Annual Report 2008

sanoma corporation

Sanoma Corporation President and CEO Hannu Syrjänen Ludviginkatu 6–8 P.O. Box 1229, 00101 Helsinki, Finland Tel. +358 105 1999, fax +358 105 19 5068 Sanoma.com

Group Strategic Development, CSO Sven Heistermann annual report 2008 Group Finance and Administration, CFO Kim Ignatius Group Treasury, Real Estate and Risk Management, Senior Vice President Nils Ittonen Group Legal Aﬀ airs, CLO Merja Karhapää Group Human Resources, CHRO Ben Tiesnitch

Group Communications Tel. +358 105 19 5062, fax +358 105 19 5068 [email protected] a Sanoma company

office of the chairman Chairman Jaakko Rauramo Erottajankatu 11 A P.O. Box 1229, 00101 Helsinki, Finland Tel. +358 105 1999, fax +358 105 19 5508

Sanoma Magazines B.V. President and CEO Eija Ailasmaa Jachthavenweg 124, 1081 KJ Amsterdam a Sanoma company P.O. Box 90484, 1006 BL Amsterdam The Netherlands Tel. +31 20 851 2100, fax +31 20 851 2149 Sanomamagazines.com Sanoma Learning and Literature B.V. CEO Jacques Eijkens Sanoma News Ltd Statenlaan 1 annual report 2008 annual report President Mikael Pentikäinen P.O. Box 99, 5201 AB ‘s-Hertogenbosch TAUKOAUAUKUKOOPELITP T Töölönlahdenkatu 2 The Netherlands PL 95, 00089 Sanoma, Finland Tel. +31 73 628 7528 Tel. +358 9 1221, fax +358 9 122 4809 Sanoma-ll.com Sanomanews.com Rautakirja Ltd (Sanoma Trade) Sanoma Entertainment Ltd President and CEO Timo Mänty President Anu Nissinen Koivuvaarankuja 2 Ludviginkatu 6–8 P.O. Box 1, 01641 Vantaa, Finland P.O. Box 1019, 00101 Helsinki, Finland Tel. +358 9 852 81, fax +358 9 853 3281 Tel. +358 10 707 1111, fax +358 10 707 7008 Rautakirja.ﬁ

Sanomaentertainment.com Sanomatrade.com sanoma corporation sanoma corporation, p.o. box 1229, 00101 helsinki, finland. tel. +358 105 1999, sanoma.com Annual report 2008

I20900519_Sanoma KANNET.indd 3 3.3.2009 09:34:01 Divisions’ management groups (as of 31 january 2009) contents 4 Key ﬁ gures and organisation 6 Management review

8 Market development

10 Mission, vision, values and objectives

12 Sanoma’s change Sanoma Magazines Sanoma Entertainment Management Board 14 Key events and operating countries Anu Nissinen (Chairman), born 1963 Eija Ailasmaa (Chairman), President 16 Divisions born 1950 Johan Flykt, born 1965 Sanoma Magazines, p. 18 President and CEO President, Welho Koos Guis, born 1947 Hans Edin, born 1959 Sanoma News, p. 22 Sanoma Entertainment, p. 26 CEO, Sanoma Magazines International President, Nelonen Media Dick Molman, born 1954 Pia Huhdanmäki, born 1969 Sanoma Learning & Literature, p. 30 CEO, Sanoma Uitgevers Senior Vice President, Administration Sanoma Trade, p. 34 Raili Mäkinen, born 1944 Ari Kurenmaa, born 1967

Corporate responsibility CEO, Sanoma Magazines Finland Senior Vice President, Finance 38 Walter van der Schaaff, born 1958 Jyri Ratia, born 1972 Personnel, p. 40 CFO Senior Vice President, Environment, p. 44 Aimé Van Hecke, born 1960 Business Development CEO, Sanoma Magazines Belgium 46 Board of Directors

Sanoma Learning & Literature Executive Management Group 48 Sanoma News Jacques Eijkens (Chairman), born 1956 50 Other management Mikael Pentikäinen (Chairman), CEO born 1964 Jyri Ahti, born 1962 President CSO Titta Halme, born 1968 Veli-Pekka Elonen, born 1965 President, Sanoma Kaupunkilehdet COO, Publishing Pekka Harju, born 1962 Barend de Graaff, born 1956 President, Ilta-Sanomat CFO Jarmo Koskinen, born 1961 Mark Marseille, born 1963 President, Sanoma Lehtimedia CHRO Liisa Kotilainen, born 1961 Tuomo Räsänen, born 1969 President, Sanoma Digital COO, Language Services Pekka Laakeristo, born 1955 President, Sanoma Data Eija Rinta, born 1955 Sanoma Trade CFO Pekka Soini, born 1957 Timo Mänty (Chairman), born 1960 President, Helsingin Sanomat President and CEO Marja-Leena Tuomola, born 1962 Senior Vice President, Movie Operations Senior Vice President, Business and Hellevi Kekäläinen, born 1953 digital operations development Senior Vice President, CFO sanoma corporation annual report 2008, production: sanoma magazines finland, custom publishing, Ismo Vuoksio, born 1963 Raimo Kurri, born 1953 design: koillinenkaakko/antti kangassalo, printed by: lönnberg print & promo, texts: michael larkin, President, Sanomapaino Senior Vice President, Press Distribution gregory moore, risto pennanen, matti remes, marianna salin, tuija sievänen, tiina tuomainen, anna tuominen, financials Jukka Nikkinen, born 1962 pictures: lk/antti aimo-koivisto, erik buis, györgy gaál, nils van houts, antti kangassalo, susanna kekkonen, 3 key indicators, 4 net sales by business, 5 operating profit by division, 5 income statement by quarter, Senior Vice President, enrico meeuwsen, lk/pekka sakki, sulev sepp, tomasz szwejer, patrick verbeeck 6 board of directors’ report 14 consolidated financial statements, 18 notes to the consolidated financial Business Development statements, 56 definitions of key indicators, 57 shares and shareholders, 64 parent company Jarmo Oksaharju, born 1961 the board of directors’ report, detailed financial statements and associated material financial statements, 70 corporate governance, 74 risk management, 77 investing in sanoma, Senior Vice President, Bookstores are published separately. annual report is available at sanoma.com in pdf format and 78 releases 2008, 79 brokerage houses providing analyses of sanoma Markku Pelkonen, born 1962 the printed version can be ordered from group communications via email Senior Vice President, Kiosk Operations [email protected] or by phone +358 105 19 5062. contents 2

I20900519_Sanoma KANNET.indd 4 3.3.2009 09:34:34 Sanoma is a strong European media company. In 2008,

the Group net sales amounted to EUR 3,030 million. Sanoma

oﬀers a challenging and interesting working environment for

over 21,000 people in 20 countries throughout Europe. We bring

information, experiences, education and entertainment to

millions of people every day. We make sure that quality

content and interesting products and services are easily

available and meet the demands of our customers. sanoma in brief 3 Key ﬁgures and organisation

Key indicators, EUR million 2008 2007 Change, % Net sales 3 030.1 2 926.3 3.5 Operating profit excluding non-recurring items 295.7 305.2 -3.1 % of net sales 9.8 10.4 Operating profit 236.3 343.8 -31.2 % of net sales 7.8 11.7 Result for the period 120.8 246.1 -50.9 Balance sheet total 3 278.7 3 192.3 2.7 Capital expenditure 109.9 90.5 21.4 Return on equity (ROE), % 9.1 18.6 Return on investment (ROI), % 10.7 15.9 Interest-bearing liabilities 971.6 793.3 22.5 Equity ratio, % 40.0 45.4 Net gearing, % 78.5 58.2 Dividend payout ratio, % * 125.1 67.9 Effective dividend yield, % * 9.8 5.1 P/E ratio 12.8 13.3 -3.9 Market capitalisation, EUR million 1 479.7 3 196.2 -53.7 Average number of employees 21 329 19 587 8.9 Average number of employees (full-time equivalents) 18 168 16 701 8.8

* year 2008 proposal of the board of directors

sanoma group

chairman jaakko rauramo president and ceo hannu syrjänen

sanoma sanoma sanoma sanoma sanoma magazines news entertainment learning & literature trade

president and ceo president president ceo president and ceo eija ailasmaa mikael pentikäinen anu nissinen jacques eijkens timo mänty

Magazines, online Newspapers, online TV, radio, broadband Learning, language Kiosk operations, press operations operations, printing internet, online services services, literature distribution, bookstores, movie operations key figures and organisation key figures and organisation 4 2 000 net salesdistribution earnings/share, eur 3 000 0.50 2 500 3 500 net sales,eurmillion 0.25 0.75 1 000 1.00 1 500 1.50 1.25 500 0 0 14% 1999, fas 1999, fas retail digital media material andbooks printed educational newspapers magazines

37% 2000, fas 2000, fas

11% 2001, fas 2001, fas 2002, fas 2002, fas 2003, fas 2003, fas 2004

11% 2004

27% 2005 2005 2006 2006 2007 2007 2008 0.72 2008 3 030 200 dividend/share, eur 300 0.50 250 350 recurring items,eurmillion operating profitexcludingnon- 0.25 0.75 100 1.00 150 1.50 1.25 50 0 0 15%

retail andother educational publishing(incl.books) distribution sales single copysales subscription sales advertising sales 1999, fas

25% 1999, fas

13% 2000, fas 2000, fas 2001, fas 2001, fas 2002, fas 2002, fas 2003, fas 8% 2003, fas 27% 2004 2004

13% 2005 2005 2006 2006 2007 2007 2008 * 0.90 2008 296 ring items non-recur- including 1999–2003 directors the board of proposal of * year2008 5 key figures and organisation “All in all, we had a good year in 2008,” Strength equals success says Jaakko Rauramo. The numbers support this view: the Sanoma Group’s operating proﬁt excluding non-recur- Leading market position and competitive ring items nearly matched the level achieved in 2007, a record-breaking products are Sanoma’s greatest assets. year in the Group’s history. According to Chairman of the Board Jaakko Rauramo and President and CEO In 2008, the Sanoma Group acquired the Polish Nowa Era and Swedish Hannu Syrjänen, future growth is key to Interverbum, expanding its educational continued success. publishing business and language services, respectively. In its magazine business the Group continued to actively develop and adjust its product portfolio. Digital products and services made strong progress around Europe.

The global recession hit the media business in the second half of 2008. According to Hannu Syrjänen, predict- ing the near future has never been as diﬀicult as it is now.

“The effects of the slowdown are the same throughout the media business. In Finland, the economic decline ini- tially slowed sales in job and real estate ”The economic downturn also advertising. Generally, newspapers and offers plenty of opportunities. television are quicker to react to economic fluctuations than magazines,” We will see considerable changes Syrjänen explains. in market shares.” Rauramo points out that the wide range of Sanoma’s product offerings softens the blow. Revenue from advertising constitutes only one fourth of the Group’s net sales. management review management 6 hannu syrjänen jaakko rauramo

“Most of our revenue comes directly “I doubt that advertising will change “The new name is a strength in inves- from consumers, and this spending is dramatically at the annual level. Busi- tor and customer relations. It also helps not nearly as cyclical as advertising. We nesses simply need to communicate our employees see the Group as one differ from many other media corpo- their products and services in order to and feel that they belong. The impor- rations in that they are clearly more survive.” tance of community spirit can never be dependent on advertising income.” stressed enough.” Of course, strong corporations are not One of Sanoma’s strategic objec- totally immune to economic fluctua- Rauramo believes that a strong brand is tives is to be the market leader in tions. an asset in recruiting new talent. After chosen businesses and markets. This all, the media is a people’s business. is a core strength in both good times “We always adjust our operations to and bad. current business conditions and the “Focusing on media’s growth areas is a foreseeable future. The old adage about primary objective in our strategy, and “Clients seek a safe haven during cutting your coat according to your talent differentiates us from the com- economic declines. They are unwilling cloth still applies. Our long-term goals petition. We need more experts with to try new options and instead seek remain unchanged, but we need to multiple skills in producing content market leaders with proven channels focus more on cost management and for print and online media as well as and techniques. This favours strong structural arrangements,” Rauramo television. We also need to know how to corporations over smaller companies adds. market this content, and both the tech- and inevitably reduces the competi- nical platforms and distribution chan- tion,” Rauramo says. Sustainable growth is one of the nels naturally need to work perfectly. Sanoma Group’s long-term goals. Even In addition, we need leaders to manage “Recession wipes out the more mar- though the Group has decided to refrain the multitude,” says Rauramo. ginal ventures also in digital media. from new big investments and acquisi- These include online services based on tions for the time being, it will monitor “Sanoma has over 21,000 employees. wishful thinking rather than a sustain- market developments closely. To achieve our goals, we need all types able business model. For this reason, of competence, both stars and team I believe that digitalisation will come “The economic downturn also offers players,” Syrjänen adds. through evolution, not revolution. Our plenty of opportunities. We will see business models in traditional media considerable changes in market shares. He emphasises that collaboration and are tried and true.” Opportunities will present themselves. a feeling of community, a sense of We must keep cool and wait for the togetherness, are the best guarantees Advertising tends to overreact to right moment,” Syrjänen predicts. of success, especially in difficult times. changes in gross domestic product. The Group changed its name to “I can certainly see this happening Sanoma in October 2008. At the same again,” says Syrjänen. “At first, compa- time, the different divisions adopted nies will defer their campaigns to save more consistent names. A more concise costs. They will soon realise, however, and expressive name conveys a clearer that less advertising also means less picture of the Group as a whole. income.” review management 7 Technological advances, population ageing and many other megatrends shape media companies’ strategies. These trends present new challenges as well as new opportunities. Sanoma is ready for both.

Media companies face historic tur- Business changes moil and change as technology leaps forward, consumer behaviour changes, with major trends and new competition emerges continuously. All these changes aﬀect one another.

Leaps in technology, for example, engender novel services and new competition. At the same time, consumer behavior changes: consumers expect free services on the internet, and this demand generates more and more sponsored products. The competition for attention intensiﬁes, and consumer habits fragment into ever smaller segments.

