Third quarter
- Net sales in the third quarter amounted to EUR 720.9 million (2010: EUR 690.6
million). Adjusted for changes in the Group structure, Sanoma's net sales grew
by 1%.
- Operating profit excluding non-recurring items was EUR 79.5 million (2010: EUR
94.9 million).
- The non-recurring items included in EBIT in the third quarter amounted to EUR
-97.1 million (2010: EUR -31.0 million) of which EUR -81.7 million consisted of
impairments of goodwill and publishing rights, mainly in Sanoma Media Russia &
CEE.
- Earnings per share were EUR -0.31 (2010: EUR 0.24). EPS excluding the non-
recurring items was EUR 0.28 (2010: EUR 0.43).
First nine months of 2011
- Sanoma Group's net sales were EUR 2,020.8 million (2010: EUR 2,043.8 million).
- Operating profit excluding non-recurring items totalled EUR 178.5 million
(2010: EUR 210.8 million)
- Cash flow from operations was EUR 133.0 million (2010: EUR 174.0 million).
- The Group outlook for 2011 is unchanged.
KEY INDICATORS 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
EUR million 2011 2010 % 2011 2010 % 2010
Net sales 720.9 690.6 4.4 2,020.8 2,043.8 -1.1 2,761.2
Operating profit excluding 79.5 94.9 -16.2 178.5 210.8 -15.4 245.4
non-recurring items
% of net sales 11.0 13.7 8.8 10.3 8.9
Operating profit -17.6 63.9 -127.5 131.0 365.3 -64.2 392.7
Result for the period -54.4 39.1 -239.0 61.6 298.3 -79.3 297.3
Capital expenditure * 67.1 59.6 12.6 85.7
% of net sales 3.3 2.9 3.1
Equity ratio, % 36.4 44.3 45.7
Net gearing, % 112.0 71.4 63.8
Number of employees at the end of the period 14,815 15,863 -6.6 15,405
(FTE)
Average number of employees (FTE) 14,683 16,148 -9.1 16,016
Earnings/share, EUR -0.31 0.24 -226.0 0.41 1.86 -78.1 1.85
Cash flow from 0.68 0.71 -3.5 0.82 1.08 -24.0 1.69
operations/share, EUR
* Including finance leases
Harri-Pekka Kaukonen, President and CEO
"Our operational performance was solid during the third quarter, given the
underlying trends and market environment. The operating segments Media, News and
Trade performed in line with our expectations. In Learning, most of the
countries also contributed as planned, but we continue to face material
challenges in Hungary due to the country's difficult economic and political
situation. The general economic outlook in Hungary and other CEE countries as
well as the development of exchange rates were main reason for impairments of
goodwill and intangible assets in Sanoma Media Russia & CEE. In language
services, the goodwill impairments were caused by the weakened business outlook.
During the year, we have made significant changes in the Group management team,
structure and portfolio. Our strategy to focus on consumer media and learning is
becoming more evident. The acquisition of SBS has been finalised and, from the
beginning of August, the Dutch operations have been consolidated. The first
steps of the integration process have been taken and a new CEO has been
appointed for SBS Netherlands. I believe that the future of SBS is bright, as we
set the main focus on strengthening SBS's position with the viewers and to
increase market share in the advertising market.
As part of our strategy we continued to dispose of non-core Trade assets. The
bookstore operations in Finland were divested in September and the Latvian press
distribution and kiosk operations in October.
Sanoma is a dynamic company in the midst of transformation. Our response to the
changing media landscape is to further utilise our understanding of consumer and
customer behaviour, to accelerate the speed of digital transition, to foster
innovation and to improve the efficiency of our operations. For the next three
years, we have set the following priorities: ensure financial flexibility by
streamlining operating expenses, focusing on cash flows and continuing to
dispose of non-core assets; maximise the efficiency of our print businesses to
ensure competitiveness and successful migration to digital; ensure profitable
organic growth of our TV and learning businesses; and to create growth from new
digital services. A key enabler is the transformation of our culture into a high
performing company."
Outlook for 2011
Sanoma Group's outlook for 2011 is unchanged. The Group's net sales are expected
to be at the previous year's level and operating profit excluding non-recurring
items is expected to decrease somewhat in 2011. In 2010, operating profit
excluding non-recurring items was EUR 245.4 million.
Sanoma's net sales and operating profit in 2011 are affected by the development
of advertising and private consumption in the Group's countries of operation.
The current outlook is based on the assumption that the advertising markets in
the Group's main operating countries will grow slightly in 2011.
Net sales
Third quarter
In the third quarter of 2011, Sanoma's net sales increased by 4% and amounted to
EUR 720.9 million (2010: EUR 690.6 million). The growth came from the acquired
TV operations and increased sales of Sanoma Media Netherlands and Finland.
Currency translations did not have a material effect on third quarter sales.
When adjusted for changes in the Group structure, net sales grew by 1%.
Print circulation sales grew by 2%. Subscription sales increased somewhat, but
single copy sales were slightly down.
Advertising sales increased by 34%, mostly due to acquired TV operations in the
Netherlands and Belgium. Online advertising sales increased significantly, by
16%. In total, advertising sales accounted for 26% (2010: 20%) of the Group's
net sales.
The TV acquisition also impacted Sanoma's digital sales, which grew by 61% in
the third quarter and accounted for 16% (2010: 10%) of the Group's net sales.
Broadband access services in Finland, which were divested in 2010, are not
included in the digital sales of the comparable period.
First nine months of 2011
In January-September, Sanoma's net sales decreased by 1% due to acquired
operations not fully compensating the effects of the divestments made in 2010
and 2011.
Online sales grew by 11% to EUR 122.0 million. Total digital sales, including
also TV and e.g. e-learning, grew by 30%, and amounted to 13% (2010: 10%) of net
sales.
By country, Finland accounted for 49% (2010: 51%) of the cumulative net sales
and the Netherlands 26% (2010: 23%). Net sales from other EU countries totalled
22% (2010: 23%) and non-EU countries accounted for 3% (2010: 3%).
Result
Third quarter
Sanoma's operating profit excluding non-recurring items in July-September
decreased by 16% and totalled EUR 79.5 million (2010: EUR 94.9 million).
Operating profit includes EUR 23.3 million of one-off transaction costs and
order backlog amortisations related to the SBS acquisition, which are not
categorised as non-recurring. Operating profit excluding non-recurring items
amounted to 11.0% (2010: 13.7%) of net sales. Currency translations did not have
a material effect on the third quarter result.
The Group's total expenses increased by 5% due to acquired operations. Paper
costs increased by 3% and employee benefit expenses by 4%. The Group had some
1,000 fewer employees than at the end of September 2010, corresponding to a
decrease of 7%. From the year-end, the number of personnel has decreased by 4%.
The decrease in the number of personnel is mostly attributable to divestment of
operations and the closing down of kiosks, partly offset by the acquisition of
SBS.
In July-September, the operating profit included EUR -97.1 million (2010: EUR
-31.0 million) in non-recurring items consisting mainly of impairments in
goodwill of Sanoma Media Russia & CEE, language service operations and
publishing rights in Sanoma Media Netherlands and Sanoma Media Russia & CEE.
NON-RECURRING ITEMS 7-9/ 7-9/ 1-9/ 1-9/ 1-12/
EUR million 2011 2010 2011 2010 2010
Media
Gain on sale of Humo and Desert Fishes 9.1 2.6 2.6
Impairment of goodwill and intangible assets -53.4 -53.4 -1.0
(Russia & CEE)
Restructuring expenses (The Netherlands) -3.3
Impairment of intangible assets (The Netherlands) -3.4 -6.3 -3.4 -6.3 -6.3
Gain on sale of Welho (Finland) 179.4 179.0
Impairment of goodwill in the Dutch press -28.9 -28.9 -28.9
distribution
News
Gain on sale of Lehtikuva 6.0 6.0
Gain on sale of Sanoma Lehtimedia's local papers 2.9
Learning
Impairment of goodwill (Language services) -24.1 -24.1
Sale of LDC 0.9
Loss on sale of Bertmark Norge -1.2 -1.1
Restructuring expenses -1.0 -0.2 -2.7 -1.5 -2.3
Impairment of a Dutch non-core entity -2.1
Trade
Loss on sale of Suomalainen Kirjakauppa -10.8 -10.8
Write-down of real estates -3.1 -3.1
Impairment (Bookstores) -0.8 -0.8
Gain on sale of movie operations -0.1 51.4
Loss on sale of Romanian operations -8.0
Loss on sale of Russian operations -0.8 -2.6
Restructuring expenses -0.4 -1.0 -2.8 -1.0 -1.0
Other companies
Gains on the sales of real estates 5.4 1.0 5.4 5.4
--------------------------------------------------------------------------------
NON-RECURRING ITEMS IN OPERATING PROFIT -97.1 -31.0 -47.5 154.5 147.3
Impairment of share in associated company -4.0 -4.0 -22.1
Hansaprint
--------------------------------------------------------------------------------
NON-RECURRING ITEMS IN RESULTS -4.0 -4.0 -22.1
IN ASSOCIATED COMPANIES
Sanoma's third quarter result included EUR -3.2 million (2010: EUR 0.8 million)
of profits from associated companies. The most important associated companies
included in this line are DNA, Hansaprint, Stratosfèra and Jokerit HC.
