- Sanoma's net sales for January-September increased by 4.9%,
totalling EUR 2,231.4 (2,126.7) million.
- Operating profit excluding non-recurring items was EUR 246.6
(241.8) million. Non-recurring items in January-September totalled
EUR 18.5 (33.7) million.
- In the third quarter, Group net sales increased to EUR 778.6
(718.6) million and operating profit excluding non-recurring items
was EUR 100.5 (90.2) million.
- Third quarter earnings per share, including non-recurring items,
were EUR 0.37 (0.36). Earnings per share in January-September
totalled EUR 1.10 (1.16).
- The Group's name is Sanoma from 1 October onwards (formerly
SanomaWSOY). Also division names were harmonised.
- Sanoma revised its outlook, operating profit excluding
non-recurring items is expected to be at the previous year's level.
KEY INDICATORS
EUR million 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
2008 2007 % 2008 2007 % 2007
Net sales 778.6 718.6 8.3 2,231.4 2,126.7 4.9 2,926.3
Operating profit
excluding non-
recurring items 100.5 90.2 11.3 246.6 241.8 2.0 305.2
% of net sales 12.9 12.6 11.1 11.4 10.4
Non-recurring
items * -6.5 -1.7 18.5 33.7 -45.0 38.6
Operating profit 94.0 88.5 6.1 265.2 275.5 -3.7 343.8
% of net sales 12.1 12.3 11.9 13.0 11.7
Balance sheet total 3,649.1 3,283.0 11.2 3,192.3
Capital expenditure 28.2 14.4 95.7 77.6 57.6 34.6 90.5
% of net sales 3.6 2.0 3.5 2.7 3.1
Equity ratio, % 39.0 44.0 45.4
Net gearing, % 75.9 65.0 58.2
Interest-bearing liabilities 1,326.7 968.6 37.0 881.4
Interest-bearing net debt 1,021.5 879.8 16.1 793.3
Average number of employees 21,181 19,470 8.8 19,587
Average number of employees
(full-time equivalents) 18,031 16,603 8.6 16,701
Earnings/share,
EUR 0.37 0.36 1.8 1.10 1.16 -4.5 1.47
Earnings/share,
diluted, EUR 0.37 0.36 2.4 1.10 1.15 -4.1 1.46
Cash flow from
operations/share,
EUR 0.74 0.46 61.5 0.97 0.71 35.8 1.38
Equity/share, EUR 8.27 8.11 2.0 8.27
Market capitalisation 2,128.7 3,599.9 -40.9 3,196.2
* In 2008, the non-recurring items included EUR 23.5 million capital
gain from the divestment of movie distributor R.C.V. Entertainment in
the first quarter, EUR 1.5 million capital gain from the divestment
of real estates in the second quarter and EUR 6.5 million of
write-offs and restructuring costs in the multi-volume and year book
publishing in the third quarter. In 2007, the non-recurring items
included EUR 1.2 million capital gain from divestment of magazines in
the first quarter, EUR 34.2 million capital gains from the
divestments of puzzle magazines and real estates in the second
quarter, EUR 1.7 million costs from the restructuring of the Dutch
press distribution operations in the third quarter and EUR 4.9
million capital gain from the divestment of multi-purpose arena in
Hamburg in the fourth quarter.
Hannu Syrjänen, President and CEO"Group net sales developed well in the third quarter. The advertising
markets in our key operating countries have, however, reacted to the
general economic uncertainty and consumer confidence has begun to
decline in many areas. Due to this, our outlook for the remaining
part of the 2008 has become somewhat weaker.
During the third quarter, we continued to invest in international
growth areas. Sanoma Magazines launched new magazines in Russia,
Serbia and the Czech Republic, and strengthened its online operations
in the Czech Republic and Croatia. The acquisition of Net Info,
Bulgaria's leading internet company, was completed in July. In
January-September, digital operations accounted for nearly 11% (7%
excluding TV operations) of the total Group net sales. Sanoma Trade
opened its first 10 kiosks in Romania and continued the integration
of the Russian kiosk chain acquired in the spring. Nowa Era, which
was acquired by Sanoma Learning & Literature earlier this year, has
showed excellent development this year. Language services also grew
with AAC Global acquiring Interverbum, one of the largest language
service companies in the Nordic countries.
Future expectations for businesses based on direct sales of books
have decreased. Therefore we have decided to begin down-sizing and
restructuring programme in Bertmark's and Weilin+Göös' multi-volume
book and annual year book operations.
Our goal is to be one of the leading media companies in Europe. We
focus on consistent, sustainable growth and improved profitability.
We believe in value-adding market leadership in our chosen businesses
and markets."
Outlook for 2008
In 2008, operating profit excluding non-recurring capital gains and
expenses is expected to be at the previous year's level. In the
comparable year of 2007, operating profit excluding non-recurring
items was EUR 305.2 million. Previously, the Group's operating profit
excluding major non-recurring capital gains, but including the
non-recurring expenses, was expected to continue to improve.
In 2008, Sanoma's net sales are projected to grow, albeit at a
somewhat slower rate than last year. In 2007, Group net sales
increased by 6.7%.
The forecast for the development of Sanoma's net sales and operating
profit in 2008 considers both organic growth and the effect of minor
acquisitions. During 2008, Sanoma 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 development of net sales and operating profit are
naturally also affected by the overall economic development in the
Group's operating countries.
Net sales
In January-September, Sanoma's net sales increased by 4.9%, totalling
EUR 2,231.4 (2,126.7) million. Out of the divisions, Sanoma
Magazines, Sanoma Learning & Literature, Sanoma Entertainment and
Sanoma Trade increased their net sales. Growth was strongest in
Sanoma Learning & Literature. Net sales in Sanoma News were slightly
down because of the decline of the tabloid and free sheet markets.
Net sales adjusted for changes in the Group structure increased by
2.9%.
Advertising sales accounted for 24% (23%) of the Group's total net
sales. Particularly the online advertising grew. In geographical
terms, Finland accounted for 49% (50%) of net sales, with other EU
countries accounting for 46% (45%) and non-EU countries for 5% (5%).
Result
The operating profit of Sanoma was EUR 265.2 (275.5) million, or
11.9% (13.0%) of net sales. The operating profit included
non-recurring items of EUR 18.5 (33.7) million. Non-recurring capital
gains of EUR 25.0 (35.4) million were realised from the sale of the
movie distribution company R.C.V. Entertainment, as well as real
estates. The operating profit also included EUR -6.5 (-1.7) million
in non-recurring expenses representing the costs and write-offs
associated with the restructuring of Bertmark's and Weilin+Göös'
multi-volume book and year book businesses. During the comparable
period, the non-recurring items were related to the restructuring of
the Dutch press distribution business. Excluding these non-recurring
items, operating profit was EUR 246.6 (241.8) million.
Sanoma Magazines' operating profit increased with both the Dutch and
the Central Eastern European operations improving their results. The
divisions clearly improving their operating profits included Sanoma
Entertainment, where all businesses improved their results, and
Sanoma Learning & Literature, where educational publishing and
language services performed well. The operating profit of Sanoma News
and Sanoma Trade decreased.
Sanoma's net financial items totalled EUR -29.8 (-25.4) million.
Financial income amounted to EUR 12.7 (7.1) million. Financial
expenses amounted to EUR 42.5 (32.5) million and comprised primarily
interest costs of EUR 38.5 (30.1) million on interest-bearing
liabilities. Financial expenses increased due to the general rise in
interest rates.
The result before taxes was EUR 240.4 (256.6) million and earnings
per share were EUR 1.10 (1.16).
Balance sheet and financial position
On 30 September 2008, the consolidated balance sheet totalled EUR
3,649.1 (3,283.0) million. Cash flow from operations was EUR 155.4
(117.3) million and cash flow per share was EUR 0.97 (0.71). Cash
flow from operations increased mainly due to the reduction in working
capital from the comparable period. Due to the nature of the
business, the amount of working capital fluctuates strongly from one
quarter to another.
At the end of September, Sanoma's equity ratio was 39.0% (44.0%).
