Report by the board of Directors

Financial performance full year 2012

  • Revenue was MEUR 320.1 (316.2), up 1.2%.
  • Circulation revenue was MEUR 119.3 (124.8), down 4.4% ; advertising revenue was MEUR 160.8 (155.3), up 3.5%; contents and service revenue was MEUR 40.0 (36.1), up 10.8%.
  • Operating margin excluding non-recurring items was MEUR 45.1 (51.9), down 13.1%.
  • Operating margin was MEUR 39.5 (51.2), down 22.7%.
  • Operating profit excluding non-recurring items was MEUR 33.5 (42.9), 10.5% (13.6%) of revenue, down 22.0%.
  • Operating profit was MEUR 26.5 (42.0) or 8.3% (13.3%) of revenue, down 36.9%.
  • Revenue from acquired businesses was MEUR 20.8 and operating profit MEUR 2.9.
  • Profit for the period was MEUR 17,4 (30.8), down 43.5%.
  • The result for the review period includes a non-recurring item, the writedown of associated company Talentum Oyj shares by MEUR 4.8.
  • Earnings per share were EUR 0.22 (0.39)
  • Dividend paid for the financial year 2011 was 0.40 (0.70) EUR per share. 
KEY FIGURES 2012 2011 Change
MEUR Q1-Q4 Q1-Q4 %
REVENUE 320.1 316.2 3.9 1.2
Circulation revenue 119.3 124.8 -5.5 -4.4
Advertising revenue 160.8 155.3 5.4 3.5
Contents and service revenue 40.0 36.1 3.9 10.8
Total expenses excluding non-recurring items 287.0 273.6 13.4 4.9
Ebitda excluding non-recurring items 45.1 51.9 -6.8 -13.1
Ebitda 39.5 51.2 -11.6 -22.7
OPERATING PROFIT EXCLUDING NON-RECURRING ITEMS 33.5 42.9 -9.4 -22.0
% of revenue 10.5 13.6
Operating profit 26.5 42.0 -15.5 -36.9
% of revenue 8.3 13.3
PROFIT FOR THE PERIOD 17.4 30.8 -13.4 -43.5
Earnings per share, EUR (basic) 0.22 0.39 -0.17 -43.4
Earnings per share, EUR (diluted) 0.22 0.39 -0.17 -43.1
ACQUIRED BUSINESSES
Revenue 20.8 0.0 20.8
Ebitda 5.7 0.0 5.7
Operating profit 2.9 0.0 2.9

Dividend proposal for the Annual General Meeting

On December 31, 2012, the Group’s parent company had distributable funds totalling EUR 8,014,054 (51,941,032). No essential changes in the company’s financial standing have taken place after the end of the financial year. The Board of Directors will propose to the Annual General Meeting that a dividend of EUR 0.10 (0.40) per share be paid for the 2012 financial year. Based on the number of shares on the closing date, December 31, 2012, the total dividend distribution would amount to EUR 7,548,685 (30,194,741). 

Outlook for 2013

The general uncertainty prevailing in the Group’s principal markets, as well as the shift in media consumption from print media to electronic channels, make it difficult to forecast the development of the advertising and circulation revenues. The share of digital services in the media market will continue.

Economic growth is estimated to remain weak in Europe in the early part of 2013. The increase in the sales of digital services is not enough to cover the drop in the sales of print media. Alma Media estimates that the company’s revenue and operating profit, excluding non-recurring items, will decrease in the first half of 2013 from the level of the corresponding period in 2012. The revenue for the first half of 2012 was MEUR 162.2 and operating profit, excluding non-recurring items, was MEUR 16.1. 

Market conditions 

According to TNS Media Intelligence, total advertising volume declined by 5.3% (grew by 0.2%) in the last quarter of the year. Advertising in newspapers and city papers decreased by 8.6% (decreased by 2.8%), while advertising in online media continued to increase, by 13.9% (19.4%) from the comparison period.

Further according to TNS Media Intelligence, total advertising volume declined by 4.1% (grew by 7.1%) in the full year 2012. Advertising in newspapers and city papers decreased by 7.6% (grew by 3.7%), while advertising in online media increased by 10.0% (25.3%) from the comparison period. 

Changes in group structure 2012 

On January 2, 2012, Alma Media Corporation acquired the entire stock of the company LMC s.r.o. From January 2, 2012, this company is reported as part of the Digital Consumer Services segment.

