ALMA MEDIA GROUPS INTERIM REPORT FOR JANUARY - MARCH 1999
ALMA MEDIA CORP. STOCK EXCHANGE BULLETIN 11 MAY 1999, 9.00 AM 1/8 ALMA MEDIA GROUPS INTERIM REPORT FOR JANUARY - MARCH 1999 Net sales for January to March 1999 totalled MFIM 725 (1998: MFIM 708) and the operating profit was MFIM 38 (45). Alpress recorded an increase in operating profit of MFIM 7, MTVs decreased by MFIM 10 and Alprints decreased by MFIM 12. Alma Medias consolidated net sales for the full year are expected to somewhat exceed last years level and the consolidated operating profit to be broadly similar to the figure in 1998. Business conditions According to Ad Facts Ltd, expenditure on media advertising in Finland rose 10 % to FIM 1.4 billion between January and March. Newspaper advertising increased 10 %, magazine advertising 10 %, television advertising 7 % and radio advertising 6 %. The general election held in March had a particularly strong impact on newspaper and television advertising. Excluding the impact of the general election, media advertising rose by almost seven percent compared to the same period in 1998. Business conditions in the newspaper sector remained good as advertising revenues increased more than forecast and circulation revenues also grew positively. Iltalehtis six-day circulation in 1998 was 5.7 % higher than one year earlier according to the circulation audit published in February. The competitive situation in the market for business dailies remained intence during the year. Kauppalehtis advertising and circulation revenues showed a further increase. Television viewing time in Finland increased between January and March by six minutes to 3 hours 2 minutes, compared to the same period in 1998. MTV3 Channels share of total viewing time rose to above 42 %. In January MTV began broadcasting Salatut Elämät (Secret Lives), the largest domestic drama series ever produced in Finland. The series reached its viewing targets. Television advertising accounted for 21.7 % (22.1 %) of total media advertising. MTVs share of television advertising was slightly reduced by the new competitive situation to 83 % (89 %). On 11 March 1999 the Council of State (the Finnish government) extended MTVs current operating licence to the end of the year 2006. This decision safeguards MTVs core operations well into the new era of digital television due to begin in the next few years. On the other hand the Council of State rejected all applications for analogue television broadcasting in Greater Helsinki on the grounds that no free frequencies exist for this purpose in Greater Helsinki and that the decision would hamper the introduction of digital broadcasting. MTV has applied, alone and in conjunction with other organizations, for digital broadcasting licences for an entire multiplex, which would contain four TV channels with existing technical capabilities. Altogether 27 applications for digital broadcasting were submitted to the Council of State, which may award digital broadcasting licences possibly before the coming summer. The first digital channels in Finland are planned to come on the air in the year 2000. No major changes took place in domestic demand for graphic products. Alprints export volumes were clearly down on last year despite growth of almost one-fifth in the western markets. The decline in exports to Russia, which began in August 1998, continues and consequently export volumes for the full year are not expected to reach more than half of last years level. Lower export volumes apply to both newspapers and magazines. Changes to Group organization During the review period the Group offered to acquire the outstanding shares of Pohjolan Sanomat Oyj and the entire stock of Kainuun Sanomain Kirjapaino Oy. At the end of March Alma Media owned 87 % of the Pohjolan Sanomat Oy stock and 85 % of the Kainuun Sanomain Kirjapaino Oy stock. Alma Media reorganized its new media operations into two companies from the start 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). 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 related to new media. Net Ventures is also responsible for relations with new media partner companies. Net sales of Alma Medias new media operations in the first quarter of the year totalled FIM 5 (3) million; this figure includes net sales from electronic newspaper editions which were recorded in the Alpress accounts. Alma Media divested its local radio stations in Helsinki, Tampere and Oulu during the period. These sales had no impact on the Groups result. Consolidated net sales and profit Consolidated net sales in the January - March period totalled FIM 725 (708) million and the operating profit was FIM 38 (45) million. Alpress reported a FIM 51 million increase in net sales to FIM 313 million. FIM 38 million of this increase was derived from the consolidation of Pohjolan Sanomat Oyj and Kainuun Sanomain Kirjapaino Oy. Alpresss comparative advertising revenue increased 8 %, i.e. FIM 11 million, and its circulation revenue FIM 3 million. All Alpresss business units increased net sales. Alpress showed an operating profit of FIM 32 (25) million. Besides growth in advertising