REPORT BY THE BOARD OF DIRECTORS
Financial performance full year 2015
- Revenue was MEUR 291.5 (295.4), down 1.3%.
- Online sales increased by 8.7% to MEUR 102.8 (94.5).
- EBITDA (Earnings before interest, taxes, depreciation and amortisation) excluding non-recurring items was MEUR 37.4 (35.1), up 6.5%.
- EBITDA was MEUR 34.5 (36.4), down 5.1%.
- Operating profit excluding non-recurring items was MEUR 23.4 (21.4) or 8.0% (7.2%) of revenue, up 9.3%.
- Operating profit was MEUR 17.7 (20.7), or 6.1% (7.0%) of revenue, down 14.5%.
- The operating profit includes non-recurring items of MEUR -5.7 (-0.7).
- Profit for the period was MEUR 12.1 (15.7), down 23.3%.
- Earnings per share were EUR 0.13 (0.19).
- The Board of Directors’ proposal of capital repayment is EUR 0.12 per share
Dividend proposal to the Annual General Meeting
On 31 December 2015, the Group’s parent company had distributable funds totalling EUR 120,642,934 (179,932,379). Alma Media’s Board of Directors proposes to the Annual General Meeting that a capital repayment of EUR 0.12 (2014: EUR 0.12) per share be paid from the reserve for invested non-restricted equity for the financial year 2015. Based on the number of shares on the closing date 31 December 2015, the capital repayment totals EUR 9,885,982 (2014: EUR 9,058,422).
No essential changes have taken place after the end of the financial year with respect to the company’s financial standing. The proposed distribution of profit does not, in the view of the Board of Directors, compromise the company’s liquidity.
Outlook for 2016
The Finnish economy is expected to show zero growth or only slight growth in 2016. Alma Media’s significant operating countries in Eastern Central Europe, such as the Czech Republic and Slovakia, are expected to see continued economic growth, but at a lower rate than in 2015.
Macroeconomic development affects both consumer demand and advertising volume. The structural transformation of advertising will continue in 2016; online advertising will grow, while print media advertising will decline. Total advertising volume is not expected to increase in Finland in 2016.
The Talentum acquisition completed in late 2015 will increase Alma Media’s revenue and operating profit in 2016. In 2016, Alma Media expects its full-year revenue and operating profit excluding non-recurring items to increase from the 2015 level. The full-year revenue for 2015 was MEUR 291.5, and operating profit excluding non-recurring items was MEUR 23.4.
Kai Telanne, President and CEO
For Alma Media, 2015 was a good year, taking the operating environment into consideration. The development of foreign operations was excellent due to strong economic growth in Eastern Central Europe, but the Finnish market did not see the hoped-for recovery that would have supported a significant improvement in Alma Media’s result. In 2015, macroeconomic development in Finland was among the weakest in the EU, and consumer purchasing power declined. The weak economic climate in Finland had a negative impact on expectations among consumers and the business sector, as well as advertising investment.
Alma Media’s operating profit excluding non-recurring items improved in 2015 in spite of the difficult economic climate. Revenue for the full year declined to MEUR 291.5 due to divestments. Operating profit excluding non-recurring items increased by 9.3 per cent to MEUR 23.4. Alma Media’s business in its primary international markets in Eastern Europe, in particular, showed continued positive profit performance. In the final quarter of 2015, the recruitment business outside Finland grew by nearly 21 per cent.
The focus of media consumption is shifting rapidly to digital channels, mobile in particular. In response to the changes in media consumption, advertising investments in print media are declining and the shift to digital channels is continuing. Alma Media has made a concerted effort to move its business operations and employees from the world of print media towards digital multimedia services. The Group’s revenue from digital products and services exceeded the MEUR 100 milestone with year-on-year growth of 8.7 per cent.