First nine months of 2011
In January-September, Sanoma's operating profit excluding non-recurring items
decreased by 15% and totalled EUR 178.5 million (2010: EUR 210.8 million). The
operating profit improved in News and Trade. Weak development of general
literature and Hungarian learning operations lowered the result in Learning. The
result in Media was burdened by costs related to the SBS acquisitions. Costs
increased significantly in the Parent Company due to development projects.
Sanoma's net financial items totalled EUR -19.8 million (2010: EUR -8.6
million). Financial income amounted to EUR 4.6 million (2010: EUR 8.7 million),
EUR 1.5 million of which were exchange rate gains (2010: EUR 5.5 million).
Financial expenses amounted to EUR 24.4 million (2010: EUR 17.3 million).
Following the increased debt, interest expenses amounted to EUR 17.4 million
(2010: EUR 9.5 million). Exchange rate losses totalled EUR 4.6 million (2010:
EUR 6.0 million).
The result before taxes amounted to EUR 109.7 million in the first nine months
(2010: EUR 356.8 million). The effective tax rate was 43.8% (2010: 16.4%).
Earnings per share were EUR 0.41 (2010: EUR 1.86). The effective tax rate and
earnings per share were affected by the impairments done in the third quarter.
The comparable figures were affected by the tax-free non-recurring gain on the
sale of the cable TV operator Welho.
Balance sheet and financial position
At the end of September, Sanoma's consolidated balance sheet totalled EUR
4,321.8 million (2010: EUR 3,246.5 million). In the first nine months, the
Group's cash flow from operations was EUR 133.0 million (2010: EUR 174.0
million). Cash flow from operations per share was EUR 0.82 (2010: EUR 1.08). In
addition to the lower result, cash flow was weakened by higher interest expenses
and paid taxes as well as investments in TV programming rights.
Sanoma's equity ratio was 36.4% (2010: 44.3%) at the end of September. Equity
totalled EUR 1,505.2 million (2010: EUR 1,357.6 million). Following the closing
of the SBS acquisition, interest-bearing liabilities increased and totalled EUR
1,788.3 million (2010: EUR 1,024.3 million). Interest-bearing net debt was EUR
1,685.3 million (2010: EUR 969.1 million).
In order to finance the SBS acquisition, Sanoma entered into the following
financing facilities: EUR 522 million syndicated term loan for five years, EUR
250 million short term bridge-to-bond facility and EUR 132 million syndicated
term loan and revolving credit facility for five years. The latter facility is
for the Dutch Sanoma Image B.V., owned by Sanoma and Talpa as a minority
shareholder. The transaction did not affect the financing terms of Sanoma's
previous credit facilities. The current net debt/EBITDA ratio is well within the
Group's finance policy and debt covenants.
Investments, acquisitions and divestments
Investments in tangible and intangible assets, including finance leases,
amounted to EUR 67.1 million (2010: EUR 59.6 million) in January-September.
Investments were mainly related to ICT systems as well as replacements and
renovations. Sanoma's business acquisitions totalled EUR 1,141.9 million (2010:
EUR 37.1 million).
In March, Sanoma sold its movie operations in Finland and the Baltic countries.
In 2010, net sales of movie operations were EUR 88.6 million and operating
profit stood at EUR 8.4 million. The enterprise value of the transaction was EUR
116.0 million, and the transaction was finalised at the end of April.
In April, Sanoma sold its press distribution and kiosk operations in Romania. In
2010, net sales of these operations amounted to some EUR 23 million. The
remaining kiosk operations in Russia were also divested at the beginning of
April.
In April, Sanoma agreed to acquire the SBS free-to-air TV assets in the
Netherlands and Belgium together with Talpa Media in the Netherlands and Corelio
and Wouter Vandenhaute & Eric Watté in Belgium. The enterprise value of the
transaction was EUR 1,225 million. The net sales of the acquired companies
totalled EUR 404 million in 2010 and their operating profit was some EUR 110
million (pro forma, unaudited). The acquisition in Belgium was finalised on 8
June and the Dutch acquisition on 29 July after the necessary approvals were
received from the competition authorities.
In April, Sanoma announced that it will acquire the Finnish educational
publisher Tammi Learning and the Swedish educational publisher Bonnier
Utbildning, both from the Swedish media company Bonnier. At the same time,
Sanoma will divest its Finnish general literature publisher WSOY to Bonnier. The
transaction was completed on 3 October.
In August, Sanoma announced the divestment of its bookstore operations in
Finland. In 2010, net sales of Sanoma's Finnish bookstores were EUR 109 million
and operating profit EUR 2 million. The divestment was completed on 30
September.
After the review period, Sanoma divested its ownership, 50% of the shares, in
the Latvian kiosk and press distribution company Narvesen Baltija. In 2010, the
net sales of the company were EUR 59 million. Sanoma will record some EUR 5
million non-recurring sales gain for the transaction in its fourth quarter
result.
MEDIA
The Media segment includes magazine, TV and digital businesses in twelve
European countries and comprises four strategic business units: Sanoma Media
Belgium, Sanoma Media Finland, Sanoma Media Netherlands and Sanoma Media Russia
& CEE.
- Sanoma Media's television operations developed well in the third quarter in
Finland and Belgium, viewing shares declined in the Netherlands because of
disappointing current programming.
- The SBS acquisition is now completed and the figures have been consolidated
with the Dutch and Belgian operations.
Key indicators 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
EUR million 2011 2010 % 2011 2010 % 2010
Net sales 355.5 297.5 19.5 970.2 949.0 2.2 1,299.6
The Netherlands 174.0 118.8 46.4 409.9 354.3 15.7 490.4
Finland 70.0 67.5 3.6 223.5 251.8 -11.2 339.3
Russia & CEE 50.8 51.0 -0.5 156.4 154.0 1.6 214.9
Belgium 48.4 48.7 -0.5 147.2 154.5 -4.7 208.3
Other businesses and eliminations 12.3 11.5 7.3 33.2 34.3 -3.4 46.7
Operating profit excluding non- 25.8 31.0 -16.6 86.5 109.5 -21.0 145.8
recurring items *
% of net sales 7.3 10.4 8.9 11.5 11.2
Operating profit -31.0 -4.2 38.8 256.3 -84.9 287.9
Capital expenditure 16.6 18.0 -7.4 25.2
Number of employees at the end of the period (FTE) 5,986 5,436 10.1 5,419
Average number of employees (FTE) 5,517 5,663 -2.6 5,602
* In 2011, the non-recurring items included in the second quarter a EUR 9.1
million gain on sale of Humo and Desert Fishes and in the third quarter a EUR
3.4 million impairment of intangible assets in the Netherlands and a EUR 53.4
million impairment of goodwill and intangible assets in Russia & CEE. In 2010,
the non-recurring items included in the second quarter a EUR 2.6 million gain
from selling 49% of the Humo magazine and a EUR 179.0 million gain on the sale
of the cable TV operator Welho, in the third quarter a EUR 28.9 million
impairment of goodwill in the Dutch press distribution and a EUR 6.3 million
impairment of intangible assets in the Dutch media business and in the fourth
quarter EUR 3.3 million restructuring expenses in the Netherlands and a EUR 1.0
impairment of intangible assets in Russia & CEE.
