INTERIM REPORT FOR JANUARY - JUNE 1999
ALMA MEDIA CORP. STOCK EXCHANGE BULLETIN 10 August 1999, 9.00 am 1(11) INTERIM REPORT FOR JANUARY - JUNE 1999 Net sales in January-June 1999 totalled MFIM 1,474 (MFIM 1,454 in 1998), i.e. MEUR 248 (MEUR 245) and the operating profit was MFIM 97 (MFIM 122), i.e. MEUR 16 (MEUR 22). Alpresss operating profit increased MFIM 11, i.e. MEUR 2, MTVs decreased MFIM 32, i.e. MEUR 5, and Alprints was down MFIM 18, i.e. MEUR 3. Net sales for the full year are expected to increase compared to last year but the operating profit will remain below the level in 1998. Business conditions According to Ad Facts Ltd, expenditure on media advertising in Finland rose 6.9 % to FIM 2.8 billion between January and June, compared to the same period last year. Growth was still 9.0 % during the first quarter. Newspaper advertising increased 8.4 %, magazine advertising 8.1 %, television advertising 1.4 % and radio advertising 3.5 %. Billboard advertising rose 6.8 % while Internet advertising grew by 157 %. Business conditions in the newspaper sector remained good, although large differences in advertising revenues were evident between the various media. Circulations of Alpresss major newspapers developed favourably. Iltalehtis circulation, which will be audited in August, continues to rise and this newspaper has increased its share of the afternoon paper market. Kauppalehtis circulation was up by 2.0 %, Aamulehtis by 0.8 % and Satakunnan Kansas by 0.3 %. However, the circulations of the northern Finnish newspapers continued to fall in areas of population decline. Lapin Kansa decreased 0.7 %, and Kainuun Sanomat 1.9 %. Pohjolan Sanomats circulation was down 1.3 % on its audited circulation last autumn. Television advertising accounted for 21 % (22 %) of all media advertising, with MTVs share of television advertising amounted to 83 % (88 %). Television viewing time in Finland increased between January and June by seven minutes to 2 hours 44 minutes on an average day, compared to the same period in 1998. MTV3 Channels share of total viewing time continued to be high, 42.6 % (41.9 %). MTV3 was also the most popular channel during the prime time viewing hours 18.00 - 23.00, with a share of 41.6 % (41.1 %) of total prime time viewing. Domestic demand for graphic industry products remained unchanged. Exports to the East were well down on the comparative period and there are no short-term signs of recovery in the decline which started last autumn. Capacity released by the eastern export markets affected both competition and price levels of graphic products in Finland. Exports of graphic products to the West increased. Paper prices did not change significantly on the same period last year. The number of Internet users and the popularity of Net-advertising continued to rise extremely rapidly. Internet advertising at the start of the year totalled FIM 13 million, which was half of one percent of all media advertising. According to the Web Traffic Monitor study conducted by Taloustutkimus Oy in May 1999, MTV3 Internet is the second most popular Internet service in Finland with 380,000 weekly visits to its web pages, while Iltalehti 2(11) Online with 319,400 weekly visits is the third most popular. The Council of State (the Finnish government) extended MTV Oys analogue television broadcasting licence until the end of 2006. The government granted the first digital television broadcasting licences. Licences for four channels were reserved for Yleisradio (The Finnish Broadcasting Company). MTV Oy, together with its associated companies and partners, received three of the eight commercial broadcasting licences granted: one for digitization of the existing MTV3 Channel and two new licences for a sports channel and regional City-TV channel respectively. Changes to Group organization Pohjolan Sanomat Oyj and Kainuun Sanomain Kirjapaino Oy were incorporated as new subsidiaries within the Group after the comparative period. Personnel negotiations were started in June to establish to possibility of printing Pohjolan Sanomat at the Lapin Kansa printing plant in Rovaniemi. In May Alpress decided to acquire Kokemäen Sanomat, a local newspaper circulated in Kokemäki. This paper, along with Harjavallan Seutu, a local newspaper already owned by Alpress, will be merged at the beginning of September to form a new bi- weekly newspaper called Sydän-Satakunta. Alma Media reorganized its new media operations into two separate companies from the beginning of