SanomaWSOY | ANNUAL REPORTANNUAL 2004

ANNUAL REPORT 2004

The Report of the Board of Directors, detailed fi nancial statements, and associated material are published separately. Annual Report material can be ordered from Investor Relations & Group Communications via email (ir@sanomawsoy.fi ) or phone (+358 105 19 5062), and all information can be

consulted at www.sanomawsoy.fi . SanomaWSOY Corporation, P.O.Box 1229, FI-00101 Helsinki, Finland. Tel. +358 105 1999, fax +358 105 19 5068, www.sanomawsoy.fi Lönnberg F.G. by: Printed Incognito Design:

552800_sw_ar_2004_kannet.indd2800_sw_ar_2004_kannet.indd 1 33.3.2005.3.2005 15:17:4815:17:48

Contents

2 SanomaWSOY in brief

4 Mission, vision, values, objectives

6 Management review

8 Key fi gures 2004

10 Key events in 2004

12 Market development

14 Sanoma Magazines

20 Sanoma

24 WSOY

28 SWelcom

32 Rautakirja

36 Environment

38 Personnel

40 Corporate governance

44 Board of Directors

46 Management Group

Financials

1 Key indicators

5 Board of Directors’ Report

12 Financial Statements

41 Shares and shareholders

48 Auditors’ report

49 IFRS reporting

50 Investing in SanomaWSOY

SanomaWSOY » Contents 1

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 1 77.3.2005.3.2005 112:16:512:16:51 SanomaWSOY Group

• Chairman & CEO Jaakko Rauramo SanomaWSOY is the leading media group in the Nordic region operating • President & COO Hannu Syrjänen in 20 European countries. The Group comprises fi ve divisions. Sanoma • Net sales € 2 493.0 million Magazines is one of the fi ve largest magazine publishers in Europe, • Operating profi t € 239.5 million Sanoma is Finland’s leading newspaper publisher, WSOY is Finland’s largest book publisher and a signifi cant European educational publisher, SWelcom focuses on electronic media, and Rautakirja is the market leader in press distribution and specialized retailing.

Sanoma Magazines • President & CEO Eija Ailasmaa • Magazine publishing • Net sales € 1 083.7 million and distribution • Operating profi t € 86.9 million

Sanoma • President Mikael Pentikäinen • Newspaper publishing • Net sales € 435.2 million and printing • Operating profi t € 71.2 million

WSOY • President Jorma Kaimio • Educational publishing, • Net sales € 253.9 million publishing, printing, • Operating profi t € 29.2 million and calendar operations

SWelcom • President Tapio Kallioja • Electronic media • Net sales € 119.4 million • Operating profi t € 9.0 million

Rautakirja • President & CEO Erkki Järvinen • Kiosk operations, press distri- • Net sales € 659.7 million bution, bookstores, and movie • Operating profi t € 41.5 million theatres

2 SanomaWSOY » In brief

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 2 77.3.2005.3.2005 112:17:212:17:21 Sanoma Magazines

Sanoma

WSOY

SWelcom

Rautakirja

Sanoma Magazines - Belgium, Bulgaria, Croatia, the Czech Republic, Finland, Hungary, the Netherlands, Romania, Russia, Serbia and Montenegro, Slovakia, Ukraine Sanoma - Estonia, Finland, the United Kingdom WSOY - Belgium, Denmark, Finland, the Netherlands, Norway, Poland, Sweden SWelcom - Finland Rautakirja - the Czech Republic, Estonia, Finland, Latvia, Lithuania, Romania

SanomaWSOY » In brief 3

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 3 77.3.2005.3.2005 112:17:212:17:21 Mission, vision, values, objectives A media company of opportunities and operational excellence

Mission Vision Values

SanomaWSOY’s mission is to be SanomaWSOY’s vision is to be the Creativity the market leader in satisfying media company of opportunities people’s need for information and operational excellence. Reliability and education and for an easier and happier life. • Our long history and wide prod- Dynamism uct range give us a sound base and put us in a strong position Creative work is the essence of to be the market leader in satis- communications; creativity and fying our customers’ needs for reliability form the basis of all our information and education, and activities. Dynamic people are for an easier and happier life. essential to our success.

• As a media company, our suc- cess depends on skilful people. As an international company operating in several fi elds, we can offer our personnel a wide range of opportunities for con- tinuous learning, self-develop- ment, and job rotation.

4 SanomaWSOY » Mission - Vision - Values - Objectives

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 4 77.3.2005.3.2005 112:17:222:17:22 Strategic objectives Financial targets

Growth Financial targets are defi ned as operating • To develop profi table new products and services profi t (EBIT) of net sales, %. that can be successfully expanded cross-media or internationally • Sanoma Magazines 9.0% • To enter new growth markets • Sanoma 12.5% • To internationalize press distribution step by step • WSOY 12.0% • SWelcom 7.5% Market leadership • Rautakirja 6.0% • To be a market leader and successfully utilize • SanomaWSOY 9.0% that leadership in our chosen businesses and markets According to a preliminary estimate, the • To be a leading European magazine and IFRS reporting started in 2005 will improve educational publisher the Group’s operating profi t margin by some 2.5 percentage points. The modifi ca- Cash fl ow tions will be most signifi cant at Sanoma • To ensure that we continue to have the most Magazines. wanted and valued products and services SanomaWSOY revises its fi nancial targets • To increase the profi tability of our present next time in May 2005 when announcing its businesses result for the fi rst quarter 2005. • To divest non-core assets and businesses Capex yearly basic level under EUR 100 million. Business practices Equity ratio approximately 50%. • To ensure sustainable growth and profi tability • To continuously promote best management Dividend policy practices SanomaWSOY pursues an active dividend • To ensure fast, fl exible, and cost-effi cient policy, based on the principle of normally business processes distributing half of the Group’s result after taxes in the form of a dividend.

SanomaWSOY » Mission - Vision - Values - Objectives 5

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 5 77.3.2005.3.2005 112:17:222:17:22 Management review SanomaWSOY’s approach

SanomaWSOY’s vision is to be a The same way of thinking steers media company of opportuni- communications in the whole of ties and operational excellence. SanomaWSOY Group. We want all our interest groups – customers, employees, owners, A media company and partners – to have the chance of operational excellence to be part of our success. It is also Our goal is that the different sec- important for us that the countries tors – content production, human and societies where we operate resources management, opera- succeed and develop. We want to tional processes, as well as effi - participate in contributing to this ciency and profi tability – will development. meet the criteria of operational We operate in accordance excellence. These same criteria with generally accepted prac- are applied when it comes to the tices, rules, and regulations. We interpretation of the spirit and are of the opinion that a societal letter of the law. approach and long-term objectives This is shown in the ethical should be obtained by a balanced principles of Sanoma Magazines: approach to stakeholders and Sanoma Magazines is an inter- bearing our responsibility. national company with roots in Europe which, above all, recognises Independent and freedom of speech and respects reliable news reporting the different cultures in the coun- Our objective can be seen in the tries where it does business. The operational principles of Helsingin Group has a long tradition and Sanomat: Helsingin Sanomat is interest in the development of an independent and non-aligned society and people’s intellectual newspaper promoting and rein- and economic wellbeing. A respon- forcing democracy, social justice, sible approach to environmental and freedom of opinion. Helsingin questions and a strong sense of Sanomat pursues its mission pri- corporate responsibility are an marily through balanced, rapid integral part of our operating and reliable news reporting. Hel- principles. singin Sanomat’s aim is to offer readers an overall picture based on Towards multimedia the information necessary for citi- Communications and advertis- zens to make their own decisions. ing develop from monomedia Helsingin Sanomat defi nes its towards multimedia. The develop- positions and views independently, ment in technology speeds up this free from political or economic trend. The most important forces decision-makers or other pressure of change are the digitalization groups. This independent policy is of TV, the internet, the increased also implemented in daily news use of personal video recorders, reporting. While aspiring to defend and reinforce democracy in a plural- istic society, Helsingin Sanomat pays special attention to secur- ing freedom of opinion. According to Hel singin Sanomat’s view, bal- anced social development is pos- sible only if all citizens are guar- anteed an uninterrupted fl ow of varied and essential information.

6 SanomaWSOY » Management review

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 6 77.3.2005.3.2005 112:17:222:17:22 and wireless communication. Reading and literacy form the colleagues from Russia, Ukraine, SanomaWSOY is fi rmly involved basis for civilisation and develop- Serbia and Montenegro, the in this process, and has also man- ment. Hence SanomaWSOY has a Netherlands, and Belgium, among aged to make commercial use of it. responsible and important role in others. In Finland, we are undoubtedly the the countries where it operates. Due to the nature and breadth leading player in the multi media We have a demanding mission of our business we have to under- fi eld. Internationally, we aim at which calls for creative, reliable stand and serve our customers as being the best option for multi- and dynamic personnel who well as possible in 20 countries. media solutions connected with respect our values. Our employees We are indeed very proud that both magazines and educational are highly educated and very skil- every year our magazines, news- materials. ful. Also, they expect that we oper- papers, and books have about 50 Net sales of our business-to- ate fairly, encourage in terms of million readers, and that we have business operations amount to remuneration, and give continuous about 200 million customers in about EUR 550 million. When com- training. At SanomaWSOY, a good our kiosks, bookstores, and movie municating with our customers, personnel policy is a prerequisite theatres. If they, as consumers we want to build on confi dence for our success. of our products and services, are and long-term co-operation. We Our personnel have shown better informed and educated, believe that, in the future, our busi- high expertise and commitment or if we have made their lives ness customers will benefi t from when meeting the challenges set easier and happier, we have been an enhanced, more creative and by our operational environment successful. more versatile service. and strategy. However, the opera- tional environment changes and Skilful people are the foundation develops constantly. This means SanomaWSOY’s mission is to be that our personnel always have the market leader in satisfying to be ready for change and also people’s need for information and that there are always new people education and for an easier and joining us. In this connection, we happier life. would like to welcome our new High-level communications and quality education are crucial for the functioning and development of democratic societies. Media also have an important role in people’s everyday lives and personal mat- ters. They offer information, solu- tions to problems, and ideas for personal development.

Hannu Syrjänen Jaakko Rauramo President & COO Chairman & CEO

SanomaWSOY » Management review 7

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 7 77.3.2005.3.2005 112:17:232:17:23 Key indicators, € million 31.12.2004 31.12.2003 SanomaWSOY Net sales 2 493.0 2 395.9 Operating profi t before amortisation 370.5 338.4 Key fi gures Operating profi t 239.5 205.2 Profi t before extraordinary items 212.2 163.1 Balance sheet total 2 528.8 2 453.0 Gross investments 274.7 94.8 Return on equity (ROE), % 15.5 11.9 Return on investment (ROI), % 14.8 11.4 Equity ratio, % 39.0 40.3 Equity ratio, % *) 45.6 47.6 Gearing, % 85.4 72.9 Gearing, % *) 58.6 46.4 Earnings / share, € 0.87 0.69 Cash fl ow / share, € 1.67 1.65 Equity / share, € 5.99 6.08 Personnel under employment contract, average 16 207 17 330 Market capitalisation 2 632.2 2 554.9

* ) Capital notes included in equity.

Net sales by division Net sales, € million *)

2 493.0 2004 2 395.9 2003 2 357.8 2002 1 734.3 2001 1 447.8 2000

*) The accounting practice of net sales has been modified in 2003. The data from 2000 to 2002 has not been adjusted accordingly.

Sanoma Magazines 43% Operating profi t, € million Sanoma 17% WSOY 10% 239.5 2004 SWelcom 5% 205.2 2003 Rautakirja 26% 134.4 2002 96.5 2001 84.0 2000

Operating profi t by division Profi t before extraordinary items, € million

212.2 2004 163.1 2003 106.7 2002 92.5 2001 138.3 2000

Cash fl ow from operations, € million

Sanoma Magazines 36% 255.3 2004 Sanoma 30% 248.1 2003 WSOY 12% 187.3 2002 SWelcom 4% 171.9 2001 Rautakirja 17% 171.7 2000

8 SanomaWSOY » Key fi gures

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 8 77.3.2005.3.2005 112:17:312:17:31 Operating profi t before amortisation Net sales (EBITA) Operating profi t (EBIT) 2004 2003 2004 % 2003 % 2004 % 2003 % Sanoma Magazines • Sanoma Uitgevers 528.8 540.6 106.4 20.1 105.1 19.4 • Sanoma Magazines Belgium 186.0 182.1 18.4 9.9 17.7 9.7 • Sanoma Magazines Finland 174.8 167.9 27.0 15.5 25.4 15.1 • Sanoma Magazines International 138.3 127.2 9.1 6.6 13.4 10.5 • Aldipress 115.7 109.3 2.3 2.0 -1.2 -1.1 • Intracompany transactions / eliminations -59.8 -62.3 -1.2 - -1.1 - Total 1 083.7 1 064.8 162.0 14.9 159.1 14.9 86.9 8.0 78.8 7.4

Sanoma *) • Helsingin Sanomat 250.8 243.7 41.0 16.3 30.4 12.5 • IS Business Unit 95.2 93.6 17.1 17.9 17.5 18.7 • Sanoma Lehtimedia 54.0 52.7 9.5 17.6 8.1 15.4 • Others 133.7 176.3 10.4 7.8 21.4 12.1 • Intracompany transactions / eliminations -98.5 -140.8 -- -- Total 435.2 425.5 78.0 17.9 77.5 18.2 71.2 16.4 69.4 16.3

WSOY *) • Publishing 178.7 142.6 26.9 15.1 12.7 8.9 • Printing 59.0 60.2 8.1 13.7 7.4 12.3 • Calendar operations 30.3 32.1 0.7 2.4 1.4 4.5 • Others 5.1 4.6 -0.4 -7.4 5.0 109.4 • Intracompany transactions / eliminations -19.1 -27.2 2.9 - 1.4 - Total 253.9 212.2 38.3 15.1 28.0 13.2 29.2 11.5 22.6 10.6

SWelcom • Nelonen 67.6 56.5 27.4 40.5 20.2 35.8 • Others 53.1 50.0 11.9 22.3 9.4 18.8 • Intracompany transactions / eliminations -1.3 -1.7 -- -- Total 119.4 104.9 39.3 32.9 29.6 28.3 9.0 7.5 1.2 1.1

Rautakirja • Kiosk operations 347.3 352.8 22.3 6.4 20.1 5.7 • Press distribution 79.5 87.6 12.6 15.9 11.9 13.6 • Bookstores 129.7 121.8 9.9 7.6 8.9 7.3 • Movie theater operations 56.8 52.8 8.5 15.0 7.8 14.8 • Restaurant operations 57.8 62.6 0.6 1.1 -0.2 -0.4 • Intracompany transactions / eliminations -11.3 -23.8 -- -- Total 659.7 653.8 50.6 7.7 45.7 7.0 41.5 6.3 35.5 5.4

Other companies **) and eliminations -59.0 -65.3 2.4 -1.4 1.7 -2.2

SanomaWSOY 2 493.0 2 395.9 370.5 14.9 338.4 14.1 239.5 9.6 205.2 8.6

*) EBITA and EBIT include a share of Rautakirja's result until 1 March 2003. **) Parent company SanomaWSOY Corporation and real estate and investment companies.