Current megatrends include not only the evolution of the internet, but also population ageing, decreasing family media markets in europe, usd million size, stronger social media, increasing mobility, growing entertainment consumption and converging tech- 400 000 nologies. Diﬀerent combinations of 350 000 these engender a myriad of changes great and small, all of which require a 300 000 response from the companies involved – preferably in advance. 250 000 consumer and educational books 200 000 radio advertising

150 000 newspapers consumer magazines 100 000 tv advertising tv subscriptions and license fees 50 000 internet advertising internet access 0 1999 2001 2007 2003 2002 2005 2008 2006 2004 2000 market development 8 megatrends: mobile broadband growth, converging media technologies, increasing mobility, fragmentation of client groups, population ageing, decreasing family size, strengthening social networks, increasing amount of free services, stronger ad-sponsored services, growing consumption of entertainment, increasing global competition…

Media companies should take Megatrends’ impacts are immense, but The development is continu- charge of megatrends. It would not sudden. Companies need not make ous. The changes generated by be rash to claim that these changes turnabouts; they can adjust to changes major trends are unstoppable, and do not present considerable chal- and develop one step at a time – even if many of them are even likely to gain lenges for media companies. It would that step is a long one. added momentum from the economic be even rasher to maintain, however, slowdown; free internet services, for that changes do not create incredible The steps and leaps Sanoma has taken example, will undoubtedly become opportunities. are already evident as substantial more popular. changes in its business portfolio. In a Some of the more traditional products few years, Sanoma has grown from a Sanoma keeps an eye on the new offered by media companies are in a traditional Finnish newspaper company trends and develops new businesses challenging situation; this is particu- into a European multimedia conglomer- continuously. It will not brake and larly true, for example, in the printed ate. Digital business constitutes more become moss-grown. The Group is con- newspapers. than 11% of the Group’s net sales, and stantly shaping a new vision of what online operations generate the fastest- the company will be like in a few years. The changing competition makes it growing stream of income within the It needs an even better understanding essential for companies to constantly Group. of changes in consumer demand: What develop new products and services, type of services will interest tomorrow’s which in turn requires a great deal of New technology constantly gives rise youth? How will lifelong learning affect new competence and a fresh mindset. to new models of operation. In Sanoma, the media and its business opportuni- Sanoma has secured these by acquir- these range from online price and prod- ties? What type of services will the ing companies, implementing extensive uct comparison services to live broad- baby boomers need when they retire? employee training programmes, and casts from the New York’s Metropolitan partnering with global players. Opera, as shown in Finnkino movie Great changes raise great questions theatres in Finland. that leave no business unaffected. How At the same time the role of the media will a business newspaper create new companies changes. They become Megatrends are apparent even in the services on the internet? Will textbooks more than content providers. This hap- Group’s kiosk chain. New technology only be published online? Who will be pens especially in the online world, but has brought new electronic services our future competition? also the printed media offers new crea- to the product range, and decreasing tive services for readers and advertis- family sizes also present new oppor- Many of these questions have no easy ers. A huge amount of new advertising tunities, such as selling fast food. answers. Finding the right answers is networks, sponsored links and adver- Globalisation has facilitated the chain’s important, but it is equally important tising funded models develops. expansion to Russia, among other to build an organisation that is ready countries. In other words, not only does for unforeseen changes. Organisational In spite of these changes media com- Sanoma exploit existing trends, it also models need to be flexible and the panies have their traditional mission to creates new ones. people need to have a genuine inter- create content and combine their audi- est in new models of operation. This ence and advertisers. requires a great deal. From everyone. market development 9 A leading European media company

Values Creativity Reliability Dynamism

Creative work is Creativity and reliability Our success is based the essence of form the basis of all on creative, reliable communications. our actions. and dynamic people.

Strategy

Our goal is to be one of the leading media companies in Europe, with a focus on sustainable growth and proﬁtability.

our strategic objectives are:

To be the market leader in chosen Magazines: We will continue to grow in print and digital media. businesses and markets. Newspapers: We will actively develop To maintain a balanced our business to maintain our proﬁtabil- ity and to ensure controlled migration business portfolio of B2C and from print to digital. B2B products and services.

focus areas Learning and Language services: We will grow via further internationali- To investigate opportunities to sation and entering new segments.

internationalise our TV operations. Online: We will strongly develop and expand our online assets. To maximise our strategic position in retail. mission, vision, values and objectives mission, vision, values 10 Mission Vision

To be the market leader in satisfying To be the media company people’s needs for information and of opportunities and education, and for an easier and operational excellence. happier life.

long-term financial targets target level

EBIT margin, % 12 (in 2008: 9.8, excluding non-recurring items)

Net debt/EBITDA < 3.5 (2.1)

Equity ratio, % 35–45 (40)

Gearing, % < 100 (78.5)

Investments/year, EUR million < 100 (109.9)

Net sales growth, % Faster than GDP growth in main operating countries (3.5)

Digital business, % of net sales To increase digital business signiﬁcantly (11.4)

Dividend policy, % Over half of Group result after taxes distributed in dividends (125.1) mission, vision, values and objectives mission, vision, values 11 1999 2001 2003

Sanoma and WSOY Magazine business Rautakirja merged merged – the Group internationalised to the Group was formed

Strong roots foster international growth In 1999, the first of May was not only the beginning of spring. It also marked the first chapter in one of the greatest success stories in European The first ten years media: Sanoma, WSOY, Helsinki Media and Devarda merged to become the of Sanoma’s European SanomaWSOY Group, by far the largest media corporation in Finland. This success story new conglomerate focused its growth on educational publishing, new online business opportunities, and internationalisation, particularly in magazine publishing.

In a decade, the Group has grown rapidly beyond national borders. Its roots, however, run deep in its operating countries and their media cultures.

In Finland, Sanoma has fostered creativity and freedom of speech ever since Sanoma inspires, Päivälehti, the predecessor to daily newspaper Helsingin Sanomat, was informs and connects. established in 1889. sanoma’s change 12 2004 2005 2008

Educational publishing Magazine business The Group’s expanded to the expanded to Russia name changed Netherlands and Belgium to Sanoma

Elsewhere in Europe, Sanoma’s prod- acquisition of the Dutch publisher ment model that creates more syn- ucts and brands are market leaders Malmberg. The expansion has con- ergies, facilitates effective business with strong local traditions. Educational tinued, and the Group now produces decisions and reduces overlapping publishers Malmberg and Van In were educational materials in five European operations. established in the Netherlands and Bel- countries. gium in the middle of nineteenth cen- In October 2008, SanomaWSOY tury. Kvety, the Group’s oldest maga- The acquisition of Independent Media, changed its name to Sanoma, which zine still in circulation, was launched in Russia’s largest consumer magazine reflects the feeling of greater unity. The 1834 in what is now the Czech Republic. publisher, in 2005 marked an impor- new name is complemented by a new tant step for Sanoma in terms of new brand design. The different divisions Internationalisation gained added markets. Today, the Group’s publishing continue their expert work in their momentum in 2001, when the Group business in Russia is complemented by respective fields, but the emphasis is acquired the consumer magazine busi- press distribution and kiosk operations. now more on the common good, the big ness of the Dutch media group VNU. picture. This made Sanoma Magazines a nota- Online business is one of the focus ble European magazine publisher that areas for growth, as the evolving The future is here. Sanoma’s goal currently operates in 13 countries. electronic channels present interest- is to be one of the leading European ing business opportunities. Sanoma media companies, with sustainable The retail specialist Rautakirja merged has already secured a strong position growth and profitability. A feeling into the Group in 2003. Press distribu- in online business in the Netherlands, of community within a more united tion has expanded strongly over the Finland, Hungary and Bulgaria. Sanoma helps us to reach our goal. years, and the Group now runs distribution operations in seven countries. Closer collaboration between the different divisions is key to continued International growth in educational success. To serve this purpose, the publishing began in 2004 with the Group adopted in 2007 a new manage- sanoma’s change 13 Investments in focus areas continue

Sanoma developed its operations in all operating countries in 2008. The Group got a new name and visual identity in the autumn. In the future the Sanoma brand will also be more visible in the hundreds of millions of yearly customer encounters.

Sanoma Magazines is also country’s largest online opera- Sanoma News Sanoma Magazines developed its tor. Netinfo’s portfolio consists, e.g., of Sanoma News developed its news- position as the leading publisher in the Bulgaria’s most popular news site and papers markedly. As was the tabloid Netherlands even further, and was able the largest email service. Ilta-Sanomat, the weekend supplement to gain market share through success- Ilta-Sanomat Plus, the weekly supple- ful launches of new print brands and The core of Sanoma Magazines’ opera- ment of Helsingin Sanomat NYT like acquisitions in digital media. An impor- tions is the locally-known magazines. the free sheet Metro renewed. Sanoma tant step was the acquisition of Euro- The 10th edition of Sanoma Magazines’ News has strongly invested in digital pean Auto Trader. Autotrader.nl is one title Story was launched in Slovenia. services alongside with the printed of the largest Dutch websites focused Story is also published in Belgium, products and its online services reach on used cars. Altogether the Division’s Bulgaria, Croatia, the Czech Republic, more than 73% of Finns over 10 years over 80 print brands reach 71% and 200 Hungary, the Netherlands, Romania of age. In 2008, Sanoma News acquired websites 65% of the Dutch population. and Ukraine. Rakentaja.fi and its sister sites to complement its offering in online services. Sanoma Magazines is also Bulgaria’s In Russia Sanoma Magazines expanded leading magazine publisher. After the its portfolio with launches and acquisi- Netinfo acquisition, Sanoma Magazines tions. Sanoma Entertainment Sanoma Entertainment grew strongly thanks to good pay TV and broadband sales of Welho, and new TV channels. net sales by geographic area, eur million Pay TV operations were developed by investing especially in offering the high definition channels. Of new TV channels Jim was the most successful.

1999 1 212 109 Sanoma Learning & Literature Sanoma Learning & Literature expanded its learning operations in Poland when the acquisition of Nowa finland other countries Era was completed in March. The country’s second largest publisher oﬀers a wide selection of educational materials. The Division’s Young Digital Planet, also operating in Poland, concentrates on 2008 1 460 1 571 e-learning materials.

The acquisition of Swedish Interver- bum clearly strengthened Sanoma Learning & Literature’s language key events and operating countries key events and operating 14 finland

norway

sweden estonia russia

latvia

the united lithuania kingdom

the netherlands poland belgium ukraine the czech republic slovakia

slovenia hungary

romania

croatia serbia

bulgaria

service operations. The aim is to expand Sanoma Trade There were already 16 kiosks the Group’s language services into a Sanoma Trade took a signiﬁcant step in at the end of the year. leading service provider for Northern Russia when it acquired KP Roznitsa’s and Eastern Europe supporting the 89 kiosks in the Rostov region in South- Sanoma Trade also opened a state-of- customers’ ability to work in a multi- ern Russia in March. In July, Sanoma the-art movie centre in Finland. The lingual and multi-cultural business Trade’s kiosk operations expanded to new multiplex brings also 3D movies to environment. Romania, while the ﬁrst R-kiosks were the repertoire. opened in the country’s largest cities. In Finland Sanoma Learning & Litera- ture launched an edutainment product series, Oppi & Ilo, for children under 12 years. key events and operating countries key events and operating 15 16 divisions 17 divisions Sanoma Magazines is a leading publisher of magazines and strong in digital media in 13 European countries. The company actively reaches out to an audience of 290 million consumers at every life stage, and aims to strengthen the market leading positions in all of its markets.

Building brands, carving cornerstones

“We have made significant investments market share increased, advertis- to grow, embrace new opportunities, in the competitive strength of our ing sales in print magazines took an and open-mindedly develop with the brands, and this has reaped rewards,” upward turn, and online business grew times. In the Netherlands, for example, says Eija Ailasmaa, President and faster than the market. Sanoma Maga- the newcomer Flow surprised its read- CEO of Sanoma Magazines. “When the zines Finland’s performance was excel- ers with refreshingly unconventional economic climate becomes challenging, lent, clearly outperforming the market. content and varied paper choices. Flow the strength of our brands becomes “Romania, Bulgaria, Ukraine and Russia seeks to balance the bustle of everyday especially important.” also showed high growth rates. But the life with content that fosters peace of economic climate in Russia is now very mind and also gives readers a taste Ailasmaa counts some twenty maga- challenging,” says Ailasmaa. of different lifestyles. “A new trend is zines as the main brands of Sanoma always an opportunity to adjust estab- Magazines. They are market leaders Each country requires products that lished brands and to create new ones,” in their respective areas, and many correspond to its culture. However, Ailasmaa says. have already attracted a fourth or fifth through careful localisation, a success- generation of readers. These long-time ful product can be launched in multiple New magazines need not necessarily favourites include, for example, the countries. The weekly Story is a prime start from scratch. The Belgian maga- women’s magazine Libelle in the Neth- example: it recently launched its 10th zine Goedele is a concept built around erlands and Donald Duck in Finland. version in Slovenia. Altogether, Sanoma a psychologist who hosts a television According to Ailasmaa, continuous Magazines launched or acquired over show and has authored several books development as well as exciting innova- 30 magazines in 2008. At the same and who originally became a household tions are the key to their success. time the company also closed or sold name after winning a beauty contest. some titles, demonstrating active Long-term investments in the portfolio management that is in balance Goedele was loosely modelled on Linda, product and service range produced with changing consumer values. a Dutch magazine centred on a televi- results in 2008. Ailasmaa is particu- sion personality. Linda was launched larly pleased with Sanoma Magazines’ The main brands ensure a solid five years ago and has since developed all-round success in the Netherlands, foundation for Sanoma Magazines’ into one of the most popular maga- its largest market, where the Division’s new and over 300 existing magazines zines in Sanoma Magazines’ portfolio. sanoma magazines 18 net sales, eur million operating profit excluding non- recurring items, eur million 1 247 1 200 150 139

1 000 125

800 100

600 75

400 50

200 25

0 0 2007 2007 2005 2005 2008 2008 2006 2006 2004 2004 1999, fas 1999, fas 2001, fas 2001, fas 2003, fas 2003, fas 2002, fas 2002, fas 2000, fas 2000, fas

1999–2003 including non-recurring items

Formerly a minority shareholder, the “We are developing our digital business models and their technical and com- company acquired Linda in 2008. “We vigorously in all markets. Our leading mercial solutions. are very happy that Linda is an integral position in the Netherlands and Hun- part of Sanoma Magazines. Now we can gary will provide increasing benefits to Ailasmaa is convinced that enhanced develop the magazine further as one of other markets in the future,” Ailasmaa co-operation reduces risks. “Increased our main brands,” Ailasmaa explains. says. “We have reached an entirely new sharing means faster learning.” level in sharing knowledge and skills The acquisition of European Auto Trader Sanoma Magazines in the Benelux countries strengthened actively supports person- the leading position Sanoma Uitgevers “A new trend is always nel training by creating has in the car and motor media market. opportunities for learning European Auto Trader manages an opportunity to adjust and sharing. Lectures Autotrader.nl, one of the largest auto- delivered by outside motive websites in the Netherlands established, well-known experts bring fresh ideas, focused on used cars. and international staff brands and to create new meetings facilitate the In addition to magazine brands, sharing of competence Sanoma Magazines has several hun- success stories.” and best practices. dred online brands. Over the years, the company has both created and Collaboration leads acquired online services. In 2008, within the Division. We continually seek to breakthroughs and consistent Sanoma Magazines acquired a majority new benefits and opportunities to learn success at its best, and it also increases in the leading Bulgarian internet com- how to work together more closely.” effectiveness. Some of the projects pany Netinfo, to name but one. launched recently at Sanoma Maga- In 2008, this resulted in systematic col- zines seek to reduce costs. “We have Online business is strongly based on laboration between thirteen operating implemented major initiatives, and independent business models, such countries in digital media. The goal is their significance will continue to grow,” as online marketplaces and search to develop and apply common business says Ailasmaa. engines. sanoma magazines 19 net sales by business, eur million personnel 6 280 6 000 sanoma magazines finland sanoma magazines belgium 5 000 206 223 307 516 sanoma magazines international 4 000 sanoma magazines netherlands 3 000 16% 18% 25% 41% 2 000

1 000

0 1999 2001 2007 2003 2002 2005 2008 2006 2004 2000

sanoma magazines

sanoma uitgevers sanoma magazines sanoma magazines sanoma magazines (the nethterlands) belgium finland international

ilse media Groep EPN International Suomen Rakennuslehti Cluster Central Europe (online operations) Jervi Egmont Kustannus Sanoma Budapest Jonge Gezinnen SBPP Hansaprint (printing) Sanoma Magazines Praha Mood for Magazines Sanoma Magazines Slovakia Sanoma Men’s Magazines Cluster South East Europe Woonbeurs Amsterdam Netinfo (online operations) (consumer fair) Sanoma Bliasak Bulgaria Sanoma Hearst Romania Sanoma Magazines Ukraine Cluster Russia and CIS Independent Media Sanoma Magazines Cluster Adriatic Region Adria Media Ljubljana Adria Media Serbia Adria Media Zagreb

She expects great benefits from Popular events, television programmes Ailasmaa expects Sanoma Magazines information technology projects, in and websites further expand the maga- to evolve from a leading European particular the renewal of the current zine brands and deepen the contact magazine company to a leading Euro- subscription system in Finland. “We’ll between advertisers and consumers. pean consumer media company – with be moving to a new environment, one Several of Sanoma Magazines’ events strong magazine brands. that is already used in the Netherlands. for instance attracted record numbers This way we can use our extensive of visitors. The annual Margriet Win- “The print magazine is a strong and experience in the Netherlands whilst terfair, for example, attracted close to lasting media product.” at the same time make sure that the 100,000 visitors, a new record in 2008. system in Finland fits with our company’s specific needs.” In 2008, Sanoma Magazines continued to divide its clientele into smaller Ailasmaa believes that efficient prac- groups defined by various factors, such tices and strong brands offer protection as current life situations. “Every life against the fluctuations of an uncertain change – move, childbirth, retirement economy. “Our position in relation to – offers us an opportunity for a new others is likely to grow stronger, as approach.” Anticipating and respond- uncertainty creates opportunities. We ing to customers’ needs is ever more can even adjust the content of our mag- important; this also applies to adver- azines to better respond to new trends tising clients. To serve this purpose, and values.” She stresses, however, the company established a dedicated that success requires a more active department in the Netherlands to lead relationship with advertisers. the way in interactive marketing. sanoma magazines 20 Major magazines and online services are thriving. This is apparent in Sanoma Magazines’ strong market position.

