Sanoma's Year-End Statement 2009: Solid Result in Difficult Environment
(Thomson Reuters ONE) - Financial Statement Release 11/02/2010 11:30- The Sanoma Group's net sales in 2009 totalled EUR 2,767.9 (3,030.1) million,8.7% less than in the comparable year.- Operating profit excluding non-recurring items was EUR 229.5 (295.7) millionin 2009. Non-recurring items totalled EUR -34.1 (-59.3) million.- In the fourth quarter, the Group net sales were EUR 733.6 (798.7) million.Operating profit excluding non-recurring items improved to EUR 49.3 (49.0)million.- Fourth quarter earnings per share were EUR 0.04 (-0.39). Earnings per sharefor 2009 were EUR 0.66 (0.72).- Cash flow from operations in 2009 totalled EUR 241.8 (250.3) million. Cashflow per share was EUR 1.50 (1.56)- The proposed dividend is EUR 0.80 per share. KEY INDICATORS 10?12/ 10?12/ Change 1?12/ 1?12/ Change EUR million 2009 2008 % 2009 2008 % Net sales 733.6 798.7 -8.2 2,767.9 3,030.1 -8.7 Operating profit excluding 49.3 49.0 0.5 229.5 295.7 -22.4 non-recurring items % of net sales 6.7 6.1 8.3 9.8 Operating profit 32.3 -28.8 212.0 195.4 236.3 -17.3 Result for the period 8.6 -59.9 114.3 107.1 120.8 -11.4 Capital expenditure 83.4 109.9 -24.2 % of net sales 3.0 3.6 Return on investment (ROI), % 8.9 10.7 Equity ratio, % 41.4 40.0 Net gearing, % 79.4 78.5 Number of employees at the end of the period 16,723 18,453 -9.4 (FTE) Average number of employees (FTE) 17,343 18,168 -4.5 Earnings/share, EUR 0.04 -0.39 110.2 0.66 0.72 -8.8 Cash flow from operations/share, 0.76 0.59 28.3 1.50 1.56 -3.5 EUR Equity/share, EUR 7.36 7.59 -3.1 Dividend/share, EUR * 0.80 0.90 -11.1 Dividend/result, % * 122.0 125.1 -2.5 Market capitalisation 2,536.5 1,479.7 71.4* Year 2009 proposal of the Board of directorsHannu Syrj?n, President and CEO"Considering the difficult business environment in 2009, we delivered a solidoperational result. Our EBIT excluding non-recurring items amounted to EUR 229.5million. When the market decline started at the end of 2008, we reacted quicklyand focused on improving the efficiency of our operations. During the year, ouroperating expenses excluding non-recurring costs came down 7.9%. In personnelcosts, we achieved savings of 4.5%. The efficiency improvements were clearlyvisible in our fourth quarter result which improved from the comparable periodand many of the effects of the structural changes we made during the year willfirst show in the 2010 figures. I am very pleased with the good level of ourcash flow and continuously solid financial position.Even though we have seen some positive signals from the advertising in our mainmarkets, no fast recovery is yet in sight. Efficiency continues to be inSanoma's focus in 2010. At the same time, we are investing in future growth byrenewing our products and services, developing our concepts and creating newinitiatives. Online operations, one of our key areas, are expected to growsignificantly in the next few years. Transactional services, gaming platformsand verticals are being developed both through our own innovations as well asacquisitions. Our new innovation management system will provide further focus tothe Group's efforts in this area and provide the right tools and incentivesystems to foster more ambitious organic growth.Our strategic goal is to be one of the leading media companies in Europe, with afocus on sustainable growth and profitability. We continue to aim at being themarket leader in our chosen businesses and markets. Our focus areas aremagazines, news, learning solutions and online business."Outlook for 2010In 2010, Sanoma's net sales are expected to grow. The operating profit excludingnon-recurring items is estimated to improve slightly. In the comparable year2009, operating profit excluding non-recurring items was EUR 229.5 million.The outlook of Sanoma's net sales and operating profit in 2010 is affected bythe development of advertising and private consumption in the Group's countriesof operation. The current outlook is based on the assumption that theadvertising markets in the Group's operating countries are stable. Theefficiency improvements executed in 2009 will continue to have effects onGroup's results in 2010.Net salesIn 2009, Sanoma's net sales amounted to EUR 2,767.9 (2008:3,030.1; 2007: 2,926.3) million, 8.7% less than in the comparable year.Excluding the effect of exchange rate changes, net sales would have been 7.0%lower than in the comparable year. Adjusted for changes in the Group structure,net sales in 2009 decreased by 9.1%. Net sales were at the comparable year'slevel in Sanoma Entertainment. Net sales were down in other divisions, withadvertising sales in particular being affected by the general economicsituation.Advertising sales decreased clearly and accounted for 21% (25%) of the Group'stotal net sales. Online advertising sales, however, remained stable in SanomaMagazines and Sanoma News with Sanoma Entertainment even reporting growth. TheGroup's subscription sales grew slightly. Single copy sales across the Groupfell somewhat, mostly in magazines in Russia and CEE countries. In geographicalterms, Finland accounted for 51% (49%) of net sales, with other EU countriesaccounting for 46% (46%) and non-EU countries for 3% (5%).ResultSanoma's operating profit excluding non-recurring items in 2009 was EUR 229.5(295.7) million or 8.3% (9.8%) of net sales. The operating profit excludingnon-recurring items in 2009 was 22.4% less than in the comparable year. Theoperating profit included a total of EUR -34.1 (-59.3) million in non-recurringitems. These non-recurring expenses are related to restructuring of operationsin several divisions. In the comparable year, non-recurring items consisted ofcapital gains from divestments, as well as write-downs of goodwill, immaterialrights and inventories as well as costs associated with the restructuring of themulti-volume book publishing business. NON-RECURRING ITEMS 10?12/ 10?12/ 1?12/ 1?12/ EUR million 2009 2008 2009 2008 Magazines Restructuring expenses (Magazines Belgium) -10.9 -12.4 Restructuring expenses (Magazines Netherlands) -0.1 -4.7 A gain on sale of R.C.V. Entertainment 23.5 A gain on sale of Payback Kft 7.0 7.0 Expenses on closing down a youth site and related impairment loss -5.1 -5.1 Impairment loss of immaterial rights and goodwill -78.6 -78.6 News Expenses related to the efficiency programme -8.4 Learning & Literature Restructuring expenses -2.4 -3.9 Expense related to the sale of children's magazines -1.1 Inventory write-downs and restructuring expenses -1.1 -7.6 Trade Restucturing expenses -3.6 -3.6 Other companies A gain on sale of a land area 1.5------------------------------------------------------------------------------- NON-RECURRING ITEMS IN OPERATING PROFIT -17.0 -77.8 -34.1 -59.3 Impairment losses on loans and other receivables and available-for-sale investments -3.7 -8.7------------------------------------------------------------------------------- NON-RECURRING ITEMS IN FINANCIAL ITEMS -3.7 -8.7The Group's operating profit was EUR 195.4 (2008: 236.3; 2007: 343.8) million or7.1 (2008: 7.8%; 2007: 11.7%) of net sales. Operating profit grew in SanomaEntertainment, where all business units developed favourably. In otherdivisions, operating profit decreased mainly as a result of lower sales andrestructuring expenses.Sanoma's net financial items totalled EUR -30.1 (-51.0) million. Financialincome amounted to EUR 22.5 (18.9) million, of which exchange rate gains wereEUR 15.0 (6.0) million. Financial expenses amounted to EUR 52.6 (69.9) million.Interest expenses amounted to EUR 25.3 (56.3) million and exchange rate lossesto EUR 16.2 (12.0) million. The refined financing structure and lower referencerates clearly decreased the Group's interest expenses in 2009. Financialexpenses also included a write-down of the shares in the e-commerce companyFruugo, amounting to EUR 5.0 million and a write-down of loan receivablestotalling EUR 3.5 million connected with a divestment in 2005.The result before taxes was EUR 161.4 (190.3) million. Sanoma's effective taxrate was clearly lower than in the comparable year. Earnings per share in 2009were EUR 0.66 (0.72). The result for the period totalled EUR 107.1 (120.8)million.Efficiency improvementsIn 2009, Sanoma completed a large number of efficiency improvement programmes tostrengthen its competitive position as well as safeguard profitability and cashflows. The non-recurring costs of the restructuring measures in 2009 amount toEUR 34.1 (91.3) million.Sanoma News redesigned its editorial and marketing processes to increaseco-operation between print and online operations. Sanoma Magazines Belgiumdecided to focus more on its key titles and strengthening relationships with itsreaders. Sanoma Magazines Netherlands has gathered all its print operationsunder Sanoma Uitgevers and all online operations under Sanoma Digital TheNetherlands. The Dutch direct marketing organisation was closed down sincedirect marketing has become less important as a marketing channel. In Estonia,Sanoma Trade is reorganising its businesses. This reorganisation aims to ensureits competitiveness in the future, improve the efficiency of operations, andmore importantly, enhance co-operation in marketing and business development. InSanoma Learning & Literature, restructuring in multi-volume book publishing wasfinalised. The integration of operations in language services continues.In addition to these larger programmes, Sanoma also reduced personnel andcarried out short-term cost-saving programmes in several other business unitseither as a result of the weakened economic outlook or related to restructuringinitiated by changing business needs in, for example, Russia, the Czech Republicand Finland. In 2009, the Group reduced its total expenses excludingnon-recurring items by 7.9% with both cost of sales and other operating expensesdecreasing more than the net sales. At the end of December, Sanoma had over1,700 employees (FTE) less than at the year-end 2008, corresponding to areduction of 9.4% in work force. Personnel costs, excluding the non-recurringitems, were down by 4.5% from the 2008 level. The effects of personnelreductions of Sanoma News and Sanoma Magazines Belgium, for example, will becomemore visible during the first half of 2010.Balance sheet and financial positionAt the end of the year, the consolidated balance sheet totalled EUR 3,106.3(3,278.7) million. Sanoma successfully maintained a good cash flow and theGroup's cash flow from operations in 2009 totalled EUR 241.8 (250.3) million.Cash flow per share was EUR 1.50 (1.56). The weaker operational result wasoffset by effective working capital management and clearly lower financial itemsand taxes paid.There were no significant changes in the Group's financial position during theyear. At the end of December, Sanoma's equity ratio was 41.4% (40.0%). Netgearing increased to 79.4% (78.5%). Equity totalled EUR 1,206.6 (1,237.1)million. Return on equity (ROE) was 9.2% (2008: 9.1%; 2007: 18.6%), and thereturn on investment (ROI) was 8.9% (10.7%). Interest-bearing liabilitiesdecreased to EUR 1,017.7 (1,082.6) million and interest-bearing net debt to EUR958.1 (971.6) million. At the end of December, the Group's cash and cashequivalents totalled EUR 59.7 (110.9) million. Sanoma's net debt/EBITDA ratiowas 2.6 at the end of 2009, in line with the Group's target to keep the ratiobelow 3.5.Sanoma's financial position is stable. The existing credit facilities, such asthe syndicated, long-term credit facility of EUR 802 million, cover all Sanoma'sfinancing needs and Sanoma has no need for material refinance in the nearfuture. Sanoma Corporation does not have any other significant agreementscovered by the statutory obligation to disclose. The Group has, within the scopeof normal business operations, agreements or agreements as a whole containing astandard change-of-control clause.Investments, acquisitions and divestmentsInvestments in tangible and intangible assets totalled EUR 83.4 (109.9) millionin 2009, and consisted mainly of ICT systems as well as replacement investmentsand renovations. Sanoma has a policy to keep the annual capital expenditure,excluding M&A, below EUR 100 million. Sanoma's business acquisitions in 2009totalled EUR 6.7 (190.7) million. R&D expenditure was recorded at EUR 1.5 (4.1)million or 0.1% (0.1%) of net sales. R&D expenditure does not include costsrelated to launches of new products and services or renewal of existing ones,which are considered normal portfolio management and incurred as costs.There were no significant transactions during the year. In the comparable year,Sanoma Magazines divested the Dutch movie distribution company R.C.V.Entertainment and a capital gain of EUR 23.5 million was recorded for thetransaction. On 11 March 2008, Sanoma Learning & Literature completed itsacquisition of the Polish educational publisher Nowa Era.SANOMA MAGAZINESSanoma Magazines, operating in 13 European countries, is a leading publisher ofmagazines and has a strong presence in digital media. The company activelyreaches out to an audience of 290 million consumers at every life stage, andaims to strengthen its market leader positions in each of the markets itoperates in.- Sanoma Magazines' strong brands were able to outperform market development inits key markets.- Sanoma Magazines improved its result in the fourth quarter with EBIT excludingnon-recurring items being 6.4% higher than in the comparable period.- The full-year result was strongly affected by the decreasing advertisingsales, in particular in Sanoma Magazines International. Key indicators 10?12/ 10?12/ Change 1?12/ 1?12/ Change EUR million 2009 2008 % 2009 2008 % Net sales 307.1 338.9 -9.4 1,111.2 1,246.8 -10.9 Operating profit excluding 38.4 36.1 6.4 113.4 138.9 -18.4 non-recurring items * % of net sales 12.5 10.6 10.2 11.1 Operating profit 27.4 -40.6 167.4 96.3 85.7 12.4 Capital expenditure 24.4 26.8 -9.1 Return on investment (ROI), % 7.9 7.2 Number of employees at the end of the period 5,191 5,900 -12.0 (FTE) Average number of employees (FTE) 5,452 5,731 -4.9* In 2009, the non-recurring items included in the second quarter EUR 1.3million, in the third quarter EUR 0.2 million and in the fourth quarter EUR10,9 million Sanoma Magazines Belgium's restructuring expenses and in the thirdquarter EUR 4.6 million and in the fouth quarter EUR 0,1 million SanomaMagazines Netherlands' restructuring expenses. In 2008, the non-recurring itemsincluded EUR 23.5 million capital gain from the divestment of movie distributorR.C.V. Entertainment in the first quarter as well as EUR 7.0 million capitalgain from sales of online assets and EUR 83.7 million impairment loss ongoodwill and immaterial rights in the fourth quarter. Operational indicators * 1?12/ 1?12/ 2009 2008 Number of magazines published 295 344 Magazine copies sold, thousands 372,995 404,750 Advertising pages sold 54,108 70,367* Including joint venturesSanoma Magazines' net sales