Operational indicators * 1-9/ 1-9/
Magazines 2011 2010
Number of magazines published 281 280
Magazine copies sold, thousands 248,766 257,426
Advertising pages sold 34,460 35,865
Finnish TV operations
TV channels' share of TV advertising 33.0% 33.7%
TV channels' national commercial viewing share (10-44 years) 34.7% 35.6%
TV channels' national viewing share 15.0% 14.9%
Dutch TV operations
TV channels' share of TV advertising 30.5% 32.1%
TV channels' national viewing share (20-49 years) 23.4% 24.5%
* Including joint ventures
Third quarter net sales
Net sales in Media grew by 19% in July-September following the consolidation of
acquired operations. Adjusted for structural changes, net sales grew by 1%.
Advertising sales grew by 50%, following the consolidation of acquired
operations, and represented 39% (2010: 31%) of the third quarter net sales.
Online advertising sales increased by 17% with all business units showing
growth.
Print circulation sales increased by 3%, due to acquired operations, and
represented 47% (2010: 55%) of the third quarter net sales. Subscription sales
were stable, but single copy sales decreased slightly.
The consolidation of acquired TV operations and growing online advertising sales
increased the segment's digital sales. In total, these sales grew by 112% in the
third quarter and represented 25% (2010: 14%) of the net sales.
Developments in the businesses
In the Netherlands, net sales grew by 46%. Most of this growth came from the
consolidation of the acquired SBS TV and print operations, part of Sanoma Media
Netherlands since 1 August 2011. Sales of the magazine operations were at the
comparable quarter's level while the digital sales increased clearly. The
declining trends in the readers market continued but Sanoma Media Netherlands'
market share remained stable. In total, circulation sales grew by 10% due to
acquired operations. Single copy sales declined from the comparable period, but
subscription sales increased clearly. Advertising sales grew significantly
following the consolidation of new TV operations, and represented 42% (2010:
27%) of the Dutch net sales. The Dutch market for consumer magazine advertising,
excluding TV guides, grew by 1% in July-August, while Sanoma Media Netherlands'
print advertising sales declined by 2%. Online advertising sales continued to
grow clearly. The TV advertising market in the Netherlands increased by 3% in
July-August, and Sanoma's TV operations developed in line with the markets.
Viewing shares, however, declined.
In Finland, net sales grew by 4% following the good development of TV
operations. During the third quarter, the TV advertising market in Finland
increased by 0.8%. Nelonen Media's advertising sales outperformed the market.
Net sales in magazine publishing were at the comparable quarter's level. The
magazine advertising market increased by 0.6% in the third quarter. Sanoma Media
Finland's advertising sales grew slightly. Circulation sales were at the
comparable quarter's level although the volumes are declining slightly. In
total, advertising sales of the Finnish operations represented 35% (2010: 35%)
of net sales.
Net sales in Belgium were at the comparable quarter's level. Magazine
advertising sales increased by 5% and circulation sales remained stable. The
trend in the Belgian readers market continued to be slightly decreasing, but
Sanoma Media Belgium has continuously improved its market position. The TV
advertising market in Belgium grew by 14% in the third quarter. Sanoma's TV
operations grew and market share improved to 24.2%. In total, advertising sales
represented 29% (2010: 24%) of net sales in Belgium.
The reported figures of Sanoma Media Belgium include 49% of the weekly magazine
Humo from May 2010 to May 2011. In connection with SBS acquisition, the
remaining holding in Humo was transferred to De Vijver, after which 33% of the
net result of De Vijver was included in the Belgium figures. Since the Belgium
competition authorities approved joint-control structure of De Vijver on 1
September, Sanoma's 33% share in De Vijver Media (which includes 100% of Humo,
the acquired TV operations as well as the TV productions operations of
Woestijnvis) is now proportionally consolidated line-by-line.
In Russia and the CEE countries, net sales remained stable. In general the
advertising market development has slowed down in all markets compared to the
beginning of the year and the uncertainty is increasing. Sanoma's advertising
sales in Russia and CEE increased slightly, with digital sales in particular
growing. Advertising sales represented 51% (2010: 48%) of the third quarter
sales. Following the declining market trends, Sanoma's single copy sales came
down in most countries and circulation sales decreased somewhat. The magazine
portfolio is continuously optimised according to the market situation and in the
third quarter, three titles were discontinued and one launched.
Third quarter operating profit
Operating profit excluding non-recurring items in the Media segment in July-
September decreased by 17%, due to the transaction costs and order backlog
amortisations totalling EUR 23.3 million. Excluding these costs, the result
improved in the Netherlands. In Finland, the result improved, partly due to
different number of magazine issues published than in the comparable quarter. In
Belgium, the result in magazine operations improved, but the investments in TV
programming rights decreased the total result. In Russia & CEE countries, the
result decreased due to investments in TV and higher personnel costs. The third
quarter result included EUR -56.8 million (2010: EUR -35.2 million) of non-
recurring items related to impairments of goodwill and publishing rights.
Media's outlook
Strategic business units in the Media segment have strong portfolios of media
brands in magazines, online and mobile media, and on radio and TV. With the
versatile portfolio and market leading positions, Sanoma is able to grow by
bringing new kind of products and services to consumers and advertisers. In
2011, the new operations will increase Media's net sales, but the operating
profit will be heavily burdened by costs related to the SBS transaction.
It is estimated that in 2011, net sales in Media will increase somewhat and
operating profit excluding non-recurring items will decrease clearly.
NEWS
The News segment includes the Sanoma News strategic business unit, Finland's
leading player in newspaper publishing and digital media.
- Sanoma News' market share of the Finnish advertising market continued to grow.
Advertising sales improved clearly in the tabloid Ilta-Sanomat and in free
sheets in particular.
- The Sanoma Kaupunkilehdet business unit improved its market share of the free
sheet media market and Ilta-Sanomat strengthened its share in the tabloid
market.
- All main brands now also have online and mobile applications and the use of
the products in tablet and smart phone devices shows significant growth.
Key indicators 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
EUR million 2011 2010 % 2011 2010 % 2010
Net sales 103.2 104.8 -1.6 323.8 322.7 0.3 437.6
Helsingin Sanomat 55.3 55.5 -0.5 177.6 171.4 3.7 235.4
Ilta-Sanomat 21.6 21.1 2.2 62.8 61.6 1.9 83.3
Other publishing 22.9 23.5 -2.6 71.6 74.5 -3.9 99.5
Other businesses and eliminations 3.4 4.6 -26.4 11.7 15.2 -23.0 19.4
Operating profit excluding non- 12.5 15.7 -20.7 35.3 34.2 3.1 47.2
recurring items *
% of net sales 12.1 15.0 10.9 10.6 10.8
Operating profit 12.5 15.7 -20.7 35.3 40.2 -12.2 56.1
Capital expenditure 12.6 7.8 60.7 14.0
Number of employees at the end of the period (FTE) 2,002 1,977 1.3 2,016
Average number of employees (FTE) 2,076 2,231 -7.0 2,176
* In 2011, the operating profit did not include any non-recurring items. In
2010, the non-recurring items included in the first quarter a EUR 6.0 million
gain on the sale of Lehtikuva and in the fourth quarter a EUR 2.9 million gain
on the sale of Sanoma Lehtimedia's local papers.
Operational indicators 7-9/ 7-9/
Online services, unique visitors, weekly 2011 2010
Iltasanomat.fi 2,021,181 1,528,812
HS.fi 1,271,805 1,050,010
Huuto.net 446,463 397,377
Oikotie.fi 443,038 343,832
Taloussanomat.fi 642,895 516,122
1-12/ 1-12/
Audited circulation 2010 2009
Helsingin Sanomat 383,361 397,838
Ilta-Sanomat 150,351 152,948
Third quarter net sales
Net sales in News decreased by 2% in July-September. Adjusted for structural
changes, sales grew by 2%.
Print circulation sales decreased by 1% in the third quarter. Subscription sales
decreased by 2% but single copy sales were at comparable quarter's level.
Circulation sales accounted for 47% (2010: 46%) of the segment's net sales.
