INTERIM REPORT JANUARY - MARCH 1998
ALMA MEDIA CORPORATION STOCK EXCHANGE BULLETIN 7 May 1998, 12.00pm INTERIM REPORT JANUARY - MARCH 1998 Alma Medias net sales for January to March 1998 totalled MFIM 694 (1997: MFIM 649). The Groups operating profit was MFIM 45 (MFIM 50). The solvency ratio was 48 % (47 % on 31 December 1997). The Groups operating profit for the full year (profit before extraordinary items, taxes and minority interests) is expected to remain at last years level. Alma Media Corporation began operating on 1 April 1998 Aamulehti Corporation and MTV Corporation merged to form a new communications company called Alma Media Corporation on 1 April 1998. The shares of each merging company have been converted into Alma Media Corporation shares, which are quoted on the Helsinki Stock Exchange. The merger was effected using the pooling method and the two companies have operated with a single set of accounts since the beginning of 1998. This interim report accordingly presents Alma Media Corporations consolidated income statement for the period 1 January to 31 March 1998 and the consolidated balance sheet at the end of the period. The per share data presented in this interim report are the per share data for Alma Media Corporation and are based on the January - March figures for the Alma Media Group. The comparative data in 1997 are pro forma figures for the Alma Media Group. Alma Media publishes its results quarterly. When assessing the result for the full year, it is important to observe the effect of seasonal fluctuations in the development of net sales and operating profit. The strongest quarters with respect to the development of profit have usually been the second and fourth quarters. In 1997, 24 % of the years net sales and 18 % of the operating profit accrued during the first quarter. Owing to the merger process Aamulehti Corporation and MTV Corporation have prepared separate financial statements for January to March 1998, which will be considered by Alma Media Corporations next shareholders meeting. Business environment Alma Medias operations are affected most of all by media advertising trends. According to Addfacts Ltd, expenditure on media advertising in Finland rose in the January-March period 14 % to FIM 1.3 billion on the same period last year. Newspaper advertising rose 15 % and magazine advertising 24 %. TV advertising rose 5 %, despite a substantial increase in potential television advertising time with the start-up of a new TV channel after the previous financial period. Radio advertising grew 20 % after the start-up of the nationwide Radio Nova channel. The strong growth in magazine advertising was attributable to an increase in direct mail type advertising of more than 30 % in institutional and customer publications. The Finnish economy continued to develop strongly, which resulted in a clear increase in newspaper circulations and demand for printing of promotional products. Exports of printed products grew favourably. Consolidated net sales and profit Consolidated net sales in the January - March period totalled FIM 694 million (1997: FIM 649 million). This marked an increase in net sales of 7 % on the comparable period in 1997. Alprint and Alpress recorded clear growth in net sales but MTVs net sales declined slightly. The overall increase in net sales was due in particular to robust growth of Aamulehtis advertising revenue and Alprints exports. Exports accounted for FIM 102 million, i.e. 15 %, of net sales (FIM 78 million and 12 %). The Groups share of associated companies profits was FIM -2 (1) million. Swedish TV4 ABs share of this figure was FIM -3 million after amortization of goodwill, and Oy Suomen Uutisradio Abs share was about FIM -1 million. Other operating income totalled FIM 18 (4) million, the most important items being a profit recorded by Aamulehti Corporation on the sale of a property in Tampere in January and profits on the disposal of shares. Operating expenses and depreciation together totalled FIM 665 (604) million, which was 10 % higher than in the comparative period. The main reasons for this increase, in addition to growth in net sales, were one-time merger costs, higher costs in Kauppalehti, costs arising