ALMA MEDIA INTERIM REPORT JANUARY - JUNE 1998
ALMA MEDIA CORPORATION STOCK EXCHANGE BULLETIN 10 August 1998 1.00pm
ALMA MEDIA INTERIM REPORT JANUARY-JUNE1998
Alma Medias net sales for January to June 1998 totalled MFIM 1,429
(1997: MFIM 1,366). The Groups operating profit was MFIM 132 (MFIM
151). The solvency ratio was 52 % (47 % on 31 December 1997).
Alma Media Corporation began operating on 1 April 1998
On 1 April 1998 Aamulehti Corporation and MTV Corporation merged to
form a new mass communications company called Alma Media
Corporation. The shares of both companies were converted into Alma
Media shares, which have been quoted on the Helsinki Stock Exchange
since the beginning of April. The merger was effected using the
pooling method and therefore the two companies have operated with a
single set of accounts since the beginning of 1998. This interim
report presents Alma Media Corporations consolidated income
statement for the period 1 January to 30 June 1998 and the
consolidated balance sheet at the end of the period. The per share
data are the per share data for Alma Media Corporation and are based
on the January - June figures for the Alma Media Group. The
comparative data in 1997 are pro forma figures for the Alma Media
The Finnish economy continued to grow strongly, which was also
positively reflected in demand for media advertising and printed
products. For the first time since 1990 the circulations of Finnish
daily newspapers (those appearing 4-7 times a week) increased on
average. Paper prices were almost 5 % higher, depending on the
grade, than in the same period last year. Demand for printed
products in Russia showed further growth, which had a healthy impact
on capacity utilization in Finland.
According to Addfacts Ltd, expenditure on media advertising in
Finland rose 13 % to FIM 2.7 (2.4) billion on the same period in
1997. Newspaper advertising increased 14 %, magazine advertising 24
% and TV advertising 5 %. Radio advertising grew 19 % after the
start-up of the nationwide Radio Nova channel.
Consolidated net sales and profit
Consolidated net sales in the January - June period totalled FIM
1,429 (1,366) million, up 5 % on the same period last year. This was
especially attributable to a strong increase in Aamulehtis
advertising revenue and to a sharp growth in delivery volumes by
Alprint Magazine Printing Group Ltd both in Finland and to Russia.
The unpredicted high load experienced by Alprint Magazine Printing
Group Ltd increased subcontracting and payroll costs, which reduced
profitability during the second quarter. Sales of MTVs advertising
time were 4 % down on the comparative period. Exports accounted for
FIM 200 million or 14 % of consolidated net sales (FIM 159 million
and 12 %).
The Groups share of principal associated companies results was FIM
-4 (2) million. The Swedish TV4 ABs share of this figure was FIM -5
million, which is included in MTV Oys result. During the review
period MTV Oy acquired Alma Media Corporations 18.4 % holding in
TV4 AB, which brings MTV Oys stake in TV4 AB to 23.4 %. Oy Suomen
Uutisradio Ab recorded a small profit in the January - June period,
which was better than forecast.
Operating expenses and depreciation together totalled FIM 1,315
(1,229) million, which was 7 % higher than in the comparative
period. Besides the growth in operating volume, costs were also
pushed up by heavier investments in Kauppalehti and Iltalehti and by
the one-time costs arising from the merger during the period. Group
depreciation totalled FIM 85 (85) million.
The consolidated operating profit was FIM 132 (151) million.
Alpresss operating profit increased FIM 9 million. Alprints
operating profit decreased FIM 16 million, which included FIM 13
million transferred to Alpress following a change in pricing of
printing services during the period. MTVs operating profit
decreased FIM 13 million.
The Groups net financial expenses came to FIM 8 (0) million. FIM 6
million of this increase was due to the acquisition of the TV4 AB
shares subsequent to the comparative period. There were no
extraordinary items during the period. Extraordinary items in the
comparative period totalled FIM 37 million. FIM 35 (39) million in
tax was deducted from the Groups profit, which corresponds to the
current tax rate. The Groups net profit was FIM 87 (145) million
and earnings per share were FIM 5.52 (7.34).