Collaboration reaps rewards

The renewal of Sanoma The new system will first be put to throughout the entire system. This will use in Sanoma Magazines Finland’s improve customer service, because call Magazines Finland’s customer service department, which centre representatives will have more subscription and financial answers as many as four thousand detailed client history at their disposal. management systems calls a day. The leading Finnish maga- Streamlined operations will also facili- zine publisher and its thirty-five maga- tate more efficient decision-making. transfers the company’s zines have 1.6 million subscribers. customer data to the This development project, initiated in “It is not just about having a new data the autumn of 2008, is not limited to SAP system managed by system, but especially how we organ- information technology. Developing the Dutch sister Sanoma ise our operations in the future. This business operations with future needs Uitgevers, and it also is a huge advantage, that we have the in mind is an equally important goal. expertise on using the system within “Subscription sales constitute a sig- changes employees’ work our own Division. The joint project nificant part of the magazine publish- processes and develops between Finland and the Netherlands ing market in both countries. We have has already been tested, when our already found common ground and future working methods. media sales system was replaced,” have learned a great deal from each says Chief Financial Officer Markku other. This project is a great example Kiiskinen. of sharing best practices across borders,” says Päivi Piiponniemi, Director, As soon as the subscription and finan- Business Processes. cial management systems are compat- ible, the data is available for all users sanoma magazines 21 net sales, eur million

500 475

The leading newspaper publisher in Finland is 400

taking news into a new era. In addition to its 300 print products, Sanoma News is also investing 200 strongly in digital business. 100

0 2007 2005 2008 2006 2004 1999, fas 2001, fas 2003, fas 2002, fas 2000, fas

operating profit excluding non- recurring items, eur million 80 70

60 57 50 40 30 20 10 0 2007 2005 2008 2006 2004 1999, fas 2001, fas 2003, fas 2002, fas 2000, fas

1999–2003 including non-recurring items

“The printed word will remain strong their desired target groups by interest Print and in Finland, if boldly developed and through Sanoma Digital Online Ad Sales enhanced,” says Mikael Pentikäinen, at the dozens of online services offered online go President of Sanoma News. “The print by Sanoma News, Sanoma Magazines media is complemented by a growing Finland and Sanoma Entertainment. together well multitude of digital services.” “Collaboration between the different The daily newspaper Helsingin Sano- Sanoma divisions has lots of potential. mat leads the way with continued suc- I believe that the co-operation will con- cess in 2008. Its circulation remained tinue to increase,” Pentikäinen says. stable, and an increasing number of readers check the online or mobile edi- In the spring of 2008, Sanoma News tion for the latest news during the day, adopted a new management model, after reading the print edition in the which facilitates effective collaboration morning. within the Division. Sales and digital services are undergoing development Digital business grew at a record across business borders. “We seek rate, about 50%, which is faster than to improve our customer service, our the overall market. Pentikäinen lists agility and flexibility, and our ability bold business development, increased to prioritise. Telemarketing teams, for amount of services, and improved example, were combined into a single, internal collaboration as the reasons flexible unit.” behind the successful year of digital operations. Advertisers can now find sanoma news 22 23 sanoma news sanoma news

helsingin ilta- sanoma sanoma sanoma esmerk sanomat sanomat lehtimedia kaupunkilehdet digital (business (free sheets) information)

Helsingin Sanomat Ilta-Sanomat Regional papers Metro Marketplaces (daily newspaper) (tabloid) Etelä-Saimaa Vartti Online advertising sales lehtikuva Radio Helsinki IS Veikkaaja Kouvolan Sanomat Taloussanomat (picture agency) (local radio station) (sports and Kymen Sanomat (ﬁnancial information) betting weekly) Local papers New digital services Suorakanava sanoma data (it operations)

personnel sanomapaino (5 printing plants)

5 000

4 000 net sales by business, eur million

3 000 2 808

ilta-sanomat 2 000 helsingin sanomat 91 280 92 153 1 000 other publishing other businesses 0 15% 45% 15% 25% 1999 2001 2007 2003 2002 2005 2008 2006 2004 2000

Sanoma News revamped several indicative of the direction free sheets hold on the entire value chain. Sanoma of its newspapers in 2008, beginning are increasingly taking. Uutislehti 100 News already offers planning services with basic editorial routines. The news merged with Metro, which became the for advertisers and application process- desk at Ilta-Sanomat, the editorial core fourth largest print news medium in ing tools for job advertisers, to name now known as the superdesk, was the Finland in terms of readership. but a few examples. first result of this thorough rejuvena- tion. The revamped quality tabloid and Reader-generated content was more The uncertain economy was most its weekend supplement were intro- than ever an integral part of newspa- apparent in job and real estate advertis- duced toward the end of the year, with pers and online services in 2008. Read- ing. However, the economic decline did refreshed and reorganised content, and ers elaborate on printed news in online not diminish development and collabo- a new design. discussions, and reader photographs ration projects at Sanoma News. and opinions increasingly reach the These improvements seem to printed edition through the online serv- Synergies are a significant asset in cost strengthen the quality tabloid’s position ices. “Interaction between the print and competition, even though the main in the market. “The market has never online media makes both more attrac- purpose of enhanced co-operation is been as challenging as now, but Ilta- tive,” says Pentikäinen, adding that the to serve customers better. “Crises are Sanomat is now better and more com- year also marked a breakthrough for opportunities to grow stronger. We petitive than ever,” Pentikäinen says. mobile services. must have the courage to invest in the future,” Pentikäinen says. Helsingin Sanomat is preparing for a Altogether, Sanoma News now reaches renewal, which will be completed in more customers than ever and more This belief in the future is evident, for time for the newspaper’s 120th anni- frequently than ever. As many as 80% example, in the continuous training versary in November 2009. Regional of Finnish internet users access its and business coaching Sanoma News newspapers, which recorded excellent online publications and services each provides for its personnel. The Group’s results, are also undergoing revamp week. “The high visitor count is an indi- first media sales trainee programme projects. cation of trust, which is a tremendous ended in 2008, strengthening the resource for us.” ranks of new sales professionals also at Vartti is a free sheet with a companion Sanoma News. “Renewal is a process of the local news website, Vartti.fi, Nonetheless, Pentikäinen does not rely that combines the will of the individual which became the sixth largest online solely on advertising sales and visitor with the opportunities the employer news medium in Finland. This is numbers. He strives for a stronger offers,” Pentikäinen summarises. sanoma news 24 Constantly evolving newspapers and increased collaboration create new sales opportunities for Sanoma News. The previous name of the Division, Sanoma, is now the brand for the whole Group.

News in a heartbeat

After a renewal completed in “The superdesk is the beating heart This direct visual and auditory contact of the editorial offices. The biggest allows for a faster response to breaking November 2008, the quality change to the traditional news desk is news. tabloid Ilta-Sanomat is now the improvement of information flow better equipped than ever and internal communication. The print “Our work is more dynamic now. edition and online content are compiled Thanks to the superdesk, we can mobi- for the tough competition side-by-side, which changes our entire lise our people immediately and divide for news scoops. The work culture,” says Tapio Sadeoja, resources accordingly between the Senior Editor-in-Chief of Ilta-Sanomat. online service and the print edition,” superdesk at the heart of Sadeoja summarises. the editorial offices serves Success in the news race requires fast as a link between different reactions. Ilta-Sanomat first publishes The new practices call for a new the news online, and then monitors the approach, a new mind-set. operations, producing the events closely for additional informa- content for both the print tion. The print edition elaborates on the “The division between print and online news the following day, offering new becomes meaningless. This new way and online editions. angles. of working requires an open mind and willingness to change. Everything is “Overlapping content was a problem more open and straightforward now.” earlier, but because of the improved working arrangements, everyone Sadeoja thanks his employees warmly knows exactly what was already pub- for their co-operation. lished online.” “We all know that the competition is The renewal also affected seating tough. Everyone has more responsibil- arrangements. An oval group of work- ity now, but also more power to make stations is now located at the centre of independent decisions.” the editorial offices. From there, news chiefs and news co-ordinators can see and hear everything that happens. sanoma news 25 Sanoma Entertainment offers the best and most exciting electronic entertainment services on TV, radio, mobile and online in Finland. sanoma entertainment 26 net sales, eur million operating profit excluding non- recurring items, eur million 157 150 25

125 20 17 100 15 75 10 50

25 5 1999, fas 2000, fas 2001, fas 2002, fas 0 0 2007 2007 2005 2005 2008 2008 2006 2006 2004 - 5 2004 1999, fas 2001, fas 2003, fas 2003, fas 2002, fas 2000, fas - 10

- 15 1999–2003 - 20 including non-

- 25 recurring items

Let us entertain you

Anu Nissinen, President, is pleased Welho was the first European cable with the Division’s name change from operator to introduce a 110M broad- SWelcom to Sanoma Entertainment, band subscription. Moreover, for the as it truly captures the essence of third year in a row, the EPSI Rating Sanoma’s electronic communications customer satisfaction survey ranked services. “We are all about entertain- Welho as the best cable operator in ment,” she emphasises. A perfect Finland. “I see this as an indication of example of this dedication is the customer oriented thinking throughout breakthrough of online casual games in our company. The technology must be 2008, the second year of operation for reliable and the products easy to use. Sanoma Entertainment’s game produc- Everything from invoicing to cus- tion business. tomer service needs to run smoothly,” explains Nissinen. Advances in entertainment services presuppose an ambitious Welho’s strides in technology facilitated approach to technology. Welho’s suc- opportunities for other operations as cess as a provider of pay television and Nelonen became the first commercial broadband services reflects this drive television channel in Finland to be and determination. broadcast in high definition, in Welho’s sanoma entertainment 27 sanoma entertainment

tv and radio cable tv and operations broadband internet online services

Nelonen Media Welho Nelonen Media online services Nelonen Pelikone.ﬁ Jim Alypaa.com KinoTV Liv Urheilukanava Urheilu+kanava Radio Aalto Radio Rock

personnel net sales by business, eur million 526 500 tv and radio other businesses 400 89 69

300

200 56% 44%

100

0 1999 2001 2007 2003 2002 2005 2008 2006 2004 2000

cable network. “High definition is Nelonen Media’s television program- Keeping abreast of the times is crucial. clearly a growth area,” Nissinen says. ming is increasingly available on the To serve this purpose, Nelonen Media internet. The WebTV service features launched the Safari project, in which The Finnish switchover to digital seventy hours of Nelonen Media’s new every employee meets with both television was completed in February programmes each week, and opens viewers and advertisers to tune into 2008. Finland was the first country new opportunities for advertisers to intriguing trends and other current in the world to digitise all distribution effectively reach their desired target phenomena. networks. “Increased television viewing groups. was one of the positive outcomes,” Nis- “Their observations engender ideas, sinen observes. Television programmes are usually discussion and collaboration beyond available for free online viewing for conventional borders. This epitomises Nelonen Media focused on further a week after the original broadcast. our goal for Sanoma Entertainment as developing the radio and television Nissinen envisions a future where pro- a whole.” channels established in 2007. The gramming is no longer tied to a time, commercial viewing share for Nelo- place, or type of terminal device. View- nen Media’s TV channels increased in ers will decide when, where and how 2008, largely because of a successful they watch the content of their choice. multi-channel strategy. Radio channels reaped favourable results as well, The business environment is together reaching a million Finns each changing ever more rapidly. However, week. broadcast licences and major investments in technology require long-term Nelonen Media also laid the ground- planning. work for Liv, the first lifestyle channel in Finland. The channel was launched in February 2009. sanoma entertainment 28 Sanoma Entertainment breaks new ground in entertaining Finns, matching the advances in content and technology with dedication, enthusiasm, and a passion for quality.

Think target group!

Nelonen Media’s Jim is “Viewing habits have changed con- The latest addition to Nelonen Media’s siderably. Television viewers are more commercial programming is Liv, a life- a prime example of a interested in new channels than they style channel that Werner-Autio thinks television channel focusing were before, but they also use other will particularly appeal to women. The on a specific target group. media more than they did previously,” newcomer was launched in February says Ville Toivonen, Channel Manager 2009. Targeted channels attract of Jim. increasing audiences: over Jim has exceeded all expectations in Attracting and keeping viewers requires advertising sales. Advertisers seek a million Finns on average ever more careful planning in the frag- cost-effective options, especially watch Jim each day. Every mented media market. Infotainment during economic decline, and targeted week, the channel reaches and documentaries top the list of the television channels constitute a perfect most popular programmes on Jim. match. a respectable 60% of its primary target group “Customer oriented thinking is criti- “Collaboration within the Nelonen cal in television as well. Instead of the Media channel family offers versatile of men between 22 production process, we need to focus and effective solutions. For advertis- and 44 years of age. on getting to know the viewers better ers targeting men, for example, we can and better,” says Kristiina Werner- provide a package that includes air time Autio, Senior Vice President, Free-TV. not only on Jim, but also on Nelonen, “The high number of potential choices the Urheilukanava sports channel and presents challenges. What consumers Radio Rock,” Werner-Autio points out. want, what they say they want, and what they actually do – these may be three very different things.”

sanoma entertainment 29 30

sanoma learning & literature Sanoma Learning & Literature is a leading European educational publisher oﬀering learning materials in print and digital format. With operations in nine countries, the Division is also the leading general literature publisher in Finland and has growing international language service operations.

