SanomaWSOY's net sales for the review period 1 January - 30 April 1999 totalled FIM 2,498 million (FIM 2,490 million in the previous corresponding period), or EUR 420 (419) million. Operating profit decreased by 26 % to FIM 97 (131) million or EUR 16 (22) million. Profit before extraordinary items increased by 2 % and was FIM 211 (207) million, or EUR 35 (35) million. Earnings per share increased by 5 % to FIM 4.16 (3.98) or EUR 0.70 (0.67).

SanomaWSOY; creation and direction

Werner Söderström Corporation - WSOY, Helsinki Media Company Oy, Sanoma Corporation as well as Oy Devarda Ab, which is a shareholder in the two last-mentioned companies, merged on 1 May 1999 according to plan to form Sanoma-WSOY Oyj.

SanomaWSOY's business units include the following subsidiaries formed as a result of transfer of operations: Helsinki Media Company Oy (hereafter Helsinki Media), Sanoma Corporation (Sanoma) and Werner Söderström Corporation (WSOY), as well as Rautakirja Oyj (Rautakirja) which continues operation as an autonomous publicly listed company. SanomaWSOY holds 54.7 % of Rautakirja's shares.

Trading in Sanoma-WSOY Oyj's shares started on 3 May 1999.

SanomaWSOY's Corporate Administration is charged with the task of ensuring that the value of the corporate entity will exceed the sum of its parts. The parent company units with responsibility for results are Development, Asset Management and Real Estate. Centralised corporate services include Group Treasury, Internal Auditing and Risk Management. The Corporate Administration also manages the Group's planning and control systems, legal affairs, human resources management, training, acquisitions and co-ordination of business facilities.

The objective of SanomaWSOY is to achieve a growth rate exceeding market growth, mainly in the media communications sector, by expanding in the Scandinavian countries and other neighbouring regions. While growth will be sought primarily through subsidiaries, priorities will be analysed and supervised by the Corporate Administration. The Development unit is responsible for implementation of projects which are extensive or targeted at new areas. The Development unit will initially focus on projects connected with Internet and digital TV operations as well as on customer management.

Market situation

In the first four months of 1999, Finnish economy developed mainly favourably, strengthening consumers' confidence in the improvement of their own financial situation and the continued positive trend of the national economy. However, the trend of retailing has been weaker than anticipated.

The growth rate in the advertising industry is levelling out. The total value of advertising in January - April grew more than 7 %. Revenues from newspaper advertising increased by more than 8 % and magazine advertising by nearly 10 %, while TV advertising increased by less than 2 %. The sales volume of non-subscription magazines declined by 3 % from the previous year but the value growth exceeded 1 %. The value of mail order sales decreased by more than 10 % during the first four months.

Domestic demand for products of the graphic industry remained stable. The declining trend in exports to Russia towards the end of last year continues to prevail with repercussions also on the domestic competitive environment.

Structural changes

Significant structural changes took place during the review period and in the comparison year, impacting on the comparability of the performances of the Group and its constituent parts. Some of the changes were due to structural arrangements that coincided with the merger, and others were the result of acquisitions and divestments. The new companies acquired during the review period are Sanoma's subsidiaries Kymen Lehtimedia Oy and Esmerk Oy. The structural changes are described in greater detail in the enclosed respective reviews of the subsidiaries.

Net sales

SanomaWSOY's consolidated net sales for the period totalled FIM 2,498 million (2,490 million in the previous corresponding period). Sanoma's net sales grew considerably following the acquisition of Kymen Lehtimedia Oy and an increase in advertising revenues, while on the other hand the divestments of operations finalised in the previous year reduced net sales in all other sub-groups. Helsinki Media sold its printing business to its associated company Hansaprint Oy on 1 January 1999, and WSOY sold its corresponding operations to Acta Print Oy on 1 May 1998. Acta Print Oy was acquired by Otava publishing company on 1 September 1998. Rautakirja's net sales for the previous corresponding period still included sales income from the Tiimari chain which were sold in April last year.


Consolidated operating profit declined by one fourth from the comparison year to FIM 97 (131) million. The decrease is partly attributable to the above-mentioned structural arrangements. Financial income increased significantly over the previous year and profit before extraordinary items increased to FIM 211 (207) million. The Group's profit for the review period totalled FIM 146 million. Earnings per share increased to FIM 4.16 (3.98).

Balance sheet

SanomaWSOY Group's balance sheet total was FIM 7,460 (6,672) million; equity accounted for FIM 4,244 (3,473) million of this figure. Consolidated equity ratio improved to 68 (64) %, partly as a result of divestments, and equity per share to FIM 124 (102).