The balance sheet totalled FIM 2,350 million on 30 June 1998 (FIM
2,450 million on 31 December 1997). The solvency ratio was 52 % (47
% on 31 December 1997) and shareholders equity per share was FIM
72.27 (FIM 70.50 on 31 December 1997).
The Groups capital expenditure totalled FIM 73 (57) million, which
included FIM 63 million for maintenance and replacement investments
in fixed assets. The largest single item, FIM 11 million, involved
the transfer of Iltalehtis printing operation from Alprint
Kaivoksela to Alprint Tampere. Other investments related mainly to
shares in fixed assets.
Liquid reserves totalled FIM 139 million at the close of the review
period (FIM 212 on 31 December 1997). Interest-bearing debt amounted
to FIM 612 million at the end of June (FIM 736 million on 31
December 1997), including FIM 15 million (FIM 227 million on 31
December 1997) in foreign currency loans which were hedged against
exchange rate risks. Gearing was 42 % (47 % on 31 December 1997).
The Aamulehti Corporation and MTV Corporation shares were converted
into Alma Media Corporation shares on 31 March 1998, after which the
Aamulehti Corporation shares were no longer traded on the Helsinki
Stock Exchange. The Alma Media Corporation shares were quoted from 1
April 1998 correspondingly. Altogether 99.9 % of the new Alma Media
Corporation shares had been registered by the end of June. Alma
Media Corporations share capital is FIM 157 million. FIM 68 million
of this comprises Series I shares and FIM 89 million Series II
shares. At the end of June 39.4 % of all the Companys shares were
held in nominee accounts or owned by foreigners. Alma Media
Corporations Board of Directors has no authorization to increase
the share capital.
The Group had 2,862 (2,811) employees on average during the period
and an additional 982 (963) part-time newspaper delivery staff.
Total circulation figures for Finnish newspapers rose for the first
time in several years. Circulations of Alpresss newspapers improved
better than the average. A competitor to Kauppalehti entered the
Finnish market for business dailies in November 1997. Kauppalehtis
circulation increased 1.2 % and exceeded 80,000, despite the added
competition. Aamulehtis weekday circulation increased 1.2 % and its
Sunday circulation 1.4 %. Satakunnan Kansas circulation was up
0.6 %. The only major Alpress newspaper to record a fall in
circulation was Lapin Kansa, albeit only 0.3 %.
Iltalehtis format and printing arrangements were renewed at the
beginning of April. The format was changed from eurotabloid to
tabloid. At the same time printing of the daily edition was moved
from Vantaa to Tampere and Jyväskylä and printing of the weekend
edition was transferred to Pori. These changes were accompanied by
substantial additions to the newspapers editorial resources.
Iltalehtis circulation will be audited in August. The afternoon
newspaper market grew 4.9 % between January and June and Iltalehti
achieved a slight gain in market share on its competitor. Alpresss
circulation revenue increased almost 3 % to FIM 240 (234) million.
According to Addfacts Ltd, the volume of media advertising in
Finnish newspapers increased 11 % and advertising expenditure 14 %
between January and June , compared to the same period in 1997.
Alpresss advertising revenue was FIM 284 (258) million, 10 % up on
the comparative period. Aamulehtis advertising revenue increased 17
%, Lapin Kansas 12 % and Satakunnan Kansas 8 %. The advertising
revenue of the Paikallissanomat groups newspapers rose 8 % and
Kauppalehtis 7 %, while. Iltalehtis remained at the comparative
periods level. Almost exactly half of the increase in Alpresss
advertising revenue was the result of higher advertising volumes.
Consumer advertising showed the strongest surge.
Alpresss net sales rose 7 % to FIM 536 (503) million and the
operating profit to FIM 77 (68) million. The best result was posted
by the Aamulehti newspaper, although Lapin Kansas result also
developed positively. Kauppalehtis advertising and circulation
revenues improved better than expected. Kauppalehti has invested
heavily in the newspapers content as well as in customer service
and marketing. These investments reduced Kauppalehtis profitability
compared to the same period in 1997 but it is still good.
Iltalehtis result for the review period was somewhat weaker than
one year earlier owing to investments in content and marketing and
to the costs arising from the change in printing location.
Satakunnan Kansa and the Paikallissanomat group showed unchanged
levels of profitability. Alpresss result is expected to continue to
develop positively during the remainder of the year.
