ALMA MEDIA INTERIM REPORT JANUARY - SEPTEMBER 1998
ALMA MEDIA CORP. STOCK EXCHANGE RELEASE 5 Nov.1998 at 9.00 am 1/10 ALMA MEDIA INTERIM REPORT JANUARY - SEPTEMBER 1998 Net sales for January to September 1998 totalled MFIM 2,050 (1997: MFIM 1,961). Operating profit was MFIM 164 (MFIM 190). Decrease in operating profit during the first half of 1998 is not expected to be recovered, although the operating profit during the last quarter is forecast to equal the performance during the same period last year. On 1 April 1998 Aamulehti Corporation and MTV Corporation merged to form a new mass communications company called Alma Media Corporation. The shares of both companies were converted into Alma Media shares, which have been quoted on the Helsinki Stock Exchange since the beginning of April. The merger was implemented using the pooling method and the two companies have operated with a single set of accounts since the beginning of 1998. This interim report presents Alma Media Corporations consolidated income statement for the period 1 January to 30 September 1998 and the consolidated balance sheet at the end of the period. The per share data for Alma Media Group are based on the Groups January - September figures. The comparative data in 1997 are pro forma figures for the Alma Media Group. Business environment According to Addfacts Ltd, expenditure on media advertising in Finland rose 12 % to FIM 3.8 (3.4) billion on the same period in 1997. Newspaper advertising increased 12 %, magazine advertising 19 %, TV advertising 6 %, and radio advertising 20 %. The volume of TV advertising began to increase during the third quarter and in September expenditure on TV advertising was 19 % higher than in the same month last year. Price levels for newsprint are almost 5 % higher, depending on the grade, than during the same period last year. Russias economic problems, which came to a head in August, have reduced demand, especially for newspaper products, and depressed price levels of all printed products in the Russian market. Domestic demand for printed products showed positive growth. New legislation concerning television and radio broadcasting was passed on 9 October 1998. The most important items are the law on television and radio broadcasting, and the law on state funding of television and radio broadcasting. The new laws will come into force on 1 January 1999. In effect they will for the first time give legal status to the financial relationships between the Finnish Broadcasting Company (Yleisradio Oy) and the countrys commercial television and radio companies, and hence they implement the provisions contained in the EUs Television Directive. The Ministry of Transport and Communications has announced its intention to initiate a wide revision of operating licenses since the operating licenses of MTV and local radio stations will expire in 1999. At the same time applications will be requested for operating licenses for digital and regional television operations. Consolidated net sales and profit Consolidated net sales in the January - September period totalled FIM 2,050 (1,961) million, up 5 % on the same period last year. Net sales of Alpress rose 7 %, mainly as a result of strong growth in advertising revenues. MTVs sales of advertising time began to increase during September, as forecast, but its net sales for the full period were still 2 % lower than during the first nine months of 1997. Alprints net sales rose 6 %. Exports accounted for FIM 287 million, ie. 14 % of Alma Media Groups net sales (FIM 249 million, 13 %). The Groups net share of its associated companies results was FIM -10 (+ 1) million. The Swedish TV 4 ABs contribution to this figure was FIM -13 million, which was included in its entirety in MTVs result. Operating expenses and depreciation together totalled FIM 1,906 (1,789) million, which was 7 % higher than in the comparative period. Besides the growth in business volume, factors pushing costs up included expenditure in Kauppalehti in response to the the competitive business daily introduced in autumn 1997, extra expenditure for competitive purposes in Iltalehti and one-time costs arising from the merger of Aamulehti Corporation and MTV Corporation. Group depreciation totalled FIM 128 (128) million. The Groups operating profit was FIM 164 (190) million. The Groups net financial expenses increased to FIM -13 million (+ 2) million, mainly because of the acquisition of the TV 4 AB shares after the comparative period last year. The Groups net profit for the period was FIM 105 (181) million. The net profit in the comparative period last year included FIM 42 million (net) in extraordinary income. Earnings per share were FIM 6.59 (9.42). Balance sheet The balance sheet totalled FIM 2,398 million on 30 September 1998 (FIM 2,450 million on 31 December 1997). The solvency