SanomaWSOY » Key fi gures 9

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 9 77.3.2005.3.2005 112:17:322:17:32 Key events Consistent in 2004 execution of strategy

Growth and market leadership In 2004, especially the Group’s During 2004, SanomaWSOY SanomaWSOY’s strategy is to magazine operations expanded markedly strengthened its position develop new, profi table products strongly in Central Eastern Europe on the European educa tional mate- and services which can be success- where several new products were rial market: In spring it increased its fully expanded cross-media and launched – Esta and Zin being share in the Polish eLearning com- internationally. Our aim is to be the largest – and operations were pany Young Digital Poland. In the the leading media company in the extended into Serbia and Monte- summer, SanomaWSOY acquired Nordic region and one of the lead- negro. Besides conventional the educational publisher Malm- ing magazine and educational magazine operations, a variety of berg, operating in the Netherlands publishers in Europe. We aim at events and internet projects were and Belgium. Today, SanomaWSOY market leadership in our chosen promoted. is the fi fth largest magazine pub- businesses and markets. lisher and the sixth largest educa- tional publisher in Europe.

16.3 WSOY acquired the majority share in Young Digital Poland

4.5 Free sheet Uutislehti 100 to Sanoma

12.2 SanomaWSOY’s result 6.4 Sanoma Magazines 30.6 Sanoma sold its for 2003: Development in sold Milvus Förlags AB shares in Savon Mediat Oy results continued to be good to Ilkka-Yhtymä

7.5 SanomaWSOY’s interim report 1.1–31.3.2004: Development in results continued to be good – operating profi t almost doubled

Cash fl ow and business practices In 2004, the Group’s develop- Group realized non-core assets SanomaWSOY’s goal is to retain ment in results continued to be and businesses in 2004 by selling the most valued and desired prod- strong and all divisions posted the Swedish magazine publisher ucts and services. The Group aims improved results. The Group Milvus Förlags, its restaurant to increase profi tability in the cur- refi nanced its loan portfolio, which operations, and the minority share rent businesses and to realize non- decreased fi nancing costs signifi - in the newspaper companies core assets and businesses. cantly. In line with its strategy, the Savon Mediat and Ilkka-Yhtymä, among others.

10 SanomaWSOY » Key events in 2004

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 1010 77.3.2005.3.2005 112:17:332:17:33 In 2004, SanomaWSOY contin- the announcement of the acqui- lehti 100, the Kellokas free sheet ued to internationalize its press sition of the leading Russian con- family, and Palvelulehti Itäväylä, distribution by extending it into sumer magazine publisher Inde- among others – and established a Romania and Lithuania. The Group pendent Media in January 2005. new business unit for free sheets. now has a very strong and sound Newspaper operations will con- Further, the establishment of a position in the Baltic press distri- tinue to focus on conventional new free sheet chain, Kaupunki- bution and movie theatre opera- newspapers. Nevertheless, accord- lehti Kymppi, in the Helsinki area tions markets. The Central Eastern ing to a decision made in 2004, was announced for 2005. European economies are growing free sheets will be one of the areas intensively, and SanomaWSOY will of growth in the newspaper sec- 19.1 SanomaWSOY acquires continue to invest in these mar- tor. SanomaWSOY acquired several the leading Russian magazine kets in 2005. An example of this is free sheets during the year – Uutis- publisher Independent Media

8.12 Rautakirja acquired a press distribution company in Lithuania 21.10 Sanoma to establish free sheets and diversify Kellokas paper operations *) 14.12 Sanoma acquired 2.7 Rautakirja expanded Palvelulehti Itäväylä *) into Romania 28.9 Free sheets Kellokas 22.12 Sanoma Magazines 16.7 SanomaWSOY acquired and Hyvinkään Kellokas International entered Malmberg Investments B.V. to Sanoma Serbia and Montenegro

10.8 SanomaWSOY’s interim 8.11 SanomaWSOY’s interim 22.12 Rautakirja report 1.1–30.6.2004: The year report 1.1–30.9.2004: Develop- sold its restaurant continued to be successful ment in results continued to be operations strong

23.9 SanomaWSOY refi nanced 15.11 Sanoma gained EUR 5.6 *) Sanoma its loan portfolio million on the sale of assets of Corporation’s Ilkka-Yhtymä shares release

SanomaWSOY’s aim is to tralizing its IT operations and ensure continuous growth and making preparations for forming a profi tability and to constantly pro- fi nancial service centre. Co-opera- A complete list of mote good management practice. tion between printing houses was SanomaWSOY’s The company also wishes to secure intensifi ed, and the centralization releases for 2004 can fast, fl exible and cost-effi cient of paper purchases was continued. be found on page 52, processes. In 2004, SanomaWSOY Major investments were also Financials, and at rationalized its processes by cen- made in personnel training. www.sanomawsoy.fi .

SanomaWSOY » Key events in 2004 11

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 1111 77.3.2005.3.2005 112:17:332:17:33 Market development Widening media fi eld

People’s time is fi lled with a con- and the women’s magazines tinuous fl ow of information from Me Naiset and Libelle – reach different media. From the media hundreds of thousands of read- companies’ point of view, the com- ers and live from one decade to petition needs to be seen as a another. Thus strong brands grow whole, where the media compete even stronger and are utilised in with other free-time opportunities. other businesses. Brand extensions Television is still the most popu- – such as fairs, household appli- lar media in Europe, even though ances and textiles – are today a the target audiences are frag- considerable part of the magazine menting due to the increasing business. number of TV channels. Also the Another trend related to the use of the internet is growing rap- magazine market is the increas- idly, partly due to the popularity ingly accurate analysis and seg- of broadband connections. mentation of readers. Due to tech- However, content requirements nological development, even short- are changing, with customers term magazines can be profi tably expecting not only information produced for smaller and smaller but also personalization and an target groups. This kind of niche enjoyable experience. Digitaliza- publishing, magazine publishing tion, the rapid development of for very specifi c target groups, is information technology, wire- growing in Europe. less technology and mobility, and increasingly versatile end-user Increased advertising equipments are enabling com- sales for newspapers pletely new products and services. The long-term development of While this change is ushering in the advertising market clearly opportunities, it is also intensify- follows the growth of GDP but ing competition for people’s time. reacts slightly stronger than the changes in GDP. The recession at Strong brands grow the change of the millennium stronger and expand depressed the advertising mar- The magazine market is in the ket, and the recovery is slow. It was process of change. The con- only in the second half of 2004 ventional magazines – such as that there were clear signs of National Geographic, Donald Duck, recovery in the Finnish adver tising

Finland: Time spent with mass media in 2004 *)

33 Magazines 48 Newspapers 10 Free sheets 2 Direct advertising 29 Books 207 TV 169 Radio 11 Video & DVD 18 Phonograms 33 Internet

Source: TNS Gallup Group *) min / day

12 SanomaWSOY » Market development

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 1212 77.3.2005.3.2005 112:17:342:17:34 Advertising expenditure in 2004, USD million Total Newspapers Magazines TV Radio Cinema Outdoor Internet market. Job advertising, which is The Netherlands 3 862 1 620 877 854 279 8 150 74 considered an indicator of eco- Russia 3 360 515 360 1 650 135 15 650 35 3 124 455 481 1 700 264 30 194 n/a nomic development, increased in Poland Belgium 2 679 623 324 1 163 284 29 225 32 2004 by 12%. Norway 2 358 1 072 260 720 127 20 95 64 Sweden 2 000 967 256 449 60 9 103 158 Radical change in Hungary 1 923 214 211 1 260 109 7 122 n/a educational publishing Denmark 1 769 721 55 322 36 9 55 87 1 356 267 268 652 82 6 58 22 A major change is in progress in The Czech Republic Finland 1 279 699 209 253 54 2 36 26 educational publishing in Europe. Bulgaria 254 41 14 165 n/a n/a 27 n/a Educational materials are conven- Romania 200 30 18 130 9 1 12 1 tionally published separately in Lithuania 95 28 12 41 7 0 6 2 each country, and there are few Latvia 83 25 13 28 10 1 5 2 70 31 8 18 6 n/a 5 2 multinational publishers. This Estonia is changing, now that curricula Source: ZenithOptimedia, 2004 are being harmonised and in the future the same, localized modules can be used to create various edu- cational materials. The internet, eLearning environments, and other eLearning materials are contrib- uting to the change. It is particu- connection in Finland by the end Press distribution has an larly the Central Eastern European of 2004. Half of them were broad- important role – particularly in countries that are currently invest- band connections. Their number Central Eastern Europe ing in developing their school was roughly 25% a year before. In Central Eastern Europe, press systems. Broadband connections facilitate a distribution was conventionally major change in media and leisure seen as a support function for Broadband internet time consumption. Weather fore- publishing. The situation is connections increase sharply casts, TV programmes and time- changing, and it is admitted In 2004, the number of broadband tables are often checked online, that correctly implemented internet connections increased a and the internet is considered distribution can be a good and lot. According to TNS Gallup, every quick and easy for ticket reserva- profi table business. second household had an internet tions and bookings.

GDP change and advertising growth rates, %

2000 2001 2002 2003 2004 2005 2006 2007 Belgium 3.7 8.6 0.7 -3.1 0.7 10.3 1.1 11.0 2.5 10.0 2.5 9.9 2.1 10.0 2.1 9.1 Bulgaria 5.4 68.6 4.1 44.2 4.9 32.0 4.3 20.5 4.7 13.1 4.2 13.5 4.2 11.9 4.3 9.1 The Czech Republic 3.9 16.4 2.6 16.5 1.5 -1.2 3.1 7.7 3.9 9.5 4.1 7.5 4.4 7.9 4.4 7.2 Denmark 2.8 4.8 1.6 0.0 1.0 -2.9 0.5 3.3 2.6 5.2 2.6 5.3 2.3 4.8 2.0 4.6 Estonia 7.8 5.5 6.4 11.2 7.2 8.4 5.1 11.5 5.9 7.4 6.0 7.3 5.8 6.0 5.5 5.8 Finland 5.1 8.0 1.1 -5.1 2.3 -1.5 2.0 2.5 2.8 5.0 3.1 4.2 3.0 3.6 2.8 3.1 Hungary 5.2 29.7 3.8 18.9 3.5 19.7 2.9 16.0 3.7 16.5 3.9 17.0 4.0 16.6 4.0 15.2 Latvia 6.9 6.8 8.0 14.0 6.4 18.4 7.5 6.2 7.5 10.5 5.5 11.8 5.5 8.3 5.2 8.2 Lithuania 3.9 -6.5 6.4 4.0 6.8 18.0 9.7 12.1 7.0 11.4 6.2 8.9 5.5 8.8 5.2 7.4 The Netherlands 3.5 9.3 1.4 -3.7 0.6 -2.7 -0.9 -6.0 1.4 -1.2 2.0 1.7 2.1 3.1 2.3 2.4 Norway 2.8 10.4 2.7 -0.8 1.4 3.6 0.4 15.1 3.1 8.4 2.9 5.6 2.3 4.4 2.1 3.7 Poland 4.0 14.4 1.0 23.7 1.4 4.9 3.8 10.9 5.5 6.5 4.5 5.9 4.0 4.9 4.1 3.8 Romania 2.1 2.0 5.7 -7.4 5.0 6.1 4.9 22.1 6.0 30.5 5.2 8.7 5.2 9.8 4.8 6.8 Russia 10.5 44.3 5.1 61.7 4.7 50.4 7.3 30.8 7.0 27.8 6.0 21.6 5.5 14.8 5.0 11.6 Sweden 4.4 13.8 1.2 -10.9 2.0 -3.9 1.7 0.2 3.3 2.2 3.0 5.4 2.7 6.8 2.3 5.1

Sources: ZenithOptimedia, 2004, EIU GDP Ad growth

SanomaWSOY » Market development 13

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 1313 77.3.2005.3.2005 112:17:342:17:34 Sanoma Magazines is one of the fi ve largest consumer magazine publishers in Europe. The division publishes some 270 titles in 12 coun- tries. Based on the core business and labelled with the magazine brands, other media plat- forms, especially the internet, are also being expanded. Sanoma Magazines’ mission is to serve the needs of readers and advertisers by Sano creating and continuously developing top qual- Sano ity magazine brands and multimedia extensions that offer sustainable profi tability and growth.

Sanoma Uitgevers, the Netherlands • Women’s magazines • Men’s magazines • Home & decoration magazines • Children’s and youth publishing • Custom publishing • Other operations – ilse Media Groep – RCV Entertainment

Sanoma Magazines Belgium • Women’s magazines • TV magazines • Home & decoration magazines • Custom publishing

Sanoma Magazines Finland • Women’s and family magazines • Technical magazines and Custom publishing • Youth publishing

Sanoma Magazines International • Consumer magazines and Custom publishing – Hungary – the Czech Republic – Croatia – Romania – Slovakia – Bulgaria – Serbia and Montenegro (2005) – Russia (2005) – Ukraine (2005)

Aldipress, the Netherlands • Magazine distribution

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 1414 77.3.2005.3.2005 112:17:352:17:35 o omama Magazines Ma One more successful year for magazines

“Sanoma Magazines geared up for “Promotion of our key titles in 2004 was a success for Sanoma future growth and strengthened all our markets was and will be Magazines. The company’s rev- its leading market position with a central in our operations. In 2004 enue increased by 1.8% to EUR record number of new initiatives in we were able to achieve above- 1,083.7 million and its operating 2004. Altogether 29 projects, such average growth in our leading profi t improved by 10.2%. The as new magazines and internet titles in most of our key markets. company strengthened its position initiatives, were launched in our “Although we invested in the as Europe’s fi fth-largest magazine nine markets during the year. future more than ever, we were publisher. “In 2004, we continued our geo- still able to continue improving The demanding market situa- graphical expansion by starting the good performance thanks to tion, especially in the Netherlands, operations in Bulgaria and prepar- the strong market positions of was addressed by actively launch- ing to start in Serbia and Monte- our businesses and initiatives to ing new titles and improving opera- negro. We also invested in new improve cost effi ciency. tional effi ciency. growth opportunities with multi- “2005 is expected to continue media initiatives and brought our as a rewarding, inspiring, and inno- Many new launches and internet operations into focus. It is vative journey in our efforts to be multimedia innovations at our ambition to expand our exist- genuinely customer driven and op- Sanoma Uitgevers ing market leadership in consumer erationally excellent by doing Despite the challenging market internet markets in the Nether- things better, smarter, and quicker. situation in the Netherlands, 2004 lands and Hungary throughout We will continue to develop the was a successful year for Sanoma the whole division. We also stimu- portfolio of our businesses by fur- Uitgevers. By launching 18 new lated custom publishing initiatives ther geographic expansion and products, off and online, Sanoma in all major markets. by utilizing our strong brands and Uitgevers strengthened its product customer communities. portfolio and extended its leading “The acquisition of the leading role as the largest Dutch multi- Russian publishing company, Inde- media company. pendent Media, and our expansion Examples of the 2004 launch- into this large growth market will es are the bi-weekly women’s be the highlight of our year.” magazine Esta, the bi-weekly ce- lebrity magazine Pulse, Zin, a maga- Eija Ailasmaa zine for 50+ readers, and Ook!, a President & CEO magazine for grandparents. New Sanoma Magazines launches for juvenile readers were Winnie de Poeh and Disney Princes. In 2004 Sanoma Uitgevers acquired equity in Preview, the leading movie magazine in the Netherlands, and established a

