year, the division reported a 7% overall improvement in
advertising sales, which accounted for 53% (52%) of net sales.
Advertising sales were clearly up in nearly all newspapers and online
products. In the fourth quarter, the growth rate slowed down and
amounted to 2%. During the year, circulation sales increased by 2%
and accounted for 39% (41%) of Sanoma's net sales.
Sanoma's reporting structure was modified in 2007 to better reflect
the focus of its operations. The comparable figures for 2006 have
been adjusted accordingly. Sanoma's reporting businesses include
Helsingin Sanomat, Ilta-Sanomat, other publishing and other
operations, which include Sanoma's ICT and printing operations.
The Helsingin Sanomat business unit increased its net sales to EUR
278.9 (267.3) million, mainly resulting from the growth in
advertising sales. Job advertising increased by 16% and real estate
advertising by 9%. The strongest growth was seen in online
advertising, where sales increased by 31%. The circulation revenue of
Helsingin Sanomat also increased despite a slight decrease in
circulation. Over the past year, Helsingin Sanomat invested heavily
in the development of its online services: the Oikotie.fi website
launched a new kind of bidding service for home auctions, among
others. Sanoma expanded its recruitment expertise by acquiring a
majority holding in recruitment system supplier Skillnet, and, after
the review period, increased its holding in car dealing systems
developer Netwheels Oy to 55%.
The Ilta-Sanomat business unit increased its net sales to EUR 94.8
(92.2) million. The unit's advertising sales were clearly up.
Ilta-Sanomat and its online service in particular increased their
advertising sales. Circulation sales increased due to the cover price
increase at the end of the comparable year. The paper commanded a
57.6% (58.6%) share of the tabloid market. Ilta-Sanomat continued to
invest in its online service. Classified advertising and online
marketplaces were also developed in both Estonia and Finland: during
the year, the company acquired an 85% share in Auto24.ee, a leading
online marketplace in Estonia.
Net sales from other publishing increased to EUR 97.5 (87.6) million.
The growth in advertising sales was particularly strong in the Sanoma
Kaupunkilehdet business unit and Sanoma Lehtimedia. The number of
free sheets increased from the comparable year with the acquisition
of the Finnish operations of the Metro free sheet in September 2006.
Sanoma Digital, a new company focusing on online business, wasestablished on 1 January 2007. During the year, the company acquired
and launched a number of new online services for a number of
enthusiast markets, including construction, style and cooking. In
October, Sanoma Kaupunkilehdet signed a sales co-operation agreement
with other players in the industry and opened a joint online service
for its free sheets. In November, financial daily Taloussanomat
decided to focus its resources online, and the last issue of the
printed newspaper came out at the end of December. Taloussanomat.fi
and the unit's other online service continued to grow.
Net sales from other operations, mainly comprising internal services,
were EUR 152.6 (145.6) million.
In 2007, Sanoma's investments in tangible and intangible assets
totalled EUR 17.7 (16.5) million, and consisted mainly of replacement
investments and investments in digital business. The most significant
acquisition of 2007 was the Auto24.ee marketplace. The most important
acquisition of the comparable year was the purchase of the Finnish
business of the Metro free sheet.
Sanoma's operating profit increased by 8.0% in 2007, totalling EUR
67.6 (62.7) million. The good development of Helsingin Sanomat in
particular was reflected in the result of the Division as a whole.
The operating profit of the fourth quarter includes non-recurring
items relating to reorganisations. The operating profit for the
comparable year included a total of EUR 1.7 million in major
non-recurring capital gains. Helsingin Sanomat improved its operating
profit clearly due to the growth of advertising sales and long-term
rationalisation measures. The result of Ilta-Sanomat was impacted by
market share investments in the latter part of the year. The result
of other publishing was also slightly down due to one-time costs
related to Taloussanomat and investments in Sanoma Digital. Earnings
from other operations were up.
Sanoma is seeking growth in new businesses. The rate of growth in
media advertising is expected to be more moderate than in 2007.
In 2008, 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, as well as globally in eLearning. The Division is
also Finland's leading book publisher and active in business
information and services.
- Good growth in educational publishing continued; e.g. Van In
clearly improving its market share in Belgium
- Strong year for language services: two acquisitions made in the
Nordic countries and a sales office opened in St. Petersburg
KEY INDICATORS 10-12/ 10-12/ Change 1-12/ 1-12/ Change
EUR million 2007 2006 % 2007 2006 %
Net sales 68.5 63.4 8.0 322.5 309.2 4.3
Operating profit -6.6 -7.1 -6.0 44.5 48.0 -7.3
% of net sales -9.7 -11.2 13.8 15.5
Operating profit excluding
major
non-recurring capital gains -6.6 -7.1 -6.0 44.5 48.0 -7.3
% of net sales -9.7 -11.2 13.8 15.5
Balance sheet total 585.0 598.2 -2.2
Capital expenditure 7.7 8.9 -13.5
Return on investment (ROI), % 10.4 12.7
Average number of employees 2,769 2,455 12.8
Average number of employees
(full-time equivalents) 2,345 2,106 11.3
OPERATIONAL INDICATORS 1-12/2007 1-12/2006
EDUCATIONAL
Number of new titles published, books, copies 1,379 1,162
Number of new titles published, electronic 309 202
products, copies
PUBLISHING
Number of new titles published, books, copies 520 565
Number of new titles published, electronic 67 93
products, copies
Number of copies sold, published books, million 23.3 24.2
copies
SanomaWSOY Education and Books' net sales in 2007 increased by 4.3%
and totalled EUR 322.5 (309.2) million. Net sales developed well in
the international growth areas, educational publishing and language
services. A total of 62% (62%) of the Division's net sales came from
outside of Finland. Net sales adjusted for changes in the Group
structure decreased by 0.6%.