Advertising sales grew by 3%. Print advertising in the News segment was at the
comparable quarter's level, but online advertising continued to grow and
increased by 15%. This was in line with the Finnish advertising market
development. The market growth, which began in the second half of 2010, is
showing signs of slowing down and according to TNS Gallup Adex, newspaper
advertising increased by 0.5% in the third quarter. Online advertising included
in the statistics continued to grow and was up by 20%. Advertising sales
represented 46% (2010: 45%) of the net sales in News in the third quarter.
Despite the transfer of Esmerk to Learning in September 2010, the total digital
sales increased by 2%, boosted by the growth of online advertising. Digital
sales represented 12% (2010: 11%) of the net sales.
Developments in the businesses
The net sales of the Helsingin Sanomat business unit were at the comparable
quarter's level in July-September. Advertising sales were stable and represented
50% (2010: 50%) of the business unit's net sales. Subscription sales were also
stable despite the decreasing trend in the circulation volume. The multichannel
use of Helsingin Sanomat continued to grow in the third quarter. Helsingin
Sanomat launched the renewed hs.fi web site and use of its tablet and smart
phone versions both increased significantly.
The Ilta-Sanomat business unit's net sales grew by 2%, with advertising sales
increasing. Both print and online advertising development was favourable.
Advertising sales represented 24% (2010: 22%) of the business unit's net sales.
Circulation sales were stable. The total volume of the Finnish tabloid market
has decreased by 5% in the last 12 months. Ilta-Sanomat's market share continued
to improve and it now commands a 58.3% (2010: 57.9%) share of the tabloid
newsstand market.
Net sales from other publishing operations decreased by 3% as a result of the
transfer of Esmerk. Free sheets improved their market positions, and their net
sales continued to increase significantly. In addition, the strong development
of digital operations continued.
Third quarter operating profit
In July-September, News' operating profit excluding non-recurring items
decreased by 21% following the lower sales as well as increased costs, due to
increased development activities and the effects of paper prices and wage
inflation. All business units posted lower results. The operating profit did not
include any non-recurring items in the third quarter or in the same period in
2010.
News' outlook
News aims to strengthen its multichannel approach when creating journalistic
content as well as when serving its advertisers. Share of digital operations
will increase and new sources of revenue through the development of the product
and service portfolio both in print and online will be created. Strengthening
the market share in both the media market and in the readers market remains a
key priority.
In 2011, net sales in News are estimated to be at the previous year's level.
Operating profit excluding non-recurring items is expected to improve slightly.
LEARNING
The Learning segment includes Sanoma's learning as well as language service and
business information operations. Sanoma Learning is a leading European provider
of learning materials and solutions in print and digital format.
- The transaction with Bonnier was completed after the review period and will
impact the fourth quarter figures of Learning.
- Following the transaction and the clearly weakened outlook of the Hungarian
learning business, the segment's outlook has been revised. It is now expected,
that net sales in Learning will be at the previous year's level but operating
profit excluding non-recurring items will decrease clearly.
Key indicators 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
EUR million 2011 2010 % 2011 2010 % 2010
Net sales 121.2 121.2 0.0 290.5 285.0 1.9 350.1
Learning 100.2 100.6 -0.3 222.0 215.5 3.0 249.3
Language services 7.2 5.2 39.7 24.0 18.3 31.5 27.1
Literature and other businesses 13.9 18.0 -22.9 49.1 58.8 -16.6 83.6
Eliminations -0.1 -2.5 95.5 -4.6 -7.7 40.2 -9.9
Operating profit excluding non- 42.4 45.7 -7.4 65.3 67.0 -2.5 52.6
recurring items *
% of net sales 35.0 37.7 22.5 23.5 15.0
Operating profit 17.3 45.5 -62.1 39.4 64.3 -38.7 47.1
Capital expenditure 9.4 10.8 -13.1 14.9
Number of employees at the end of the period (FTE) 2,559 2,676 -4.4 2,656
Average number of employees (FTE) 2,615 2,614 0.0 2,629
* In 2011, the non-recurring items included in the first quarter a EUR 0.9
million non-recurring income related to sale of LDC, in the second quarter EUR
1.7 million restructuring expenses and in the third quarter EUR 1.0 million
restructuring expenses and a EUR 24.1 million impairment of goodwill. In 2010,
the non-recurring items included in the first quarter a EUR 1.1 million loss on
the sale of Bertmark Norge and in the second quarter EUR 1.3 million, in the
third quarter EUR 0.2 million and in the fourth quarter EUR 0.8 million
restructuring expenses and in the fourth quarter a EUR 2.1 million impairment of
a Dutch non-core entity.
Third quarter net sales
Net sales in the Learning segment were stable in July-September. Also adjusted
for structural changes, net sales were stable.
The learning business has, by nature, an annual cycle and strong seasonality. It
accrues most of its net sales and results during the second and third quarters.
Changes between quarters can be significant and often explain most of the
changes from the comparable period.
Developments in the businesses
Net sales in learning were at the comparable quarter's level. Net sales grew in
most countries, in particular in Poland and in Belgium where Sanoma's market
share improved. In the Netherlands, sales were realised already during the
previous quarters, whereas in the comparable year, the third quarter was strong.
In Hungary, the net sales decreased significantly as a result of increased
recycling of learning materials, following the cuts in the governmental budget
and the difficult political situation. In other countries, the market conditions
remain stable. After the review period, Sanoma completed the acquisition of
learning operations in Finland and Sweden. These units will be consolidated with
the learning business in the fourth quarter.
Net sales in language services increased significantly due to new operations:
the business information and media monitoring service provider Esmerk has been
included in the figures since September 2010. In addition, Esmerk's operations
have developed positively, and its net sales continued to grow in the third
quarter. Net sales also grew in AAC Global.
Net sales in literature and other businesses decreased by 23%. Sales of general
literature and printing were lower than in the comparable quarter.
After the review period, Sanoma completed the acquisition of the Finnish
educational publisher Tammi Learning and the Swedish educational publisher
Bonnier Utbildning (now Sanoma Utbildning) from Bonnier as well as the
divestment of its Finnish general literature publisher WSOY. The new learning
units will be included and the general literature operations excluded from
Sanoma figures from 1 October onwards. The learning business has a strong
seasonality within the year, the first and fourth quarters being typically loss
making. For general literature, on the other hand, the fourth quarter is
typically the strongest. Due to this seasonality, this transaction will lower
the fourth quarter result in 2011.
Third quarter operating profit
Operating result excluding non-recurring items in the Learning segment decreased
by 7% in the third quarter. In learning, most of the results were accrued
already in the second quarter. Result weakened in Hungary and in YDP (Poland).
The operational result improved in language services. In the third quarter, the
result included EUR -25.1 million (2010: EUR -0.2 million) of non-recurring
items related mainly to the impairment of goodwill in language services.
Learning's outlook
Customers in learning and language services are increasingly looking for
comprehensive solutions. Sanoma Learning will continue its transformation in
order to offer the most appealing solutions, create value for the customer by
applying new technologies and gain efficiency through developing concepts and
platforms to be used in several markets. At the same time, growth is sought
through further internationalisation of its learning businesses.
It is estimated that the net sales of Learning in 2011 will be at the previous
year's level and operating profit excluding non-recurring items will decrease
clearly.
TRADE
The Trade segment includes Sanoma's kiosk operations and trade services in
Finland, Estonia and Lithuania.
- Customer volumes and sales of the Finnish kiosks showed positive development
in the third quarter and the operational result improved significantly.
- The bookstore operations in Finland were divested at the end of September.
- After the review period, the kiosk and press distribution operations in Latvia
were divested.
- Following the positive development of kiosk operations, the outlook for the
segment in 2011 has been revised. It is now expected that Trade's net sales will
decrease significantly, but the operating profit excluding non-recurring items
will decline only slightly.