Equity ratio was affected by the increase in the Group's cash balance
and the resulting growth of long-term debt. Net gearing increased to
75.9% (65.0%). Equity totalled EUR 1,346.2 (1,353.6) million. A total
of EUR 47.6 million was spent on the acquisition of treasury shares
during the period under review. Interest-bearing liabilities
increased to EUR 1,326.7 (968.6) million and interest-bearing net
debt to EUR 1,021.5 (879.8) million. The debt was mainly driven by
the acquisition of the Polish educational publisher Nowa Era and
other acquisitions. The Group prepared for the instability of the
financial markets by increasing its cash balance. At the end of
September, the Group's cash and cash equivalents totalled EUR 305.1
(88.8) million.
Sanoma's financial position remains good as a result of the Group's
strong balance sheet, steady cash flow and a long-term, syndicated
credit facility. This credit facility agreement worth a total of EUR
802 million is in effect until autumn 2012.
At the end of September, the Group had a net debt/EBITDA ratio of
2.1. In spite of the general financial crises, the Group has had no
problems with financing its operations.
Investments, acquisitions and divestments
In January-September, investments in tangible and intangible assets
totalled EUR 77.6 (57.6) million, and were focused, for example, on
ICT systems, replacement investments and improvement of real estate.
R&D expenditure was recorded at EUR 2.9 (2.4) million or 0.1% (0.1%)
of net sales.
On 10 January 2008, Sanoma Magazines divested the Dutch movie
distribution company R.C.V. Entertainment. In 2007, the company's net
sales amounted to EUR 34.2 million and operating profit to some EUR 5
million. A capital gain amounting to EUR 23.5 million was recorded in
the first quarter of 2008 for the transaction.
On 11 March 2008, Sanoma Learning & Literature finalised its
acquisition of the Polish educational publisher Nowa Era. In 2007,
Nowa Era's net sales amounted to about EUR 43 million, and the
company's profitability was in line with the general level of good
profitability in educational publishing. The acquisition improved
Sanoma Learning & Literature's result in March-September
significantly. Nowa Era's business is seasonal, and it typically
makes a loss in the first and fourth quarters. Goodwill of some EUR
57 million has been preliminary recorded from the transaction.
SANOMA MAGAZINES
Sanoma Magazines is one of the largest consumer magazine publishers
in Europe. The Division publishes more than 300 magazines in 13
different countries. Apart from developing its strong portfolio of
magazine brands, Sanoma Magazines is rapidly expanding its business
to digital media platforms.
- Online advertising sales continued their strong growth and were up
by 32%.
- In total, nine magazine titles and four online services were
launched or acquired during the third quarter.
- Acquisition of the internet company Net Info in Bulgaria was
closed in July.
- Sanoma Magazines' operating profit excluding non-recurring items
in 2008 is estimated to be at the previous year's level.
KEY INDICATORS
EUR million 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
2008 2007 % 2008 2007 % 2007
Net sales 304.0 290.4 4.7 907.9 885.7 2.5 1,238.1
Operating profit
excluding non-
recurring items 31.6 30.4 4.0 102.8 102.6 0.3 139.7
% of net sales 10.4 10.5 11.3 11.6 11.3
Non-recurring items *.0 23.5 21.2 10.8 21.2
Operating profit 31.6 30.4 4.0 126.3 123.8 2.1 160.9
% of net sales 10.4 10.5 13.9 14.0 13.0
Balance sheet total 2,047.5 1,900.9 7.7 1,937.5
Capital expenditure 19.9 14.0 42.1 20.6
Average number of employees 6,206 5,577 11.3 5,623
Average number of employees
(full-time equivalents) 5,668 5,127 10.5 5,169
* In 2008, the non-recurring items included EUR 23.5 million capital
gain from the divestment of movie distributor R.C.V Entertainment in
the first quarter. In 2007, the non-recurring items included EUR 1.2
million capital gain from divestment of magazines in the first
quarter and EUR 20.0 million capital gains from the divestments of
puzzle magazines in the second quarter.
OPERATIONAL INDICATORS *
1-9/2008 1-9/2007
Number of magazines published 333 313
Magazine copies sold, thousands 312,835 320,645
Advertising pages sold 49,123 44,382
* Including joint ventures
Sanoma Magazines' net sales in January-September increased 2.5% and
totalled EUR 907.9 (885.7) million. Net sales grew in all businesses,
except in Sanoma Magazines Netherlands where operations were divested
both in June 2007 and January 2008. Adjusted for changes in the Group
structure, the Division's net sales grew by 3.7%. Of the Division's
net sales, 17% (17%) came from Finland. In July-September, Sanoma
Magazines' net sales grew by 4.7% and amounted to EUR 304.0 (290.4)
million. The growth came mainly from Sanoma Magazines International.
The Division's advertising sales increased by 13% and represented 32%
(29%) of net sales. Most growth came from Sanoma Magazines
International and online advertising in the Netherlands. In total,
the Division's online advertising sales grew by 32%.
Circulation sales grew by 1% and represented 57% (57%) of Sanoma
Magazines' net sales. Circulation sales in Belgium and Finland
developed positively, but single copy sales in the Netherlands have
declined in the first nine months.
Sanoma Magazines Netherlands' net sales decreased to EUR 371.7
(385.6) million. This was mainly due to structural changes. Sanoma
Magazines Netherlands has strongly focused its operations, divesting
its puzzle portfolio in June 2007. In January 2008, Sanoma Magazines
Netherlands consolidated magazine publisher Mood for Magazines and
divested movie distributor R.C.V. Entertainment. In 2007, R.C.V.
Entertainment's annual net sales totalled EUR 34.2 million.
According to Nielsen Media Research, the consumer magazine
advertising market in the Netherlands decreased by 1% in
January-August 2008 with magazine advertising's share of the total
advertising market decreasing. Sanoma Magazines Netherlands'
advertising sales grew due to new operations and online advertising
sales. Online advertising grew by 25% and outperformed market growth
of 11%. The readers' market in the Netherlands declined in the second
quarter of 2008. However, subscription sales at Sanoma Magazines
Netherlands have increased. With decreased single copy sales, the
total circulation sales were slightly behind the comparable period.
In the third quarter, Sanoma Magazines Netherlands strengthened its
position in the automotive market by acquiring European Autotrader, a
publisher of five motor magazines and a successful online site. It
also launched Donald Duck Junior magazine for small kids and
Hockey.nl, a combination of a print magazine and an online site
focusing on field hockey. Two magazines were sold.
Net sales in Sanoma Magazines International grew to EUR 224.3 (200.3)
million. Growth came from increased advertising sales. Advertising
sales increased in all countries, with Russia and Hungary
contributing the most. Circulation sales in Sanoma Magazines
International were slightly above the comparable period, with most
markets showing some growth. In the third quarter, Sanoma Magazines
International launched home and decoration magazine Elle Dekor in
Serbia, a men's lifestyle title Best Life in Russia and a bimonthly
glossy Moje Zeme, focusing on the Czech culture and history. In
Czech, a women's portal, Kafe.cz, was also opened. In Croatia, Adria
Media launched a parenting portal Roditelji.hr. The acquisition of
82% in the leading Bulgarian internet company Net Info was closed in
July.
Sanoma Magazines Belgium's net sales grew to EUR 163.3 (156.4)
million. The increase in sales came mainly from growing subscription
and other sales. In Belgium, the readers' market declined slightly.
Sanoma Magazines Belgium has increased its circulation sales, through
both cover price increases and successful launches such as Goedele
magazine, which came to the market in September. Sanoma Magazines
Belgium's advertising sales were at the previous year's level.
Net sales in Sanoma Magazines Finland increased to EUR 151.7 (146.8)
million. Growth came both from increased advertising and circulation
sales. Especially subscription sales developed well and also single
copy sales increased. Successful new launches as well as established
titles contributed to the growth. There were also timing differences,
i.e., more issues in some magazines than in the comparable period.
According to TNS Gallup Adex, advertising in consumer magazines in
Finland increased by 1% in January-September. The magazine single
copy market declined in volume by 1% during the first nine months.
Sanoma Magazines Finland improved its market share both in
advertising and the readers' market.