Educational publishing's net sales amounted to EUR 197.7 (187.7)
million. All operations performed well, with most growth coming from
Belgium, where Van In gained additional market share through
successful launch of new learning systems, as well as from Hungary,
where Láng became part of SanomaWSOY Education in June 2006. Net
sales in the Netherlands increased slightly compared to the previous
year, when a large number of products were renewed due to changes in
the Dutch spelling. Malmberg has continued to diversify its
operations to include career orientation and educational consultancy
to schools. Educational sales in Finland were at the comparable
year's level. Net sales in Poland increased slightly.
The Polish educational publisher Nowa Era and its subsidiaries were
acquired in June and the necessary antitrust approvals were received
at the end of October. The deal is expected to be closed during the
first quarter of 2008.
Net sales in publishing totalled EUR 97.3 (96.0) million. Net sales
of general literature were behind those of the comparable period.
Multivolume books in Finland and the Nordic countries faced a strong
decrease in sales, and WSOY sales were also lower than in the
previous year, particularly in the fourth quarter. WSOY has begun to
strengthen its sales and marketing organisation for general
literature.
The growth in publishing came from business information and services,
where language services and professional books and materials
performed particularly well. The language service provider AAC
Global, acquired in February 2006, expanded its operations in March
2007 with the acquisition of Translation Services Noodi in Finland
and in June 2007 with the business of language service company The
Works, Sweden.
Net sales from other operations, mainly printing, totalled EUR 51.1
(43.3) million.
The Division's investments in tangible and intangible asset totalled
EUR 7.7 (8.9) million. They mainly comprised investments in the
renovation of office buildings, and ICT investments. The most
significant acquisition during the year was that of Translation
Services Noodi. In the comparable year, the most significant
acquisitions included Hungarian publisher Láng Kiadó és Holding and
AAC Global.
In 2007, operating profit in SanomaWSOY Education and Books decreased
by 7.3% and was EUR 44.5 (48.0) million. There were no major
non-recurring capital gains during the review period or the
comparable period. Operating profit in educational publishing was at
the comparable year's level. Results improved in all countries,
except in Poland, where government tender projects had lower margins
than in the comparable year. Operating profit in publishing
decreased: business information and services improved its results,
due to strong performance in language services, but disappointing
results in general literature, as well as in other operations,
decreased the Division's operating profit.
SanomaWSOY Education and Books is continuing to develop its three
main businesses with the focus on internationalising educational
publishing, expanding business information and services in the
language services market and maintaining Finnish market leadership in
general literature publishing.
In 2008, net sales of SanomaWSOY Education and Books are estimated to
increase. Operating profit excluding major non-recurring capital
gains, Nowa Era included, is expected to improve clearly.
SWelcom
The commercial television channel Nelonen, part of the electronic
media division SWelcom, is Finland's third largest medium in terms of
advertising sales, while Welho is the country's largest cable
television company and a major provider of broadband services.
- Television operations expanded: SWelcom added four new TV channels
during the year
- The radio networks have found their audiences - the two networks
have a total of over one million weekly listeners
- Online casual gaming became a new business for SWelcom
KEY INDICATORS 10-12/ 10-12/ Change 1-12/ 1-12/ Change
EUR million 2007 2006 % 2007 2006 %
Net sales 42.5 37.2 14.3 146.0 131.8 10.7
Operating profit 5.4 4.8 12.0 15.8 12.5 26.6
% of net sales 12.6 12.9 10.8 9.5
Operating profit excluding
major
non-recurring capital gains 5.4 4.8 12.0 15.8 12.5 26.6
% of net sales 12.6 12.9 10.8 9.5
Balance sheet total 168.2 158.6 6.0
Capital expenditure 14.8 15.2 -2.4
Return on investment (ROI), % 14.2 12.3
Average number of employees 501 437 14.6
Average number of employees
(full-time equivalents) 457 398 14.8
OPERATIONAL INDICATORS 1-12/2007 1-12/2006
TV channels' share of Finnish TV advertising 29.3% 31.4%
TV channels' daily coverage 44% 42%
TV channels' commercial viewing share 26.8% 25.0%
TV channels' national viewing share 12.6% 12.1%
Number of connected households, thousand copies 319 305
(31 Dec)
Number of pay TV subscriptions, thousand copies 86 58
(31 Dec)
Number of broadband internet connections, 99 86
thousand copies (31 Dec)
In 2007, SWelcom's net sales increased substantially by 10.7%,
totalling EUR 146.0 (131.8) million. The increase in net sales was
particularly due to the growth of Welho, as well as the new radio
networks and television channels. Net sales adjusted for changes in
the Group structure increased by 9.2%. Advertising sales represented
54% (58%) of SWelcom's net sales.
