REPORT BY THE BOARD OF DIRECTORS

Financial performance full year 2014

  • Revenue was MEUR 295.4 (300.2), down 1.6%.
  • Online sales were MEUR 94.5 (84.5), up 11.9%.
  • EBITDA (Earnings before interest, taxes, depreciation and amortisation) excluding non-recurring items was MEUR 35.1 (37.5), down 6.4%.
  • EBITDA was MEUR 36.4 (45.3), down 19.7%.
  • Operating profit excluding non-recurring items was MEUR 21.4 (24.2), or 7.2% (8.0%) of revenue, down 11.5%.
  • Operating profit was MEUR 20.7 (27.0), or 7.0% (9.0%) of revenue, down 23.5%.
  • The operating profit for January–December includes non-recurring items of MEUR -0.7 (2.8).
  • Profit for the period was MEUR 15.7 (16.0), down 1.7%.
  • Earnings per share were EUR 0.19 (0.20).
KEY FIGURES 2014 2013 Change
MEUR Q1-Q4 Q1-Q4 %
Revenue 295.4 300.2 -4.8 -1.6
Content revenue 110.1 115.3 -5.1 -4.5
Content revenue, print 104.6 111.2 -6.7 -6.0
Content revenue, online 5.6 3.8 1.7 45.8
Revenue from advertising sales 146.4 147.3 -0.9 -0.6
Advertising revenue, print 73.7 80.0 -6.3 -7.8
Advertising revenuem online 72.7 66.5 6.2 9.4
Service revenue 38.8 37.6 1.2 3.2
Total expenses excluding non-recurring items 274.6 276.7 -2.1 -0.8
EBITDA excluding non-recurring items 35.1 37.5 -2.4 -6.4
EBITDA 36.4 45.3 -8.9 -19.7
Operating profit excluding non-recurring items 21.4 24.2 -2.8 -11.5
% of revenue 7.2 8.0
Operating profit 20.7 27.0 -6.3 -23.5
% of revenue 7.0 9.0
Profit for the period 15.7 16.0 -0.3 -1.7
Earnings per share, EUR (basic) 0.19 0.20 -0.01 -5.6
Earnings per share, EUR (diluted) 0.19 0.20 -0.01 -5.6
Online sales 94.50 84.50 10.00 11.9
Online sales, % of revenue 32.00 28.10

Dividend proposal to the Annual General Meeting

On 31 December 2014, the Group’s parent company had distributable funds totalling EUR 179,932,379 (23,905,611). No essential changes in the company’s financial standing have taken place after the end of the financial year. Alma Media’s Board of Directors proposes to the Annual General Meeting that a capital repayment of EUR 0.12 (0.10) per share be paid from the reserve for invested non-restricted equity for the financial year 2014. Based on the number of shares on the closing date, 31 December 2014, the capital repayment totals EUR 9,058,422 (EUR 7,548,685).

Outlook for 2015

Low interest rates, weaker euro and decreased oil price improve our chances for growth in the long run. However, in 2015, economic growth is still expected to remain weak in Europe and in particular in Finland. The weak overall economic growth has an impact on advertising volume, which is not expected to increase in Finland in 2015.

In the first half of 2015, Alma Media expects its revenue and operating profit excluding non-recurring items to decrease from the 2014 level. The revenue for the first half of 2014 was MEUR 148.4 and operating profit excluding non-recurring items was MEUR 8.8.

Kai Telanne, President & CEO

In 2014, media companies had another challenging year. Print media continued to decline, as media users increasingly switched to digital channels, mobile services in particular. With increasing unemployment rates and the declining trade between Finland and Russia, the long-awaited upswing in the Finnish national economy did not take place. According to TNS Media Intelligence, media advertising volume, which is linked to GDP growth, decreased in Finland in 2014 by 3.5% year-on-year. According to a recent advertising barometer, this trend will continue in the beginning of 2015.