“The outcome of a series of positive “Our ambition is to become a genuine Delivering events in 2008 validated our long- market-oriented publisher. Attracting term strategy of proﬁtable growth talented authors and publishing good Continuity through acquisitions and the continued books is increasingly customer-driven,” renewal of our existing businesses,” Eijkens emphasises. “In the future, the says Jacques Eijkens, CEO of Sanoma customer will be more self-conscious. Learning & Literature (previously The impact of this trend led us through SanomaWSOY Education and Books). a restructuring phase in the multi-volume and yearbook operations, and also In March 2008, the Division ﬁnalised its organisationally at the general litera- acquisition of Polish educational pub- ture publisher WSOY. We are already lisher Nowa Era, announced in 2007. seeing positive results.”

“It was not our first acquisition in A clear example has been the per- Poland, but it was an important one,” formance of WSOY-published novels. explains Eijkens. “It established us as WSOY’s books received a number of the leading educational publisher in a nominations at the annual Finlandia large, dynamic market.” Prize competition, and, as an encore, the winning fiction novel, Puhdistus Another notable expansion announced (Purge) by Sofi Oksanen, is published during 2008 was the purchase of the by WSOY. Also, the Finlandia Prize for Nordic language service company non-fiction was awarded to WSOY’s Interverbum. author Marjo Nurminen for her book Tiedon tyttäret (Daughters of Knowl- “We entered into the language serv- edge). ice business in 2006 by acquiring a major stake in AAC Global. Our strategic During 2008, the Division also sought intention is to increase our presence ways to exploit its synergies amongst in this market through further acquisi- its business units. tions, as evidenced by the acquisition of Interverbum, which gives us a leading “We recognised that within our Division position in language services in the there are hidden synergies waiting to Nordic area.” be discovered, to be unlocked. During 2008, we made a conscious effort to The Division also turned its atten- uncover and employ them.” tion to restructuring initiatives aimed at realigning its resources and invigorat- “For instance, we launched a consumer ing customer interest, particularly in product targeted at children, creating a general literature. new category in Finland, called Oppi & sanoma learning & literature 31 sanoma learning & literature

net sales by business, eur million

learning language literature services

Malmberg AAC Global WSOY General Literature 104 259 50 the netherlands finland, sweden finland Nowa Era Bertmark poland norway, sweden NTK/Perfekt WS Bookwell hungary (2 printing plants) 25% 63% 12% WSOY Oppimateriaalit finland finland Kirjakeskus Van In (book logistics unit) publishing belgium finland educational publishing Young Digital Planet other businesses poland

net sales, eur million operating profit excluding non- personnel

recurring items, eur million 3 221

400 390 60 1999–2003 3 000 including non- 53 50 300 recurring items 40 2 000

200 30

20 1 000 100 10

0 0 0 1999 2001 2007 2007 2007 2003 2002 2005 2005 2005 2008 2008 2008 2006 2004 2006 2006 2000 2004 2004 1999, fas 1999, fas 2001, fas 2001, fas 2003, fas 2003, fas 2002, fas 2002, fas 2000, fas 2000, fas

Ilo (Learning & Fun). It’s a hybrid con- develop their careers, Eijkens mentions general literature we do not expect any cept that overlaps into the educational a programme that encourages internal signiﬁcant impact from the current and entertainment domains, making mobility to other units of the Division. economic downturn. However, we are it an edutainment product. Oppi & Ilo “It’s another way to leverage our inter- more cautious in our language service was launched in the autumn of 2008 national presence for the beneﬁt of the business as companies may be inclined and was inspired by the collaboration companies.” to cut costs.” among our business units in other markets where similar initiatives have Despite an encouraging 2008, Eijkens “In 2009 we will, of course, continue worked,” explains Eijkens. points to challenges that remain. to pay close attention to costs, but our real objective will be about growth and Another example in which common The year saw stagnation in the Dutch innovation in our portfolio, to consider synergies were found is in the sharing market due to funding rollbacks by further acquisitions, and to continue of digital assets that educational pub- the government in the procurement of forward with our long-term strategy,” lishers across international boundaries secondary educational materials. Addi- Eijkens concludes. can utilise. “We launched a common tionally, concerns have surfaced over asset bank where these expensive the impact of the slowdown in global assets can now be easily found and economic activity heading into 2009. reused in other markets, which naturally saves time and costs, and also However, Eijkens sees the Sanoma encourages cross border co-operation,” Learning & Literature division is avoid- Eijkens adds. ing much of the negative impact.

And in an effort to reach out to “Apart from the situation in the Neth- employees who value intra-company erlands, funding for schools and pupils transfers as a means to enrich and is largely remaining in place, and in sanoma learning & literature 32 Sanoma Learning & Literature continues expansion through renewals, acquisitions and leverage.

Partners in internationalisation

AAC Global is a partner of “Effective communication is a key collaboration and, if needed, expands challenge for Metso and other global it to cover all countries in which Metso the engineering company organisations, both with clients and has operations. Metso in the language, personnel. We need to learn how to communication and make the most of our competence “Our collaboration is based on a and information resources in different common view of goals and how training services required cultural environments,” says Reijo to reach them. AAC Global’s core in international markets. Heinämäki, Manager of the Metso strengths include an extensive network Competence Team. of language partners, excellent refer- In recent years, Metso has ences and the ability to tailor content to grown into a multinational Services provided by AAC Global client needs. AAC Global is part of the supplier of sustainable include language and communication Sanoma Group, which also presents skills training, management training, many advantages,” Heinämäki says. technologies and services, organisational development, documen- employing some 28,000 tation and digital learning solutions. Metso has evolved from a product- AAC Global also offers terminology based company to a service organisa- experts in over 50 countries. management in a number of foreign tion, which further emphasises the languages as well as translation and significance of education and com- localisation services that help adapt munication. The focus has increasingly business operations to different cul- shifted to developing markets, such tures. as China, India, Brazil and Russia. This adds rich and distinct cultural flavours AAC Global and Metso share a long his- to everyday business. tory of co-operation in Finland. The current strategic partnership deepens this sanoma learning & literature 33 net sales, eur million

900 867 800 Retail specialist Sanoma Trade serves its 700 customers in over 200 million annual sales 600 500 contacts at kiosks, bookstores or movie theatres. 400 Operating in seven countries, press distribution 300 200 is a strong link between publishers and retailers. 100 0 2007 2005 2008 2006 2004 1999, fas 2001, fas 2003, fas 2002, fas 2000, fas

operating profit excluding non- recurring items, eur million 60

50 45

0 2007 2005 2008 2006 2004 1999, fas 2001, fas 2003, fas 2002, fas 2000, fas

1999–2003 including Selection adds strength non-recurring items

Sanoma Trade (the Division known The future of Sanoma Trade does Finnkino introduced live performances previously as Rautakirja) does business not depend on a single product group in from the Metropolitan Opera in New with half a million customers each day. any operation – be it press distribution, York, shown on big screens in movie Most of them make impulse purchases. bookstores, or movie theatres. theatres. “The popularity of these broadcasts exceeded all our expecta- “We have to be extremely active. Press distribution developed its logis- tions. Digitalisation enables us to offer Dynamic selections and concepts are tics services, and the point-of-sale many types of new content in our thea- crucial,” says Timo Mänty, President marketing specialist Printcenter intro- tres in the future, from sports events to and CEO. The advanced point-of-sale duced a new impulse purchase concept concerts,” Mänty promises. system enabled Finnish R-kiosks to for kiosks and service stations. In complement their offering with new Finland, also the magazine distribution Moreover, Finnkino started the era of printable and downloadable products, contracts were remodelled to achieve 3D movies in Finland, at its new theatre such as recreational fishing licences greater flexibility. at the Flamingo recreational centre in and Matkahuolto bus tickets. R-kiosks Vantaa. in Latvia and Estonia adopted the new “We continually develop new services system in 2008. in collaboration with publishers and In addition to product ranges, retailers,” Mänty says. Sanoma Trade expanded its markets. A customer loyalty campaign boosted The acquisition of a kiosk chain in kiosk sales in Finland. “It permanently The Suomalainen Kirjakauppa book- Rostov and collaboration with Auchan, increased our market share of Veikkaus store chain actively sought new product an international retail group, strength- gaming products, which was large to groups and revamped its online store ened Sanoma Trade’s market position begin with.” together with the WSOY publishing in Russia. company. The aim is to further improve Suomalainen.com to be Finland’s lead- The majority of the 135 R-kiosks in ing online bookstore. Russia are located in the Moscow and sanoma trade 34 35 sanoma trade sanoma trade

kiosk operations press distribution bookstores movie operations

R-kioski Lehtipiste Suomalainen Kirjakauppa Finnkino finland finland finland finland R Kiosk Eesti Lehepunkt Yliopistokirjakauppa Forum Cinemas estonia estonia finland estonia Narvesen Baltija Preses Serviss Lukiolaisten Kirjakauppa Forum Cinemas latvia latvia finland latvia Lietuvos Spauda Impress Teva Reader’s Forum Cinemas lithuania lithuania finland lithuania R-Kiosk Aldipress Suomalainen.com Forum Cinemas russia the netherlands finland Home Entertainment R-Kiosk TK Pressexpo Apollo Raamatud estonia, latvia, lithuania, ukraine romania russia estonia Press Point International russia Hiparion Distribution personnel romania Printcenter 8 396 finland 8 000 7 000 6 000 net sales by business, eur million 5 000 4 000 movie operations 3 000 bookstores 94 139 242 409 2 000 press distribution 1 000 kiosk operations 0 1999 2001

11% 16% 27% 46% 2007 2003 2002 2005 2008 2006 2004 2000

Rostov areas, but increasingly also in the near future – on the contrary. At the in tabloid sales, whereas magazines other major metropolitan areas. “We same time, retail in Finland is preparing held their own in the competition. The seek to consolidate our position as the for the changes in the Opening Hours new enterprise resource management leading player in our field in Northern Act, which adds on the Sunday open- system and dispatch centre that are Europe and Russia.” ing of all stores. “It’s a challenge for being built in Finland will foster further everyone. On the other hand, the more development in press distribution, as Mänty is also interested in expanding people are on the move, the better.” will the new dispatch centre in Lithua- kiosk operations to countries in Central nia. Eastern Europe. The first R-kiosk in Mänty may be a realist, but not a pes- Romania was opened in July 2008, and simist: the year 2008 also gave good In the Netherlands, Aldipress competed at the end of 2008 the number had reasons to celebrate. Kiosk operations fiercely with another distributor. The increased to 16. “In developing markets, flourished in Finland and Lithuania in company focused on streamlining it is essential that magazine distribu- spite of the growing economic uncer- operations and modernising customer tion is supported by our own kiosk tainty. Movie theatres reached record service. According to Mänty, other chain.” numbers in ticket and concession sales. countries will benefit from these Mänty trusts that affordable entertain- improvements. In Ukraine, Sanoma Trade established a ment and enjoyment, such as books movie import business. Movie opera- and movies, will appeal to customers The future holds ever more effective tions also have room to grow in the even in a slowing economy. Major pur- collaboration between Sanoma Trade’s Baltic countries, where the theatre chases may be postponed, but not the different operations, beginning with network is more fragmented than in little joys of life. product cross-sales and consumer Finland. insight. Sanoma Trade made systematic invest- “We entered the Baltic market at ment in consumer insight a common “The possibilities are enormous. The exactly the right time in the late nine- goal for all operations, as they largely innovation is up to us.” ties. This has ensured us a strong share the same clientele. Other focus market position.” areas include good customer service timo mänty was appointed to president and personnel training. and ceo of sanoma trade as of 1 january The year 2008 in retail was marked 2009. erkki järvinen served as presi- by major changes. Cost pressures are Press distribution business in dent and ceo of sanoma trade until escalating, and Mänty sees no relief in Finland was affected by the decline 31 december 2008. sanoma trade 36 Sanoma Trade expands its market, investing in more diverse and comprehensive product ranges. At the same time, it focuses on anticipating customer behaviour.

Leveraging knowhow

The Finnish press Allan Liima, Lehepunkt’s Managing of press products in the racks based Director, explains that facing the key on electronic tracking of sales under distribution company customers’ demands requires con- a data-sharing arrangement with the Lehtipiste has, over the stant innovation. But he is not afraid supermarket. Instead of stocking at years, built an efficient of challenges: his latest idea, auto- weekly intervals, we bring in small mated warehousing of magazines and quantities several times a week, as business model and newspapers, has broad international soon as the reserve in stores drops to processes for press implications. an agreed minimum level. This cuts the rate of return of unsold magazines to distribution, and In 2000, the single copy sales of below 20% – a huge improvement in a successfully exported this magazines and newspapers in Esto- business where return rates can run as knowhow to the Baltic nia were conducted largely through high as 50%. Our plan is now to extend kiosks. Building on Sanoma Trade’s this approach to all Estonian R-kiosks markets. In just ten years, own R Kiosk business, which provided and the largest retail chains during the Estonian Lehepunkt has well over half of Lehepunkt’s initial 500 2009.” points-of-sale, Liima began to push for become the market leader distribution points at supermarkets Although each of Sanoma Trade’s press in the press distribution and hypermarkets. distribution companies in Estonia, Latvia and Lithuania are independent, market. In a business which measures profit- the Baltic managers meet regularly to ability by the metre, Lehepunkt has come up with the best concepts. Liima changed the one-and-two-metre-long reports: “All of us work with the major displays to 20-metre racks in some chains in our respective countries, so hypermarkets. we can develop effective co-operation with retailers based on increased data “Realising the ineffectiveness of haul- exchange and incentives for higher ing unsold books and magazines back sales.” to the warehouse, we ran a trial of an automated storage concept in two hypermarkets at the end of 2008. The idea is to manage the replenishment sanoma trade 37 38 Sanoma’s business principles are firmly founded on the Group’s long traditions in social responsibility. The Sanoma Group is a good corporate citizen in all areas: financial responsibility, ethics, the environment and stakeholder relations.