Largely due to the new channels, broadcast operations increased its
net sales to EUR 83.2 (76.5) million. The TV channels' combined share
of all television advertising declined to 29.3% (31.4%). Nelonen's
viewing shares declined due to the fragmentation of viewing across an
increasing number of channels. In the fourth quarter, Nelonen's
commercial viewing share turned upwards due to strong programming
investments. The new TV channel JIM, launched in February, was a
success and attracted higher viewing shares than expected.
SWelcom entered the radio business in January 2007 with two
commercial radio channels. Radio Rock and Radio Aalto reached a
combined total of over one million weekly listeners. Radio Rock
reached its target group better than expected right from the start.
Radio Rock had an average of 700,000 listeners each week. The network
performed extremely well within its target group of 20-44 year-old
males. At its best, Radio Aalto reached a weekly listenership of over
400,000 people in the second half of 2007. Radio Aalto has increased
its listening share, particularly among female listeners over 25
years of age.
SWelcom expanded its range of services for television viewers. The
pay TV movie and series channel KinoTV was launched in September. By
December, KinoTV already had 61,000 subscribers. Nelonen also
launched its "Hot from the US" Video On Demand (VOD) service that
allows viewers to watch episodes of popular television series' on
Nelonen's Web TV just a few days after their original broadcast in
the United States.
In August, SWelcom became the majority shareholder in the
Urheilukanava sports channel and the pay TV sports channel
Urheilu+kanava. Urheilukanava broadcasts over 400 live sports events
each year and its audience reach is growing. Urheilu+kanava had over
230,000 subscribers at the end of 2007.
Welho's net sales increased due to strong growth in pay TV, broadband
subscriptions and the sale of digital set-top boxes. In 2007, Welho's
pay TV subscriptions increased by nearly 50% and broadband
subscriptions by 15%.
Welho revised its pay TV offering with new channel packages that can
be augmented with individual channels. Welho also offers four high
definition (HDTV) channels. Welho launched the Welho Play VOD
service, which allows Welho broadband subscribers to download films
and television programmes onto their computers whenever they want. In
addition, Welho launched an IPTV service in the Helsinki metropolitan
area, bringing Welho's TV services to customers outside the cable
network.
SWelcom expanded its business into online casual gaming. August saw
the launch of the Pelikone.fi online game portal, where users can
play games for free and also publish their own games. In September,
SWelcom acquired Alypaa.com, the biggest online quiz portal in
Finland.
In 2007, SWelcom's investments in tangible and intangible assets
totalled EUR 14.8 (15.2) million, most of which was allocated to the
development of Welho's cable network and services. The most
significant acquisition of the year was the purchase of the
Urheilukanava channels. There were no major acquisitions during the
comparable year.
SWelcom's operating profit improved significantly, by 26.6%, to EUR
15.8 (12.5) million. The increase in operating profit was driven by
the good sales development of Welho and Nelonen's improved
profitability, due to cost savings.
After the review period on 7 February 2008, SanomaWSOY's Board of
Directors appointed Anu Nissinen as the new President of SWelcom,
effective 25 February 2008. Tapio Kallioja, President of the
Division, will retire according to his contract of employment on 31
March 2008. At the end of January, SWelcom divested the operations of
2ndhead, focusing on corporate digital communications and marketing
solutions. The deal will have no significant impact on the Division's
earnings.
SWelcom will increasingly focus on providing a wider variety of
programming and continue to develop its digital content and media
solutions businesses, as well as its online community services.
In 2008, SWelcom's net sales are estimated to increase and operating
profit excluding major non-recurring capital gains is expected to
improve clearly.
Rautakirja
Rautakirja is the market leader in kiosk operations, press
distribution and movie theatres in Finland and the Baltic countries,
and press distribution in the Netherlands and Romania. Additionally,
it leads the Finnish and Estonian markets for bookstores. Its press
distribution business and kiosk operations have also expanded into
the Russian market.