In the Digital Consumer Services segment, revenue growth was highly profitable as operating profit excluding non-recurring items grew by 47 per cent from the previous year. The most significant factor in the improved result was the strong development of the recruitment business outside of Finland. In Finland, Alma Media’s digital services maintained their profit level.
The improved profitability of the Financial Media and Business Services segment was supported by good advertising sales and the increase in revenue attributable to JM Tieto. Kauppalehti’s content sales managed to compensate for the decline in print media by achieving growth in digital content revenue.
For IL-Media, 2015 was a difficult year. Print media content revenue and advertising sales showed a significant decline. Nevertheless, there was a positive turn in digital advertising towards the end of the year. The increase in online advertising sales in the latter part of the year was particularly supported by mobile sales as well as new programmatic buying and targeted advertising solutions.
The Regional Media segment made several divestments and implemented operational restructuring and efficiency improvement measures to secure the profitability of the publishing business. The segment also began a gradual shift towards paid digital content.
One of the biggest news in the Finnish media sector in 2015 was Alma Media’s acquisition of Talentum. With the two companies’ business operations complementing each other very well, the combination creates a significant player in professional media and business services.
The Talentum acquisition was funded by both equity financing and debt. In spite of this significant investment, Alma Media’s financial position remained strong in 2015, with our equity ratio remaining at 42.5%. Our strong balance sheet enables us to continue investing in growth and internationalisation whenever opportunities that are in line with our strategy arise.
We carried out organisational restructuring in our national media sales in 2015. We strengthened our competitiveness and increased our market share in advertising by focusing on areas such as the development of effective digital multimedia solutions and the versatile utilisation of data.
According to TNS Media Intelligence, the media advertising volume in Finland decreased by approximately two per cent in 2015 compared to the previous year, totalling EUR 1.2 billion. It is estimated that media advertising’s share of GDP was at a historical low in 2015, at a level that is similar to many developing markets. Well-executed marketing communications play an important role in maintaining economic activity in Finland. Instead of streamlining and cost restructuring, Finland needs an atmosphere that encourages investment, hard work and entrepreneurship in order to increase confidence in the future. If you want to sell and be successful, you must also create consumer demand and be active in marketing.
Strategy and related activities during the review period
The cornerstones of strategic development are multi-channel content, marketing and advertising solutions, digital services and improving resources and competencies.
The review period saw the approval of the combination of Alma Media and Talentum, two major Finnish media companies, which was initially announced in September 2015. The combination supports the continued implementation of Alma Media’s strategy in the coming years and creates significant value for the shareholders of both Alma Media and Talentum based on, inter alia, the advantages of having a larger business entity on the digitising media market, on the concrete cost synergies, and on utilising the subscriber potential of the combined company. Alma Media published the final result of the Talentum exchange offer in November 2015. The exchange offer was approved by shareholders representing approximately 95 per cent of Talentum’s shares. The combination also received the approval of the Finnish Competition and Consumer Authority. With the other conditions for the exchange offer also fulfilled, Alma Media decided to proceed with the exchange offer to Talentum’s shareholders and option rights holders.Trading in the new shares in Alma Media offered in the exchange offer commenced on 20 November 2015. Alma Media initiated arbitral proceedings pursuant to the Finnish Limited Liability Companies Act in November to complete the compulsory redemption of the Talentum shares held by minority shareholders.
The companies initiated integration planning during the review period. In accordance with the combination plan, Talentum’s business operations will be combined with Alma Media’s Financial Media and Business Services unit. Talentum’s management will be combined with Alma Media’s Group management. Alma Media estimates that the annual cost synergies expected from the combination may amount to EUR 4–5 million, and the integration costs resulting from the combination will be approximately EUR 1–2 million in the first year of operation following the combination. The integration will proceed to the implementation phase in the first half of 2016.
Alma Media decided to refocus the operations of the Financial Media and Business Services unit and sold the customer media and content marketing service provider Alma 360 to Otavamedia in October 2015.