Alma Media’s revenue remained almost on last year’s level. Operating profit excluding non-recurring items decreased to MEUR 21.4. As the economy in Finland continued to be weak, the development of the company’s business in Finland in 2014 was also weak in print media. However, Alma Media’s digital recruitment service business in Eastern Central Europe grew vigorously throughout the year, and its profitability remained excellent. In the final quarter of 2014, recruitment business outside Finland grew by over 25%.

Alma Media’s investment in digital development paid off in 2014. The Group’s revenue from digital products and services increased by 12%. Digital advertising sales nearly reached the level of print media advertising sales. Digital products and services accounted for 32.0% (28.4%) of Group revenue.

Towards the end of 2014, Alma Media decided to divest City24, a housing portal in the Baltic countries. Outside Finland, Alma Media will now focus on strengthening its digital recruitment services.

Regardless of economic cycles, Alma Media has a solid position in the diversifying media field, due to its digital expertise and strong brands. The company is making significant investments in developing multichannel content, creating new mobile solutions, increasing digital services, using data in multiple ways and developing successful advertising solutions.

Alma Media’s financing standing strenghtened significantly during last year and the gearing ratio increased to over 42%. The company continues to invest in growth and internationalisation, whenever opportunities that are in line with the company strategy arise.

Strategy and related activities during the review period

The cornerstones of the strategy are multi-channel content, marketing and advertising solutions, digital services and improving resources and competencies.

Multi-channel content was developed in the fourth quarter by Alma Regional Media that publishes Alma Media’s regional, local and city newspapers. Alma Regional Media appointed a new director of digital business. In addition, Alma Regional Media launched the Etukeno project, in which employees participate in the planning of digital business. The project will last for approximately 18 months.

Kauppalehti finalised the reformation of its online service in the fourth quarter. The new online service with renewed content, visual design and technologies was launched in January 2015. New arrivals on the site include the continuously updated news flow KL Nyt (“KL Now”), which allows the reader to keep up with financial and stock market news using a mobile device. In addition, the site includes the articles of the day’s Kauppalehti and Kauppalehti Optio. The editors are also monitoring new thematic areas, such as digital economy, more extensively.

IL-Media, strongly focusing on digital media, reinforced its lifestyle expertise by appointing a new publications manager for content related to health, living, cars and travel. IL-Media reshaped its visual design production organisation. The company completed statutory personnel negotiations on 6 October 2014, as a result of which the photo and layout departments of IL-Media will be combined into a single visual design department.

In the fourth quarter, Alma Media streamlined its digital service offering outside Finland by divesting City24, a housing portal in the Baltic countries. The service was sold to Oü 24m2, owned by the Estonian investment company Koha Capital Oü. After the divestment of City24, Alma Media’s focus outside Finland is on strengthening its digital recruitment services.

The Lännen Media newsroom officially started operations at the beginning of October. The joint project of 12 newspapers employs an editorial team of 40 people. As a result of the collaboration, regional papers benefit from a significant amount of new content to be utilised in both the print newspaper and paid online services.

In the fourth quarter, major Finnish newspaper publishers decided to investigate the possibility of establishing a joint venture to develop the co-operation between early morning delivery service providers and their logistics and to manage the nationwide sales of delivery services. The aim is to create a system for the early morning delivery network of newspaper publishers, so that it could take on more material to deliver and the high standard and cost-efficiency of delivery could be ensured.

Domestic market conditions

According to TNS Media Intelligence, total advertising volume decreased by 3.5% (decreased by 8.5%) in 2014. Advertising in city papers and newspapers declined by 8.3% (declined by 15.7%) but increased in online media by 12.3% (increased by 5.8%) from the comparison period.

Changes in Group structure in 2014

On 28 November 2014, Alma Media sold City24, a housing portal in the Baltic countries. The service was sold to Oü 24m2, owned by the Estonian investment company Koha Capital Oü.

The parties agreed not to disclose the selling price. Alma Media records sales proceeds in the amount of MEUR 1.7 in its fourth-quarter 2014 result from the transaction.