- Net sales grew across all businesses; movie theatres had an
excellent year
- Rautakirja sold its multi-purpose arena in Hamburg in October
- Kiosk operations in Russia are showing good momentum; at the end
of the year, Rautakirja had 43 kiosks in Russia
KEY INDICATORS 10-12/ 10-12/ Change 1-12/ 1-12/ Change
EUR million 2007 2006 % 2007 2006 %
Net sales 241.1 232.9 3.5 849.3 799.9 6.2
Operating profit 23.1 22.5 2.7 55.6 54.7 1.6
% of net sales 9.6 9.7 6.5 6.8
Operating profit excluding
major
non-recurring capital gains 18.2 22.5 -19.1 50.7 54.7 -7.3
% of net sales 7.5 9.7 6.0 6.8
Balance sheet total 565.0 586.9 -3.7
Capital expenditure 28.4 23.1 22.7
Return on investment (ROI), % 20.9 20.1
Average number of employees 7,886 7,496 5.2
Average number of employees
(full-time equivalents) 6,234 5,932 5.1
OPERATIONAL INDICATORS 1-12/2007 1-12/2006
Number of customers in kiosks, thousands 213,081 207,745
Number of customers in bookstores, thousands 7,459 7,247
Number of customers in movie theatres, thousands 9,784 8,163
Number of copies sold (press distribution), 376,108 374,838
thousands
In 2007, Rautakirja's net sales grew by 6.2%, totalling EUR 849.3
(799.9) million. Net sales increased across all businesses. Growth
was particularly strong in kiosk operations, entertainment business
and press distribution. Net sales adjusted for changes in the Group
structure increased by 5.2%. Of Rautakirja's net sales, 34% (33%)
came from outside Finland. The Dutch press distribution company
Aldipress was combined with Rautakirja on 1 January 2007. The
comparable figures have been adjusted to reflect the inclusion of
Aldipress.
Net sales from kiosk operations increased in all countries of
operation, rising to EUR 385.5 (369.1) million. Net sales for the
comparable period include the net sales of the Pizza Hut restaurant
chain, which was divested in June 2006. Traditional kiosk products
did well in Finland and the Baltic countries. Finnish R-kiosks
developed several new service products, such as the kiosk-based
ÄrräExpress pick-up service for parcels.
The first R-kiosks in Moscow opened their doors in June. In October,
the press distributor Press Point International and the kiosk
operator HDS CIS acquired from Lagardère Services were consolidated
in Rautakirja's kiosk and press distribution operations. The combined
net sales of the two companies are about EUR 5 million and they have
about 180 employees. As a result of the deal, Rautakirja acquired 25
store locations, most of which are in Moscow, and the rest in St.
Petersburg, Kazan, Yekaterinburg and Nizhny Novgorod. These stores
will be converted into R-kiosks. At the end of the year, Rautakirja
already had 43 kiosks in Russia.
The net sales of press distribution rose to EUR 245.5 (223.6)
million. Net sales increased in all markets except the Netherlands.
The increase was particularly strong in the Baltic countries and
Romania. In Finland, press distribution was bolstered by the February
acquisition of the point-of-sale (POS) marketing company Printcenter
and the weekday cover price increase by quality tabloids. The salesof women's magazines and comics have also clearly increased. The weak
performance of the Dutch single copy market was also reflected in the
net sales of Aldipress, with distribution volumes decreasing somewhat
from the comparable period. In September, a decision was made to
rationalise the operations of Aldipress; the company's workforce will
be reduced by about one-third in 2008. In December, Rautakirja
announced that it is exploring the possibility of co-operating with
the Swiss Ringier Group on Romanian press distribution. The October
transaction, in which Rautakirja increased its shareholding in the
Lithuanian press distributor Impress Teva to 100%, was concluded in
January 2008, when it was approved by antitrust officials.
The net sales of bookstores were EUR 140.3 (138.9) million. The net
sales of the comparable period included the library business divested
in the autumn of 2006. On the whole, the development of the bookstore
business was weak, but Suomalainen Kirjakauppa strengthened its
market share. Net sales increased strongly in Estonia. During the
year, new stores were opened in Pärnu in May and in Rakvere in
December.
Net sales from the entertainment business increased clearly in all
countries of operation, rising to EUR 95.9 (81.7) million. Driven by
summer blockbusters, movie theatres in Finland and the Baltic
countries broke all-time box office records in July. Development in
the latter part of the year was also strong and in December, Finnish
movie theatres again attracted a record number of customers, although
there were no such box-office hits as there were in the comparable
year. In addition to the good selection of movies, the growth has
been particularly boosted by new movie theatres: Finnish operations
were expanded significantly in the second half of 2006. In April
2007, the company opened a new multiplex in Kaunas, Lithuania,
followed by a multiplex in Lahti, Finland, in November. In October,
Rautakirja sold D+J Arena Hamburg GmbH, the company responsible for
the multi-purpose arena in Hamburg, in line with its stated strategy.
The net sales of the company were EUR 12.7 million in 2006.
In 2007, Rautakirja's investments in tangible and intangible assets
totalled EUR 28.4 (23.1) million. They focused mainly on business ICT
projects, as well as the acquisition of new retail premises and the
renovation of existing ones. The most significant acquisitions of the
year were Printcenter in Finland, along with Press Point
International and HDS CIS in Russia. There were no major acquisitions
during the comparable period.
In 2007, Rautakirja's operating profit grew by 1.6%, totalling EUR
55.6 (54.7) million. The operating profit includes a total of EUR 4.9
million in major non-recurring capital gains from the multi-purpose
arena and real estate sales. The entertainment business significantly
improved its operating income, with movie theatres doing extremely
well. Operating profit from kiosk operations improved despite the
start-up costs of the Russian operations. The operating profit of
press distribution was below the comparable period last year,
reflecting the non-recurring costs incurred in connection with the
rationalisation of Aldipress operations. Operating profit from
bookstores declined from the comparable year due to lower Christmas
sales and the decrease of subscription sales.
