TALENTUM OYJ STOCK INTERIM REPORT 29 APRIL 2008 AT 8.30 AM
INTERIM REPORT JANUARY-MARCH 2008
TALENTUM'S NET SALES AND FINANCIAL PERFORMANCE IN JANUARY-MARCH MEET COMPANY
EXPECTATIONS
January-March 2008 in brief
The consolidated net sales recorded by Talentum's continuing operations in
January-March amounted to EUR 26.6 million (EUR 26.3 million). Publishing's net
sales went up by 11% to EUR 23.1 million (EUR 20.9 million). The net sales for
online operations increased by 107%.
The operating profit (EBIT) recorded by the continuing operations for
January-March was EUR 3.6 million (EUR 4.0 million). Publishing's operating
profit was EUR 3.7 million (EUR 3.9 million). The profit is hampered by the
start-up costs of EUR 0.4 million for the businesses acquired in Sweden in 2007
and higher expenses (EUR 0.4 million) relating to online operations, in addition
Easter fell in the first quarter of the year.
The earnings per share of the continuing operations were EUR 0.05 (EUR 0.07).
The profit on the sale of the Varesvuo Partners sub-group was of EUR 0.8 million
and the loss caused by the sale of Oy Filmiteollisuus Fine Ab was EUR 0.4
million. The figures for the period under review and for the year of comparison
do not include the TV Content Production, which are presented in the
discontinuing operations.
CEO JUHA BLOMSTER:
”Net sales by Talentum's publishing showed an increase of 11 percent in
January-March. Publishing's operating profit fell slightly compared with the
previous year, one of the reasons being that Easter fell in the first quarter of
the year. Talentum's advertising sales in Finland have started to grow again,
growth 5 percent. Much of this year's investment in online operations was
scheduled for the first quarter.
“We have been following our strategy and focusing on the core operations. In
February we sold most of the TV Content Production business area, i.e. Varesvuo
Partners, to Finnish operators in the sector. In March we sold Filmiteollisuus
Fine to a company owned by its executive management. So Talentum no longer has
TV Content Production companies. In February we also sold a Premedia company, DH
Tools, which specialized in digital data management.
“After the above-mentioned transactions the core operations accounted for about
90 per cent of Talentum's consolidated net sales for January-March.
“An audit of the circulation of Talentum magazines in February showed, in the
main, growth in Finland and Sweden in 2007. The circulation of Arvopaperi went
up by as much as 37% and Tekniikka & Talous by 9%. In Sweden Ny Teknik's
circulation rose by 6% and Affärsvärlden's by 11%.
“The competitiveness and success of Talentum's products are based on quality
that is being constantly developed. Awards are recognition of quality, and two
of Talentum's journalists were nominated to receive Aikakausmedia's Journalist
of the Year and Editorial of the Year awards.
Talentum's book on community media and changes in marketing (Yhteisöllinen media
ja muuttuva markkinointi 2.0) was awarded the Golden Feather (Kultasulka) prize
given annually by the Finnish Association of Marketing Communication Agencies.
In Sweden the magazine Byggvärlden, which was launched at the turn of the year,
received the Newcomer of the Year (Årets nykomling) award from the magazine
Resumé.
“We are also investing in online operations in order to serve our customers in a
professional target group through the channels in which they prefer to read our
publications and use our services. The online services are being upgraded, the
latest being the appearance of Affarsvarlden.se for readers. The net sales of
online services rose by 107 per cent in the first quarter compared with the
previous year. It accounted for 13 per cent of Publishing's net sales compared
with 7 per cent a year earlier. The new Talentum Fakta, which was acquired last
year, accounts for about a third of this.
“Talentum media are the market leaders in their own fields and the uncertainty
that began on the money markets has not, at least not yet, been reflected in
Talentum's advertising sales. We aim to reduce the effect of economic
fluctuations by diversifying the income structure and making operations more
efficient.”
KEY INDICATORS, CONTINUING OPERATIONS *)
--------------------------------------------------------------------------------
| | 1-3/ | 1-3/ 2007 | Change % | 1-12/ 2007 |
| | 2008 | | | |
--------------------------------------------------------------------------------
| EUR Million | | | | |
--------------------------------------------------------------------------------
| Net sales | 26.6 | 26.3 | 1.5 | 101.2 |
--------------------------------------------------------------------------------
| Operating profit | 3.6 | 4.0 | -9.9 | 12.7 |
--------------------------------------------------------------------------------
| % of net sales | 13.6 | 15.4 | | 12.6 |
--------------------------------------------------------------------------------
| Operating profit | 3.6 | 4.0 | -9.9 | 13.8 |
| without | | | | |
| non-recurring items | | | | |
--------------------------------------------------------------------------------
| % of net sales | 13.6 | 15.4 | | 13.6 |
--------------------------------------------------------------------------------
| Total assets | 74.8 | 101.0 | -25.9 | 89.0 |
--------------------------------------------------------------------------------
| Investments | 0.6 | 0.8 | -23.7 | 10.8 |
--------------------------------------------------------------------------------
| % of net sales | 2.3 | 3.0 | | 10.7 |
--------------------------------------------------------------------------------
| Equity ratio % | 31.9 | 26.8 | | 36.7 |
--------------------------------------------------------------------------------
| Gearing % (net debt | -18.9 | 7.3 | | 16.7 |
| to equity) | | | | |
--------------------------------------------------------------------------------
| Interest bearing | 5.4 | 29.2 | -81.4 | 19.2 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Interest bearing net | -4.5 | 1.9 | -331.7 | 5.3 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Personnel, average | 873 | 900 | -3.0 | 896 |
--------------------------------------------------------------------------------
| Earnings/share EUR | 0.05 | 0.07 | -28.8 | 0.19 |
--------------------------------------------------------------------------------
| Cash flow from | 0.01 | 0.08 | -84.9 | 0.30 |
| operating | | | | |
| activities/share EUR | | | | |
--------------------------------------------------------------------------------
| Equity/share EUR | 0.54 | 0.56 | -4.5 | 0.69 |
--------------------------------------------------------------------------------
| Market | 129.4 | 149.7 | -13.6 | 121.1 |
| capitalization on | | | | |
| closing rate at | | | | |
| period end | | | | |
--------------------------------------------------------------------------------
*) TV Content Production is not included in figures
Calculation of key indicators is presented in the Talentum Group Annual Report
2007
Operating environment and seasonal variations
The general economic situation still remained good in the first quarter of 2008,
even if uncertainty clearly increased.