Key indicators 7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
EUR million 2011 2010 % 2011 2010 % 2010
Net sales 154.5 181.1 -14.7 472.6 525.8 -10.1 726.3
Kiosk operations 97.6 99.2 -1.6 285.2 296.0 -3.7 398.4
Trade services 29.6 32.7 -9.5 93.1 96.8 -3.8 131.3
Bookstores 29.7 31.6 -6.1 73.3 77.5 -5.4 120.6
Movie operations 0.0 20.7 -100.0 28.4 66.0 -57.0 90.0
Eliminations -2.3 -3.1 24.7 -7.4 -10.5 29.5 -14.0
Operating profit excluding non- 6.8 7.4 -7.9 14.2 13.5 5.8 19.1
recurring items *
% of net sales 4.4 4.1 3.0 2.6 2.6
Operating profit -8.4 6.4 -232.0 39.3 12.5 215.8 15.5
Capital expenditure 29.4 22.1 32.7 29.7
Number of employees at the end of the period (FTE) 4,089 5,631 -27.4 5,149
Average number of employees (FTE) 4,294 5,528 -22.3 5,486
* In 2011, the non-recurring items included in the second quarter a EUR 0.8
million loss on sale of Russian operations, a EUR 8.0 million loss on sale of
Romanian operations, a 51.4 million gain on sale of movie operations and EUR
2.4 restructuring expenses. In the third quarter the non-recurring items
included a EUR 10.8 million loss on sale of Suomalainen Kirjakauppa, a EUR 3.1
million write-down of real estates, a EUR 0.8 million impairment (Bookstores)
and EUR 0.4 million restructuring expenses. In 2010, the non-recurring items
included in the third quarter EUR 1.0 million restructuring expenses and in the
fourth quarter a EUR 2.6 million loss on sale of Russian operations.
Operational indicators 1-9/ 1-9/
2011 2010
Number of kiosk outlets 1,188 1,400
Customer volume in kiosk operations, thousands 128,574 136,746
Customer volume in bookstores, thousands 4,716 4,886
Number of copies sold (press distribution), thousands 148,849 197,902
Third quarter net sales
Trade's net sales in July-September decreased by 15% due to the divestment of
operations. Net sales adjusted for structural changes were at the comparable
quarter's level.
Developments in the businesses
Net sales from kiosk operations were down by 2% in the third quarter due to the
divestment of Russian and Romanian operations. As a part of the development
programme, a major optimisation of the kiosk network has been executed during
2011. The customer volumes as well as net sales showed positive development in
the comparable part of the kiosk chain in Finland thanks to the continued
performance uplift measures during the second and third quarters. Net sales grew
also in all Baltic countries.
Net sales from trade services decreased by 10% due to the divestment of Russian
and Romanian operations. Net sales increased in Finland, Estonia and Latvia. In
Finland, the new ERP system, which enables the distribution of new products and
services, is now fully operational.
Net sales in bookstores decreased by 6%. Sales grew in Estonia but decreased
somewhat in Finland. The market situation remained sluggish in both markets. The
Finnish bookstore operations were divested at the end of September.
Movie operations, divested at the end of April, were no longer included in
Trade's figures in the third quarter.
After the review period, the Latvian kiosk and press distribution operations
were sold to Reitan Group. In its fourth quarter result, Trade will record a EUR
5 million non-recurring sales gain for the transaction. The divestment will have
only minor impacts in the segment's net sales and operating profit in 2011.
Third quarter operating profit
Trade's operating profit excluding non-recurring items in July-September
decreased by 8% due to structural changes. Increased customer volumes and
increased sales of higher margin products as well as several efficiency
improvement measures improved the operational result in the kiosk operations
significantly. The result improved also in trade services. The positive effects
of divesting loss-making operations partly compensated for the loss of result
from the divestment of movie operations. Trade's operating profit in the third
quarter included EUR -15.2 million (2010: EUR -1.0 million) of non-recurring
items, consisting mainly of sales loss related to the divestment of bookstore
operations in Finland and write-downs of store premises in Finland.
Trade's outlook
Continuous development of its product and service offering, based on the
consumer insight gained from its 160 million annual customer contacts, is a key
success factor for Trade's operations. In addition to continuously developing
its kiosk concept and trade service offering, Trade is focusing on improving the
performance of its operations.
Following the divestments of operations, it is estimated that Trade's net sales
in 2011 will decrease significantly. Operating profit excluding non-recurring
items is expected to decline slightly.
Dividend
The Annual General Meeting on 5 April 2011 decided to pay a dividend of EUR
1.10 (2010: EUR 0.80) per share. The dividends were paid on 15 April 2011 in
Finland. Sanoma conducts an active dividend policy and primarily distributes
over half of the Group result for the period in dividends.
Shares and holdings
In January-September, 64,647,516 (2010: 44,018,242) Sanoma shares were traded on
the NASDAQ OMX Helsinki. Traded shares accounted for 40% (2010: 27%) of the
average number of shares. Sanoma's total stock exchange turnover was EUR 876.4
million (2010: EUR 671.5 million).
During the first nine months, the volume-weighted average price of a Sanoma
share was EUR 13.55, with a low of EUR 8.51 and a high of EUR 17.79. At the end
of September, Sanoma's market capitalisation was EUR 1.4 billion (2010: EUR 2.5
billion), with Sanoma's share closing at EUR 8.85 (2010: EUR 15.52). The Company
had 27,443 shareholders at the end of September, with foreign holdings
accounting for 7.7% (2010: 11.1%) of all shares and votes. There were no major
changes in share ownership during the third quarter and Sanoma did not issue any
flagging announcements. At the end of September, Sanoma had 162,810,593 shares.
Board of Directors, auditors and management
The AGM held on 5 April 2011 confirmed the number of Sanoma's Board members at
ten. Board members Jane Erkko and Rafaela Seppälä were re-elected, and Nancy
McKinstry and Kai Öistämö were elected as new members to the Board. The Board of
Directors of Sanoma consists of Jaakko Rauramo (chairman), Sakari Tamminen (vice
chairman), and Annet Aris, Jane Erkko, Antti Herlin, Sirkka Hämäläinen-Lindfors,
Seppo Kievari, Nancy McKinstry, Rafaela Seppälä and Kai Öistämö as members.
The AGM appointed chartered accountants KPMG Oy Ab as the auditor of the
Company, with Pekka Pajamo, Authorised Public Accountant, as Auditor in Charge.
Sanoma's new organisational model was announced on 5 August 2011. As of 1
September, the Executive Management Group (EMG) comprises: Harri-Pekka Kaukonen
(President and CEO of the Sanoma Group, chairman of the EMG), Jacqueline
Cuthbert (CHRO), Jacques Eijkens (Sanoma Learning), Koos Guis (Sanoma Media
Russia & CEE; acting member), Kim Ignatius (CFO), John Martin (Chief Digital
Officer, CDO), Dick Molman (Sanoma Media Netherlands), Anu Nissinen (Sanoma
Media Finland), Pekka Soini (Sanoma News), Aimé Van Hecke (Sanoma Media
Belgium), and Customer Market Officer, CMO, which will be appointed later.
Board authorisations
The AGM held on 5 April 2011 authorised the Board to decide on the repurchase of
a maximum of 16,000,000 of the Company's own shares, accounting for 9.8% of
total voting rights that the maximum number of own shares covered by the
authorisation would provide entitlement to. This authorisation is effective
until 30 June 2012 and terminates the corresponding authorisation granted by the
AGM on 8 April 2010. The Board of Directors did not exercise its right under
this authorisation during the third quarter.
The Board also has a valid authorisation from the AGM held on 8 April 2010 to
decide on an issuance of a maximum of 82,000,000 new shares and a transfer of a
maximum of 5,000,000 treasury shares, together accounting for 35.5% of total
voting rights that the maximum number of own shares covered by the authorisation
would provide entitlement to. The authorisation will be valid until 30 June
2013. The Board did not use this authorisation during the third quarter.
Seasonal fluctuation
The net sales and results of media businesses are particularly affected by the
development of advertising. Advertising sales are influenced, for example, by
the number of newspaper and magazine issues published each quarter, which varies
annually. Television advertising in Finland, the Netherlands and Belgium is
usually strongest in the second and fourth quarters.
Learning accrues most of its net sales and results during the second and third
quarters.
A major portion of the net sales and results in retail are, however, generated
in the last quarter, particularly due to Christmas sales. Of course, the number
of shopping days and, for example, the distribution of public holidays over
different quarters has an impact on the retail sales between quarters.
Seasonal business fluctuations influence the Group's net sales and operating
profit, with the first quarter traditionally being clearly the smallest one for
both.
Significant risks and uncertainty factors
The most significant risks and uncertainty factors Sanoma currently faces are
described in the Financial Statements of 2010 and on the Group's website at
Sanoma.com, together with the Group's main principles of risk management. Many
of the identified risks relate to changes in customer preferences. The driving
force behind these changes is the ongoing digitisation. Sanoma has identified
action plans in all its strategic business units on how to respond to this
challenge.