ratio was 51 % (47 % on 31 December 1997) and shareholders equity per share was FIM 73.24 (FIM 70.50 on 31 December 1997). Capital expenditure The Groups capital expenditure totalled FIM 122 (94) million, most of which covered maintenance and replacement of fixed assets. FIM 38 million were invested in shares. Financing Liquid reserves totalled FIM 128 million at the close of the period (FIM 212 million on 31 December 1997). Interest-bearing debt amounted to FIM 683 million at the end of September (FIM 736 million on 31 December 1997), including FIM 15 million (FIM 227 million on 31 December 1997) in foreign currency loans which were hedged against exchange rate risks. Gearing was 48 % (47 % on 31 December 1997). Shares Alma Media Corporation has a share capital of FIM 157 million. FIM 68 million of this comprises Series I shares and FIM 89 million Series II shares. At the end of September 37.2 % of all the Companys shares were held in nominee accounts or owned by foreigners. Alma Media Corporations Board of Directors has no authorization to increase the share capital. Personnel The Group had 2,889 (2,818) employees on average during the period and an additional 980 (972) part-time newspaper delivery staff. Alpress Circulations of Alpresss newspapers developed better than the industry average. The average drop in circulations of daily newspapers in Finland was 0.3 % compared to last year. Iltalehtis circulation rose 7.1 %, Kauppalehtis 1.5 %, Aamulehtis 1.1 % and Satakunnan Kansas 0.6 %. Lapin Kansas circulation fell 0.3 %. The circulations of the Suomen Paikallissanomat Oy newspapers increased 0.2 % on average. Alpresss advertising revenues increased 11 % to FIM 407 (368) million and its circulation revenues rose 3 % to FIM 366 (357) million. Alpress posted net sales of FIM 790 (741) million and an operating profit of FIM 116 (94) million. A change in internal pricing improved Alpresss operating profit by FIM 21 million but its investments in Iltalehti and Kauppalehti added FIM 16 million to costs. Aamulehtis advertising revenue increased 17 % and its circulation revenue rose 2 %. Kauppalehti performed well despite the new competitive situation, showing growth in both advertising and circulation revenues compared to the same period last year. Iltalehti focused heavily on content, distribution and appearance. Iltalehtis circulation increased 7 % and the number of readers 15 %. Both of these figures are the highest in the industry. Lapin Kansas net sales rose 12 % and its profitability improved. Net sales and profitability of Satakunnan Kansa and the Suomen Paikallissanomat group were at same level as in the comparative period last year. In September Puossakka Oy, a wholly owned subsidiary of Alpress Oy, made a public offer to acquire the stock of Pohjolan Sanomat Oyj. At the start of the offer period, Alma Media Group held 45.0 % of the PS stock and 30.0 % of the voting rights. At the end of October the offer period was extended until the end of November since Alma Media Groups holding had risen to 67.6 % of the stock and 51.9 % of the voting rights. FIM 40 per share will be paid for the shares. MTV Television accounted for 21 % (23 %) of media advertising during the first nine months of the year. MTVs share of television advertising was 88 % (96 %) and of total media advertising 19 % (21 %). MTVs sales of advertising time totalled FIM 718 (736) million, which was 2 % less than one year ago. MTVs net sales totalled FIM 752 (768) million. Other operating income was FIM 8 (13) million and the operating profit was FIM 52 (67) million. The net effect of the Swedish TV 4 AB´s result and the depreciation on goodwill was to reduce MTVs operating profit by FIM 13 million. Changes in the competitive environment had no major impact on MTVs share of total viewing time. MTVs share of viewing time was 41 % (43 %) between January and September. MTVs share fell to below 40 % during the summer, owing to the World Cup and the European Athletics Championships shown on the Yle channels. In September, however, MTVs share jumped to over 45 %, which was higher than one year ago, as a result of its new autumn programme offering. MTV Oy acquired 48 % of the stock of Pescado Oy, the leading producer of electronic feedback services in Finland. This company has been responsible for most of the operations related to MTVs service telephone numbers subject to special charge. After the acquisition the company was renamed MTV3-Tele Oy. In September MTV Oy sold 23 % of the stock of its subsidiary Funny-Films Oy to United Magazines Ltd. Alprint Demand for graphic products in Finland continues to increase but the export markets have weakened. The economic problems in Russia, which came to a head in August, have substantially reduced demand for newspapers dependent on local advertising. On the other