On 2 June 2014, Alma Media Partners Oy, a subsidiary of Alma Media Group, acquired the entire share capital of Alkali Oy. Alma Media Group previously held a 24.3% stake in the company. The acquisition is treated in Alma Media’s consolidated financial statements as a business combination achieved in stages. The arrangement did not have a significant effect on Alma Media’s profit or loss at the time of its implementation. The company will be consolidated with Alma Media Group in accordance with the Group’s holding of 65%.

Alma Media Corporation and Monster Worldwide Inc. agreed to strengthen their co-operation to cover Eastern Central Europe and the Baltic countries. The expansion of the cooperation saw Monster’s services being added to Alma Media’s recruitment service offering, which is available in Finland, Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary and Croatia. The business will be run by Alma Career Oy (previously Monster Oy), and it will be reported under Alma Media’s Digital Consumer Services segment.

Monster Worldwide Inc. became Alma Career Oy’s minority shareholder with a 15% holding. Against its holding, Monster Worldwide Inc. transferred its recruitment service business in Poland, Hungary and Czech Republic to the company and purchased shares in the company for MEUR 4.7. Alma Media owns 85% of the company’s shares. Monster has an option to increase its holding to 20% by 2017. The arrangement was carried out on 3 January 2014, and it did not have any effects on Alma Media’s profit or loss at the time of its implementation. The arrangement had a positive cash flow impact of MEUR 4.7 million in the first quarter of 2014. More information on the arrangement is provided in the tables section of the interim report.

Baltic News Service, reported in Alma Media’s Financial Media and Business Services segment, was sold in February 2014. The buyer is OÜ Uudisvoog, a company owned by the Estonian investment company Koha Capital OÜ. Alma Media recorded sales proceeds in the amount of MEUR 0.7 in its first-quarter 2014 result from the transaction.

Group revenue and result full year 2014

Revenue declined by 1.6% to MEUR 295.4 (300.2) in 2014.

Content revenue decreased by 4.5% to MEUR 110.1 (115.3). The year-on-year decline was due to the decrease in print media circulations.

Revenue from advertising sales decreased by 0.6% to MEUR 146.4 (147.3). Advertising sales for print media decreased by 7.8% year-on-year to MEUR 73.7 (80.0). Online advertising sales increased by 9.4% to MEUR 72.7 (66.5).

Service revenue totalled MEUR 38.8 (37.6). Service revenue includes items such as Kauppalehti Information Services, the operations of the custom publishing house Alma 360 and E-kontakti and the printing and distribution services sold to customers outside the Group by Alma Manu. The increased revenues of Kauppalehti Information Services and Alma Manu were major contributors to the increase in service revenue.

Total expenses decreased in 2014 by MEUR 4.5, or 1.6%, to MEUR 277.9 (282.4). Depreciation and impairment included in the total expenses amounted to MEUR 15.7 (18.3).

Operating profit excluding non-recurring items was MEUR 21.4 (24.2), or 7.2% (8.0%) of revenue. Operating profit was MEUR 20.7 (27.0), or 7.0% (9.0%) of revenue. The operating profit includes net non-recurring items in the amount of MEUR -0.7 (2.8).

The financial result for 2014 was MEUR 15.7 (16.0), and the result for the period excluding non-recurring items was MEUR 16.5 (18.1).

Digital Consumer Services

The services of the Digital Consumer Services segment operating in Finland are Etuovi.com, Vuokraovi.com, Monster.fi, Autotalli.com, MyyJaOsta.com, Telkku.com, Kotikokki.net, E-kontakti.fi and Meedio.fi. The services outside Finland are Jobs.cz, Prace.cz, Topjobs.sk, CV Online, Profesia.sk, MojPosao.net, Monster.hu, Monsterpolska.pl, Monster.cz and City24.

In 2014, the Digital Consumer Services segment’s revenue was MEUR 55.8 (52.6), up 6.1%. Recruitment-related business accounted for 67.5% (62.0%) of the segment’s revenue in 2014. The revenue for the comparison period includes MEUR 2.2 in revenue from the Mascus business sold in April 2013. The devaluation of the Czech koruna in November 2013 decreased the segment’s euro revenue by a total of MEUR 1.1 year-on-year. Revenue was increased by MEUR 1.8 by new recruitment service companies in Hungary, the Czech Republic and Poland.