In addition to the home markets of Finland and the Baltic countries,
Rautakirja's expansion and development efforts will also focus on the
emerging economies of Russia and Central Eastern Europe.
In 2008, Rautakirja's net sales are estimated to grow. Operating
profit excluding major non-recurring capital gains is expected to
improve.
This Year-End Statement is unaudited. Definitions of key indicators
are presented in SanomaWSOY's Financial Statements 2006.
Helsinki
Board of Directors
SanomaWSOY Corporation
CONSOLIDATED FINANCIAL STATEMENTS (NON-AUDITED)
CONSOLIDATED INCOME STATEMENT
EUR million 1-12/2007 1-12/2006 Change, %
NET SALES 2,926.3 2,742.1 6.7
Other operating income 95.2 57.2 66.4
Materials and services 1,308.9 1,243.3 5.3
Personnel expenses 646.5 595.5 8.6
Other operating expenses 572.7 532.2 7.6
Depreciation and impairment losses 149.7 135.8 10.3
OPERATING PROFIT 343.8 292.5 17.5
Share in result of associated 12.4 8.4 47.8
companies
Financial income 9.2 12.5 -26.2
Financial expenses 44.9 37.0 21.4
RESULT BEFORE TAXES 320.4 276.3 16.0
Income taxes -74.4 -68.0 9.4
RESULT FOR THE PERIOD 246.1 208.4 18.1
Attributable to:
Equity holders of the Parent company 242.8 209.5 15.9
Minority interest 3.2 -1.1
Earnings per share for result attributable to the
equity
holders of the Parent company:
Earnings per share, EUR 1.47 1.32 11.9
Diluted earnings per share, EUR 1.46 1.31 12.0
CONSOLIDATED BALANCE SHEET
EUR million 31.12.2007 31.12.2006 Change, %
ASSETS
NON-CURRENT ASSETS
Tangible assets 498.7 572.3 -12.9
Investment property 9.5 10.0 -4.7
Goodwill 1,432.8 1,392.7 2.9
Other intangible assets 379.6 368.1 3.1
Interest in associated companies 75.2 68.2 10.2
Available-for-sale financial assets 15.9 16.4 -3.1
Deferred tax receivables 42.4 45.2 -6.2
Other receivables 37.9 38.4 -1.1
NON-CURRENT ASSETS, TOTAL 2,492.1 2,511.3 -0.8
CURRENT ASSETS
Inventories 170.7 150.1 13.7
Income tax receivables 25.9 20.1 29.3
Trade and other receivables 415.4 369.2 12.5
Available-for-sale financial assets 0.1
Cash and cash equivalents 88.1 81.5 8.1
CURRENT ASSETS, TOTAL 700.2 620.9 12.8
ASSETS, TOTAL 3,192.3 3,132.2 1.9
EQUITY AND LIABILITIES
EQUITY
Equity attributable to the equity
holders of the Parent company
Share capital 71.3 70.9 0.5
Premium fund 187.6 181.0 3.7
Treasury shares -51.6
Other reserves 0.1 6.9 -99.0
Translation differences 11.4 17.6 -35.1
Retained earnings 1,127.1 1,029.3 9.5
1,345.9 1,305.7 3.1
Minority interest 18.3 17.0 7.9
EQUITY, TOTAL 1,364.2 1,322.7 3.1
NON-CURRENT LIABILITIES
Deferred tax liabilities 103.9 96.2 8.1
Pension obligations 45.2 57.6 -21.5
Provisions 8.8 7.8 13.5
Interest-bearing liabilities 328.1 44.2
Trade and other payables 28.3 36.0 -21.6
CURRENT LIABILITIES
Provisions 7.8 7.9 -1.4
Interest-bearing liabilities 553.4 819.7 -32.5
Income tax liabilities 8.4 28.8 -70.8
Trade and other payables 744.3 711.2 4.6
LIABILITIES, TOTAL 1,828.1 1,809.5 1.0
EQUITY AND LIABILITIES, TOTAL 3,192.3 3,132.2 1.9
CHANGES IN CONSOLIDATED EQUITY
EUR million Equity attributable to the equity holders
of the Parent Company
Sha Pre Other Tran Trea Retai Total Minor Equity,
re mium reser slat sury ned ity total
capi fund ves ion sha earn inter
tal diff res ings est
eren
ces
Equity at 1 67.5 93.7 363.8 15.9 600.5 1,141.5 16.3 1,157.7
Jan 2006
Change in
translation
differences 1.7 1.7 0.3 2.0
Other items -0.5 -0.5 -0.5
Items
recognised
directly in 1.7 -0.5 1.2 0.3 1.5
equity,
total
Result for 209.5 209.5 -1.1 208.4
the period
Total
recognised
income and
expenses 1.7 209.0 210.7 -0.8 209.9
Directed
issue of
shares 1.0 1.0 1.0
Conversion
of capital