in 2009 amounted to EUR 1,111.2 (1,246.8) million,10.9% less than in the comparable year. The general economic situation affectedsales in all operating countries with Sanoma Magazines International's net salesbeing impacted the most. The Division's net sales adjusted for changes in theGroup structure were down by 11.3%. Of the Division's net sales, 18% (16%) camefrom Finland. In October-December, the Division's net sales decreased by 9.4% toEUR 307.1 (338.9) million with advertising sales in the Netherlands, Belgium andFinland showing slight improvement during the last months of the year.The Division's advertising sales decreased by 23% in 2009 and represented 29%(33%) of net sales. The economic downturn hit advertising revenues in allmarkets, in particular Sanoma Magazines International's advertising sales. TheDivision's online advertising sales were at the comparable year's level.Sanoma Magazines' circulation sales decreased by 3% and represented 60% (55%) ofthe Division's net sales. Subscription sales increased slightly in 2009 due togood development in the Netherlands, Belgium and Finland. Single copy salesdeclined, mostly in the CEE countries.Sanoma Magazines Netherlands' net sales amounted to EUR 493.2 (515.7) million,due to weaker print advertising sales than in 2008. According to Nielsen MediaResearch, the consumer magazine advertising market in the Netherlands decreasedby 16% in 2009. However, with its strong brands Sanoma Magazines Netherlands wasable to outperform the market development both in print and online advertisingand increase its market share. New assets, acquired in the second half of 2008,contributed to Sanoma Magazines Netherlands' online advertising growth of 6%. Intotal, advertising sales represented 27% (29%) of Sanoma Magazines Netherlands'net sales. Sanoma Magazines Netherlands also improved its market position in thereaders' market. Its circulation revenues were at the comparable year's level,even though some titles were discontinued during the year. Subscription sales inparticular developed positively with increased sales of core brands offsettingthe changes in the portfolio. During the year, Sanoma Magazines Netherlandsclosed down or sold 11 magazines, and launched two magazines as well as nineonline services.Sanoma Magazines International's net sales were EUR 211.3 (306.7) million. Theeconomic downturn affected sales strongly in all countries. The reported netsales were also substantially impacted by negative translation effects,especially of the Russian rouble and Hungarian forint. Advertising sales,representing 49% (56%) of Sanoma Magazines International's net sales, decreasedespecially in Russia, Hungary and Ukraine. Sanoma Magazines Internationalreacted quickly to changing market conditions at the beginning of the year anddiscontinued 21 unprofitable magazine titles, which also lowered advertisingsales, in particular in the Czech Republic. Circulation sales were clearly belowthe comparable year. This is also partly attributable to the reduced number ofmagazines published and, in some cases, the number of issues. The publicationfrequency of various titles has been adjusted in order to save costs. SanomaMagazines International launched one magazine in 2009 and strengthened itsleading position in the Hungarian online market through the acquisition of thecomparison site Olcsobbat.hu. Sanoma Magazines International also improved itsmarket share in Romania and is now the leading magazine publisher in thecountry.Net sales at Sanoma Magazines Belgium totalled EUR 212.3 (223.2) million. In thereaders' market, Sanoma Magazines Belgium outperformed the market development.Its circulation sales grew slightly due to increased subscription sales. In linewith the market development, advertising sales were below the comparable periodand represented 25% (27%) of net sales. During the year, Sanoma MagazinesBelgium renewed its strategy and started to redesign its organisation to betteruse the opportunities of the changing media environment.Sanoma Magazines Finland's net sales amounted to EUR 198.8 (205.6) million.Circulation sales in Finland held up well but advertising sales were down fromthe comparable year. According to TNS Gallup Adex, advertising in consumermagazines in Finland decreased by 21% in 2009 and the volume of the single copymarket for magazines by 7%. Advertising sales represented 13% (15%) of SanomaMagazines Finland's net sales. Sanoma Magazines Finland outperformed the marketdevelopment both in advertising and the readers' market and has increased itsmarket shares. In particular the key titles, such as the women's weekly MeNaiset and the glossy Gloria together with its brand extensions increased theirreadership.Sanoma Magazines' investments in tangible and intangible assets totalled EUR24.4 (26.8) million and consisted mainly of ICT investments. The mostsignificant acquisition in 2009 was that of Hungarian SELKO kft, which operatesthe comparison site Olcsobbat.hu. In the comparable year, the major acquisitionswere the majority shareholding in magazine publisher Mood for Magazines and theacquisitions of Netinfo and European Autotrader.Sanoma Magazines' operating profit excluding non-recurring items in 2009 wasEUR 113.4 (138.9) million, a decrease of 18.4% from the comparable year.Decreasing advertising sales affected results in all businesses, in particularin Sanoma Magazines International and also in Sanoma Magazines Netherlands.Operating profit improved slightly in Finland. Non-recurring items totalled EUR-17.1 (-53.2) million and were related to restructuring in Sanoma MagazinesBelgium and the direct marketing organisation in the Netherlands. In thecomparable year, the non-recurring items consisted of a recognition ofimpairment and write-downs totalling EUR 83.7 million and capital gains of EUR30.5 million related to the divestments of R.C.V. Entertainment and some onlineassets. Operating profit in 2009 amounted to EUR 96.3 (85.7) million. TheDivision initiated several programmes to improve the profitability of itsbusiness units and in October-December, Sanoma Magazines improved its operatingprofit excluding non-recurring items by 6.4% to EUR 38.4 (36.1) million.Sanoma Magazines continues to develop its magazine portfolio with a specialfocus on its key titles in each operating country. Sanoma Magazines is investingin strengthening its market positions, and wants to become stronger in digitalmedia. The growth in digital operations can be done by leveraging existingassets and will be speeded up by organisational changes made in 2009. At thesame time Sanoma Magazines continues to strongly focus on improving efficiencyand saving costs.In 2010, Sanoma Magazines' net sales are expected to grow slightly and it isestimated that operating profit excluding non-recurring items will be at theprevious year's level.SANOMA NEWSSanoma News is the leading newspaper publisher in Finland and its printed anddigital products have a strong presence in the lives of Finns. In addition toHelsingin Sanomat, the largest daily in the Nordic region, Sanoma News publishesother national and regional newspapers and it is also one of the mostsignificant digital media players in Finland.- Sanoma News improved its result in the fourth quarter and posted 14.5% higherEBIT than in the comparable period. Total savings of over EUR 30 million wereachieved during 2009.- In 2009, the tabloidIlta-Sanomat was able to reverse its market sharedevelopment. Online visitors and advertising sales continued to growsignificantly.