the year. Alma Media Interactive Oy is responsible for Alma Media Groups Internet operations including Internet sales and marketing. This companys largest business unit is MTV3 Internet (MTV3i). During the review period Alma Media Interactive launched a free Finnish-language e-mail service called Luukku.com. By the end of June this new service had almost 7000 registered users. Similarly, a new e-commerce site called ShopIt for small and medium-sized enterprises was introduced on MTV3 Internets web pages, offering companies the means to trade their products on the Internet. The first ShopIt contracts with companies were signed in May. The second company, Alma Media Net Ventures, gathers together the technical services, R&D and business development, and coordination of Alma Media Groups development projects. Net Ventures is also responsible for relations with partner companies in the new media sector. Net sales of Alma Medias new media operations in the first half of the year totalled FIM 12 (6) million; this figure includes net sales from electronic newspaper editions which were recorded in the Alpress accounts. Group net sales and profit Consolidated net sales between January and June totalled FIM 1,474 (1,454) million. The Groups operating profit was FIM 97 (132) million. Alpress recorded net sales totalling FIM 644 (541) million. FIM 77 million of this increase was attributable to the addition of Pohjolan Sanomat Oyj and Kainuun Sanomain Kirjapaino Oy to Alpress. The entire net sales of these two companies are included within the Alpress figures. Of Alpresss net sales 52 % (53 %) was derived from advertising income, 42 % (44 %) from circulation income and 6 % (3 %) from other income. Alpresss comparative advertising revenue increased 6 % and its circulation revenue 3 %. 3(11) Alpress showed an operating profit of FIM 83 (72) million. Profitability developed well, especially in the case of Iltalehti. MTV3 Channels programme offering was successful and its share of total viewing time favourable. MTV3 Channels total programming time amounted to 2,847 (2,895) hours. The share of domestic programmes increased compared to the same period last year to 49.2 % (48.6 %) of total programming time. MTV Group posted net sales of FIM 548 (566) million and operating profit of FIM 22 (55) million. The decrease in operating profit was primarily attributable to lower advertising prices and increased programme costs caused by the competitive situation. Despite lower net sales, MTV paid FIM 2 million more in licence fees than one year ago. TV4 AB in Sweden will publish its interim report on 12 August 1999. TV4 ABs impact on MTVs operating profit was estimated to be FIM -1 million (-1), based on the first quarter of this year and last years actual figure. Radio Nova, in which Alma Media has a 48 % holding, recorded net sales of FIM 29 (27) million and an operating profit of FIM 1 (0) million in the period. Alprints net sales totalled FIM 401 (469) million. Exports to Russia amounted to only FIM 34 (118). The fall in export volumes particularly affected tabloid products. Alprints domestic sales were roughly equivalent to the comparative period. Exports to the West increased FIM 19 million on the same period last year to FIM 102 million. Alprint showed an operating profit of FIM 4 (22) million. The parent company, other operations and Group entries reduced the consolidated result by FIM -12 (-17) million. Profits on the sale of listed securities during the period totalled FIM 16 (13) million. The impact of associated companies on Alma Medias consolidated operating profit was FIM -1 (-4) million. The net profit for the period was FIM 66 (87) million and earnings per share were FIM 4.23 (5.52). The equity ratio at the end of June was 51 % (31 December 1998: 51 %) and shareholders equity per share was FIM 75.71 (31 December 1998: FIM 76.60). Investments and financing Group capital expenditure totalled FIM 131 (73) million, which included FIM 32 million in listed securities and FIM 48 million in replacement investments for Alprints production machinery. The remainder mainly comprised normal maintenance investments. The Groups financial position was good. Liquid reserves totalled FIM 131 (139) at the end of June. Interest-bearing debt amounted to FIM 667 (612) million at the close of the period. Gearing was 45 % (31 December 1998: 39 %). Personnel and administration The Group had 3,111 (2,862) employees on average during the period and an additional 1,058 (982) part-time newspaper delivery staff. The reason for the increase was the new units acquired by Alpress. Mr Lauri Helve was appointed to the Board of Directors of Alma Media Corporation as of 1 May 1999. He continues as publisher of Kauppalehti and its editor-in-chief. 