Divisions » Sanoma Magazines 15

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 1515 77.3.2005.3.2005 112:17:562:17:56 Sanoma Magazines is a preferred license partner to many well-known international magazine brands like National Geographic, Men’s Health, and Donald Duck.

new publishing company, Sanoma Sanoma Magazines Belgium ket share in both the readers’ and Men’s Magazines, which brings improved its result advertising markets. This includes all men's titles together. Linda, In the very competitive market in new launches and acquisitions. published by the 30% owned sub- 2004, Sanoma Magazines Belgium The focus will also be on improv- sidiary Mood for Magazines, won improved its fi nancial performance ing operational excellence, for the award of Magazine of the Year and its biggest titles maintained example by improving the total 2004. their market positions. The com- supply chain process. Also, cross-media activities pany acquired some small-scale were expanded in 2004. In addi- publishing titles and launched The success of Sanoma Magazines tion to the readers’ events of new custom publishing titles. Finland continued Libelle and Margriet, a new event In 2004, Sanoma Magazines 2004 was very successful for for young families became an Belgium also launched an initia- Sanoma Magazines Finland. The instant success. In 2004, 20% of tive to increase the market share net sales increased by 4.1% to EUR Sanoma Uitgevers’ revenues came of magazines in the advertising 174.8 million. The positive devel- from brand extensions like events, market. This important initiative opment of own operations’ profi t- books, and internet sites. was later supported by all major ability continued, reaching an all- ilse Media Group had a very Belgian magazine publishers in time high. successful year and acquired the context of Febelma (Federation Sanoma Magazines Finland several internet initiatives like of Belgian Magazine publishers). also succeeded in the readers’ Kaboem.nl, web-log.nl, and CU2.nl. Furhermore, Sanoma Maga- market. The total circulation of its This strengthened ilse’s posi- zines Belgium created new ways 40 titles went up from 2.0 million tion among Dutch youngsters of expanding the traditional adver- to 2.2 million. substantially. Also the internet tising relationships to include ET-lehti, a 50+ magazine, initiatives of Autoweek.nl and other marketing activities like increased the number of issues Vrouwonline.nl were very special events and competitions, from 14 to 15 in 2004 and there will successful. new editorial initiatives, work- be 18 issues in 2005. Me Naiset shops, internet services, etc. magazine continued the positive In 2005, Sanoma Magazines development by increasing both Belgium aims to increase its mar- circulation and number of readers. The Donald Duck character celebrated its 70th birthday and Donald Duck, Finland’s biggest magazine in circulation, continued its success, selling some 300,000 copies.

16 Divisions » Sanoma Magazines

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 1616 77.3.2005.3.2005 112:17:572:17:57 Sanoma Magazines publishes the popular Cosmopolitan magazine now in seven countries – Bulgaria, Finland, Hungary, the Netherlands, Romania, Russia, and Ukraine.

Sanoma Magazines Finland a free cultural program maga- Sanoma Hearst Romania added broadened its magazine portfolio zine. FHM, the men’s lifestyle Bine! pentru mine, a bi-weekly by launching two new magazines magazine, from joint venture women’s magazine, to the port- in March: Auto Bild Suomi, a bi- company Hearst Sanoma Press folio, and the publication fre- weekly car magazine and Meidän Publications, was awarded the quency of Story and TV Story Perhe, a monthly parenting bronze EFFI prize, one of the most changed from bi-weekly to weekly. magazine. valued international awards for Sanoma Magazines Zagreb’s During 2004, Sanoma Maga- advertising effectiveness. most recent launch was the zines Finland divested two non- The economic fundamentals bi-weekly lifestyle magazine Viva, core assets. In March, a weekly of the Czech Republic look very introduced on the Croatian market tabloid, ITviikko, was transferred good. However, in 2004 consum- in October 2004. The company has to Sanoma and in May, Swedish ers showed low confi dence as a also strengthened its magazine magazine publisher Milvus Förlags result of recent VAT increases and portfolio as well as its multimedia was sold. EU entrance. products. Because of its strong position Two new titles launched by Sanoma Magazines Slovakia, in the readers’ market, Sanoma Sanoma Magazines Praha were leading in the business-to- Magazines Finland’s starting point closed before the year-end. To business segment in Slovakia, for 2005 is good. The magazine meet the changing market con- performed according to expecta- portfolio will continue to refl ect ditions and to secure its market tions. Sanoma Bliasak Bulgaria market trends and environmental share, Sanoma Magazines Praha strengthened its existing portfolio values. launched several new titles in the and reported a continuing success low-priced magazines’ segment. story for Cosmopolitan, launched Several new launches from In December 2004, Sanoma Maga- in March 2004. Sanoma Magazines International zines Praha divested its business- In 2004, Hungarian-based Sanoma to-business magazines to fully Budapest continued to show focus its attention on the con- strong performance, although the sumer magazines and to remain media advertising market was the leading publisher in the Czech subject to increasing price compe- Republic in this segment. tition. Top performers were Best, Szines RTV and Story. The women’s weekly Maxima was launched in January 2004. In September 2004, Sanoma Budapest, through a joint venture company, launched Exit,

Divisions » Sanoma Magazines 17

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 1717 77.3.2005.3.2005 112:18:022:18:02 Well-known magazine brands have also created wide and active internet communities – like the parenting community around Vauva (Baby) magazine in Finland.

Aldipress – a year of growth and and distribution activities for the ilse Media – the leading development magazine group of De Telegraaf Dutch online publishing Though 2004 has been a year of (TTG), adding nine major tittles to company pressure on margins from the its portfolio. The strategy of ilse Media is retail side, Aldipress managed to As part of an operational excel- focused on three areas: search improve its share in shelf positions. lence program the processing of engines and portals, news In food channels its market unsold copies and all logistical sites, and youth communities. share grew from 68% to almost activities will be concentrated on At the moment, ilse Media 75%. Shell selected Aldipress as the one site. At the same time strong generates about 450 million exclusive supplier of magazines impulses are given to improve- page impressions per month and home entertainment products ment of processes and structures and its sales are growing fast, to its service station network in as well as to upgrade of systems. providing higher profi t mar- the Netherlands. gins than in the consumer Aldipress started a number of Acquisition of Independent print industry. In December pilot schemes to develop several Media Holding – the leading 2004, ilse Media won three new retail channels and persuaded Russian magazine publisher prizes in the Dutch Website new initiatives to increase sales In January 2005, SanomaWSOY of the Year contest with its through its retail partners. announced that Sanoma Maga- ilse.nl, Startpagina.nl, and At the beginning of 2004 zines has entered into an agree- Nu.nl websites. Aldipress acquired the whole sale ment to acquire Independent Due to Sanoma Maga- Media Holding. The company zines’ strong online market consists of six main operating positions, its online assets companies in Russia and Ukraine. contribute substantial value This acquisition makes Sanoma to Sanoma Magazines’ total Magazines the leading consumer business. In 2005, Sanoma magazine publisher in Russia. Magazines will strengthen and develop its existing internet activities and know- ledge to increase its online presence in its core countries. This will be done through launches, partnerships, and acquisitions.

18 Divisions » Sanoma Magazines

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 1818 77.3.2005.3.2005 112:18:052:18:05 Sanoma Magazines Net sales and EBITA, % Net sales by business, € million

528.8 Sanoma Uitgevers 186.0 Sanoma Magazines Belgium 174.8 Sanoma Magazines Finland 138.3 Sanoma Magazines International 115.7 Aldipress

EBITA by business, € million

Net sales 43% of Group 106.4 Sanoma Uitgevers EBITA 44% of Group 18.4 Sanoma Magazines Belgium 27.0 Sanoma Magazines Finland 9.1 Sanoma Magazines International 2.3 Aldipress

Management Board Key indicators, € million

Eija Ailasmaa, (Chairman), born 1950 31.12.2004 31.12.2003 President & CEO, Net sales 1 083.7 1 064.8 Sanoma Magazines B.V. Operating profi t before amortisation 162.0 159.1 % of net sales 14.9 14.9 Koos Guis, born 1947 Operating profi t 86.9 78.8 CEO, % of net sales 8.0 7.4 Sanoma Magazines Operating profi t excl. associated companies 80.4 67.2 International B.V. % of net sales 7.4 6.3 Balance sheet total 1 515.2 1 504.7 Edo Meerloo, born 1948 Gross investments 19.8 18.4 CEO, Return on investment, % (ROI) 8.4 6.9 B.V. Aldipress Personnel under employment contract, average 4 522 4 421 Personnel, average (full-time equivalents) 3 992 3 879 Raili Mäkinen, born 1944 CEO, Sanoma Magazines Finland Oy Operational indicators, 1.1–31.12.

Walter van der Schaaff, born 1958 2004 2003 CFO, Number of copies sold (press distribution / Aldipress), Sanoma Magazines B.V. thousands 121 822 115 124 Number of magazines published 243 232 Dirk Van den Bossche, born 1962 Magazine copies sold, thousands 410 007 411 421 CEO, Number of advertising pages sold 46 042 47 122 Sanoma Magazines Belgium N.V.

Pim de Wit, born 1952 CEO, Sanoma Uitgevers B.V.

Paul van Driessen, born 1954 Secretary to the Management Board, Chief Legal Offi cer and Company Secretary, Sanoma Magazines B.V.

Divisions » Sanoma Magazines 19

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 1199 77.3.2005.3.2005 112:18:302:18:30 Sanoma publishes and prints Helsingin Sanomat, the largest subscription-based newspaper in the Nordic region, and Ilta-Sanomat, Finland’s second-largest newspaper. Sanoma’s other national papers include the business daily Taloussanomat, the sports and sport betting weekly IS Veikkaaja, and the free-ad publica- tions Keltainen Pörssi and Palsta. Sanoma’s titles also include the dailies Etelä-Saimaa, Kouvolan Sanomat Sano and Kymen Sanomat, as well as local papers and free sheets in south-eastern Finland and free sheets in the Sano Uusimaa region. In addition, Sanoma provides picture agency and news analysis and summary services.

Helsingin Sanomat (Daily newspaper) • Oikotie

Ilta-Sanomat • Ilta-Sanomat (Tabloid) • IS Veikkaaja (Sports and betting weekly) • Free-ad publications – Keltainen Pörssi – Palsta – Kuldne Börs

Sanoma Lehtimedia • Regional papers – Etelä-Saimaa – Kouvolan Sanomat – Kymen Sanomat • Local papers, 6 titles • Free sheets, 2 titles

Taloussanomat • Taloussanomat (Business daily) • News Agency Startel • ITviikko • Digitoday.fi

Sanoma Kaupunkilehdet (Free sheets) • Uutislehti 100 • Kellokas • Palvelulehti Itäväylä • Free sheet chain, Kaupunkilehti Kymppi, in 2005

Sanomapaino • 5 printing plants

Lehtikuva (Picture agency)

Esmerk (Information services)

Sanoma Data (IT operations)

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 2020 77.3.2005.3.2005 112:18:372:18:37 o omama Focus on newspapers, free sheets a new growth area

“Sanoma Corporation is the lead- Sanoma’s net sales amounted discussions about the EU elections ing producer of daily content in to EUR 435.2 million in 2004 and in Sanoma House, together with Finland. Sanoma’s aim is to be the operating profi t grew by 2.7%. the TV channel Nelonen. most profi table media company Sanoma’s focus will continue to The aim for 2005 is to increase in the Nordic region offering its be on the subscription and news- Helsingin Sanomat’s media mar- reading and advertising customers stand sales of newspapers. In ket share and circulation sales, in the most valued media products 2004, free sheets were defi ned the Uusimaa region in particular. in Finland. as one attractive area of growth. “Our strategic objectives During the year, Sanoma acquired Helsingin Sanomat’s printing include growth, improved profi t- free sheets Uutislehti 100, Kellokas plants combined in Sanomapaino ability and strong market position, and Palve lu lehti Itäväylä, and At Helsingin Sanomat’s printing particularly in the Uusimaa region, announced the establishment plants, the revised printing proc- in newsstand and free sheet of a new free sheet chain in the ess introduced towards the end sales, and online. We aim at these Uusimaa region around Helsinki of 2003 gained a fi rm foothold, goals by developing our products, in 2005. A new business unit new products were developed, and acquiring new companies, devel- was established for free sheets. preparations were made for incor- oping new products, making use of Sanoma started to incorporate its porating the printing operations at Group synergy, and strengthening operations in 2005. The purpose the beginning of 2005. The print- our operative excellence. The wel- is clarity in operations and cost- ing operations are now centralised fare of personnel and continuous effi ciency. in Sanomapaino, which is one of professional development are the largest newspaper printing crucial for us. Helsingin Sanomat plants in the Nordic region. “In 2004, we successfully breaks with tradition The aim for 2005 is to enhance reached our targets for growth Helsingin Sanomat is the leading production reliability, acquire new and result. Sanoma's operating advertising medium in Finland. customers for print jobs, and to profi t was the best ever. The The product family includes the boost exports, to Western Europe development in the media market core daily, the weekly supplement in particular. was positive towards the end of Nyt, the monthly magazine the year. Kuukausiliite, and online products: Ilta-Sanomat strengthened “We expect growth and further Verkkoliite, the online news service, its position in newsstand sales improvement in results in 2005. Nyt.fi , and Oikotie, which is a web- Ilta-Sanomat is the leading pub- We believe that the year will site with classifi ed ads shared by lisher for newsstand sales with be good in the reader market. seven newspapers. a market share of about 32% of We expect that the media market In autumn 2004, job advertis- newsstand sales, and more than will grow further, even though ing in Helsingin Sanomat started 60% of tabloid sales. The main it is good to be prepared for to grow intensely. Sales from Oiko- products – Ilta-Sanomat with its surprises.” tie’s job advertising grew by 47% daily supplements, the IS product compared to 2003. family for sports and sport bet- Mikael Pentikäinen In 2004, Helsingin Sanomat ting, and the publication Keltainen President started to publish HS books, for Pörssi for classifi ed ads – are all Sanoma example, and developed new market leaders in their fi elds. activities by arranging a series of