hand, magazines published by Western publishers for the Russian market have been largely untouched by the crisis; the same applies to locally published magazines receiving most of their revenues from advertising of Western products. Alprints exports of magazine products to Russia were almost exactly as forecast. Alprint has downscaled its own forecast for exports to Russia during the current year by approximately FIM 40 million Exports to Russia for the full year are expected to reach approximately the same level as last year, due to strong growth experienced earlier in the year. Price levels of printed products in the Western export markets have fallen owing to the weakening of the Swedish krona and stiffer competition caused by restructuring. Alprints net sales totalled FIM 679 (638) million. Alprint Magazine Printing Groups net sales increased FIM 62 million but net sales for Alprint Newspaper Printing Group fell FIM 22 million. Alprints operating profit for the January - September period was FIM 32 (62) million. A change in internal pricing reduced the operating profit by FIM 21 million. The growth in Alprint Magazine Printing Groups net sales will slow down during the fourth quarter but its profitability is expected to improve slightly. Alprint Newspaper Printing Groups net sales will remain well below last years level due to the decline in exports to Russia, and its profitability during the fourth quarter will be weak. Parent company and other operations The figures include Aamulehti Corporation (1 January - 31 March 1998), Alma Media Corporation (1 April - 30 September 1998) and other operations including Alexpress Oy and the Groups local radio broadcasting activities. These operations generated net sales of FIM 58 (57) million and an operating result of FIM -30 (-25) million. The parent companys net sales mainly comprises rental income from properties and charges for administrative expenses. Associated companies Alma Medias principal associated companies during the review period were TV4 AB (23 %) in Sweden and Oy Suomen Uutisradio Ab (48 %). The Groups other major associated companies and its holdings in them on 30 September 1998 were as follows: Pohjolan Sanomat Oy (45 %), the Finnish News Agency (28 %), Alcap Group (28 %) and Tampereen Tietoverkko Oy (35 %). TV4 ABs net sales between January and September totalled 1,410 (1,239) million Swedish krona, an increase of 14 %. The operating profit was 25 (50) million Swedish krona. Radio Nova (Oy Suomen Uutisradio Ab) exceeded both its financial and listener targets. According to the National Radio Survey, Nova has almost one million listeners daily. Radio Novas net sales between January and September were FIM 41 million and its operating result was positive. Network business Alma Medias network business sector includes MTV3 Internet, the electronic newspaper editions of the Alpress publications and digital media development. More than 100,000 Finns use Alma Medias Internet services daily. Alma Media plans to group all its digital media activities under common management and to set up separate subsidiaries for design and production. The new organization will come into effect on 1 January 1999. Alma Media Groups existing Internet operations, as well as the sales and marketing of these operations, will be placed within Alma Media Interactive Oy, which will also be responsible for their development. Alma Media Net Ventures Oy will have responsibility for the technical services related to Alma Media Groups digital media operations, for R&D concerning new business operations and for co- ordination of the Groups development projects. Alma Media Net Ventures Oy will also be responsible for partner companies in the digital media sector. Alma Media and Nokia have signed a co-operation agreement, according to which Alma Media will begin planning and producing content and services for Nokias forthcoming wireless multimedia terminals. Prospects to year end The Group´s net sales for the full year are expected to be slightly higher than in 1997. Decrease in operating profit during the first half of 1998 is not expected to be recovered, although the operating profit during the last quarter is forecast to equal the operating profit during the same period last year. Alpresss net sales will continue to increase and its profitability is expected to improve slightly compared to the beginning of the year. Alpress will post a substantially higher operating profit for the full year than in 1997. MTVs net sales for the full year will roughly match last years level. Actual advertising in September and October, together with advertising orders to the end of the year, suggest that MTVs operating profit will be higher than last year and its profit before extraordinary items will roughly equal last years figure. Alprints net sales are