Ilkka-Yhtymä Oyj Interim Report 28 April 2008, at 1 p.m. ILKKA-YHTYMÄ OYJ'S INTERIM REPORT FOR Q1/2008 The Group's consolidated net sales totalled EUR 13.4 million (EUR 13.5 million) for the period under review. Net sales remained at the level of the previous year's first quarter figures. The figures for the reference quarter in 2007 include advertising for parliamentary elections, affecting the comparability of the figures. The Group's consolidated operating profit came to EUR 2.8 million (EUR 3.1 million). Pre-tax profits grew by 12.3 per cent, to EUR 9.5 million (EUR 8.5 million). Earnings per share were EUR 0.61 (EUR 0.47) and shareholders' equity per share EUR 4.21 (EUR 4.50). Ilkka-Yhtymä Group's interim report has been prepared in compliance with the recognition and measurement principles of IFRS but not in compliance with all IAS 34 requirements. In preparing this interim report, the same standards have been used as when preparing the previous financial statements. Net sales and profit performance In January-March, the Group's net sales remained at the previous year's level, amounting to EUR 13.4 million (EUR 13.5 million in the reference period in 2007). External net sales from publishing increased by 0.4 per cent, while those from the printing business decreased by 3.0 per cent. Other operating income for January-March totalled EUR 0.3 million (EUR 0.1 million). Operating expenses for January-March amounted to EUR 11.0 million (EUR 10.5 million), up by 4.5 per cent year-on-year. This growth was mainly due to personnel expenses (9.7 per cent), but materials and services as well as other operating costs showed a slight increase. Higher personnel expenses were partly due to investment in e-business and the Vaasa Housing Fair. Depreciation included in the operating expenses for the period amounted to EUR 0.7 million (EUR 0.8 million). Consolidated operating profit came to EUR 2.8 million (EUR 3.1 million), accounting for 20.6 per cent (23.1 per cent) of net sales. Operating profit from publishing increased moderately, while that from printing decreased, due in part to transferring the layout of Ilkka and Etelä-Pohjanmaa newspapers from printing to publishing operations. In March, Ilkka-Yhtymä Oyj purchased a total of 5,255,200 shares in Alma Media Oyj, for EUR 51.8 million. Following the purchase, Ilkka-Yhtymä Oyj's holding in Alma Media Oyj increased from 3.3 per cent to 10.3 per cent. Ilkka-Yhtymä Oyj's objective is to function as a long-term owner in Alma Media and to participate in the development of its future operations. Net financial income for January-March came to EUR 6.7 million (EUR 5.3 million), of which financial assets at fair value through profit or loss accounted for EUR -0.3 million (EUR 0.3 million) and available-for-sale assets for EUR 6.9 million (EUR 4.9 million). Gains from available-for-sale financial assets include EUR 6.9 million (EUR 1.6 million) in dividend income from Alma Media Oyj. The corresponding item in the first quarter of 2007 included capital gains (EUR 3.2 million) from the sale of Alma Media Oyj's shares. The share of associated companies' profit totalled EUR 0.01 million (EUR 0.02 million). Pre-tax profits amounted to EUR 9.5 million (EUR 8.5 million). Tax totalled EUR 0.6 million (EUR 1.5 million) and the profit for the report period EUR 8.9 million (EUR 6.9 million). Balance sheet and financial position The consolidated balance sheet total was EUR 119.0 million (EUR 90.9 million) and shareholders' equity EUR 61.7 million (EUR 66.0 million). The fair value reserve has diminished by EUR 6.7 million in a year and EUR 11.1 million since the beginning of 2008. Interest-bearing liabilities totalled EUR 41.7 million (EUR 6.1 million). Equity ratio was 54.8 per cent (78.0 per cent) and liquid assets were EUR 11.9 million (EUR 27.3 million). Reported cash flow from business operations totalled EUR 4.2 million (EUR 1.6 million), while that from investments was EUR -46.3 million (EUR 11.1 million). Share performance The Series I shares of Ilkka-Yhtymä Oyj have been listed on the Helsinki Stock Exchange since 1981. The Series II shares have been listed since their issue in 1988 and, on 10 June 2002, they were listed on the Main List of the Helsinki Stock Exchange. As of 2 October 2006, the Series II shares have been listed on the OMX Nordic Exchange, Consumer Discretionary sector, the company's market value being classified as Mid Cap. The Series I shares are listed on the Pre List. The number of Series I shares of Ilkka-Yhtymä Oyj traded in January-March was 13,081, which represents 0.3 per cent of series share stock. The trading value of the shares was EUR 0.2 million. The number of Series II shares traded totalled 227,486, which equals 2.7 per cent of the series share stock. Their trading value was EUR 3.1 million. During the report period, the lowest quotation for Ilkka-Yhtymä Oyj's Series I share was EUR 10.75 and the highest EUR 13.30, while the lowest quotation for a Series II share was EUR 9.99 and the highest EUR 11.99. At the period-end closing price, the share capital market value was EUR 175.0 