In accordance with its strategy, Alma Media builds sustainable growth in its business operations by making use of digitisation opportunities. Alma Media focuses on the development and sales of digital content, as well as business growth in services and agile marketing solutions. In its operations, Alma Media has created sustainable growth in digital services while also ensuring the vitality of its traditional, print-based business operations through efficiency measures.
To develop the service business, the Digital Consumer Services segment, for example, provides clients with system and expert services to support their business management while also offering media advertising opportunities. A brokering system and information services have been developed and offered to real estate agents, while recruitment business operations have invested in HR consulting and recruitment systems, for example. Through acquisitions, the service offering has also been expanded to cover ERP systems for the automotive trade. During the review period, Alma Media’s subsidiary Alma Mediapartners Oy acquired the software company Autosofta to complement its digital business in the automotive retail industry.
Alma Media continued to implement structural reforms in the fourth quarter in order to improve the profitability of the publishing business. Alma Regional Media, the regional and local newspaper unit of Alma Media, completed statutory personnel negotiations pursuant to the Finnish Act on Co-operation within Undertakings. The negotiations began in September and concerned a total of 500 employees. A total of 19 employees were laid off, while a further reduction of approximately 50 man-years was accomplished through retirement or other arrangements. The negotiations concerned all of the publication employees of Regional Media, with the exception of papers published in Lapland. Alma Manu Oy, the printing and distribution company under Regional Media, was not included in the negotiations.
In December 2015, Alma Media’s Board of Directors approved the company’s updated strategy for 2016–2018. The update of the strategy did not involve any changes to Alma Media’s long-term financial targets. The cornerstones of the strategy are content, multimedia solutions, the service business, as well as resources and ways of working.
Domestic market conditions
According to TNS Media Intelligence, total advertising volume decreased by 2.9% (decreased by 3.5%) in 2015. Advertising in city papers and newspapers declined by 6.2% (declined by 8.3%) but increased in online media by 6.7% (increased by 12.3%) from the comparison period. In terms of volume, the total market of afternoon papers declined by 15.3% (declined by 7.1%) in 2015.
Changes in Group structure in 2015
In January 2015, Alma Media acquired the entire share capital of JM Tieto Oy as a business combination achieved in stages. Prior to the acquisition, Alma Media held a 20% stake in the company. JM Tieto Oy specialises in improving the effectiveness of B2B sales, with a focus on marketing information and its utilisation. JM Tieto was reorganised to form part of Kauppalehti Business Information Services’ operations.
In March 2015, Alma Media’s newspaper business in Kainuu was transferred to a new owner, SLP Kustannus Oy. The divestment saw the regional newspaper Kainuun Sanomat, the town paper Koti-Kajaani and three subscription-based local papers transferred to the subsidiary of Suomalainen Lehtipaino Oy. The transaction does not affect Alma Media’s result for 2015.
Alma Media’s subsidiary Alma Media Kustannus Oy divested Koti-Lappi, a town paper published in Kemijärvi, in April 2015.
Alma Media’s subsidiary Alma Media Kustannus Oy divested Kuriiri, a town paper delivered to all households in Ranua and Posio. Starting from 1 July 2015, the new publisher of the town paper has been Kuriirilainen Oy, a company owned by the paper’s current employees.
On 1 October 2015, Alma Media sold Alma 360, the customer media and content marketing service provider, to Otavamedia.
Alma Mediapartners Oy, a subsidiary of Alma Media, acquired the software company Autosofta from its founders in October in order to complement Alma Media’s digital business in the automotive retail industry. The annual revenue of Autosofta, which has its head office in Kempele, is approximately EUR 0.5 million.
Alma Media acquired a controlling interest in Talentum Corporation on 17 November 2015. Talentum was previously reported by the Group as an associated company and consolidated using the equity method. The Group’s previous holding was 14,236,295 Talentum shares, which corresponded to 32.4 per cent of the outstanding shares. The conditions of the exchange offer were fulfilled on 17 November 2015, from which time Talentum has been part of Alma Media Group and it is consolidated in the consolidated financial statements dated 31 December 2015 as a subsidiary.