4(11) Shares and bond with warrants Trading in Alma Media shares was brisk. Altogether 643,794 Series I shares were traded, representing 9.5 % of the Series I stock, and 1,967,337 Series II shares, or 22.0 % of the Series II stock. A total of 9.6 % of the companys shares were held in nominee accounts at the end of the period. Share price Lowest Highest Price on Series I 26.00 euro 40.50 euro 27.01 euro Series II 25.00 euro 40.00 euro 26.00 euro During the period the company offered bonds with warrants to its employees totalling FIM 1,220,000. The bond warrants may be exercised to subscribe for altogether 610,000 Alma Media Corporation Series II shares. The bond was oversubscribed by a factor of almost five. The number of subscribers totalled 759. At the close of the period Alma Media Corporations subsidiary Marcenter Oy owned warrants carrying entitlement to subscribe for 75,750 shares. The warrants are marked A and B. The share subscription price of the A warrants is the weighted average price of Alma Media Corporations Series II share on the Helsinki Exchanges in October 1999 plus 12 %, and in the case of the B warrants, the weighted average price of Alma Media Corporations Series II share on the Helsinki Exchanges in October 1999 plus 28 %. Share subscription with the A warrants may begin on 28 May 2001 and with the B warrants on 28 May 2003. In both cases the share subscription period will end on 30 June 2006. Alma Media Corporations Board of Directors has no other authorizations to raise the companys share capital. Year 2000 The Groups preparations for the change of millennium have not revealed any significant factors which could threaten the Groups operations. Preparations have proceeded as planned. Subsequent events and year-end prospects In July MTV Oy sold the operations of MTV-Musiikki to Suomen Mediamusiikki Oy. MTV Oy owns 15 % the new company. MTV Musiikki Oys net sales in the second quarter of 1999 totalled FIM 4 million and it had 7 employees on average. In July MTV Oy and Jääkiekon SM-liiga ry (Finnish Icehockey Championship) extended their existing television contract for a further three years. MTV has the option to continue the contract, which is worth FIM 36 million. No major changes are expected in the newspaper sector during the remainder of the year. Alpress estimates that growth in newspaper advertising this year will not exceed 5 - 6 %. Alpresss net sales will increase by roughly one fifth as a result of its new units and strong growth in advertising sales, and its operating profit will be clearly higher than last year. 5(11) MTVs net sales for the full year will be slightly below last years level. Although MTVs profitability is expected to improve during the latter half of the year, MTVs operating profit will be clearly lower than in 1998. No major changes are expected in the development of Alprints net sales in the remainder of the year. Exports to Russia will be down on the previous year by more than FIM 100 million. Alprints operating profit will be lower than in 1998. As a media Group Alma Media is subject to strong variation in the accrual of its profits during the four quarters of the year. In this respect the third quarter of the year is typically the weakest. Last year the Group posted a third-quarter operating profit of FIM 32 million and a fourth-quarter operating profit of FIM 78 million. All in all, Alma Media Groups net sales will be higher than last year but the operating profit will be lower. This interim report is unaudited. Alma Media will publish its interim report for the first nine months of the year on 9 November 1999. ALMA MEDIA CORPORATION BOARD OF DIRECTORS 6(11) CONSOLIDATED INCOME STATEMENT(MFIM/MEUR) MFIM MEUR MFIM MEUR MFIM MEUR NET SALES 1 474 248 1 454 245 2 868 482 Share of profits of associated companies -1 0 -4 -1 -3 -1 Other operating income 24 4 18 3 25 4 Expenses -1 400 -235 -1 336 -225 -2 648 -445 OPERATING PROFIT 97 16 132 22 242 41 Financial income and exp. -6 -1 -8 -1 -18 -3 PROFIT BEFORE EXTRAORDINARY ITEMS 91 15 124 21 225 38 Extraordinary items 0 0 0 0 18 3 PROFIT BEFORE TAXES AND MINORITY INTERESTS 91 15 124 21 242 41 Taxes -23 -4 -35 -6 -76 -13 Minority interests -2 0 -2 0 -4 -1 NET PROFIT 66 11 87 15 