expected to roughly equal last years level but its operating profit is forecast to be lower than last year. The figures in this interim report are unaudited. Alma Media will publish its Financial Statements Bulletin for 1998 on 18 February 1999. ALMA MEDIA CORPORATION BOARD OF DIRECTORS ALMA MEDIA CORPORATION Ahti Martikainen Vice President, Corporate Communications Further information: Mr Matti Packalén, CEO, tel. +358 (0)9 507 8715 Ms Ritva Sallinen, CFO, tel. +358 (0)9 507 8708 Distribution: Helsinki Stock Exchange Principal Media ALMA MEDIA CONSOLIDATED INCOME STATEMENT (MFIM) (1997 FIGURES PRO FORMA) NET SALES (NS) 2,050 1,961 2,727 Share of profits of associated companies -10 1 5 Other operating income 30 17 25 Expenses -1,906 -1,789 -2,487 OPERATING PROFIT 164 8.0 190 9.7 270 9.9 Financial income and exp. -13 2 -2 PROFIT BEFORE EXTRAORDINARY ITEMS 151 7.4 192 9.8 268 9.8 Extraordinary items 1 42 32 PROFIT BEFORE TAXES AND MINORITY INTERESTS 152 7.4 234 11.9 300 11.0 Taxes -45 -51 -66 Minority interests -2 -2 -3 NET PROFIT 105 5.1 181 9.2 231 8.5 NET SALES AND OPERATING PROFIT (MFIM) I/97 II/97 III/97 IV/97 1997 Net sales 649 717 595 766 2,727 Operating profit 50 101 39 80 270 I/98II/98 III/98 Net sales 694 735 621 Operating profit 45 87 32 CONSOLIDATED BALANCE SHEET (MFIM) ASSETS FIXED ASSETS Intangible assets 82 87 93 Goodwill on consolidation 93 107 100 Tangible assets 933 980 978 Investments 666 130 663 CURRENT ASSET Inventories 186 145 158 Receivables 310 301 246 Cash and bank receivables 128 208 212 CONSOLIDATED BALANCE SHEET (MFIM) SHAREHOLDERS EQUITY AND LIABILITIES SHAREHOLDERS EQUITY 1,152 1,055 1,109 MINORITY INTERESTS 19 20 20 OBLIGATORY PROVISIONS 6 6 6 LIABILITIES Long-term 627 310 304 Current 594 567 1,011 CAPITAL EXPENDITURE (MFIM) 8/10 Gross capital expenditure on fixed assets 122 94 661 GROUP CONTINGENT LIABILITIES (MFIM) Against own debt Pledges 8 21 402 Mortgages on land and buildings 252 151 252 Chattel mortgages 143 142 141 Guarantees 2 4 2 On behalf of associated companies Guarantees 4 4 7 Other own commmitments Leasing commitments 10 9 10 Buyback commitments 44 44 44 Other commitments 1 Total 463 376 858 Group leasing payments falling due (MFIM) Between 1 Oct. and 31 Dec. 1998 1 1 4 After 1998 9 8 6 DERIVATIVE INSTRUMENTS Foreign currency loans totalling FIM 15 million were hedged against exchange rate fluctuations using forward contracts and currency swaps. The exchange rate differences on loans and the derivative results compared to the balance sheet exchange rates are entered under Other Financial Income and Expenses. PLEDGES The TV4 AB shares held as loan collateral were no longer pledged at the end of the period. NET SALES BY DIVISION (MFIM) Alpress 790 741 1,014 MTV 752 768 1,079 Alprint 679 638 888 Parent company and other operations 58 57 76 Intragroup sales -229 -243 -330 Total 2,050 1,961 2,727 OPERATING PROFIT BY DIVISION (MFIM) Alpress 116 94 130 MTV 52 67 96 Alprint 32 62 88 Parent company and other operations -30 -25 -44 Group entries -6 -8 Total 164 190 270 AVERAGE PERSONNEL BY DIVISION Alpress 1,065 1,075 1,068 MTV 725 679 681 Alprint 977 962 963 Parent and other companies 122 102 106 Total 2,889 2,818 2,818 In addition part-time newspaper delivery staff 980 972 970 PER SHARE DATA, FIM Earnings per share 6.59 9.42 12.71 Shareholders equity per share 73.24 67.18 70.50 10 PRINCIPAL SHAREHOLDERS ON 30 SEPTEMBER 1998 Series I Series II Total % % sharesvotes 1. Tidnings AB Marieberg 1,549,155 2,089,523 3,638,678 23.1 22.9 2. United Magazines Ltd 914,636 1,114,778 2,029,414 12.9 13.4 3. Nokia Group 390,993 520,219 911,212 5.7 5.7 - Nokia Corporation 151,276 201,274 352,550 2.2 2.2 - Nokia Mobile Phones 150,450 200,175 350,625 2.2 2.2 - Nokia Telecommunications 59,000 78,500 137,500 0.9 0.9 - Nokia Multimedia Network Terminals 30,267 40,270 70,537 0.4 0.4 4. Pohjola Group 422,779 188,327 611,106 3.9 5.7 - Pohjola Non-Life Insurance Company Ltd 350,469 65,940 416,409 2.6 4.7 - Pohjola Life Assurance Company Ltd 47,289 140,000 187,289 1.2 0.8 - Suomi Mutual Life Assurance Company 25,021 22,387 47,408 0.3 0.4 5. C V Åkerlundin fund 278,228 15,419 293,647 1.9 3.6 6. Ilmarinen Pension Insurance Company Ltd 243,087 284,319 427,406 3.4 3.5 7. Mutual Pension Insurance Company Varma-Sampo 228,898 228,898 1.5 3.0 8. Industrial Insurance Company Ltd 193,197 161,180 354,377 2.3 2.7 9. The Local Government Pensions Institution 104,170 292,105 396,275 2.5 1.7 10. Federation of Finnish Textile and Clothing Industries 128,600 128,600 0.8 1.7 Total 4,453,743 4,665,870 9,119,613 58.0 63.9 Nominee-registered 216,164 1,994,370 2,210,534 14.1 5.4 Others 2,101,679 2,298,234 4,399,913 27.9 30.7 Total 6,771,586 8,958,474 15,730,060 100.0100.0
- Date: 5.11.1998, 08:00
- News type: Stock exchange release
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