Alma Media Group’s second-quarter operating profit (excluding the Broadcasting division and the EUR 324.5 million capital gain booked on its sale) totalled EUR 9.4 million, or 12.8% of net sales (EUR 10.5 million and 14.5% in 2004). The April-June operating profit includes one-time income totalling EUR 1.2 million and one-time expenses amounting to EUR 1.4 million.
During the second quarter Alma Media sold its Broadcasting division to Bonnier AB and Proventus Industrier AB for an enterprise value of EUR 460 million. This interim report principally describes the operations and performance of Alma Media’s continuing businesses, i.e. those outside the Broadcasting division. Certain tables additionally show the figures for the Broadcasting division as a discontinued operation. The Broadcasting business was divested from the Alma Media Group on 26 April 2005, yielding a capital gain for the Group totalling EUR 324.5 million.
– The plan, announced in January, for divesting the Broadcasting operation proceeded as planned during the second quarter.
– The operating profit of the newspapers (formerly Alpress) developed favourably during the second quarter due in particular to good advertising sales by Iltalehti and to improved profitability of printing operations. The aggregate operating profit of the Alma Media newspapers came to EUR 9.8 million, or 17.9% of net sales.
– The operating profit of the Kauppalehti group (formerly BIG) was EUR 1.4 million lower than in the comparison period owing to the Presso costs and weaker than expected media sales in the core newspaper. The operating profit was EUR 0.9 million. Kauppalehti signed an acquisition agreement at the close of the period under which it gained the ePortti business from TietoEnator in July and set up a direct marketing company with TietoEnator in which it owns 49%.
– Net sales from the classified services offered by Marketplaces (formerly Media Services) grew 26.0%. Marketplaces’ operating profit was EUR 0.1 million.
President and CEO Kai Telanne:
Alma Media’s operations during the second quarter developed favourably with the exception of Kauppalehti’s media sales. The group level administration has been restructured and a flatter organization based on profit centres has been introduced.
The May-June labour dispute in the Finnish paper sector had no significant impact on Alma Media as the company had anticipated this well in advance by increasing its paper stocks. The shut-down of paper production for several weeks will reduce the forecast growth of the Finnish economy by roughly one percentage point, according to a number of sources, and this could dampen growth in media advertising somewhat during the remainder of the year. The company believes that newspaper advertising will rise on last year’s level.
Alma Media’s strategy is close-knit chaining of its operations in the domestic market coupled with controlled expansion in selected business areas. The company’s core business is anchored around subscribed newspapers supplemented by free papers and online services offered on the Internet. Alma Media’s goal is to raise its market share in the domestic newspaper sector.
Internet services are seen in Alma Media as a growing core business that well supports the print media and that offers potential for operating internationally across language barriers. In this context, during the second quarter Alma Media started a property Internet marketplace in Latvia, and Kauppalehti signed an business expansion agreement with TietoEnator acquiring this company’s online and direct marketing business.
In the short term Alma Media’s operations will continue to focus on the Finnish market. The company has started to evaluate its possibilities for expanding in its core businesses, newspaper publishing and online marketplaces, outside Finland. One year has been reserved for this process and therefore no decisions can be expected before the second half of 2006.
The company has no net debt at all in its balance sheet as a result of the Broadcasting divestment. For this reason Alma Media, as a steady cash flow generator, has the financial reserves to undertake acquisitions and to return capital to its owners. Capital returns will not be possible until 2006, however, when it becomes technically possible to return restricted equity.
A general meeting of Alma Media shareholders on 31 January 2005 approved the Board’s proposition to sell the company’s Broadcasting division to Bonnier AB and Proventus Industrier AB for an enterprise value of EUR 460 million. This was to be implemented by establishing a new company, Almanova Corporation, which would make a public purchase and exchange offer to all Alma Media shareholders and option holders. In the Almanova offer, holders of Alma Media Series I shares were offered EUR 6.50 in cash and one Almanova share for each share, and Alma Media Series II shareholders EUR 5.60 in cash and one Almanova share for each share. EUR 29.00 was offered for each A option and EUR 25.70 for each B option. The offer period began on 30 March 2005 and ended on 19 April 2005. During this period Almanova acquired 626,523 Alma Media Series I shares, 7,477,565 Series II shares, 25,284 A options and 38,592 B options. Almanova’s holding after the purchase and exchange offer represents approximately 13% of all the shares and almost 5% of the votes.