Sanoma Magazines' operating profit in January-September improved by
2.1% and amounted to EUR 126.3 (123.8) million. The result included
EUR 23.5 (21.2) million of non-recurring items related to the
divestment of R.C.V. Entertainment. Excluding these items, the
Division's operating profit was EUR 102.8 (102.6) million. Operating
profit in July-September totalled EUR 31.6 (30.4) million.
Sanoma Magazines Netherlands' operating profit improved. There were
significant sales gains in both the reporting and comparable period.
The operational result improved due to improved cost efficiency and
changes in the product mix. Sanoma Magazines International's
operating profit increased significantly. The main reason for
improved profit was the good development in Russia. Sanoma Magazines
Belgium's result decreased due to investments in new businesses.
Sanoma Magazines Finland's operating profit was behind the comparable
period due to marketing costs focusing more on the first months of
the year than on the comparable period.
Sanoma Magazines continues 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. Operating
profit excluding non-recurring items is expected to remain at the
previous year's level.
SANOMA NEWS
Sanoma News (formerly Sanoma) is the leading newspaper publisher in
Finland, and its products have a strong presence both in print and
digital format in the lives of their readers. In addition to
Helsingin Sanomat, the largest daily in the Nordic region, Sanoma
News publishes national and regional newspapers and is also investing
heavily in digital business.
- Online advertising continued to perform very well, with Sanoma
News' online advertising growing by 50% in January-September.
- Metro and Uutislehti 100 were merged. The renewed Metro free sheet
is Finland's fourth largest newspaper in terms of readership.
- Oikotie.fi's housing portal was strengthened by Helsingin
Sanomat's acquisition of Igglo's online business and trademarks.
- The discontinuation of the printed version of Taloussanomat,
together with the decline of tabloid and free sheet markets, slowed
down growth.
- Sanoma News' operating profit excluding non-recurring items in
2008 is expected to remain below the previous year's level.
KEY INDICATORS
EUR million 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
2008 2007 % 2008 2007 % 2007
Net sales 113.5 114.0 -0.4 355.5 356.2 -0.2 480.8
Operating profit
excluding non-
recurring items 15.2 17.2 -11.6 47.9 54.1 -11.5 67.6
% of net sales 13.4 15.1 13.5 15.2 14.1
Non-recurring items 0.0 0.0 0.0 0.0
Operating profit 15.2 17.2 -11.6 47.9 54.1 -11.5 67.6
% of net sales 13.4 15.1 13.5 15.2 14.1
Balance sheet total 478.1 525.9 -9.1 445.0
Capital expenditure 13.5 11.4 18.9 17.7
Average number of employees 2,812 2,715 3.5 2,716
Average number of employees
(full-time equivalents) 2,504 2,422 3.4 2,411
OPERATIONAL INDICATORS
ADVERTISING, COLUMN KM 1-9/2008 1-9/2007
Helsingin Sanomat 29.1 30.9
Ilta-Sanomat 5.6 5.4
Free sheets 22.7 27.7
Distribution of free sheets, millions 70.2 78.6
AUDITED CIRCULATION 1-12/2007 1-12/2006
Helsingin Sanomat 419,791 426,117
Ilta-Sanomat 176,531 186,462
ONLINE SERVICES, UNIQUE VISITORS,
WEEKLY 7-9/2008 7-9/2007
Iltasanomat.fi 1,364,050 943,675
HS.fi 939,063 700,994
Huuto.net 437,834 397,541
Oikotie.fi 317,769 302,355
Taloussanomat.fi 286,012 214,639
Keltainenpörssi.fi 196,560 145,396
Sanoma News' net sales for January-September totalled EUR 355.5
(356.2) million. Net sales increased in Helsingin Sanomat, but
decreased in the Ilta-Sanomat and other publishing business units.
Net sales adjusted for changes in the Group structure were in line
with the previous year. In July-September, the Division's net sales
were at the comparable year's level totalling EUR 113.5 (114.0)
million.
According to TNS Gallup Adex, newspaper advertising in Finland
decreased by 1% in January-September. Job advertising grew 4%
cumulatively, but begin to decrease in September. Advertising in free
sheets fell by 5%. Online advertising included in statistics
developed strongly, growing by 28%. Sanoma News advertising sales
were up slightly reflecting the good development of online
advertising. Online advertising sales were up by 50%. Sanoma News'
advertising sales represented 53% (53%) of its net sales.
The Finnish tabloid market declined 7% in January-September.
Decreased revenues from newsstand sales in January-September affected
Sanoma News' circulation sales, which were down by 4%. Subscription
sales for daily newspapers remained at the previous year's level.
Circulation sales accounted for 38% (40%) of the Division's net
sales.
The Helsingin Sanomat business unit increased its net sales to EUR
210.9 (206.5) million mainly as a result of the good development of
circulation sales and newly acquired business. Advertising sales were
up slightly. Online advertising in Helsingin Sanomat developed well
with an increase of 19%. An increase in overall economic uncertainty
affected job and real estate advertising. Job advertising in
Helsingin Sanomat was down 2%. Online products, such as the
newspaper's online service and the Oikotie service entity for
classified advertisements, continued to develop strongly. The
development of the housing portal at Oikotie.fi was accelerated by
Helsingin Sanomat's acquisition of Igglo Oy's online business and
trademarks in September.
The net sales of the Ilta-Sanomat business unit were EUR 69.1 (71.2)
million. The circulation sales of the business unit decreased due to
the considerable shrinkage of the tabloid market. Ilta-Sanomat
commanded a 57.1% (57.6%) share of the tabloid market. Advertising
sales grew clearly faster than the market. Online advertising, in
particular, increased strongly.
Net sales from other publishing amounted to EUR 67.8 (71.6) million.
The decrease was affected by the discontinuation of the printed
version of Taloussanomat and the decline of free sheet advertising.
The free sheets Metro and Uutislehti 100 were merged in September.
The renewed Metro became Finland's fourth largest and the capital
area's second largest newspaper in terms of readership. The regional
dailies of Sanoma Lehtimedia slightly increased their circulation
sales. Sanoma Digital, a new company focusing on online business,
increased its advertising sales.
Net sales from other operations, mainly comprising internal services,
were EUR 113.6 (113.5) million.
The operating profit of Sanoma News decreased by 11.5% to EUR 47.9
(54.1) million in January-September. The decrease in profit was
mainly due to the decline in the tabloid market that reduced the
operating profit of the Ilta-Sanomat business unit, as well as
investments in digital business. The operating profit of Helsingin
Sanomat was also down, primarily due to the decline in job and real
estate advertising in the printed daily and increased costs.
Investments in sales and marketing both in print and online increased
expenses. Other publishing improved its result slightly as a result
of cost-saving measures. The result of other operations remained at
the previous year's level. In July-September, Sanoma News' operating
profit totalled EUR 15.2 (17.2) million.
The strongest growth of Sanoma News comes from digital businesses,
while the printed media will also be strongly developed. The rate of
growth in media advertising is expected to be considerably more
moderate than in 2007.
In 2008, Sanoma News' net sales are expected to remain at the
previous year's level. Operating profit excluding non-recurring items
is expected to remain below the previous year's level.
SANOMA LEARNING & LITERATURE
Sanoma Learning & Literature (formely SanomaWSOY Education and Books)
is a significant European educational publisher offering a broad
range of printed and digital educational materials and services to
support the learning processes of children and young people. The
Division, operating in eight countries, is also Finland's leading
book publisher and has growing business information and language
service operations.
- Educational publishing operations grew, largely due to the Nowa
Era acquisition.
- Language services expanded through the acquisition of Interverbum
operations in Sweden, Denmark and UK.
- Sanoma Learning & Literature's operating profit excluding
non-recurring items in 2008 is estimated to improve clearly from the
previous year.