million. Risks and risk management No major near-term risks are foreseen in the Group's publishing and printing operations, provided that a satisfying agreement is reached for the period beginning on 1 October 2008 in the journalists' collective labour agreement negotiations. More details on operating risks can be found in the Annual Report 2007. Ilkka-Yhtymä Oyj's interest-bearing debt totals EUR 41.7 million, related to the purchase of Alma Media Oyj's shares. Renegotiations are underway for short-term debt included in current liabilities and it will be transferred under non-current liabilities. The market value of publicly traded available-for-sale financial assets came to EUR 67.1 million in 31 March 2008. A 5 per cent change in value would result in a EUR 2.5 million change in shareholders' equity. Events after the report period The Annual General Meeting (AGM) of 14 April 2008 approved the financial statements, discharged the members of the Supervisory Board and the Board of Directors as well as the CEO of any liability, and decided to distribute a per share dividend of EUR 1.00 for 2007. The AGM confirmed the membership of the Supervisory Board at 28 for 2008. In order to replace Supervisory Board members retiring during their terms of office, the following new members were elected: Anne Katajamäki, Seinäjoki (term ending in 2011); Sami Talso, Mustasaari (2010); Sami Eerola, Nurmo (2010); Johanna Kankaanpää, Ähtäri (2010). The following Supervisory Board members, whose term of office had come to an end, were re-elected, for the term ending in 2012: Vesa-Pekka Kangaskorpi, Jyväskylä; Jarmo Rinta-Jouppi, Seinäjoki; Matti Ritamäki, Lapua; Kimmo Simberg, Seinäjoki; Jyrki Viitala, Seinäjoki. Ernst & Young Oy, Authorised Public Accountants, with Tomi Englund, Authorised Public Accountant and Pekka Kiljunen, Authorised Public Accountant, were elected as principal auditors. Päivi Virtanen, Authorised Public Accountant, and Johanna Winqvist-Ilkka, Authorised Public Accountant, were elected as deputy auditors. The AGM decided to amend Sections 5(1), 7 and 9(1) of the Articles of Association. In Section 5(1), the minimum number of Supervisory Board members was modified to 20 and its maximum number to 30. Sections 7 and 9(1) were amended to comply with the new Limited Liability Companies Act, requiring that the Board of Directors elect the Managing Director. On 17 April 2008, Keskisuomalainen Oyj purchased Ilkka-Yhtymä Oyj's Series II shares, accounting for 4.6 per cent of share capital and approximately 0.7 per cent of votes. The seller was Thominvest Oy. PROSPECTS FOR 2008 Media advertising is expected to show moderate growth in Finland due to increasing consumer spending, while printing volumes are likely to remain almost unchanged and competition will remain tough. Ilkka-Yhtymä Group expects slight growth in its consolidated net sales as net sales of publishing improve. Operating profit and operating profit as a percentage of net sales are anticipated to remain at the healthy levels of 2007, unless major changes occur in external circumstances later in 2008. Profit for the entire year will be affected by securities trading volumes, the price performance of shares invested in, as well as dividends obtained from available-for-sale financial assets. -------------------------------------------------------------------------------- | GROUP INCOME STATEMENT (EUR | 1-3/ | 1-3/ | Change | 1-12/ | | 1,000) | 2008 | 2007 | | 2007 | -------------------------------------------------------------------------------- | NET SALES | 13 423 | 13 456 | 0 % | 54 885 | -------------------------------------------------------------------------------- | Change in inventories of | 3 | 8 | -64 % | 12 | | finished and unfinished | | | | | | products | | | | | -------------------------------------------------------------------------------- | Other operating income | 294 | 127 | 132 % | 560 | -------------------------------------------------------------------------------- | Materials and services | -4 015 | -3 932 | 2 % | -16 514 | -------------------------------------------------------------------------------- | Employee benefits | -4 660 | -4 248 | 10 % | -17 415 | -------------------------------------------------------------------------------- | Depreciation | -705 | -807 | -13 % | -3 141 | -------------------------------------------------------------------------------- | Other operating costs | -1 582 | -1 503 | 5 % | -6 597 | -------------------------------------------------------------------------------- | OPERATING PROFIT | 2 759 | 3 102 | -11 % | 11 790 | -------------------------------------------------------------------------------- | Financial income and | 6 730 | 5 341 | 26 % | 5 570 | | expenses | | | | | -------------------------------------------------------------------------------- | Share of associated | 9 | 15 | -39 % | 28 | | companies' profit | | | | | -------------------------------------------------------------------------------- | PROFIT BEFORE TAXES | 9 499 | 8 458 | 12 % | 17 388 | -------------------------------------------------------------------------------- | Income