163 27 CONSOLIDATED BALANCE SHEET (MFIM/MEUR) MFIM MEUR MFIM MEUR MFIM MEUR ASSETS FIXED ASSETS AND OTHER LONG-TERM INVESTMENTS Intangible assets 81 14 86 14 84 14 Goodwill on consolidation 104 17 94 16 95 16 Tangible assets 979 165 944 159 924 155 Investments 725 122 654 110 713 120 CURRENT ASSETS Inventories 230 39 173 29 207 35 Receivables 252 42 260 44 276 46 Cash and bank receivables 131 22 139 23 158 27 SHAREHOLDERS EQUITY AND LIABILITIES SHAREHOLDERS EQUITY 1 191 200 1 137 191 1 205 202 MINORITY INTERESTS 25 4 22 4 28 5 PROVISIONS 6 1 5 1 5 1 LIABILITIES Long-term 702 118 536 90 637 107 Short-term 578 97 650 109 582 98 7(11) CAPITAL EXPENDITURE (MFIM/MEUR) MFIM MEUR MFIM MEUR MFIM MEUR Gross capital expenditure on fixed assets 131 22 73 12 219 37 GROUP CONTINGENT LIABILITIES (MFIM/MEUR) 30 Jun. 30 Jun. 31 Dec. MFIM MEUR MFIM MEUR MFIM MEUR Against own debt Pledges 10 2 10 2 16 3 Mortgages on land and buildings 234 39 252 42 185 31 Chattel mortgages 158 27 141 24 152 25 Guarantees 1 0 2 0 3 1 On behalf of associated companies Guarantees 4 1 4 1 4 1 Other own commitments Leasing commitments 7 1 11 2 6 1 Buyback commitments 0 0 44 7 0 0 Total 414 70 464 78 366 62 Group leasing payments falling due (MFIM) 1 Jul. - 31 Dec.1999 2 3 3 After 1999 5 8 3 DERIVATIVE CONTRACTS Foreign currency loans totalling FIM 12 million were denominated in DEM and FRF and were hedged using forward contracts and currency swaps. The exchange rate differences on loans and the derivative results are entered under Other Financial Income and Expenses. NET SALES BY DIVISION (MFIM/MEUR) MFIM MEUR MFIM MEUR MFIM MEUR Alpress 644 108 541 91 1 107 186 MTV 548 92 566 95 1 114 187 Alprint 401 67 469 79 880 148 Parent company and other operations 41 7 39 7 79 13 Intragroup sales -160 -27 -161 -27 -312 -52 Total 1 474 248 1 454 245 2 868 482 8(11) OPERATING PROFIT BY DIVISION (MFIM/MEUR) MFIM MEUR MFIM MEUR MFIM MEUR Alpress 83 14 72 12 150 25 MTV 22 4 55 9 111 19 Alprint 4 1 22 4 29 5 Parent company and other operations -14 -2 -16 -3 -50 -8 Group entries 2 0 -1 0 2 0 Total 97 16 132 22 242 41 AVERAGE PERSONNEL BY DIVISION Alpress 1 298 1 053 1 085 MTV 716 721 726 Alprint 968 970 971 Parent company and other operations 129 118 123 Total 3 111 2 862 2 905 In addition part-time newspaper delivery staff 1 058 982 983 PER SHARE DATA (FIM/EUR) FIM EUR FIM EUR FIM EUR Earnings per share 4.23 0.71 5.52 0.93 9.21 1.55 Equity per share 75.71 12.73 72.27 12.15 76.6012.88 NET SALES AND OPERATING PROFIT BY QUARTER (MFIM) I/98 II/98 III/98 IV/98 1998 Net sales 694 735 621 818 2868 Operating profit 45 87 32 78 242 I/99 II/99 Net sales 725 749 Operating profit 38 59 9(11) Digital TV licences The decision taken by the Council of State (the Finnish government) on 23 June 1999 to award operating licences for digital television broadcasting represented an important step in the development of Finlands national communications structure. Eight licences in all were granted for commercial activities as well as one multiplex for Yleisradio Oy (the Finnish Broadcasting Company). Licences for national digital general channels were granted to MTV Oy, Oy Ruutunelonen Ab (Channel Four Finland), Deuterium Oy and Wellnet Oy. MTV Oy received three national channels. In addition the government granted a national licence for three digital special-interest channels: one for films, one for education and one for sports. The digital channels were divided into three multiplexes. Multiplex A was entirely reserved for the use of Yleisradio Oy, which as Finlands public broadcaster does not require a licence. Yleisradios channels are TV1D, TV2D, YLE24 news channel, KOT (a culture, education and science channel), and the Swedish-language FST channel. Multiplex B is mainly controlled by MTV Oy. It will comprise MTV3D, CityTV (Helsinki, Tampere, Turku, and Rest of Finland), a national sports channel, and Wellnet Oy. Multiplex C will consist of the digital version of Channel Four Finland, a film channel, an education channel, and Canal+ Finlnad. The commercial licences were granted for ten years, from 1 September 2000 to 31 August 2010. In its decision, the government also states its objective to terminate analogue TV broadcasting in Finland by the end of 2006. MTV Oy owns 40 - 51 % of the regional television companies and 50 % of the sports channel. The governments decision gives MTV the chance to take a strong role in the development of Finlands new TV environment, its content and the commercial opportunities it