In June Alpress acquired 25 % of Suomen Lehdentekijät Group Oy,
which publishes customer and corporate magazines. It has net sales
of approximately FIM 40 million and 24 employees.
Television accounted for 22 % (23 %) of media advertising during the
first half of the year. MTV3 Channels share of television
advertising was 88 % (96 %) and of total media advertising 19 % (22
MTVs sales of advertising time totalled FIM 524 (545) million,
which was 4 % less than one year ago. MTVs net sales totalled FIM
545 (568) million. The reasons for the decrease were the new
competitive situation and a change in the system for pricing
advertising. This system, introduced at the beginning of the year,
enabled advertisers, contrary to previous practice, to receive
volume discounts and other related benefits from the beginning of
the year. Other operating income was FIM 4 (9) million. MTV posted
an operating profit of FIM 55 (68) million.
MTV3 Channels viewing time remained at the level of 42 %. According
to a TV measurement survey performed by Finnpanel Oy, the channel
was most successful in reaching 10- to 24-year-olds and 25- to 44-
year-old female viewers. MTV3 Channel reached almost half of both
these sought-after groups.
A study performed in May 1998 by Gallup Finland to determine the
appeal and image of Finlands TV channels indicated that 51 % of the
Finnish population, and 77 % of 15- to 24-year-olds, switched on to
MTV3 Channel if they did no know what was on television. The
corresponding figures for the other channels were YLE1 29 %, YLE2 8
% and Nelonen 4 %.
MTV3 Channel signed three major multiyear programme contracts for
foreign films and television series. The contracts were made with
Twentieth Century Fox International (USA), British Independent
Television Enterprises, BRITE (U.K.) and Southern Star in Australia.
MTV3 Channels total transmission time was 3,498 hours; it comprised
2,895 hours of programme time, 443 hours of advertising time and 160
hours of other items. Transmission time was increased by about 10 %
on the previous year. Of total programme time, 33 % was produced by
MTV itself, 16 % by other Finnish producers, and 51 % by foreign
producers. European content accounted for 52 % of the total.
An increase in the volume of annual contracts for advertising time
is expected to raise net sales of advertising time during the
remainder of the year. MTVs full-year result is expected to remain
on a par with last years level.
Overall demand for graphic products is clearly increasing,
especially in Russia and Finland. This growth has been most
pronounced in magazines and printed promotional products. The change
in pricing governing Alprint and Alpress reduced Alprints operating
profit by FIM 13 million.
Paper prices this year have been roughly 5 % higher on average than
Alprints net sales increased 12 % to FIM 469 (420) million. Exports
rose 26 % but intragroup invoicing fell 6 %. Deliveries to other
domestic customers increased 13 %. Exports accounted for 43 % (38 %)
of Alprints net sales. The increase in exports of printed products
to Russia has clearly raised capacity levels. No significant changes
were noted in the Russian market during the second quarter.
Competition in the Western markets continues to be stiff.
Alprints operating profit was FIM 22 (38) million. In addition to
the change in internal pricing policy which reduced the Newspaper
Printing Groups performance, the operating profit was also
adversely affected by a weakening of the Magazine Printing Groups
gross profit and an increase in raw material costs. Export growth
and a sharp increase in demand for printing of promotional products
in the domestic market caused bottlenecks in the Magazine Printing
Groups production processes. As a result of increased overtime and
subcontracting the Magazine Printing Groups result was weaker than
in the comparative period, despite the increase in its net sales.
Profitability declined, especially in Western exports.
Alprint Magazine Printing Groups net sales increased 23 % to FIM
257 (209) million. Domestic net sales rose 21 % and exports 24 %.
The growth in exports was the result of stronger sales in Russia.
Alprint Newspaper Printing Groups net sales increased one per cent
to FIM 214 (212) million. Exports, principally to Russia, rose 30 %.
Intragroup net sales fell 6 % and net sales to other domestic
customers fell 9 %.
Alprints profitability is expected to improve during the remainder
of the year. Despite the increase in net sales, the result for the
full year is expected to remain weaker than last year, even
including the change in internal pricing.