Northern Media, part of Alma Media’s Newspapers segment, on January 1, 2012 acquired the publishing rights of the free issue paper Kotikymppi that appears in Kemijärvi, Finland.

On February 2, 2012, Alma Media Corporation acquired the entire stock of CV Online, the leading online recruitment service company in the Baltic countries. From February 2, 2012, this company is reported as part of the Digital Consumer Services segment.

Alma Mediapartners Oy, part of the Alma Media Group, acquired the entire stock of PlanMyRoom Finland Oy. From May 2, 2012, this company is reported as part of the Digital Consumer Services segment.

Alma Media Corporation acquired the entire stock of Suomen Hankintakeskus Oy. Suomen Hankintakeskus will merge into Mascus, Alma Media’s international marketplace for used heavy machinery and transport vehicles. From June 1, 2012, Suomen Hankintakeskus Oy is reported as part of the Digital Consumer Services segment.

Alma Media acquired a 51% shareholding in Adalia Media, based in the United States. The company has acted as licence partner of Mascus, Alma Media’s international marketplace for used heavy machinery and transport vehicles, since 2009. From June 1, 2012, Adalia Media, Inc. is reported as part of the Digital Consumer Services segment.

On August 1, 2012, Alma Media Corporation acquired the entire stock of Finland’s leading online dating service company, E-Kontakti Oy. From August 1, 2012, the company is reported as part of the Digital Consumer Services segment.

On August 1, 2012, Alma Media Corporation sold the entire stock of Bovision AB. The company was reported as part of the Digital Consumer Services segment.

On October 1, 2012, Alma Media Corporation purchased 20% of the stock of JM-Tieto Oy, a company providing business information services. The company is reported as part of the Kauppalehti Group segment.

On November 1, 2012, Alma Media Corporation purchased 20% of the stock of Locatia Oy. The company is reported as part of the Kauppalehti Group segment.

On November 15, 2012, Alma Media Corporation purchased the leading recruitment services companies in Slovakia (Profesia s.r.o. and Autovia) and Croatia (Tau on-line d.o.o.), as well as minority holdings in the leading job portals in the Serbian and Bosnian markets (Infostud 3 d.o.o. and Development Studio d.o.o., respectively). From November 1, 2012, the purchased companies are reported as parts of the Digital Consumer Services segment.

On November 30, 2012, Alma Media Corporation sold the Vuodatus.net business to Rohea Oy. 

Group revenue and result full year 2012 

The Group’s revenue for the full year 2012 grew by 1.2% to MEUR 320.1 (316.2). Revenue from business operations acquired in 2012 was MEUR 20.8 (0.0). Revenue from print media was MEUR 217.2 (236.1), with a share of 67.9% (74.7%) in the Group’s revenue. Revenue from digital products and services was MEUR 77.8 (56.8), an increase of 37.0% mainly due to acquisitions. Digital products and services accounted for 24.3% (18.0%) of Group revenue. Other revenue totalled MEUR 24.7 (23.1), accounting for 7.7% (7.3%) of Group revenue.

Revenue from advertising sales grew by 3.5% and was MEUR 160.8 (155.3). Advertising sales made up 50.2% (49.1%) of the Group’s total revenue. Advertising sales for printed papers declined by 12.2% from the comparison period, totalling MEUR 97.7 (111.3). Online advertising sales grew by 43.4% to MEUR 61.8 (43.1).

Circulation revenue declined by 4.4% to MEUR 119.3 (124.8). The circulation revenue of the Newspapers segment decreased by 4.6% to MEUR 104.8 (109.9). Kauppalehti’s circulation revenue declined by 2.7% to MEUR 14.6 (15.0).

Contents and service revenue was MEUR 40.0 (36.1).

Total expenses excluding non-recurring items went up by MEUR 13.4 or 4.9%, totalling MEUR 287.0 (273.6). Total expenses increased by 7.0% to MEUR 294.5 (275.1). Businesses acquired during the review period accounted for MEUR 18.0 of total expenses. The increase in total expenses was mainly due to reorganisation provisions.

EBITDA, excluding non-recurring items, declined by 13.1% to MEUR 45.1 (51.9). EBITDA amounted to MEUR 39.5 (51.2).