KEY INDICATORS
EUR million 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
2008 2007 % 2008 2007 % 2007
Net sales 133.2 97.0 37.4 302.0 254.0 18.9 322.5
Operating profit
Excluding non-
recurring items 42.8 27.9 53.4 64.8 51.2 26.6 44.5
% of net sales 32.1 28.8 21.5 20.1 13.8
Non-recurring items * -6.5 0.0 -6.5 0.0
Operating profit 36.3 27.9 30.1 58.3 51.2 13.9 44.5
% of net sales 27.2 28.8 19.3 20.1 13.8
Balance sheet total 717.6 655.9 9.4 585.0
Capital expenditure 10.9 4.8 127.4 7.7
Average number of employees 3,172 2,754 15.2 2,769
Average number of employees
(full-time equivalents) 2,684 2,328 15.3 2,345
* In 2008, the non-recurring items included EUR 6.5 million of
write-offs and restructuring costs in the multi-volume and year book
publishing in the third quarter.
OPERATIONAL INDICATORS
1-9/2008 1-9/2007
EDUCATIONAL PUBLISHING
Number of new titles published, books 1,139 1,082
Number of new titles published,
electronic products 318 293
PUBLISHING
Number of new titles published, books 435 430
Number of new titles published,
electronic products 86 44
Books sold, millions 32.1 21.0
Sanoma Learning & Literature's net sales in January-September
increased by 18.9% and totalled EUR 302.0 (254.0) million. Most
growth came from new Polish educational publishing operations. Net
sales adjusted for changes in the Group structure were at the
previous year's level. A total of 63% (58%) of the Division's net
sales came from outside of Finland. In July-September, the Division's
net sales grew by 37.4% to EUR 133.2 (97.0) million. The net sales
from educational publishing were more focused on the third quarter
than in the comparable year.
Educational publishing's net sales increased to EUR 211.3 (167.1)
million. Most of the growth came from the new Polish operations. In
the Netherlands, the net sales declined slightly because of changes
in governmental funding and the procurement model of secondary
educational materials, which decreased the markets. However,
Malmberg's market share has remained at the previous year's level. In
Finland, sales of educational materials were at the previous year's
level. A new edutainment product series, Oppi & Ilo, was launched for
children in September. Net sales increased in all other countries. In
Belgium, net sales from the Flemish market in particular grew due to
successful launches of new product series. Net sales in Hungary grew.
In Poland, the net sales increased due to the new operations of Nowa
Era, consolidated at the end of the first quarter. Net sales of the
e-learning unit Young Digital Planet were behind the comparable
period because of delays in governmental tenders.
Net sales in publishing grew to EUR 70.8 (67.7) million due to
increased sales of language services. General literature sales were
at the previous year's level with domestic fiction and non-fiction in
general developing positively. Direct sales in all Nordic countries
continued to remain under pressure and expectations for the future
have been revised. Therefore Bertmark's and Weilin+Göös' multi-volume
book and annual year book businesses will be down-sized and
restructured. The development of language services, one of the
international growth areas of the Division, was excellent. Partly the
increase of sales is due to new operations: AAC Global expanded its
operations in March 2007 with the acquisition of Translation Services
Noodi in Finland and in June 2007 the operations of the language
service company The Works, Sweden. In August 2008, AAC Global
acquired Interverbum, one of the leading language service companies
in the Nordic market. The Interverbum companies acquired operate in
Sweden, Denmark and the UK and their net sales in 2007 totalled EUR
8.9 million.
Net sales from other operations, mainly printing, totalled EUR 37.5
(37.1) million.
The Division's operating profit increased by 13.9% in
January-September and was EUR 58.3 (51.2) million. Operating profit
included EUR 6.5 (0.0) million of non-recurring expenses related to
write-offs and other restructuring costs of Bertmark's and
Weilin+Göös' multi-volume and year book operations. Excluding
non-recurring items, operating profit totalled EUR 64.8 (51.2)
million. Sanoma Learning & Literature's operating profit in
July-September increased to EUR 36.3 (27.9) million mainly due to new
operations.
Especially the operating profit in the educational publishing
business improved significantly in January-September, with the new
Polish operations contributing the most to the growth. Operating
profit in publishing declined. Language services and general
literature performed well, but write-offs of Bertmark's and
Weilin+Göös' inventories and ICT investments as well as restructuring
costs decreased operating profit in publishing. Some further
restructuring costs are expected also in the fourth quarter. The
restructuring will safeguard the future profitability of the
publishing business. Results in other operations were in line with
the previous year.
The Division's business is very seasonal. Profit in educational
publishing is mainly accrued in the second and third quarters. The
acquisition of Nowa Era adds to growth in the educational publishing
business and therefore strengthens seasonality in the Division.
Sanoma Learning & Literature continues to focus on further
internationalising its educational business, expanding language
services and maintaining market leadership in Finnish general
literature publishing.
In 2008, net sales of Sanoma Learning & Literature are estimated to
increase. Operating profit excluding non-recurring items is expected
to improve clearly from the previous year.
SANOMA ENTERTAINMENT
Sanoma Entertainment (formerly SWelcom) offers consumers entertaining
experiences on television, radio, online and mobile devices. Sanoma
Entertainment's business units include Nelonen Media, primarily
focused on TV and radio broadcasting, and Welho, Finland's largest
cable television operator. The Division's latest business area is
online casual gaming.
- Television channel viewing shares increased in July-September with
JIM registering the fastest growth.
- Welho launched super-fast broadband connection in August.
- After the review period, Nelonen Media announced that it will
launch a new TV channel in cable networks in early 2009.
- Sanoma Entertainment's operating profit excluding non-recurring
items is estimated to improve clearly in 2008 from the previous year.
KEY INDICATORS
EUR million 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
2008 2007 % 2008 2007 % 2007
Net sales 34.7 32.8 5.7 116.1 103.4 12.3 146.0Operating profit
excluding non-
recurring items 2.8 3.5 -19.5 13.2 10.4 26.9 15.8
% of net sales 8.2 10.7 11.4 10.1 10.8
Non-recurring items 0.0 0.0 0.0 0.0
Operating profit 2.8 3.5 -19.5 13.2 10.4 26.9 15.8
% of net sales 8.2 10.7 11.4 10.1 10.8
Balance sheet total 166.5 171.9 -3.1 168.2
Capital expenditure 9.4 10.0 -5.9 14.8
Average number of employees 523 488 7.2 501
Average number of employees
(full-time equivalents) 478 448 6.6 457
OPERATIONAL INDICATORS
1-9/2008 1-9/2007
TV channels' share of Finnish TV advertising 29.8% 29.4%
TV channels' daily reach 44% 43%
TV channels' national commercial viewing share 30.2% 25.5%
TV channels' national viewing share 14.2% 11.8%
Number of connected households, thousands (30 Sept) 322 318
Number of pay TV subscriptions, thousands (30 Sept) 103 81
Number of broadband internet connections,
thousands (30 Sept) 103 97
Sanoma Entertainment's net sales for January-September increased
12.3% to EUR 116.1 (103.4) million. This clear increase in net sales
was brought about in particular by the new TV and radio channels and
the growth of Welho. Adjusted for changes in the Group structure, the
Division's net sales grew by 6.5%. Advertising sales accounted for
50% (53%) of Sanoma Entertainment's net sales. In July-September, the
net sales increased by 5.7% to EUR 34.7 (32.8) million.
Broadcast operations increased its net sales to EUR 65.1 (56.7)
million in January-September. The increase was largely due to new
channels. According to TNS Gallup Adex, Finnish television
advertising grew by 6%. The combined share of the TV channels of
Nelonen Media of all television advertising was 29.8% (29.4%).
Nelonen Media has continued to invest in its programming, and the
television channels increased their viewing shares in the third
quarter. JIM, the channel launched in February 2007, has consistently
increased its share of viewers, and in July-September it already had
a commercial viewing share of 9.4% (5.6%) in the core demographic of
men aged 25-44.
According to the Association of Finnish Broadcasters, radio
advertising grew by 7% in January-September and Nelonen Media's share
of the national radio advertising was 11.3%. The audience reaches of
Radio Rock and Radio Aalto remained at a good level.
Nelonen Media launched in September an online music store called the
Radio Rock Store. Unique in Finland, Radio Rock Store is a fee-based
music store designed to provide Radio Rock listeners with better
service. Since the beginning of October, JIM's content has been
freely available online some 60 minutes after the television
broadcast through a so-called catch-up service. After the review
period, Nelonen Media announced that it will launch a new targeted
commercial TV channel in cable networks in early 2009.