Almanova announced on 26 April 2005 that it would implement the conditional offer and on the same day Bonnier AB and Proventus Industrier AB paid Alma Media EUR 124.8 million in downpayment for the Broadcasting division, which completed the divestment of the division. The Broadcasting division is included in Alma Media’s consolidated figures for the period 1 January – 30 April 2005.
Almanova was admitted to the Pre List of the Helsinki Exchanges on 27 April 2005. Alma Media Corporation and Almanova Corporation will merge into a single company on or about 3 October 2005. At the same time the Alma Media shares and options held by Almanova, as well as the Alma Media shares currently held by Bonnier AB and Proventus Industrier AB and due to be transferred to Almanova before completion of the merger, will be nullified. After the merger the company will have approximately 74.8 million shares. Almanova will be renamed Alma Media in the merger. It is planned that the new Alma Media share will be listed on the Main List of the Helsinki Exchanges.
Alma Media’s reporting units in this interim report are as follows: Newspapers (corresponding to the former Alpress division), Kauppalehti group (the BIG division) and Marketplaces (Media Services division). These entities form the continuing operations as defined by IFRS. The Broadcasting division is shown in the financial statements as a discontinued operation.
Net sales of the Group’s continuing operations totalled EUR 142.6 (140.0) million between January and June. The Group’s circulation income grew by almost 3% and its advertising income by 6.5%. Sales increased in particular in Marketplaces and Alma Media’s large newspapers. The volume of printing contracts for outside customers declined by about EUR 2 million.
The Group’s operating profit between January and June amounted to EUR 15.0 (18.6) million. This figure includes EUR 2.9 million in one-time expenses arising from restructuring of the parent company and Alpress, and EUR 1.2 million in one-time income.
The Group’s net sales between April and June totalled EUR 73.5 (72.7) million.
Net sales of the newspapers rose only 2% due to the decrease in printing work. Net sales of the Kauppalehti group increased 6% and of Marketplaces 7%. In the former case growth was the result of an increase in customer newspapers and Presso’s volume. Classified services continued to grow strongly.
The Group’s operating profit between April and June was EUR 9.4 (10.5) million. This figure includes EUR 1.4 million in one-time expenses arising from restructuring of the parent company and Alpress, and from Broadcasting divestment, and EUR 1.2 million in one-time income in the form of compensation that Edita Oyj was required by a court of arbitration to pay on Acta Print.
Finland is undoubtedly one of the best performers in the Euro area in terms of economic growth even though the average growth forecast for 2005 offered by the research institutions is clearly below last year’s growth. Following the first quarter the full-year GDP forecast was slightly less than three per cent but the industrial dispute in the paper sector will probably result in a lower full-year figure.
The Finnish economy has developed well, buoyed by a lively domestic market. Consumer confidence in economic growth has remained high, while tax cuts and wage increases have increased the purchasing power of households. Unemployment, likewise, has improved slightly. Private consumption is expected to grow by over 3% this year. Continuing low interest rates have had a positive impact on consumer demand and in particular on home buying and property advertising.
Media advertising rose 4.4% between January and June according to TNS Gallup. The strongest increase by far was in Internet advertising, 29.2%. Television advertising rose 7.3% during the first quarter but began to decline during the second quarter. The actual growth figure for television advertising between January and June was 0.4%, which was well below the average for media advertising in general, whereas newspaper advertising grew 5.8% in the same period; within this group, town and free papers increased 13.4%.
The strong growth in newspaper advertising was driven by rising retail advertising, recovering recruitment advertising and property advertising, boosted by low interest rates.
Business newspaper advertising started well at the beginning of the year but appeared to decline between March and April, picking up again at the end of the reporting period.
The paper industry dispute had no significant impact on Alma Media’s six-month performance.
Terhi Lambert
Communications Manager
DISTRIBUTION: Helsinki Exchanges, principal media

Q2 presentation material will be available at  at 11.00 A.M. EET. The company will hold a webcast starting at 1.00 P.M. EET at followed immediately by a conference call. The call-in phone number is +47-2239 1800.

The full report can be downloaded from the following link:
  • Published: 12.8.2005, 11:00
  • Category: Releases, Stock exchange release

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