Depreciations in the review period amounted to MEUR 13.0 (9.2). Depreciations in the financial period include an impairment loss of MEUR 1.6 reported as a non-recurring item. Acquisition-related depreciations totalled MEUR 3.0 (0.0).

Operating profit excluding non-recurring items was down 22.0% (down 2.2%) to MEUR 33.5 (42.9). The operating profit excluding non-recurring items was 10.5% (13.6%). The operating profit was MEUR 26.5 (42.0), and the operating margin 8.3% (13.3%). Operating profit from acquired businesses amounted to MEUR 2.9 (0.0).

The operating profit includes MEUR -7.0 (-1.0) in net non-recurring items. The non-recurring items during the review period were related to organisational restructuring, as well as impairment losses for capitalised R&D costs for the Marketplaces business.

The full-year 2012 financial result was MEUR 17.4 (30.8), and excluding non-recurring items, MEUR 29.3(31.7). The period’s financial result includes a non-recurring item, a write-down of MEUR 4.8 in the shareholding in Talentum Oyj. It also includes changes in the fair value of contingent considerations and debt incurred by the reorganisation of the Marketplaces business in the amount of MEUR 3.6. 

Newspapers 

The Newspapers segment reports the Alma Regional Media and Iltalehti business units, that is, the publishing activities of a total of 35 newspapers. The best-known titles in this segment are Aamulehti and Iltalehti.

The Newspapers segment’s revenue decreased to MEUR 206.6 (218.3). Advertising sales in the segment were MEUR 98.0 (104.4), down 6.1% (up 1.7%). Advertising sales in print media decreased by 8.3% (increased by 0.3%). The segment’s online advertising sales increased by 14.9%, totalling MEUR 11.3 (9.8). The segment’s circulation revenue in January–December was down 4.6%, totalling MEUR 104.8 (109.9). Online business accounted for 5.6% (4.6%) of the segment’s revenue.

The segment’s total expenses excluding non-recurring items were MEUR 181.1 (187.7) and total expenses amounted to MEUR 184.6 (188.7). The non-recurring expenses in the amount of MEUR 3.5 were related to operational restructuring and loss from the sale of real estate.

The segment’s operating profit excluding non-recurring items was MEUR 25.6 (30.7) and operating profit MEUR 22.1 (29.7). The segment’s operating profit excluding non-recurring items declined due to the decreases in circulation revenue and print media advertising sales.

Pohjois-Suomen Media Oy (Alma Media Northern Media), part of the Newspapers segment, concluded its statutory personnel negotiations in January 2012. As a result of the negotiations, the number of employees of Pohjois-Suomen Media is reduced by 9 full-time work years.

Alma Media combined its 34 regional and local papers into a new business unit, Alma Regional Media, at the beginning of 2012 and started a large-scale renewal project to strengthen the collaboration between the papers. In the statutory personnel negotiations in connection with the project, the number of employees in Alma Regional Media decreases by 100 full-time work years. As part of the renewal of Alma Regional Media’s operational model, Alma Regional Media and the newspapers Ilkka and Pohjalainen, members of Ilkka-Yhtymä, in August agreed on wide-ranging operational collaboration covering content and development. A letter of intent for the collaboration was signed on August 30, 2012, and the jointly developed new collaboration model is meant to be in full operation from the beginning of 2014.

Iltalehti, part of the Newspapers segment, initiated statutory personnel negotiations in November. The negotiations, held for production-related reasons, aim at renewing the production process and shift arrangements. 

Kauppalehti Group 

The Kauppalehti Group specialises in the production of business and financial information as well as in the provision of business utility and marketing solutions. Its best known title is Finland’s leading business paper, Kauppalehti. The Group also includes the custom media house Alma 360 Custom Media and the news agency and media monitoring unit BNS Group that operates in all the Baltic countries.

The revenue for the full year 2012 of the Kauppalehti Group was MEUR 56.9 (56.7). The revenue for the review period increased by 0.4% (decreased by 2.1%). Online business accounted for 26.3% (24.9%) of the segment’s total revenue.

Advertising sales in the segment were down 10.9% (down 3.2%) and were MEUR 15.2 (17.1). Online advertising sales increased by 0.9% (decreased by 2.3%) from the comparison period.

The segment’s circulation revenue declined by 2.7% to MEUR 14.6 (15.0). Content and service revenue grew by 10.2% to MEUR 27.1 (24.6).

