Vuosikertomus Interim Report 2015 1 Jan. 31 Mar. 2016
Ilkka-Yhtymä Oyj s Interim Report 1 January 31 March 2016 Net sales: EUR 9,748 thousand (EUR 10,078 thousand) Operating profit: EUR 748 thousand (EUR 1,071 thousand) Operating profit excluding Alma Media Corporation and the other associated companies amounted to EUR 518 thousand (EUR 680 thousand) Operating profit totalled 7.7% (10.6%) of net sales, or 5.3% excluding Alma Media and other associated companies (6.7%) Net financial expenses were EUR 1,026 thousand (EUR 196 thousand), of which the change in the market value of interest rate swaps accounted for EUR -730 thousand (EUR -44 thousand). Loss before tax: EUR 278 thousand (profit before tax EUR 875 thousand) Earnings per share: EUR -0.01 (EUR 0.03) Net gearing was 59.6 % (68.4 %) and eguity ratio 52.0 % (50.0 %) NET SALES AND PROFIT PERFORMANCE The Group s consolidated net sales for January March showed a 3.3% decline. Net sales came to EUR 9,748 thousand (EUR 10,078 thousand). External net sales from the publishing business fell by 2.2%. Advertising revenues fell by 4.3% and content revenues fell by 2.2%. External net sales from the printing business decreased by 9.4%. Content income accounted for 47% of consolidated net sales, while advertising income and printing income represented 38% and 13%, respectively. Other operating income in January March totalled EUR 49 thousand (EUR 154 thousand). Operating expenses for January March amounted to EUR 9,280 thousand (EUR 9,565 thousand), down by 3.0% year on year. Expenses arising from materials and services increased by 0.9%. Personnel expenses decreased by 3.0%. Other operating costs decreased by 11.3%. Depreciation contracted by 7.3%. thousand (EUR 349 thousand). In order to hedge against interest rate risk, the company has transformed some of its floating-rate liabilities into fixed-rate liabilities, by means of interest rate swaps. Given that the Group does not apply hedge accounting, unrealised changes in the market value of the interest rate swaps are recognised through profit or loss. In January March 2016, the change in the market value of these interest rate swaps amounted to EUR -730 thousand (EUR -44 thousand). Net gain/loss on shares held for trading was EUR -6 thousand (EUR 199 thousand). Loss before tax totalled EUR 278 thousand (profit before tax EUR 875 thousand) and the Group's loss for the period totalled EUR 175 thousand (profit for the period EUR 784 thousand). BALANCE SHEET AND FINANCING The consolidated balance sheet total came to EUR 133,009 thousand (EUR 137,176 thousand), with EUR 65,837 thousand (EUR 65,403 thousand) of equity. On the reporting date of 31 March 2016, the balance sheet value of the holding in the associated company Alma Media Corporation was EUR 99,242 thousand and the market value of the shares was EUR 76,478 thousand. According to the management s estimate, write-down in this holding is unnecessary. Interest-bearing liabilities totalled EUR 52,220 thousand (EUR 56,938 thousand). The equity ratio was 52.0 per cent (50.0%), and shareholders equity per share was EUR 2.57 (EUR 2.55). The increase in financial assets for the period totalled EUR 5,467 thousand (EUR 5,405 thousand), with liquid assets at the end of the period totalling EUR 11,967 thousand (EUR 10,939 thousand). The share of the associated companies result was EUR 230 thousand (EUR 391 thousand). Consolidated operating profit amounted to EUR 748 thousand (EUR 1,071 thousand), down by 30.2 per cent year-on-year. The Group s operating margin was 7.7 per cent (10.6%). Operating profit excluding Alma Media Corporation and the other associated companies amounted to EUR 518 thousand (EUR 680 thousand), representing 5.3% (6.7%) of net sales. Operating profit from publishing fell by EUR 77 thousand, and operating profit from printing fell by EUR 75 thousand. Net financial expenses for January March amounted to EUR 1,026 thousand (EUR 196 thousand). Interest expenses excluding the fair value change in derivatives hedging them totalled EUR 303 Cash flow from operations for the period came to EUR 2,840 thousand (EUR 2,832 thousand). Cash flow from investments totalled EUR 2,626 thousand (EUR 2,573 thousand), including capital repayment from Alma Media Corporation in the amount of EUR 2,699 thousand (EUR 2,699 thousand). PERSONNEL The Group had an average of 285 (294) employees during the period. Ilkka-Yhtymä announced on 29 February 2016 that it would initiate negotiations at its printing house I-print Oy in accordance with Interim Report 1 January-31 March 2016 3