According to TNS Gallup, media advertising in Finland grew by 1.8% in
January-March. In Sweden the figures are not available, but the growth estimate
for the media market in 2008 is 3.3% (Institute for Advertising and Media
Statistics). Job advertising continued to increase in January-March in both
Finland and Sweden.
According to the Finnish Audit Bureau of Circulations, the circulation of every
other magazine that it examined increased slightly or remained stable. The
launching of new magazines onto the market and investment by old magazines in
marketing their circulation were characteristic of the period examined. Growth
in the circulation of special-interest magazines was also typical.
The media and media service markets are subject to seasonal variations. In the
spring the Easter break falls in the first or second quarter and this has an
effect on the financial performance of these two periods. During the summer
holidays magazines and books do not generally come out, and for this reason the
third quarter is the lowest in terms of sales. Business is at its liveliest
during the final quarter of the year.
Consolidated net sales and financial performance January-March
The consolidated net sales recorded by Talentum's continuing operations in
January-March amounted to EUR 26.6 million (EUR 26.3 million). Publishing's net
sales went up by 11% to EUR 23.1 million (EUR 20.9 million). The business
operations acquired in Sweden in 2007 accounted for EUR 2.2 million of the
growth in net sales. The comparability of Publishing's net sales is also
affected by the seasonal variation between the first and second quarter. The
first half-year will be comparable with last year in this respect. Premedia's
net sales fell by EUR 1.8 million as a result of divestments.
The consolidated operating profit of the continuing operations in January-March
totalled EUR 3.6 million (EUR 4.0 million), i.e. 13.6% of the net sales (15.4%).
Publishing's operating profit was EUR 3.7 million (EUR 3.9 million). The
comparability of the operating profit is affected by the businesses acquired in
2007, a total of some EUR -0.4 million, and seasonal variation. Direct Marketing
and Premedia improved their financial performance compared with last year.
TV Content Production, which was sold in the first quarter, was classified as
discontinued operations in January. The effect of TV Content Production overall
on the financial performance is shown in the item Discontinued operations in the
income statement. A profit of EUR 0.8 million was recorded on the sale of the
main part of TV Content Production.
Net financial expenses amounted to EUR -0.2 million (EUR -0.1 million).
Associated companies contributed EUR -0.4 million (EUR 0.0 million) towards the
financial performance, an amount that includes not only the performance in the
period under review but also an associated company's losses EUR 0.3 million that
were incurred in the previous financial period but detected after the balance
sheet date.
The profit of continuing operations before taxes was EUR 3.0 million (EUR 3.9
million).
Sector's and Talentum's prospects for 2008
The uncertainty in the economic situation has increased since the autumn, and
the latest economic forecasts in particular have been downwards. This
uncertainty, which began on financial markets, based on our view, has not, as
yet, affected the sector. In a downturn, media sales are more susceptible to
market fluctuations than content sales.
Talentum is keeping the forecast for the entire year unchanged and expects the
net sales of the core operations to increase over the previous year and the
operating profit to improve in 2008 in spite of the costs of integrating the
acquired businesses and developing the online business.
Risks to business operations in near future
The biggest risk to the Group's business operations is associated with product
and job advertising, which is sensitive to economic trends. About 40% of the
consolidated net sales are tied to advertising. We endeavour to control this
market risk by increasing revenue from circulation sales and content sales.
Cash flow, financial position and balance sheet
The cash flow from operating activities was EUR 0.6 million (EUR 3.7 million) in
January-March. The change in working capital was EUR -2.2 million (EUR -0.5
million).
The consolidated balance sheet total was reduced considerably as a result of the
sale of TV Content Production and at the end of March stood at EUR 74.8 million
(EUR 89.0 million on 31 December 2007). Interest-bearing net liabilities were
EUR -4.5 million (EUR 5.3 million). The Group's liquid assets, EUR 10.0 million
(EUR 13.8 million), have been invested mostly in interest-bearing financial
assets. Loans and borrowing amounted to EUR 5.4 million (EUR 19.2 million). At
the end of the period under review there were commercial papers outstanding to
the value of EUR 1.0 million (EUR 14.0 million). Current non-interest-bearing
liabilities include a dividend of EUR 8.8 million that was paid on 8 April 2008.
In order to minimize the Group's liquidity risk, Talentum Oyj agreed on a
current account credit facility of EUR 12.0 million for the Group for three
years in February and a financial credit facility of EUR 20.0 million. Of the
financial credit facilities, loans can be withdrawn or paid back within the
framework of the rules during the limit's maturity time of three years. The
limits had not been used as at 31 March 2008.
The equity ratio was 31.9% at the end of March (36.7% on 31 December 2007). The
figure is affected by the dividend of EUR 8.8 million, which was transferred
from Retained earnings to Current liabilities by a decision of the Annual
General Meeting. The Group's equity per share was EUR 0.54 (EUR 0.69 on 31
December 2007).
Investment
Gross investment of continuing operations in tangible and intangible assets in
January-March totalled EUR 0.6 million (EUR 0.8 million), i.e. 2.3% (3.0%) of
net sales.
Of the investment, EUR 0.3 million was spent on developing online business
recognized as an asset, and the rest comprised normal replacement and
maintenance investment, such as procuring equipment, software and fixtures.