Responsibility runs deep at Sanoma

The Sanoma Group strives to take good Reading and literacy constitute the Each year, Sanoma donates part care of its personnel. We also seek to foundation of civilisation and democ- of its earnings to charities, with the further improve managing the environ- racy. Sanoma acknowledges its role consent of the Annual General Meet- mental issues at Sanoma. and responsibility in providing quality ing. These funds have mainly been education and a diversity of creative channelled to foundations and projects Profitable growth and long-term content. Encouraging children and supporting free speech, culture, jour- commitment are the core principles of teenagers to become media-literate cit- nalism research and Finnish society Sanoma’s operations. We invest in both izens is important to Sanoma. In 2008, as a whole. In 2008, these donations new businesses and the development we also encouraged senior citizens to amounted to EUR 500,000. In addition, of our current products and services. take part in the information society: the the various divisions and businesses cable operator Welho offered free train- within the Group also channel direct Sanoma offers its shareholders a stable ing sessions in the use of the internet in support to projects they deem impor- dividend yield: the Group primarily Helsinki libraries. tant. pays out over half of its result after taxes in dividends each year. Reliability, Together with other publishers, In the Netherlands, the employees of accuracy and continuity are the guiding Sanoma organises an annual Magazine Sanoma Uitgevers dedicated an entire principles in our financial reporting. Day and an annual Newspaper Week day in June to moving people – both Group-wide guidelines for reporting, in Finland. During these theme events, physically and emotionally. Some 600 appropriate approval procedures and journalists visit schools and publishers employees participated in the Moving internal audits ensure the implemen- provide newspapers, magazines and People Day, which provided joy, caring tation of good practices in everyday other materials for educational use. and presents to children and old people operations. For more information on During the Newspaper Week, Helsingin in hospitals, homes and other institu- Sanoma’s corporate governance and Sanomat publishes special content for tions. This event met with positive risk management, please see pages 70 schoolchildren each day. The press feedback and will be organised again in to 74 of the Financial statements. distributor Lehtipiste contributes to 2009. Magazine Day by collecting magazines Sanoma fosters free speech and and transporting them to schools The Sanoma Group has supported the independence in its publishing opera- around Finland. international Pink Ribbon campaign tions. The Group is a member of the around Europe for several years. The European Publishers Council, which In the Netherlands, Sanoma contrib- campaign strives to increase awareness promotes journalistic and commercial uted to the Learn for Life! book project of breast cancer among women. freedom of expression and monitors that supported a school construction media legislation. programme in Ethiopia. corporate responsibility corporate 39 Sanoma contributes to public dis- In Belgium, the Humo and Télé Mous- Sanoma Trade has also invited its cussion on current and crucial issues tique magazines selected sustainable customers to join the campaign to through its different media outlets by development as one of their continuous prevent climate change. Recycling bins offering, for example, information and themes. In Finland, the leading news- in selected movie theatres encourage practical tips on how to prevent climate paper Helsingin Sanomat actively dis- waste sorting and remind moviegoers change and make a positive impact cussed sustainable development and of the importance of everyday choices. on the environment. In 2008, Nelonen environmental issues, dedicating an Media’s campaign Operation Earth entire issue of its HS Teema magazine please visit sanoma.com for more increased awareness of climate change to the state of the Baltic Sea. Helsingin information on corporate responsibil- through entertainment while collecting Sanomat also included a carbon foot- ity and current projects. a substantial donation for the World print calculator on its website, helping Wildlife Fund. readers understand the effect of their choices on climate change.

In order to reach millions of customers Dynamic and innovative daily, we need – and we have – professional people with a versatile range of professionals skills. Producing and selling magazines, newspapers, books and online services The media industry is a people business and Sanoma with high-quality content is the core is a company of people. The Group’s success is built of our business. For this we employ creative, reliable and dynamic people to up by its employees’ ability to constantly develop function in all roles. skills and competencies. To achieve this success, Sanoma offers employment opportuni- Sanoma focuses on the recruitment, retention and ties for different phases of life, includ- development of its personnel. ing flexible working hours. During the personnel 40 average number of employees average number of employees net sales per employee, eur 1 000 (full-time equivalents)

25 000 25 000 200 21 329

175 167 20 000 20 000 18 168 150

15 000 15 000 125 100 10 000 10 000 75 50 5000 5000 25 0 0 0 2007 2007 2007 2005 2005 2005 2008 2008 2008 2006 2006 2006 2004 2004 2004

high season, our retail operations hire Common goals are best achieved Opportunities Policy, Sanoma monitors seasonal workers in order to meet the in an inspiring work environment. the relative shares of the genders and customers’ needs. Sanoma promotes the well-being of different age categories of employees. its personnel by encouraging a posi- The Sanoma international way of tive work atmosphere. As an employer, In 2008, 70% of all employees were operating opens up interesting chal- Sanoma is committed to equal treat- female, while 30% were male. In top lenges for our personnel. New thinking ment and provides its personnel with management positions (the Executive and innovation is encouraged in all our a fair reward structure. To ensure this, Management Group, the Corporate activities, and we build up our work Sanoma has designed the Group Equal Centre Management Group and the environment based on the best charac- Opportunities Policy. Its principles are Management Groups of Sanoma’s divi- teristics of our units. In 2008, the Group further specified in the Equal Opportu- sions), the figures are 26% and 74% employed on average more than 21,000 nities Policy for each Sanoma division. respectively. people in 20 European countries. In accordance with the Group Equal personnel 41 work experience at sanoma personnel by age

6 000

4 705 6 937 3 919 3 071 1 468 927 5 000

4 000

3 000 under 1–4 5–9 10–19 20–29 over 30 1 year years years years years years 2 000

1 000 men women 0 aged 25–29 aged aged 30–39 aged aged 50–59 aged aged 40–49 aged aged over 60 aged aged under 25 aged

The European Works Council, in tax). In addition, all teams nominated programmes tailored to the Group’s Sanoma called the International as Sanoma Award finalists get a EUR needs are an effective way to develop Co-operation Council (ICC), is continu- 3,000 citation. and improve professional skills. They ing its work. ICC was established in also play an important role in network- 2006 to improve communication and Future growth and success is ing people and sharing best practices co-operation between management taken into account in all organisa- within the Group. and employees. The council consists of tional issues. Sanoma’s position in representatives from different Sanoma the evolving European media market Constant learning is a key to operating countries. The ICC meets presents challenges to its organisa- Sanoma’s future success. In the spring annually to review and develop proc- tional dynamism and its personnel. As of 2007, the Group-wide internal train- esses. The 2008 meeting was held in an employer, the Group appreciates ing programmes were combined under Helsinki. professional expertise and supports the Sanoma Academy umbrella. The various training and competence devel- Academy brings the Group’s leadership The work environment is monitored opment programmes for its employees. and management training programmes through regular surveys. In Finland, all together, and co-ordinates the Trainee divisions conduct a bi-annual survey. To sustain success in a changing Programmes. Sanoma Academy also The results and development measures environment, successor planning and organises additional training based on are closely followed at the manage- career development processes are divisions’ needs. ment level. For example, in Sanoma constantly being developed and closely News, the survey offers a regular feed- monitored at the top management In addition to the Group-wide training, back channel, provides information to levels. Sanoma is continuously recruit- divisions and business units arrange the management and forms a basis for ing new personnel – both fresh gradu- extensive training aimed at support- the development of the personnel. ates beginning their careers as well ing business unit specific needs. In as highly experienced professionals. 2008, Sanoma Magazines, for example, In addition to country-specific basic Particular attention is paid to the age continued its Strategic Leadership salary structures, a variety of incentive structure of personnel in the operating Programme. This 6-day programme schemes (profit-sharing and per- countries where population is aging for key employees (Senior Manage- sonal short term incentive plans) are the fastest. Ensuring that experienced ment and Management Teams) has implemented and designed to reward employees pass their tacit knowledge been executed four times: one ses- performance in different parts of the on to less seasoned employees is sion in 2007 and three in 2008. For Group. Each year, the Group distributes becoming increasingly important. each programme, 20 participants were a Sanoma Award to three employees or selected to ensure a well-balanced mix teams that have substantially improved Group-wide training and develop- of nationalities. and developed the Group’s operations. ment is one way of transferring such Each prize totals EUR 12,000 (including tacit knowledge. Different training personnel 42 personnel by division type of employment

9 000 9 000 8 000 8 000 7 000 7 000 6 000 6 000 5 000 5 000 4 000 4 000 3 000 3 000 2 000 2 000 men temporary 1 000 1 000 women permanent 0 0 news news trade trade magazines magazines sanoma corp sanoma corp entertainment entertainment learning & literature learning & literature personnel by country, 31 dec. 2008

finland, 9 785 45.9%

Sanoma Academy offers training and cause and effect of one’s own persona development on a broad scale: leader- and feelings in a leadership position. ship and management development JUMP is an international programme the netherlands, 2 364 11.1 programmes with an emphasis on the targeted at future potential. The pro- strategic targets of the Group as well gramme is designed to offer partici- as other subjects, such as language pants new managerial and leadership russia, 2 003 9.4 and ICT training. The Academy also skills. A third group started the course co-ordinates two trainee programmes, in the autumn of 2008. The Sanoma the Media Trainee Programme and the Executive Programme is a top-man- lithuania, 1 187 5.6 Media Sales Trainee Programme, which agement training programme aimed are aimed at recruiting future experts. at developing strategic thinking and estonia, 1 114 5.2 management skills. The School of Journalism, the oldest poland, 871 4.1 part of the Sanoma Academy, has Sanoma’s Media Trainee Programme trained 308 journalists since 1967. The has fostered business profession- latvia, 685 3.2 13th long course graduated in August als wanting to learn about the media 2008. In addition to comprehensive industry since 1999. The programme belgium, 670 3.1 journalistic courses, the School of Jour- will be developed further to incorpo- hungary, 617 2.9 nalism organises further studies for the rate international aspects of the media Group’s Finnish journalists. business. romania, 536 2.5

Sanoma’s leadership and management The Media Sales Trainee Programme, the czech republic, 499 2.3 training consists of six programmes: started in 2008, has been very suc- bulgaria, 189 0.9 START offers the basic skills needed cessful: both trainees and participat- in managerial work for new manage- ing businesses have found this type sweden, 182 0.9 rial staff, whereas JET develops the of training programme quite valuable. croatia, 161 0.8 strategic skills further. STEP is a train- The programme teaches new media ukraine, 123 0.6 ing programme designed for special- sales professionals to become familiar serbia, 106 0.5 ists to equip them with the skills and with the Group’s product portfolio and slovakia, 61 0.3 competencies required in developing in its customer base and values. The the united kingdom, 60 0.3 non-managerial roles. programme continues in 2009. slovenia, 40 0.2 malaysia, 32 0.1 In 2008, Sanoma launched the Growth germany, 14 0.1 france, 13 0.1 Leader Programme for management. denmark, 12 0.1 The participants learned about the norway, 10 0.1 personnel 43 Sanoma operates according to the principles of sustainable development by preventing environmental damage and using natural resources responsibly. The Group also strives to minimise the environmental effects of its operations by consistently reducing emissions and waste. Environmental concerns are an integral part of the business principles approved by the Board of Directors.

Responsible use of resources

Optimal use of paper and other materi- matter, a procedure that provides direct als, streamlined deliveries, effective benefits for the Group. recycling, efficient use of water and energy as well as the safe handling of In 2008, paper purchases constituted chemicals are the key environmental 5% of the Sanoma Group’s total annual issues at Sanoma. Office work does expenses. Optimising the paper usage not produce significant environmental is a key development area. In 2008, impacts, but the Group will pay increas- the Group used 264,200 tons of paper, ing attention to energy use in the which marks an increase of 5,700 tons, coming years. or more than 2%.

The single most important raw Print production is geared toward material of our operations, paper, is printed publications of the highest both renewable and recyclable. More quality. Sanoma’s printing plants than half of the paper we use is made constantly develop their products and from certified fibre, and we continually operations, seeking to reduce their seek to increase this proportion. We environmental impact by applying the also use secondary fibre from recycled best available technologies and efficient paper as often as possible. production processes.

Our production facilities are committed The Group operates eight printing to using raw materials, other materials plants, all located in Finland: five news- and energy as efficiently as possible. paper printing units (in Vantaa, Forssa, We also promote the reuse of printed Varkaus, Kouvola and Lappeenranta), 44 paigns. Thebook printingplantsalso through various projectsandcam- formance inenvironmentalprotection are continuallyimprovingtheir per- Sanoma’s newspaperprintingplants help. expert materials arebeingdevelopedwith waste transport. New usesforwaste increase theefficiencyofrecyclingand tainers andoptimalcollectionintervals duction waste. Appropriatelysizedcon- recycle asmuch99%oftheirpro- The fivenewspaperprintingplants sourced printingoperations. In othercountries,theGrouphasout- environmentally friendlydistribution. which allowsforcost-effectiveand to bothourclientsandraw materials, These printingplantsarelocatedclose sales marketing materials(Vaajakoski). Juva) andaprintingunitfor point-of- two bookprintingplants(Porvoo and sales jointlywith otherpublishers. handles alldeliveriesforsingle copy other countries,Sanoma Magazines single copysalesatretailoutlets. In ers allmagazinesandnewspapers for company Lehtipiste collectivelydeliv- Finland, Sanoma’s pressdistribution both costsandtheenvironment.In press distributionsolutionsthatsave The Groupemploys of printing. that reducestheenvironmentalimpact the Groupemploysanewtechnology In point-of-salemarketing materials, paper anddesign. mentally friendlychoicesinbooks, calculator helpsclientsmake environ- entire lifecycleoftheseproducts,the for printedpublications.Basedonthe Group willintroduceaneco-calculator impact oftheirproducts.In2009,the closely monitortheenvironmental 100 000 200 000 300 000 250 000 sanoma’s paper usage, tons 125 000 100 000 150 000 sanoma’s electricity consumptioninfinland,gwh sanoma’s electricity 50 000 25 000 75 000 50 000 highlyefficient 0 0

2004 2004 2005 2005 2006 2006 2007 2007 management at sanoma. information onenvironmental please visitsanoma.comformore book publishers. organised incollaboration withother uses jointdeliveriesforitsproducts, Sanoma Learning &Literature also and otherproducts. and recycledasraw materialforpaper are thendeliveredtocollectionsites operating countries.Unsoldmaterials oftheirdailyroundsinall pers aspart collect unsoldmagazinesandnewspa- Sanoma Trade’s distributiontrucks 2008 109 027 2008 264 200 includes allthepaper acquired consumption partly affectelectricity acquisitions anddivestments ~30% printingoperations. estates andpoints-of-sale, ~70%real use ofelectricity: newsprint magazine paper fine andbookpaper board book bindingboard 45 environment from the left: hannu syrjänen, paavo hohti, sari baldauf, sirkka hämäläinen-lindfors, robert castrén, jane erkko, rafaela seppälä, seppo kievari, jaakko rauramo and sakari tamminen.