- The total reach ofHelsingin Sanomat is at an all-time-high due to increasingprint readership and growing online audience.- After the review period, Sanoma News focused its operations by divestingpicture agency Lehtikuva. Key indicators 10?12/ 10?12/ Change 1?12/ 1?12/ Change EUR million 2009 2008 % 2009 2008 % Net sales 112.9 119.2 -5.4 428.9 474.7 -9.7 Operating profit excluding 10.8 9.4 14.5 40.6 57.3 -29.2 non-recurring items * % of net sales 9.6 7.9 9.5 12.1 Operating profit 10.8 9.4 14.5 32.2 57.3 -43.9 Capital expenditure 10.6 19.6 -46.0 Return on investment (ROI), % 12.1 19.2 Number of employees at the end of the period (FTE) 2,306 2,449 -5.8 Average number of employees (FTE) 2,399 2,491 -3.7* In 2009, the non-recurring items included in the first quarter EUR 2.3 millionand in the second quarter EUR 6.1 million expenses related to the efficiencyprogramme. Operational indicators 1?12/ 1?12/ 2009 2008 Distribution of free sheets, millions 74.8 92.4 1?12/ 1?12/ Audited circulation 2009 2008 Helsingin Sanomat 397,838 412,421 Ilta-Sanomat 153,051 161,615 10?12/ 10?12/ Online services, unique visitors, weekly 2009 2008 Iltasanomat.fi 1,827,379 1,548,421 HS.fi 1,280,225 1,096,222 Huuto.net 462,347 452,712 Oikotie.fi 374,397 288,133 Taloussanomat.fi 508,089 418,740 Keltainenporssi.fi 169,441 175,199Sanoma News' net sales in 2009 totalled EUR 428.9 (474.7) million, a decrease of9.7% from the comparable year. Most of the decrease came from the HelsinginSanomat business unit, where advertising sales declined significantly. Adjustedfor changes in the Group structure, net sales decreased by 10.1%. InOctober-December, some improvement was seen in advertising and single copysales. The Division's net sales were down by 5.4%, clearly less than in theprevious quarters, and amounted to EUR 112.9 (119.2) million.The advertising market in Finland in 2009 was significantly below the comparableyear. The last months of the year showed small positive signs, but according toTNS Gallup Adex, newspaper advertising in Finland decreased by 22% inJanuary-December. Job advertising in Finland decreased by 51% and real estateadvertising by 35%. Advertising in free sheets was down by 19%. Onlineadvertising included in the statistics also decreased by 4%.Sanoma News' advertising sales followed the general advertising environment, anddecreased by 22% during the year, with print classified advertising inparticular affecting sales. However, November and December sales showed clearprogress. The Division's online advertising sales performed clearly better thanthe market and were almost at the comparable year's level. Advertising salesrepresented 45% (53%) of the Division's net sales in 2009.The Finnish tabloid market has been affected by structural migration to onlineand declined by 6% in 2009. However, the decrease in circulation of Ilta-Sanomathas slowed down markedly with the fourth quarter showing a level close to thecomparable year. With the amount of online visitors increasing constantly, thetotal reach of Sanoma News improved during the year. The Division's circulationsales grew by 3% with both subscription and single copy sales increasing.Circulation sales accounted for 44% (38%) of the Division's net sales.The Helsingin Sanomat business unit's net sales totalled EUR 240.3 (279.5)million. Circulation sales increased from the comparable year due to new hybridsubscription models combining print and digital products and increases insubscription prices. In November, the renewed daily newspaper was launched andthe renewed product and promotional measures offset the circulation decrease.This positive development is expected to continue in 2010. The number of readersof the Helsingin Sanomat daily newspaper increased according to the latestNational Readership Survey. Together with its growing online audience, the totalreach of Helsingin Sanomat is at an all-time high. Advertising sales of thebusiness unit were strongly affected by the overall economic situation. Jobadvertising in the daily print edition of Helsingin Sanomat was 52% lower thanin 2008 and real estate advertising 53%. In total, advertising sales represented53% (62%) of the business unit's net sales.Net sales of the Ilta-Sanomat business unit were almost at the comparable year'slevel and amounted to EUR 78.2 (80.4) million. Ilta-Sanomat had a 57.1% (57.1%)share of the tabloid market. The development of the newsstand market in the lastquarter of 2009 was considerably better than in January-September. The positivesigns in circulation development together with the content revamp in 2008, andsuccessful marketing efforts in 2009 enabled Ilta-Sanomat to reverse its marketshare development. Online advertising sales of the business unit were 28% abovethe comparable year. However, the print advertising sales declined and in total,advertising sales represented 24% (31%) of the business unit's net sales in2009.Net sales from other publishing decreased to EUR 91.8 (100.9) million due tolower advertising revenues in regional papers in particular. However, thecirculation sales of regional papers grew and the number of readers ofEtel?aimaa increased markedly. In the Sanoma Kaupunkilehdet business unit forfree sheets net sales decreased due to the merging of the Metro and Uutislehti100 titles in autumn 2008. In 2009, Sanoma Kaupunkilehdet gained market share.The Sanoma Digital Finland business unit's net sales were at the comparableyear's level and its advertising sales outperformed the market, in particular inthe second half of the year.After the review period, Sanoma News decided to sell the picture agencyLehtikuva to the Finnish News Agency (STT). The purchase price will be partlypaid by means of a share issue directed at Sanoma News. Following thetransaction, Sanoma News' holding in STT will increase from 23.1 to 34.3%. Thedeal is subject to the approval by STT's Annual General Meeting and is expectedto be closed at the end of February. Sanoma News will book a non-recurring gainof some millions on the sale in its 2010 results.Net sales from other businesses, mainly comprising internal billing, were EUR143.7 (150.1) million. Net sales decreased due to fewer internal printing jobs.External printing services developed well and grew by 17% from the comparableyear.In 2009, Sanoma News' investments in tangible and intangible assets totalled EUR10.6 (19.6) million, and consisted mainly of investments in digital business andreader-customer management system. There were no significant acquisitions in2009. The most significant transaction of the comparable year was theacquisition of a majority holding in Suorakanava.In 2009, Sanoma News' operating profit excluding non-recurring items wasEUR 40.6 (57.3) million, 29.2% less than in the comparable year. Thenon-recurring items included in the operating profit totalled EUR -8.4 (0.0)million and consisted of expenses related to the efficiency programme. Operatingprofit including the non-recurring items totalled EUR 32.2 (57.3) million.Efficiency improvements and cost-savings offset partly the effects of decreasedadvertising sales, but operating profits were below the comparable year in allreported businesses, except in the Ilta-Sanomat business unit where the resultimproved. The effects of the efficiency improvements became more visible towardsthe end of the year and in October-December Sanoma News' operating profitexcluding non-recurring items increased by 14.5% to EUR 10.8 (9.4) million.Sanoma News will continue the planned development of its printed products anddigital services. The company has also decided to invest in a newreader-customer management system to support, among other actions, productdevelopment opportunities for newspapers in the multimedia environment. In 2010the media advertising market continues to be challenging and structural changesin the market continue. Sanoma News will therefore continue its efforts toreshape its organisation, adapt its operations to the lower revenue level andfind new revenue sources.In 2010, Sanoma News' net sales are expected to be at the previous year's leveland operating profit excluding non-recurring items is estimated to improveslightly.SANOMA ENTERTAINMENTSanoma Entertainment offers entertaining experiences on television, radio andonline. Sanoma Entertainment's business units include Nelonen Media, whichfocuses on broadcast operations, and Welho, Finland's largest cable televisionoperator. The Division's newest business unit is Sanoma Games, whichconcentrates on online casual gaming.