Total expenses during the review period amounted to MEUR 46.8 (43.4)

The Digital Consumer Services segment's operating profit excluding non-recurring items was MEUR 9.2 (9.4). The segment’s operating profit was MEUR 10.7 (17.7). Investments were made in the new recruitment services acquired in January 2014, causing a negative effect of MEUR 1.2 on the result. The operating profit for 2014 includes non-recurring items of MEUR 1.5 (8.5). The non-recurring items for 2014 were related to sales gains from the divestment of the City24 housing portal and impairment of assets. The operating profit for the comparison period includes non-recurring proceeds from the divestment of the Mascus business. 

Financial Media and Business Services

The Financial Media and Business Services segment specialises in the production of financial information as well as providing information and marketing solutions for businesses. Its best-known product is Finland’s leading business paper, Kauppalehti. The segment also includes Kauppalehti Information Services, the business premises service provider Objektvision.se and the custom media house Alma 360.

Revenue for the Financial Media and Business Services segment declined by 6.7% to MEUR 53.0 (56.8). The divestment of the BNS business operations in February had an effect of MEUR 2.1 on the decline in revenue. Online business accounted for 43.0% (33.4%) of the segment’s revenue.

Content revenue for the Financial Media and Business Services segment declined by 3.5% to MEUR 16.2 (16.8). The increase in digital content revenue partly covered the decline in content revenue for print media.

In 2014, advertising sales declined by 4.1% to MEUR 15.6 (16.2). Online advertising sales increased by 14.4% from the comparison period.

The segment’s total expenses excluding non-recurring items were MEUR 46.4 (49.1). The decrease in total expenses is due to the divestment of the BNS business operations.

Operating profit excluding non-recurring items for the Financial Media and Business Services segment was MEUR 6.7 (7.8) and operating profit MEUR 6.5 (7.8). Operating profit excluding non-recurring items accounted for 12.6% (13.8%) of revenue.

The operating profit includes non-recurring income in the amount of MEUR 0.7 (0.0) and non-recurring expenses in the amount of MEUR 0.5 (0.0). Operating profit was weighed down by the weakened profitability of custom media business operations. The non-recurring items affecting operating profit were related to sales gains from the divestment of the BNS business, the restructuring of Alma 360’s operations and impairment loss.

National Consumer Media

The National Consumer Media segment reports the various publishing services of IL-Media.

Revenue for the National Consumer Media segment declined by 4.2% to MEUR 46.9 (49.0) in 2014. Online business accounted for 27.0% (21.5%) of the segment’s revenue.

The segment’s content revenue declined by 7.8% to MEUR 28.5 (30.9) in January–December. Iltalehti’s market share was 39.4% (39.8%) in 2014.

The segment’s advertising sales increased by 4.8% to MEUR 18.4 (17.5). Advertising sales for print media decreased by 17.4% Online advertising sales increased by 20.8% to MEUR 12.5 (10.4).

The segment’s operating profit excluding non-recurring items was MEUR 3.7 (4.7) and operating profit MEUR 3.1 (4.7). Operating profit excluding non-recurring items accounted for 7.8% (9.6%) of revenue. The non-recurring expenses of MEUR 0.6 recorded in 2014 were related to the restructuring of operations. No non-recurring expenses were reported for the comparison period.

Regional Media

The Regional Media segment reports the publishing activities of more than 30 newspapers of Alma Regional Media and the Group’s printing and distribution company Alma Manu. The segment’s best-known title is Aamulehti.

The Regional Media segment’s revenue declined by 1.3% to MEUR 145.2 (147.1) in January–December. Online business operations accounted for 2.6% (1.8%) of the segment’s revenue.

The segment’s content revenue decreased by 3.1% to MEUR 65.5 (67.6) in January–December, mainly due to the decrease in print media circulation.

The segment’s advertising sales declined by 6.1% to MEUR 62.5 (66.5). Advertising sales for print media decreased by 6.7% The segment’s online advertising sales increased by 10.8% to MEUR 2.1 (1.9).