from Iltalehtis change of format, and a rise in paper prices. Group depreciation totalled FIM 42 (43) million. The consolidated operating profit was FIM 45 (50) million. The acquisition of the TV4 AB shares increased interest-bearing debt, which raised net financial costs to FIM 4 (2) million. Extraordinary items during the period amounted to FIM 1 (37) million. FIM 14 (16) million in tax was deducted from the Groups profit, which corresponds to the current tax rate. The Groups net profit was FIM 27 (69) million and earnings per share were FIM 1.70 (2.22). Balance sheet The balance sheet totalled FIM 2,394 million at the end of March (FIM 2,450 million on 31 December 1997). The solvency ratio at the end of March was 48 % (47 % on 31 December 1997) and shareholders equity per share was FIM 68.43 (FIM 70.50 on 31 December 1997). Capital expenditure The Groups capital expenditure totalled FIM 35 (34) million. Investments comprised small replacement and maintenance investments in fixed assets. Financing The Groups liquidity was good. At the end of March liquid reserves totalled FIM 143 (312) million. Aamulehti Corporation and MTV Corporation paid altogether FIM 57 (44) million in dividends during March. The merger agreement stipulated that dividends per share were to be paid at a ratio of 1:137.5. Hence Aamulehti Corporations dividend was FIM 3.30 and MTV Corporations FIM 453.75. Interest-bearing debt amounted to altogether FIM 619 (424) million at the end of March. The increase was caused by the shareholding in TV4 AB acquired in the autumn of 1997. Gearing was 44 % (47 % on 31 December 1997). Shares A FIM 205,500 increase in Aamulehti Corporations share capital was registered in the Trade Register in March, representing 20,500 Series II shares converted between 31 August 1997 and 13 March 1998 in exchange for convertible bonds issued in 1993. After this conversion Aamulehti Corporations registered share capital was FIM 96,334,480, which consisted of 4,155,585 Series I shares and 5,477,863 Series II shares. These shares were converted into Alma Media Corporation shares on 31 March 1998 at a ratio of 1:1. Altogether 10,765 MTV Corporation shares owned by Aamulehti Corporation were annulled in the merger. The remaining 44,339 shares were converted into Alma Media Corporation shares on 31 March 1998; this was done by converting each MTV Corporation share of nominal value FIM 500 into 59 Alma Media Corporation Series I shares of nominal value FIM 10 per share and 78.5 Alma Media Corporation Series II shares of nominal value FIM 10 per share. By 1 April 1998 approximately 90 % of the converted MTV Corporation shares had been registered into Alma Media Corporation shares (99,8 % April 30 1998). Alma Media Corporations share capital is FIM 157 million. Since the situation at the end of the period does not give a correct view of the ownership of Alma Media Corporation, this interim report also presents a list of principal shareholders as at 30 April 1998. On this date 16.6 % of the Alma Media Corporation shares were held in nominee accounts. Alma Media Corporations Board of Directors has no authorization to raise the companys share capital. Personnel The Group had 2,817 (2,803) employees on average during the period and an additional 963 (940) part-time newspaper delivery staff. Administration Alma Media Corporations Board of Management was appointed in February 1998. The Board comprises President and CEO Matti Packalén, Executive Vice President Eero Pilkama, Executive Vice President Heikki Saraste, Executive Vice President Risto Takala, Senior Vice President Jaakko Nieminen and Chief Financial Officer Ritva Sallinen. Alpress Media advertising in newspapers showed better than expected development. Alpresss advertising revenues rose 13 % on the comparable period in 1997. Aamulehtis advertising revenue grew especially strongly. Despite the new competition facing Kauppalehti, both its circulation and advertising revenues were up on the comparable period. However, Kauppalehtis costs were also increased by the investments in its editorial content and marketing and changes in its printing arrangements, which resulted in a slight fall in profitability compared to the previous