Capital expenditure; financing

The Group's gross investments totalled FIM 669 (251) million. More than half of this sum related to Sanoma projects, building of the Sanoma House currently under construction, and acquisitions of shares in Kymen Lehtimedia Oy and other companies operating in the same industry. The capital expenditure of other subsidiaries consisted of replacement investments and acquisitions of shares in companies operating in related fields.

The Group's financial position is strong. The bookvalue of securities included in financial assets, cash and bank totalled FIM 1,389 (1,550) million at the end of the review period. SanomaWSOY's interest-bearing liabilities amounted to FIM 634 (401) million.

Tv operating licenses

On 11 March 1999, the Council of State granted a new analogue TV operating license to Oy Ruutunelonen Ab until 31 December 2006.

On 23 June 1999, the Council of State granted SanomaWSOY's subsidiaries two new digital TV operating licenses and one digital TV operating license to Channel Four Finland. The new digital channels are Helsinki Media's movie channel and WSOY's educational channel. Helsinki Media is also a shareholder in Suomen Urheilutelevisio Oy (sports TV channel). All these licenses were granted for ten years.

Decisions of general meetings

The general meetings of the merging companies approved 1998 the financial statements and discharged their administrative bodies from liability. The former administrative bodies will continue in their duties until the merger has been fully implemented.

The companies decided to distribute dividend in accordance with the merger plan. The distribution to parties outside the Group's subsidiaries excluding Rautakirja's dividend totalled FIM 232 million. WSOY's dividend of FIM 10.25 per share, in total FIM 123 million, included FIM 58 million in extra dividends in accordance with the merger agreement.


The average number of personnel under employment contracts with the various Group companies was 12,137 (11,716) during the review period. Expressed as a number of full-time employees, the average personnel was 9,454 (9,323).


Altogether 5,350 (6,221) WSOY A-shares were traded during the period for the average price of EUR 64.67, or FIM 384.50 (288). The number of B-shares traded was 820,865 (613,747) for the average price of EUR 55.59, or FIM 330.50 (253). Trading on the Helsinki Exchanges was EUR 46 million, or FIM 273 (157) million. WSOY's market capitalisation at the end of April was EUR 772 million, or FIM 4,591 (3,119) million. Trading in WSOY's shares was discontinued at the end of April, and trading in SanomaWSOY's shares started at the beginning of May. Sanoma-WSOY Oyj's calculated market capitalisation at the end of April totalled EUR 2,341 million, or FIM 13,920 million.

On 3 May 1999 Suomen Kulttuurirahasto acquired 392,239 shares of Class A from Tiikerijakelu Oy pursuant to the shareholders' agreement included in the merger plan.


Sanoma-WSOY Oyj's Board of Directors is composed of Mr. Aatos Erkko, Chairman; Mr. Esko Koivusalo, Vice Chairman; as well as members Ms. Jane Erkko, Ms. Marjukka af Heurlin, Mr. Paavo Hohti, Mr. L.J. Jouhki, Mr. Kyösti Järvinen, Mr. Robin Langenskiöld, Ms. Rafaela Noyer, Mr. Jaakko Rauramo and Mr. Antero Siljola. SanomaWSOY's Board of Management includes Mr. Jaakko Rauramo, Chairman; Mr. Antero Siljola, Vice Chairman; and members Mr. Aarno Heinonen, Mr. Nils Ittonen, Mr. Tapio Kallioja, Mr. Seppo Kievari, Ms. Kerstin Rinne and Mr. Hannu Syrjänen.

Outlook for the latter part of the year

Growth in the media markets is expected to continue also in the latter part of the year. In spite of the weak development trend in the first part of the year also retailing is expected to increase by 3 - 4 % in 1999. The instability of exports to Russia which became apparent towards the end of last year is reflected in the Group's operations. In spite of this the subsidiaries retained their market positions, and the outlook of existing operations follows the overall growth trend of their respective sectors.

SanomaWSOY's group units have undergone major structural changes since the beginning of last year. Operations and companies have been sold and new significant companies have been acquired. The impact of these corporate arrangements on the result of the first four months as compared to the previous corresponding period was a decrease in net sales, while the companies acquired towards the end of the year increased consolidated corporate net sales to some extent. The Group's pro forma net sales are expected to be nearly FIM 8,000 (7,443) million if no essential changes occur in the operating environment.

Financial income has great significance for SanomaWSOY's result. Investments in equities and bonds also involve risks. These investments yielded high returns in the first four months of the year. The same relative performance is not anticipated for the whole year.

SanomaWSOY Group invested in the development of new operations, evaluation of possibilities for expansion and strengthening of market positions. Implementation of the merger and creation of efficient organisations have demanded and will demand a lot of work. Although all the above-mentioned investments encumber the result, the Group's operating profit and result before extraordinary items are expected to improve slightly from the previous year.