The segment’s service revenue increased by 32.7% to MEUR 17.2 (13.0). The increase in service revenue is attributable to the growth in printing revenue from external customers.

The segment’s total expenses excluding non-recurring items were MEUR 135.8 (137.4) and total expenses MEUR 137.2 (142.9). Total expenses were reduced by the efficiency improvement measures for newspapers and printing operations. Non-recurring items totalled MEUR -1.3 (-5.5). The non-recurring items for 2014 were related to impairment loss on goodwill. The non-recurring items in the comparison period were mainly related to the restructuring of printing operations.

Operational reliability at the new printing facility in Tampere is back to normal, and paper losses in connection with production changes have been successfully reduced. Printing operations in Rovaniemi were discontinued on 31 March 2014, and the printing of Pohjolan Sanomat and Lapin Kansa was transferred to a printing house outside the Group.

The segment’s operating profit excluding non-recurring items was MEUR 9.6 (9.8) and operating profit MEUR 8.3 (4.3). Operating profit excluding non-recurring items accounted for 6.6% (6.6%) of revenue.

Associated companies

Alma Media Group holds a 32.14% stake in Talentum Oyj, which is reported under the Financial Media and Business Services segment. The company’s own shares in the possession of Talentum are included in the total number of shares. In consolidated financial statement of Alma Media, the own shares held by Talentum itself are not included in the total number of shares. Alma Media’s shareholding in Talentum is stated as 32.38% in Alma Mideia’s consolidated financial statements of 31 December 2014.

Alma Media acquired 35% of the share capital of the leading online travel service Rantapallo Oy in February. Starting from the first quarter of 2014, Rantapallo is reported as an associated company of Alma Media under the Digital Consumer Services segment.

The Group’s parent company

The reported revenue of the Group’s parent company Alma Media Plc in 2014 was MEUR 26.6 (27.1) and the loss for the period was MEUR 36.4 (76.6). The parent company recorded a write-down of MEUR 45.1 (93.4) on investments in subsidiaries and associated companies in 2014. At the end of December 2014, the parent company’s balance sheet stood at MEUR 413.9 (471.1).

Non-recurring items

A non-recurring item is a comprehensive income or expense arising from non-recurring or rare events. Gains or losses from the sale or discontinuation of business operations or assets, gains or losses from restructuring business operations as well as impairment losses of goodwill and other assets are recognised as non-recurring items. Non-recurring items are recognised in the profit and loss statement within the corresponding income or expense group.

NON-RECURRING ITEMS 2014 2013
MEUR Q1–Q4 Q1–Q4
Digital Consumer Services
Impairment losses -0.2 -0.2
Restructuring 0.0 0.0
Gains on sale of assets 1.7 8.5
Financial Media and Business Services
Impairment losses -0.5 0.0
Restructuring -0.5 0.0
Gains on sale of assets 0.7 0.0
National Consumer Media
Restructuring -0.6 0.0
Gains on sale of assets 0.0 0.0
Regional Media
Impairment losses -1.3 -4.7
Restructuring -0.1 -0.8
Gains on sale of assets 0.1 0.0
Non-allocated
Restructuring -0.2 0.0
Gains on sale of assets 0.0 0.0
NON-RECURRING ITEMS IN OPERATING PROFIT -0.7 2.8
Impairment losses of associated companies 0.0 -5.0
NON-RECURRING ITEMS IN PROFIT BEFORE TAX -0.7 -2.1

Balance sheet and financial position

At the end of December 2014, the consolidated balance sheet stood at MEUR 256.1 (270.7). The Group’s equity ratio at the end of December was 42.6% (34.4%) and equity per share was EUR 1.17 (1.14).

The consolidated cash flow from operations in January–December was MEUR 26.5 (24.4). Cash flow before financing was MEUR 34.9 (26.7).

At the end of December, the Group’s interest-bearing debt amounted to MEUR 83.0 (109.9). The total interest-bearing debt comprised MEUR 69.5 in finance leasing debt, MEUR 8.5 in loans from financial institutions and MEUR 5.0 in commercial papers.