year. In January Aamulehti acquired Hervannan Sanomat, a bi-weekly town paper with a print-run of 21,500. Iltalehti was substantially renewed from 1 April 1998. Its earlier eurotabloid format was changed to a tabloid and the weekday issue is printed throughout in four-colours on special newsprint. Two- thirds of the weekday run is printed by Alprint in Tampere and one- third by Keskisuomalainen Oys Lehtipaino newspaper printing works in Jyväskylä. The weekend edition was also changed to a tabloid format but this is still a hybrid newspaper containing both glossy magazine paper and standard newsprint. The weekend edition is printed by Alprint in Pori. These changes will enable the newspaper to be distributed for sale earlier than before in the growing afternoon paper market, and they will also reduce its printing costs. Alpress and Alprint changed their internal pricing so that Alprint now transfers FIM 3 million of its operating profit to Alpress. Alpresss net sales totalled FIM 260 (239) million. All Alpresss major newspapers showed a clear increase in net sales, largely as a result of an increase in advertising revenues. Alpresss operating profit for the first quarter was FIM 27 (21) million. Iltalehtis lighter cost structure will improve the divisions profitability in the future. Alpresss strong performance is expected to continue to the end of the year. MTV Television advertising rose more slowly than forecast, increasing only a good 5 % compared to the same period in 1997 despite the entry of a new player in the market. MTVs sales of advertising time totalled FIM 250 million, which was almost 2 % less than one year ago. The decrease was affected by changes in the channels media marketing. Since the beginning of the year MTV Media Oy, which is responsible for sales of MTV3 Channels advertising time, has employed a new pricing system which allows advertisers, contrary to previous practice, to receive all benefits from the beginning of the year. This change reduced net sales from advertising time in the first quarter. Television viewing time also declined slightly on the previous year despite an increase in programming. MTV Channels transmission time between January to March was 20 (18) hours per day on average. The domestic content of programming was 51 % (56 %). MTV3 Channel is the leading television channel in Finland. During the period its share of total viewing time was 42.1 % (43.9 %) on average despite the fact that the Nagano Winter Olympics boosted the viewing times of the Finnish Broadcasting Companys channels. This positive development was especially apparent in March when MTV3 Channels share of total viewing time rose to 44.9 % (43.4 %) compared with 23.5 % (26.1 %) for the Finnish Broadcasting Companys TV1 channel, 19.8 % (23.2 %) for its TV2 channel, and 6.7 % (-) for Nelonen (Channel Four). MTV3 Channels share of viewing time grew especially strongly in the target groups favoured by advertisers; its share of 25-44 year old female viewers rose to 49.8 % (46.0 %). MTV3 Channels daily coverage remained unchanged. The channel reached daily 65 % of the Finnish population aged over ten. MTVs net sales totalled FIM 261 (266) million. The decrease was caused by the change in pricing. Other operating income came to FIM 3 (3) million and the operating profit was FIM 13 (20) million. Net sales from sales of advertising time are expected to begin growing towards the end of the year due to an increase in the stock of annual advertising time contracts. MTVs result for the full year is expected to remain at last years level. Alprint Paper prices were almost 5 % higher on average than during the comparative period in 1997. Overall demand for graphic industry products was better during the first quarter of the year than in the comparative period year ago. Demand was strong for Alprints products, especially in Russia, although price levels declined slightly. Alprints stock of export orders to the east already exceeds the previous years actual volume of deliveries. An internal change in pricing reduced Alprints operating profit in the first quarter by FIM 3 million. Alprints net sales totalled FIM 237 (204) million. This 16 % increase was mainly due to higher