In April Alprint announced a three-year investment programme aimed
at safeguarding its competitive strength. The programme involves
upgrading technically outdated production machinery and
rationalizing the production processes, and will not introduce new
capacity to the market.
The programme includes replacing the Kaivoksela newspaper rotation
press, rationalization and modernization of the Magazine Printing
Groups production machinery, and an analysis to establish the
feasibility of starting production in Russia.
Kaivokselas new four-colour combination press will replace the
outdated hybrid newspaper rotation press started up in 1980. The
investment is scheduled for implementation in 1998 - 2000 and,
including construction work, will cost around FIM 140 million.
The second part of the investment programme calls for the
modernization of Alprint Magazine Printing Groups entire production
facilities to enhance their competitiveness. These investments,
which will be implemented between 1998 and 2001, will total
approximately FIM 90 million.
Various alternatives for starting production in Russia will be
examined by the end of the current year.
Parent company and other operations
The figures include Aamulehti Corporation (1 January - 31 March
1998), Alma Media Corporation (1 April - 30 June 1998) and other
operations including Alexpress Oy and the Groups local radio
broadcasting activities. These operations generated net sales of FIM
39 (38) million and an operating loss of FIM 16 (-19) million.
Alma Medias principal associated companies are TV4 AB (23 %) in
Sweden and Oy Suomen Uutisradio Ab (48 %). 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 between January and June totalled 1,002 (870)
million Swedish krona, an increase of 15 %. The operating profit was
36 (51) million Swedish krona, the decrease being caused mainly by
single payments in connection with the change of management, an
increase in the cost of local television and a loss recorded by the
Radio Nova (Oy Suomen Uutisradio Ab) became operational on 12 May
1997 and in less time than forecast has achieved both its financial
and listener targets. Nova has become the most popular radio channel
among young adult listeners, more than one million of whom tune in
on the best days. Radio Novas net sales between January and June
were FIM 27 million and its operating result was marginally
Alma Medias network business sector includes MTV3 Internet, the
electronic newspaper editions of the Alpress publications, digital
media development, technology for the distribution and maintenance
of network products, and electronic trading trials. Alma Media
invests some FIM 15 - 20 million in its network operations annually.
A study of Internet home pages performed by Taloustutkimus in spring
1998 indicated that MTV3s Internet pages are the most popular in
Finland with 50 % of Internet users having visited them. About
100,000 Finns use Alma Medias Internet services daily.
According to Addfacts Ltd Internet advertising grew 81 % compared to
the same period last year. Alma Medias market share of Internet
advertising is almost 40 %.
The media markets are forecast to continue growing to the end of the
year. Alpress is expected to return a distinctly better result than
last year and MTV to remain at last years levels, but Alprints
result is expected to remain notably weaker. Financing of the
acquisition of the TV4 AB shares will increase the Groups financial
Alma Media Groups net sales are expected to increase. Additional
spending behind Kauppalehti, Iltalehti and MTV contributed to
maintain and even increase market shares in the new, more
competitive situation. This has, however, also increased costs. The
Group will continue these efforts during the second half of the year
and therefore the decrease in operating profit in the first half of
1998 is not expected to be recovered in the full year results.
The figures in this interim report are unaudited.
Alma Media Corporation will publish its January - September interim
report on 6 November 1998.