The total expenses of the segment excluding non-recurring items amounted to MEUR 51.3 (49.3) and total expenses MEUR 52.4 (49.3).

The operating profit of the Kauppalehti Group excluding non-recurring items was MEUR 5.7 (7.4) and operating profit MEUR 4.7 (7.4). The operating profit excluding non-recurring items was 10.1% (13.0%) of revenue.

In May, Kauppalehti renewed its printed paper and online contents, as well as the subscription models of its services.

The statutory personnel negotiations that concerned the staff of Kauppalehti’s media business were concluded in December. The workforce was reduced by six persons through voluntary agreements. 

Digital Consumer Services 

The Digital Consumer Services segment, reported since the beginning of 2012, comprises the former Marketplaces segment and the digital consumer service operations previously reported in the Newspapers and Other Operations segments.

The services operating in Finland are Etuovi.com, Vuokraovi.com, Monster.fi, Autotalli.com, Mascus.fi, MyyJaOsta.com, Telkku.com, Kotikokki.net, E-kontakti.fi, Nytmatkaan.fi and Suomenyritykset.fi. The services operating outside Finland are Jobs.cz, Prace.cz, topjobs.sk, CV Online, Profesia.sk, MojPosao.net, Autovia.sk, Mascus, Objektvision.se and City24. In addition, the segment includes the development of the technology platform for the online services of the regional and local papers.

In the full year 2012, the revenue of the Digital Consumer Services segment was MEUR 56.5 (42.1), up 34.2% (15.8%). Revenue from businesses acquired in 2012 was MEUR 20.8. The segment’s advertising sales totalled MEUR 49.2 (36.4).

The total expenses for the review period excluding non-recurring items were MEUR 49.3 (35.9) and total expenses MEUR 51.8 (35.9). The expenses of the acquired businesses amounted to MEUR 18.0.

The operating profit for the Digital Consumer Services segment excluding non-recurring items increased by 17.5% to MEUR 7.4 (6.3). The operating profit was MEUR 4.9 (6.4). The operating profit from businesses acquired in 2012 was MEUR 2.9. The non-recurring expenses in the amount of MEUR 2.5 were due to reorganisation measures and impairment losses for capitalised R&D costs. The non-recurring income during the comparison period, MEUR 0.2, was due to corporate restructuring. The segment’s operating profit excluding non-recurring items grew, thanks to the businesses acquired. 

Other Operations 

The Other Operations segment reports the operations of the Group’s printing and distribution company Alma Manu Oy as well as the parent company. The financial characteristics of both are similar as they primarily provide services for the other business segments.

Alma Media Corporation entered an agreement with Pohjola Bank Plc for the financing of the machinery and movable property of Alma Media’s new printing facility. The total amount of the agreements is MEUR 44.7 at the end of December 2012, out of which MEUR 35.0 have been paid to suppliers by the end of December. The total amount of the investment is approximately MEUR 47.0.

The rent agreement for the new printing facility property became effective on January 1, 2012, and it is treated as a finance leasing agreement in the consolidated balance sheet.

Alma Manu expanded its distribution operations in the province of Lapland. The distribution of Lapin Kansa and Koillis-Lappi, both Alma Media’s newspapers, was transferred from Itella to Alma Manu in January 2012.

Alma Manu initiated statutory personnel negotiations in relation to its planned operational rationalisation and reorganisation measures for its printing operations in Rovaniemi in March. As a result of the negotiations, completed in April, the number of employees at the Rovaniemi printing facility was reduced by four full-time work years.

Alma Manu started statutory personnel negotiations with its newspaper deliverers in the Pirkanmaa region in June. As a result of the negotiations, concluded in August, the work load in delivery operations decreases by 13 full-time work years.

Alma Manu agreed on the sale of its Pori printing press to Daily Print i Umeå AB in August. 

Associated companies 

Alma Media Group holds a 32.14-% stake in Talentum Oyj, which is reported under the Kauppalehti Group. The company’s own shares in the possession of Talentum are here included in the total number of shares. In the consolidated financial statements 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 32.64% in Alma Media’s consolidated financial statements of December 31, 2012.

The period’s financial result includes a non-recurring item, a writedown of MEUR 4.8 in the shareholding in Talentum Oyj. 

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 of business operations or assets, gains or losses from discontinuing or restructuring business operations as well as impairment losses of goodwill and other assets are recognised as non­recurring items. Non-recurring items are recognised in the profit and loss statement within the corresponding income or expense group.