notes 2.4 85.5 -1.2 86.7 86.7
Usage of
share
options 0.1 1.7 1.8 1.8
Expense
recognition
of granted 5.4 5.4 5.4
options
Dividends -141.3 -141.3 -1.4 -142.7
paid
Change in
minority
interests 3.0 3.0
Other -355.6 355.6
changes
Equity at
31 Dec 2006 70.9 181.0 6.9 17.6 1,029.3 1,305.7 17.0 1,322.7
Equity at 1 70.9 181.0 6.9 17.6 1,029.3 1,305.7 17.0 1,322.7
Jan 2007
Change in
translation
differences -6.2 -6.2 0.3 -5.9
Other items -0.7 -0.7 -0.7
Items
recognised
directly in -6.2 -0.7 -6.9 0.3 -6.6
equity,
total
Result for 242.8 242.8 3.2 246.1
the period
Total
recognised
income and
expenses -6.2 242.1 235.9 3.5 239.4
Unregistered
usage
of share 0.1 2.4 2.6 2.6
options
Conversion
of
capital 0.0 1.7 0.0 1.7 1.7
notes
Purchase of
treasury -51.6 -51.6 -51.6
shares
Usage of
share 0.1 2.5 2.6 2.6
options
Expense
recognition
of options 5.5 5.5 5.5
granted
Dividends -156.7 -156.7 -2.1 -158.8
paid
Change in
minority 0.0 0.0
interests
Other -6.9 6.9
changes
Equity at
31 Dec 2007 71.3 187.6 0.1 11.4 -51.6 1,127.1 1,345.9 18.3 1,364.2
CONSOLIDATED CASH FLOW STATEMENT
EUR million 1-12/2007 1-12/2006 Change, %
OPERATIONS
Result for the period 246.1 208.4 18.1
Adjustments
Income taxes 74.4 68.0 9.4
Financial expenses 44.9 37.0 21.4
Financial income -9.2 -12.5 -26.2
Share in result of associated -12.4 -8.4 47.8
companies
Depreciation and impairment losses 149.7 135.8 10.3
Profit on sales of non-current -41.3 -8.2
assets
Other adjustments -44.6 -53.6 -16.7
Change in working capital
Change in trade and other -38.6 -27.9 38.3
receivables
Change in inventories -19.0 2.3
Change in trade and other payables, 11.9 30.5 -61.1
and provisions
Interest paid -38.2 -34.9 9.5
Other financial items -1.8 1.3
Taxes paid -93.8 -77.9 20.4
CASH FLOW FROM OPERATIONS 227.9 259.9 -12.3
INVESTMENTS
Acquisition of tangible and intangible -88.6 -81.2 9.2
assets
Operations acquired -49.1 -88.5 -44.5
Associated companies acquired -0.6 -2.5 -75.3
Acquisition of other holdings -0.1 -0.2 -62.4
Sales of tangible and intangible assets 23.8 11.9 99.8
Operations sold 83.7 11.5
Associated companies sold 0.3 0.3 6.6
Sales of other companies 0.9 11.9 -92.3
Loans granted -4.4 -9.5 -53.6
Repayments of loan receivables 3.9 3.4 11.8
Sales of short-term investments 0.0 0.5 -100.5
Interest received 5.5 4.8 13.9
Dividends received 7.6 4.6 62.7
CASH FLOW FROM INVESTMENTS -17.2 -132.9 -87.1
CASH FLOW BEFORE FINANCING 210.7 127.0 65.9
FINANCING
Proceeds from share subscriptions 5.2 2.8 89.1
Minority capital investment/repayment -0.1 0.2
of equity
Purchase of treasury shares -51.0
Change in loans with short maturity 101.5 7.1
Drawings of other loans 295.5 328.3 -10.0
Repayments of other loans -403.1 -329.1 22.5
Payment of finance lease liabilities -2.5 -2.2 14.1
Dividends paid -158.8 -142.7 11.3
Donations/other profit sharing -0.4 -0.4 17.4
CASH FLOW FROM FINANCING -213.7 -136.0 57.2
Change in cash and cash equivalents
according to
cash flow statement -3.0 -8.9 -66.5
Effect of exchange rate differences on
cash and cash
equivalents -1.7 1.1
Net increase(+)/decrease(-) in cash and
cash
equivalents -4.7 -7.8 -40.5
Cash and cash equivalents at 1 Jan 77.1 84.9 -9.2
Cash and cash equivalents at 31 Dec 72.4 77.1 -6.1
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/
2007 2007 2007 2007 2006 2006 2006 2006
Sanoma Magazines
Sanoma Magazines
Netherlands 119.8 136.6 129.2 154.2 116.7 138.7 127.4 148.3
Sanoma Magazines
International 65.8 68.5 66.0 83.2 58.1 59.7 57.9 71.9
Sanoma Magazines 52.5 55.8 48.1 60.1 44.7 48.2 43.8 51.9
Belgium
Sanoma Magazines 50.1 48.6 48.1 56.0 45.8 47.1 47.3 53.1
Finland
Eliminations -1.2 -1.2 -1.0 -1.2 -1.2 -1.3 -1.2 -0.9