The Group’s interest-bearing net debt at the end of December stood at MEUR 71.1 (97.6). The decrease in net debt was due to cash flows from business reorganisation, significantly lower investment level and cash flow from operations.

Alma Media has two MEUR 20.0 committed financing limits at its disposal, which were entirely unused on 31 December 2014. In addition, the company has a commercial paper programme of MEUR 100.0 in Finland. Of the commercial paper programme, MEUR 5.0 was in use on 31 December 2014.

Alma Media did not have financial assets or liabilities created in conjunction with business combinations measured at fair value and recognised through profit or loss on 31 December 2014.

Capital expenditure

Alma Media Group’s capital expenditure in January–December 2014 totalled MEUR 14.4 (62.8). The capital expenditure comprised the acquisitions of new recruitment service companies in Hungary, Poland and the Czech Republic, increasing the shareholding in Alma Career Oy in Finland, buying shares in the associated company Alkali Oy to make it a subsidiary, as well as normal operating and maintenance investments.

Research and development costs

The Group’s research and development costs in 2014 totalled MEUR 5.5 (MEUR 5.3 in 2013). Of this total, MEUR 4.0 (MEUR 4.2 in 2013) was recognised in the income statement and MEUR 1.5 (MEUR 1.1 in 2013) were capitalised to the balance sheet in 2014. On 31 December 2014, capitalised research and development costs on the balance sheet totalled MEUR 1.3.

Employees 

During 2014, Alma Media had on average 1,828 (1,969) employees, calculated as full-time employees (excluding delivery staff). The number of newspaper delivery staff was 985 (998) on average.

Administration

Alma Media Corporation’s Annual General Meeting (AGM) held on 20 March 2014 elected Niklas Herlin, Esa Lager, Petri Niemisvirta, Perttu Rinta, Erkki Solja, Catharina Stackelberg-Hammarén and Harri Suutari as members of the company’s Board of Directors. In its constitutive meeting held after the AGM, the Board of Directors elected Harri Suutari as its Chairman.

The Board of Directors appointed the members of its permanent committees. Perttu Rinta and Catharina Stackelberg-Hammarén were elected as members of the Audit Committee and Esa Lager as Chairman of the Committee. Esa Lager, Niklas Herlin and Erkki Solja were elected as members of the Nomination and Compensation Committee and Petri Niemisvirta as Chairman of the Committee.

The Board of Directors of Alma Media Corporation has evaluated that with the exception of Perttu Rinta, Esa Lager and Niklas Herlin, the elected members of the Board of Directors are independent of the company and its significant shareholders. The members named above are evaluated to be independent of the company but dependent on its significant shareholders.

Mikko Korttila, General Counsel of Alma Media Corporation, was appointed secretary to the Board of Directors.

The AGM appointed PricewaterhouseCoopers Oy as the company’s auditors, with Markku Launis, APA, as principal auditor.

Alma Media Corporation applies the Finnish Corporate Governance Code for listed companies, issued by the Securities Market Association on 15 June 2010 and in effect since 1 October 2010, in its unaltered form. The Corporate Governance Statement as well as the details of salaries and bonuses for 2014 is available on the company’s website at www.almamedia.com/investors.

Dividends

In accordance with the proposal of the Board of Directors, the AGM resolved that no dividend be paid for the financial year 2013. The company has no retained earnings.                                                

Use of the invested non-restricted equity fund

In accordance with the proposal of the Board of Directors, the AGM resolved that EUR 76,100,000 be used from the invested non-restricted equity fund, complying with the company’s balance sheet of 31 December 2013, to cover losses. The covering of losses improves the preconditions for the distribution of profit in future financial periods.