revenues, this increase was due in particular to Iltalehtis improved profitability. MTVs net sales decreased FIM 5 million to FIM 268 million owing to lower than forecast sales of advertising time. MTVs competitive strategy is to focus on a comprehensive portfolio of high-quality programmes in order to secure a consistently high share of total viewing time. MTVs operating profit was FIM 3 (13) million. MTVs comparative concession fee was FIM 2 million higher than in the same period last year, in addition to which the impact of TV4 AB (FIM -3 million) was included in 1998 under the parent companys Group entries. TV4 AB in Sweden recorded net sales of 499 (481) million krona and an operating profit of 9 (11) million krona. TV4 ABs impact on MTVs operating profit was FIM -4 million. Radio Nova, in which the Group has a 48 % holding, recorded net sales for the period totalling FIM 12 (5) million. Alprints net sales decreased FIM 35 million to FIM 202 million, mainly because exports to Russia reached only FIM 19 (61) million. Demand for newspaper products in the Russian market continued to be slack, in addition to which many magazine publishers were forced to reduce print-runs. Alprints sales in Finland were similar to the comparative periods figure. Sales to western countries increased by almost one-fifth on the same period last year thanks to new printing contracts in Sweden. Alprint recorded an operating profit of FIM 5 (17) million. The parent company, other operations and Group entries reduced the consolidated result by FIM -2 (-10) million. The most significant item was a FIM 4 million profit on the sale of listed securities during the period. The comparative figure includes TV4 ABs profit contribution of FIM -3 million. The impact of associated companies on Alma Medias consolidated operating profit was FIM -3 (-2) million. Operating expenses and depreciation totalled FIM 696 (676) million. Group depreciation amounted to FIM 42 (42) million. FIM 9 (14) million in taxes were deducted, calculated according to the current tax rate. The net profit for the period was FIM 24 (27) million and earnings per share were FIM 1.56 (1.70). Balance sheet The equity ratio at the end of March was 48 % (31 December 1998: 51 %) and shareholders equity per share was FIM 72.93 (31 December 1998: FIM 76.60). Capital expenditure and financing The Groups capital expenditure totalled FIM 80 (35) million. FIM 33 million of this amount was spent on shares in fixed assets. The most significant production investment was expenditure of FIM 17 million on Alprint Magazine Printing Groups Rahola unit. The Groups financial position was good. Liquid reserves totalled FIM 148 (143) at the end of March. Interest-bearing debt amounted to FIM 634 (619) million on 31 March. Gearing was 42 % (31 December 1998: 39 %). Year 2000 The Groups preparations for the change of millennium proceeded according to plan during the first quarter. Personnel The Group had 3,030 (2,817) employees on average during the period and an additional 1,039 (963) part-time newspaper delivery staff. The reason for the increase was the new units acquired by Alpress. Administration Alma Media Corporations Annual General Meeting re-elected Matti Häkkinen and elected Kari Stadigh to the Board of Directors. The Board elected Björn Mattsson as its chairman and Bengt Braun as his deputy. The AGM re-elected Matti Ahde, Jukka Koivisto and Arto Liinpää to the Supervisory Board. Hannu Jaakkola was elected as a new member. Veli Kalle Tavakka was elected to the Supervisory Board in place of Jukka Rantala, who resigned, for the remainder of the latters two-year term of office. The AGM appointed KPMG Wideri Oy Ab and Mauri Palvi APA as the companys auditors, and approved distribution of a dividend of FIM 4.00 (3.30) per share. The dividend payment date was 7 April 1999. With Alma Media Corporations Vice President - Administration, Jaakko Paavela, due to retire from his position as Executive Vice President of MTV Oy on 1 July 1999, the following Group appointments were made. Ms Ritva Sallinen, Senior Vice President - Finance, was named Senior Vice President - Finance and Administration on 1 April 1999. Mr Tauno Äijälä, MTV Oys Vice President - Programming, was also named Executive Vice President of MTV Oy and deputy to the President in addition to his current post from 1 July 1999. Mr Ilkka Kylmälä was named Executive Vice President of MTV Oy and President of MTV Media Oy with effect from 1 August 1999. Bond with warrants The AGM approved the Board of Directors proposal to offer bonds with warrants to personnel and the Groups wholly owned subsidiary Marcenter Oy. The bond totals FIM 1,220,000 and its attached warrants may be exercised to subscribe for at most 610,000 Series II 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. Prospects to the year end The media markets are expected to increase in volume during the rest of the year as well. For this reason, and owing to the addition of new business units, Alma Media Groups net sales for the full year are expected to somewhat exceed last years level and the operating profit to roughly equal the figure in 