Helsinki, 29 June 1999

Jaakko Rauramo
President and CEO

Additional information: Mr. Jaakko Rauramo, President and CEO; tel. +358 105 19 5020 or +358 400 50 4813 and Mr. Aarno Heinonen, Vice President, Administration and Finance; tel. +358 105 19 5120 or +358 400 408 938

Distribution: HEX Helsinki Stock Exchange, principal media

The figures are unaudited.

*) Finnish Accounting Standard


*) includes change in conversion difference, increase in HTV subscription fees, reversal of value increases and donations

Derivative instruments are used to hedge currency denominated receivables. The FIM denominated counter-value of open currency forwards positions was FIM 5.7 million at 30 April 1999 and FIM 5.7 at 31 December 1998.


The net sales for the period decreased from the previous year and was FIM 376 (403) million following the transfer of printing operations to Hansaprint Oy at the end of the year. Helsinki Media holds 40 % and TS-Yhtymä Oy 60 % of the shares in the company. The trend of printing operations was positive in the first part of the year.

The circulation volumes of magazines remained largely unchanged from the previous year. Advertising sales have developed favourably and the advertising booking situation has improved from the previous year. The Cosmopolitan magazine was launched according to plan in April.

Sales of advertising time by Channel Four Finland increased faster than the industry average and it´s share of prime time spectators in April was 17.9 % of the viewing of commercial TV channels. The number of households in HTV's cable network exceeded 200,000.

Helsinki Media's result for the first four months met expectations and improved over the previous year.

Helsinki Televisio's audiovisual production was transferred to WSOY's subsidiary Tuotantotalo Werne Oy at the beginning of the year and at the same time HTV became a shareholder in Werne with a stake of 24 %. In connection with the merger, Werne became a wholly owned subsidiary of Helsinki Media. During the review period Helsinki Media's Norwegian subsidiary Helsinki Media Company A/S increased its participation in the publicly listed Norwegian A-pressen ASA to 20.6 %. The associated company A-pressen ASA transferred to the ownership of the parent company SanomaWSOY in connection with the merger.

Helsinki Media's net sales for 1999 are expected to remain unchanged from the previous year's level. The magazine circulation growth is expected to remain modest while advertising sales are expected to show a positive trend. The most significant growth will be generated in the operations of Channel Four Finland. The company will increase its sales of advertising time faster than the overall market. The trend of TV advertising remains weaker than in the other media groups and will constitute an uncertainty factor also in the latter part of the year.

Investments in the development of Channel Four Finland burden Helsinki Media's result. A turning point in the channel's result trend is expected this year, and Helsinki Media will improve its result to some extent compared to the previous year.


Sanoma's net sales increased to FIM 853 (697) million during the review period. The growth was partly attributable to acquisitions and increases in advertising and subscription revenues. Helsingin Sanomat's (daily) advertising revenues developed favourably, and Ilta-Sanomat's (quality tabloid) trend was better than anticipated. Taloussanomat (new financial daily) increased its revenues significantly, but the paper is still non-profitable.

Sanoma's operating profit was FIM 93 (81) million; the figure includes FIM 14 (19) million representing share of associated companies' results. The sum of 10 (7) million paid out to the employee profit-sharing fund by way of distribution of profits is included in personnel expenses.

Sanoma's capital expenditure for the period totalled FIM 376 million. Most of the investments related to the construction of the Sanoma House and acquisitions of shares in companies operating in the same industry. Kymen Lehtimedia Oy and Esmerk Oy became wholly owned Sanoma subsidiaries during the period. Kymen Lehtimedia publishes regional newspapers in South eastern Finland, such as Kymen Sanomat, Kouvolan Sanomat and Etelä-Saimaa and its net sales amounted to FIM 489 million in 1998. Esmerk produces financial follow-up services tailored to customers' information profiles. Esmerk's net sales totalled FIM 29 million in 1998.

During the review period the company decided to upgrade the mailing systems at Sanomala and in Varkaus and to extend the four-colour facility of Forssa printing machines. The cost estimate of these upgrading and extension investments is approximately FIM 210 million. The Sanoma House will be completed this summer, and moving to the new premises will start in September.

After the review period, Sanoma's subsidiary Arnedo Oy (60 %) acquired about one third of the shares and 10 % of the votes in Ilkka-Yhtymä Oyj. The arrangement that will subsequently lead to a decrease in Sanoma's participation in the company is part of the program to develop co-operation between the paper publishing companies operating in the central provinces of Finland.

If no major changes occur in the operating environment, the growth rate of Sanoma's net sales is expected to continue largely unchanged from the first part of the year. Helsingin Sanomat's advertising revenues will grow at a slower pace than in the previous year, and its circulation will decline slightly. Ilta-Sanomat will continue its steady development. Kymen Lehtimedia's net sales will decrease as a result of declining exports to Russia. While Startel's (publisher of Taloussanomat) operations still remain in the capital investment phase, Sanoma's profitability will remain good.