Changes in Group structure
On 22 January 2008 Talentum Oyj and CapMan Plc agreed that a company established
by the CapMan Buyout VIII Fund, which is managed by CapMan Plc, would purchase
Varesvuo Partners Oy, which focuses on TV Content Production. The transaction
was concluded on 20 February 2008. The sub-group Oy Filmiteollisuus Fine Ab was
sold on 28 March 2008 to Yellow Film & TV Oy, which is owned by members of the
executive management of Oy Filmiteollisuus Ab. TV Content Production's net sales
in 2007 amounted to EUR 22.9 million and it employed 95 people.
The operating result of TV Content Production, apart from the Oy Filmiteollisuus
Fine Ab sub-group, is not included in the Group's financial performance for
January-March 2008. The sales profit created by the transactions and the
financial performance of TV Content Production are shown under Discontinued
operations in the income statement for January-March 2008 and for 2007.
In February the Talentum Group also sold the entire shareholding of DH Tools Oy,
which was part of Premedia and focused on digital data management.
Personnel
During January-March the Talentum Group (continuing operations) employed an
average of 873 (900) people. Geographically, the personnel were divided as
follows: Finland 489 people (582), Sweden 188 (120), Latvia 94 (77), Lithuania
24 (20), Estonia 69 (86) and Russia 9 (15).
BUSINESS AREAS
Publishing
--------------------------------------------------------------------------------
| EUR million | 1-3/2008 | 1-3/2007 | 1-12/2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | | | |
--------------------------------------------------------------------------------
| Advertising net sales | 11.5 | 10.7 | 42.6 |
--------------------------------------------------------------------------------
| Circulation net sales | 6.2 | 5.9 | 24.3 |
--------------------------------------------------------------------------------
| Other content net sales | 5.3 | 4.3 | 16.9 |
--------------------------------------------------------------------------------
| Total | 23.1 | 20.9 | 83.8 |
--------------------------------------------------------------------------------
January-March
Publishing's net sales in January-March amounted to EUR 23.1 million (EUR 20.9
million), an increase of 11% over the previous year. The business operations
acquired in Sweden during 2007 brought net sales of EUR 2.2 million. This year
the net sales of Talentum's publishing operations during the first quarter are
reduced by the Easter break falling in March. There were fewer weekly magazines
during the period under review than one year earlier and some seminars were
postponed until April.
The circulation revenue from Talentum's magazines grew by 7% in Finland and 5%
in Sweden. Advertising revenue rose by 5% in Finland and 12% in Sweden. Of the
growth in advertising sales in Sweden, 10 percentage points were the result of
the acquisition of the magazines Arbetarskydd and Dagens Media. Recruitment
advertising in Talentum's media was still strong in both Finland and Sweden. The
net sales of other content sales are increased by the acquisition of Talentum
Fakta in November 2007.
The online business operations, which increased by 107% in the initial part of
the year, stood at EUR 3.0 million (EUR 1.5 million) i.e. 13% of Publishing's
total net sales.
Publishing's operating profit (EBIT) was EUR 3.7 million (EUR 3.9 million). The
business operations acquired in Sweden during 2007 brought in an operating
profit of EUR -0.4 million in January-March. In addition the seasonal variation
also reduces the operating profit. Investment in the online business operations
generated expenses /costs exceeding the previous year by EUR 0.4 million, and
development costs of EUR 0.3 million were recognized as an intangible asset in
the balance sheet.
--------------------------------------------------------------------------------
| Eur million | 1-3/2008 | 1-3/2007 | 1-12/2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | | | |
--------------------------------------------------------------------------------
| Finland | 14.2 | 14.2 | 53.9 |
--------------------------------------------------------------------------------
| Sweden and other | 8.9 | 6.7 | 29.9 |
--------------------------------------------------------------------------------
| Total | 23.1 | 20.9 | 83.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating profit | | | |
--------------------------------------------------------------------------------
| Finland | 3.0 | 3.3 | 10.6 |
--------------------------------------------------------------------------------
| Sweden and other | 0.6 | 0.7 | 4.2 |
--------------------------------------------------------------------------------
| Total | 3.7 | 3.9 | 14.8 |
--------------------------------------------------------------------------------
Direct Marketing
January-March
Direct Marketing's net sales in January-March totalled EUR 2.6 million (EUR 2.5
million), and the operating profit (EBIT) was EUR 0.4 million (EUR 0.4 million).
The growth and profitability were as expected.
Premedia
January-March
The net sales of the Premedia business area in January-March were EUR 2.3
million (EUR 4.1 million), and the operating profit (EBIT) was EUR 0.4 million
(EUR 0.2 million). The restructuring of the business area was continued with the
sale in February of DH Tools Oy, which focused on data management. The sub-areas
remaining in the business area, page production and packaging printing material,
have developed as planned.
AGM, Board and auditor
Talentum's Annual General Meeting was held on 27 March 2008. The meeting
confirmed the financial statements for 1 January - 31 December 2007 and granted
the company's Board of Directors and CEO exemption from liability.
The AGM re-elected Manne Airaksinen, Harri Kainulainen, Eero Lehti, Kai Mäkelä,
Atte Palomäki and Tuomo Saarinen members of the Board of Directors. Tuomo
Saarinen was re-elected Chairman of the Board of Directors and Manne Airaksinen
was re-elected Deputy Chairman.
Authorized Public Accountants PricewaterhouseCoopers Oy with APA Juha Wahlroos
as the accountable auditor were re-elected auditors.
Shares and share capital
At the end of the financial period, Talentum Oyj's share capital totalled EUR
18,593,518.79, comprising 44,295,787 fully paid-up shares. The shares are listed
on the OMX Nordic Exchange Helsinki list.
At the end of the review period, the company held 292,000 company shares, 0.7%
of Talentum's total stock and votes.
A total of 3.346.604 shares were traded during the financial period, 7.6% of the
total average stock during the financial period.