Capital repayment

In accordance with the proposal of the Board of Directors, the AGM resolved to distribute EUR 0.10 per share as capital repayments from the invested non-restricted equity. At the time of the AGM, the company had 75,486,853 shares, translating into a repayment amount of EUR 7,548,685. Capital repayments were paid to shareholders registered in Alma Media Corporation’s shareholder register, maintained by Euroclear Finland Ltd, on the record date, 25 March 2014. The capital repayments were paid on 1 April 2014 as proposed by the Board of Directors.                                                                     

Authorisation to the Board of Directors to resolve capital repayment

The AGM authorised, in accordance with the proposal by the Board of Directors, the Board, at its discretion, to resolve the distribution of funds to shareholders as capital repayments from the invested non-restricted equity fund. The maximum amount of capital repayment on the basis of the authorisation is EUR 0.10 per share. At the time of the AGM, the company had 75,486,853 shares, translating into a maximum repayment amount of EUR 7,548,685. The authorisation remains valid until the start of the subsequent AGM, yet not past 30 June 2015.

Other decisions by the Annual General Meeting

As proposed by the Board of Directors, the AGM resolved to reduce the share premium fund shown on the balance sheet on 31 December 2013, EUR 319,295,759, by a total of EUR 200,000,000, which will be transferred to the company’s invested non-restricted equity fund. The equity of the company consists almost entirely of restricted equity, and it is expedient for the equity structure and distribution of profits to change the structure in a way that reduces the proportion of restricted equity in total equity. The share premium fund constitutes part of the company’s restricted equity, which is why reducing the fund requires a public notice to creditors in accordance with the Limited Liability Companies Act. All practicalities of reducing the share premium fund are decided by the Board of Directors.

The AGM authorised the Board of Directors to decide on a share issue. The authorisation entitles the Board to issue a maximum of 15,000,000 shares. This maximum amount of shares corresponds to approximately 20% of the total number of shares of the company. The share issue may be implemented by issuing new shares or transferring shares now in possession of the company. The authorisation entitles the Board to decide on a directed share issue, which entails deviating from the pre-emption rights of shareholders. The Board can use the authorisation in one or more parts.

The Board may use the authorisation for developing the capital structure of the company, widening the ownership base, financing or realising acquisitions or other arrangements, or for other purposes decided upon by the Board. The authorisation may not, however, be used to implement incentive programmes for the management or key employees of the company. The authorisation is valid until the following ordinary AGM, however no longer than until 30 June 2015.

The Alma Media share

In January–December, altogether 5,977,028 Alma Media shares were traded at the NASDAQ OMX Helsinki Stock Exchange, representing 7.9% of the total number of shares. The closing price of the Alma Media share at the end of the last trading day of the reporting period, 31 December 2014, was EUR 2.75. The lowest quotation in 2014 was EUR 2.55 and the highest EUR 3.16. Alma Media Corporation’s market capitalisation at the end of the review period was MEUR 207.6.

Option programme and share-based incentive plan

Alma Media has the option programme 2009 in effect. The programme is an incentive and commitment system for Group management. If all the subscription rights are exercised, the programme 2009 will dilute the holdings of the earlier shareholders by a maximum of 2.0%. Further details about the programme are given in the notes to this Interim Report.

The Board of Directors of Alma Media Corporation decided in 2012 on a new share-based incentive plan for the Group’s key employees. The new Performance Share Plan consists of three performance periods, the calendar years 2012, 2013 and 2014. The Board of Directors will decide on the plan’s performance criteria and the achievement targets at the beginning of each performance period. No rewards were paid for the performance periods 2012 and 2013. The potential reward from the plan for the performance period 2014 will be based on Alma Media Group’s profitability, and it will be paid partly in the company’s shares and partly in cash in 2015. For the members of the Group Executive Team, the plan additionally includes one three-year performance period, the calendar years 2012–2014, based on the profitable growth of the Group. No reward is expected to be paid for these performance periods. The Performance Share Plan includes approximately 20 persons.

Other authorisations of the Board of Directors

The Board of Directors has no other current authorisations.

Market liquidity guarantee

The Alma Media share has no market liquidity guarantee in effect.

Flagging notices

In 2014, Alma Media received notices of changes in shareholdings pursuant to Chapter 9, Section 5 of the Finnish Securities Markets Act as follows:

On 18 September 2014, Mariantorp Oy announced that it had purchased 200,000 Alma Media Corporation shares. After the transaction, Mariantorp Oy holds approximately 15.2% of Alma Media’s share capital and votes.