Welho's net sales increased clearly due to good growth in pay TV and
broadband subscriptions. In August, Welho became the first service
provider in Europe to launch super-fast broadband (110 Mbps). In
September, Welho and HS.fi, part of the Sanoma News division,
together launched an online TV guide called TvNyt.fi.
The usage of Sanoma Entertainment's online casual gaming sites
increased. Älypää online quizzes reached the one billion game mark
in August, and the Pelikone.fi online game portal launched in August
2007 has clearly become the most popular free online casual gaming
service in Finland.
Sanoma Entertainment's operating profit increased by 26.9% in
January-September, totalling EUR 13.2 (10.4) million. This increase
was driven by improved profitability due to the growth of broadcast
operations and the positive development of Welho. In
January-September, Sanoma Entertainment's operating profit was EUR
2.8 (3.5) million. In the third quarter, the operating profit was
negatively impacted by programming and marketing investments.
In line with its strategy, Sanoma Entertainment focuses on its core
businesses: television, broadband services and consumer entertainment
services. Sanoma Entertainment continues to develop its digital
content and media solutions business, invest resources in the
development of its online community services and in its viewing and
listening shares.
In 2008, Sanoma Entertainment's net sales are estimated to increase
and operating profit excluding non-recurring items is expected to
improve clearly from the previous year.
SANOMA TRADE
Sanoma Trade (formerly Rautakirja) is a retail specialist with
operations in seven countries and whose business is based on a
thorough understanding of customers' needs and on strong concepts.
Sanoma Trade's success is built on over 200 million annual sales
contacts, in which the consumer is present at a kiosk, bookstore or
movie theatre. Sanoma Trade's press distribution operations serve
publishers and retailers.
- Sanoma Trade's net sales continued to grow in all businesses.
- Kiosk operations increased and R-kiosks expanded to Romania.
- Movie theatres had another record-breaking summer season.
- In 2008, Sanoma Trade's operating profit excluding non-recurring
items is expected to be somewhat lower than in the previous year.
KEY INDICATORS
EUR million 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
2008 2007 % 2008 2007 % 2007
Net sales 221.4 214.5 3.2 627.3 608.2 3.1 849.3
Operating profit
excluding non-
recurring items 13.0 14.7 -11.0 30.4 34.2 -11.2 52.4
% of net sales 5.9 6.8 4.8 5.6 6.2
Non-recurring items *0.0 -1.7 0.0 -1.7 3.2
Operating profit 13.0 13.0 0.7 30.4 32.5 -6.5 55.6
% of net sales 5.9 6.0 4.8 5.3 6.5
Balance sheet total 558.7 540.4 3.4 565.0
Capital expenditure 23.2 16.3 42.3 28.4
Average number of employees 8,365 7,847 6.6 7,886
Average number of employees
(full-time equivalents) 6,598 6,193 6.5 6,234
* In 2007, the non-recurring items included EUR 1.7 million costs
from the restructuring of the Dutch press distribution operations in
the third quarter and EUR 4.9 million capital gain from the
divestment of multi-purpose arena in Hamburg in the fourth quarter.
OPERATIONAL INDICATORS
Thousands 1-9/2008 1-9/2007
Customer volume in kiosk operations 159,173 156,481
Customer volume in bookstores 5,082 4,988
Customer volume in movie theatres 7,487 7,120
Number of copies sold
(press distribution) 292,288 289,609
Sanoma Trade's net sales for January-September increased 3.1% to EUR
627.3 (608.2) million. The increase was largely due to kiosk
operations and movie operations. Net sales adjusted for changes in
the Group structure increased by 4.2%. Of Sanoma Trade's net sales,
34% (34%) came from outside Finland. In July-September, the net sales
increased by 3.2% to EUR 221.4 (214.5) million. In the third quarter,
net sales were again driven by the growth of kiosk operations and
movie operations.
Net sales from kiosk operations increased to EUR 300.9 (281.7)
million. The sales of R-kiosks in Finland increased. Candy,
fresh-brewed coffee, travel tickets and lottery products sold
particularly well. The selection of travel and entertainment tickets
expanded. Net sales from kiosk operations increased in the Baltic
countries. The Russian kiosk chain launched in June 2007 was
developed further, and, in July, R-kiosks expanded into Romania with
the opening of the first store in Bucharest. In 2008, the company
plans to open 30 R-kiosks in Romania, and by the end of 2009 it is
expected that the total number of R-kiosks in Romania will be over
100.
Press distribution increased its net sales to EUR 180.2 (178.9)
million. Net sales were up in Finland, bolstered by the point-of-sale
(POS) marketing company Printcenter, acquired in February 2007, and
the positive development of magazine and collector product sales. The
growth was slowed down by falling tabloid sales. Net sales also
increased in Estonia, Lithuania, Russia and Romania. The Dutch press
distribution market has shrunk, which also decreased the net sales of
Aldipress. The Aldipress efficiency improvement programme is
progressing.
Net sales from bookstores increased to EUR 91.9 (90.4) million. The
Finnish book market increased slightly. Postcards and other paper
products generated growth for the bookstores. In Estonia, net sales
were boosted, for example, by the new stores opened in 2007.
Net sales from movie operations were EUR 67.6 (60.0) million. Sales
increased in Finland, Latvia and Lithuania. Movie admissions
continued to grow, and movie theatres again broke all-time box office
records over the summer. Net sales were also boosted by new theatres
in Finland and Lithuania. In September, new multiplex theatres opened
their doors in Vantaa, Finland, and Panevezys, Lithuania. This year,
digital technology has provided movie theatres all new content, such
as sports and cultural events.
In the comparable period net sales from other operations totalled EUR
9.4 million and included the multi-purpose arena in Hamburg divested
in October 2007.
Sanoma Trade's operating profit in January-September decreased by
6.5%, totalling EUR 30.4 (32.5) million. In the comparable period,
the operating profit was burdened by a total of EUR 1.7 million in
non-recurring expenses from the restructuring of Dutch press
distribution operations. Excluding these non-recurring items,
operating profit was EUR 30.4 (34.2) million. In July-September, the
operating profit totalled EUR 13.0 (13.0) million. The operating
profit of the third quarter was driven by the good result of Finnish
kiosk operations and improved efficiency at Aldipress in the
Netherlands.
In January-September, the results of kiosk operations and press
distribution were above all affected by investments in Russia and
Romania. Operating profit from kiosk operations remained at the
comparable period's level. In addition to investments, the operating
profit of press distribution was also impacted by smaller
distribution volumes in the Netherlands. The result of the bookstores
was burdened by the launch costs of the renewed online store. Movie
operations increased their operating profit.
In addition to the home markets of Finland and the Baltic countries,
Sanoma Trade's expansion and development efforts will also focus on
the emerging economies of Russia and Central Eastern Europe. At the
moment, the company is investing in kiosks and press distribution in
Russia and Romania. Sanoma Trade's goal is to achieve a strong
position in these countries and participate actively in the
development of the local newspaper and magazine markets.
In 2008, Sanoma Trade's net sales are expected to grow. Operating
profit excluding non-recurring items is expected to be somewhat lower
than in the previous year.
Dividend
The distributable funds of Sanoma Corporation for 2007 amounted to
EUR 503.3 million, of which profit for the year made up EUR 266.8
million. In line with the Board's proposal, the Annual General
Meeting paid out a dividend of EUR 1.00 (0.95) per share. Sanoma
conducts an active dividend policy and primarily distributes over
half of the Group result after taxes in dividends.
Shares and holdings
In January-September, trading with Sanoma shares accounted for 50%
(41%) of the average number of shares on issue during the period, or
about 80.8 million shares. Sanoma's total stock exchange turnover was
EUR 1,285.1 (1,525.2) million.
In January-September, the volume-weighted average price of a Sanoma
share was EUR 15.82, with a low of EUR 12.70 and a high of EUR 19.87.