the Act on Co-operation within Undertakings. The negotiations concerned the production personnel of I-print Oy s newspaper printing press. The objective was to adjust the operations and the amount of personnel to the reduced volumes. The negotiations affected the production personnel of the newspaper printing press, excluding service staff, 26 persons in all. The negotiations ended on 27 April 2016. As a result, one person will retire and three persons will be made redundant. Additionally, part of the personnel will be laid off for up to 38 working days per person and some full-time jobs will be turned into part-time jobs. The Group s major financial risks include credit risk of the Group s operative business, the risk associated with the price of shares held for trading, the risk of changes in market interest rates applied to the loan portfolio and liquidity risk. In order to hedge against interest rate risk, the company has transformed some of its floating-rate liabilities to a fixed rate, by means of interest rate swaps. Given that the Group does not apply hedge accounting, changes in the market value of the interest rate swap are recognised through profit and loss. Other financial risks are discussed in more detail in the 2015 Annual Report. EVENTS AFTER THE REPORT PERIOD Annual General Meeting Decisions On 20 April 2016, the Annual General Meeting (AGM) of Ilkka-Yhtymä Oyj approved the financial statements, discharged the members of the Supervisory Board and the Board of Directors and the Managing Director from liability and decided that a per-share dividend of EUR 0.10 be paid for the year 2015. SHARE PERFORMANCE The Series I shares of Ilkka-Yhtymä Oyj were listed on the Helsinki Stock Exchange in 1981 and have remained listed ever since. The Series II shares have been listed since their issue in 1988, and on 10 June 2002 they were transferred from the I List of the Helsinki Stock Exchange to the Main List. At present, the Series II shares of Ilkka-Yhtymä Oyj are listed on the Nasdaq Helsinki List, in the Consumer Services sector, the company s market value being classified as Small Cap. The Series I shares are listed on the Pre List. In January March, 27,373 series-i shares of Ilkka-Yhtymä Oyj were traded, accounting for 0.6 per cent of the total number of series-i shares. The total value of the shares exchanged was EUR 65 thousand. In total, 530,719 series-ii shares were traded, corresponding to 2.5 per cent of the total number of series II shares. The total value of the shares traded was EUR 1,065 thousand. The lowest price at which series-i shares of Ilkka-Yhtymä Oyj were traded during the period under review was EUR 2.20, and the highest per-share price was EUR 2.59. The lowest price at which series-ii shares were traded was EUR 1.95 and the highest EUR 2.12. The market value of the share capital at the closing rate for the reporting period was EUR 54,506 thousand. RISKS AND RISK MANAGEMENT In the current economic climate, the forecasting of both net sales and operating profit involve uncertainties. Ilkka-Yhtymä s most significant short-term risks are related to the development of media advertising, in particular, as well as circulation and printing volumes, which affect the industry in general. The risks in the industry are due to its digitalisation and the continuing poor economic conditions. Other risks associated with the Group s own operations and its holding in associated company Alma Media Corporation are described in more detail in the Annual Report 2015. The number of members on the Supervisory Board for 2016 was confirmed to be 23. Of the Supervisory Board members whose term had come to an end, the following were re-elected for the term ending in 2020: Vesa-Pekka Kangaskorpi, Kimmo Simberg and Jyrki Viitala. Raimo Puustinen, Managing Director, Pohjois-Karjalan Kirjapaino Oyj, was elected as a new member for the term ending in 2020. At the Annual General Meeting it was decided to maintain the payments made to the Chairman of the Supervisory Board and the board members at their current level: the Chairman will receive a retainer of EUR 1,500 per month and a fee of EUR 400 per meeting, and the board members will be paid a fee of EUR 400 per meeting attended. The board members travel expenses are reimbursed in accordance with the current maximum level specified by the tax authorities. Ernst & Young Oy, Authorised Public Accountants, was elected as the auditor, with Authorised Public Accountant, M.Sc.