Jaakko Rauramo Sari Baldauf born 1941, m.sc. (tech.), born 1955, m.sc. (business Board of d.sc. (tech.) h.c. (helsinki administration), d.sc. (tech.) h.c. university of technology) (helsinki university of technology), Directors Chairman of the Board since 2001 doctor h.c. (econ. & bus. adm.) (turku and member since 1999. school of economics and business Term ends in 2009. administration) Vice Chairman of the Board since 2005 Joined the Sanoma Group in 1966. and member since 2003. Term ends in Served as Chairman and CEO 2009. 2001–2005 and President and CEO of SanomaWSOY 1999–2001, President Served as Executive Vice President and of Sanoma Corporation 1984–1999 General Manager of Networks, Nokia and member of the Board 1979–1999, Corporation 1998–2005 and member Sanoma Corporation’s Executive Vice of the Nokia Group Executive Board President, General Manager of the 1994–2005. Newspaper division and General Man- board memberships, companies ager at Sanomaprint, among others. CapMan Plc (Finland), Daimler AG board memberships, companies (Germany) (Supervisory Board), East Office of Finnish Industries Oy F-Secure Corporation (Finland), (Finland) (Chairman), Metso Corporation Hewlett-Packard Company (USA), (Finland) (Vice Chairman) Savonlinna Opera Festival Ltd (Finland) (Chairman) board of directors of directors board 46 Robert Castrén Sirkka Hämäläinen-Lindfors Hannu Syrjänen born 1957, b.sc. (econ.) born 1939, d.sc. (econ.), doctor h.c. born 1951, b.sc. (econ.), Board member since 2001. (econ. & bus. adm.) (turku school master of laws Term ends in 2011. of economics and business President and CEO. Board member administration) since 2001. Term ends in 2010. Sales Director at UPM-Kymmene Corpo- Board member since 2004. ration. Held various marketing positions Term ends in 2010. President and COO of SanomaWSOY at UPM-Kymmene Corporation and its 2001–2005. Served Rautakirja Corpora- predecessor, Kymmene Oy, since 1991. Served as member of the Executive tion 1989–2001 as President and CEO, Prior to that, he worked for Finnpap Board of the European Central Bank Vice President, and Executive Vice and Lamco Paper Sales, among others. 1998–2003 and as Governor and Chair- President and Deputy CEO. Previously Served Sanoma Corporation’s Board man of the Board of the Bank served as Vice President of the TS member 1994–1999 and Vice Chairman of Finland 1992–1998, among others. Group, Vice President of Wihuri Oy and 1999–2002. board memberships, companies Managing Director of Finnish Lawyers’ Investor AB (Sweden), Kone Corporation Publishing Oy. (Finland) (Vice Chairman) board memberships, companies Jane Erkko East Office of Finnish Industries Oy born 1936 (Finland), Ilmarinen Mutual Pension Board member since 1999. Seppo Kievari Insurance Company (Finland) (Chair- Term ends in 2011. born 1943 man), Orion Corporation (Finland) Board member since 2003. Served as member of Sanoma Corpo- Term ends in 2010. ration’s Board 1990–1999 and as Vice Sakari Tamminen Chairman of the Board of Helsinki Media Served Sanoma Corporation 1966– born 1953, m.sc. (econ.) Company Oy 1995–1999. 2004 as President, as Publisher of Board member since 2003. board memberships, companies Sanoma’s newspapers, as Executive Term ends in 2009. Oy Asipex Ab (Finland) Vice President and as Senior Editor- in-Chief of Helsingin Sanomat, among President of Rautaruukki Corporation others. since 2004. Served Metso Corporation Paavo Hohti board memberships, companies 1999–2003 as Senior Vice President born 1944, ph.d., professor Hämeen Sanomat Oy (Finland) and CFO, Executive Vice President and Board member since 1999. CFO, and Deputy to the President and Term ends in 2011. CEO. Previously served as Executive Rafaela Seppälä Vice President and CFO, as well as Managing Director of the Council of born 1954, m.sc. (journalism) Senior Vice President and Chief Finan- Finnish Foundations since 2004. Board member since 1 April 2008. cial and Accounting Officer of Rauma Served in the Finnish Cultural Founda- Term ends in 2011. Oy, as Vice President, Finance of tion 1980–2004. Member of WSOY’s Rauma-Repola Oy’s Engineering Indus- Supervisory Board 1991–1994 and Vice Served as SanomaWSOY Board try, and as Financial Manager of Metal Chairman 1994–1999. member 1999–2003, President of Industry division of Oy W. Rosenlew Ab. Lehtikuva Oy 2001–2004, Project board memberships, companies Manager at Helsinki Media Company Oy Confederation of Finnish Industries EK 1994–2000 and member of Sanoma (Finland) (Chairman), Lemminkäinen Corporation’s Board 1994–1999, Corporation (Finland), Varma Mutual among others. Pension Insurance Company (Finland)

Robin Langenskiöld born 1946, b.sc. (econ.) Board member since 1999. Term ended on 1 April 2008.

the complete list of all board memberships can be found at sanoma.com. the share ownership information as well as stock options can be found on the notes 31 of the financial statements and changes in ownership at sanoma.com. board of directors of directors board 47 Executive Management Group

Hannu Syrjänen President and CEO of Sanoma. Member of the Executive Manage- ment Group of Sanoma since 1999, Chairman since 2001. Chairman of the Corporate Centre Management Group since 2007. Sanoma Board member since 2001. Hannu Syrjänen Kim Ignatius

Eija Ailasmaa Kim Ignatius born 1950, m.pol.sc. born 1956, b.sc. (econ.) President and CEO of Sanoma Magazines. Chief Financial Oﬀicer (CFO) of Member of the Executive Management Group Sanoma. Member of the Executive of Sanoma since 2000. Management Group and Corporate Centre Management Group Joined the Sanoma Group in 1973. Served as of Sanoma since 1 August 2008. President of Sanoma Magazines Finland Oy 2001–2003 and Helsinki Media Oy 2000– Served TeliaSonera 2000–2008 2001, as well as Executive Vice President and as Executive Vice President and General Manager, Magazines of Helsinki Media CFO. Previously served as CFO and Company Oy 1998–2000. Previously served member of the Executive Board of as Vice President, Publishing of Sanoma Cor- Tamro Corporation. poration’s Sanomaprint and Helsinki Media Company Oy, as Editor-in-Chief of Kodin Kuvalehti and in various editorial positions at Ilta-Sanomat. board memberships, companies Huhtamäki Corporation (Finland), Eija Ailasmaa Solidium Oy (Finland) (Vice Chairman)

the complete list of all board Timo Mänty memberships of sanoma’s born 1960, m.sc. (econ.) management can be found President and CEO of Sanoma at sanoma.com. the share Trade and member of the ownership information as well Executive Management Group of as stock options can be found Sanoma since 1 January 2009. on the notes 31 of the financial statements and changes in Served Sanoma Trade as Senior ownership at sanoma.com. Vice President of Movie operations and Managing Director of Finnkino Oy since 1998. Previously served as Executive Vice President of Suomalainen Kirjakauppa Oy, Vice President of Lehtipiste and in managerial capacity in Hartwall Oyj and Suomen Unilever Oy. executive management group executive management 48 Timo Mänty Jacques Eijkens born 1956, b.sc. (econ.) CEO of Sanoma Learning & Literature. Member of the Executive Management Group of Sanoma since 2006.

Served as CEO of Malmberg Investments 2001−2004 and Educational Information Group (part of VNU) 1998−2001. Joined Malmberg B.V. in 1981 (part of Sanoma Learning & Literature since 2004) and served in various management and marketing functions.

Jacques Eijkens

Anu Nissinen Tapio Kallioja born 1963, m.sc. (econ.) born 1948, m.sc. (tech.) President of Sanoma Entertain- President of SWelcom and ment and member of the Executive member of the Executive Management Group of Sanoma since Management Group of 25 February 2008. SanomaWSOY until 24 February 2008. Served Sanoma Entertainment since 2001. Served as President of SW Served the Sanoma Group Television Oy (Welho) and as Market- 1984–2008 as President of ing Director of Helsinki Televisio Oy. Helsinki Media Company Oy, Previously served Oy Sinebrychoﬀ Helsinki Television Ltd. and Ab as Marketing Director and Cultor Helsinki Telset Oy. Also served Group as Deputy Product Manager, as Vice President of Eurocable among others. Group and New Media Group.

Anu Nissinen

Mikael Pentikäinen Erkki Järvinen born 1964, m.sc. born 1960, m.sc. (econ.) (agriculture and forestry) President and CEO of Sanoma Trade President of Sanoma News. and member of the Executive Man- Member of the Executive agement Group of Sanoma until Management Group of Sanoma 31 December 2008. since 2004.

Served Rautakirja Ltd as President Served the Finnish News Agency and Senior Vice President, Kiosk as Editor-in-Chief and President Operations 1997–2008. Previously 1999–2004. Previously served served Cultor Group as Marketing as Editor-in-Chief of Etelä-Saimaa Manager and Head of Marketing 1996–1999 and as Editor in politi- at Vaasamills Ltd and as Manag- cal news of Helsingin Sanomat ing Director of Siljans Knäcke AB 1992–1996. in Sweden, and as Product and board memberships, companies Marketing Manager of Oy Karl Fazer The Finnish News Agency (Fin- Ab’s Fazer Bakeries. land), Suomalainen Yhteiskoulu Corporation (Finland) Mikael Pentikäinen Corporate Centre Management Group

Hannu Syrjänen Nils Ittonen (see pages 47 and 48) born 1954, b.sc. (econ.) Senior Vice President, Group Treasury, Real Estate and Risk Management of Sven Heistermann Sanoma. Member of the Corporate born 1972, m.sc. (tech.) Centre Management Group since 2007. Chief Strategy Officer (CSO) of Sanoma. Member of the Corporate Centre Man- agement Group since 4 August 2008. Merja Karhapää born 1962, master of laws, postgraduate ipr diploma (bristol Kim Ignatius university) (see page 48) Chief Legal Officer (CLO, Group Legal Affairs) of Sanoma, member of the Corporate Centre Management Group Matti Salmi and Secretary of the Board of Sanoma born 1950, m.sc. (econ.) (Company Secretary) since 1 August Senior Vice President, Group Financial 2008. Management of SanomaWSOY and member of the Corporate Centre Man- agement Group until 31 July 2008. Ben Tiesnitsch born 1952 Chief Human Resources Officer (CHRO) of Sanoma. Member of the Corporate Centre Management Group since 1 June 2008.

Kerstin Rinne born 1950, ll.b., master of laws (trained on the bench) Senior Vice President, Group Strategic Development and Legal Aﬀairs of SanomaWSOY, member of the Corporate Centre Management Group and Secretary of the Board of SanomaWSOY until 1 September 2008. other management management other 50 Divisions’ management groups (as of 31 january 2009) contents 4 Key ﬁ gures and organisation 6 Management review

8 Market development

10 Mission, vision, values and objectives

I20900519_Sanoma KANNET.indd 4 3.3.2009 09:34:34 Divisions’ management groups (as of 31 january 2009) contents 4 Key ﬁ gures and organisation 6 Management review

8 Market development

10 Mission, vision, values and objectives

I20900519_Sanoma KANNET.indd 4 3.3.2009 09:34:34 sanoma corporation

Sanoma Corporation President and CEO Hannu Syrjänen Ludviginkatu 6–8 P.O. Box 1229, 00101 Helsinki, Finland Tel. +358 105 1999, fax +358 105 19 5068 Sanoma.com

Group Communications Tel. +358 105 19 5062, fax +358 105 19 5068 [email protected] a Sanoma company

office of the chairman Chairman Jaakko Rauramo Erottajankatu 11 A P.O. Box 1229, 00101 Helsinki, Finland Tel. +358 105 1999, fax +358 105 19 5508

Sanomaentertainment.com Sanomatrade.com sanoma corporation sanoma corporation, p.o. box 1229, 00101 helsinki, finland. tel. +358 105 1999, sanoma.com Annual report 2008

I20900519_Sanoma KANNET.indd 3 3.3.2009 09:34:01 sanoma corporation

Sanoma Corporation President and CEO Hannu Syrjänen Ludviginkatu 6–8 P.O. Box 1229, 00101 Helsinki, Finland Tel. +358 105 1999, fax +358 105 19 5068 Sanoma.com

Group Communications Tel. +358 105 19 5062, fax +358 105 19 5068 [email protected] a Sanoma company

office of the chairman Chairman Jaakko Rauramo Erottajankatu 11 A P.O. Box 1229, 00101 Helsinki, Finland Tel. +358 105 1999, fax +358 105 19 5508

Sanomaentertainment.com Sanomatrade.com sanoma corporation sanoma corporation, p.o. box 1229, 00101 helsinki, finland. tel. +358 105 1999, sanoma.com Annual report 2008

I20900519_Sanoma KANNET.indd 3 3.3.2009 09:34:01 6 432 5 5 2 06 6 6 861 01 956 3 2 3 5 6 0 124 8 1 3 69 20 8 548 47 35 12 2 3 2 3 5 8 5 6 2 6 6 3 3 15 4 3 7 0 2 2 5 4 2 4 1 5 21 4 1 3 3 87 2 2 1 9 4 3 51 1 440 7 0 43 5 4 5 2 9 2 5 05 5 9 2 2 3 6 5 2 4530 2 5 9 2 3 3 5 5 2 2 4 9 4 5 361 1255 5 35 2 82

Financial statements for 2008 Contents

Key indicators ...... 3 Net sales by business ...... 4 Operating profi t by division ...... 5 Income statement by quarter ...... 5 Board of Directors’ Report ...... 6 Consolidated income statement ...... 14 Consolidated balance sheet ...... 15 Changes in consolidated equity ...... 16 Consolidated cash fl ow statement ...... 17 Notes to the consolidated fi nancial statements ...... 18 1. Accounting policies ...... 18 2. Segment information ...... 23 3. Acquisitions and disposals ...... 25 4. Other operating income ...... 27 5. Personnel expences ...... 28 6. Other operating expences ...... 29 7. Financial items ...... 30 8. Income taxes and deferred taxes ...... 30 9. Earnings per share ...... 32 10. Property, plant and equipment ...... 33 11. Investment property ...... 34 12. Intangible assets ...... 35 13. Interest in associated companies ...... 37 14. Available-for-sale fi nancial assets ...... 39 15. Trade and other receivables, non-current ...... 39 16. Inventories ...... 39 17. Trade and other receivables, current ...... 39 18. Cash and cash equivalents...... 40 19. Equity ...... 40 20. Stock options ...... 41 21. Provisions...... 44 22. Interest-bearing liabilities ...... 44 23. Trade and other payables ...... 45 24. Contingent liabilities ...... 46 25. Operating lease liabilities ...... 46 26. Financial risk management...... 47 27. Derivative instruments ...... 49 28. Most signifi cant subsidiaries ...... 50 29. Joint ventures ...... 52 30. Related party transactions ...... 52 31. Management compensation, benefi ts and ownership ...... 53 32. Events after the balance sheet date ...... 55 Defi nitions of key indicators...... 56 Shares and shareholders ...... 57 Parent Company income statement ...... 64 Parent Company balance sheet ...... 65 Parent Company cash fl ow statement ...... 66 Parent Company shareholders’ equity and contingent liabilities ...... 67 Board’s proposal for distribution of profi ts and signatures ...... 68 Auditors’ report ...... 69 Corporate governance ...... 70 Risk management ...... 74 Investing in Sanoma...... 77 Releases 2008 ...... 78 Analyst coverage of Sanoma ...... 79 Key indicators

Key indicators, EUR million 2008 2007 2006 2005 2004

Net sales 3 030.1 2 926.3 2 742.1 2 622.3 2 504.6 Operating profi t before depreciation and impairment losses 468.3 493.4 428.2 431.9 421.7 % of net sales 15.5 16.9 15.6 16.5 16.8 Operating profi t excluding non-recurring items 295.7 305.2 288.2 269.1 270.9 % of net sales 9.8 10.4 10.5 10.3 10.8 Non-recurring items -59.3 38.6 4.3 32.2 25.8 Operating profi t 236.3 343.8 292.5 301.3 296.7 % of net sales 7.8 11.7 10.7 11.5 11.8 Result before taxes 190.3 320.4 276.3 286.0 271.6 % of net sales 6.3 11.0 10.1 10.9 10.8 Result for the period 120.8 246.1 208.4 228.4 203.8 % of net sales 4.0 8.4 7.6 8.7 8.1 Balance sheet total 3 278.7 3 192.3 3 132.2 2 972.5 2 693.6 Capital expenditure 109.9 90.5 81.9 93.8 71.0 % of net sales 3.6 3.1 3.0 3.6 2.8 Return on equity (ROE), % 9.1 18.6 17.7 22.3 22.7 Return on investment (ROI), % 10.7 15.9 14.3 15.4 18.0 Equity ratio, % 40.0 45.4 45.0 41.3 38.6 Net gearing, % 78.5 58.2 59.2 72.9 81.6 Interest-bearing liabilities 1 082.6 881.4 863.9 928.7 894.8 Non-interest-bearing liabilities 959.0 946.7 945.5 886.1 812.8 Interest-bearing net debt 971.6 793.3 782.4 843.8 804.5 Average number of employees 21 329 19 587 18 434 16 885 16 209 Average number of employees (full-time equivalents) 18 168 16 701 15 732 14 256 13 651