tax | -622 | -1 508 | -59 % | -3 689 | -------------------------------------------------------------------------------- | PROFIT FOR THE PERIOD UNDER | 8 877 | 6 950 | 28 % | 13 699 | | REVIEW | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share, | 0.61 | 0.47 | | 0.93 | | undiluted (EUR)*) | | | | | -------------------------------------------------------------------------------- *) There are no factors diluting the figure. SEGMENT INFORMATION -------------------------------------------------------------------------------- | Group net sales (EUR 1,000) | 1-3/ | 1-3/ | Change | 1-12/ | | | 2008 | 2007 | | 2007 | -------------------------------------------------------------------------------- | Publishing | 11 020 | 10 968 | 0 % | 44 428 | -------------------------------------------------------------------------------- | Printing | 4 697 | 5 138 | -9 % | 21 169 | -------------------------------------------------------------------------------- | Non-allocated | 688 | 543 | 27 % | 2 150 | -------------------------------------------------------------------------------- | Net sales between segments | -2 981 | -3 193 | -7 % | -12 862 | -------------------------------------------------------------------------------- | Total | 13 423 | 13 456 | 0 % | 54 885 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Group operating profit (EUR | 1-3/ | 1-3/ | Change | 1-12/ | | 1,000) | 2008 | 2007 | | 2007 | -------------------------------------------------------------------------------- | Publishing | 2 429 | 2 400 | 1 % | 9 507 | -------------------------------------------------------------------------------- | Printing | 607 | 864 | -30 % | 3 475 | -------------------------------------------------------------------------------- | Non-allocated | -277 | -162 | 71 % | -1 190 | -------------------------------------------------------------------------------- | Operating profit between | | | | -1 | | segments | | | | | -------------------------------------------------------------------------------- | Total | 2 759 | 3 102 | -11 % | 11 790 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | GROUP BALANCE SHEET (EUR 1,000) | | -------------------------------------------------------------------------------- | | 3/2008 | 3/2007 | Change | 12/2007 | -------------------------------------------------------------------------------- | ASSETS | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NON-CURRENT ASSETS | | | | | -------------------------------------------------------------------------------- | Intangible rights | 463 | 466 | -1 % | 439 | -------------------------------------------------------------------------------- | Investment property | 621 | 723 | -14 % | 646 | -------------------------------------------------------------------------------- | Property, plant and equipment | 20 304 | 19 159 | 6 % | 19 537 | -------------------------------------------------------------------------------- | Shares in associated companies | 495 | 473 | 5 % | 486 | -------------------------------------------------------------------------------- | Available-for-sale assets | 71 681 | 26 777 | 168 % | 34 666 | -------------------------------------------------------------------------------- | Non-current trade and other | 39 | 39 | | 39 | | receivables | | | | | -------------------------------------------------------------------------------- | Other tangible assets | 214 | 214 | | 214 | -------------------------------------------------------------------------------- | Deferred tax asset | 1 019 | | | | -------------------------------------------------------------------------------- | TOTAL NON-CURRENT ASSETS | 94 836 | 47 851 | 98 % | 56 027 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current assets | | | | | -------------------------------------------------------------------------------- | Inventories | 718 | 875 | -18 % | 714 | -------------------------------------------------------------------------------- | Trade and other receivables | 6 952 | 11 897 | -42 % | 3 997 | -------------------------------------------------------------------------------- | Income tax assets | 786 | 3 | 28663 % | 31 | -------------------------------------------------------------------------------- | Financial assets at fair value | 3 767 | 2 977 | 27 % | 4 345 | | through profit or loss | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 11 942 | 27 332 | -56 % | 12 396 | -------------------------------------------------------------------------------- | TOTAL Current assets | 24 165 | 43 084 | -44 % | 21 482 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets | 119 000 | 90 935 | 31 % | 77 509 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY AND | | | | | | LIABILITIES | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDER'S EQUITY | | | | | -------------------------------------------------------------------------------- | Share capital | 3 666 | 3 666 | | 3 666 | -------------------------------------------------------------------------------- | Fair value reserve and other | 9 962 | 16 646 | -40 % | 21 041 | | reserves | | | | | -------------------------------------------------------------------------------- | Retained earnings | 48 076 | 45 650 | 5 % | 39 199 | -------------------------------------------------------------------------------- | SHAREHOLDER'S EQUITY | 61 705 | 65 962 | -6 % | 63 907 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NON-CURRENT LIABILITIES | | | | | -------------------------------------------------------------------------------- | Deferred tax liability | 1 771 | 3 404 | -48 % | 4 692 | -------------------------------------------------------------------------------- | Non-current interest-bearing | | 6 000 | -100 % | | | liabilities | | | | | -------------------------------------------------------------------------------- | NON-CURRENT LIABILITIES | 1 771 | 9 404 | -81 % | 4 692 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CURRENT LIABILITIES | | | | | -------------------------------------------------------------------------------- | Current interest-bearing | 41 700 | 63 | 66016 % | | | liabilities | | | | | -------------------------------------------------------------------------------- | Accounts payable and other | 12 109 | 14 676 | -17 % | 7 903 | | payables | | | | | -------------------------------------------------------------------------------- | Income tax liability | 1 715 | 829 | 107 % | 1 008 | -------------------------------------------------------------------------------- | CURRENT LIABILITIES | 55 525 | 15 569 | 257 % | 8 911 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY AND | 119 000 | 90 935 | 31 % | 77 509 | | LIABILITIES TOTAL | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | GROUP CASH FLOW STATEMENT (EUR 1,000) | -------------------------------------------------------------------------------- | | 1-3/ | 1-3/ | 1-12/ | | | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | CASH FLOW FROM OPERATIONS | | | | -------------------------------------------------------------------------------- | Profit for the period under review | 8 877 | 6 950 | 13 699 | -------------------------------------------------------------------------------- | Adjustments | -5 621 | -3 041 | 1 109 | -------------------------------------------------------------------------------- | Change in working capital | 2 026 | 4 315 | 257 | -------------------------------------------------------------------------------- | CASH FLOW FROM OPERATIONS | | | | -------------------------------------------------------------------------------- | BEFORE FINANCE AND TAXES | 5 282 | 8 223 | 15 065 | -------------------------------------------------------------------------------- | Financial income and expenses | -415 | -6 301 | -2 206 | -------------------------------------------------------------------------------- | Direct taxes paid | -717 | -330 | -2 617 | -------------------------------------------------------------------------------- | CASH FLOW FROM OPERATIONS | 4 151 | 1 593 | 10 242 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CASH FLOW FROM INVESTMENTS | | | | -------------------------------------------------------------------------------- | Investments in tangible and | -1 264 | -200 | -2 685 | | intangible assets, net | | | | -------------------------------------------------------------------------------- | Other investments, net | -51 985 | 9 715 | 7 759 | -------------------------------------------------------------------------------- | Dividends received from investments | 6 948 | 1 602 | 1 738 | -------------------------------------------------------------------------------- | CASH FLOW FROM INVESTMENTS | -46 300 | 11 118 | 6 813 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CASH FLOW BEFORE FINANCING ITEMS | -42 149 | 12 710 | 17 055 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CASH FLOW FROM FINANCING | | | | -------------------------------------------------------------------------------- | Change in current loans | 41 700 | | -63 | -------------------------------------------------------------------------------- | Change in non-current loans | | | -6 000 | -------------------------------------------------------------------------------- | Dividends paid and other profit | -4 | -4 | -13 221 | | distribution | | | | -------------------------------------------------------------------------------- | CASH FLOW FROM FINANCING | 41 696 | -4 | -19 285 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | INCREASE (+) OR DECREASE (-)IN | -454 | 12 706 | -2 230 | | FINANCIAL ASSETS | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liquid assets at the beginning of the | 12 396 | 14 626 | 14 626 | | financial period | | | | -------------------------------------------------------------------------------- | Liquid assets at the end of the | 11 942 | 27 332 | 12 396 | | financial period | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | GROUP KEY FIGURES | | -------------------------------------------------------------------------------- | | 3/2008 | 3/2007 | 12/2007 | -------------------------------------------------------------------------------- | Earnings/share (EUR) | 0.61 | 0.47 | 0.93 | -------------------------------------------------------------------------------- | Shareholders' equity/share (EUR) | 4.21 | 4.50 | 4.36 | -------------------------------------------------------------------------------- | Average number of personnel | 376 | 373 | 388 | -------------------------------------------------------------------------------- | Investments (EUR 1 000) *) | 53 530 | 652 | 5 283 | -------------------------------------------------------------------------------- | Interest-bearing debt (EUR 1 | 41 700 | 6 063 | - | | 000) | | | | -------------------------------------------------------------------------------- | Equity ratio, % | 54.8 | 78.0 | 84.2 | -------------------------------------------------------------------------------- *) Investment in tangible and intangible assets and available-for-sale assets (shares). Taxes included in the income statement are taxes corresponding to the result for the period under review. -------------------------------------------------------------------------------- | CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY (EUR 1,000) | -------------------------------------------------------------------------------- | Change in | Share | Fair | Other | Retained | Total | | shareholders' | capital | value | reserves | earnings | | | equity 1-3/ 2007 | | reserve | | | | -------------------------------------------------------------------------------- | SHAREHOLDERS' | 3 666 | 5 540 | 12 862 | 38 700 | 60 768 | | EQUITY 1.1. | | | | | | -------------------------------------------------------------------------------- | Available-for-sal | | | | | | | e | | | | | | | financial assets: | | | | | | -------------------------------------------------------------------------------- | Gain/loss on fair | | 21 | | | 21 | | valuation | | | | | | -------------------------------------------------------------------------------- | Amount | | -2 394 | | | -2 394 | | transferred to | | | | | | | income statement | | | | | | -------------------------------------------------------------------------------- | Share of deferred | | 617 | | | 617 | | taxes | | | | | | -------------------------------------------------------------------------------- | Net gains and | | -1 756 | | | -1 756 | | losses recognised | | | | | | | in equity | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | 6 950 | 6 950 | | period | | | | | | -------------------------------------------------------------------------------- | TOTAL | 3 666 | 3 784 | 12 862 | 45 650 | 65 962 | | SHAREHOLDERS' | | | | | | | EQUITY 3/ 2007 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Change in | Share | Fair | Other | Retained | Total | | shareholders' | capital | value | reserves | earnings | | | equity 1-3/ 2008 | | reserve | | | | -------------------------------------------------------------------------------- | SHAREHOLDERS' | 3 666 | 8 179 | 12 862 | 39 199 | 63 907 | | EQUITY 1.1. | | | | | | -------------------------------------------------------------------------------- | Available-for-sal | | | | | | | e | | | | | | | financial assets: | | | | | | -------------------------------------------------------------------------------- | Gain/loss on fair | | -14 971 | | | -14 971 | | valuation | | | | | | -------------------------------------------------------------------------------- | Share of deferred | | 3 893 | | | 3 893 | | taxes | | | | | | -------------------------------------------------------------------------------- | Net gains and | | -11 079 | | | -11 079 | | losses recognised | | | | | | | in equity | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | 8 877 | 8 877 | | period | | | | | | -------------------------------------------------------------------------------- | TOTAL | 3 666 | -2 900 | 12 862 | 48 076 | 61 705 | | SHAREHOLDERS' | | | | | | | EQUITY 3/ 2008 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | GROUP CONTINGENT LIABILITIES (EUR 1,000) | -------------------------------------------------------------------------------- | | 3/2008 | 3/2007 | 12/2007 | -------------------------------------------------------------------------------- | Collateral pledged for own | | | | | commitments | | | | -------------------------------------------------------------------------------- | Mortgages on company assets | | 168 | 168 | -------------------------------------------------------------------------------- | Mortgages on real estate | 4 017 | 4 017 | 4 017 | -------------------------------------------------------------------------------- | Pledged shares | 44 669 | | | -------------------------------------------------------------------------------- | On behalf of others | | | | -------------------------------------------------------------------------------- | Guarantees | 16 | 16 | 16 | -------------------------------------------------------------------------------- The figures have not been audited. Seinäjoki, 28 April 2008 ILKKA-YHTYMÄ OYJ Board of Directors Matti Korkiatupa Managing Director For more information: Matti Korkiatupa, Managing Director, Ilkka-Yhtymä Oyj Tel. +358 (0)500-162 015 DISTRIBUTION Helsinki Stock Exchange The main media www.ilkka-yhtyma.fi