More detailed information on acquired subsidiaries is provided in Note 2 to the financial statements.
Group revenue and result full year 2015
Revenue declined by 1.3% to MEUR 291.5 (295.4) in 2015. Talentum Corporation, acquired in November, represented an increase in revenue of MEUR 5.8 of which MEUR 0.8 was revenue from online business. The effect of JM Tieto, acquired in January, on the increase in revenue was MEUR 3.4. The effect of the Alma 360 business, divested in September, on revenue was MEUR -3.6, while the effect of the Regional Media segment’s newspapers divested in 2015 on the Group’s revenue was MEUR -9.8.
Content revenue decreased by 4.9% to MEUR 104.7 (110.1). Content revenue declined due to the decline of print subscriptions and single-copy sales. Talentum’s effect on the increase in content revenue was MEUR 4.1.
Revenue from advertising sales increased by 0.3% to MEUR 146.9 (146.4). Advertising sales for print media decreased by 10.2% from the comparison period, to MEUR 66.2 (73.7). Online advertising sales increased by 11.0% to MEUR 80.7 (72.7).
Service revenue totalled MEUR 39.9 (38.8). Service revenue includes items such as Kauppalehti Business Information Services, the operations of the custom publishing house Alma 360 divested in October, as well as the operations of E-kontakti and the printing and distribution services sold to customers outside the Group by Alma Manu. The increased revenues of Kauppalehti Business Information Services and Alma Manu were major contributors to the increase in service revenue.
Total expenses decreased during the year by MEUR 0.5, or 0.2%, to MEUR 277.4 (277.9). Total expenses excluding non-recurring items were MEUR 268.7 (274.6). Depreciation and impairment included in the total expenses amounted to MEUR 16.8 (15.7). The non-recurring expenses of MEUR 8.7 (3.3) recognised in 2015 were related to impairment losses, restructuring costs and costs associated with acquisitions and divestments.
Operating profit excluding non-recurring items was MEUR 23.4 (21.4), or 8.0% (7.2%) of revenue. Operating profit was MEUR 17.7 (20.7), or 6.1% (7.0%) of revenue. The operating profit includes net non-recurring items in the amount of MEUR -5.7 (-0.7).
Alma Media Group in 2015, taking the effects of acquisitions and divestments into account (Pro forma)
Alma Media Group’s revenue and operating profit excluding non-recurring items in 2015, taking the effects of acquired and divested businesses into account, is presented in the following table:
* Divested business operations include the effects of the following divestments: Regional Media’s newspaper business in Kainuu, the City24 business, BNS business and Alma 360 Oy.
** Acquired business operations include the effects of the acquisitions of Talentum Corporation, JM Tieto and Autosofta. The operating profit attributed to acquired business operations takes into account acquisition-related increases in IFRS 3 depreciation.
Digital Consumer Services
The services of the Digital Consumer Services segment operating in Finland are Etuovi.com, Vuokraovi.com, Gofinland.fi, Monster.fi, Autotalli.com, Autosofta.fi, 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 and Monster.cz.
In 2015, the Digital Consumer Services segment’s revenue was MEUR 61.7 (55.8), up 10.5%. Revenue from the recruitment business increased by 20.5% and accounted for 73.6% (67.5%) of the segment’s revenue in 2015. The growth in the international recruitment business was particularly supported by strong GDP growth in Eastern Central European countries.
Total expenses during the review period excluding non-recurring items were MEUR 48.4 (46.8).
The Digital Consumer Services segment's operating profit excluding non-recurring items was MEUR 13.4 (9.2) in 2015. The segment’s operating profit was MEUR 12.4 (10.7). Non-recurring items for the period totalled MEUR -1.1 (1.5). The non-recurring items recognised in 2015 were related to impairment losses recognised on goodwill allocated to online services in Finland. The non-recurring items in the comparison period were related to impairment losses and sales gains from the City24 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. The custom media house Alma 360, which was previously reported in this segment, was divested in October 2015. The business operations of Talentum, acquired in November, are reported under this segment.