(Econ.) Harri Pärssinen as the principal auditor. It was decided that the auditors would be reimbursed per the invoice. The AGM authorised the Board of Directors to decide upon a donation to be put toward charitable causes or similar, totalling, at maximum, EUR 50,000, as well as to decide upon the recipients, purposes of use, schedules and other terms of these donations. OUTLOOK FOR 2016 In the current uncertain economic climate and competitive environment, forecasting net sales in the newspaper business involves major uncertainties. Media advertising in Finland is expected to remain roughly at the previous year s level and newspaper circulation income is forecast to decline slightly. Printing business volumes are expected to decline further. The net sales of Ilkka-Yhtymä Group are estimated to remain almost at the 2015 level. Operating profit from the Group s own operations, excluding non-recurring items and the share of Alma Media s and other associated companies results, is expected to fall slightly. The associated company Alma Media Corporation (Group ownership 27.30%) will have a significant impact on Group operating profit and profit. 4 Interim Report 1 January-31 March 2016
Summary of financial statements and notes DRAFTING PRINCIPLES Ilkka-Yhtymä Group s interim report was prepared in accordance with the requirements of the IAS 34 Interim Financial Reporting standard. been complied with. These changes have not affected the reported figures. The principles and formulae for the calculation of the indicators, presented on page 63 of the 2015 annual report, remain unchanged. The interim report has been prepared according to the same principles as the 2015 financial statements. Annual improvements to IFRS and IFRIC interpretations (Annual Improvements 2012 2014) that become effective in 2016 have also All the figures in the interim report are rounded, so the sum of separate figures may differ from that presented in the report. The figures in the interim report have been presented unaudited. CONSOLIDATED INCOME STATEMENT EUR 1,000 1-3/2016 1-3/2015 Change 1-12/2015 NET SALES 9 748 10 078-3 % 41 172 Change in inventories of finished and unfinished products 1 12-90 % 1 Other operating income 49 154-68 % 1 763 Materials and services -3 423-3 392 1 % -13 418 Employee benefits -4 250-4 380-3 % -16 548 Depreciation -390-421 -7 % -1 653 Other operating costs -1 217-1 372-11 % -5 331 Share of associated companies' profit 230 391-41 % 3 012 OPERATING PROFIT/ LOSS 748 1 071-30 % 8 998 Financial income and expenses *) -1 026-196 -424 % -4 519 PROFIT/ LOSS BEFORE TAX -278 875-132 % 4 479 Income tax 103-91 -213 % -872 PROFIT/ LOSS FOR THE PERIOD UNDER REVIEW -175 784-122 % 3 607 Earnings per share, undiluted (EUR) **) -0.01 0.03-122 % 0.14 The undiluted share average (to the nearest thousand) **) 25 665 25 665 25 665 *) As a result of the dilution of ownership in the associated company Alma Media Corporation, a non-recurring loss of EUR 3,533 thousand was recorded in the financial expenses for Q4/2015. **) There are no factor diluting the figure. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME EUR 1,000 1-3/2016 1-3/2015 Change 1-12/2015 PROFIT/ LOSS FOR THE PERIOD UNDER REVIEW -175 784-122 % 3 607 Other comprehensive income: Items that may be reclassified subsequently to profit or loss: Available-for-sale assets Measured at fair value 2 4 Transferred to the income statement 11-8 Share of associated companies' other comprehensive income -24 103-123 % 517 Income tax related to components of other comprehensive income 3 Other comprehensive income, net of tax -24 115-121 % 516 Total comprehensive income for the period -199 899-122 % 4 123 Interim Report 1 January-31 March 2016 5