- Sanoma Entertainment's operating profit in 2009 grew by 20% with allbusinesses improving their results.- Nelonen Media's viewing and listening shares developed positively. In thefourth quarter, the TV channels' commercial viewing grew by four percentagepoints in its main target group.- Welho increased the number of both its broadband and pay TV subscribers.- Nelonen Sport Pro, Finland's most diversified sports channel was launched inFebruary 2010. Key indicators 10?12/ 10?12/ Change 1?12/ 1?12/ Change EUR million 2009 2008 % 2009 2008 % Net sales 41.1 41.0 0.3 157.1 157.1 0.0 Operating profit excluding 3.9 4.1 -4.0 20.7 17.3 19.8 non-recurring items % of net sales 9.5 10.0 13.2 11.0 Operating profit 3.9 4.1 -4.0 20.7 17.3 19.8 Capital expenditure 9.3 13.5 -31.3 Return on investment (ROI), % 18.3 15.8 Number of employees at the end of the period (FTE) 458 488 -6.1 Average number of employees (FTE) 469 482 -2.6 Operational indicators 1?12/ 1?12/ Thousands 2009 2008 TV channels' share of Finnish TV advertising 32.6% 29.5% TV channels' national commercial viewing share 29.8% 29.6% TV channels' national viewing share 14.8% 14.1% Number of connected households (31 Dec) 326 323 Number of pay TV customers (31 Dec) 76 68 Number of broadband internet connections (31 Dec) 116 105Sanoma Entertainment's net sales in 2009 were at the comparable year's level andamounted to EUR 157.1 (157.1) million. In addition, net sales adjusted forchanges in the Group structure remained stable. Advertising sales accounted for49% (52%) of Sanoma Entertainment's net sales. In October-December, net saleswere EUR 41.1 (41.0) million.Broadcast operation's net sales totalled EUR 88.1 (88.9) million, while theFinnish TV advertising market shrank by 12% in 2009 according to TNS GallupAdex. Nelonen Media's multichannel strategy in TV operations has resulted in theincrease of its market share to 32.6% (29.5%). New targeted TV channels,national radio stations and online TV all increased their advertising sales.Nelonen Media's lifestyle channel Liv, launched in February 2009, startedbroadcasts on the terrestrial network in December, which will further improvethe good viewing shares the channel achieved during 2009. Other TV channels alsoposted good viewing shares and Nelonen Media's commercial viewing share in 2009reached 33.7% in the target group of 10-44 year olds. In the fourth quarter, theviewing share grew by four percentage points. The online TV service Ruutu.fi,launched in June 2009, has rapidly become very popular. In December, NelonenMedia announced that it will launch new sports channels in February 2010. Thepay TV channel Nelonen Sport Pro will be a co-operation with Viasat.According to the Association of Finnish Broadcasters, national radio advertisingdecreased by 1% in 2009. Nelonen Media increased its share of national radioadvertising to 14%. The repositioning of Radio Aalto in August increased thechannel's weekly listeners significantly. Radio Aalto is now reaching its targetgroup well. Radio Rock has also improved its listening share and increased itsadvertising sales.Net sales from other operations were EUR 70.4 (69.4) million and include cableand broadband operator Welho and Sanoma Games, the Division's emerging onlinegaming business unit. Welho's fast and easy-to use broadband services togetherwith rewarded customer service were the key to increasing the number of fixedbroadband subscribers in 2009. For the fourth year in a row, Welho received themost points in the customer satisfaction survey for the Finnish broadbandoperators.Welho has also actively marketed its pay TV services. This, together with theSeptember launch of Welho Mix, a pay TV channel package offering extensivecustomisation, enabled Welho to grow its customer base in the fourth quarter. InDecember, Welho started 3DTV test distribution among the first players in theworld. Sanoma Games expanded internationally by launching a fantasy sports gamewith the Swedish Hockey League Elitserien in October. Online gaming is one ofthe spear heads of the Group's online strategy.Sanoma Entertainment's investments in tangible and intangible assets totalledEUR 9.3 (13.5) million, most of which was allocated to the development ofWelho's cable network and services. There were no major acquisitions in 2009 orthe comparable year.Sanoma Entertainment's operating profit increased by 19.8% in 2009, totallingEUR 20.7 (17.3) million. The operating profit did not include non-recurringitems. Operating profit improved both in broadcasting and other operations. Theincrease was driven by lower expenses in general and cost-saving measures. InOctober-December, Sanoma Entertainment invested in increasing customer base andviewing shares for the future and as a result, the operating profit amounted toEUR 3.9 (4.1) million, 4.0% less than in the comparable period.Sanoma Entertainment focuses on developing its television and broadband servicesas well as its online gaming operations. In addition, Sanoma Entertainmentcontinuously refines its processes and service offering to better meet the needsof its customers and to improve its efficiency.In 2010, Sanoma Entertainment's net sales and operating profit excludingnon-recurring items are expected to be at the previous year's level.SANOMA LEARNING & LITERATURESanoma Learning & Literature, operating in 10 countries, is a leading Europeanprovider of learning materials and solutions in print and digital format. TheDivision has growing international language service operations and is also theleading general literature publisher in Finland.- Learning performed well in 2009, with market positions strengthening inBelgium and Poland.- Sales of language services and training were clearly affected by the economicenvironment.- Finnish multi-volume book publishing was restructured in December and newprinting activities were combined in January 2010.