Total 287.1 308.2 290.4 352.4 264.1 292.3 275.2 324.3
Sanoma
Helsingin Sanomat 72.3 68.0 66.2 72.4 66.8 66.2 62.9 71.4
Ilta-Sanomat 23.6 24.6 22.9 23.6 22.3 23.4 22.8 23.7
Other publishing 24.3 24.7 22.6 25.9 20.9 21.5 20.3 24.8
Others 38.5 38.0 37.0 39.1 37.5 36.5 34.9 36.8
Eliminations -36.4 -35.5 -34.8 -36.4 -34.9 -33.7 -32.6 -34.3
Total 122.4 119.8 114.0 124.6 112.6 113.8 108.2 122.4
SanomaWSOY Education and Books
Educational 20.0 78.5 68.7 30.6 15.3 69.7 77.3 25.4
publishing
Publishing 26.3 20.8 20.7 29.6 24.2 22.1 19.0 30.7
Others 12.0 11.0 14.2 14.0 10.3 9.7 11.3 12.0
Eliminations -6.0 -5.4 -6.5 -5.7 -4.5 -4.3 -4.3 -4.7
Total 52.2 104.8 97.0 68.5 45.4 97.2 103.3 63.4
SWelcom
TV and radio 20.1 20.3 16.3 26.5 19.2 21.0 13.4 22.8
Others 15.4 15.3 16.7 16.2 14.3 13.2 14.0 14.6
Eliminations -0.3 -0.2 -0.2 -0.2 -0.2 -0.1 -0.2 -0.1
Total 35.2 35.4 32.8 42.5 33.3 34.1 27.2 37.2
Rautakirja
Kiosk operations 86.9 99.3 95.5 103.8 82.3 94.4 91.4 101.0
Press distribution 56.2 61.0 61.8 66.5 50.7 57.5 56.6 58.7
Bookstores 29.6 23.1 37.7 50.0 30.2 22.5 37.2 49.0
Entertainment 23.5 22.0 24.0 26.6 20.1 15.7 18.0 28.0
Eliminations -3.9 -4.0 -4.3 -5.8 -2.6 -3.2 -3.6 -3.9
Total 192.4 201.3 214.5 241.1 180.7 186.8 199.6 232.9
Other companies and
eliminations -25.6 -25.1 -30.1 -29.4 -23.6 -25.1 -25.3 -37.9
Total 663.7 744.4 718.6 799.6 612.5 699.2 688.2 742.2
NET SALES BY BUSINESS
EUR million 1-12/ 1-12/
2007 2006
Sanoma Magazines
Sanoma Magazines Netherlands 539.8 531.2
Sanoma Magazines International 283.4 247.6
Sanoma Magazines Belgium 216.6 188.6
Sanoma Magazines Finland 202.8 193.2
Eliminations -4.6 -4.7
Total 1,238.1 1,155.9
Sanoma
Helsingin Sanomat 278.9 267.3
Ilta-Sanomat 94.8 92.2
Other publishing 97.5 87.6
Others 152.6 145.6
Eliminations -143.0 -135.6
Total 480.8 457.1
SanomaWSOY Education and Books
Educational publishing 197.7 187.7
Publishing 97.3 96.0
Others 51.1 43.3
Eliminations -23.7 -17.8
Total 322.5 309.2
SWelcom
TV and radio 83.2 76.5
Others 63.6 56.0
Eliminations -0.8 -0.6
Total 146.0 131.8
Rautakirja
Kiosk operations 385.5 369.1
Press distribution 245.5 223.6
Bookstores 140.3 138.9
Entertainment 95.9 81.7
Eliminations -18.0 -13.4
Total 849.3 799.9
Other companies and eliminations -110.3 -111.9
Total 2,926.3 2,742.1
OPERATING PROFIT BY DIVISION
EUR million 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
2007 2007 2007 2007 2006 2006 2006 2006
Sanoma Magazines 32.1 61.3 30.4 37.2 23.3 35.3 28.2 41.9
Sanoma 19.6 17.3 17.2 13.6 16.1 15.0 15.0 16.5
SanomaWSOY Education
and Books -6.5 29.8 27.9 -6.6 -4.3 33.8 25.6 -7.1
SWelcom 2.9 4.0 3.5 5.4 3.2 4.0 0.4 4.8
Rautakirja 9.0 10.6 13.0 23.1 10.4 8.1 13.7 22.5
Other companies and
eliminations -3.1 10.1 -3.4 -4.3 -3.1 -3.4 -2.9 -4.7
Total 54.0 133.0 88.5 68.3 45.6 92.8 80.1 73.9
OPERATING PROFIT BY DIVISION 1-12/ 1-12/
EUR million 2007 2006
Sanoma Magazines 160.9 128.8
Sanoma 67.6 62.7
SanomaWSOY Education and Books 44.5 48.0
SWelcom 15.8 12.5
Rautakirja 55.6 54.7
Other companies and eliminations -0.7 -14.1
Total 343.8 292.5
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 31.12.2007 31.12.2006 Change, %
Carrying amount at 1 Jan 572.3 566.5 1.0
Increases 63.4 59.4 6.7
Acquisition of operations 1.2 15.5 -92.3
Decreases -4.3 -5.3 -19.1
Disposals of operations -66.9 -2.3
Depreciation for the period -65.7 -62.9 4.4
Impairment losses for the period -0.3 -0.2 6.3
Exchange rate differences and other -1.1 1.6
changes
Carrying amount at 31 Dec 498.7 572.3 -12.9
In the end of financial period commitments for acquisitions of
tangible assets were EUR 3.1 million (2006: EUR 6.3 million).