Shareholdings of the Board of Directors and CEO
On 31 March 2008, the number of Talentum Oyj shares and options owned by members
of the Board of Directors and the CEO personally and through companies in which
they have a controlling interest was 4,470,162, representing 10.1% of the
company's total shares and votes.
Board of Directors' authorizations
Authorization of the Board of Directors to decide on a share issue including the
conveyance of own shares and issue of special rights
The Annual General Meeting on 27 March 2008 authorized the Board of Directors to
decide on a share issue which may be either liable to charge or free of charge,
including the issuing of new shares and the conveyance of own shares possibly in
the company's possession.
The Board of Directors has the right, by virtue of the authorization, to decide
on an issue of option rights and other special rights that grant entitlement,
against payment, to receive new shares or shares possibly in possession of the
company.
By virtue of the authorizations applying to a share issue and/or special rights
a maximum of 3,500,000 new shares, which corresponds to approximately eight per
cent of the issued shares of the company, may be issued together or in one or
several lots and/or own shares possessed by the company may be conveyed.
The authorizations will remain in force until 30 June 2009.
The Board of Directors is otherwise authorized to decide on all the terms and
conditions for a share issue and the issuing of special rights, including the
right to decide on a directed share issue and issue of special rights.
Shareholders' pre-emptive subscription rights can be deviated from providing
that there is a significant financial reason for the company to do so.
Authorization of the Board of Directors to decide on acquisition of own shares
The Annual General Meeting on 27 March 2008 authorized the Board of Directors to
decide on the acquisition of the company's own shares. The shares can be
acquired for the value that is decided by the Board of Directors and is based on
the fair value at the time of the acquisition formed for the shares in public
trading. Own shares may be only acquired with unrestricted equity.
By virtue of the authorization a maximum of 3,500,000 own shares, which
corresponds to approximately eight per cent of the issued shares of the company,
can be acquired, either in one or several lots.
The authorization will remain in force until 30 June 2009.
The Board of Directors is otherwise authorized to decide on all the terms and
conditions regarding the acquisition of own shares including the manner of
acquisition of the shares. The authorization does not exclude the right of the
Board of Directors to also decide on a directed acquisition of own shares
providing that there is a significant financial reason for the company to do so.
Directed issue free of charge
The Talentum Board of Directors decided on 8 March 2007 to set up a share-based
incentive plan for the Group management. The Annual General Meeting on 27 March
2007 gave the Board authorization to decide on a share issue that would be
liable to charge and/or free of charge. The Board has decided to issue to the
people coming under the share-based incentive plan rewards in shares specified
according to the terms and conditions of the plan in question in the form of a
directed share issue free of charge, incorporating in total 74,970 new shares.
The shares were registered with the Trade Register on 20 March 2008.
Acquisition of own shares
The Board of Directors of Talentum Oyj decided on 26 February 2008, by virtue of
an authorization given by the Annual General Meeting on 27 March 2007, to
acquire a maximum of 500,000 of the company's own shares, which corresponds to
about 1.13 per cent of all the company's shares. The shares will be acquired
with the company's distributable funds and the acquisition of the shares will
reduce the company's distributable unrestricted equity. The shares will be
acquired in public trading on the OMX Nordic Exchange Helsinki at the price on
the day of purchase as provided by the law on the public trading of shares. The
own shares will be acquired for use as consideration in possible corporate
acquisitions and other arrangements when the company acquires assets relevant to
its operations, and for developing the company's main structure, including the
possible further conveying and cancellation of shares. There is therefore a
significant financial reason for acquiring the shares. The purchase of the
shares will terminate at the latest on 30 June 2008.
By 31 March 2008 the company had acquired 111,000 of its own shares and it had
in its possession a total of 292,000.
Decreasing the share premium reserve
The Annual General Meeting decided that the share premium reserve as shown in
the balance sheet as at 31 December 2007 will be decreased by EUR 89,593,601.28.
The decreased amount will be transferred to the invested unrestricted equity.
After the decrease the amount of the share premium reserve in the balance sheet
will be zero.
The reduction of the share premium reserve requires public notice
to creditors and registration procedure in accordance with chapter 14, sections
3 - 5 of the Limited Liabilities Companies Act.
Management share-based incentive plan
The Group management of Talentum Oyj has a share-based incentive plan. The plan
includes three earning periods, which last for at least one financial year and
not more than three financial years. The first earning period began on 1 January
2007 and ended on 31 December 2007. The total length of the plan is five years.
The rewards will be paid partly in the Company's shares and partly in cash after
the end of each earning period. The proportion to be paid in cash will cover
taxes and tax-related costs arising from the reward. Transferring the shares
earned from the earning period 2007 within two years from the end of the earning
period is prohibited. After this, the CEO of the company must, however, own 50%
of the shares earned on the basis of the plan as long as the service of the CEO
continues and one year after the end of the service. The Board of Directors will
later decide on the following earning periods and transfer restrictions
concerning shares earned on the basis of those earning periods. The target group
in the plan for the 2008 earning period comprises 10 people.
Notifications
There were no notifications in January-March.
Shareholder agreements
The company is not aware of any mutual shareholder agreements between its
shareholders relating to the operations or ownership of the company.
Liquidity providing agreement
An agreement with Nordea Securities Oyj on a market guarantee for Talentum Oyj
shares became effective on 21 June 2004. Under the agreement, Nordea Securities
will submit a purchase and sale offer so that the maximum permitted differential
between them is 3% of the purchase offer. The offers will include a minimum of
2,500 shares.