Revenue for the Financial Media and Business Services segment increased by 10.3% to MEUR 58.5 (53.0). Online business accounted for 41.7% (43.0%) of the segment’s revenue. Talentum Corporation, acquired in November, represented an increase in revenue of MEUR 5.8, while JM Tieto, acquired in January, represented an increase in revenue of MEUR 3.4. The divestment of Alma 360 in September had an effect of MEUR -3.6 on revenue.
Content revenue for the Financial Media and Business Services segment increased by 24.8% to MEUR 20.3 (16.2). Kauppalehti’s content revenue was on a par with the previous year.
Advertising sales in 2015 amounted to MEUR 17.2 (15.6). Online advertising sales increased by 16.3% year-on-year.
The segment’s total expenses excluding non-recurring items were MEUR 50.7 (46.4). The segment’s total expenses were MEUR 52.3 (47.4).
Operating profit excluding non-recurring items for the Financial Media and Business Services segment was MEUR 8.0 (6.7) and operating profit MEUR 6.9 (6.5). Operating profit excluding non-recurring items was 13.6% (12.6%) of revenue. The non-recurring items for the review period were related to a loss of MEUR 0.4 recognised through profit or loss associated with the Talentum acquisition achieved in stages, a gain of MEUR 0.6 recognised through profit or loss associated with the JM Tieto acquisition achieved in stages, as well as an adjustment of MEUR 1.2 on impairment losses related to the Alma 360 business. The Talentum acquisition had a minor effect on the result for the full year.
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 11.3% to MEUR 41.6 (46.9) in January–December. Online business accounted for 29.8% (27.0%) of the segment’s revenue.
The segment’s content revenue declined by 13.2% to MEUR 24.7 (28.5) in January–December, mainly due to the decrease in Iltalehti’s circulation.
The segment’s advertising sales declined by 8.6% to MEUR 16.8 (18.4). Advertising sales for print media decreased by 22.6%. The segment’s online advertising sales for the full year declined by 2.1% to MEUR 12.3 (12.5). The growth in online advertising in the fourth quarter was not sufficient to compensate for the decline in online advertising in the early part of the year.
The segment’s total expenses excluding non-recurring items were MEUR 39.1 (43.2). The decrease in total expenses was particularly attributable to the decrease in printing and distribution costs due to lower print media sales, as well as efficiency improvement measures in content production. The segment’s expenses in the review period include non-recurring expenses of MEUR 0.3 (0.6) related to restructuring. The segment’s total expenses were MEUR 39.4 (43.8).
The segment's operating profit excluding non-recurring items was MEUR 2.5 (3.7). Operating profit excluding non-recurring items was 6.1% (7.8%) of revenue. The segment’s operating profit was MEUR 2.2 (3.1).
The Regional Media segment reports the publishing activities of the 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 7.5% to MEUR 134.4 (145.2) in January–December. Online business accounted for 3.5% (2.6%) of the segment’s revenue. The effect of the Regional Media segment’s newspapers divested in 2015 on revenue was MEUR -9.8.
The segment’s content revenue declined by 8.7% to MEUR 59.8 (65.5) in January–December. The effect of divested newspapers on the decrease in the segment’s content revenue was MEUR 4.7.
The segment’s advertising sales declined by 9.9% to MEUR 56.3 (62.5). Advertising sales for print media decreased by 11.1%. The segment’s online advertising sales increased by 23.2% to MEUR 2.5 (2.1). The decline in national advertising has been the fastest in print media advertising sales. The effect of divested newspapers on the decrease in the segment’s advertising sales was MEUR 4.8.
The segment’s service revenue increased by 6.1% to MEUR 18.3 (17.2).
