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
- Published: 11.5.1999 08:00
- Category: Press release, Releases