Divisions » Sanoma 21

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 2121 77.3.2005.3.2005 112:18:552:18:55 Free sheets – like Uutislehti 100 distributed in Greater Helsinki commuter Esmerk continues to grow traffi c – are an interesting growth area. Esmerk produces customised media analysis and summary serv- In 2004, Ilta-Sanomat strength- In 2005, the good development ices. It expanded its operations in ened its position in newsstand in advertising and circulation sales 2004. The electronic media analy- sales and launched several new is expected to continue. sis and summary service estab- titles: the Ilta-Sanomat Plussa in lished its position in the Finnish magazine format, IS sports papers, Taloussanomat to be the leading market and was expanded to 21 the IS TV supplement and IS cross- ICT decision-making media new countries. In 2005, the aim word puzzles. IS Sports News In September 2004, Startel Oy is to grow further, particularly in started on TV channel Nelonen in became Taloussanomat Oy. Talous- Western Europe. February 2004. sanomat Oy includes the fi nancial Ilta-Sanomat aims at being the newspaper Taloussanomat, the leading cross-media publisher in news agency Startel, the weekly IT Finland. Ilta-Sanomat will continue supplement ITviikko and the online Oikotie – the biggest to expand its product family in paper Digitoday.fi . online service for 2005. In the spring of 2004, the acqui- classifi ed ads in Finland sition of the publishing rights for Oikotie is the biggest website Sanoma Lehtimedia’s advertising ITviikko and the procurement of for classifi ed ads in Finland. The sales better than expected Digitoday.fi made Taloussanomat service has 560,000 monthly In November 2004, Kymen Lehti- the leading media for ICT decision visitors, and it reaches about two media was renamed Sanoma makers in Finland. million Finns every day. Besides Lehti media. The company pub- In 2005, Taloussanomat will Sanoma’s papers – Helsingin lishes dailies, local newspapers report on general fi nancial issues Sanomat, Etelä-Saimaa, Kouvolan and free sheets. Its titles include and chosen themes of interest. Sanomat and Kymen Sanomat Etelä-Saimaa, Kouvolan Sanomat Taloussanomat’s electronic serv- – Oikotie is shared by Turun Sano- and Kymen Sanomat, as well as six ices attracted a considerably mat, Etelä-Suomen Sanomat and local papers and two free sheets. increased number of visitors in Hämeen Sanomat. Circulation of the dailies 2004, and the services will be Oikotie provides its custom- remained roughly at the previous intensively developed in 2005. ers with a market place for classi- year’s level, and advertising sales fi ed ads combining the strength were better than expected. Since Lehtikuva produces videos of the newspaper and the web. exports to Russia were discontin- Lehtikuva is the biggest picture Oikotie covers housing, cars, ued as of the beginning of 2004, agency in Finland. The main education, jobs, and a search personnel rearrangements had to projects in 2004 included the engine for travelling, which was be made. However, a new, large Olympics in Athens and the Para- launched in January 2005. The customer was won from Denmark. lympics. Lehtikuva aims at next to aim is to increase the travel sec- Lehtimedia’s printing plants were daily production of news videos. tor, and to attract the greatest reorganised to be part of the In 2005, the World Championships number of visitors there. organisation of Sanomapaino in Athletics in Helsinki will be Oikotie is a profi table service from January 2005 onwards. the largest editorial project for with an increase in net sales of Lehtikuva. 81% in 2004.

22 Divisions » Sanoma

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 2222 77.3.2005.3.2005 112:18:562:18:56 Sanoma Net sales and EBITA, % Net sales by business, € million

250.8 Helsingin Sanomat 95.2 IS Business Unit 54.0 Sanoma Lehtimedia 133.7 Others

EBITA by business, € million

Net sales 17% of Group 41.0 Helsingin Sanomat EBITA 21% of Group 17.1 IS Business Unit 9.5 Sanoma Lehtimedia 10.4 Others

Management Group Key indicators, € million

Mikael Pentikäinen, 31.12.2004 31.12.2003 (Chairman), born 1964 Net sales 435.2 425.5 President, Operating profi t before amortisation 78.0 77.5 Sanoma Corporation % of net sales 17.9 18.2 Operating profi t 71.2 69.4 Veli-Pekka Elonen, born 1965 % of net sales 16.4 16.3 President Sanoma Data Oy, Operating profi t excl. associated companies 71.0 67.3 Vice President, Development and % of net sales 16.3 15.8 Legal Affairs, Sanoma Corporation Balance sheet total 462.4 447.7 Gross investments 24.9 29.7 Pekka Harju, born 1962 Return on investment, % (ROI) 24.5 23.5 President, Personnel under employment contract, average 2 746 4 027 Ilta-Sanomat Oy Personnel, average (full-time equivalents) 2 389 3 041

Antti Mäkelä, born 1952 President, Operational indicators, 1.1–31.12. Sanoma Lehtimedia Oy and Sanomapaino Oy 2004 2003 Helsingin Sanomat Juhani Pekkala, born 1955 Weekday circulation, copies *) 424 598 429 244 President, Sunday circulation, copies *) 492 385 500 269 Taloussanomat Oy Advertising volume (column metres) 41 251 42 359 Ilta-Sanomat Niko Ruokosuo, born 1961 Circulation, copies *) 201 281 198 693 President, Advertising volume (column metres) 6 797 7 036 Sanoma Kaupunkilehdet Oy Taloussanomat Circulation, copies *) 39 229 34 784 Pekka Soini, born 1957 Advertising volume (column metres) 2 735 2 393 President, Other daily papers Helsingin Sanomat Oy Total circulation, copies *) 88 952 88 715 Advertising volume (column metres) 23 319 21 967 Eija Rinta, born 1955 Local newspapers Secretary to the Management Total circulation, copies 32 781 33 100 Group, Vice President, Finance (CFO), Advertising volume (column metres) 9 055 8 179 Sanoma Corporation Paper consumption, tonnes 98 896 99 724

*) Audited circulation fi gures

Divisions » Sanoma 23

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 2233 77.3.2005.3.2005 112:19:082:19:08 WSOY is Finland’s largest book publisher and a signifi cant Euro- pean educational publisher. WSOY is also one of the largest book printers and the leading calendar WSO Y publisher in the Nordic region. WSO

Educational publishing • WSOY Educational Publications • Malmberg • Van In • Young Digital Poland (55%)

Publishing • WSOY General Literature • WSOY Business Information – Docendo Group – Everscreen (64%) • Weilin+Göös – Bertmark Media

Printing • WS Bookwell • Lönnberg Painot • Dark

Calendar operations • Ajasto Osakeyhtiö – Almanacksförlaget – Emil Moestue

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 2424 77.3.2005.3.2005 112:19:152:19:15 SO OYY Educational materials started to go international

“WSOY took an important step The objectives set for 2004 Success in general literature towards international expansion included international expansion The publishing year 2004 was in 2004 by acquiring the educa- in educational publishing, and particularly successful for general tional publisher Malmberg, oper- increase of market share in general literature. Finnish fi ction contin- ating in Belgium and the Nether- literature and educational mate- ued to be popular among Finnish lands. Our aim is to be one of the rials in Finland. Both objectives readers. As for translated fi ction, leading European educational were reached. WSOY’s net sales Dan Brown’s thriller The Da Vinci publishers. This position is achiev- increased to EUR 253.9 million and Code was an exceptional success, able by ensuring high quality and operating profi t grew by 29.4%. and it sold some 158,000 copies by by the new process for making The year of internationalisation the end of the year. The translation learning systems, which profi ts was started by acquiring the was published in June and sold from the materials developed in majority share in Young Digital well at once, showing that the top different countries. Poland in March. The deal for season for book sales is no longer “In 2005, WSOY’s aim is to fur- making Malmberg Investments, an restricted to the autumn only. ther expand educational publish- educational publisher operating in In children’s and juvenile pub- ing in Europe. In the Nordic region, the Netherlands and Belgium, part lishing, the highlight of the year WSOY continues to publish qual- of WSOY, was closed in November. was the fi rst prize for Finland in ity books, and in Finland it will Malmberg, Van In, WSOY Educa- a Nordic competition for picture strengthen its position as pub- tional Publications, eWSOY and books. The winner is ‘Mummon lisher, and bearer and renewer of the Polish subsidiary Young Digital kone’ (‘Grandma’s Machine’), writ- the Finnish book culture. Our great Poland were combined in a new ten by Jukka Laajarinne and illus- success in the Finnish book mar- business, SanomaWSOY Education. trated by Martti Ruokonen. WSOY ket in 2004 is a sign of a thriving A change in curriculum is will publish the books of all the publishing house which is both currently in progress in Finnish fi ve Finnish fi nalists in autumn international and delights Finnish schools. WSOY Educational Publi- 2005. readers.” cations is in the process of renew- The biggest event in the ing educational materials for all multi-volume book business Jorma Kaimio school levels and in every subject, (Weilin+Göös, Bertmark) was the President and this project will continue until success of the Swedish Aha!, which WSOY the end of 2007. follows the Finnish encyclopedia Factum. In the fi rst year, Bertmark sold 9,000 copies of the series which is to include 10 books.

Divisions » WSOY 25

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 2525 77.3.2005.3.2005 112:19:362:19:36 Electronic educational materials and eLearning environments like OPIT are nowadays an essential part of learning. Educational materials also are one of the international businesses of SanomaWSOY.

Lönnberg retains WSOY Business Publications Young Digital Poland its leading position became WSOYpro The 250 employees of Young Book publishing and digital print- WSOY Business Information Digital Poland (YDP) develop ing were successful in 2004. In renamed its business publications and produce eLearning mate- advertising materials, competition sector WSOYpro and opened a new rials in Gdansk for publishers was intense due to overcapacity website, WSOYpro.fi . The purpose around the world. The big- and decreased demand. Lönnberg of WSOYpro is not to provide indi- gest customer is the school Painot, which also comprises the vidual products but to be a partner system in Malaysia, which in-store display and gift packag- for the customer’s knowledge and has introduced the broad ing company Mainos ja Etiketti, skill development. electronic learning content of retained its position as the leading The Swedish-based Everscreen YDP. Malmberg Investments, producer of high-quality printing AB, which was part of the WSOY a company acquired by WSOY materials. Business Information business in summer, is also a major The book printer WS Bookwell unit, was sold in April. The Finnish customer for YDP. and the digital printer Dark com- operations of Everscreen Oy were YDP, 55.1% of which is pleted their long-term investment not affected. owned by WSOY, produces programs, and can react to compe- In calendar operations, produc- eLearning materials for differ- tition with high-quality production tion was rearranged. The calendar ent school subjects, and lan- technology. production of Norwegian-based guage learning programs for Emil Moestue was discontinued, individual consumers as well. and production was centralised in The focus is currently on creat- Finland. A 30% share was acquired ing new generation eLearning in October in the leading Estonian material for elementary edu- calendar publisher Büroodisain. cation. The product range cov- An agreement was made on ers a virtual learning environ- increasing WSOY’s share to 100% ment, Leo. According to YDP’s at a later stage. estimations, the use of IT and communications technology can reduce the teachers’ work- load by 10 to 15%. YDP also has solutions for companies.

26 Divisions » WSOY

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 2626 77.3.2005.3.2005 112:19:372:19:37 WSOY Net sales and EBITA, % Net sales by business, € million

178.7 Publishing 59.0 Printing 30.3 Calendar operations 5.1 Others

EBITA by business, € million

Net sales 10% of Group 26.9 Publishing EBITA 10% of Group 8.1 Printing 0.7 Calendar operations -0.4 Others

Management Group Key indicators, € million

Jorma Kaimio, (Chairman), born 1946 31.12.2004 31.12.2003 President, WSOY Net sales 253.9 212.2 Operating profi t before amortisation 38.3 28.0 Jyri Ahti, born 1962 % of net sales 15.1 13.2 Senior Vice President, Operating profi t 29.2 22.6 Business Development, WSOY % of net sales 11.5 10.6 Operating profi t excl. associated companies 29.2 21.0 Jacques Eijkens, born 1956 % of net sales 11.5 9.9 CEO, SanomaWSOY Education Balance sheet total 435.4 203.8 Gross investments 197.9 8.7 Yrjö Franssila, born 1951 Return on investment, % (ROI) 17.3 17.8 President, Ajasto Osakeyhtiö Personnel under employment contract, average 2 188 1 933 Personnel, average (full-time equivalents) 2 025 1 859 Jaana Korpi, born 1958 Managing Director, Weilin+Göös Oy Operational indicators, 1.1–31.12. *) Mikko Laine, born 1966 Senior Vice President, eWSOY 2004 2003 Number of new titles published Hannu Laukkanen, born 1957 Books 740 714 Senior Vice President, Electronic products 132 105 WSOY Educational Publications Number of reprints published Books 957 1 168 Jorma Mikkonen, born 1949 Electronic products 209 202 Senior Vice President, Finance and Corporate Services, WSOY Books printed, millions 20 21 Paper consumption, tonnes 16 482 16 930 Pekka Pätynen, born 1951 Senior Vice President, WSOY Printing *) Units in Finland

Tuomo Räsänen, born 1969 Senior Vice President, WSOY Business Information

Touko Siltala, born 1957 Literary Director, General Literature, WSOY

Katja Vuorialho, born 1968 Secretary to the Management Group,

Senior Counsel, WSOY Divisions » WSOY 27

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 2277 77.3.2005.3.2005 112:19:542:19:54 SWelcom operates in the electronic media busi- ness and focuses on commercial TV and cable TV operations. The division’s biggest business unit, TV channel Nelonen, is Finland’s third most important advertising medium. HTV (Helsinki Television) is the country’s biggest cable TV com- pany. SWelcom also includes 2ndhead, providing SWel digital communications services, and Tuotan- totalo Werne, which is specialised in technical SWe services for TV programme and audio production.

Television operations • Nelonen

Cable television, pay-tv and broadband internet • HTV (Helsinki Television)

Digital services • 2ndhead

Production services • Tuotantotalo Werne

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 2828 77.3.2005.3.2005 112:19:552:19:55 lelcom com

A year of growth and development

“SWelcom is an active player in the 2004 was an excellent year for year-end. Of the notable advertis- electronic media sector looking for SWelcom. Net sales grew by 13.9%, ing media, Nelonen’s growth in development and new opportu- and the division reached the net sales was by far the greatest, nities. Our distribution channels operating profi t target. Nelonen almost 20%. Due to the expansion include TV and cable networks, and increased its market share in TV of the digital distribution network, our top products are TV channel advertising considerably, and the Nelonen reached about 94% of Nelonen and Welho, broadband and channel’s viewing shares grew the Finnish population at the end digi TV. Other services include inter- intensely. HTV continued to grow: of 2004. net and TV production. the sales of both connections and Nelonen’s success is based on “Our market position is fascinat- broadband services developed a different, versatile, carefully tar- ing but challenging. Nelonen has well. geted choice of programs, and developed into a personal, different Besides fi nancial growth, an effi cient sales and marketing. and profi table commercial TV chan- investment was made in develop- Nelonen is known for high-quality nel. Our viewing and market share ing company culture. A wide inter- foreign series, such as Sopranos grew signifi cantly in all our target nal discussion of values took place and Alias, and popular format pro- groups in 2004. HTV has already during the year, which resulted in grams, such as Queer Eye for the had three successive record years in an electronic set of values to be Straight Guy and The Block. The connecting households to the cable used by the personnel and interest Finnish classics, Krisse, Hyppönen network. Despite intense competi- groups. SWelcom’s values include Enbuske Experience and Kumman tion, the number of broadband sub- open cooperation, passion for one’s kaa have attracted keen supporters scribers is growing continuously. own work, courage, and reliability. and were the topic of discussion Customers were offered as much week after week. The World Cup in as 10-megabit speeds at the end of Year of success for Nelonen Ice Hockey was one of the sports the year. Nelonen is Finland’s third most events of the year, and its trans- “The development in communi- important advertising medium mission by Nelonen in autumn cations promises a good outlook for and the second most viewed TV 2004 increased the viewing share SWelcom: TV’s share in advertising channel among viewers aged markedly. and the share that the electric chan- between 10 and 44. The market nels have of the time used for media share target for TV advertising is developing intensively. We believe that was set when Nelonen was in our ability to grow in our cur- founded was reached by the end rent operational areas; the results of the year. The share of commer- achieved so far are promising. We cial TV channel viewers grew, and have strong knowledge in technol- amounted to about 25% at the ogy, and we believe that, combined with new ideas and opportunities for cooperation, new signifi cant businesses will be generated to complement the current ones.”