At the end of September, Sanoma's market capitalisation excluding
treasury shares held by the Company was EUR 2,128.7 (3,599.9) million
and the closing price of the share was EUR 13.29 (21.81). At the end
of September, the Company had 17,946 shareholders. Foreign holdings
accounted for 10.9% (13.2%) of the shares and votes. There were no
major changes in share ownership during the review period and Sanoma
did not issue any flagging announcements.
Sanoma began acquiring its shares on 10 August 2007 under the 2007
AGM authorisation. On 1 April 2008, the AGM issued a new
authorisation to acquire the Company's own shares and the share
buybacks under this authorisation started on 12 June 2008. In
January-September, Sanoma acquired, under these authorisations, a
total of 2,984,097 of the Company's own shares at the cost of EUR
47.6 million. At the end of September, the Company held a total of
2,425,000 of these shares, representing 1.5% of the Company's shares
and votes. The shares held by Sanoma have no accountable par;
however, the calculated par value of the treasury shares held by the
Company was EUR 1,062,764.55. Under the current AGM authorisation,
Sanoma retains the authority to acquire a further 7,620,000 of its
own shares.
Under the review period, Sanoma's share capital was increased by EUR
137,076.26. The share capital increases were related to the exercise
of stock options into shares. A total of 292,462 shares were
subscribed with 2001A stock options and 30,820 with 2001B stock
options. In February, Sanoma cancelled all treasury shares held by
the Company at that time. In addition, 10,600 stock options have been
exercised to subscribe for new shares without increasing the share
capital. At the end of September Sanoma's registered share capital
was EUR 71,258,986.82 and the number of shares was 162,597,674.
Board of Directors, Auditors and Management
The AGM confirmed on 1 April 2008 the number of Sanoma's Board
members as ten. Board members Robert Castrén, Jane Erkko and Paavo
Hohti were re-elected, and Rafaela Seppälä was elected as a new
member to the Board. The Board of Directors of Sanoma consists of:
Jaakko Rauramo, Chairman, Sari Baldauf, Vice Chairman, and Robert
Castrén, Jane Erkko, Paavo Hohti, Sirkka Hämäläinen-Lindfors, Seppo
Kievari, Rafaela Seppälä, Hannu Syrjänen and Sakari Tamminen as
members.
The AGM 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.
After the review period, Sanoma announced that Erkki Järvinen,
President of Rautakirja and the head of the Sanoma Trade division,
will leave his current position during the spring 2009 in order to
resume similar responsibilities outside the Sanoma Group.
Board authorisations
The AGM held on 1 April 2008 authorised the Board of Sanoma to decide
on the acquisition of the Company's own shares, valid until the AGM
of 2009.
A maximum of 8,285,000 shares may be acquired, corresponding to 5.1%
of the Company's shares and voting rights at the end of March. These
treasury shares will not be acquired in proportion to the
shareholdings of the existing shareholders. They will be acquired
with the Company's unrestricted equity at the market price at the
time of acquisition on NASDAQ OMX. However, the minimum acquisition
price of a share is the lowest market price in public trading and the
maximum acquisition price is the highest price quoted in public
trading during the authorisation period. The Board decided on 1 April
2008 to deploy the authorisation and the acquisition of own shares
commenced on 12 June 2008.
In addition, the Board has a valid authorisation to increase the
share capital. According to the authorisation issued by the AGM on 4
April 2007, the Board may 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 transfer of a maximum of
5,000,000 treasury shares. In a directed share issue, a maximum of
41,000,000 shares may 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.
During the review period, the authorisation by the AGM of 4 April
2007 for acquiring own shares was in force. The authorisation allowed
acquiring a maximum of 8,200,000 Company shares. These shares were
not to be acquired in relation to the holdings of existing
shareholders. They were acquired with the Company's unrestricted
equity at the market price at the moment of acquisition - however, in
such a way that the minimum acquisition price of a share was the
lowest market price in public trading and the maximum acquisition
price was the highest price noted in public trading during the
authorisation period. The share acquisitions commenced on 10 August
2007, and the authorisation remained valid until 1 April 2008.
Other resolutions by the AGM
The AGM decided to amend Article 1 (the Company's business name and
domicile) of Sanoma's Articles of Association as proposed by the
Board. The Company's new business name is Sanoma Oyj in Finnish,
Sanoma Abp in Swedish, and Sanoma Corporation in English. The
Company's registered office continues to be in Helsinki. The new name
was adopted on 1 October 2008.
At the same time, the names of other Divisions were harmonised. The
Group now consists of the following Divisions and reporting segments:
Sanoma Magazines, Sanoma News (formerly Sanoma), Sanoma Learning &
Literature (formerly SanomaWSOY Education and Books), Sanoma
Entertainment (formerly SWelcom) and Sanoma Trade (formerly
Rautakirja).
Seasonal fluctuation
Developments in media advertising have an impact on the net sales and
results of Sanoma Magazines, Sanoma News and Sanoma Entertainment.
Advertising sales are influenced, for example, by the number of
newspaper and magazine issues published during each quarter, which
varies annually. Television advertising in Finland is usually
strongest in the second and fourth quarters. The exact date of Easter
has an impact on the net sales accumulated from newspapers and
distribution when comparing quarters in these businesses on a
year-to-year basis.
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 clearly
the smallest.
Significant risks and uncertainty factors
The evaluation of business risks and the opportunities associated
with them is part of Sanoma's daily management procedure. The
management must take calculated risks in order to ensure that the
Company carries out its business as successfully as possible.
The most significant risks and uncertainty factors Sanoma is facing
are described in the Annual Report, together with the main principles
of risk management. The most significant uncertainty factors of the
current year are related to the growth of media advertising and
consumer spending. Overall economic uncertainty has clearly increased
in the second half of 2008, and there are no reliable forecasts
available for the remainder of the year. The rapid decline of media
advertising and consumer confidence can affect the Group result.
Helsinki
Board of Directors
Sanoma Corporation
Accounting policies
The Sanoma Group has prepared its Interim Report in accordance with
IAS 34 'Interim Financial Reporting' while adhering to related
standards and interpretations applicable within the EU on 1 January
2008. The Interim Report has been prepared in accordance with the
accounting policies described in the Group's Consolidated Financial
Statements for 2007. This Interim Report is unaudited. The
definitions of key indicators have been refined. The definitions are
presented on the Sanoma website at www.sanoma.com.