- Sanoma Learning & Literature improved its result in the fourth quarter fromthe comparable period's level. Key indicators 10?12/ 10?12/ Change 1?12/ 1?12/ Change EUR million 2009 2008 % 2009 2008 % Net sales 64.7 88.0 -26.5 345.1 390.0 -11.5 Operating profit excluding -10.4 -11.6 10.5 43.5 53.2 -18.3 non-recurring items * % of net sales -16.1 -13.2 12.6 13.6 Operating profit -12.8 -12.7 -0.6 38.5 45.6 -15.7 Capital expenditure 13.1 15.6 -16.2 Return on investment (ROI), % 7.2 9.6 Number of employees at the end of the period (FTE) 2,745 2,908 -5.6 Average number of employees (FTE) 2,780 2,737 1.6*In 2009, the non-recurring items included in the third quarter EUR 1.5 millionand in the fourth quarter EUR 2,4 million restructuring expenses and in thethird quarter EUR 1.1 million expenses related to the sale of children'smagazines. In 2008, the non-recurring items included EUR 6.5 million ofwrite-downs and restructuring costs in the multi-volume and year book publishingin the third quarter and EUR 1.1 million restructuring costs in the fourthquarter. Operational indicators 1?12/ 1?12/ 2009 2008 Learning Number of new titles published, books 1,470 1,539 Number of new titles published, digital products 346 411 Literature and other businesses Number of new titles published, books 400 443 Number of new titles published, digital products 102 100 Books sold, millions 35.6 33.5Sanoma Learning & Literature's net sales in 2009 amounted to EUR 345.1 (390.0)million, a decrease of 11.5% from the comparable year, coming mainly from thenegative translation effect of the Polish zloty and the Hungarian forint and theeffect of incidental government tenders in Young Digital Planet's (YDP)e-learning sales in 2008. Net sales adjusted for changes in the Group structuredecreased by 13.7%. A total of 62% (62%) of the Division's net sales came fromoutside Finland. In October-December, the Division's net sales were EUR 64.7(88.0) million, a decrease of 26.5% mainly due to decreasing sales of languageservices and a decrease in the number of projects through government tenders inthe sales of YDP compared to 2008.Net sales in learning totalled EUR 239.1 (273.3) million. In the Netherlands netsales were somewhat below the comparable year's level due to the divestment ofthe consumer business and the effects of the downturn in the economy on adjacentbusiness. Net sales in Finland decreased due to the economic situation affectingthe sales of business training and books. The sales of learning materials andsolutions grew in 2009, although upper secondary sales were under pressurebecause of increasing re-use of textbooks. Net sales grew clearly in Belgium,where Van In's learning materials and solutions were successful in all segments,in particular new products in primary education sold well. Nowa Era in Polandwas very successful in the material reform and has improved its market sharesignificantly in secondary education and posted increased net sales. In Hungary,the sales of learning materials and solutions were at the comparable year'slevel, but total net sales were impacted by a severe decrease of sales in thebusiness training segment. YDP's sales in 2008 were characterized by incidentalgovernment tenders. In 2009 YDP sales were lower but consisted mostly of exportsales of own products.Net sales in language services were EUR 27.5 (28.8) million. Sales of languageservices have been strongly affected by the general economic situation. Thedecrease in net sales was partly offset by the new operations acquired in 2008.The language service business unit has reviewed its processes in 2009 and is nowfocusing on integrating its country organisations in order to build an efficientand distinctive language service provider in the Nordic market.Net sales in literature and other businesses were EUR 88.9 (101.2) million. InFinland, the general literature market in 2009 continued to slow down, but WSOYperformed relatively well in the market. Net sales in multi-volume and year-bookpublishing are markedly lower than in the comparable year. The Divisiondownscaled its Nordic multi-volume operations in 2008 and the Finnishorganisation in 2009. Sales were down in book printing, where the market has hadconsiderable overcapacity. WS Bookwell reinforced its position by acquiring theassets and business of Gummerus Printing in December, consolidating itsoperations and downscaling personnel at the beginning of 2010.Sanoma Learning & Literature's investments in tangible and intangible assetstotalled EUR 13.1 (15.6) million. They comprised ICT investments, among others.The most significant transactions were the acquisition of the Belgian WeesWegwijs, specialised in publishing road safety books, and the acquisition of theFinnish book printer Gummerus Printing. In the comparable period, the mostsignificant acquisitions included that of the Polish educational publisher NowaEra and the Swedish language service provider Interverbum.The Division's operating profit excluding non-recurring items in 2009 amountedto EUR 43.5 (53.2) million, 18.3% less than in the comparable year. Currencyfluctuations and the result decrease in language service operations, where theeconomic downturn has affected sales considerably, explain most of the decreasein the Division's result. In addition to negative exchange rate developments,operating profit in learning was affected by the negative impact of theconsolidation of Nowa Era's seasonal losses in the first quarter. Theoperational result of learning was up in most countries. The result inliterature and other businesses improved. Cost-savings partly offset the effectthat lower sales have had on profits. The non-recurring items totalled EUR -5.0(-7.6) million and were related to the restructuring of unprofitable units bothin 2009 and in 2008. Operating profit including non-recurring items totalled EUR38.5 (45.6) million. In October-December, the Division's operating lossexcluding non-recurring items was EUR 10.4 (11.6) million, 10.5% less than inthe comparable period. The improvement came from increased efficiency inlearning as well as in literature and other businesses.Sanoma Learning & Literature continues to focus on further internationalisingits learning business, expanding language services and maintaining marketleadership in Finnish general literature publishing. At the same time, theDivision will continue to restructure its operations. Customers are increasinglylooking at customised solutions both in learning and language services. SanomaLearning & Literature is well positioned to offer these and can gain efficiencyfrom developing platforms to be used in several markets.In 2010, it is estimated that the net sales and operating profit excludingnon-recurring items of Sanoma Learning & Literature will increase somewhat fromthe previous year's level.SANOMA TRADERetail specialist Sanoma Trade's strengths are a thorough understanding ofcustomers' needs and solid concepts. Sanoma Trade serves its customers in 230million annual sales contacts at kiosks, bookstores and movie theatres.Operating in eight countries, trade services (previously press distribution) isa strong link between publishers and retailers.- Movie operations had another record breaking year in Finland: movie admissionsincreased by 4.3% to over 5 million visits and box-office revenues reached anall-time high.- The results in business in Finland and in the Netherlands were at thecomparable year's level despite difficult market conditions.