Risks and risk management

The purpose of Alma Media Group’s risk management activities is to continuously evaluate and manage all opportunities, threats and risks in conjunction with the company’s operations to enable the company to reach its set objectives and to secure business continuity.

The risk management process identifies and controls the risks, develops appropriate risk management methods and regularly reports on risk issues to the risk management organisation. Risk management is part of Alma Media’s internal control function and thereby part of good corporate governance. Alma Media specifies limits to and procedures for quantitative and qualitative risks in writing in its risk management system.

The most critical strategic risks for Alma Media are a significant drop in its print newspaper readership, a permanent decline in advertising sales and a significant increase in distribution and delivery costs. The media industry is undergoing changes following the transformation in media consumption and technological development. Alma Media’s strategic objective is to meet this challenge through renewal and the development of new business in digital consumer and business services.

Fluctuating economic cycles are reflected in the development of advertising sales. Advertising sales account for approximately half of the Group’s revenue. Business operations outside Finland, such as in the East and Central European countries, include country-specific risks relating to market development and economic growth. The expansion of business outside Finland has reduced the risks inherent in operating in one market area.

The most important operational risks are disturbances in information technology and data transfer, as well as an interruption of the printing operations.

Sustainable development

With its Code of Ethics, Alma Media is committed to supporting the universally accepted principles in the areas of human rights, labour, environment and anti-corruption laid out in the United Nations Global Compact initiative. Alma Media participates in the annual Carbon Disclosure Project (CDP) climate reporting directed at investors, and was ranked as the top Nordic media company in October 2014. In addition, the Alma Media share is included in the OMX GES Sustainability Finland index. Alma Media is a member of the corporate responsibility networks Nordic Media CR Forum and Finnish Business & Society.

The most significant environmental impacts of Alma Media’s business operations are related to purchases, printing and delivery operations and real estate. In 2014, the company’s printing facilities used approximately 23,956 (23,489) tonnes of newsprint. Alma Media used 13,298 (16,333) MWh of electric power in 2014. Electricity consumption decreased by 18.6% year-on-year. Additional information on the company’s Sustainable Media programme is available on the Alma Media website.

Events after the review period

Alma Media acquired the entire stock of JM Tieto Oy, implemented as a business combination achieved in states. Prior to this, Alma Media already held a 20 per cent stake in the company. JM Tieto Oy is a company specialising in efficient B2B sales. It focuses on marketing information and its use. In spring 2015, JM Tieto will be reorganized to constitute part of the Kauppalehti Information Services business operations.

Alma Media Kustannus Oy, a subsidiary of Alma Media Group, has initiated negotiations with Suomalainen Lehtipaino Oy concerning the divestment of Alma Media’s newspaper business in Kainuu. If the divestment is realised, the regional newspaper Kainuun Sanomat, the town paper Koti-Kajaani and three subscribable local papers will be transferred to the buyer approximately by the middle of March. In Kainuu, Alma Media Kustannus Oy is currently publishing the daily newspaper Kainuun Sanomat and the twice-weekly newspapers Koti-Kajaani, Ylä-Kainuu, Kuhmolainen and Sotkamo, with a total turnover of approximately EUR 11.5 million in 2014.

Proposal by the Board of Directors for distribution of profit

Alma Media’s Board of Directors proposes to the Annual General Meeting that a refund of capital of EUR 0.12 (0.10) per share be paid from the reserve for invested non-restricted equity for the financial year 2014. Based on the number of shares on the closing date, 31 December 2014, the capital repayment totals EUR 9,058,422 (7,548,685).

On 31 December 2014, the Group’s parent company had distributable funds totalling EUR 179,932,379 (23,905,611). The parent company’s profit for the period amounted to EUR -36,424,547 (-76,559,758). No essential changes in the company’s financial standing have taken place after the end of the financial year. The refund of capital will be paid to shareholders who are registered in Alma Media Corporation’s shareholder register maintained by Euroclear Finland Oy on the record date, 19 March 2015. The payment date of the refund of capital is 26 March 2015.

Annual Review 2014

Financial Statements 2014

More information