TABLES
CONSOLIDATED INCOME STATEMENT
--------------------------------------------------------------------------------
| | 1-3/ 2008 | 1-3/ 2007 | 1-12/ 2007 |
--------------------------------------------------------------------------------
| EUR Million | | | |
--------------------------------------------------------------------------------
| CONTINUING OPERATIONS | | | |
--------------------------------------------------------------------------------
| Net sales | 26.6 | 26.3 | 101.2 |
--------------------------------------------------------------------------------
| Other operating income | 0.1 | 0.1 | 0.6 |
--------------------------------------------------------------------------------
| Material and services | -4.4 | -4.2 | -16.3 |
--------------------------------------------------------------------------------
| Employee benefit expenses | -11.9 | -11.7 | -45.1 |
--------------------------------------------------------------------------------
| Depreciation and amortization | -0.5 | -0.6 | -2.3 |
--------------------------------------------------------------------------------
| Other operating expenses | -6.4 | -5.9 | -25.4 |
--------------------------------------------------------------------------------
| Operating profit | 3.6 | 4.0 | 12.7 |
--------------------------------------------------------------------------------
| Financial income | 0.0 | 0.2 | 0.7 |
--------------------------------------------------------------------------------
| Financial expenses | -0.2 | -0.3 | -1.8 |
--------------------------------------------------------------------------------
| Share of results of associates | -0.4 | 0.0 | -0.1 |
--------------------------------------------------------------------------------
| Profit before taxes | 3.0 | 3.9 | 11.5 |
--------------------------------------------------------------------------------
| Income taxes | -1.0 | -1.0 | -3.1 |
--------------------------------------------------------------------------------
| Profit for the period, continuing | 2.1 | 2.9 | 8.4 |
| operations | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| DISCONTINUED OPERATIONS | | | |
--------------------------------------------------------------------------------
| Profit for the period, discontinued | 0.4 | 0.1 | 0.8 |
| operations | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit for the period | 2.5 | 3.0 | 9.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | |
--------------------------------------------------------------------------------
| Equity holders of the parent company | 2.5 | 3.0 | 8.8 |
--------------------------------------------------------------------------------
| Minority interest | 0.0 | 0.0 | 0.4 |
--------------------------------------------------------------------------------
| Basic and diluted * | | | |
--------------------------------------------------------------------------------
| Earnings per share, EUR | 0.06 | 0.07 | 0.20 |
--------------------------------------------------------------------------------
| Earnings per share, continuing | 0.05 | 0.07 | 0.19 |
| operations, EUR | | | |
--------------------------------------------------------------------------------
*for the profit attributable to the equity holders of the parent company
CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------
| | 31.3.2008 | 31.3.2007 | 31.12.2007 |
--------------------------------------------------------------------------------
| EUR Million | | | |
--------------------------------------------------------------------------------
| ASSETS | | | |
--------------------------------------------------------------------------------
| Non-current assets | | | |
--------------------------------------------------------------------------------
| Property, plant and equipment | 2.7 | 7.4 | 6.6 |
--------------------------------------------------------------------------------
| Goodwill | 27.8 | 23.3 | 32.5 |
--------------------------------------------------------------------------------
| Other intangible assets | 12.0 | 12.3 | 11.8 |
--------------------------------------------------------------------------------
| Investments in associates | 0.3 | 2.8 | 2.1 |
--------------------------------------------------------------------------------
| Available-for-sale investments | 0.1 | 0.9 | 0.1 |
--------------------------------------------------------------------------------
| Deferred tax assets | 0.8 | 3.4 | 1.0 |
--------------------------------------------------------------------------------
| Receivables | 1.6 | 0.5 | 0.7 |
--------------------------------------------------------------------------------
| Total non-current assets | 45.4 | 50.6 | 54.9 |
--------------------------------------------------------------------------------
| Current assets | | | |
--------------------------------------------------------------------------------
| Inventories | 1.5 | 3.8 | 4.4 |
--------------------------------------------------------------------------------
| Trade and other receivables | 18.0 | 19.3 | 15.8 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 10.0 | 27.2 | 13.8 |
--------------------------------------------------------------------------------
| Total current assets | 29.5 | 50.3 | 34.1 |
--------------------------------------------------------------------------------
| TOTAL ASSETS | 74.8 | 101.0 | 89.0 |
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES | | | |
--------------------------------------------------------------------------------
| Equity attributable to equity holders | | | |
| of the parent company | | | |
--------------------------------------------------------------------------------
| Share capital | 18.6 | 18.6 | 18.6 |
--------------------------------------------------------------------------------
| Share premium reserve | 5.9 | 5.9 | 5.9 |
--------------------------------------------------------------------------------
| Other reserves | -0.2 | 0.0 | -0.2 |
--------------------------------------------------------------------------------
| Treasury shares | -1.6 | -1.3 | -1.3 |
--------------------------------------------------------------------------------
| Retained earnings | 1.0 | 1.7 | 7.4 |
--------------------------------------------------------------------------------
| Total | 23.7 | 24.9 | 30.3 |
--------------------------------------------------------------------------------
| Minority interest | 0.1 | 1.7 | 1.6 |
--------------------------------------------------------------------------------
| Total equity | 23.9 | 26.5 | 31.9 |
--------------------------------------------------------------------------------
| Non-current liabilities | | | |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 3.2 | 3.2 | 3.1 |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 2.6 | 3.4 | 3.8 |
--------------------------------------------------------------------------------
| Pension obligations | - | - | 0.1 |