The segment’s total expenses excluding non-recurring items were MEUR 125.7 (135.8) and total expenses MEUR 129.1 (137.2).
The segment’s operating profit excluding non-recurring items was MEUR 8.9 (9.6) and operating profit MEUR 5.9 (8.3). Operating profit excluding non-recurring items was 6.6% (6.6%) of revenue. Non-recurring items for 2015 amounted to MEUR -3.0 (-1.3). The non-recurring items were related to restructuring costs, impairment losses and a sales gain on real estate.
Talentum was previously consolidated in Alma Media’s consolidated financial statements as an associated company, as the Group held 14,236,295 Talentum shares, which corresponded to 32.4 per cent of the outstanding shares. Alma Media’s exchange offer was completed on 17 November 2015, from which time Talentum has been part of Alma Media Group and it is consolidated in the consolidated financial statements dated 31 December 2015 as a subsidiary.
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.
Balance sheet and financial position
At the end of December 2015, the consolidated balance sheet stood at MEUR 328.2 (256.1). The Group’s equity ratio at the end of December was 42.5% (42.6%) and equity per share was EUR 1.35 (1.17).
The consolidated cash flow from operations in January–December was MEUR 33.2 (26.5). The increase in cash flow from operations was particularly attributable to a lower level of working capital as well as lower interest and taxes paid. Cash flow before financing activities in 2015 declined to MEUR 11.1 (34.9), which was attributable to significant acquisitions carried out in 2015.
At the end of December, the Group’s interest-bearing debt amounted to MEUR 90.6 (83.0). The total interest-bearing debt at the end of December comprised MEUR 65.0 in finance leasing debt and MEUR 25.6 in loans from financial institutions. The Group’s interest-bearing net debt at the end of December stood at MEUR 76.2 (71.1).
Alma Media has two MEUR 20.0 committed financing limits at its disposal, of which MEUR 15 was in use on 31 December 2015. In addition, the company has a commercial paper programme of MEUR 100 in Finland. The commercial paper programme was entirely unused on 31 December 2015.
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 2015. Financial liabilities measured at fair value and recognised through profit or loss amounted to MEUR 0.3 (0.0).
Alma Media Group’s capital expenditure in 2015 totalled MEUR 60.2 (14.4). The capital expenditure comprised mainly the acquisition of the entire share capital in the former associated companies JM Tieto Oy and Talentum Oyj, as well as normal operating and maintenance investments.
Research and development costs
The Group’s research and development costs in 2015 totalled MEUR 5.5 (MEUR 5.5 in 2014). Of this total, MEUR 4.0 (MEUR 4.0) was recognised in the income statement and MEUR 1.5 (MEUR 1.5) was capitalised to the balance sheet in 2015. On 31 December 2015, capitalised research and development costs on the balance sheet totalled MEUR 1.5 (MEUR 1.3).
During 2015, Alma Media had on average 1,793 (1,828) employees, calculated as full-time employees (excluding delivery staff). The number of newspaper delivery staff was 929 (985) on average.
Alma Media Corporation’s Annual General Meeting (AGM) held on 17 March 2015 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 the principal auditor.
Alma Media Corporation applied in 2015 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 unamended form. The Remuneration Statement for 2014 was published on 13 February 2015 on the company’s website at www.almamedia.com/investors.
The Corporate Governance Statement is available on the company’s website at www.almamedia.com/investors.
In accordance with the proposal of the Board of Directors, the AGM resolved that no dividend be paid for the financial year 2014. 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 36,420,000 be used from the invested non-restricted equity fund, complying with the company’s balance sheet of 31 December 2014, to cover losses. The covering of losses improves the preconditions for the distribution of profit in future financial periods.
In accordance with the proposal of the Board of Directors, the AGM resolved to distribute EUR 0.12 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 9,058,422.36. Capital repayments were paid to shareholders registered in Alma Media Corporation’s shareholder register, maintained by Euroclear Finland Ltd, on the record date, 19 March 2015. The capital repayments were paid on 26 March 2015 as proposed by the Board of Directors.