NON-RECURRING ITEMS 2012 2011
MEUR Q1-Q4 Q1-Q4
NEWSPAPERS
Restructuring -3.3 -0.8
Gains on sales of assets -0.1
Impairment losses of intangible and tangible assets -0.2
KAUPPALEHTI GROUP
Restructuring -0.9
Gains on sales of assets -0.1
DIGITAL CONSUMER SERVICES
Restructuring -0.3
Gains on sales of assets -0.6 0.2
Impairment losses of intangible and tangible assets -1.6 0.0
Other operations
OTHER OPERATIONS -0.5 -0.5
Gains on sales of assets 0.4 0.4
NON-RECURRING ITEMS IN OPERATING PROFIT -7.0 -1.0
Translation differences -0.1 0.1
Impairment losses of associated companies -4.8
NON-RECURRING ITEMS IN PROFIT BEFORE TAX -11.9 -0.9

The non-recurring items during the financial year 2012 comprised restructuring expenses, sales losses and writedowns of plant and equipment. In financial items, the writedown of associated company shares was reported as a non-recurring item. 

Parent company

The reported revenue of the parent company Alma Media Corporation in 2012 was MEUR 25.8 (21.7) and the result for the period MEUR -14.2 (47.5). The period’s financial result includes a write-down of MEUR 27.0 in the shareholding in subsidiary and associated companies. The balance sheet of the parent company stood at MEUR 573.2 (586.0) in the end of December 2012.

Balance sheet and financial position 

At the end of December 2012, the consolidated balance sheet stood at MEUR 245.1 (198.0). Alma Media’s equity ratio at the end of December was 36.7% (57.0%) and equity per share declined to EUR 1.08 (1.24).

At the end of December, the Group’s interest-bearing net debt was MEUR 62.3 (-32.3). The increase in net debt was due to the entering into force of the rental agreement of the printing facility, treated as finance leasing, as well as loans taken for company acquisitions and dividend payment. Financial assets recognised at fair value through profit or loss created through corporate transactions amounted to MEUR 0.9 (4.9) on December 31, 2012, and the fair value of debts on the same date MEUR 2.7 (2.0).

The consolidated cash flow from operations in 2012 was MEUR 24.9 (50.7). Cash flow before financing was MEUR -38.0 (50.7). Because of the change in value-added tax treatment of newspaper subscriptions, part of 2012 subscription revenue was exceptionally created in 2011, which significantly reduced the cash flow from operations during the review period. Cash flow from investing activities was affected primarily by the acquisitions of business operations during the financial period.

The Group currently has a MEUR 100.0 commercial paper programme in Finland under which it is permitted to issue papers to a total amount of MEUR 0–100. The unused part of the programme was MEUR 78.0 on December 31, 2012. In addition, the Group has a credit limit in the amount of MEUR 30.0 until October 9, 2013, of which MEUR 13.0 were unused on December 31, 2012, and a credit limit in the amount of MEUR 50.0 until October 15, 2014, of which MEUR 37.0 were unused on December 31, 2012.

To further strengthen and diversify its financing structure, Alma Media Corporation in October signed two new credit facilities, both valued at MEUR 25 with Nordea Pankki Suomi Oyj and Skandinaviska Enskilda Banken Ab. At the same time, Alma Media terminated its valid credit facility of MEUR 35, previously agreed with Skandinaviska Enskilda Banken Ab. The new credit facilities are valid for two years. 

Research and development costs 

The Group’s research and development costs in 2012 amounted to MEUR 4.1 (4.6). Of this total, MEUR 3.1 (3.0) were expensed and MEUR 1.0 (1.6) capitalised. The most significant projects pertained to the development of digital business. 

Capital expenditure 

Alma Media Group’s capital expenditure in January–December 2012 totalled MEUR 111.3 (6.3), consisting mainly of corporate acquisitions, development projects, normal operational and replacement investments and the investment in the new printing facility. 

Employees 

During 2012, the average number of Alma Media employees, calculated as full-time employees (excluding newspaper deliverers), was 1,910 (1,816). The average number of delivery staff totalled 941 (961). 

Environmental Impacts

The most significant environmental impacts from Alma Media’s business operations are related to printing and distribution operations as well as real estate.  27,900 (31,400) tons of newsprint were used in 2012.  Electricity consumption by Alma Media in 2012 was 16,696 (17,572) megawatt-hours. Further details on  environmental issues are given in the Alma Media Annual Review.