--------------------------------------------------------------------------------
| Provisions | 1.0 | 1.7 | 1.4 |
--------------------------------------------------------------------------------
| Total non-current liabilities | 6.8 | 8.3 | 8.3 |
--------------------------------------------------------------------------------
| Current liabilities | | | |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 2.9 | 25.8 | 15.4 |
--------------------------------------------------------------------------------
| Trade and other payables | 41.0 | 40.0 | 33.1 |
--------------------------------------------------------------------------------
| Provisions | 0.3 | 0.3 | 0.3 |
--------------------------------------------------------------------------------
| Total current liabilities | 44.1 | 66.1 | 48.8 |
--------------------------------------------------------------------------------
| TOTAL EQUITY AND LIABILITIES | 74.8 | 101.0 | 89.0 |
--------------------------------------------------------------------------------
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR Million | 1-3/2008 | 1-3/2007 | 1-12/2007 |
--------------------------------------------------------------------------------
| Cash flow from operating activities, | | | |
| continuing operations | | | |
--------------------------------------------------------------------------------
| Operating profit | 3.6 | 4.0 | 12.7 |
--------------------------------------------------------------------------------
| Adjustments to operating profit | -0.6 | 0.8 | 3.6 |
--------------------------------------------------------------------------------
| Change in working capital | -2.2 | -0.5 | -2.2 |
--------------------------------------------------------------------------------
| Financial items and taxes | -0.2 | -0.7 | -0.8 |
--------------------------------------------------------------------------------
| Net cash from operating activities | 0.6 | 3.7 | 13.3 |
--------------------------------------------------------------------------------
| Cash flow from investing activities, | | | |
| continuing operations | | | |
--------------------------------------------------------------------------------
| Acquisitions of subsidiaries and | - | - | -6.4 |
| associates, net of cash | | | |
--------------------------------------------------------------------------------
| Disposal of subsidiaries and | 0.4 | - | 1.0 |
| associates, net of cash | | | |
--------------------------------------------------------------------------------
| Acquisition of property, plant and | -0.6 | -0.3 | -0.9 |
| equipment and intangible assets | | | |
--------------------------------------------------------------------------------
| Other items | 0.0 | -0.9 | 0.2 |
--------------------------------------------------------------------------------
| Net cash used in investing | -0.2 | -1.2 | -6.0 |
| activities | | | |
--------------------------------------------------------------------------------
| Cash flow from financing activities, | | | |
| continuing operations | | | |
--------------------------------------------------------------------------------
| Change in current loans | -12.3 | 4.0 | -6.4 |
--------------------------------------------------------------------------------
| Proceeds from non-current loans | - | - | 1.4 |
--------------------------------------------------------------------------------
| Repayment of non-current loans | -0.7 | -0.2 | -1.1 |
--------------------------------------------------------------------------------
| Dividends paid | 0.0 | 0.0 | -8.0 |
--------------------------------------------------------------------------------
| Purchase of treasury shares | -0.3 | - | - |
--------------------------------------------------------------------------------
| Other items | - | -0.1 | 0.1 |
--------------------------------------------------------------------------------
| Net cash used in (from) financing | -13.3 | 3.7 | -14.1 |
| activities | | | |
--------------------------------------------------------------------------------
| Discontinued operations | | | |
--------------------------------------------------------------------------------
| Net cash from operating activities | 0.0 | 0.8 | 1.4 |
--------------------------------------------------------------------------------
| Net cash from (used in) investing | 9.2 | 0.0 | -0.8 |
| activities | | | |
--------------------------------------------------------------------------------
| Net cash used in financing | 0.0 | -0.2 | -0.4 |
| activities | | | |
--------------------------------------------------------------------------------
| Cash flow from discontinued | 9.2 | 0.6 | 0.2 |
| operations | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash and cash equivalents | -3.8 | 6.8 | -6.6 |
--------------------------------------------------------------------------------
| Cash and cash equivalents at 31 | 13.8 | 20.4 | 20.4 |
| December | | | |
--------------------------------------------------------------------------------
| Foreign exchange adjustment | -0.1 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Net change in cash and cash | -3.8 | 6.8 | -6.6 |
| equivalents | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at 31 | 10.0 | 27.2 | 13.8 |
| March | | | |
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
--------------------------------------------------------------------------------
| EUR | Share | Share | Other | Treas | Retain | Attribu | Minori | Total |
| Million | capit | premiu | reser | ury | ed | table | ty | equit |
| | al | m | ves | share | earnin | to the | intere | y |
| | | reserv | | s | gs | equity | st | |
| | | e | | | | holders | | |
| | | | | | | of the | | |
| | | | | | | parent | | |
--------------------------------------------------------------------------------
| Equity | 18.6 | 5.9 | -0.2 | -1.3 | 7.4 | 30.3 | 1.6 | 31.9 |
| at 1 | | | | | | | | |
| January | | | | | | | | |
| 2008 | | | | | | | | |
--------------------------------------------------------------------------------
| Change | | | 0.0 | | | 0.0 | | 0.0 |
| in | | | | | | | | |
| transla | | | | | | | | |
| tion | | | | | | | | |
| differe | | | | | | | | |
| nces | | | | | | | | |
--------------------------------------------------------------------------------
| Other | | | | | -0.1 | -0.1 | -0.1 | -0.2 |
| items | | | | | | | | |
--------------------------------------------------------------------------------
| Divestm | | | | | | | -1.3 | -1.3 |
| ent of | | | | | | | | |
| compani | | | | | | | | |
| es | | | | | | | | |
--------------------------------------------------------------------------------
| Profit | | | | | 2.5 | 2.5 | 0.0 | 2.5 |
| for the | | | | | | | | |
| period | | | | | | | | |
--------------------------------------------------------------------------------
| Total | | | | | 2.4 | 2.4 | -1.4 | 1.0 |
| recogni | | | | | | | | |
| zed | | | | | | | | |