Other decisions by the Annual General Meeting
The AGM authorised the Board of Directors to decide on the repurchase of a maximum of 754,000 shares in one or more lots. The proposed maximum authorised quantity represents approximately one (1) per cent of the company’s entire share capital. The shares shall be acquired using the company’s non-restricted shareholders’ equity through trading in a regulated market arranged by NASDAQ OMX Helsinki Oy and in accordance with its rules and instructions, which is why the acquisition is directed, that is, the shares are purchased otherwise than in proportion to shareholders’ current holdings. The price paid for the shares shall be based on the price of the company share in the regulated market, so that the minimum price of purchased shares is the lowest market price of the share quoted in the regulated market during the term of validity of the authorisation and the maximum price, correspondingly, the highest market price quoted in the regulated market during the term of validity of the authorisation. Shares may be purchased for the purpose of improving the company’s capital structure, financing or carrying out corporate acquisitions or other arrangements, implementing incentive schemes for the management or key employees, or to be otherwise transferred or cancelled. The authorisation is valid until the following ordinary AGM, however no longer than until 30 June 2016.
The AGM authorised the Board of Directors to decide on a share issue by transferring shares in possession of the company. A maximum of 754,000 shares may be issued on the basis of this authorisation. The proposed maximum authorised quantity represents approximately one (1) per cent of the company's entire share capital. 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 of Directors may use the authorisation to implement incentive programmes for the management or key employees of the company. The authorisation is valid until the following ordinary AGM, but no longer than until 30 June 2016.
The AGM authorised the Board of Directors to decide on a share issue. A maximum of 15,000,000 shares may be issued on the basis of this authorisation. The proposed maximum authorised amount represents approximately 20% of the company’s entire share capital. 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 on 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, but no longer than until 30 June 2016. This authorisation overrides the share issue authorisation granted at the Annual General Meeting of 20 March 2014.
In accordance with the proposal of the Board of Directors, the AGM resolved to establish a Shareholders’ Nomination Committee. The Nomination Committee’s duties include preparing proposals related to the election and remuneration of the member of the Board of Directors to the Annual General Meeting. In conjunction with this decision, the AGM approved the Charter for the Shareholders’ Nomination Committee as proposed by the Board of Directors. The Shareholders’ Nomination Committee consists of four members appointed by shareholders, and the members elect a chairman from among their number. In addition, the Chairman of the Board acts as an expert member in the Nomination Committee.In the year preceding the AGM, on the basis of shareholding on 30 September in the preceding calendar year, the Chairman of the Board will request each one of the four largest shareholders to appoint one member to the Shareholders’ Nomination Committee. The four shareholders who are registered in the shareholder register maintained by Euroclear Finland Ltd on 30 September in the year preceding the AGM and whose share of the votes produced by all shares in the company is the greatest according to this shareholder register have the right to nominate members to represent shareholders. Should a shareholder choose not to exercise the right to appoint a member, the right is transferred to the next largest shareholder in the shareholder register, who would not otherwise have the right to appoint a member. The Nomination Committee Charter is available on the Alma Media Corporation website at www.almamedia.fi/sijoittajille/hallinto/yhtiokokous/yhtiokokous-2015.
The Alma Media share
In January–December, altogether 9,668,430 Alma Media shares were traded on the NASDAQ Helsinki Stock Exchange, representing 12.7% 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, 30 December 2015, was EUR 3.00. The lowest quotation in 2015 was EUR 2.51 and the highest EUR 3.25.
Alma Media Corporation’s market capitalisation at the end of the review period was MEUR 247.1.