Tapio Kallioja President

SWelcom Divisions » SWelcom 29

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 2929 77.3.2005.3.2005 112:20:122:20:12 Agreements with Sony Pictures Television International and Buena Vista International (Disney) guarantee that, in addition to top domestic TV series, also the best of Hollywood movies and TV series will be seen in Nelonen in future.

HTV’s consumer services Attractive services Television is the driving under the Welho brand at 2ndhead and Werne engine for multimedia HTV is Finland’s largest cable TV 2ndhead is a company specializ- It is no longer a novelty for company. HTV offers broadband ing in digital media content and popular TV programmes to and digital TV services to house- communications solutions. It have websites that comple- holds connected to its cable net- develops services and systems for ment the programme and work in the Helsinki region. In internet, mobile and digi TV dis- provide a channel for advertis- 2004, a record number of house- tribution channels. 2ndhead has ers. Now television is paving holds were connected: more been involved in SanomaWSOY’s its way to the mobile phone. than 23,000. At the year-end, the internal multimedia and internet The Block, shown on Nelonen number of households connected projects for a long time. The popu- in autumn 2004, was the fi rst reached over 280,000. lar websites for Nelonen, Finnkino programme allowing viewers During 2004, HTV combined and Ilta-Sanomat are made by to subscribe video material its broadband and digi TV services 2ndhead. During 2004, services onto a mobile phone. under the shared Welho brand. were sold to external customers “Future multimedia is The Welho family comprises all as well. 2ndhead will design the driven by TV. Television estab- HTV broadband and digi TV serv- outline and a new graphic layout lishes the brands, and other ices, and includes the ready-to-use for the internet sites of the City media provide interesting, Welho broadband and about 80 of Helsinki, and a solution for the entertaining and useful addi- digital TV channels. new city portal shared by the city tional services, both for view- Broadband services increased and the university of Helsinki. ers and advertisers. Multi- greatly in Finland during 2004. Tuotantotalo Werne offers media is everyday life and it Welho is the most popular broad- technical production services and gives Nelonen new opportu- band service in its operating area, comprehensive solutions for com- nities to earn money”, says and it had 52,000 subscribers at panies producing and distributing Juha-Pekka Louhelainen, the end of the year. TV, video and audio services in the President of Nelonen. 2004 was good also for Welho Nordic region and the Baltic coun- Digi TV. All HTV’s pay-TV programs tries. In 2004, Werne focused on its have been digital since December core businesses and sold Måndag, 2004, and the number of subscrip- which specialises in video copying tions grew somewhat in the HTV’s and DVD mastering services. own network area.

30 Divisions » SWelcom

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 3030 77.3.2005.3.2005 112:20:132:20:13 SWelcom Net sales and EBITA, % Net sales by business, € million

67.6 Nelonen 53.1 Others

EBITA by business, € million

Net sales 5% of Group 27.4 Nelonen EBITA 11% of Group 11.9 Others

Management Group Key indicators, € million

Tapio Kallioja, (Chairman), born 1948 31.12.2004 31.12.2003 President, Net sales 119.4 104.9 SWelcom Oy Operating profi t before amortisation 39.3 29.6 % of net sales 32.9 28.3 Pekka Jaakola, born 1947 Operating profi t 9.0 1.2 Senior Vice President, Technology, % of net sales 7.5 1.1 SWelcom Oy Operating profi t excl. associated companies 9.1 1.0 % of net sales 7.6 1.0 Pirkko Jokinen, born 1952 Balance sheet total 130.6 142.3 President, Gross investments 10.7 8.9 2ndhead Oy Return on investment, % (ROI) 8.7 1.5 Personnel under employment contract, average 415 416 Juha-Pekka Louhelainen, born 1955 Personnel, average (full-time equivalents) 378 392 President, Oy Ruutunelonen Ab Operational indicators, 1.1–31.12. Anu Nissinen, born 1963 President, 2004 2003 Helsinki Television Ltd. Nelonen’s share of Finnish TV advertising 29.8% 27.3% Nelonen’s daily coverage 41% 41% Marja-Leena Tuomola, born 1962 Nelonen’s national commercial viewing share 25.0% 22.0% Vice President, Administration, Nelonen’s national viewing share 12.5% 11.4% SWelcom Oy Number of connected households, thousands (31.12.) 280 257 Number of pay-TV subscriptions, thousands (31.12.) 32 33 Pia Huhdanmäki, born 1969 Number of broadband internet connections, Secretary to the Management thousands (31.12.) 52 43 Group, Senior Counsel, SWelcom Oy

Divisions » SWelcom 31

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 3311 77.3.2005.3.2005 112:20:292:20:29 Rautakirja is the market leader in all its operational areas in Finland: kiosk operations, press distribu- tion, bookstores, and movie theatres. In the Baltic countries, it is the market leader in press distribu- tion and movie theatres. Press distribution is one Raut a of SanomaWSOY Group’s international businesses. Rau

Kiosk operations • R-kioski • Veikkausrasti • Pizza Hut • R Kiosk Eesti (Estonia) • Narvesen Baltija (Latvia) • CZ Retail (the Czech Republic)

Press distribution • Lehtipiste • Lehepunkt (Estonia) • Preses Serviss (Latvia) • Impress Teva (Lithuania) • Hiparion Distribution (Romania)

Bookstores • Suomalainen Kirjakauppa – Yliopistokirjakauppa – Lukiolaisten Kirjakauppa – Reader’s – Apollo Raamatud (Estonia)

Movie theatres • Finnkino – MPDE (Estonia) – Baltic Cinema (Latvia) – Vingio kino teatras (Lithuania) – V & K Holding (Estonia, Latvia, Lithuania) – Interprint

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 3232 77.3.2005.3.2005 112:20:342:20:34 ut akirjatakirja

International expansion continued

“Rautakirja’s core business know 2004 went according to plan for trade, and market shares were how comprises the wholesale and Rautakirja. Net sales grew to EUR re-divided. Rautakirja reacted retail of newsstand newspapers 659.7 million and operating profi t successfully by focusing on devel- and magazines, and specialized increased by 16.7%. Internal opera- oping kiosk operations and mar- retail, which represent extensive tions were harmonized to match keting communication. distribution knowledge in the the group standard but businesses Rautakirja’s kiosk operations Group. Rauta kirja aims at profi t- continued to operate as aim at further development and able growth in Finland and abroad. autonomous subsidiaries. expansion, and the goal is to be “The competition in kiosk trade Rautakirja invested in growth the leading company in northern grew even stronger in 2004, and by focusing on international Europe in the kiosk and conven- changes took place in market expansion and developing its ience store chain sector towards shares. Rautakirja managed to information systems. Press distri- the end of the decade. increase its market share in all bution was extended in particular. key areas of business and posted In December, Rautakirja decided to International expansion the best comparable result ever. divest its restaurant operations. of press distribution It focused on core businesses and In the autumn, a fi nancial serv- Rautakirja’s press distribution is a sold its restaurant operations. ice centre started serving the marketing and distribution organi- “Net sales were slightly below whole of Rautakirja. The fi nance sation for newsstand sales of the target but future growth was functions of all basic operations newspapers and magazines open supported considerably by acquisi- were concentrated at this service to all publishers and products. It tions, information system projects centre. offers publishers a cost-effi cient and personnel development. distribution system and the trade “The challenging situation in Kiosk operations an appealing product group with retail trade will continue but we meet new challenges chances of development. believe that our active growth Kiosks provide customers with In 2004, press distribution strategy and skilful personnel will entertainment, excitement and became much more interna- also push Rautakirja to success in pleasure, and with basic daily tional. In July, a majority share 2005. Net sales will grow strongest products and services, quickly and was acquired in a press distribu- outside Finland, and operating easily, from early in the morning tion company in Romania, and profi t is expected to increase to late at night in Finland, Estonia, in December in Lithuania. Rauta- signifi cantly.” Latvia and the Czech Republic. kirja’s press distribution business 2004 was a strong year of is the market leader in Finland, Erkki Järvinen development for kiosk operations. Estonia, and Latvia. President & CEO The main project was the renewal Lehtipiste opened an online Rautakirja of the outlet system in Finland. service for publishers early 2004. The system to be introduced in The Finnish Lidl was the fi rst to 2005 will facilitate future kiosk introduce newspaper and maga- operations with new products and zine sales for the chain in Europe. services. Newsstand sales in Finland Strong price competition grew by slightly less than 3%. The marked the year in Finnish retail trend was particularly positive in

Divisions » Rautakirja 33

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 3333 77.3.2005.3.2005 112:20:472:20:47 Rautakirja has a strong position in press distribution in Baltic countries. The Estonian Lehepunkt has a market share of 90% and it delivers newspapers and magazines to more than 1,400 points of sale.

tabloids and magazines related to Movie theatres in four countries Oiva is a new outlet system living and special interests. The objective of the movie theatre in the kiosk business In press distribution, inter- operations is to develop a leading The kiosk outlet system Oiva national expansion will continue movie theatre chain in the Baltic is one of the largest individual together with the development of Sea area, which offers movie and projects in the history of kiosk current activities. entertainment experiences in line operations. The new system with a shared concept and is cost- will change operations at all A good year for bookstores effi cient on the growing market. levels. Rautakirja has bookstores in Fin- There are currently operations The system facilitates the land and Estonia. Suomalainen in Finland, Estonia, Latvia, and introduction of new products Kirjakauppa is a nationwide book- Lithuania. and services in R-kiosks. The store chain and the strongest In January, Finnkino acquired fi rst signifi cant cooperation brand and the market leader in its the majority share in an Estonian agreements were signed with fi eld in Finland. The outlets and video wholesale company operat- the ticket service Lippupalvelu direct sales are complemented by ing in all Baltic countries. The mul- and the teleoperator Telia- the online webstore suomalainen. tiplex movie theatre opened in Sonera in the end of 2004. com. Besides the Suomalainen October 2003 in Riga attracted 1.1 Oiva will change the daily Kirjakauppa outlets, the chain million visitors in the fi rst year. In tasks of the sales personnel by includes Reader’s paperback book- Lithuania, the focus was on devel- giving more time for customer stores, Yliopistokirjakauppa and oping the market and establishing service while background Lukiolaisten Kirjakauppa. Five new the operations in the new units work will be real-time and outlets were opened during 2004. acquired in 2003. electronic. Goods fl ow man- The year was good for book In Finland, new co-operation agement will be improved sales in Finland, especially for was successfully started with markedly. the sales of general literature. Kesko, and customers can collect Design of Oiva was started In Estonia, Apollo Raamatud has Plussa points at Finnkino’s movie at the end of 2003 and test- established itself with a market theatres within the Kesko’s cus- ing in all kiosks started in the share of about 20%. tomer loyalty programme. Several beginning of 2005. The aim is Suomalainen Kirjakauppa new multiplex movie theatres to extend the new system to developed a customer loyalty pro- were planned, and the plans may the more than 700 outlets of gramme, which was launched in be realized in the coming years. the R-kiosk chain in Finland early 2005. The challenge for the The summer was better than during 2005. future is to further develop the ever for movie theatre operations chain and to focus on customer in Finland, and there were 12% service systems. more viewers than in the previous year.

34 Divisions » Rautakirja

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 3434 77.3.2005.3.2005 112:20:472:20:47 Rautakirja Net sales and EBITA, % Net sales by business, € million

347.3 Kiosk operations 79.5 Press distribution 129.7 Bookstores 56.8 Movie theatre operations 57.8 Restaurant operations

EBITA by business, € million

Net sales 26% of Group 22.3 Kiosk operations EBITA 14% of Group 12.6 Press distribution 9.9 Bookstores 8.5 Movie theatre operations 0.6 Restaurant operations

Management Group Key indicators, € million

Erkki Järvinen, (Chairman), 31.12.2004 31.12.2003 born 1960 Net sales 659.7 653.8 President & CEO, Operating profi t before amortisation 50.6 45.7 Rautakirja Corporation % of net sales 7.7 7.0 Operating profi t 41.5 35.5 Hellevi Kekäläinen, born 1953 % of net sales 6.3 5.4 Senior Vice President, CFO, Operating profi t excl. associated companies 42.8 41.3 Rautakirja Corporation % of net sales 6.5 6.3 Balance sheet total 353.9 348.6 Raimo Kurri, born 1953 Gross investments 18.0 28.7 Senior Vice President, Return on investment, % (ROI) 17.4 18.1 Press Distribution Personnel under employment contract, average 6 261 6 458 Personnel, average (full-time equivalents) 4 795 4 962 Timo Mänty, born 1960 Senior Vice President, Movie Theatres Operational indicators, 1.1–31.12. *)

Jukka Nikkinen, born 1962 2004 2003 Senior Vice President, Customer volume in kiosk operations, thousands 115 919 119 380 Business Development, Customer volume in bookstore operations, thousands 6 239 6 316 Rautakirja Corporation Customer volume in movie theatres, thousands 3 499 3 599 Number of copies sold (press distribution), thousands 131 148 127 562 Jarmo Oksaharju, born 1961 Senior Vice President, *) Units in Finland Bookstores

Markku Pelkonen, born 1962 Senior Vice President, Kiosk Operations

Divisions » Rautakirja 35 Environment

Group-wide environmental policy divisions are aware of the environ- Sanomapaino’s printing plants In line with the graphics industry mental impact of their operations are located in Vantaa, Fors sa in general, SanomaWSOY’s envi- and their environmental respon- and Varkaus, among others. This ronmental impact is minor. sibilities. shortens the distances in news- A Group-wide environ mental paper deliveries. Ilta-Sanomat is team was established in 2003 to Joint logistics partly printed in Oulu. In total, promote the sharing of best envi- SanomaWSOY’s main users of SanomaWSOY has 12 printing ronmental practices. In 2004, this logistics services are Sanoma, plants in Finland. team drafted an environmental Sanoma Magazines and Rauta- WSOY’s book deliveries to deal- policy based on responsibility, kirja. Sanoma’s largest provider of ers and bookstores are handled ethics and Group values, from logistics services is Finland Post. jointly with other book publishers. which the divisions derive their Sanoma Magazines’ Aldipress environmental targets and objec- is the Netherlands’ largest dis- Systematic recycling tives. Both the Group and its tributor of newsstand copies, also SanomaWSOY’s environmental handling logistics for Sanoma principles include safe and appro- Uitgevers’ products. In the other priate sorting, recycling and fi nal countries in which Sanoma Maga- disposal of by-products and waste. zines operates, deliveries of news- The Group aims to reduce its stand copies of magazines are material consumption and handled jointly with other publish- waste volumes throughout its ers. Rautakirja’s Lehtipiste handles operations. joint deliveries of newsstand cop- Printing plates used in print- ies of magazines and tabloids in ing plants are sorted and recycled Finland. as industrial raw material, while printing inks are sent to waste disposal plants. There is a separate recycling system for waste paper produced in the printing process in each plant: all waste paper from printing plants is recycled. Rautakirja’s Lehtipiste collects and recycles unsold copies of news- papers and magazines from points of sale during regular distribution rounds.