exports than in the comparative period. In 1997 exports showed a clear increase towards the end of the year. Export deliveries contributed 43 % (38 %) of Alprints first quarter net sales. Intragroup deliveries remained at the previous years level in monetary terms. Deliveries to other domestic customers increased 13 %. Alprint Magazine Printing Groups net sales increased 21 % to FIM 127 (105) million and Alprint Newspaper Printing Groups net sales increased 11 % to FIM 111 (99) million. Alprint Magazine Printing Groups exports rose 21 % and Alprint Newspaper Printing Groups exports rose 55 %. Despite the rise in demand Alprints profitability was lower than in the comparative period. The main reasons for this were the change in intragroup pricing, fiercer competition in exports to the east and higher raw material costs. Alprints operating profit was FIM 17 (17) million. Its profit expectations improved during the first quarter but its result for the full year is nonetheless expected to be weaker than in 1997. Parent company and other operations The parent companys figures comprise the operations of Aamulehti Corporation and the Groups corporate functions as well as the Alexpress Oys and Groups local radio broadcasting activities. The parent company and these other companies had aggregate net sales of FIM 19 (19) million and an operating loss of FIM 6 (9) million. Associated companies Alma Medias principal associated companies are TV4 AB and Oy Suomen Uutisradio Ab. Alma Media holds 23 % of TV4 AB and 48 % of Oy Suomen Uutisradio Ab, which operates under the name of Radio Nova. The Groups other major associated companies and its holdings in them are as follows: Pohjolan Sanomat Oy (44 %), the Finnish News Agency (28 %), Alcap Group (28 %) and Tampereen Tietoverkko Oy (35 %). TV4 ABs net sales were 481 (428) million Swedish krona and its operating profit was 11 (5) million Swedish krona. Radio Nova had net sales of FIM 10 million and an operating loss of FIM 2 million. Subsequent events Iltalehtis format and printing arrangements were changed with effect from 1 April 1998. The new Iltalehti has been warmly welcomed by both readers and advertisers. Iltalehtis daily copy sales have been rising, compared to the previous year, and reservations of advertising space will be better in the next few months than last year. The Council of State (the Finnish government) has proposed new legislation to parliament governing television and radio broadcasting. This would make operating licence fees subject to the net sales of the applicant company. This proposal is expected to become law on 1 January 1999. Alprint plans to implement a wide-reaching, three-year production modernization programme and to evaluate the feasibility of starting production in Russia. The programme includes replacing one newspaper rotation press with a versatile new combination press designed to print newspapers, magazines and high-quality promotional products. This investment has an estimated cost of FIM 140 million. Alprint Magazine Printing Group plans to invest FIM 90 million in new production machinery in the next few years. In addition to these investments Alprint will assess various alternatives for starting production in Russia. Alprints modernization programme is scheduled for implementation between 1998 and 2001 and it will have an overall cost of approximately FIM 250 million. The programme will be financed by the companys cash flow from operations. Short-term prospects The media markets are expected to continue growth throughout the year. Alpresss result is forecast to improve on last year, MTVs to remain at last years level, and Alprints to be slightly weaker despite livelier overall demand for graphic products during the first quarter of the year. The acquisition of the TV4 AB shares will increase the Groups financial costs but TV4 ABs overall impact on the Groups result will depend first and foremost on TV4 ABs performance. The Alma Media Groups net sales for the year are expected to slightly exceed last years level. The Groups operating profit (profit before extraordinary items, taxes and minority interests) is expected to be of the same order of magnitude as in 1997. The figures