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 has approved the establishment of a new long-term share-based incentive programme for the key management of Alma Media. The LTI 2015 arrangement consists of annually commencing individual plans, each subject to separate Board approval. Each of the individual plans consists of three main elements: an investment in Alma Media shares as a precondition for the key management member’s participation in LTI 2015, matching shares based on the above share investment and the possibility of earning performance-based matching shares. At most 35 people are eligible to participate in the first plan under the LTI 2015 arrangement, commencing in 2015.
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.
In 2015, Alma Media received notices of changes in shareholdings pursuant to Chapter 9, Section 5 of the Finnish Securities Markets Act as follows:
On 20 November 2015, Mariatorp Oy announced that the agreement for which it issued a flagging notice on 12 November was carried through, and that due to the increase in Alma Media’s number of shares as a result of the completion of the Talentum exchange offer, Mariatorp’s holding of the shares and votes in Alma Media has fallen below the threshold of 20 per cent. Follow this event, Mariatorp Oy holded approximately 18.8% of Alma Media’s share capital and votes.
On 12 November 2015, Mariatorp Oy announced that it has signed an agreement that, if realised, would result in the acquisition of shares and voting rights and Mariatorp’s holding of the shares and votes in Alma Media would exceed the threshold of 20%.
On 30 April 2015, Mariatorp Oy (Business ID 1948056-9, also referred to below as the Demerging Company) issued a flagging notice according to which had Mariatorp Oy signed a demerger plan on 30 April 2015 regarding a total demerger pursuant to Chapter 17, Section 2, Subsection 1 of the Finnish Securities Markets Act (624/2006). In connection with the registration of the execution of the demerger, the assets, liabilities and rights of the Demerging Company would be transferred without liquidation proceedings to the two new limited companies to be founded as stated in the demerger plan. As the demerger was executed, the shares of Alma Media Corporation owned by the Demerging Company in which Niklas Herlin exercises controlling power would be transferred in connection with the registration of the execution of the demerger to Mariatorp Oy that was to be founded. No shares of Alma Media Corporation would be transferred to the other company.
The registration of the execution of the demerger was completed on 31 August 2015 according to the notification received by Alma Media. After the execution of the demerger, the new Mariatorp Oy held 16.03% of Alma Media Corporation’s shares and votes carried by the shares (12,100,000 shares).
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 and to the Board of Directors. 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 Eastern 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.
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 first among Nordic media companies in November 2015. In December 2015, Alma Media committed to the Paris Pledge for Action to reach the COP21 targets. In addition, the Alma Media share is included in the OMX GES Sustainability Finland index. Alma Media is a member of the pan-European Media CSR Forum and the Finnish Business & Society corporate responsibility network.
The most significant environmental impacts of Alma Media’s business operations are related to purchases, printing and delivery operations and real estate. In 2015, the company’s printing facilities used approximately 23,966 (23,956) tonnes of newsprint. Alma Media used 12,943 (13,298) MWh of electric power in 2015. Electricity consumption decreased by 2.6 % year-on-year. Additional information on the Group’s corporate responsibility approach is available on the Alma Media website.
Events after the review period
In January 2016, LMC s.r.o, part of Alma Career Oy and the leading provider of digital recruitment services in the Czech Republic, acquired Jobote s.r.o, a Czech start-up developing and providing new technology in recruitment. Its online service jobote.com is targeted at reaching the most skilled and hard-to-find candidates.
In January 2016, Alma Media’s subsidiary Alma Mediapartners Oy acquired 51 per cent of the share capital of Raksa ja KotiKauppa Oy from the company’s founders. The company provides ERP systems for construction and renovation. The revenue of Raksa ja KotiKauppa Oy for 2015 is expected to amount to approximately EUR 0.5 million.
In February 2016, Alma Regional Media announced plans to reorganise its customer service operations. The goal is to create a model that would better support digitised media consumption and customer service. At this juncture, possibilities will be explored to achieve closer cooperation between customer services and the circulation service. Alma Regional Media will commence statutory personnel negotiations to prepare for potential impact on employees. According to the provisional plan of the employer, the required reduction in workforce is 34 person-years at most.