- The Baltic as well as the Russian and Romanian businesses were stronglyaffected by the recession. Key indicators 10?12/ 10?12/ Change 1?12/ 1?12/ Change EUR million 2009 2008 % 2009 2008 % Net sales 235.3 239.3 -1.7 827.8 866.6 -4.5 Operating profit excluding 10.3 14.7 -30.3 27.6 45.1 -38.8 non-recurring items* % of net sales 4.4 6.2 3.3 5.2 Operating profit 6.7 14.7 -54.7 24.0 45.1 -46.8 Capital expenditure 25.5 33.8 -24.5 Return on investment (ROI), % 8.2 16.5 Number of employees at the end of the period (FTE) 5,943 6,626 -10.3 Average number of employees (FTE) 6,164 6,633 -7.1* In 2009, the non-recurring items included in the fourth quarter EUR 3,6million restructuring expenses. Operational indicators 1?12/ 1?12/ Thousands 2009 2008 Customer volume in kiosk operations 194,692 212,171 Customer volume in bookstores 7,239 7,484 Customer volume in movie theatres 9,501 10,192 Number of copies sold (press distribution) 350,186 383,289Sanoma Trade's net sales in 2009 totalled EUR 827.8 (866.6) million, 4.5% lessthan in the comparable year. Net sales of kiosk operations were at thecomparable year's level. Most of the decrease in the Division's net sales camefrom trade services and bookstores. Net sales adjusted for changes in the Groupstructure decreased by 4.3%. Of Sanoma Trade's net sales, 32% (33%) came fromoutside Finland. In October-December, the Division's net sales were down by only1.7% and totalled EUR 235.3 (239.3) million, with kiosk sales growing from thecomparable period.Net sales from kiosk operations amounted to EUR 410.9 (409.4) million. Kiosksales in Finland were in line with the 2008 level. Net sales increased by 16% inLithuania. Sales in the new operations in Romania also grew. In Estonia, Latviaand Russia, kiosk sales were down. During the year, Sanoma Trade closed downover 100 loss-making kiosks, mostly in Latvia and Lithuania. In Finland, thefirst pilot stores testing a number of new R-kiosk concepts were launched inNovember. In Russia, Sanoma Trade has decided to focus its kiosk operations tothe Moscow region.Net sales from trade services were EUR 222.2 (241.5) million. With all Europeanmarkets faced with declines in press distribution volumes, net sales in theDivision's trade services developed satisfactorily and outperformed the marketsin many countries. In Finland, the sales of tabloids showed some positive signsat the end of the year. In the Netherlands, newsstand sales began to grow in thesecond half of 2009. Cumulatively, however, press distribution volumes and netsales were down. In the Baltic markets, cover prices rose due to VAT increases,which also affected volumes negatively. In the fourth quarter, contracts fordistributing new products were signed in Finland and Lithuania.Net sales from bookstores were EUR 123.3 (139.2) million. Net sales of thecomparable year included the subscription business divested in May 2008. InFinland, Christmas book sales developed positively and sales of fiction,paperbacks in particular, grew during the year. However, the total book marketwas sluggish and net sales from bookstores decreased both in Finland andEstonia. In Estonia, two new bookstores were opened in the fourth quarter.Net sales from movie operations totalled EUR 88.0 (94.3) million. In Finland,2009 was the second record year in row with over 5 million movie admissions andnet sales increased. Alternative content, 3D movies, easy-to-use online ticketservice and the multiplex theatre concept clearly attract customers. Theconstant supply of interesting movies has evened out differences betweenquarters. The economic downturn and lower private consumption affected moviesales in the Baltic countries and net sales decreased in Latvia in particular.Sanoma Trade's investments in tangible and intangible assets totalled EUR 25.5(33.8) million, and focused mainly on ICT projects, 3D digital equipment as wellas on the expansion of the dispatch centre. There were no major acquisitions in2009. In the comparable year, the most important acquisitions included minorityshares in the Latvian movie theatre operator Forum Cinemas and Lithuanian pressdistributor Impress Teva, and the acquisition of the Russian kiosk chain KPRosnitza.Sanoma Trade's operating profit excluding non-recurring items in 2009 amountedto EUR 27.6 (45.1) million, a decrease of 38.8% coming from the foreignoperations. The non-recurring items included in the operating profit totalledEUR -3.6 (0.0) million and consisted of restructuring costs in Russia, Latviaand Lithuania. The operating profit decreased in all businesses due to lowersales and earlier investments in new markets. The results in businesses inFinland and the Netherlands were at the previous year's level. Operating profitincluding non-recurring items totalled EUR 24.0 (45.1) million. InOctober-December, the Division's operating profit excluding non-recurring itemswas down by 30.3% and totalled EUR 10.3 (14.7) million. The fourth quarter'sdevelopment is the result of Sanoma Trade's intensive cost-saving programmes inall businesses and the improved sales in Finnish kiosk operations andbookstores.Sanoma Trade continues to develop its concepts, particularly its kiosk andbookstore concepts. Efficient chain management as well as a product and serviceoffering that caters to the needs of customers are key success factors in allmarkets and will ensure the competitiveness of Sanoma Trade. With its 230million annual customer contacts, Sanoma Trade gains valuable consumer insightand has good possibilities to develop its product and service offering.In 2010, Sanoma Trade's net sales are expected to increase slightly andoperating profit excluding non-recurring items to improve clearly from theprevious year's level.THE GROUPPersonnelIn 2009, the average number of persons employed by the Sanoma Group was 20,637(2008: 21,329; 2007: 19,587). In full-time equivalents, the number of Groupemployees at the end of the year was 16,723 (2008: 18,453; 2007: 16,730). Thenumber of employees decreased due to restructuring measures in differentdivisions. Some of the arrangements will continue to have an impact on personnelnumbers in 2010. In full-time equivalents, Sanoma Magazines had 5,191 (5,900)employees at the end of 2009, Sanoma News 2,306 (2,449), Sanoma Entertainment458 (488), Sanoma Learning & Literature 2,745 (2,908) and Sanoma Trade 5,943(6,626). The number of employees in the Parent Company was 79 (81).The total employee benefits to Sanoma employees in 2009, including the expenserecognition of options granted, amounted to EUR 563.0 (2008:575.5; 2007: 533.0) million.DividendOn 31 December 2009, Sanoma Corporation's distributable funds were EUR 668.8million, of which profit for the year made up EUR 145.0 million.The Board of Directors proposes to the Annual General Meeting that:- A dividend of EUR 0.80 per share, or in total an estimated EUR 129.5 million,shall be paid- A sum of EUR 0.5 million shall be transferred to the donation reserve and usedat the Board's discretion- The amount left in equity shall be EUR 538.9 millionIn accordance with the Annual General Meeting's decision, Sanoma paid out aper-share dividend of EUR 0.90 for 2008. Sanoma conducts an active dividendpolicy and primarily distributes over half of the Group result after taxes individends.AGM, Financial Statements and Annual ReportSanoma Corporation AGM will be held on 8 April 2010 at 2 pm at the Congress Wingof the Helsinki Exhibition & Convention Centre, Finland. The agenda of themeeting is available on the Group's website. Sanoma's Annual Report, FinancialStatements and Board of Directors' Report for 2009 will be published in digitalformat during week 10 (the week beginning 8 March). A printed copy of the AnnualReport will be available during week 11 (the week beginning 15 March).Shares and holdingsIn 2009, the number of Sanoma shares traded totalled 72,078,344 (100,271,123).Traded shares accounted for 45% (62%) of the average number of shares for theyear. Sanoma's total stock exchange turnover