| income | | | | | | | | |
| and | | | | | | | | |
| expense | | | | | | | | |
| s for | | | | | | | | |
| the | | | | | | | | |
| period | | | | | | | | |
--------------------------------------------------------------------------------
| Dividen | | | | | -8.8 | -8.8 | | -8.8 |
| ds paid | | | | | | | | |
--------------------------------------------------------------------------------
| Purchas | | | | -0.3 | | -0.3 | | -0.3 |
| e of | | | | | | | | |
| treasur | | | | | | | | |
| y | | | | | | | | |
| shares | | | | | | | | |
--------------------------------------------------------------------------------
| Share | | | | | 0.0 | 0.0 | | 0.0 |
| based | | | | | | | | |
| payment | | | | | | | | |
| s | | | | | | | | |
--------------------------------------------------------------------------------
| Equity | 18.6 | 5.9 | -0.2 | -1.6 | 1.0 | 23.7 | 0.1 | 23.9 |
| at 31 | | | | | | | | |
| March | | | | | | | | |
| 2008 | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity | 18.6 | 5.9 | 0.5 | -1.3 | 6.7 | 30.5 | 1.7 | 32.2 |
| at 1 | | | | | | | | |
| January | | | | | | | | |
| 2007 | | | | | | | | |
--------------------------------------------------------------------------------
| Change | | | -0.6 | | -0.1 | -0.7 | | -0.7 |
| in | | | | | | | | |
| transla | | | | | | | | |
| tion | | | | | | | | |
| differe | | | | | | | | |
| nces | | | | | | | | |
--------------------------------------------------------------------------------
| Profit | | | | | 3.0 | 3.0 | | 3.0 |
| for the | | | | | | | | |
| period | | | | | | | | |
--------------------------------------------------------------------------------
| Total | | | -0.6 | | 2.9 | 2.3 | | 2.3 |
| recogni | | | | | | | | |
| zed | | | | | | | | |
| income | | | | | | | | |
| and | | | | | | | | |
| expense | | | | | | | | |
| s for | | | | | | | | |
| the | | | | | | | | |
| period | | | | | | | | |
--------------------------------------------------------------------------------
| Dividen | | | | | -7.9 | -7.9 | -0.1 | -8.0 |
| ds paid | | | | | | | | |
--------------------------------------------------------------------------------
| Share | | | | | 0.1 | 0.1 | | 0.1 |
| based | | | | | | | | |
| payment | | | | | | | | |
| s | | | | | | | | |
--------------------------------------------------------------------------------
| Equity | 18.6 | 5.9 | 0.0 | -1.3 | 1.7 | 24.9 | 1.7 | 26.5 |
| at 31 | | | | | | | | |
| March | | | | | | | | |
| 2007 | | | | | | | | |
--------------------------------------------------------------------------------
Change in the number of shares outstanding is presented in the notes below.
NOTES TO THE FINANCIAL STATEMENTS
This interim report has been drawn up according to the IFRS recognition and
valuation principles. The interim report for January-June will be reported in
accordance with IAS 34 Interim Financial Reporting. In drawing up this interim
report, Talentum has applied the same accounting policies as in the financial
statements for 2007 apart from those described in the following paragraph.
In drawing up the interim report, the Group has recognized as an asset the costs
of developing the online business operations under intangible assets in
progress. The costs of project research have been recognized as an expense in
the income statement as incurred. Development expenditure has been recognized as
an asset when the asset has been considered to be technically and commercially
feasible, and it is expected to generate future economic benefits. The useful
life of intangible assets created from development activities is two years. The
main item in the development costs is external services.
Talentum has also adopted from 1 January 2008 the following new IFRIC
interpretations: IFRIC 11 - Group and Treasury Share Transactions and IFRIC 14,
IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and
their Interaction. The adoption of the interpretations has had no effect on
Talentum's interim report. Other new interpretations are not relevant to the
Group.
All the figures in this report have been rounded up or down, so the sum of the
figures may be different from the totals shown.
TALENTUM-GROUP, BUSINESS AREAS, CONTINUING OPERATIONS
--------------------------------------------------------------------------------
| EUR Million | 1-3/2008 | 1-3/2007 | 1-12/2007 | 12 months | 12 months |
| | | | | rolling | rolling |
| | | | | 4/07-3/08 | 4/06-3/07 |
--------------------------------------------------------------------------------
| Net sales | | | | | |
--------------------------------------------------------------------------------
| Publishing | 23.1 | 20.9 | 83.8 | 86.0 | 76.9 |
--------------------------------------------------------------------------------
| Direct Marketing | 2.6 | 2.5 | 9.5 | 9.6 | 8.6 |
--------------------------------------------------------------------------------
| Premedia | 2.3 | 4.1 | 12.5 | 10.7 | 16.7 |
--------------------------------------------------------------------------------
| Adjustments and | -1.3 | -1.2 | -4.7 | -4.8 | -4.5 |
| eliminations | | | | | |
--------------------------------------------------------------------------------
| Total | 26.6 | 26.3 | 101.2 | 101.5 | 97.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating profit | | | | | |
--------------------------------------------------------------------------------
| Publishing | 3.7 | 3.9 | 14.8 | 14.5 | 9.0 |
--------------------------------------------------------------------------------
| Direct Marketing | 0.4 | 0.4 | 1.3 | 1.4 | 1.2 |
--------------------------------------------------------------------------------
| Premedia | 0.4 | 0.2 | -0.9 | -0.7 | -2.7 |
--------------------------------------------------------------------------------
| Adjustments and | -0.8 | -0.5 | -2.5 | -2.9 | -2.9 |
| eliminations | | | | | |
--------------------------------------------------------------------------------
| Total | 3.6 | 4.0 | 12.7 | 12.3 | 4.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
GROUP COMPANIES SOLD IN PERIOD UNDER REVIEW
In February the Group sold the sub-group Varesvuo Partners, which focused on TV
Content Production, apart from holdings in Oy Filmiteollisuus Fine Ab, which was
part of the sub-group, and in the companies that it owned, which were sold in
March. The Varesvuo Partners sub-group has not been included in Talentum's
consolidated figures for January-March, except for Oy Filmiteollisuus's Fine
Ab's result of EUR -0.00. The Varesvuo Partners sub-group was classified overall
as discontinued operations in January. The main areas of activity of the
Varesvuo Partners companies are TV programme production and advertising film
production. The customers are TV channels and advertising agencies. Talentum
focuses on publishing targeted at professionals and TV programme production and
advertising films are no longer seen to have any synergy with the core
operations.