ALMA MEDIA CORPORATION
BOARD OF DIRECTORS
ALMA MEDIA CORPORATION
Vice President, Corporate Communications
Further information: Mr Matti Packalén, CEO, tel. +358 (0)9 507 8715
Ms Ritva Sallinen, CFO, tel. +358 (0)9 507 8708
Distribution: Helsinki Stock Exchange
ALMA MEDIA (1997 FIGURES PRO FORMA)
CONSOLIDATED INCOME STATEMENT (MFIM)
NET SALES (NS) 1,429 1,366 2,727
Share of profits of
associated companies -4 2 5
Other operating income 22 12 25
Expenses -1,315 -1,229 -2,487
OPERATING PROFIT 132 9.2 151 11.1 270 9.9
Financial income and expenses-8 0 -2
EXTRAORDINARY ITEMS 124 8.7 151 11.1 268 9.8
Extraordinary items 37 32
PROFIT BEFORE TAXES AND
MINORITY INTERESTS 124 8.7 188 13.8 300 11.0
Taxes -35 -39 -66
Minority interests -2 -4 -3
NET PROFIT 87 6.1 145 10.6 231 8.5
NET SALES AND OPERATING PROFIT (MFIM)
I/97 II/97 III/97 IV/97 1997
Net sales 649 717 595 766 2,727
Operating profit 50 101 39 80 270
Net sales 694 735
Operating profit 45 87
CONSOLIDATED BALANCE SHEET (MFIM)
Intangible assets 86 101 93
Goodwill on consolidation 94 110 100
Tangible assets 944 996 978
Investments 654 124 663
Inventories 173 122 158
Receivables 260 252 246
Cash and bank receivables 139 281 212
CONSOLIDATED BALANCE SHEET (MFIM)
SHAREHOLDERS EQUITY AND LIABILITIES
SHAREHOLDERS EQUITY 1,137 991 1,109
MINORITY INTERESTS 22 32 20
OBLIGATORY PROVISIONS 5 5 6
Long-term 536 377 304
Current 650 581 1,011
CAPITAL EXPENDITURE (MFIM)
Gross capital expenditure on
fixed assets 73 57 661
GROUP CONTINGENT LIABILITIES (MFIM)
Against own debt
Pledges 10 21 402
Mortgages on land
and buildings 252 151 252
Chattel mortgages 141 142 141
Guarantees 2 4 2
On behalf of associated companies
Guarantees 4 4 7
On behalf of others
Other own commmitments
Leasing commitments 11 10 10
Buyback commitments 44 44 44
Other commitments 1
Total 464 378 858
Group leasing payments falling due (MFIM)
Between 1 July and
31 Dec. 1998 3 2 4
After 1998 8 8 6
Foreign currency loans totalling FIM 15 million were hedged 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.
The TV4 AB shares held as loan collateral were no longer pledged at
the end of the period.
NET SALES BY DIVISION (MFIM)
Alpress 536 503 1,014
MTV 545 568 1,079
Alprint 469 420 888
Parent company and
other operations 39 38 76
Intragroup sales -160 -163 -330
Total 1,429 1,366 2,727
OPERATING PROFIT BY DIVISION (MFIM)
Alpress 77 68 130
MTV 55 68 96
Alprint 22 38 88
Parent company and
other operations -16 -19 -44
Group entries -6 -4
Total 132 151 270
AVERAGE PERSONNEL BY DIVISION
Alpress 1,053 1,073 1,068
MTV 721 686 681
Alprint 970 953 963
Parent and other companies 118 99 106
Total 2,862 2,811 2,818
In addition part-time
newspaper delivery staff 982 963 970
PER SHARE DATA, FIM
Earnings per share 5.52 7.34 12.71
per share 72.27 66.09 70.50
10 PRINCIPAL SHAREHOLDERS ON 30 JUNE 1998
Series I Series II Total % %
1. Tidnings AB
Marieberg 1,549,155 2,089,523 3,638,678 23.1 22.9
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
Telecommunications 59,000 78,500 137,500 0.9 0.9
- Nokia Multimedia
Network Terminals Oy 30,267 40,270 70,537 0.4 0.4
4. Pohjola Group 422,579 120,887 543,466 3.4 5.7
- Pohjola Insurance
Company Ltd 350,469 65,940 416,409 2.6 4.7
- Pohjola Life Assurance
Company Ltd 47,089 32,560 79,649 0.5 0.7
- Suomi Mutual Life
Assurance Company 25,021 22,387 47,408 0.3 0.4
5. C V Åkerlundin fund 276,810 15,419 292,229 1.9 3.6
6. Ilmarinen Pension
Insurance Company Ltd 243,087 214,169 457,256 2.9 3.4
7. Pension Varma Mutual
Insurance Company 228,898 228,898 1.5 3.0
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
of Finnish Textile and
Clothing Industries 128,600 128,600 0.8 1.7
Total 4,452,125 4,458,375 8,910,500 56.5 63.8
Nominee-registered 216,164 2,345,776 2,561,940 16.3 5.9
Others 2,103,297 2,154,323 4,257,620 27.2 30.3
Total 6,771,586 8,958,474 15,730,060 100.0100.0