offers. Instead of the four TV channels currently available, Finland will have at least 12 channels with additional interactive services. The decision emphasizes the important place of commercial TV channels since at least eight of the new channels will operate on a commercial basis. The decision also creates a market for pay-TV channels in Finland as well as opportunities for further growth in Internet operations. The decision is a major step in the development of Finlands communications environment. On the other hand it leaves many central issues unsolved. These include financing of the new channels, the final decision on when analogue broadcasting is to cease, copyright issues, and the pace at which reception of digital broadcasts proceeds. The digital sports channel will provide both domestic and international sports coverage including top sports events, sports and recreational life-style programmes, sports magazine programmes, documentaries, games, and films appropriate to the channels profile. The sports channel will be funded partly by advertising and partly by subscription. It will be controlled by MTV Oy, which will own half of the company. The channels other owners include Helsinki Media Company Oy, which has agreed to sell part of its holding to 10(11) other organizations. Suomen Liikunta ja Urheilu ry (The Finnish Sports Federation), Oy Veikkaus Ab and Suomen Hippos ry have all expressed interest in cooperation and ownership, and Yleisradio has also indicated its support. CityTV, which is managed by MTV Oy, was granted four licences for regional digital television operations. These ten-year licences were given to: CityTV Oy Helsinki, CityTV Oy Pirkanmaa, CityTV Oy Turku, and CityTV Oy Suomi. CityTVs programme concept offers good opportunities for cooperation with enterprises and organizations in its region served. The concept is based on that of Chumcity Ltd in Toronto, Canada. CityTVs programme offering will be based on morning and early- evening regional programmes concentrating on issues of local topical interest. At other times of the day national programmes in line with the City concept will be broadcast in all regions. The government did not consider MTV Oys application for a new analogue City-TV channel for Greater Helsinki. Adoption of new accounting standards Alma Media has adopted the provisions of the new Accounting Act with effect from the start of the current financial year. The most important change applies to the treatment of deferred tax liabilities and assets which, as required by the general guidelines of the Finnish Accountancy Board, follows the main principles laid down in IAS 12. Hence, deferred tax liabilities calculated on revaluations and allocated goodwill on consolidation are made between balance sheet items. Deferred tax liabilities and assets arising in previous accounting periods and calculated on other items are shown under extraordinary items in the income statement, and the changes which occurred during the review period are shown as a change in deferred tax liability in the income statement under direct taxes. Comparability Aamulehti Group and MTV Group merged on 1 April 1998 forming a new media company called Alma Media Corporation. The merger was implemented using the pooling method, which means that the two companies operated with a single set of accounts from the beginning of 1998. Hence the consolidated figures for the review period are in all respects comparable with the figures for the corresponding period in 1998. A new law governing television and radio broadcasting operations came into force at the beginning of the current year. This law broadened the fee base of the licence fee payable by commercial television companies since, in addition to net sales from advertising time, the fee is now also levied on sponsoring and text TV revenues. Sponsoring revenues were previously recorded under other income or as deductions to programme costs. For MTV this change brought FIM 60 million of previously unaffected net sales within the scope of the annual licence fee. Net sales for 1998 has been adjusted accordingly. Ahti Martikainen Vice President, Corporate Communications 11(11) Further information: Mr Matti Packalén, CEO, tel. +358 9 5078715 Ms Ritva Sallinen, Senior Vice President, Finance and Administration, tel. +358 9 5078708 DISTRIBUTION: Helsinki Exchanges, Principal Media
- Date: 10.8.1999, 08:00
- News type: Stock exchange release
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