With regard to changing customer preferences and digitisation, new entrants
might be able to better utilise these changes and therefore gain market share
from Sanoma's established businesses.
Normal business risks associated with the industry relate to developments in
media advertising and consumer spending. Media advertising is sensitive to
economic fluctuations. Therefore, the general economic conditions of the
countries in which the Group operates and the economic trends of the industry
influence Sanoma's business activities and operational performance.
Sanoma's financial risks include interest rate and currency risks as well as
those related to liquidity, counterparties, impairment and availability of
capital. At a Group level, the most significant risks are changes to interest
rates and refinancing risks.
As a result of the SBS acquisition, Sanoma's consolidated balance sheet includes
about EUR 3.0 billion in goodwill, publishing rights and other intangible
assets. Most of this is related to magazine and TV operations. In accordance
with IFRS, instead of goodwill being amortised regularly, it is tested for
impairment on an annual basis, or whenever there is any indication of
impairment. Major changes in business fundamentals could lead to impairment.
INTERIM REPORT (UNAUDITED)
Accounting policies
The Sanoma Group has prepared its Interim Report in accordance with IAS 34
'Interim Financial Reporting' while adhering to related IFRS standards and
interpretations applicable within the EU on 30 September 2011. The accounting
policies of the Interim Report and the definitions of key indicators are
presented on the Sanoma website at Sanoma.com. All figures have been rounded and
consequently the sum of individual figures can deviate from the presented sum
figure. Key figures have been calculated using exact figures. This Interim
Report is unaudited.
CONSOLIDATED INCOME STATEMENT
EUR million 7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2011 2010 2011 2010 2010
NET SALES 720.9 690.6 2,020.8 2,043.8 2,761.2
Other operating income 17.0 20.9 106.8 238.5 258.8
Materials and services 294.8 300.7 846.0 887.0 1,207.4
Employee benefit expenses 158.3 151.9 490.8 493.4 668.6
Other operating expenses 153.4 124.2 428.9 385.5 554.2
Share of results in associated companies -1.1 -1.2
Depreciation, amortisation and impairment 147.9 70.7 229.6 151.2 197.1
losses
--------------------------------------------------------------------------------
OPERATING PROFIT -17.6 63.9 131.0 365.3 392.7
Share of results in associated companies -3.2 0.8 -1.5 0.1 -23.9
Financial income 1.0 4.0 4.6 8.7 11.1
Financial expenses 13.1 5.0 24.4 17.3 23.8
--------------------------------------------------------------------------------
RESULT BEFORE TAXES -32.9 63.7 109.7 356.8 356.0
Income taxes -21.5 -24.6 -48.0 -58.5 -58.6
--------------------------------------------------------------------------------
RESULT FOR THE PERIOD -54.4 39.1 61.6 298.3 297.3
Result attributable to:
Equity holders of the Parent Company -49.7 39.2 66.3 300.5 299.6
Non-controlling interests -4.6 -0.1 -4.7 -2.2 -2.3
Earnings per share for result attributable
to the equity holders of the Parent company:
Earnings per share, EUR -0.31 0.24 0.41 1.86 1.85
Diluted earnings per share, EUR -0.31 0.24 0.41 1.85 1.85
STATEMENT OF COMPREHENSIVE INCOME
EUR million 7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2011 2010 2011 2010 2010
Result for the period -54.4 39.1 61.6 298.3 297.3
Other comprehensive income:
Change in translation differences -29.9 -3.4 -23.4 8.7 9.8
Cash flow hedges -7.8 -6.9 0.2
Income tax related to cash flow hedges 2.0 1.8 -0.1
Other comprehensive income for the period, net of -35.6 -3.4 -28.5 8.7 10.0
tax
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD -90.0 35.7 33.1 307.0 307.3
Total comprehensive income attributable to:
Equity holders of the Parent Company -85.3 35.8 37.8 309.2 309.6
Non-controlling interests -4.6 -0.1 -4.7 -2.2 -2.3
CONSOLIDATED BALANCE SHEET
EUR million 30.9.2011 30.9.2010 31.12.2010
ASSETS
NON-CURRENT ASSETS
Tangible assets 348.0 431.7 429.3
Investment property 7.6 8.8 8.7
Goodwill 2,253.1 1,447.9 1,447.5
Other intangible assets 728.6 403.6 403.2
Interests in associated companies 236.1 273.0 248.7
Available-for-sale financial assets 15.7 15.9 15.8
Deferred tax receivables 50.8 34.8 34.8
Trade and other receivables 40.7 30.0 28.3
--------------------------------------------------------------------
NON-CURRENT ASSETS, TOTAL 3,680.7 2,645.7 2,616.3
CURRENT ASSETS
Inventories 100.0 128.9 122.8
Income tax receivables 2.0 9.0 8.6
Trade and other receivables 435.5 407.5 391.0
Available-for-sale financial assets 0.6 0.3 0.3
Cash and cash equivalents 102.9 55.2 64.0
--------------------------------------------------------------------
CURRENT ASSETS, TOTAL 641.0 600.8 586.8
ASSETS, TOTAL 4,321.8 3,246.5 3,203.0
EQUITY AND LIABILITIES
EQUITY
Equity attributable to the equity holders of the Parent Company
Share capital 71.3 71.3 71.3
Fund for invested unrestricted equity 203.3 188.8 203.3
Other reserves -5.0 0.2
Other equity 971.3 1,094.4 1,096.5
--------------------------------------------------------------------
1,240.9 1,354.5 1,371.2
Non-controlling interests 264.3 3.2 4.8
--------------------------------------------------------------------
EQUITY, TOTAL 1,505.2 1,357.6 1,376.0
NON-CURRENT LIABILITIES
Deferred tax liabilities 149.8 97.2 94.2
Pension obligations 24.6 30.3 26.7
Provisions 6.7 8.2 7.3
Interest-bearing liabilities 1,464.1 517.0 472.5
Trade and other payables 40.8 19.6 19.9
--------------------------------------------------------------------
NON-CURRENT LIABILITIES, TOTAL 1,686.0 672.2 620.5
CURRENT LIABILITIES
Provisions 14.3 16.5 15.6
Interest-bearing liabilities 324.2 507.3 469.4
Income tax liabilities 26.2 35.8 22.1
Trade and other payables 765.9 657.0 699.4
--------------------------------------------------------------------
CURRENT LIABILITIES, TOTAL 1,130.6 1,216.7 1,206.5
--------------------------------------------------------------------
LIABILITIES, TOTAL 2,816.6 1,888.9 1,827.0
EQUITY AND LIABILITIES, TOTAL 4,321.8 3,246.5 3,203.0
CHANGES IN CONSOLIDATED EQUITY
EUR million
Equity attributable to the equity holders of the Parent Company
Fund for Non-
inves- cont-
ted rol-
unres- Other ling Equi-
Share tricted re- Other inte- ty,
capital equity serves equity Total rests total
Equity at
1 Jan 2010 71.3 188.8 931.1 1,191.2 15.4 1,206.6
Share subscription
with options 0.0 0.0 0.0
--------------------------------------------------------------------------
Expense
recognition of
options granted 2.8 2.8 2.8
--------------------------------------------------------------------------
Dividends paid -129.5 -129.5 -1.8 -131.2
--------------------------------------------------------------------------
Change in non-
controlling
interests -18.7 -18.7 -8.3 -27.0
--------------------------------------------------------------------------
Donations -0.5 -0.5 -0.5
--------------------------------------------------------------------------
Comprehensive
income for the period 309.2 309.2 -2.2 307.0
--------------------------------------------------------------------------
Equity at
30 Sept 2010 71.3 188.8 1,094.4 1,354.5 3.2 1,357.6
Equity at
1 Jan 2011 71.3 203.3 0.2 1,096.5 1,371.2 4.8 1,376.0
Expense
recognition of
options granted 2.9 2.9 2.9
--------------------------------------------------------------------------
Dividends paid -179.1 -179.1 -0.3 -179.4
--------------------------------------------------------------------------
Change in non-
controlling
interests 8.0 8.0 264.6 272.6
--------------------------------------------------------------------------
Comprehensive
income for the period -5.1 42.9 37.8 -4.7 33.1
--------------------------------------------------------------------------
Equity at
30 Sept 2011 71.3 203.3 -5.0 971.3 1,240.9 264.3 1,505.2