SEGMENT INFORMATION EUR 1,000 1-3/2016 1-3/2015 Change 1-12/2015 NET SALES BY SEGMENT Publishing External 8 435 8 629-2 % 35 123 Inter-segments 22 30-27 % 95 Publishing total 8 457 8 658-2 % 35 218 Printing External 1 313 1 449-9 % 6 048 Inter-segments 1 438 1 575-9 % 6 273 Printing total 2 751 3 024-9 % 12 321 Non-allocated Inter-segments 526 554-5 % 2 199 Non-allocated total 526 554-5 % 2 200 Elimination -1 985-2 159-8 % -8 567 Group net sales total 9 748 10 078-3 % 41 172 EUR 1,000 1-3/2016 1-3/2015 Change 1-12/2015 OPERATING PROFIT/ LOSS BY SEGMENT Publishing 477 554-14 % 3 238 Printing 154 230-33 % 1 543 Associated companies 230 391-41 % 3 012 Non-allocated -113-104 -9 % 1 205 Group operating profit/ loss total 748 1 071-30 % 8 998 EUR 1,000 3/2016 3/2015 Change 12/2015 ASSETS BY SEGMENT Publishing 14 228 14 239 0 % 9 882 Printing 8 869 9 253-4 % 9 257 Non-allocated 109 912 113 685-3 % 108 042 Group assets total 133 009 137 176-3 % 127 181 6 Interim Report 1 January-31 March 2016
CONSOLIDATED BALANCE SHEET EUR 1,000 3/2016 3/2015 Change 12/2015 ASSETS NON-CURRENT ASSETS Intangible rights 639 621 3 % 674 Goodwill 314 314 0 % 314 Investment properties 63 142-56 % 63 Property, plant and equipment 8 512 9 960-15 % 8 825 Shares in associated companies 100 115 103 105-3 % 102 608 Available-for-sale financial assets 2 922 2 945-1 % 2 922 Non-current trade and other receivables 567 567 0 % 567 Other tangible assets 214 214 0 % 214 Non-current assets 113 347 117 869-4 % 116 188 CURRENT ASSETS Inventories 576 551 4 % 614 Trade and other receivables 5 848 6 144-5 % 2 787 Income tax assets 231 396-42 % 36 Financial assets at fair value through profit or loss 1 041 1 278-19 % 1 057 Cash and cash equivalents 11 967 10 939 9 % 6 500 Current assets 19 662 19 307 2 % 10 993 ASSETS 133 009 137 176-3 % 127 181 SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY Share capital 6 416 6 416 0 % 6 416 Invested unrestricted equity fund and other reserves 48 690 48 729 0 % 48 691 Retained earnings 10 730 10 257 5 % 10 928 Shareholders' equity 65 837 65 403 1 % 66 035 NON-CURRENT LIABILITIES Deferred tax liability 23 148-84 % 194 Non-current interest-bearing liabilities 31 943 54 559-41 % 31 943 Non-current interest-free liabilities 61 75-18 % 61 Non-current liabilities 32 028 54 781-42 % 32 199 CURRENT LIABILITIES Current interest-bearing liabilities 20 277 2 379 752 % 20 286 Accounts payable and other payables 14 411 13 955 3 % 8 309 Income tax liability 457 659-31 % 352 Current liabilities 35 145 16 992 107 % 28 947 SHAREHOLDERS' EQUITY AND LIABILITIES 133 009 137 176-3 % 127 181 Interim Report 1 January-31 March 2016 7
CONSOLIDATED CASH FLOW STATEMENT EUR 1,000 1-3/2016 1-3/2015 1-12/ 2015 CASH FLOW FROM OPERATIONS Profit/ loss for the period under review -175 784 3 607 Adjustments 1 079 313 2 592 Change in working capital 2 269 2 165 62 Cash flow from operations before finance and taxes 3 173 3 262 6 262 Interest paid -179-221 -1 255 Interest received 6 5 50 Dividends received 9 8 66 Other financial items -11-11 -33 Direct taxes paid -157-212 -889 Cash flow from operations 2 840 2 832 4 201 CASH FLOW FROM INVESTMENTS Investments in tangible and intangible assets, net -73-133 -590 Disposal of subsidiaries 1 748 Capital repayment received 2 699 2 699 2 699 Proceeds from sale of other investments 8 68 Dividends received from investments 95 Cash flow from investments 2 626 2 573 4 019 Cash flow before financing items 5 467 5 405 8 220 CASH FLOW FROM FINANCING Change in current loans -2 353 Change in non-current loans -2 353 Dividends paid and other profit distribution -2 547 Cash flow from financing -7 253 Increase(+) or decrease (-) in financial assets 5 467 5 405 967 LIQUID ASSETS AT THE BEGINNING OF THE FINANCIAL PERIOD 6 500 5 534 5 534 LIQUID ASSETS AT THE END OF THE FINANCIAL PERIOD 11 967 10 939 6 500 GROUP KEY FIGURES 3/2016 3/2015 12/2015 Earnings/share (EUR) -0.01 0.03 0.14 Shareholders' equity/share (EUR) 2.57 2.55 2.57 Average number of personnel 285 294 299 Investments (EUR 1,000) *) 42 140 584 Interest-bearing debt (EUR 1,000) 52 220 56 938 52 229 Equity ratio, % 52.0 50.0 52.9 Net gearing, % 59.6 68.4 67.6 Average number of shares during the financial period 25 665 208 25 665 208 25 665 208 Number of shares at the end on the financial period 25 665 208 25 665 208 25 665 208 *) Includes investments in tangible and intangible assets and shares in associated companies and in available-for-sale financial assets. Taxes included in the income statement are taxes corresponding to the profit for the period under review. 8 Interim Report 1 January-31 March 2016
STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY EUR 1,000 Share capital Fair value reserve Invested unrestricted equity fund Other reserves Retained earnings Total CHANGE IN SHAREHOLDERS' EQUITY 1-3/2015 Shareholders' equity 1.1. 6 416 194 48 498 24 9 371 64 503 Comprehensive income for the period 12 887 899 SHAREHOLDERS' EQUITY TOTAL 3/2015 6 416 207 48 498 24 10 257 65 403 EUR 1,000 Share capital Fair value reserve Invested unrestricted equity fund Retained earnings Total CHANGE IN SHAREHOLDERS' EQUITY 1-3/2016 Shareholders' equity 1.1. 6 416 193 48 498 10 928 66 035 Comprehensive income for the period -199-199 SHAREHOLDERS' EQUITY TOTAL 3/2016 6 416 193 48 498 10 730 65 837 GROUP CONTINGENT LIABILITIES EUR 1,000 3/2016 3/2015 12/2015 COLLATERAL PLEDGED FOR OWN COMMITMENTS Mortgages on company assets 1 245 1 245 1 245 Mortgages on real estate 8 801 8 801 8 801 Pledged shares 62 425 52 694 55 081 CONTINGENT LIABILITIES ON BEHALF OF ASSOCIATED COMPANY Guarantees 3 961 3 961 3 961 CHANGES IN PROPERTY, PLANT AND EQUIPMENT EUR 1,000 1-3/2016 1-3/2015 Change 1-12/2015 Carrying amount at the beginning of the financial period 8 825 10 230-14 % 10 230 Increase 20 88-78 % 410 Decrease -1-100 % -261 Depreciation for the financial period -333-357 -7 % -1 408 Transfers between items -147 Carrying amount at the end of the financial period 8 512 9 960-15 % 8 825 Interim Report 1 January-31 March 2016 9
RELATED PARTY TRANSACTIONS Ilkka-Yhtymä Group s related parties include associated companies, members of the Board of Directors, members of the Supervisory Board, the Managing Director and the Group Executive Team. The following related party transactions were carried out: EUR 1,000 1-3/2016 1-3/2015 1-12/2015 SALES OF GOODS AND SERVICES To associated companies 76 58 258 To other related parties 264 198 921 PURCHASES OF GOODS AND SERVICES From associated companies 98 73 256 From other related parties 2 37 NON-CURRENT LOAN RECEIVABLES FROM ASSOCIATED COMPANIES 567 567 567 TRADE AND OTHER RECEIVABLES From associated companies 90 45 68 From other related parties 102 81 75 ACCOUNTS PAYABLE To associated companies 31 23 24 Transactions with related parties are conducted at fair market prices. EUR 1,000 1-3/2016 1-3/2015 1-12/2015 EMPLOYEE BENEFITS TO MANAGEMENT Salaries and other short-term employee benefits 317 226 1 026 The management comprises the Board of Directors, Supervisory Board, Managing Director and Group Executive Team. The figures stated on the basis of the cash method do not differ significantly from those based on the accrual method. 10 Interim Report 1 January-31 March 2016
FAIR VALUE HIERARCHY OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES MEASURED AT FAIR VALUE Fair value at end of period EUR 1,000 3/2016 Level 1 Level 2 Level 3 Assets measured at fair value Financial assets at fair value through profit or loss 1 041 1 041 Available-for-sale financial assets 1 502 1 502 Total 2 543 1 041 1 502 Liabilities measured at fair value Interest rate swaps 2 536 2 536 Total 2 536 2 536 Fair value at end of period EUR 1,000 3/2015 Level 1 Level 2 Level 3 Assets measured at fair value Financial assets at fair value through profit or loss 1 278 1 278 Available-for-sale financial assets 1 525 1 525 Total 2 803 1 278 1 525 Liabilities measured at fair value Interest rate swaps 1 848 1 848 Total 1 848 1 848 Available-for-sale assets also include EUR 1,420 thousand for unlisted shares (EUR 1,420 thousand in 3/2015), which are measured at cost since no reliable fair value was available for them. At Level 1 of the hierarchy, fair value is based on quoted prices (unadjusted) in active markets for identical assets or liabilities. At Level 2, the instruments fair value is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). At Level 3, the instruments fair value is based on inputs for the asset or liability that are not based on observable market data. GENERAL STATEMENT This report contains certain statements that are estimates based on the management s best knowledge at the time they were made. For this reason, they involve a certain amount of inherent risk and uncertainty. The estimates may change in the event of significant changes in general economic and business conditions. ILKKA-YHTYMÄ OYJ Board of Directors Matti Korkiatupa Managing Director Interim Report 1 January-31 March 2016 11
Koulukatu 10, P.O. Box 60, FIN-60101 Seinäjoki Tel. +358 6 247 7100 www.ilkka-yhtyma.fi