Share indicators Earnings/share, EUR 0.72 1.47 1.32 1.45 1.31 Earnings/share, diluted, EUR 0.72 1.46 1.31 1.42 1.26 Cash ﬂ ow from operations/share, EUR 1.56 1.38 1.63 1.69 1.58 Equity/share, EUR 7.59 8.27 7.92 7.27 6.34 Dividend/share, EUR * 0.90 1.00 0.95 0.90 0.80 Dividend payout ratio, % * 125.1 67.9 72.2 62.0 61.2 Market capitalisation, EUR million *** 1 479.7 3 196.2 3 521.8 3 121.5 2 632.2 Eﬀ ective dividend yield, % *, ** 9.8 5.1 4.4 4.6 4.7 P/E ratio ** 12.8 13.3 16.2 13.5 13.2 Adjusted number of shares at the end of the period **, *** 160 665 651 162 822 889 164 957 053 156 927 582 153 112 152 Adjusted average number of shares **, *** 160 900 511 164 827 232 159 154 715 154 238 909 157 294 911 Lowest share price ** 8.31 18.32 17.80 17.07 13.70 Highest share price ** 19.87 24.51 22.45 21.60 17.77 Average share price ** 14.84 21.70 20.19 19.72 15.72 Share price at the end of the period ** 9.21 19.63 21.35 19.67 17.19 Trading volumes ** 100 271 123 92 576 174 72 670 001 81 239 652 29 868 290 % of share capital 62.3 56.2 45.7 52.7 19.0

* Year 2008 proposal of the Board of Directors ** Sanoma’s share series were combined on 7 April 2006. Share indicators of 2004–2005 are based on the old Series B shares. The number of shares in 2004–2005 includes all share classes. More information can be found in “Shares and shareholders” of the Financial Statements for 2006. key indicators *** The shares on the market, no treasury shares included 3 Net sales by business

1–12/ 1–12/ EUR million 1–3/ 4–6/ 7–9/ 10–12/ 1–3/ 4–6/ 7–9/ 10–12/ 2008 2008 2008 2008 2008 2007 2007 2007 2007 2007

Sanoma Magazines

Sanoma Magazines Netherlands 111.7 135.2 124.8 143.9 515.7 119.8 136.6 129.2 154.2 539.8 Sanoma Magazines International 70.1 76.8 77.4 82.4 306.7 65.8 68.5 66.0 83.2 283.4 Sanoma Magazines Belgium 54.2 55.5 53.7 59.8 223.2 52.5 55.8 48.1 60.1 216.6 Sanoma Magazines Finland 50.7 51.9 49.1 53.9 205.6 50.1 48.6 48.1 56.0 202.8 Eliminations -1.3 -0.9 -1.0 -1.1 -4.3 -1.2 -1.2 -1.0 -1.2 -4.6 Total 285.5 318.5 304.0 338.9 1 246.8 287.1 308.2 290.4 352.4 1 238.1

Sanoma News

Helsingin Sanomat 74.1 71.2 65.6 68.6 279.5 72.3 68.0 66.2 72.4 278.9 Ilta-Sanomat 22.5 24.1 22.5 21.9 91.0 23.6 24.6 22.9 23.6 94.8 Other publishing 22.4 23.3 22.1 24.6 92.4 24.3 24.7 22.6 25.9 97.5 Other businesses 38.5 38.1 37.1 38.9 152.5 38.5 38.0 37.0 39.1 152.6 Eliminations -36.6 -35.6 -33.7 -34.8 -140.7 -36.4 -35.5 -34.8 -36.4 -143.0 Total 120.8 121.1 113.5 119.2 474.7 122.4 119.8 114.0 124.6 480.8

Sanoma Entertainment

TV and radio 22.6 24.5 18.0 23.8 88.9 20.1 20.3 16.3 26.5 83.2 Other businesses 18.0 16.7 16.8 17.9 69.4 15.4 15.3 16.7 16.2 63.6 Eliminations -0.1 -0.3 -0.1 -0.6 -1.1 -0.3 -0.2 -0.2 -0.2 -0.8 Total 40.5 40.9 34.7 41.0 157.1 35.2 35.4 32.8 42.5 146.0

Sanoma Learning & Literature

Educational publishing 24.6 83.9 102.9 48.1 259.4 20.0 78.5 68.7 30.6 197.7 Publishing 27.5 20.8 22.6 33.3 104.2 26.3 20.8 20.7 29.6 97.3 Other businesses 12.0 11.3 14.1 12.3 49.8 12.0 11.0 14.2 14.0 51.1 Eliminations -5.7 -5.5 -6.4 -5.7 -23.3 -6.0 -5.4 -6.5 -5.7 -23.7 Total 58.3 110.5 133.2 88.0 390.0 52.2 104.8 97.0 68.5 322.5

Sanoma Trade

Kiosk operations 94.6 102.5 103.8 108.6 409.4 86.9 99.3 95.5 103.8 385.5 Press distribution 58.2 60.2 61.8 61.3 241.5 56.2 61.0 61.8 66.5 245.5 Bookstores 31.0 24.0 36.9 47.3 139.2 29.6 23.1 37.7 50.0 140.3 Movie operations 24.4 19.4 23.8 26.7 94.3 19.5 18.8 21.8 25.5 85.5 Other businesses 0.0 0.0 0.0 0.0 0.0 4.0 3.2 2.1 1.1 10.4 Eliminations -5.5 -3.0 -4.8 -4.5 -17.8 -3.9 -4.0 -4.3 -5.8 -18.0 Total 202.7 203.2 221.4 239.3 866.6 192.4 201.3 214.5 241.1 849.3

Other companies and eliminations -24.8 -24.4 -28.2 -27.9 -105.2 -25.6 -25.1 -30.1 -29.4 -110.3 Total 683.1 769.8 778.6 798.7 3 030.1 663.7 744.4 718.6 799.6 2 926.3 net sales by business

4 Operating proﬁ t by division

1–12/ 1–12/ EUR million 1–3/ 4–6/ 7–9/ 10–12/ 1–3/ 4–6/ 7–9/ 10–12/ 2008 2008 2008 2008 2008 2007 2007 2007 2007 2007

Sanoma Magazines 48.2 46.6 31.6 -40.6 85.7 32.1 61.3 30.4 37.2 160.9 Sanoma News 17.9 14.7 15.2 9.4 57.3 19.6 17.3 17.2 13.6 67.6 Sanoma Entertainment 4.0 6.3 2.8 4.1 17.3 2.9 4.0 3.5 5.4 15.8 Sanoma Learning & Literature -4.3 26.4 36.3 -12.7 45.6 -6.5 29.8 27.9 -6.6 44.5 Sanoma Trade 9.9 7.4 13.0 14.7 45.1 9.0 10.6 13.0 23.1 55.6 Other companies and eliminations -3.0 -2.9 -5.0 -3.7 -14.6 -3.1 10.1 -3.4 -4.3 -0.7 Total 72.7 98.5 94.0 -28.8 236.3 54.0 133.0 88.5 68.3 343.8

Income statement by quarter

1–12/ 1–12/ EUR million 1–3/ 4–6/ 7–9/ 10–12/ 1–3/ 4–6/ 7–9/ 10–12/ 2008 2008 2008 2008 2008 2007 2007 2007 2007 2007

Net sales 683.1 769.8 778.6 798.7 3 030.1 663.7 744.4 718.6 799.6 2 926.3 Other operating income 38.1 17.7 14.8 26.5 97.1 13.3 49.0 12.4 20.6 95.2 Materials and services 309.4 333.4 352.0 372.6 1 367.4 294.9 327.1 323.3 363.5 1 308.9 Personnel expenses 172.2 177.5 167.8 185.2 702.8 158.4 162.2 151.8 174.2 646.5 Other operating expenses 131.1 141.5 141.9 174.3 588.8 135.0 133.9 130.3 173.5 572.7 Depreciation and 35.8 36.6 37.7 121.9 231.9 34.6 37.3 37.1 40.7 149.7 impairment losses Operating proﬁ t 72.7 98.5 94.0 -28.8 236.3 54.0 133.0 88.5 68.3 343.8 Share in result of associated 3.0 1.6 0.4 -0.1 4.9 1.8 2.7 2.0 5.9 12.4 companies Financial income 3.5 3.1 6.1 6.2 18.9 4.8 -0.2 2.5 2.1 9.2 Financial expenses 12.7 14.5 15.3 27.4 69.9 11.9 9.4 11.2 12.4 44.9 Result before taxes 66.5 88.7 85.2 -50.1 190.3 48.6 126.1 81.9 63.8 320.4 Income taxes -12.2 -23.4 -24.1 -9.8 -69.4 -13.7 -30.6 -20.3 -9.7 -74.4 Result for the period 54.4 65.3 61.1 -59.9 120.8 34.9 95.5 61.5 54.1 246.1

Attributable to: Equity holders 54.5 64.4 59.0 -62.2 115.7 35.5 95.8 59.7 51.8 242.8 of the Parent Company Minority interest -0.2 0.9 2.1 2.3 5.1 -0.6 -0.3 1.8 2.3 3.2 operating profit by division / income statement by quarter profit by division / income statement operating

5 6 board of directors’ report lishing businessimpactingtheSanoma Learning &Literature division. rateexchange fl aff newspaper advertising cantly weaker thanduringthefull-yeardueespeciallytodecreasing ating profi Sanoma’s netresultfor2009isexpectedtodecreaselessthanitsoper- Group’s fi ating profi decline fromthepreviousyear. Inthecomparable yearof2008,oper- Group’s operating profi In 2009,Sanoma’s netsalesareexpectedtodecreasesomewhat.The outlook for2009 • • • • • Board ofDirectors’Report aff