INCOME STATEMENT BY QUARTER
EUR million 1-3/ 4-6/ 7-9/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2011 2011 2011 2010 2010 2010 2010 2010
NET SALES 610.2 689.7 720.9 637.9 715.4 690.6 717.3 2,761.2
Other operating 12.8 77.0 17.0 20.4 197.3 20.9 20.3 258.8
income
Materials and 263.5 287.7 294.8 279.0 307.3 300.7 320.4 1,207.4
services
Employee benefit 164.0 168.5 158.3 169.1 172.3 151.9 175.3 668.6
expenses
Other operating 128.4 147.2 153.4 128.9 132.4 124.2 168.7 554.2
expenses
Share of results in associated -0.1 -1.1
companies
Depreciation, amortisation and 39.8 41.9 147.9 40.8 39.6 70.7 45.9 197.1
impairment losses
--------------------------------------------------------------------------------
OPERATING PROFIT 27.3 121.3 -17.6 40.4 261.0 63.9 27.4 392.7
Share of results in associated 1.9 -0.1 -3.2 -2.4 1.7 0.8 -24.0 -23.9
companies
Financial income 2.2 1.3 1.0 2.2 2.5 4.0 2.4 11.1
Financial expenses 4.7 6.6 13.1 6.0 6.2 5.0 6.6 23.8
--------------------------------------------------------------------------------
RESULT BEFORE TAXES 26.7 115.8 -32.9 34.1 259.0 63.7 -0.8 356.0
Income taxes -8.2 -18.3 -21.5 -10.0 -23.8 -24.6 -0.2 -58.6
--------------------------------------------------------------------------------
RESULT FOR THE PERIOD 18.5 97.5 -54.4 24.1 235.1 39.1 -1.0 297.3
Result attributable to:
Equity holders of the Parent 18.5 97.5 -49.7 25.9 235.4 39.2 -0.9 299.6
Company
Non-controlling interests 0.0 -0.1 -4.6 -1.8 -0.2 -0.1 -0.1 -2.3
Earnings per share for result attributable
to the equity holders of the Parent company:
Earnings per share, EUR 0.11 0.60 -0.31 0.16 1.45 0.24 -0.01 1.85
Diluted earnings per share, 0.11 0.60 -0.31 0.16 1.45 0.24 -0.01 1.85
EUR
CONSOLIDATED CASH FLOW STATEMENT 1-9/ 1-9/ 1-12/
EUR million 2011 2010 2010
OPERATIONS
Result for the period 61.6 298.3 297.3
Adjustments
Income taxes 48.0 58.5 58.6
Financial expenses 24.4 17.3 23.8
Financial income -4.6 -8.7 -11.1
Share of results in associated companies 2.7 -0.1 23.9
Depreciation, amortisation and impairment losses 229.6 151.2 197.1
Gains/losses on sales of non-current assets -39.9 -194.9 -195.2
Other adjustments -66.5 -38.2 -55.1
Change in working capital
Change in trade and other receivables -17.4 -54.5 -41.1
Change in inventories -4.6 4.3 9.5
Change in trade and other payables, and provisions -22.1 -11.9 36.8
Interest paid -13.8 -8.7 -13.7
Other financial items -12.2 -1.7 -3.2
Taxes paid -52.1 -36.8 -53.9
--------------------------------------------------------------------------------
CASH FLOW FROM OPERATIONS 133.0 174.0 273.8
INVESTMENTS
Acquisition of tangible and intangible assets -53.0 -55.2 -81.8
Operations acquired -1,078.2 -48.7 -49.5
Sales of tangible and intangible assets 13.8 14.3 17.8
Operations sold 67.2 25.1 30.8
Loans granted -9.2 -0.6 -0.8
Repayments of loan receivables 37.1 4.5 3.5
Sales of short-term investments -0.3 0.2 0.2
Interest received 0.6 1.7 2.7
Dividends received 14.2 3.9 3.9
--------------------------------------------------------------------------------
CASH FLOW FROM INVESTMENTS -1,007.7 -54.8 -73.1
CASH FLOW BEFORE FINANCING -874.7 119.2 200.8
FINANCING
Proceeds from share subscriptions 0.0 14.5
Minority capital investment/repayment of equity 264.0 1.6
Change in loans with short maturity -155.2 50.1 4.2
Drawings of other loans 1,048.0 263.2 287.7
Repayments of other loans -76.6 -280.3 -355.8
Payment of finance lease liabilities -1.7 -2.8 -3.7
Dividends paid -179.4 -131.2 -131.3
Donations/other profit sharing -0.5 -0.5
--------------------------------------------------------------------------------
CASH FLOW FROM FINANCING 899.0 -101.5 -183.3
CHANGE IN CASH AND CASH EQUIVALENTS
ACCORDING TO CASH FLOW STATEMENT 24.3 17.7 17.5
Effect of exchange rate differences on cash and cash -1.3 1.4 2.1
equivalents
NET CHANGE IN CASH AND CASH EQUIVALENTS 23.0 19.1 19.5
Cash and cash equivalents at the beginning of the period 41.1 21.6 21.6
Cash and cash equivalents at the end of the period 64.1 40.7 41.1
Cash and cash equivalents in cash flow statement include cash and cash
equivalents less bank overdrafts.
NET SALES BY BUSINESS UNIT
EUR million 1-3/ 4-6/ 7-9/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2011 2011 2011 2010 2010 2010 2010 2010
MEDIA
The Netherlands 105.3 130.6 174.0 107.4 128.0 118.8 136.1 490.4
Finland 74.2 79.4 70.0 92.6 91.7 67.5 87.4 339.3
Russia & CEE 51.4 54.3 50.8 48.7 54.3 51.0 60.9 214.9
Belgium 50.1 48.7 48.4 53.5 52.3 48.7 53.8 208.3
Other businesses and 10.2 10.7 12.3 9.9 13.0 11.5 12.4 46.7
eliminations
--------------------------------------------------------------------------------
TOTAL 291.1 323.7 355.5 312.1 339.4 297.5 350.6 1,299.6
NEWS
Helsingin Sanomat 61.2 61.2 55.3 59.1 56.7 55.5 64.1 235.4
Ilta-Sanomat 19.1 22.2 21.6 19.9 20.7 21.1 21.6 83.3
Other publishing 23.7 25.0 22.9 25.3 25.6 23.5 25.0 99.5
Other businesses and 4.4 3.9 3.4 5.0 5.5 4.6 4.2 19.4
eliminations
--------------------------------------------------------------------------------
TOTAL 108.4 112.2 103.2 109.4 108.5 104.8 114.9 437.6
LEARNING
Learning 34.3 87.4 100.2 29.9 85.0 100.6 33.7 249.3
Language services 8.7 8.1 7.2 6.9 6.2 5.2 8.9 27.1
Literature and other 20.1 15.1 13.9 23.6 17.2 18.0 24.8 83.6
businesses
Eliminations -2.4 -2.1 -0.1 -2.3 -2.9 -2.5 -2.2 -9.9
--------------------------------------------------------------------------------
TOTAL 60.7 108.6 121.2 58.2 105.5 121.2 65.1 350.1
TRADE
Kiosk operations 85.3 102.3 97.6 91.9 104.9 99.2 102.4 398.4
Trade services 32.4 31.1 29.6 30.3 33.8 32.7 34.5 131.3
Bookstores 24.8 18.8 29.7 26.0 19.9 31.6 43.2 120.6
Movie operations 21.9 6.5 0.0 25.4 19.9 20.7 23.9 90.0
Eliminations -2.6 -2.4 -2.3 -3.4 -4.0 -3.1 -3.5 -14.0
--------------------------------------------------------------------------------
TOTAL 161.8 156.3 154.5 170.2 174.4 181.1 200.5 726.3
Other companies and -11.7 -11.0 -13.5 -12.0 -12.5 -14.1 -13.8 -52.4
eliminations
--------------------------------------------------------------------------------
TOTAL 610.2 689.7 720.9 637.9 715.4 690.6 717.3 2,761.2
OPERATING PROFIT BY SEGMENT
EUR million 1-3/ 4-6/ 7-9/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2011 2011 2011 2010 2010 2010 2010 2010
Sanoma Media 22.7 47.0 -31.0 31.2 229.3 -4.2 31.6 287.9
Sanoma News 12.9 9.9 12.5 15.6 8.9 15.7 15.9 56.1
Sanoma Learning -5.2 27.3 17.3 -6.4 25.1 45.5 -17.2 47.1
Sanoma Trade 3.3 44.4 -8.4 3.7 2.4 6.4 3.0 15.5
Other companies and eliminations -6.5 -7.4 -7.9 -3.7 -4.7 0.5 -6.1 -13.9
------------------------------------------------------------------------------
TOTAL 27.3 121.3 -17.6 40.4 261.0 63.9 27.4 392.7
OPERATING PROFIT EXCLUDING NON-RECURRING ITEMS BY SEGMENT
EUR million 1-3/ 4-6/ 7-9/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2011 2011 2011 2010 2010 2010 2010 2010
Media 22.7 37.9 25.8 31.2 47.3 31.0 36.3 145.8
News 12.9 9.9 12.5 9.6 8.9 15.7 13.0 47.2
Learning -6.1 29.0 42.4 -5.2 26.4 45.7 -14.4 52.6
Trade 3.3 4.1 6.8 3.7 2.4 7.4 5.6 19.1
Other companies and eliminations -6.5 -8.4 -7.9 -3.7 -4.7 -4.9 -6.1 -19.3
---------------------------------------------------------------------------
TOTAL 26.4 72.6 79.5 35.6 80.3 94.9 34.5 245.4
SEGMENT INFORMATION
Sanoma Group has four operating segments: Media, News, Learning and Trade. The
segmentation is based on business model and product differences. The media
business, based on advertising and circulation sales, is divided into two
segments: Media, operating in 12 countries, is responsible for magazines and TV
operations and News for newspapers in Finland. Both segments also have a great
variety of online and mobile services. Learning's business is mainly B2B
business. Trade, on the other hand, operates on a retail business model. In
addition to the Group eliminations column unallocated/eliminations includes
Sanoma Corporation and real estate companies as well as items not allocated to
segments.