WSOY's net sales declined in the first four months to FIM 334 (396) million. The decrease was mainly due to the transfer of the magazine printing company to Acta Print Oy, finalised in May 1998.

The operating profit of FIM 17 (98) million for the period includes FIM 12 (57) million of the result of the associated company Rautakirja. The figure in 1998 was exceptionally high due to the profit on sale of operations.

The Publishing division's operating profit and net sales declined slightly compared to the previous corresponding period. Special Publishing and the Educational Materials divisions met expectations. General Literature invested resources in book club marketing and New Media operations.

The net sales from Production decreased and the operating result for the period was negative. The result was weakened by the sale of the magazine printing unit. Ajasto posted an unprofitable result for the first part of the year due to the nature of its operations. The Norwegian and Swedish units of the Calendar division introduced development measures because of the disappointing performances of the previous year.

WSOY's capital expenditure was FIM 38 (105) million; nearly half of this figure related to the acquisition of HTV's TV and video production for Tuotantotalo Werne. Werne was transferred to Helsinki Media in connection with the merger.

The arrangements in associated companies and the structural changes connected with the merger will decrease net sales from the level of the previous year, and development investments will also weaken the result. Profitability will, however, remain on a good level. WSOY will dedicate resources to traditional book publishing and new media in 1999. Special Publishing, organised as an independent division at the turn of the year, will grow. The advance orders received by the Educational Materials division from primary and secondary schools will exceed the previous year's level. Under an agreement closed at the end of May, WSOY acquired 80 % of Tummavuoren Kirjapaino Oy, which specialises in digital printing.


Rautakirja is an autonomous publicly listed company where SanomaWSOY is a shareholder with a participation of 54.7 %.

Rautakirja's net sales declined to FIM 1,110 (1,173) million. The decrease is attributable to the fall-off of net sales from the Tiimari chain, still included in the comparison figures in 1998 (FIM 70 million). The net sales of R-kiosks decreased to some extent due to the weak trend of lottery sales and the reduction in the number of sales outlets. Press distribution continued to grow. Also the net sales of Suomalainen Kirjakauppa developed positively. Finnkino's net sales decreased although the movie theatre complexes inaugurated in Helsinki and Tampere during the review period attracted more spectators than anticipated. EuroStrada's net sales growth was modest.

Operating profit was FIM 50 (64) million. The decrease was primarily due to the weaker result of kiosk operations in Finland and to Finnkino.

Capital expenditure for the period totalled FIM 113 (74) million. Expansion in the Baltic region and investments in activities that support the basic strategy were characteristic of Rautakirja's operations in the first part of the year. Rautakirja increased its participation in leisure industry by acquiring a 21 % holding in Jokerit HC Oyj. Pohjalainen Kirjakauppa was acquired by Suomalainen Kirjakauppa in April, and Kirjavälitys Oy became a Rautakirja subsidiary. In May Finnkino acquired 90 % of the leading Estonian movie distribution and cinema company AS MPDE.

Rautakirja's financial position is strong and its equity ratio was 63 (61) %.

Rautakirja has introduced measures to reduce costs, to compensate for the effect of the fall-off of sales compared to the budgeted level. Following these measures, the performance for the whole year is expected to reach the good level of the previous year.


Dividend policy

SanomaWSOY implements an active dividend policy and distributes at least one third of its net result on dividends.

The shareholders' agreement executed in connection with the merger includes a clause that an extra dividend per year of approximately FIM 5.00 per share in excess of the profit distribution paid by WSOY for 1997 will be distributed for 1999 - 2001. In practice this means a minimum dividend payment of FIM 10 - 11 per share for each of these three years.

Trading codes

Sanoma-WSOY Oyj's share trading codes are SWSAV and SWSBV. Round lot is 10 shares.

Information schedule

Sanoma-WSOY Oyj will publish its interim report for 1 January to 31 August 1999, on Wednesday 20 October 1999 at 17.00 hours.

The meetings of Helsinki Media Company Oy's, Sanoma Corporation's and WSOY's pre-merger shareholders will be held on 2 August 1999.

President and CEO Jaakko Rauramo's interview on SanomaWSOY's strategies and the outlook of the media sector can be read at The interview will also bee published in the printed version of interim report which is issued on 5 July.

*) Finnish Accounting Standard


*) wage and salary earners, average, expressed as full-time employees

*) includes change in conversion difference, increase in HTV subscription fees, reversal of value increases and a donation

Derivative instruments are used to hedge currency denominated receivables. The FIM denominated counter-value of open currency forwards positions was FIM 5.7 million (EUR 1 million) at 30 April 1999 and FIM 5.7 (EUR 1 million) at 31 December 1998.