Administration 

Alma Media Corporation’s Annual General Meeting (AGM) held on March 14, 2012 elected Timo Aukia, Petri Niemisvirta, Seppo Paatelainen, Kai Seikku, Erkki Solja, Catharina Stackelberg-Hammarén and Harri Suutari members of the company’s Board of Directors. In its constitutive meeting held after the AGM, the Board of Directors elected Seppo Paatelainen its Chairman.

The Board also elected the members of its committees. Timo Aukia, Kai Seikku, Catharina Stackelberg-Hammarén and Harri Suutari as chairman were elected members of the Audit Committee. Petri Niemisvirta and Erkki Solja, as well as Seppo Paatelainen as Chairman, were elected members of the Nomination and Compensation Committee.

The Board of Directors of Alma Media Corporation has evaluated that the persons elected members of the Board are independent of the company and its significant shareholders, with the exception of Timo Aukia, Petri Niemisvirta and Seppo Paatelainen. These members are evaluated as 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 Ernst & Young Oy as the company’s auditors.

In December, Hämeenlinna Administrative Court overruled the decision by the Regional State Administrative agency for Southern Finland to approve a special audit on Alma Media, thus dismissing the application placed by Oy Herttaässä Ab. The application by Oy Herttaässä Ab, an Alma Media Corporation shareholder, approved by the Regional State Administrative agency for Southern Finland in August 2011, concerned a special audit regarding the operations of the Nomination and Compensation Committee and its predecessor, the Election Committee, of the Board of Directors of Alma Media Corporation.

Mr Juha Nuutinen was appointed CFO of Alma Media Corporation and a member of its Group Executive Team as of November 1, 2012.

Ms Virpi Juvonen has served as the acting Head of HR since December 10, 2012, as the holder of the post, Mr Pekka Heinänen, left the post.

Alma Media Corporation applies the Finnish Corporate Governance Code for listed companies, issued by the Securities Market Association on June 15, 2010, in its unaltered form. The Corporate Governance Statement and the Salary and Remuneration Report for 2012 are available separately on the company’s website at http://www.almamedia.com/investors/. 

Dividends 

The Annual General Meeting resolved to distribute a dividend of EUR 0.40 per share for the financial year 2011, in total MEUR 30.2 (52.5), in accordance with the proposal of the Board of Directors. The dividend was paid on March 26, 2012 to shareholders who were registered in Alma Media Corporation’s shareholder register maintained by Euroclear Finland Oy on the record date, March 19, 2012. 

The Alma Media share 

In January–December, altogether 5,066,413 Alma Media shares were traded at NASDAQ OMX Helsinki Stock Exchange, representing 6.7% of the total number of shares. The closing price of the Alma Media share at the end of the last trading day of the year, December 28, 2012, was EUR 4.55. The lowest quotation during the year was EUR 4.35 and the highest EUR 6.80. Alma Media Corporation’s market capitalisation was MEUR 343.5 at the end of the year.

The Annual General Meeting of Alma Media Corporation on March 14, 2012 authorised the Board of Directors to repurchase a maximum of 1,000,000 of the company’s shares, corresponding to approximately 1.4 % of the company’s total number of shares. The shares will be repurchased at the market price in public trade on NASDAQ OMX Helsinki using the company’s non-restricted equity, which will decrease the disposable funds of the company for the distribution of profit. The price paid for the shares shall be based on the price of the company’s shares in public trade with the minimum price of the shares to be purchased being the lowest quoted market price in public trade during the validity of the authorisation and the maximum price the highest quoted market price during the validity of the authorisation. The shares can be repurchased for the purpose of developing the capital structure of the company, or financing or implementing of corporate acquisitions or other arrangements, or implementing of incentive programmes for the management or key personnel of the company, or to be otherwise disposed of or cancelled. The authorisation is valid until the following ordinary Annual General Meeting, however no longer than until June 30, 2013.

The Annual General Meeting of Alma Media Corporation on March 14, 2012 authorised the Board of Directors to decide on a share issue by transferring shares in possession of the company. The authorisation entitles the Board to issue a maximum of 1,000,000 shares, corresponding to approximately 1.4 % of the total number of shares of the company. The authorisation entitles the Board to decide on a directed share issue, which would entail deviating from the pre-emption rights of shareholders. The Board may use the authorisation in one or more parts. The authorisation may be used to implement incentive programmes for the management or key personnel of the company. The authorisation is valid until the following ordinary Annual General Meeting, however no longer than until June 30, 2013. This authorisation does not override the authorisation for a share issue resolved in the Annual General Meeting held on March 17, 2011.