36 SanomaWSOY » Environment

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 3636 77.3.2005.3.2005 112:20:562:20:56 SanomaWSOY’s consumption of electrical energy in Finland *)

Consumption of electrical energy, MWh 2004 2003 2002 2001 127 879 131 054 132 335 121 132

*) Consumption sites changed to some extent from 2001 to 2004.

SanomaWSOY’s paper usage *)

Paper usage, tonnes 2004 2003 2002 Newsprint 99 000 99 500 97 000 Magazine paper 103 000 102 000 94 000 Fine and book paper and board 19 700 17 000 17 500 Bookbinding board 1 100 1 000 1 000 Total 222 800 219 500 208 500

*) Includes both the paper used in the Group’s own printing plants and the paper acquired for products printed elsewhere. Sustainable development is important SanomaWSOY pays constant attention to developing its pro- duction processes to protect the Responsible corporate citizen environment and reduce the envi- SanomaWSOY aims to be Helsingin Sanomat, Sanoma ronmental load. Thanks to the a good corporate citizen. Magazines Finland and Rauta- environmental positive processes, SanomaWSOY’s social respon- kirja’s Lehtipiste participated in energy, water, chemicals and paper sibility includes fi nancial the magazine day for schools wastage is being reduced, and responsibility, environmental and in Finnish Newspaper the Group’s cost effi ciency and responsibility, and responsibil- Week for schoolchildren. ecological balance are improving. ity for society, which includes SanomaWSOY’s divisions SanomaWSOY aims to reduce responsibility for personnel also participate actively in its environmental load through and published products, and projects enhancing children’s the selection of materials. Veg- ethical business. rights. In 2004, Helsingin Sano- etable oil based printing inks and As a strong player in the mat strengthened its collabo- increased use of printing paper media market, SanomaWSOY ration with the Plan Finland made from wood from certifi ed nurtures freedom of speech Foundation. One aspect was forests will also prove important in and recognises its responsibili- a joint campaign to enhance the future. Some 70% of the paper ties. Many of the Group’s units children’s possibilities to get used in SanomaWSOY’s printing have an infl uential position in schooling in developing coun- plants is made fully from Finnish their national markets, and it tries. The bookstore chain wood. is important to maintain their Suomalainen Kirjakauppa con- SanomaWSOY monitors envi- values and principles in the tinued its co-operation with ronmental issues and risks during future. Save the Children Finland and planning, decision-making and Many of SanomaWSOY’s participated to the charity’s implementation. Investments are units work together with support program that encour- made bearing the environment schools with the aim of e.g. ages the young from families in mind. enhancing media literacy with limited fi nancial means Personnel play a central role in among the young and encour- to study. environmental protection, being aging children to read. In 2004, continuously trained, instructed and encouraged to perform To read more about SanomaWSOY’s social responsibility, please visit: their work in an environmentally www.sanomawsoy.fi responsible manner.

SanomaWSOY » Environment 37

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 3737 77.3.2005.3.2005 112:21:042:21:04 Personnel

As an employer, SanomaWSOY Each division monitors the ment whereas JET offers practical appreciates professional people working climate and the success tools for business development. and emphasises its personnel’s of HR policy with regular person- JET continues in 2005 with two opportunities for development nel surveys. new groups, and with revised con- and fair remuneration. In 2004, SanomaWSOY began tent. SWEP is being continuously SanomaWSOY employs more to develop common Group-wide developed to meet the divisions’ than 16,000 people. The Group HR procedures. changing needs. provides equal opportunities for An in-house training course for men and women, and for people of Continuous development supervisors, ‘Supervisor’s Toolkit’, different ages, with different back- for personnel was launched in 2003. The purpose grounds and in different positions. The Group grows and expands of the lectures, organised together SanomaWSOY has a Group- internationally through mergers with WSOYpro, is to give high- wide HR policy, which is further and acquisitions, and organisa- quality, practise-oriented training clarifi ed by division-specifi c objec- tional structures around employ- for supervisors throughout the tives. Key words for personnel ees change constantly. Develop- Group. In 2004, the series covered responsibility are respect, fairness, ment programmes aim to enhance communications skills, among common values, and a positive a positive attitude towards other areas. attitude to change, training, career change. Besides their educational con- development and remuneration. SanomaWSOY has two Group- tent, the Group-wide programmes wide training programmes: are aimed at strengthening the SanomaWSOY Executive Program, co-operation between people SWEP, and SanomaWSOY Man- working in different parts of the agement Training Program, JET. Group, and to facilitate sharing of These programmes are intended best practices. for supervisors and experts. At the In addition to these pro- end of 2004, 161 Group employees grammes, the divisions have their had participated in SWEP and 181 own programmes for training and in JET. development to ensure that the SWEP focuses on developing professional needs specifi c to the strategic thinking and manage- respective division and its focuses are fulfi lled. The Group also has a Media Trainee Program. The trainees are given a wide knowledge and understanding of media business. In 2004, three new trainees began the programme. So far, 21 trainees have participated, fi ve of which are currently either going through the programme or about to start. Eleven of those who have success- fully completed the programme are today employed in different positions around the Group.

38 SanomaWSOY » Personnel

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 3838 77.3.2005.3.2005 112:21:052:21:05 Increasing internal mobility Personnel by Division *) Internal mobility or job rota- 3 992 tion within the Group has been Sanoma Magazines 2 389 considered important ever since Sanoma 2 025 SanomaWSOY was founded. In WSOY 378 2004, the SanomaWSOY Inter- SWelcom 4 795 nal Mobility (SWIM) process was Rautakirja 73 launched to further increase SanomaWSOY Corporation rotation of employees between *) In average, full-time equivalents divisions. Internal mobility contributes Turnover of personnel by Divison *) to reaching the Group’s objectives 738 and speeds up essential change Sanoma Magazines 162 in activities and structures. Also, Sanoma 72 it improves professional skills and WSOY 45 boosts the process of adopting SWelcom 2 329 best practices across the Group. Rautakirja 5 SanomaWSOY Corporation

Versatile remuneration *) Includes kiosk staff and fixed-term employees Most SanomaWSOY employees are covered by annual incentive Sick day percentage systems. The general principles 4.10 of these schemes are Group-wide Sanoma Magazines 3.61 and confi rmed by SanomaWSOY’s Sanoma 3.50 Board of Directors. Further infor- WSOY 2.80 mation about incentive schemes SWelcom 2.89 can be found under Corporate Rautakirja 1.58 Governance on page 42. SanomaWSOY Corporation

Corporate security Work experience at SanomaWSOY Occupational health and safety 2 618 1 issues are part of the Group’s Under year 4 385 1 4 security policy. The policy also cov- – years 2 958 5 9 ers security of premises, personal – years 2 579 10 19 security, operational and data – years 1 621 20 29 security, rescue services, labour – years 967 30 protection, environmental protec- over years tion, contingency planning, as well as risk and security management. Age distribution A team responsible for security at 1 929 25 SanomaWSOY has drafted a Group Under years 1 981 25 29 policy on security. – years 4 033 30–39 years 3 415 40–49 years 3 151 50–59 years 619 Over 60 years

Personnel by country 31 Dec. 2004

Finland 9 487 Poland 269 The United Kingdom 58 France 14 The Netherlands 2 544 The Czech Republic 251 Slovakia 56 Germany 12 Estonia 969 Croatia 96 Norway 54 Singapore 4 Belgium 596 Lithuania 79 Sweden 40 USA 4 Latvia 548 Romania 78 Malaysia 20 China 2 Hungary 490 Bulgaria 59 Russia 15 15 745

Personnel 2004 2003 2002 2001 Personnel under employment contract, average 16 207 17 330 18 657 15 129 Personnel average (full-time equivalents) 13 652 14 207 15 210 12 077 Net sales per employee*), € 1 000 182.6 171.3 155.0 143.6

*) Calculated from the figure for personnel in average, converted to full-time equivalents.

SanomaWSOY » Personnel 39

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 3939 77.3.2005.3.2005 112:21:222:21:22 Corporate Governance

The SanomaWSOY Group com- The Group’s administrative ber is elected for the remainder of prises fi ve fully owned divisions: bodies are the Board of Directors the term. The Articles of Associa- Sanoma Magazines, Sanoma, and the President & Chief Oper- tion stipulate that no person aged WSOY, SWelcom, and Rautakirja. ating Offi cer (COO). Their duties 75, or who will reach the age of 75 SanomaWSOY’s divisions essentially refl ect those laid down during his or her term in offi ce, can operate independently within by the Finnish Companies Act. be elected to the Board. agreed goals and operational SanomaWSOY’s Management The Helsinki Exchanges’ cor- principles. The parent company, Group prepares matters to be dis- porate governance principles rec- SanomaWSOY Corporation, is cussed at the meetings of the ommend that the term of offi ce responsible for strategic control Board of Directors and coordinates of Board members is one year. and administration of the Group the management of the Group. At SanomaWSOY, the term of as well as Group-wide cooperation The Management Group is not a offi ce of Board members is three projects. The management of the formal decision-making body. years. The company believes that Group and the Group’s businesses Matters of principle reviewed and the nature of its business activi- is based on a clear organisational recommended by the Manage- ties makes it necessary for Board structure, defi ned areas of author- ment Group are approved legally members to have a longer period ity and responsibility, common by SanomaWSOY’s Board of Direc- to familiarise themselves with and strategy and action plans, support- tors or those of its subsidiaries, or commit themselves to the Group’s ing planning and reporting sys- are implemented by authority of operations. The Board members’ tems, and Group policies. the President & COO. terms of offi ce have been arranged SanomaWSOY Group’s corpo- so that about one-third of the rate governance principles are Board of Directors members are elected annually. approved by the Board of Direc- The Annual General Meeting The current Board, elected by tors. The principles follow the rules elects the members of the Board the AGM of 30 March 2004, has of the Helsinki Exchanges and the of Directors, the Chairman, and ten members. Paavo Hohti, Robert principles recommended by the his deputy. The number of Board Castrén, Jane Erkko, and Robin Helsinki Exchanges, the Finnish members can vary between fi ve Langenskiöld have announced Central Chamber of Commerce and eleven. In addition, a maxi- that they will vacate their seats at and the Confederation of Finnish mum of two personnel representa- the AGM in spring 2005. According Industries EK. The valid corporate tives can be elected to the Board. to the Articles of Association, the governance principles can be The term of offi ce of a Board term of offi ce of a Board member found on the Group’s website, member begins at the close of the is three years. The term of offi ce of www.sanomawsoy.fi . AGM and expires after the third Sari Baldauf, Jaakko Rauramo, and AGM following their election. If Sakari Tamminen is until the AGM a Board member’s seat becomes in spring 2006, and the term of vacant before the end of this Sirkka Hämäläinen, Seppo Kievari, three-year period, a new mem- and Hannu Syrjänen until the AGM in spring 2007. The full-time Chairman & CEO of the Board is Jaakko Rauramo. Hannu Syrjänen, President & COO, is also employed by the Group. Half of the Board members are

40 SanomaWSOY » Corporate governance

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 4040 77.3.2005.3.2005 112:21:232:21:23 Chairman, and Hannu Syrjänen, Full-time Chairman and CEO President & COO. The Executive The Board has a full-time Committee convened eight times Chairman & CEO who prepares, during the year, and all the Com- in cooperation with the President mittee members attended all the & COO, the matters brought to meetings. The Board is empowered the Board of Directors and chairs to establish other committees Board and Executive Commit- as appropriate. A Compensation tee meetings. The Chairman & Committee, an Audit Committee CEO’s specifi c area of responsibil- and an Editorial Committee oper- ity lies with the Group’s strate- ated during 2004. gic decisions and positions, and The Compensation Committee strategic HR matters. In addition, prepares matters regarding the he is responsible for handling management’s remuneration and the Group’s broad range of exter- the Group’s remuneration policy. nal relations together with the The Compensation Committee’s President & COO. members at the year-end were Sari The Chairman & CEO takes part independent of the company and Baldauf (Chairman), Paavo Hohti in the operational management of its signifi cant shareholders in the (Vice Chairman), Jane Erkko, and the Group only in pre-agreed cases, manner recommended in the Seppo Kievari. In 2004, the Com- particularly in respect of growth corporate governance principles pensation Committee convened and international expansion issued by the Helsinki Exchanges: twice, and on average 75% of its projects. In 2004, Jaakko Rauramo Sari Baldauf, Robert Castrén, Paavo members attended the meetings. served as full-time Chairman Hohti, Sirkka Hämäläinen, and The Audit Committee develops & CEO. Sakari Tamminen. In addition, Jane and controls the Group’s fi nancial Erkko and Robin Langenskiöld are reporting procedures, the auditors’ President & COO independent of the company. work, the reliability of internal con- The President & COO is independ- SanomaWSOY’s Board of Direc- trol, and the execution of corpo- ently responsible for the Group’s tors is responsible for the overall rate governance principles. At the operations, in line with strate- management of the Group and for end of 2004, the Audit Commit- gic plans and budgets approved organising its administration in tee comprised Sakari Tamminen by the Board of Directors and in accordance with the Finnish Com- (Chairman), Robert Castrén (Vice accordance with general prin- panies Act. The Board appoints Chairman), Robin Langenskiöld, ciples approved by the Board of SanomaWSOY’s President & and Sirkka Hämäläinen. The Com- Directors. The President & COO is COO, his deputy and the parent mittee convened four times dur- responsible for day-to-day man- company executives who sit on ing the year. On average, 94% of its agement of the Group, for the SanomaWSOY’s Management members attended the meetings. preparation of matters brought Group. In addition, it approves the In April 2004, SanomaWSOY’s to the Board and for presenting nominations of the Presidents of Board of Directors established an these matters to the Board and the divisions, their deputies and Editorial Committee. The Edito- its Committees. The President & the Senior Editors-in-Chief of Hel- rial Committee is responsible for COO also acts as Chairman of both singin Sanomat and Ilta-Sanomat, following the editorial policies of SanomaWSOY’s Management and decides on the remunera- the Group’s main newspapers and Group and the Boards of Directors tion of senior management. The preparing changes in these prin- of SanomaWSOY’s divisions, unless Board develops its performance ciples as well as the appointment otherwise agreed. Hannu Syrjänen by an internal self-evaluation of the Senior Editors-in-Chief. The served as President & COO of process implemented regularly by members of the Editorial Commit- SanomaWSOY in 2004. PricewaterhouseCoopers. tee at the end of 2004 were Seppo In 2004, the Board of Directors Kievari (Chairman), Jane Erkko convened eight times. On average, (Vice Chairman), Paavo Hohti, and 93% of Board members attended Sirkka Hämäläinen. The Commit- the meetings. tee convened once during the year and all the Committee members Board Committees attended the meeting. Matters to be presented to the Board are prepared, in accord- ance with the Articles of Associa- tion, by the Executive Committee, which consists of Jaakko Rauramo, Chairman & CEO, Paavo Hohti, Vice