presented in this interim report are unaudited. ALMA MEDIA CORPORATION BOARD OF DIRECTORS Ahti Martikainen Vice President Corporate Communications Distribution: Helsinki Stock Excange Principal Media ALMA MEDIA (1997 figures pro forma) CONSOLIDATED INCOME STATEMENT (MFIM) 1998 1997 1997 3 mo. % 3 mo. % 12 mo. % of NS of NS of NS NET SALES (NS) 694 649 2 727 Share of profits of associated companies -2 1 5 Other operating income 18 4 25 Expenses -665 -604 -2 487 OPERATING PROFIT 45 6.5 50 7.7 270 9.9 Financial income and expenses -4 -2 -2 PROFIT BEFORE EXTRAORDINARY ITEMS 41 5.9 48 7.4 268 9.8 Extraordinary items 1 37 32 PROFIT BEFORE TAXES AND MINORITY INTERESTS 42 6.1 85 13.1 30011.0 Taxes -14 -16 -66 Minority interests -1 -3 NET PROFIT 27 3.9 69 10.6 231 8.5 CONSOLIDATED BALANCE SHEET (MFIM) 1998 1997 1997 31 Mar. 31 Mar. 31 Dec. ASSETS FIXED ASSETS Intangible assets 88 93 93 Goodwill on consolidation 98 115 100 Tangible assets 950 1 016 978 Investments 663 117 663 VALUATION ITEMS 5 9 5 CURRENT ASSETS Inventories 160 115 158 Trade receivables 287 312 241 Cash and bank receivables 143 312 212 2 394 2 089 2 450 CONSOLIDATED BALANCE SHEET (MFIM) 1998 1997 1997 31 Mar. 31 Mar. 31 Dec. SHAREHOLDERS' EQUITY AND LIABILITIES 1 076 923 1 109 MINORITY INTERESTS 21 31 20 OBLIGATORY PROVISIONS 6 5 6 LIABILITIES Long-term 295 464 304 Current 996 666 1 011 2 394 2 089 2 450 CAPITAL EXPENDITURE (MFIM) 1998 1997 1997 3 mo. 3 mo. 12 mo. Gross capital expenditure on fixed assets 35 34 661 GROUP CONTINGENT LIABILITIES (MFIM) 1998 1997 1997 31 Mar. 31 Mar. 31 Dec. Against own debt Pledges 402 21 402 Mortgages on land and buildings 252 273 252 Chattel mortgages 141 92 141 Guarantees 2 2 2 On behalf of associated companies Guarantees 4 4 7 On behalf of others Guarantees 1 Other own commitments Leasing commitments 10 12 10 Buy-back commitments 44 45 44 Other commitments 1 Total 855 451 858 Group leasing payments falling due (MFIM) Between 1 April and 31 December 1998 3 5 4 After 1998 7 7 6 DERIVATIVE CONTRACTS FIM 174 million of foreign currency loans were protected 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 NET SALES BY DIVISION (MFIM) 1998 1997 1997 3 mo. 3 mo. 12 mo. Alpress 260 239 1 014 MTV 261 266 1 079 Alprint 237 204 888 Parent company and other operations 19 19 76 Intragroup sales -83 -79 -330 Total 694 649 2 727 OPERATING PROFIT BY DIVISION (MFIM) 1998 1997 1997 3 mo. 3 mo. 12 mo. Alpress 27 21 130 MTV 13 20 96 Alprint 17 17 88 Parent company and other operations -6 -9 -44 Group entries -6 1 Total 45 50 270 AVERAGE PERSONNEL BY DIVISION 1998 1997 1997 3 mo. 3 mo. 12 mo. Alpress 1 040 1 062 1 068 MTV 710 706 681 Alprint 946 936 963 Parent company and other companies 121 99 106 Total 2 817 2 803 2 818 In addition part-time newspaper delivery staff 963 940 970 PER SHARE DATA, FIM 1998 1997 1997 3 mo. 3 mo. 12 mo. Earnings per share 1.70 2.22 12.71 Shareholders' equity per share 68.43 61.86 70.50 10 PRINCIPAL SHAREHOLDERS ON 30 APRIL 1998 Series I Series II Total % of % of shares voting rights 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 Oyj 151 276 201 274 352 550 2.2 2.2 - Nokia Mobile Phones 150 450 200 175 350 625 2.2 2.2 - Nokia Tele- communications 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 394 580 110 887 505 467 3.2 5.3 - Pohjola Insurance Company Ltd 350 469 65 940 416 409 2.6 4.7 - Suomi Mutual Life Assurance Company 25 021 22 387 47 408 0.3 0.4 - Pohjola Life Assurance Company Ltd 19 090 22 560 41 650 0.3 0.3 5. Pension Varma Mutual Insurance Company 326 997 187 815 514 812 3.3 4.5 6. C V Åkerlund Fund 276 810 15 419 292 229 1.9 3.6 7. Ilmarinen Pension Insurance Company Ltd 231 087 206 169 437 256 2.8 3.3 8. Industrial Insurance Company Ltd 193 197 137 180 330 377 2.1 2.7 9. The Local Government Pensions Institution 104 170 246 200 350 370 2.2 1.7 10.Federation of Finnish Textile and Clothing Industries 128 600 128 600 0.8 1.7 Total 4 510 225 4 628 190 9 138 415 58.1 64.9 Nominee- registered 216 164 2 391 171 2 607 335 16.6 5.9 Others 2 045 197 1 939 113 3 984 310 25.3 29.2 Total 6 771 586 8 958 474 15 730 060 100.0 100.0
- Date: 7.5.1998, 08:00
- News type: Stock exchange release
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