CONSOLIDATED FINANCIAL STATEMENTS (un-audited)
CONSOLIDATED INCOME STATEMENT
EUR million 1-9/ 1-9/ Change 1-12/
2008 2007 % 2007
NET SALES 2,231.4 2,126.7 4.9 2,926.3
Other operating income 70.6 74.6 -5.5 95.2
Materials and services 994.8 945.3 5.2 1,308.9
Personnel expenses 517.6 472.3 9.6 646.5
Other operating expenses 414.4 399.2 3.8 572.7
Depreciation and impairment
losses 110.0 109.0 0.9 149.7
OPERATING PROFIT 265.2 275.5 -3.7 343.8
Share in result of associated
companies 5.0 6.5 -22.7 12.4
Financial income 12.7 7.1 77.9 9.2
Financial expenses 42.5 32.5 30.8 44.9
RESULT BEFORE TAXES 240.4 256.6 -6.3 320.4
Income taxes -59.6 -64.6 -7.8 -74.4
RESULT FOR THE PERIOD 180.7 192.0 -5.9 246.1
Attributable to:
Equity holders of
the Parent Company 177.9 191.0 -6.9 242.8
Minority interest 2.8 0.9 3.2
Earnings per share for result attributable to
the equity holders of the Parent Company:
Earnings per share, EUR 1.10 1.16 -4.5 1.47
Diluted earnings per share, EUR 1.10 1.15 -4.1 1.46
CONSOLIDATED BALANCE SHEET
EUR million 30.9.2008 30.9.2007 Change % 31.12.2007
ASSETS
NON-CURRENT ASSETS
Tangible assets 510.9 560.6 -8.9 498.7
Investment property 10.0 9.5 4.7 9.5
Goodwill 1,567.6 1,418.5 10.5 1,432.8
Other intangible assets 400.3 375.4 6.6 379.6
Interest in associated
companies 70.9 72.2 -1.9 75.2
Available-for-sale
financial
assets 20.9 15.8 32.9 15.9
Deferred tax receivables 46.4 55.9 -16.9 42.4
Trade and other receivables 38.9 44.7 -13.0 37.9
NON-CURRENT ASSETS, TOTAL 2,665.9 2,552.6 4.4 2,492.1
CURRENT ASSETS
Inventories 180.1 168.5 6.9 170.7
Income tax receivables 45.2 40.2 12.4 25.9
Trade and other receivables 452.2 432.7 4.5 415.4
Available-for-sale
financial
assets 0.5 0.1 0.1
Cash and cash equivalents 305.1 88.8 88.1
CURRENT ASSETS, TOTAL 983.2 730.4 34.6 700.2
ASSETS, TOTAL 3,649.1 3,283.0 11.2 3,192.3
EQUITY AND LIABILITIES
EQUITY
Equity attributable to the equity holders of the Parent Company
Share capital 71.3 71.1 0.2 71.3
Treasury shares -37.5 -7.2 -51.6
Other equity 1,291.1 1,274.2 1.3 1,326.2
1,324.9 1,338.1 -1.0 1,345.9
Minority interest 21.4 15.5 37.7 18.3
EQUITY, TOTAL 1,346.2 1,353.6 -0.5 1,364.2
NON-CURRENT LIABILITIES
Deferred tax liabilities 110.3 106.3 3.8 103.9
Pension obligations 42.7 53.8 -20.6 45.2
Provisions 7.3 8.5 -13.4 8.8
Interest-bearing
liabilities 613.0 41.1 328.1
Trade and other payables 34.9 36.0 -3.1 28.3
CURRENT LIABILITIES
Provisions 12.2 9.6 27.5 7.8
Interest-bearing
liabilities 713.7 927.5 -23.0 553.4
Income tax liabilities 45.6 45.7 -0.2 8.4
Trade and other payables 723.2 701.0 3.2 744.3
LIABILITIES, TOTAL 2,302.9 1,929.4 19.4 1,828.1
EQUITY AND LIABILITIES, TOTAL 3,649.1 3,283.0 11.2 3,192.3
CHANGES IN CONSOLIDATED EQUITY
EUR million Equity attributable to the equity
holders of the Parent Company
Share Treasury Other Total Minor Equity,
capital shares equity ity total
inter
est
EQUITY AT
1 JAN 2007 70.9 1,234.8 1,305.7 17.0 1,322.7
Change in translation differences -2.4 -2.4 0.1 -2.3
Other items -0.8 -0.8 -0.8
Items recognised directly in equity,
total -3.2 -3.2 0.1 -3.1
Result for the period 191.0 191.0 0.9 192.0
TOTAL RECOGNISED INCOME AND EXPENSES 187.8 187.8 1.0 188.8
Conversion of
capital notes 0.0 1.7 1.7 1.7
Acquisition of
treasury shares -7.2 -7.2 -7.2
Use of share
options 0.1 2.4 2.6 2.6
Expense recognition of options granted 4.2 4.2 4.2
Dividends paid -156.7 -156.7 -2.3 -159.0
Change in minority interests -0.2 -0.2
EQUITY AT
30 SEPT 2007 71.1 -7.2 1,274.2 1,338.1 15.5 1,353.6
EQUITY AT
1 JAN 2008 71.3 -51.6 1,326.2 1,345.9 18.3 1,364.2
Change in translation differences 9.4 9.4 0.2 9.7
Other items -1.0 -1.0 -1.0
Items recognised directly in equity,
total 8.4 8.4 0.2 8.7
Result for the period 177.9 177.9 2.8 180.7
TOTAL RECOGNISED INCOME AND EXPENSES 186.4 186.4 3.1 189.4
Acquisition of
treasury shares -47.6 -47.6 -47.6
Cancellation of
treasury shares 61.6 -61.6
Use of share
options 0.0 0.2 0.2 0.2
Expense recognition of options granted 3.9 3.9 3.9
Dividends paid -160.8 -160.8 -3.0 -163.9
Change in minority interests -3.1 -3.1 3.0 -0.1
EQUITY AT
30 SEPT 2008 71.3 -37.5 1,291.1 1,324.9 21.4 1,346.2
CONSOLIDATED CASH FLOW STATEMENT
EUR million 1-9/ 1-9/ Change 1-12/
2008 2007 % 2007
OPERATIONS
Result for the period 180.7 192.0 -5.9 246.1
Adjustments 138.4 124.7 11.0 161.5
Change in working capital -70.8 -98.8 -28.3 -45.8
Financial items and taxes -92.9 -100.6 -7.6 -133.8
CASH FLOW FROM OPERATIONS 155.4 117.3 32.5 227.9
INVESTMENTS
Acquisition of tangible and intangible
assets -74.4 -57.6 29.2 -88.6
Operations acquired -139.9 -39.1 -49.8
Sales of tangible and intangible
assets 11.5 18.3 -37.4 23.8
Operations sold 42.4 23.6 79.9 85.0
Loans granted -18.7 -3.3 -4.4
Repayments of loan receivables 8.0 3.6 122.1 3.9
Other cash flow from investments 11.9 10.5 12.9 13.0
CASH FLOW FROM INVESTMENTS -159.1 -43.9 -17.2
CASH FLOW BEFORE FINANCING -3.7 73.4 210.7
FINANCING
Proceeds from share subscriptions 0.2 2.6 -90.5 5.2
Change in loans with short maturity 8.5 107.3 -92.1 101.5
Drawings of other loans 521.3 155.0 295.5
Repayments of other loans -96.2 -178.8 -46.2 -403.1
Treasury shares -48.2 -5.1 -51.0
Dividends paid -163.9 -159.0 3.1 -158.8
Other cash flow from financing -0.2 -2.2 -92.7 -3.0
CASH FLOW FROM FINANCING 221.7 -80.3 -213.7
CHANGE IN CASH AND CASH EQUIVALENTS
ACCORDING TO CASH FLOW STATEMENT 218.0 -6.9 -3.0
Effect of exchange rate differences
on cash and cash equivalents 1.2 -0.8 -1.7
NET CHANGE IN CASH AND CASH
EQUIVALENTS 219.2 -7.7 -4.7
Cash and cash equivalents at 1 Jan 72.4 77.1 -6.1 77.1
Cash and cash equivalents at
30 Sept / 31 Dec 291.6 69.4 72.4
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/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2008 2008 2008 2007 2007 2007 2007 2007
SANOMA MAGAZINES
Sanoma
Magazines
Netherlands 111.7 135.2 124.8 119.8 136.6 129.2 154.2 539.8
Sanoma
Magazines
International 70.1 76.8 77.4 65.8 68.5 66.0 83.2 283.4
Sanoma
Magazines
Belgium 54.2 55.5 53.7 52.5 55.8 48.1 60.1 216.6
Sanoma
Magazines
Finland 50.7 51.9 49.1 50.1 48.6 48.1 56.0 202.8
Eliminations -1.3 -0.9 -1.0 -1.2 -1.2 -1.0 -1.2 -4.6
TOTAL 285.5 318.5 304.0 287.1 308.2 290.4 352.4 1,238.1
SANOMA NEWS
Helsingin
Sanomat 74.1 71.2 65.6 72.3 68.0 66.2 72.4 278.9