1998. Alpresss net sales will increase more than 10 % and its result is forecast to improve. MTV is expected to report slightly lower net sales than in 1998, in addition to which MTVs profitability will be adversely affected by an approximately FIM 15 million higher concession fee compared to last year. For these reasons MTVs result is expected to remain below the level in 1998. Alprints net sales will be clearly lower than in 1998 owing to reduced exports to Russia. In the light of its streamlining measures, Alprint could reach the same level of operating profit as last year. The most significant factors affecting the profit forecast for the full year are net sales from television advertising and how Alprints exports to Russia develop. Forecasting the result for the whole year is made more difficult by the strongly cyclical way in which the annual profits of media companies accrue. The second and fourth quarters of the year are considerably more important for the formation of Alma Media Groups profits than the first and third quarters. This interim report has not been audited by the auditors. ALMA MEDIA CORPORATION BOARD OF DIRECTORS 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. The Groups holding in Kainuun Sanomain Kirjapaino Oy exceeded 50 % on 10 February 1999. This companys results have been consolidated with Alpresss figures from the beginning of the current year. 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. CONSOLIDATED INCOME STATEMENT (MFIM/MEUR) MFIM MEUR MFIM MEUR MFIM MEUR NET SALES 725 122 708 119 2 868 482 Share of associated companies' results -3 -1 -2 0 -3 -1 Other operating income 12 2 15 3 25 4 Operating expenses -696 -117 -676 -114 -2 648 -445 OPERATING PROFIT 38 6 45 8 242 41 Financial income and expenses -5 -1 -4 -1 -18 -3 PROFIT BEFORE EXTRAORDINARY ITEMS 33 5 41 7 225 38 Extraordinary items -1 0 1 0 18 3 PROFIT BEFORE TAXES AND MINORITY INTERESTS 32 5 42 7 242 41 Taxes -7 -1 -14 -2 -76 -13 Minority interest -1 0 -1 0 -4 -1 NET PROFIT FOR THE PERIOD 24 4 27 5 163 27 CONSOLIDATED BALANCE SHEET (MFIM/MEUR) MFIM MEUR MFIM MEUR MFIM MEUR ASSETS FIXED ASSETS Intangible assets 80 13 88 15 84 14 Goodwill on consolidation 108 18 98 16 95 16 Tangible assets 973 164 950 160 924 155 Investments 756 127 663 112 713 120 CURRENT ASSETS Inventories 224 38 160 27 207 35 Receivables 329 55 292 49 276 46 Cash and bank receivables 148 25 143 24 158 27 CONSOLIDATED BALANCE SHEET (MFIM/MEUR) MFIM MEUR MFIM MEUR MFIM MEUR SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY 1 147 193 1 076 181 1 205 202 MINORITY INTERESTS 25 4 21 4 28 5 OBLIGATORY PROVISIONS 5 1 6 1 5 1 LIABILITIES Long-term 676 114 295 50 637 107 Short-term 765 129 996 168 582 98 CAPITAL EXPENDITURE (MFIM/MEUR) MFIM MEUR MFIM MEUR MFIM MEUR Gross capital expenditure on fixed assets 80 13 35 6 219 37 GROUP CONTINGENT LIABILITIES (MFIM/MEUR) MFIM MEUR MFIM MEUR MFIM MEUR Against own debt Pledges 18 3 402 68 16 3 Mortgages on land and buildings 234 39 252 42 185 31 Chattel mortgages 159 27 141 24 152 25 Guarantees 2 0 2 0 3 1 On behalf of associated companies Guarantees 4 1 4 1 4 1 Other own commitments Leasing commitments 8 1 10 2 6 1 Buyback commitments 0 0 44 7 0 0 Total 425 71 855 144 366 62 Group leasing payments falling due (MFIM) Between 1 April and 31 December 1999 3 3 3 After 1999 5 7 3 DERIVATIVE FINANCIAL INSTRUMENTS Foreign currency loans totalling FIM 14 million and denominated in DEM and FRF were hedged using forward contracts and currency swaps. The exchange rate differences on loans and the derivative results compared to the balance sheet are entered under other financial income and expenses. NET SALES BY DIVISION (MFIM/MEUR) MFIM MEUR MFIM MEUR MFIM MEUR Alpress 313 53 262 44 1 107 186 MTV 268 45 273 46 1 114 187 Alprint 202 34 237 40 880 148 Parent company and other operations 21 4 19 3 79 13 Intragroup sales -79 -13 -83 -14 -312 -52 Total 725 122 708 119 2 868 482 OPERATING PROFIT BY DIVISION (MFIM/MEUR) MFIM MEUR MFIM MEUR MFIM MEUR Alpress 32 5 25 4 150 25 MTV 3 1 13 2 111 19 Alprint 5 1 17 3 29 5 Parent company and other operations -8 -1 -6 -1 -50 -8 Group entries 6 1 -4 -1 2 0 Total 38 6 45 8 242 41 AVERAGE PERSONNEL BY DIVISION1999 1998 1998 Alpress 1 243 1 040 1 085 MTV 711 710 726 Alprint 945 946 971 Parent and other companies 131 121 123 Total 3 030 2 817 2 905 In addition part-time newspaper delivery staff 1 039 963 983 PER SHARE DATA, FIM/EUR 1999 1998 1998 FIM EUR FIM EUR FIM EUR Earnings per share 1,56 0,26 1,70 0,29 9,21 1,55 Shareholders' equity per share 72,93 12,27 68,43 11,51 76,6012,88 NET SALES AND OPERATING PROFIT (MFIM) I/98 II/98 III/98 IV/98 1998 Net sales 708 746 632 782 2 868 Operating profit 45 87 32 78 242 I/99 Net sales 725 Operating profit 38 ALMA MEDIA CORPORATION Ahti Martikainen Vice President, Corporate Communications Further information: Mr Matti Packalen, CEO, tel. +358 9 5078715 Ms Ritva Sallinen, Senior Vice President, Finance and Administration, tel. +358 9 5078708 DISTRIBUTION: Helsinki Exchanges, Principal Media
- Date: 11.5.1999, 08:00
- News type: Stock exchange release
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