was EUR 821.6 (1,500.2) million.The volume-weighted average price of a Sanoma share in 2009 was EUR 11.45, witha low of EUR 8.02 and a high of EUR 15.80. At the end of the year, Sanoma'smarket capitalisation was EUR 2,536.5 (1,479.7) million, with Sanoma's shareclosing at EUR 15.76 (9.21). On 31 December 2009, the Company had 21,045shareholders, with foreign holdings accounting for 10.4% (10.9%) of all sharesand votes. There were no major changes in share ownership in 2009, and Sanomadid not issue any flagging announcements.During the year, the Board did not use its authorisation to repurchase theCompany's shares. The Company shares acquired in 2008 were cancelled in February2009. During the first quarter of 2009, the number of shares also changedbecause of shares registered with stock options. At the end of December, Sanomahad 161,816,894 shares, including the interim shares related to the conversionand registered on 7 January 2010. The registered share capital totalled EUR71,258,986.82.Board of Directors, auditors and managementThe AGM of 1 April 2009 confirmed the number of Sanoma's Board members at ten.Board members Jaakko Rauramo and Sakari Tamminen were re-elected, and Annet Ariswas elected to the Board as a new member. The Board of Directors of Sanomaconsists of the following: Jaakko Rauramo, Chairman; Sakari Tamminen, ViceChairman; and Annet Aris, Robert Castr? Jane Erkko, Paavo Hohti, SirkkaH?l?en-Lindfors, Seppo Kievari, Rafaela Sepp? and Hannu Syrj?n asmembers.The AGM re-appointed Pekka Pajamo, APA, and Sixten Nyman, APA, as his deputy,and chartered accountants KPMG Oy Ab, with Kai Salli, APA, acting as the Auditorin Charge, as the auditors of the Company.During the year, two new members joined Sanoma's Executive Management Group(EMG). Timo M?y was appointed President and CEO of the Sanoma Trade divisionand a member of the EMG as of 1 January 2009 and Chief Strategy Officer SvenHeistermann was appointed a member of the EMG as of 1 October 2009. At the endof 2009, the EMG comprised Hannu Syrj?n (Chairman), Eija Ailasmaa, JacquesEijkens, Sven Heistermann, Kim Ignatius, Timo M?y, Anu Nissinen and MikaelPentik?en.Board authorisationsThe AGM held on 1 April 2009 authorised the Board of Sanoma to decide on therepurchase of a maximum 16,000,000 of the Company's own shares with theCompany's unrestricted shareholders' equity. The authorisation is effectiveuntil 30 June 2010. The Board did not use this authorisation in 2009.In addition, the Board has a valid authorisation until the AGM of 2010 toincrease the share capital with a maximum of 82,000,000 new shares and thetransfer of a maximum of 5,000,000 treasury shares. Under this authorisation,the Board decided on 18 December 2009 on the issuance of Stock Option Scheme2009.During the review period, the authorisation by the AGM of 1 April 2008 forrepurchasing the Company's own shares was in force. The authorisation was notused during the review period and its validity ended on 1 April 2009.Seasonal fluctuationThe net sales and result of Sanoma Magazines, Sanoma News and SanomaEntertainment are particularly affected by the development of advertising.Advertising sales are influenced, for example, by the number of newspaper andmagazine issues published during each quarter, which varies annually. Televisionadvertising in Finland is usually strongest in the second and fourth quarters.Learning accrues most of its net sales and results during the second and thirdquarters.A major portion of the net sales and results in retail are, on the other hand,generated in the last quarter, particularly from Christmas sales. Of course, thenumber of shopping days and, for example, the distribution of holidays overdifferent quarters impacts the retail sales between quarters.Seasonal business fluctuations influence the Group's net sales and operatingprofit, with the first quarter traditionally being clearly the smallest.Significant risks and uncertainty factorsWhile executing strategy, Sanoma and its divisions and subsidiaries are exposedto numerous risks and risk taking opportunities. Managing business risks and theopportunities associated with them is a core element in the dailyresponsibilities of Sanoma's management.The most significant risks and uncertainty factors Sanoma is facing aredescribed in the Financial Statements, together with the main principles of riskmanagement. Many of the identified risks relate to changes in customerpreferences. Ongoing digitisation has been the driving force behind thesechanges for some time, and Sanoma has identified action plans in all itsdivisions on how to respond to this challenge.Normal business risks associated with the industry relate to developments inmedia advertising and consumer spending. Media advertising is sensitive toeconomic fluctuations. Therefore, the general economic conditions of thecountries in which the Group operates and the economic trends of the industryinfluence Sanoma's business activities and operational performance.GROUP FINANCIAL STATEMENTS (FULL-YEAR FIGURES AUDITED)Accounting policiesThe Sanoma Group has prepared its Financial Statements in accordance with IAS34 'Interim Financial Reporting' while adhering to related IFRS standards andinterpretations applicable within the EU on 31 December 2009.The Group has applied the following new or revised standards as of January2009: IAS 1 'Presentation of Financial Statements' and IFRS 8 'OperatingSegments'. The adoption of IAS 1 'Presentation of Financial Statements' affectedthe terminology in the Interim Report and the presentation of some financialstatements. The adoption of IFRS 8 had no material effect on Sanoma's InterimReport.Sanoma Learning & Literature has started to capitalize prepublication costs oflearning materials and solutions to intangible assets as of 1 January 2009.Previously, the principle was to include prepublication expenses in acquisitioncost of inventory. The change in accounting policy does not have any materialimpact on Sanoma's income statement or balance sheet.The accounting policies of the Financial Statements and the definitions of keyindicators are presented on the Sanoma website at Sanoma.com. All figures havebeen rounded and consequently the sum of individual figures can deviate from thepresented sum figure. Key figures have been calculated using exact figures. CONSOLIDATED INCOME STATEMENT 1?12/ 1?12/ EUR million 2009 2008 NET SALES 2,767.9 3,030.1 Other operating income 64.6 97.1 Materials and services 1,238.5 1,367.4 Employee benefit expenses 695.5 702.8 Other operating expenses 536.2 588.8 Depreciation, amortisation and impairment losses 167.0 231.9------------------------------------------------------------------ OPERATING PROFIT 195.4 236.3 Share of results in associated companies -3.9 4.9 Financial income 22.5 18.9 Financial expenses 52.6 69.9------------------------------------------------------------------ RESULT BEFORE TAXES 161.4 190.3 Income taxes -54.3 -69.4------------------------------------------------------------------ RESULT FOR THE PERIOD 107.1 120.8 Result attributable to: Equity holders of the Parent Company 105.6 115.7 Non-controlling interests 1.6 5.1 Earnings per share for result attributable to the equity holders of the Parent company Earnings per share, EUR 0.66 0.72 Diluted earnings per share, EUR 0.66 0.72 STATEMENT OF COMPREHENSIVE INCOME 1?12/ 1?12/ EUR million 2009 2008 Result for the period 107.1 120.8 Other c
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