Segment assets do not include cash and cash equivalents, interest-bearing
receivables and tax receivables. Transactions between segments are based on
market prices.
Sanoma segments 1.1-30.9.2011
Unallo-
cated/ Con-
Lear- elimi- soli-
EUR million Media News ning Trade nations dated
--------------------------------------------------------------
External net sales 967.3 322.6 280.6 450.4 -0.2 2,020.8
Internal net sales 2.9 1.2 9.8 22.2 -36.1
NET SALES, TOTAL 970.2 323.8 290.5 472.6 -36.3 2,020.8
OPERATING PROFIT 38.8 35.3 39.4 39.3 -21.8 131.0
Share of results in
associated companies -1.0 0.7 -0.1 -1.1 -1.5
Financial income 4.6 4.6
Financial expenses 24.4 24.4
RESULT BEFORE TAXES 109.7
SEGMENT ASSETS 3,048.5 319.8 540.3 192.6 47.8 4,149.1
Sanoma segments 1.1-30.9.2010
Unallo-
cated/ Con-
Lear- elimi- soli-
EUR million Media News ning Trade nations dated
--------------------------------------------------------------
External net sales 945.5 317.9 274.4 506.3 -0.1 2,043.8
Internal net sales 3.5 4.8 10.6 19.5 -38.5
NET SALES, TOTAL 949.0 322.7 285.0 525.8 -38.6 2,043.8
OPERATING PROFIT 256.3 40.2 64.3 12.5 -7.8 365.3
Share of results in
associated companies -0.6 0.3 0.0 0.3 0.1
Financial income 8.7 8.7
Financial expenses 17.3 17.3
RESULT BEFORE TAXES 356.8
SEGMENT ASSETS 1,830.9 326.3 596.6 349.6 32.7 3,136.0
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 30.9.2011 30.9.2010 31.12.2010
Carrying amount at the beginning of the period 429.3 484.2 484.2
Increases 43.8 35.6 50.7
Acquisition of operations 6.9 0.4 0.4
Decreases -11.0 -4.7 -5.4
Disposal of operations -76.2 -31.5 -31.8
Depreciation for the period -38.8 -47.8 -61.8
Impairment losses for the period -0.6 -0.1 -1.0
Exchange rate differences and other changes -5.4 -4.5 -6.1
-----------------------------------------------------------------------------
Carrying amount at the end of the period 348.0 431.7 429.3
The Group had no commitments for acquisition of tangible assets at the end of
the reporting period or in the comparative period.
EFFECT OF ACQUISITIONS ON THE CONSOLIDATED BALANCE SHEET
EUR million 1-9/ 1-12/
2011 2010
Acquisition costs 1,141.9 37.1
Fair value of acquired net assets 226.5 14.5
Recognised in equity -18.7
Recognised in income statement -0.5
---------------------------------------------------------
Goodwill 915.4 3.5
Negative goodwill in income statement
---------------------------------------------------------
Change in goodwill 915.4 3.5
CONTINGENT LIABILITIES
EUR million 30.9.2011 30.9.2010 31.12.2010
Contingencies for own commitments
Mortgages 9.8 23.3 20.6
Pledges 2.5 6.7 6.7
Other items 0.0 0.0 0.6
TOTAL 12.3 30.0 27.8
Contingencies incurred on behalf of associated companies
Guarantees 10.5 10.5
TOTAL 10.5 10.5
Contingencies incurred on behalf of other companies
Guarantees 0.0 0.4 0.0
TOTAL 0.0 0.4 0.0
Other contingencies
Operating lease liabilities 201.4 261.3 249.1
Royalties 18.9 13.9 23.5
Other items 36.4 18.8 26.9
TOTAL 256.7 294.0 299.5
----------------------------------------------------------------
TOTAL 269.1 334.8 337.8
DERIVATIVE INSTRUMENTS
EUR million
Fair values 30.9.2011 30.9.2010 31.12.2010
Interest rate derivatives
Interest rate swaps -9.3 0.1
KEY EXCHANGE RATES
1-9/ 1-9/ 1-12/
Average rate 2011 2010 2010
EUR/CZK (Czech Koruna) 24.43 25.51 25.36
EUR/HUF (Hungarian Forint) 272.02 275.46 276.04
EUR/PLN (Polish Zloty) 4.03 4.01 4.01
EUR/RUB (Russian Rouble) 40.78 40.13 40.45
EUR/SEK (Swedish Crown) 9.00 9.67 9.55
Closing rate 30.9.2011 30.9.2010 31.12.2010
EUR/CZK (Czech Koruna) 24.75 24.60 25.06
EUR/HUF (Hungarian Forint) 292.55 275.75 277.95
EUR/PLN (Polish Zloty) 4.41 3.98 3.98
EUR/RUB (Russian Rouble) 43.35 41.69 40.82
EUR/SEK (Swedish Crown) 9.26 9.14 8.97
Press Conference
Press and analyst meeting will be held in English by President and CEO Harri-
Pekka Kaukonen and CFO Kim Ignatius at 11 am Finnish time at Sanomatalo,
Töölönlahdenkatu 2, Helsinki. Webcast of the event can be viewed at Sanoma.com
either live or later on as on demand. Questions to the presenters can be asked
also by phone during the meeting. To join the conference call, please dial +44
(0)20 7162 0125 (Europe) or +1 334 323 6203 (US) and quote the conference code
905777.
Sanoma's Full-Year Result for 2011 will be published on Tuesday, 7 February
2012 at 8:30 am Finnish time (CET +1).
Sanoma Corporation
Kim Ignatius
Chief Financial Officer
Additional information: Sanoma's Investor Relations, Anna Tuominen, tel.
+358 105 19 5066 or ir@sanoma.com
Sanoma.com
Sanoma inspires, informs and connects. As a diversified media group, we bring
information, experiences, education and entertainment to millions of people
every day. We make sure that quality content and interesting products and
services are easily available and meet the demands of our readers, viewers and
listeners. We offer a challenging and interesting working environment for nearly
20,000 people in over 20 countries throughout Europe. In 2010, the Group's net
sales totalled EUR 2.8 billion.
[HUG#1560019]
Sanoma's Interim Report 1 January-30 September 2011: Stable sales in volatile markets - result burdened by one-offs
| Source: Sanoma Oyj
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