CONTINGENT LIABILITIES
EUR million 31.12.2007 31.12.2006 Change, %
Contingencies for own commitments
Mortgages 20.2 10.5 92.4
Pledges 5.8 18.4 -68.6
Other items 0.4 0.4 -2.0
Total 26.4 29.4 -10.1
Contingencies incurred on
behalf of associated companies
Guarantees 7.9 7.9 0.0
Total 7.9 7.9 0.0
Contingencies incurred on
behalf of other companies
Guarantees 0.1 0.1 -0.4
Total 0.1 0.1 -0.4
Other commitments
Operating lease liabilities (Note 25) 275.8 249.1 10.7
Royalties 27.2 15.9 70.6
Other items 42.9 47.2 -9.1
Total 345.9 312.2 10.8
Total 380.4 349.6 8.8
No derivative contracts were open in the end of financial period in
SanomaWSOY Group.
CONSOLIDATED INCOME STATEMENT BY QUARTER
EUR million 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
2007 2007 2007 2007 2006 2006 2006 2006
NET SALES 663.7 744.4 718.6 799.6 612.5 699.2 688.2 742.2
Other operating 13.3 49.0 12.4 20.6 15.4 12.8 13.8 15.2
income
Materials and 294.9 327.1 323.3 363.5 280.9 306.6 322.0 333.8
services
Personnel expenses 158.4 162.2 151.8 174.2 145.6 148.7 142.0 159.1
Other operating 135.0 133.9 130.3 173.5 124.8 129.8 124.3 153.3
expenses
Depreciation and
impairment losses 34.6 37.3 37.1 40.7 30.9 34.0 33.5 37.3
OPERATING PROFIT 54.0 133.0 88.5 68.3 45.6 92.8 80.1 73.9
Share in result of
associated 1.8 2.7 2.0 5.9 1.9 2.3 3.4 0.8
companies
Financial items -7.1 -9.6 -8.7 -10.3 -6.2 -7.5 -6.1 -4.7
RESULT BEFORE TAXES 48.6 126.1 81.9 63.8 41.3 87.6 77.4 70.1
Income taxes -13.7 -30.6 -20.3 -9.7 -12.4 -25.3 -18.2 -12.1
RESULT FOR THE 34.9 95.5 61.5 54.1 28.9 62.3 59.2 58.0
PERIOD
Attributable to:
Equity holders of
the Parent Company 35.5 95.8 59.7 51.8 32.5 62.2 57.2 57.6
Minority interest -0.6 -0.3 1.8 2.3 -3.6 0.1 2.0 0.4
CONSOLIDATED INCOME STATEMENT BY YEAR
EUR million 1-12/ 1-12/
2007 2006
NET SALES 2,926.3 2,742.1
Other operating income 95.2 57.2
Materials and services 1,308.9 1,243.3
Personnel expenses 646.5 595.5
Other operating expenses 572.7 532.2
Depreciation and impairment losses 149.7 135.8
OPERATING PROFIT 343.8 292.5
Share in result of associated companies 12.4 8.4
Financial items -35.7 -24.5
RESULT BEFORE TAXES 320.4 276.3
Income taxes -74.4 -68.0
RESULT FOR THE PERIOD 246.1 208.4
Attributable to:
Equity holders of the Parent Company 242.8 209.5
Minority interest 3.2 -1.1
Press conference
Press and analyst meeting in Finnish will be held by Hannu Syrjänen,
President and CEO of SanomaWSOY at 1:30 pm (Finnish time) at
Sanomatalo, Töölönlahdenkatu 2, Helsinki. The event can also be
viewed on the Group's website at www.sanomawsoy.fi either live or
later on as on demand.
The conference call in English for analysts and investors will be
arranged at 4 pm (Finnish time). Hannu Syrjänen will present the
result. To join the conference, please dial +44 20 3003 2666 (Europe)
or +1 866 966 5335 (US). The event can also be listened on web at
www.sanomawsoy.fi either live or later on 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 on
SanomaWSOY's website after the press and analyst meeting has started.
Publishing of 1Q08 Result
SanomaWSOY will publisht its Interim Report January-March on 9 May
2008, approximately at 12 pm Finnish time.
SANOMAWSOY CORPORATION
Matti Salmi
Senior Vice President
Finance and Administration
Additional information: SanomaWSOY's Group Communications, tel. +385
105 19 5062 or ir@sanomawsoy.fi
www.sanomawsoy.fi
www.sanomawsoy.fi/Investors
SanomaWSOY provides information, experiences, education and
entertainment to millions of people. Quality content, products and
services that are creative and customer centric, and efficient
distribution ensure satisfaction for our customers in the more than
20 European countries we operate in. With net sales of EUR 2.9
billion, SanomaWSOY was the largest media company in the Nordic
countries in 2007. The Group employs nearly 20,000 people.