Ilta-Sanomat 22.5 24.1 22.5 23.6 24.6 22.9 23.6 94.8
Other
publishing 22.4 23.3 22.1 24.3 24.7 22.6 25.9 97.5
Other
businesses 38.5 38.1 37.1 38.5 38.0 37.0 39.1 152.6
Eliminations -36.6 -35.6 -33.7 -36.4 -35.5 -34.8 -36.4 -143.0
TOTAL 120.8 121.1 113.5 122.4 119.8 114.0 124.6 480.8
SANOMA LEARNING & LITERATURE
Educational
publishing 24.6 83.9 102.9 20.0 78.5 68.7 30.6 197.7
Publishing 27.5 20.8 22.6 26.3 20.8 20.7 29.6 97.3
Other
businesses 12.0 11.3 14.1 12.0 11.0 14.2 14.0 51.1
Eliminations -5.7 -5.5 -6.4 -6.0 -5.4 -6.5 -5.7 -23.7
TOTAL 58.3 110.5 133.2 52.2 104.8 97.0 68.5 322.5
SANOMA ENTERTAINMENT
TV and radio 22.6 24.5 18.0 20.1 20.3 16.3 26.5 83.2
Other
businesses 18.0 16.7 16.8 15.4 15.3 16.7 16.2 63.6
Eliminations -0.1 -0.3 -0.1 -0.3 -0.2 -0.2 -0.2 -0.8
TOTAL 40.5 40.9 34.7 35.2 35.4 32.8 42.5 146.0
SANOMA TRADE
Kiosk
operations 94.6 102.5 103.8 86.9 99.3 95.5 103.8 385.5
Press
distribution 58.2 60.2 61.8 56.2 61.0 61.8 66.5 245.5
Bookstores 31.0 24.0 36.9 29.6 23.1 37.7 50.0 140.3
Movie
operations 24.4 19.4 23.8 19.5 18.8 21.8 25.5 85.5
Others 0.0 0.0 0.0 4.0 3.2 2.1 1.1 10.4
Other
businesses -5.5 -3.0 -4.8 -3.9 -4.0 -4.3 -5.8 -18.0
TOTAL 202.7 203.2 221.4 192.4 201.3 214.5 241.1 849.3
Other
companies and
eliminations -24.8 -24.4 -28.2 -25.6 -25.1 -30.1 -29.4 -110.3
TOTAL 683.1 769.8 778.6 663.7 744.4 718.6 799.6 2,926.3
OPERATING PROFIT BY DIVISION
EUR million 1-3/ 4-6/ 7-9/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2008 2008 2008 2007 2007 2007 2007 2007
Sanoma Magazines 48.2 46.6 31.6 32.1 61.3 30.4 37.2 160.9
Sanoma News 17.9 14.7 15.2 19.6 17.3 17.2 13.6 67.6
Sanoma Learning &
Literature -4.3 26.4 36.3 -6.5 29.8 27.9 -6.6 44.5
Sanoma
Entertainment 4.0 6.3 2.8 2.9 4.0 3.5 5.4 15.8
Sanoma Trade 9.9 7.4 13.0 9.0 10.6 13.0 23.1 55.6
Other companies
and eliminations -3.0 -2.9 -5.0 -3.1 10.1 -3.4 -4.3 -0.7
TOTAL 72.7 98.5 94.0 54.0 133.0 88.5 68.3 343.8
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 30.9.2008 30.9.2007 Change % 31.12.2007
Carrying amount at 1 Jan 498.7 572.3 -12.9 572.3
Increases 59.7 40.8 46.3 63.4
Acquisition of operations 7.7 0.8 1.2
Decreases -5.9 -2.2 -4.3
Disposals of operations -0.2 -0.8 -75.0 -66.9
Depreciation for the period -48.9 -49.4 -1.1 -65.7
Impairment losses for
the period -0.7 0.0 -0.3
Exchange rate differences
and other changes 0.5 -0.7 -1.1
Carrying amount at
30 Sept / 31 Dec 510.9 560.6 -8.9 498.7
The commitments for acquisitions of tangible assets were EUR 0.0
million (2007: EUR 6.3 million).
Effects of acquisitions to the Consolidated Balance Sheet
In January-September, Sanoma has made numerous acquisitions. The most
significant acquisition during the review period was that of the
Polish educational publisher Nowa Era Sp. z.o.o. Other acquisitions
include, e.g., 53% of a Dutch magazine publisher Mood for Magazines
B.V., 55% of a Russian magazine publisher LLC Lux Media, 82% of the
leading Bulgarian internet company Net Info.BG AD, shares of the
European Auto trader B.V., a publisher of automotive magazines and
online services as well as the subsidiaries of the Swedish
translation, localisation and language training company Interverbum
(Interverbum AB, Interverbum Localisation AB and Interverbum UK
Ltd.). In addition, the Group has made smaller acquisitions in online
and magazine publishing operations, among others. Calculations on the
effects of the acquisitions are preliminary.
EUR million 1-9/2008 1-9/2008
Nowa Era Other
Acquisition costs 62.5 101.8
Fair value of acquired net assets 5.7 36.9
Goodwill 56.8 64.9
CONTINGENT LIABILITIES
EUR million 30.9.2008 30.9.2007 Change % 31.12.2007
CONTINGENCIES FOR OWN COMMITMENTS
Mortgages 23.4 18.2 28.9 20.2
Pledges 5.9 16.5 -64.5 5.8
Other items 0.4 0.4 0.5 0.4
TOTAL 29.7 35.1 -15.4 26.4
CONTINGENCIES INCURRED ON BEHALF OF ASSOCIATED COMPANIES
Guarantees 10.5 7.9 32.4 7.9
TOTAL 10.5 7.9 32.4 7.9
CONTINGENCIES INCURRED ON BEHALF OF OTHER COMPANIES
Guarantees 0.2 0.1 25.5 0.1
TOTAL 0.2 0.1 25.5 0.1
CONTINGENCIES INCURRED ON BEHALF OF OTHER COMPANIES
Operating lease liabilities 262.9 261.7 0.5 275.8
Royalties 23.9 20.9 14.0 27.2
Other 36.1 49.8 -27.4 42.9
TOTAL 322.9 332.4 -2.8 345.9
CONTINGENT LIABILITIES, TOTAL 363.3 375.6 -3.3 380.4
CONSOLIDATED INCOME STATEMENT BY QUARTER
EUR million 1-3/ 4-6/ 7-9/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2008 2008 2008 2007 2007 2007 2007 2007
NET SALES 683.1 769.8 778.6 663.7 744.4 718.6 799.6 2,926.3
Other
operating
income 38.1 17.7 14.8 13.3 49.0 12.4 20.6 95.2
Materials and
services 309.4 333.4 352.0 294.9 327.1 323.3 363.5 1,308.9
Personnel
expenses 172.2 177.5 167.8 158.4 162.2 151.8 174.2 646.5
Other
operating
expenses 131.1 141.5 141.9 135.0 133.9 130.3 173.5 572.7
Depreciation
and impair-
ment losses 35.8 36.6 37.7 34.6 37.3 37.1 40.7 149.7
OPERATING
PROFIT 72.7 98.5 94.0 54.0 133.0 88.5 68.3 343.8
Share in
result of
associated
companies 3.0 1.6 0.4 1.8 2.7 2.0 5.9 12.4
Financial
income 3.5 3.1 6.1 4.8 -0.2 2.5 2.1 9.2
Financial
expenses 12.7 14.5 15.3 11.9 9.4 11.2 12.4 44.9
RESULT BEFORE
TAXES 66.5 88.7 85.2 48.6 126.1 81.9 63.8 320.4
Income taxes -12.2 -23.4 -24.1 -13.7 -30.6 -20.3 -9.7 -74.4
RESULT FOR
THE PERIOD 54.4 65.3 61.1 34.9 95.5 61.5 54.1 246.1
Attributable to:
Equity
holders of
the Parent
Company 54.5 64.4 59.0 35.5 95.8 59.7 51.8 242.8
Minority
interest -0.2 0.9 2.1 -0.6 -0.3 1.8 2.3 3.2
Press and analyst meeting
Press and analyst meeting in Finnish will be held by Mr Hannu
Syrjänen, President and CEO of Sanoma at 11 am (Finnish time) at
Sanomatalo, Töölönlahdenkatu 2, Helsinki.
The conference call in English for analysts and investors will be
arranged at 2 pm (Finnish time). Mr 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 at
www.sanoma.com 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 Sanoma's
website after the press and analyst meeting has started.
Sanoma Corporation
Kim Ignatius
Chief Financial Officer
Additional information: Sanoma's Group Communications, tel +358 105
19 5062 or communications@sanoma.com
www.sanoma.com
Sanoma 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 20 European countries we
operate in. In 2007, the Group's net sales totalled EUR 2.9 billion
and our EBIT was EUR 344 million. The Sanoma Group employs over
20,000 people.