Financial performance of discontinued operations
--------------------------------------------------------------------------------
| EUR million | 1-3/2008 | 1-3/2007 | 1-12/2007 |
--------------------------------------------------------------------------------
| Revenue | 1.1 | 5.8 | 24.1 |
--------------------------------------------------------------------------------
| Costs | -0.6 | -5.6 | -22.7 |
--------------------------------------------------------------------------------
| Taxes | -0.0 | -0.1 | -0.6 |
--------------------------------------------------------------------------------
| Profit after taxes | 0.4 | 0.1 | 0.8 |
--------------------------------------------------------------------------------
| Earnings per share, | 0.01 | 0.00 | 0.01 |
| discontinued | | | |
| operations | | | |
--------------------------------------------------------------------------------
The revenue in the period January-March 2008 includes the profit of EUR 0.8
million on the sale of the Varesvuo Partners sub-group and the loss of EUR 0.4
million caused by the sale of Oy Filmiteollisuus Fine Ab, which was separated
from the sub-group and sold separately in March.
Effect of sale of discontinued operations on Group's financial position
--------------------------------------------------------------------------------
| EUR Million | 3/2008 |
--------------------------------------------------------------------------------
| Property, plant and equipment | 3.3 |
--------------------------------------------------------------------------------
| Goodwill | 4.1 |
--------------------------------------------------------------------------------
| Other intangible assets | 0.3 |
--------------------------------------------------------------------------------
| Investments in associates | 1.6 |
--------------------------------------------------------------------------------
| Inventories | 3.0 |
--------------------------------------------------------------------------------
| Current receivables | 3.4 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 1.7 |
--------------------------------------------------------------------------------
| Minority interest | -1.3 |
--------------------------------------------------------------------------------
| Non-current liabilities | -0.3 |
--------------------------------------------------------------------------------
| Current liabilities | -5.3 |
--------------------------------------------------------------------------------
| Total assets and liabilities | 10.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total consideration | 11.1 |
--------------------------------------------------------------------------------
| Consideration received in cash | 10.9 |
--------------------------------------------------------------------------------
| Cash disposed of | 1.7 |
--------------------------------------------------------------------------------
| Net cash inflow | 9.2 |
--------------------------------------------------------------------------------
| Current consideration receivable | 0.2 |
--------------------------------------------------------------------------------
In February the Group also sold the entire shareholding in DH Tools Oy, which
was part of Premedia and focused on digital data management. DH Tools Oy's main
area of activity is supplying companies with digital systems for marketing. At
the time of sale it was employing 16 people. The sale is part of the Group
withdrawal from operations unrelated to the core operations. The sale of DH
Tools has not had a material effect on the Group's financial performance or its
financial position.
CHANGE IN NUMBER OF SHARES
--------------------------------------------------------------------------------
| | 1-3/2008 | 1-3/2007 | 1-12/2007 |
--------------------------------------------------------------------------------
| 1,000 | | | |
--------------------------------------------------------------------------------
| Shares outstanding | 44,040 | 44,040 | 44,040 |
| at beginning of | | | |
| period | | | |
--------------------------------------------------------------------------------
| Share issue | 75 | - | - |
--------------------------------------------------------------------------------
| Acquisition of own | -111 | - | - |
| shares | | | |
--------------------------------------------------------------------------------
| Number of shares | 44,004 | 44,040 | 44,040 |
| outstanding at end | | | |
| of period | | | |
--------------------------------------------------------------------------------
The free-of-charge, directed share issue consists of the shares granted to the
company's management on the basis of Talentum Oyj's share-based incentive plan.
At the end of the period under review the Group had in its possession a total of
292,000 treasury shares.
The weighted average of the number of shares that was used for calculating the
earnings per share during the period under review is 44,061,000 (44,040,000 in
January-March 2007 and January-December 2007).
AVERAGE NUMBER OF EMPLOYEES, CONTINUING OPERATIONS
--------------------------------------------------------------------------------
| | 1-3/2008 | 1-3/2007 | 1-12/2007 |
--------------------------------------------------------------------------------
| Publishing | 418 | 369 | 384 |
--------------------------------------------------------------------------------
| Direct Marketing *) | 363 | 354 | 365 |
--------------------------------------------------------------------------------
| Premedia | 79 | 165 | 133 |
--------------------------------------------------------------------------------
| Group Administration | 13 | 12 | 14 |
--------------------------------------------------------------------------------
| Total | 873 | 900 | 896 |
--------------------------------------------------------------------------------
| *) includes part-time | 314 | 304 | 316 |
| telemarketing staff | | | |
--------------------------------------------------------------------------------
CONTINGENT LIABILITIES AND OTHER COMMITMENTS
--------------------------------------------------------------------------------
| EUR Million | 31.3.2008 | 31.3.2007 | 31.12.2007 |
--------------------------------------------------------------------------------
| Guarantees posted for own | | | |
| commitments | | | |
--------------------------------------------------------------------------------
| Financial institution loans | 3.9 | 2.9 | 3.7 |
--------------------------------------------------------------------------------
| Book value of shares pledged | 3.5 | 5.9 | 8.7 |
--------------------------------------------------------------------------------
| Mortgage | 0.4 | 0.4 | 0.4 |
--------------------------------------------------------------------------------
The figures in this release are unaudited.
The forecasts and estimates presented here are based on the management's view of
developments in the economy at this present moment, and the actual results may
differ substantially from what the company now expects.
In 2008 Talentum will be publishing the interim report for January-June on 23
July and for January-September on 28 October.
TALENTUM OYJ
Juha Blomster
CEO
FURTHER INFORMATION
Juha Blomster, CEO, tel +358 (0)20 442 4444
Kaisa Kokkonen, CFO, tel +358 (0)40 342 4212
COPIES TO
OMX Nordic Exchange Helsinki
Key media
BRIEFING
A briefing will be held for analysts and the media today, 29 April 2008 at 10.00
a.m. at the Talentum head office, Annankatu 34-36 B, Kamppi, Helsinki. The
financial performance will be presented by CEO Juha Blomster and CFO Kaisa
Kokkonen.
TALENTUM'S NET SALES AND FINANCIAL PERFORMANCE IN JANUARY-MARCH MEET COMPANY EXPECTATIONS
| Source: Talentum Oyj