SanomaWSOY » Corporate governance 41

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 4141 77.3.2005.3.2005 112:21:312:21:31 Remuneration and incentives Group’s divisions and their depu- tion corresponds to 18 months’ The Board of Directors approves ties, if any, as well as other mem- salary. The severance pay includes the employment terms of the bers of SanomaWSOY’s Manage- a fi xed term non-competition President & COO and the other ment Group. This sum only covers clause. Syrjänen holds 50,000 members of senior management, the remuneration and benefi ts 2001A stock options, 50,000 2001B based on the proposal prepared by paid to the persons for these posi- stock options, 50,000 2001C stock the Compensation Committee. The tions during the fi nancial year. options, and 50,000 2004A stock compensation paid to the Board of In 2004, the full-time Chair- options. Directors is decided by the AGM. man & CEO Jaakko Rauramo was The retirement age for the In 2004, the members of the paid remuneration, bonuses, and other members of SanomaWSOY’s Board of Directors were paid the other benefi ts totalling some Management Group is 60 years, following monthly compensations: EUR 937,900 (in 2003 some EUR and their pension is approximately EUR 5,500 to the Chairman, EUR 732,600). Rauramo is entitled to 60% of their salary. Their period of 5,000 to the Vice Chairman and retire after the age of 60 on a pen- notice is six months and severance EUR 4,000 to members. A sum sion of 60% of his salary when he pay in the case of termination cor- of EUR 200 was paid for attend- or the Company so wishes under responds to 12 months’ salary. The ing the meetings. Of the Board the provisions of Sanoma Corpo- severance pay includes a fi xed members, Jaakko Rauramo, Chair- ration’s pension fund. The contract term non-competition clause. man & CEO, Hannu Syrjänen, of employment of the Chairman To promote the achievement President & COO, and Seppo & CEO is valid for the duration of of challenging fi nancial targets, Kievari are included in the scope his term of offi ce, unless other- all SanomaWSOY’s divisions oper- of SanomaWSOY’s Stock Option wise agreed with or decided by ate incentive systems designed Schemes. the AGM. Rauramo holds 100,000 to foster the personnel’s commit- Remuneration and other ben- 2001B stock options and 100,000 ment to business goals and to the efi ts paid to SanomaWSOY’s 2001C stock options. company, and to reward people for management in 2004 amounted Hannu Syrjänen, President & good performance and results. In to EUR 5.0 (4.3) million. In this COO, was paid in total approxi- addition to a skill-, responsibility- respect, management includes mately EUR 765,400 in remunera- and performance-based salary, the members of the Board of Directors tion and benefi ts during 2004 personnel receive one-off bonuses. of SanomaWSOY, the President (some EUR 656,700 in 2003). Divisions also operate short-term & COO, and the Presidents of the According to his employment con- incentive systems tied to their par- tract, Syrjänen will retire at the age ticular businesses. SanomaWSOY’s of 60, unless otherwise agreed, Board of Directors confi rms the and his pension will be approxi- general principles of incentive sys- mately 60% of his salary. The tems. The incentives are set by the period of notice of the President previous year’s development, the & COO is six months and sever- competitive situation, the life cycle ance pay in the case of termina- of the business, action plans, etc. Sanoma and Sanoma Magazines Finland also maintain a person- nel fund for profi t sharing. Annual payments from this fund are based on operational result. The Group also has stock option schemes, which are described in more detail on page 44 of the Financials.

42 SanomaWSOY » Corporate governance

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 4242 77.3.2005.3.2005 112:21:432:21:43 System of control nal Auditing Department, which Risks related to product and risk management reports to the President & COO. launches and acquisitions are SanomaWSOY’s Board of Directors Internal Auditing is carried out in more diffi cult to anticipate than has approved the Group’s risk collaboration with SanomaWSOY’s the business risks related to management policy. In addition Management Group, the Audit product and service development to this, the most important risk Committee, and the Group’s and to defi nition of authority. management tools include the auditors in accordance with the However, SanomaWSOY’s wide Group’s, divisions’ and business Group’s corporate governance product and service portfolio units’ policies and guidelines. principles and the policy for inter- reduces risks related to launches. The Board of Directors is nal auditing given by the Audit Technological development responsible for monitoring the Committee. especially challenges the media Group’s asset management. The Authority issues regarding business. As part of its normal President & COO is responsible approval of investments and HR- business development and report- for arranging the appropriate related matters have been clearly ing, SanomaWSOY constantly accounting and control mecha- defi ned in SanomaWSOY’s corpo- monitors risks in the media fi eld in nisms. The Group’s fi nancial rate governance principles. Invest- the future and ways to prepare for performance is monitored on a ments are considered as part of them. Divisions report regularly monthly basis using a Group-wide the review of strategies, action to the Board of Directors on the operational planning and report- plans and budgets carried out possible risks they may be facing. ing system. The system includes by various administrative bodies Financial risk management is data on the actual income state- across the Group. All investment described in more detail in note 22 ment, balance sheet fi gures and decisions are taken on the basis of on page 39 of the Financials. main key fi gures, up-to-date esti- a separate investment proposal, in mates for the current year, and accordance with the authority to Intellectual property rights rolling estimates for the next 12 approve investments. For decision- SanomaWSOY’s most important months. making and monitoring purposes, intellectual property rights in The Board of Directors annually an investment proposal, which respect of the Group’s products selects an Audit Committee from covers the bases for the invest- and services are copyrights, pub- among its members. The Audit ment, including fi nancial calcula- lishing rights, trademarks, busi- Committee prepares, steers and tions, is made for all major invest- ness names, domains, and know- evaluates the Group’s risk man- ments. how possessed or licensed by the agement, internal control proce- The usual business risks in Group. Intellectual property rights dures, fi nancial reporting, opera- media are related to the devel- are an essential part of the Group’s tional processes, auditing, and opment of advertising and con- identifi able intellectual capital, internal auditing in accordance sumption. Media advertising and the principles regarding their with the policy confi rmed by the reacts quickly to changes in eco- management have been approved Board of Directors. nomic cycles. Only about one by SanomaWSOY’s Management At the end of 2004, all fi fth of SanomaWSOY net sales Group. members of SanomaWSOY’s are derived from media advertis- The Group aims to gain a com- four-person Audit Committee ing. The distribution of risks varies petitive advantage by acquiring were independent of the com- both geographically and by busi- and exploiting intellectual prop- pany. All Board members are nesses. The Group operates in 20 erty rights as cost-effectively as entitled to attend the meetings European countries in different possible. of the Committee. Depending businesses and some 45% of its on the issue it is addressing, the net sales are derived from outside Audit Committee invites experts Finland. Thus the Group is inde- to attend its meetings, such as pendent of the development of the President & COO, Senior Vice any specifi c geographic area or President, Finance and Administra- business. tion, Internal Audit Director, or the auditors. SanomaWSOY’s chartered public accountant in charge is PricewaterhouseCoopers Oy. In 2004, SanomaWSOY paid a total of EUR 2.4 million to the chartered public accountant, of which EUR 1.1 million was for statutory audit. SanomaWSOY’s internal audit- ing is handled by the Group’s Inter-

SanomaWSOY » Corporate governance 43

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 4343 77.3.2005.3.2005 112:21:482:21:48 SanomaWSOY’s Board of Directors visiting Sanoma Magazines’ headquarters in Amsterdam. From left: Robert Castrén, Sirkka Hämäläinen, Sakari Tamminen, Hannu Syrjänen, Paavo Hohti, Jane Erkko, Jaakko Rauramo, Sari Baldauf, Seppo Kievari, Kerstin Rinne (Secretary to the Board), Robin Langenskiöld, and Heli Rahka (Secretary to the Committees).

Board of Directors

Jaakko Rauramo Owns 2,452 SanomaWSOY Series A Sari Baldauf born 1941, M.Sc. (Eng), Chairman & shares and 42,449 Series B shares, 10 born 1955, M.Sc. CEO of SanomaWSOY Corporation notes of SanomaWSOY’s Convertible (Business Administration) President & CEO of SanomaWSOY Capital Notes 2001, 100,000 2001B Served as Executive Vice President between 1999 and 2001. Served and 100,000 2001C stock options. and General Manager of Networks, as President of Sanoma Corpora- Member of the Board of Directors Nokia Corporation and a member tion between 1984 and the creation of SanomaWSOY Corporation since of the Nokia Group Executive Board of SanomaWSOY in 1999. Joined 1999, Chairman since 2001. between 1998 and 31 January 2005. Sanoma Corporation in 1966, elected Previously served as Executive Vice to the Board in 1979, and served as Paavo Hohti President of Nokia APAC, President of General Manager at Sanoma print, born 1944, Ph.D., Professor, Nokia Telecommunications, Cellular General Manager of the Newspaper Vice Chairman of the Board Systems. Division, and as Sanoma Corpora- Served the Finnish Cultural Foun- Board memberships: Foundation tions’s Executive Vice President. dation between 1980 and 2004. for Economic Education and Inter- Board memberships: Metso Cor- Previously served as Vice Chairman national Youth Foundation. poration (Finland) (Vice Chairman), of WSOY’s Supervisory Board bet- Owns 7,000 SanomaWSOY Series The Foundation of Confederation ween 1994 and 1999 and a member B shares. of Finnish Industry and Employers between 1991 and 1994. Member of the Board of Directors (Finland), Helsingin Sanomat Board memberships: Huhtamäki of SanomaWSOY Corporation since Centennial Foundation, Jane and Corporation (Finland) (Vice Chair- 2003. Aatos Erkko Foundation (Finland), man), The Tapio Wirkkala – Rut Bryk the European Publishers Council, Foundation (Finland) (Chairman), Robert Castrén Reuters Founders Share Company Werner Söderström Corporation’s born 1957, B.Sc. (Econ) Limited (the United Kingdom) Literature Foundation (Finland) Serves as Sales & Marketing Direc- (Trustee), The Museum of Tele vision (Chairman), the Foundation for the tor at UPM-Kymmene Corporation. and Radio (USA) (Councilor), the Finnish Institute in Athens (Finland), Held various marketing positions Scandinavian International Manage- the delegation of Foundation Institu- with UPM-Kymmene Corporation ment Institute Foundation (Den- tum Romanum Finlandiae (Finland) and its predecessor, Kymmene Oy, mark), Stiftelsen Svenska Dagbladet (Chairman), the Valamo Foundation since 1991. Prior to that, he worked (Sweden). Also Member of National (Finland). for Finnpap and Lamco Paper Sales, Board of Economic Defence (Fin- Owns 824 SanomaWSOY Series B among others. Served at Sanoma land) (Chairman), the Delegation shares. Corporation’s Board as a member of the Finnish Central Chamber of Member of the Board of Directors between 1994 and 1999 and as Vice Commerce (Finland), the Helsinki of SanomaWSOY Corporation since Chairman between 1999 and 2002. Chamber of Commerce (Finland), 1999. Owns 7,040 SanomaWSOY Series the Honorary Delegation of the A shares and 13,172 Series B shares. Student’s Union of the Helsinki Member of the Board of Directors University of Technology (Finland). of SanomaWSOY Corporation since 2001.

44 SanomaWSOY » Board of Directors

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 4444 77.3.2005.3.2005 112:21:492:21:49 Jane Erkko Robin Langenskiöld Sakari Tamminen born 1936 born 1946, B.Sc. (Econ) Born 1953, M.Sc. (Econ) Served on the Board of Sanoma Served as a member of Sanoma President of Rautaruukki Corpora- Corporation between 1990 and Corporation’s Board of Directors tion. Served Metso Corporation bet- 1999 and on that of Helsinki Media between 1990 and 1999 and that ween 1999 and 2003 fi rst as Senior Company Oy as Vice Chairman of Helsinki Media Company Oy Vice President and CFO and later as between 1995 and 1999. between 1995 and 1999. Executive Vice President and CFO Board memberships: American Board memberships: Pencentra Oy and Deputy to the President and Scandinavian Foundation (USA) (Finland). CEO. Previously served as Executive (Overseas Trustee), Jane and Aatos Owns 1,119,604 SanomaWSOY Vice President & CFO and Senior Erkko Foundation (Finland) (Vice Series A shares and 6,577,712 Series Vice President and Chief Financial Chairman). B shares. and Accounting Offi cer of Rauma Owns 43,808 SanomaWSOY Series Member of the Board of Directors Oy, as Vice President, Finance of A shares and 200,024 Series B shares. of SanomaWSOY Corporation since Rauma-Repola Oy’s Engineering Member of the Board of Directors 1999. Industry and as Financial Manager of SanomaWSOY Corporation since of Oy W. Rosenlew Ab. 1999. Hannu Syrjänen Board memberships: Lemmin- born 1951, B.Sc. (Econ), käinen Corporation (Finland), Sirkka Hämäläinen Master of Laws, President & COO, the Finnish Foundation for Share born 1939, D.Sc. (Econ) SanomaWSOY Corporation Promotion, Technology Industries of Served e.g. as Member of the Execu- Served Rautakirja 1989–2001 as Finland, Association of Finnish Steel tive Board of the European Central President & CEO, Vice President, and and Metal Producers. Supervisory Bank, Governor and Chairman of the Executive Vice President & Deputy Board memberships: Mutual Pension Board of the Bank of Finland. CEO. Previously served as Vice Presi- Insurance Company Varma (Finland), Board memberships: Kone Corpo- dent at the TS Group, Vice President Sampo Life Insurance Company Limi- ration (Finland), Investor AB (Swe- at Wihuri Oy and Managing Director ted (Finland), The Finnish Fair Corpo- den), Helsinki School of Economics of Finnish Lawyers’ Publishing Oy. ration (Finland). Also a member of Holding Oy the Board of Trustees Board memberships: Federation of the delegation of Foundation of the (Finland), Savonlinna Opera Festival the Finnish Media Industry (Finland) Finland-France Institution (Finland), Patrons’ Association (Finland) (Chairman), Ilmarinen Mutual Pen- the consultative committee of the (Vice Chairman), the Foundation sion Insurance Company (Finland) major customers of Pohjola Group for Economic Education (Finland), (Chairman), Confederation of Finnish (Finland), the Advisory Council of the Anders Chydenius Foundation Industries EK (Finland), the National Major Customers, Finland-function (Finland), Finnish Chamber Orchestra Board of Economic Defence (Finland), of Nordea Bank, and Vuorimies- (Chairman). the Graphic Industry Pool (Finland) yhdistys – Bergsmannaföreningen ry Member of the Board of Directors (Chairman), Foundation for Economic (Miner Association). of SanomaWSOY Corporation since Education (Finland), Finnish Scouts Member of the Board of Directors 2004. Foundation (Finland) (Member of the of SanomaWSOY Corporation since Supervisory Board). Chairman of the 2003. Seppo Kievari Board’s of SanomaWSOY’s divisions: born 1943 Sanoma Corporation, SWelcom Oy, Served Sanoma Corporation bet- Werner Söderström Corporation, and ween 1966 and 2004 e.g. as Senior Rautakirja Corporation. Editor-in-Chief of Helsingin Sanomat, Also a member of the council of Executive Vice President of Sanoma National Voluntary Defence Support Corporation, publisher of Sanoma’s Association (Finland), Advisory Board newspapers, and President of of Helsinki School of Economics (Fin- Sanoma Corporation. land), Research Foundation of the Board memberships: WAN (World University of Helsinki (Finland), the Association of Newspapers), Hämeen Helsinki Chamber of Commerce (Fin- Sanomat Oy (Finland), Helsingin land), the delegation of Foundation Sanomat Centennial Foundation Institutum Romanum Finlandiae (Finland) (Chairman), and Päivälehti (Finland), Sector for Information Archives Foundation (Finland) (Vice Society of the National Board of Eco- Chairman). nomic Defence (Finland), Executive Owns 5,000 SanomaWSOY Series Board of the Finnish section of Inter- B shares, 30,000 2001A, 30,000 national Chamber of Commerce 2001B, and 20,000 2001C stock (ICC), and Value Creating Manage- options. ment of Media Companies-program/ Member of the Board of Directors INSEAD (Member of Advisory Board). of SanomaWSOY Corporation since Owns 20,000 SanomaWSOY The share ownership information 2003. Series B shares, 5 notes of shown on pages 44–45 refers to Sanoma WSOY’s Convertible Capital 31 January 2005. A complete list of Notes 2001, 50,000 2001A, 50,000 SanomaWSOY’s insider holdings, 2001B, 50,000 2001C, and 50,000 updated monthly, can be found 2004A stock options. at www.sanomawsoy.fi . Further Member of the Board of Directors information about Board of of SanomaWSOY Corporation since Directors can be found on pages 2001. 40–43, Corporate governance.