The Annual General Meeting of Alma Media Corporation on March 17, 2011 authorised the Board of Directors to decide on a share issue. The authorisation entitles the Board to issue a maximum of 7,500,000 shares, corresponding to approximately 10% of the total number of shares of the company. The share issue can be implemented by issuing new shares or transferring shares in possession of the company. The authorisation entitles the Board to decide on a directed share issue, which would entail deviating from the pre-emption rights of shareholders. The Board may 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 similar arrangements, or for other purposes decided upon by the Board. The authorisation may not, however, be used for incentive programmes for the management or key personnel of the company. The authorisation is in effect until March 17, 2013. 

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 2.22%. Further details about the programmes are given in the notes to this Financial Statement Release.

The Board of Directors of Alma Media Corporation has resolved on a new share-based incentive plan for the Group 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 their targets at the beginning of each performance period. The potential reward from the plan for the performance period 2012 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 2013. 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. The potential reward from the performance period 2012–2014 will be paid partly in the company’s shares and partly in cash one year and two years from the end of the performance period. The Performance Share Plan includes approximately 20 persons. 

Other authorisations of the Board of Directors 

The Board of Directors has no other current authorisations to raise convertible loans. 

Market liquidity guarantee 

There is no market liquidity guarantee in effect for the Alma Media share.

Flagging notices 

In the fourth quarter 2012, Alma Media did not receive notices of changes in shareholdings pursuant to Chapter 2, Section 9 of the Securities Markets Act.

In the second quarter of 2012, Alma Media received the following notices of changes in shareholdings pursuant to Chapter 2, Section 9 of the Securities Markets Act:

On June 21, 2012 Mandatum Life Insurance Company Limited informed Alma Media that its holding in Alma Media shares and voting rights has decreased to 3.69%. Kaleva Mutual Insurance Company informed Alma Media that its holding has decreased to 3.01%. Additionally, Mariatorp Oy announced on the same day that it had acquired 7,600,000 Alma Media shares, representing approximately 10.07% of all Alma Media shares 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 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. Limits and processing methods are set for quantitative and qualitative risk methods by the corporate risk management system in writing.

The most critical strategic risks for Alma Media are a significant drop in its newspaper subscriptions, a decline in advertising sales and a significant increase in distribution and delivery costs. Fluctuating economic cycles are reflected on the development of advertising sales, which accounts for approximately half of the Group’s revenue. Developing businesses outside Finland such as in the Baltic countries and other East European countries include country-specific risks relating to market development and economic growth.

In the long term, the media business will undergo changes along with the transformation in media consumption and technological developments. The Group’s strategic objective is to meet this challenge through renewal and the development of new business operations in online media. The most important operational risks are disturbances in information technology systems and telecommunication, and an interruption of printing operations. 

Events after the period 

Alma Media’s printing and distribution company, Alma Manu Oy, is planning the future of its newspaper printing facility in Rovaniemi, Finland, and therefore started statutory personnel negotiations in January 2013. The negotiations concern the entire staff of the Rovaniemi printing facility and mailing department, a total of 23 employees. The topic of the negotiations is the planning of the future for the Rovaniemi printing facility and the various options involved, as well as the possible measures affecting staff and the reasons, effects and alternatives of these measures. 

Proposal by the Board of Directors for distribution of profit 

The Board of Directors proposes to the ordinary Annual General Meeting that a dividend of EUR 0.10 (0.40) per share be paid for the financial year 2012. Based on the number of shares on the closing date, December 31, 2012, the dividend distribution would total EUR 7,543,685 (30,194,741).

On December 31, 2012, the Group’s parent company had distributable funds totalling EUR 8,014,054 (51,941,032) of which profit for the period amounted to EUR -14.169.546 (+47,486,273). No essential changes in the company’s financial standing have taken place after the end of the financial year. Dividends are paid to shareholders who are entered in Alma Media Corporation’s shareholder register maintained by Euroclear Finland Oy no later than the record date, March 19, 2013. The dividend payment date is March 26, 2013.