SanomaWSOY » Board of Directors 45

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 4545 77.3.2005.3.2005 112:21:552:21:55 Management Group

Hannu Syrjänen Board), Sanoma Magazines Finland Erkki Järvinen born 1951, B.Sc. (Econ), Master Corporation (Chairman of the Board) born 1960, M.Sc. (Econ), President of Laws, President & COO, (Finland), Hansaprint Oy (Finland), & CEO, Rautakirja Corporation SanomaWSOY Corporation since 2001 Huhtamäki Corporation (Finland), Served Rautakirja Corporation as Served Rautakirja 1989–2001 as R.C.V. Entertainment B.V. (the Nether- Senior Vice President, Kiosk Opera- President & CEO, Vice President, and lands), Sanoma Budapest Kiadói tions since 1997 and as President Executive Vice President & Deputy Részvénytársaság (Hungary), since 2001. Previously served as CEO. Previously served as Vice Presi- Sanoma Magazines Belgium N.V. Marketing Manager and Head of dent at the TS Group, Vice President (Belgium), and Uitgevers Maatschap- Marketing at Vaasamills and as at Wihuri Oy, and Managing Director pij N.V. (Belgium). Managing Director of Siljans Knäcke of Finnish Lawyers’ Publishing Oy. Owns 80 SanomaWSOY Series A AB in Sweden when they were part Board memberships: see entry on shares, 6,000 series B shares, 30,000 of the Cultor Group, and as Product pages 44–45. 2001A, 30,000 2001B, 30,000 2001C, and Marketing Manager for Oy Karl Owns 20,000 SanomaWSOY and 37,000 2004A stock options. Fazer Ab’s Fazer Bakeries. Series B shares, 5 notes of Member of the Management Board memberships: Rautakirja SanomaWSOY’s Convertible Capital Group of SanomaWSOY Corporation Corporation (Finland), Rautakirja’s Notes 2001, 50,000 2001A, 50,000 since 2000. Pension Foundation (Finland) (Chair- 2001B, 50,000 2001C, and 50,000 man), Finnkino Oy (Finland) (Chair- 2004A stock options. Nils Ittonen man), Suomalainen Kirjakauppa Oy Member of the Management born 1954, B.Sc. (Econ), Senior Vice (Finland) (Chairman), JHC Arena Hol- Group of SanomaWSOY Corporation President, Group Treasury, Asset ding Oy (Finland), IBA (International since 1999, Chairman since 2001. Management and Real Estate Book and Press Retailers Association), Joined Sanoma Corporation in 1977 Narvesen Baltija SIA (Latvia) (Chair- Eija Ailasmaa and served in various positions, man of the Supervisory Board), Baltic born 1950, M.Pol.Sc., President & CEO, including as Vice President, Asset Cinema SIA (Latvia) (Chairman of Sanoma Magazines B.V. Management at Sanoma Corpo- the Supervisory Board), AS MPDE Served as President of Sanoma ration and as CFO of Sanoma Inc. (Estonia) (Chairman of the Super- Magazines Finland Oy and Helsinki (USA), and Crafton Graphic Co (USA). visory Board), UAB Vingio kino teat- Media Oy between 2000 and 2002, Board memberships: Rautakirja ras (Lithuania) (Chairman of the as Executive Vice President and Corporation (Finland) (Vice Chair- Super visory Board), R-Kiosk Eesti AS General Manager, Magazines at man), SWelcom Oy (Finland), (Estonia) (Chairman of the Super- Helsinki Media Company Oy bet- Sanoma Magazines Finland Corpo- visory Board), AS Lehepunkt (Estonia) ween 1998 and 2000. Previously ser- ration (Finland), Oy Asipex Ab (Chairman of the Supervisory Board), ved as Vice President, Publishing at (Finland), and Jane and Aatos Erkko Jokerit HC Oy (Finland), and Federa- Sanoma Corporation’s Sanomaprint Foundation (Finland). tion of Finnish Commerce. and Helsinki Media Company Oy, as Owns 50,000 SanomaWSOY Owns 30,000 2001B, 30,000 Editor-in-Chief of the family maga- Series B shares, 30,000 2001A, 2001C, and 37,000 2004A stock zine Kodin Kuvalehti, and in various 30,000 2001B, 30,000 2001C, and options. editorial positions at Ilta-Sanomat. 30,000 2004A stock options. Member of the Management Board memberships: Sanoma Member of the Management Group of SanomaWSOY Corporation Magazines B.V. (the Netherlands) Group of SanomaWSOY Corporation since 2001. (Chairman of the Management since 1999.

46 SanomaWSOY » Management Group

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 4646 77.3.2005.3.2005 112:21:562:21:56 Jorma Kaimio Board memberships: SWelcom Oy Kerstin Rinne born 1946, Ph.D., Docent in Classical (Finland), Helsinki Television Ltd. born 1950, LL.B., Master of Laws Philology at the Universities of (Finland) (Chairman), Oy Ruutu- (trained on the bench), Senior Vice Helsinki and Turku, President, Werner nelonen Ab (Finland) (Chairman), President, Group Strategic Planning Söderström Corporation 2ndhead Oy (Finland) (Chairman), and Legal Affairs Served as WSOY’s Literary Director Suomen Urheilutelevisio Oy (Fin- Joined Sanoma Corporation in 1980. and Deputy President from 1991 and land), the Association of Commercial Served as Vice President, Legal as President from 2000. Prior to join- Television of Finland (Finland), SSH Affairs between 1984 and 1999. In ing WSOY, he served as Managing Communications Security Corp (Fin- addition to Legal Affairs, Rinne has Director of the Academic Bookstore, land), and Savonlinna Opera Festival been responsible for e.g. corporate and as Research Fellow and Lecturer Patrons’ Association. planning, information services, and at the University of Helsinki, and as Owns 1,600 SanomaWSOY Series administration at various points. Secretary of the Finnish Matricula- B shares, 30,000 2001A, 30,000 Previously worked e.g. as Attorney for tion Examination Board. 2001B, 30,000 2001C, and 34,000 the law offi ces Silkko & Ståhlberg, Board memberships: Werner 2004A stock options. H. Hedman, and Rinne & Talikka. Söderström Corporation (Finland), Member of the Management Board memberships: Sanoma Ajasto Osakeyhtiö (Finland) (Chair- Group of SanomaWSOY Corporation Corporation (Finland) (Vice Chair- man), Weilin+Göös Oy (Finland) since 1999. man), Werner Söderström Corpora- (Chairman), Bertmark Media AB tion (Finland), SWelcom Oy (Finland) (Sweden) (Chairman), Helsingin Mikael Pentikäinen (Vice Chairman), Sanoma Finance AG yliopiston Holding Oy (Finland), born 1964, M.Sc. (Agriculture (Switzerland) (Chairman), the HYY Licentia Oy (Finland) (Chairman), and Forestry), President, Group (HYY Group Ltd, Kaivopiha Ltd, WSOY Literary Foundation (Finland) Sanoma Corporation HYY Real Estate Division) (Finland). (Secretary), Lauri Jäntti Foundation Served Finnish News Agency as Also a member of the Information (Finland), The Finnish Book Publis- Editor-in-Chief and President bet- Society Council and the Corporate hers Association (Finland) (Deputy ween 1999 and 2004. Previously Affairs Group of the European Publis- Chairman), the Federation of Finnish served as Editor-in-Chief of Etelä- hers Council. Media Industry, the delegation of the Saimaa between 1996 and 1999 Owns 1,199 SanomaWSOY Series B Valamo Foundation (Finland), and as editor in political news of shares, 30,000 2001A, 30,000 2001B, Owns 14,480 SanomaWSOY Series Helsingin Sanomat between 1992 30,000 2001C, and 30,000 2004A B shares, 30,000 2001A, 30,000 and 1996. stock options. 2001B, 30,000 2001C, and 34,000 Board of memberships: Sanoma Member of the Management 2004A stock options. Corporation (Finland), Helsingin Group of SanomaWSOY Corporation Member of the Management Sanomat Oy (Finland) (Chairman), since 1999. Group of SanomaWSOY Corporation Ilta-Sanomat Oy (Finland) (Chair- since 2000. man), Taloussanomat Oy (Finland) Matti Salmi (Chairman), Sanoma Lehtimedia Oy born 1950, M.Sc. (Econ), Senior Vice Tapio Kallioja (Finland) (Chairman), Sanomapaino President, Finance and Administration born 1948, M.Sc. (Eng), Oy (Finland) (Chairman), Sanoma Served Rautakirja Corporation President, SWelcom Oy Data Oy (Finland) (Chairman), Lehti- between 1988 and 2004 as Senior Joined Sanoma in 1984. Served as kuva Oy (Finland) (Chairman), Esmerk Vice President, Corporate Finance Vice President of Sanoma’s Euro- Oy (Finland) (Chairman), Sanoma and Administration. Previously ser- cable Group and New Media Group Kaupunkilehdet Oy (Finland) (Chair- ved as Vice President, Finance at and President of Helsinki Telset Oy, man), and Finnish News Agency Suomen Tupakka Oy and as Control- Helsinki Television Ltd., and Helsinki (Finland). ler at British American Tobacco Ltd. Media Company Oy. Owns 30,000 2001C and 37,000 Board memberships: Rautakirja 2004A stock options. Corporation (Finland), Sanoma Member of the Management Corporation (Finland), Werner Söder- Group of SanomaWSOY Corporation ström Corporation (Finland), Jokerit since 2004. HC Oy (Finland) and the Media Employers' Association. Owns 12,000 2001B, 30,000 2001C, and 30,000 2004A stock options. Member of the Management Group of SanomaWSOY Corporation since 2004.

The share ownership information shown on pages 46–47 refers to 31 January 2005. A complete list of SanomaWSOY’s insider holdings, updated monthly, can be found at www.sanomawsoy.fi . Further information about Management Group can be found on pages 40–43, Corporate governance.

SanomaWSOY » Management Group 47

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 4477 77.3.2005.3.2005 12:22:4012:22:40 Contact information

SanomaWSOY Corporation Sanoma Magazines B.V. President & COO, Hannu Syrjänen President & CEO, Eija Ailasmaa Ludviginkatu 6–8 Jachthavenweg 124, 1081 KJ Amsterdam P.O.Box 1229 P.O.Box 90473 FI-00101 Helsinki, Finland NL-1006 BL Amsterdam, The Netherlands tel. +358 105 1999 tel. +31 20 851 2100 fax +358 105 19 5068 fax +31 20 851 2149 www.sanomawsoy.fi

Sanoma Corporation Finance and Administration President, Mikael Pentikäinen Senior Vice President, Matti Salmi Töölönlahdenkatu 2 Group Strategic Planning P.O.Box 95 and Legal Affairs FI-00089 Sanomat, Finland Senior Vice President, Kerstin Rinne tel. +358 9 1221 Group Treasury, Asset fax +358 9 122 4809 Management and Real Estate www.sanoma.fi Senior Vice President, Nils Ittonen Investor Relations and Group Communications Werner Söderström Corporation tel. +358 105 19 5062 President, Jorma Kaimio ir@sanomawsoy.fi Bulevardi 12 P.O.Box 222 FI-00121 Helsinki, Finland Offi ce of the Chairman tel. +358 9 616 81 Chairman & CEO, Jaakko Rauramo fax +358 9 6168 3560 Erottajankatu 11 A www.wsoy.fi P.O.Box 1229 FI-00101 Helsinki, Finland tel. +358 105 1999 SWelcom Oy fax +358 105 19 5508 President, Tapio Kallioja Ludviginkatu 6–8 P.O.Box 1019 FI-00101 Helsinki, Finland tel. +358 10 707 1111 fax +358 10 707 7008 www.swelcom.fi

Rautakirja Corporation President & CEO, Erkki Järvinen Koivuvaarankuja 2 P.O.Box 1 FI-01641 Vantaa, Finland tel. +358 9 85 281 fax +358 9 853 3281, 852 8511 www.rautakirja.fi

Annual Report 2004 / Pictures Marja Airio, Jaakko Avikainen, Julie Blik, Sari Gustafsson, Martti Kainulainen, Jaakko Lukumaa, Kimmo Mäntylä, Samuli Pulkkinen, Tiina Pyrylä

48 SanomaWSOY » Contact information

552800_Sanoma_VSK_FI_EN.indd2800_Sanoma_VSK_FI_EN.indd 4488 77.3.2005.3.2005 12:23:1412:23:14 SanomaWSOY | ANNUAL REPORTANNUAL 2004

ANNUAL REPORT 2004

The Report of the Board of Directors, detailed fi nancial statements, and associated material are published separately. Annual Report material can be ordered from Investor Relations & Group Communications via email (ir@sanomawsoy.fi ) or phone (+358 105 19 5062), and all information can be

consulted at www.sanomawsoy.fi . SanomaWSOY Corporation, P.O.Box 1229, FI-00101 Helsinki, Finland. Tel. +358 105 1999, fax +358 105 19 5068, www.sanomawsoy.fi Lönnberg F.G. by: Printed Incognito Design:

552800_sw_ar_2004_kannet.indd2800_sw_ar_2004_kannet.indd 1 33.3.2005.3.2005 15:17:4815:17:48