ectedbythe overall economicdevelopmentin theGroup’scountriesof In thefi The outlookofSanoma’s netsalesandoperating profi The proposeddividendisEUR0.90pershare. (1.47). were EUR-0.39(0.32).Earningspersharefor20080.72 Fourth earningspershare,includingnon-recurringitems, quarter (63.4) million. and operating profi quarter,In thefourth GroupnetsaleswereEUR798.7(799.6)million (38.6) million. (305.2) millionin2008.Non-recurringitemstotalledEUR-59.3 profi Operating EUR 3,030.1(2,926.3)million. Sanoma Group’snetsalesincreasedby3.5%in2008,totalling nancial expensesareexpectedtodecrease,andasaresult, t. non-recurringitemswast excluding EUR295.7million.The of2009,developmentisexpectedtobesignifi rst quarter uctuations and the growth ofseasonal educationalpub- uctuations andthegrowth t excluding non-recurringitemswast excluding EUR295.7 t excluding non-recurringitemswast excluding EUR49.0 non-recurringitemsisestimatedto t excluding ectingtheSanoma News divisionandcurrency t in2009is - Sanoma Trade decreased. accounting for46%(46%)andnon-EUcountries5%(5%). Finland accountedfor49%(49%)ofnetsales,withotherEUcountries sales. Particularly grew. theonlineadvertising Ingeographical terms, sales adjustedforchangesintheGroupstructureincreasedby2.4%. marketof thedeclineadvertising towards theendofyear. Net ing &Literature. Net salesinSanoma News wereslightlydownbecause Trade was increasedtheirnetsales.Growth strongestinSanoma Learn- Sanoma Learning &Literature, andSanoma Sanoma Entertainment 2,926.3; 2006:2,742.1)million.Outofthedivisions,Sanoma Magazines, In 2008,Sanoma’s netsalesgrewby3.5%,totallingEUR3,030.1(2007: salesnet impairment losses recordedinthemagazinebusiness, corporate acqui- The equityratio andotherbalance sheetitemswereimpactedbythe capital onlyincreasedslightly. management bytheGroup–despite acquisitions,Sanoma’s working from operations increasedasaresult ofmoreeff (227.9) millionandcashfl 3,278.7 (3,192.3)million.Cashfl At theendofyear, theconsolidatedbalancesheettotalledEUR andfinancialposition balance sheet profi recording ofanon-recurringimpairmentlossimpactedtheoperating The publishing wassuccessful,andSanoma Entertainment. particularly ing profi 292.5) millionor7.8% (2007:11.7%;2006:10.7%)ofnetsales.Operat- multi-volume bookandyearbookbusinesses. and inventories,aswellcostsassociatedwiththerestructuringof expenses weretheresultofwrite-downsgoodwill,immaterialrights company R.C.V. aswellrealestate.Non-recurring Entertainment, ring capitalgainswererealisedfromthesaleofmoviedistribution million innon-recurringitems.Duringthefi (305.2) million.Theoperating profi Sanoma’s operating profi result been 27.5%. Theprofi quarter.the fourth theseimpairments,thetax Excluding rate wouldhave tionally to36.5%(23.2%) asaresultoftheimpairmentrecognitionsin per sharewereEUR0.72(1.47).TheGroup’seff Financial expensesincreasedduetotheriseinreferencerates. interest costsofEUR56.3(41.4)milliononinterest-bearingliabilities. amounted toEUR69.9(44.9)millionandwerecomprisedprimarilyof cial incomeamountedtoEUR18.9(9.2)million.Financialexpenses increase theeff and strengtheningitsmarket positions.At thesametime,Groupwill in 2009.Sanoma willcontinueitsfocusoninvestinginonlinemedia in particular. isexpectedtodecreaseintheprimarymarkets Advertising operation, andprivate andthedevelopmentofadvertising consumption Sanoma’s netfi Advertising salesaccounted for25%(24%)oftheGroup’stotalnet Advertising At the end ofDecember, Sanoma’s equity ratio was 40.0%(45.4%). The Group’soperating profi The resultbeforetaxes was EUR190.3(320.4)millionandearnings t ofSanoma Magazines.Theoperating profi t increasedinSanoma Learning &Literature, whereeducational iciency ofitsoperations inallmarkets. nancial itemstotalledEUR-51.0(-35.7)million.Finan- t fortheyeartotalledEUR120.8(246.1)million. t excluding non-recurringitemswast excluding EUR295.7 ow persharewas EUR1.56(1.38).Cashfl t was EUR236.3 (2007:343.8;2006: ow fromoperations was EUR250.3 t includedatotalofEUR-59.3(38.6) nancial period,non-recur- ective tax rate roseexcep- ts ofSanoma News and ective workingcapital ow sitions and the repurchases of own shares. Net gearing increased to sanoma magazines 78.5% (58.2%). Equity totalled EUR 1,237.1 (1,364.2) million. A total of EUR 47.6 million was spent on repurchasing of treasury shares. Return Sanoma Magazines is one of the largest consumer magazine publishers on equity (ROE) was 9.1% (2007: 18.6%; 2006: 17.7%), and the return on in Europe. The Division publishes more than 300 magazines in 13 dif- investment (ROI) was 10.7% (15.9%). Interest-bearing liabilities increased ferent countries. Apart from developing its strong portfolio of magazine to EUR 1,082.6 (881.4) million and interest-bearing net debt to EUR 971.6 brands, Sanoma Magazines is rapidly expanding its business to digital (793.3) million. The debt was mainly driven by the acquisition of the media platforms. Polish educational publisher Nowa Era and other acquisitions. At the end of December, the Group’s cash and cash equivalents totalled EUR 110.9 (88.1) million. At the end of December, the Group had a net debt/EBITDA ratio of 2.1. 1–12/ Key indicators, EUR million 1–12/ Sanoma’s fi nancial position is stable as a result of the Group’s strong 2008 2007 balance sheet, steady cash fl ow and a syndicated, long-term credit line. 1 246.8 Sanoma has no need for instalments of long-term loans. This credit line Net sales 1 238.1 agreement worth a total of EUR 802 million is in eff ect until autumn 2012. Operating profi t excluding non-recurring items 138.9 139.7 Sanoma Corporation does not have any other signifi cant agreements % of net sales 11.1 11.3 covered by the statutory obligation to disclose. In addition, the Group Non-recurring items -53.2 21.2 has, within the scope of normal business operations, agreements or 85.7 agreements as a whole containing a standard change-of-control clause. Operating profi t 160.9 % of net sales 6.9 13.0 investments, acquisitions and divestments Balance sheet total 1 903.0 1 937.5 Capital expenditure 26.8 20.6 In 2008, investments in tangible and intangible assets totalled EUR 7.2 109.9 (90.5) million, and were focused, for example, on ICT systems, Return on investment (ROI), % 12.4 replacement investments and improvement of real estate. R&D expend- Average number of employees 6 280 5 623 iture was recorded at EUR 4.1 (2.0) million or 0.1% (0.1%) of net sales. Average number of employees 5 731 5 169 Acquisition costs of Sanoma’s acquisitions during the year totalled EUR (full-time equivalents) 190.7 (67.5) million. On 10 January 2008, Sanoma Magazines divested the Dutch movie distribution company R.C.V. Entertainment. In 2007, the company’s net • Sanoma Magazines’ net sales increased, with most businesses con- sales amounted to EUR 34.2 million and operating profi t to about EUR 5 tributing to growth. million. Capital gains amounting to EUR 23.5 million were recorded in the • Advertising sales in 2008 increased by 11% and online advertising fi rst quarter of 2008 for the transaction. sales by 32%. On 11 March 2008, Sanoma Learning & Literature fi nalised its acquisi- • Sanoma Magazines’ portfolio was developed actively: a total of over tion of the Polish educational publisher Nowa Era. In 2007, Nowa Era’s 35 new magazines and 17 online sites were launched or acquired dur- net sales amounted to about EUR 43 million, and the company’s profi t- ing the year. ability was in line with the general level of good profi tability in educa- • Weakened short-term outlook in CEE countries and Russia caused a tional publishing. The acquisition resulted in a signifi cant improvement signifi cant impairment aff ecting Sanoma Magazines’ operating profi t in Sanoma Learning & Literature’s March–September result. Due to markedly. The operational result was at the previous year’s level. the seasonal nature of Nowa Era’s business, the fi rst and fourth quarters typically post losses. Goodwill amounting to EUR 54.6 million was Sanoma Magazines’ net sales in 2008 totalled EUR 1,246.8 (1,238.1) recorded for the transaction. million. Net sales grew in all businesses, except in Sanoma Magazines Netherlands where operations were divested both in June 2007 and January 2008. Net sales growth was strongest in Sanoma Magazines International. Adjusted for changes in the Group structure, the Division’s net sales grew by 1.8%. Of the Division’s net sales, 16% (16%) came from Finland. In October–December, Sanoma Magazines’ net sales decreased by 3.8% and amounted to EUR 338.9 (352.4) million. Net sales decreased in all businesses due to structural changes as well as lower sales from line and brand extensions. The Division’s advertising sales in 2008 increased by 11% and represented 33% (30%) of net sales. Most growth during the year came from board of directors’ report of directors’ board Sanoma Magazines International and online advertising in the Neth- erlands. In total, the Division’s online advertising sales grew by 32%. 7 Advertising sales growth slowed down at the end of the year. Circulation sales grew by 1% and represented 55% (55%) of Sanoma Magazines’ net sales. Circulation sales in Belgium and Finland developed positively. Single copy sales in the Netherlands and some CEE countries declined. Sanoma Magazines Netherlands’ net sales in 2008 totalled EUR 515.7 (539.8) million. This was mainly due to structural changes. Sanoma Magazines Netherlands has strongly focused its operations, divesting recurring items included in operating profi t totalled EUR -53.2 (21.2) mil- its puzzle portfolio in June 2007. In January 2008, Sanoma Magazines lion and consisted of a recognition of impairment and write-off s in the Netherlands consolidated magazine publisher Mood for Magazines and fourth quarter totalling EUR 83.7 million and capital gains of EUR 30.5 divested movie distributor R.C.V. Entertainment. In 2007, R.C.V. Enter- million related to the divestments of R.C.V. Entertainment and some tainment’s annual net sales totalled EUR 34.2 million. online assets. Operating profi t in 2008 decreased by 46.8% due to non- According to Nielsen Media Research, the consumer magazine adver- recurring costs and amounted to EUR 85.7 (160.9) million. Operating tising market in the Netherlands decreased by 4% in 2008 with magazine profi t excluding non-recurring items in October–December totalled EUR advertising’s share of the total advertising market decreasing. Sanoma 36.1 (37.2) million. Magazines Netherlands’ advertising sales grew due to new operations Sanoma Magazines Netherlands’ operating profi t improved. There and online advertising sales. Online advertising grew by 26% and out- were signifi cant sales gains in both the reporting and comparable period. performed market growth. In total, advertising sales represented 29% The operational result grew due to improved cost eff iciency and changes (24%) of Sanoma Magazines Netherlands’ net sales. The readers’ market in the product mix. Sanoma Magazines International’s operating profi t in the Netherlands declined in the third quarter of 2008. Subscription decreased markedly due to the recognition of impairment, but opera- sales at Sanoma Magazines Netherlands were on the comparable year’s tional result improved due to good development in Russia and Hungary. level, but with decreased single copy sales, the total circulation sales Sanoma Magazines Belgium’s result decreased due to investments in decreased slightly. Sanoma Magazines Netherlands developed its prod- new businesses. Sanoma Magazines Finland’s operating profi t was uct portfolio through acquisitions and launches with over 10 magazines below the comparable year due to increased personnel and ICT costs. and fi ve online services. Two magazines were sold. Sanoma Magazines continues to develop its magazine portfolio and Sanoma Magazines International’s net sales grew to EUR 306.7 online businesses and invest in strengthening market positions in all (283.4) million. Growth came from increased advertising sales. Advertis- operating countries. ing sales increased in most countries, but especially in Hungary, Russia In 2009, Sanoma Magazines’ net sales and operating profi t excluding and Bulgaria, where Sanoma Magazines International’s online advertis- non-recurring items are expected to remain somewhat below the previ- ing revenues grew as a result of the acquisition of Netinfo, the leading ous year’s level. Bulgarian internet company, in July. In total, online advertising sales of the business increased by 52%. Advertising sales represented 56% sanoma news (52%) of Sanoma Magazines International’s net sales. Circulation sales in Sanoma Magazines International were slightly below the compara- Sanoma News is the leading newspaper publisher in Finland, and its ble year, with most markets showing some decline in single copy sales. products have a strong presence both in print and digital format in the Net sales in Russia, the biggest market of Sanoma Magazines Interna- lives of their readers. In addition to Helsingin Sanomat, the largest daily tional, grew by 7% despite the negative impact of the exhange rate and in the Nordic region, Sanoma News publishes national and regional amounted to some EUR 109 million. In 2008, Sanoma Magazines Inter- newspapers and is also investing heavily in digital business. national launched or acquired 24 magazines and 12 online sites. Five magazines were discontinued or divested. Net sales at Sanoma Magazines Belgium increased to EUR 223.2 (216.6) million. The increase in sales came mainly from growing circulation and 1–12/ Key indicators, EUR million 1–12/ other sales. In Belgium, the readers’ market declined slightly. Sanoma 2008 2007 Magazines Belgium increased its circulation sales, through both cover price 474.7 increases and successful launches. Especially subscription sales developed Net sales 480.8 positively. In Belgium, the total advertising market grew only slightly with Operating profi t excluding non-recurring items 57.3 67.6 magazine advertising’s share of the total remaining stable. Sanoma Maga- % of net sales 12.1 14.1 zines Belgium’s advertising sales were at the previous year’s level. Adver- Non-recurring items tising sales represented 27% (28%) of Sanoma Magazines Belgium’s net 57.3 sales. The portfolio in Belgium grew by one title in 2008. Operating profi t 67.6 Sanoma Magazines Finland’s net sales amounted to EUR 205.6 (202.8) % of net sales 12.1 14.1 million. Growth came from increased circulation sales. Especially subscrip- Balance sheet total 456.3 445.0 tion sales grew. Single copy sales and advertising sales were at the com- Capital expenditure 19.6 17.7 parable year’s level. Advertising sales represented 15% (15%) of Sanoma 19.2 Magazines Finland’s net sales. According to TNS Gallup Adex, advertising in Return on investment (ROI), % 19.7 consumer magazines in Finland decreased by 7% in 2008. The magazine Average number of employees 2 808 2 716 single copy market increased in volume by 5% in 2008. Sanoma Magazines Average number of employees 2 491 2 411 Finland improved its market share both in advertising and the readers’ mar- (full-time equivalents) ket, and developed its portfolio by launching two magazines. board of directors’ report report of directors’ board Sanoma Magazines’ investments in tangible and intangible assets 8 totalled EUR 26.8 (20.6) million and consisted mainly of ICT investments • Net sales in Sanoma News were slightly down because of the dis- and improvement of real estate. The most signifi cant acquisitions in continuation of the printed version of Taloussanomat and the severe 2008 were the majority shareholding in magazine publisher Mood for downturn of the media market towards the end of the year. Magazines and the acquisitions of Netinfo and European Auto Trader. In • Ilta-Sanomat , Ilta-Sanomat Plus, Nyt (Helsingin Sanomat’s weekly the comparable year, the most signifi cant transaction was the acquisi- supplement) and Metro were redesigned. tion of SchoolBANK.nl and its related online sites. • Sanoma News online advertising performed extremely well during Sanoma Magazines’ operating profi t excluding non-recurring items the year, recording a robust growth of 50%. was at the previous year’s level at EUR 138.9 (139.7) million. The non- • Sanoma News also invested heavily in digital services. In 2008, Sanoma News’ net sales decreased by 1.3%, totalling EUR The most signifi cant acquisition of the comparable year was that of the 474.7 (480.8) million. Net sales remained at the previous year’s level Auto24.ee marketplace. in Helsingin Sanomat, but decreased in the Ilta-Sanomat and other In 2008, Sanoma News’ operating profi t decreased by 15.3%, totalling publishing business units. Net sales adjusted for changes in the Group EUR 57.3 (67.6) million. The operating profi t did not include non-recur- structure decreased by 1.2%. In the fourth quarter, Sanoma News’s net ring items. The operating profi t of the Helsingin Sanomat business unit sales decreased by 4.3%, totalling EUR 119.2 (124.6) million. Advertis- decreased from the comparable period due to the decline in job and real ing sales were down signifi cantly in the fourth quarter due to the rapid estate advertising and increased marketing investments. The operating and severe downturn in the Finnish newspaper advertising in Novem- profi t of the Ilta-Sanomat business unit was reduced by the decline of ber–December. the tabloid market, price competition and investments in digital business. According to TNS Gallup Adex, newspaper advertising in Finland Other publishing improved its result thanks to the discontinuation of the decreased by 3% in 2008. Job and real estate advertising were the fi rst to printed version of Taloussanomat and other cost-saving measures. Earn- react to the general economic uncertainty, showing a sharp drop towards ings from other operations were down. In October–December, Sanoma the end of the year. Job advertising in Finland decreased by 4% and real News’ operating profi t totalled EUR 9.4 (13.6) million. The result of the estate advertising by 1% in 2008. Advertising in free sheets was down fourth quarter was aff ected by the rapid decline of newspaper advertising, by 3%. Online advertising included in statistics developed strongly during especially classifi ed advertisements, towards the end of 2008. the year, growing by 22%. Sanoma News’ advertising sales decreased by In 2009, the media advertising market is challenging and of low pre- 2% from the comparable period due to the decline of newspaper advertis- dictability. Sanoma News has launched a rationalisation programme to ing. Online advertising was up by 50% during the year. Sanoma News’ secure its competitive advantage. At the same time, Sanoma News will advertising sales represented 53% (53%) of its net sales. continue the determined development of its printed products and digital The shift of tabloid readers to the internet reduced the Finnish printed services. tabloid market by 8%. Decreased revenues from newsstand sales In 2009, net sales and operating profi t excluding non-recurring items aff ected Sanoma News’ circulation sales, which were down 4% in 2008. of Sanoma News are estimated to decline clearly from the previous year Subscription sales for daily newspapers were at the previous year’s level. due to the decline of the advertising market. Circulation sales accounted for 38% (39%) of the Division’s net sales. The Helsingin Sanomat business unit posted net sales of EUR 279.5 sanoma entertainment (278.9) million. Increased circulation sales and new acquisitions boosted net sales. Advertising sales were down, although online advertising in Sanoma Entertainment off ers consumers entertaining experiences on Helsingin Sanomat developed well. Advertising sales represented 62% television, radio, online and mobile devices. Sanoma Entertainment’s (63%) of net sales. Helsingin Sanomat’s job and real estate advertising, business units include Nelonen Media, primarily focused on broadcast in particular, has been aff ected by the overall economic situation. Job operations, and Welho, Finland’s largest cable television operator. The advertising in the Helsingin Sanomat business unit decreased by 8% Division’s latest business area is online casual gaming. and real estate advertising by 11%. Online products were clearly up. The Helsingin Sanomat product family, especially the Oikotie.fi service entity for classifi ed advertisements, was developed in many diff erent ways 1–12/ during the year. Key indicators, EUR million 1–12/ The net sales of the Ilta-Sanomat business unit were EUR 91.0 (94.8) 2008 2007 million. The circulation sales of the business unit decreased due to the Net sales 157.1 146.0 shrinkage of the tabloid market. Ilta-Sanomat commanded a 57.1% (57.6%) share of the tabloid market. The advertising sales of the busi- Operating profi t excluding non-recurring items 17.3 15.8 ness unit grew and the overall readership reached a record level due to % of net sales 11.0 10.8 the strong growth of online business. Online sales were up by a total Non-recurring items of 58%. Advertising sales represented 31% (27%) of net sales. Editorial Operating profi t 17.3 15.8 processes were renewed and cost eff ectiveness increased. Net sales from other publishing amounted to EUR 92.4 (97.5) mil- % of net sales 11.0 10.8 lion. The decrease from the comparable year was aff ected by the dis- Balance sheet total 161.9 168.2 continuation of the printed version of Taloussanomat and the decline of Capital expenditure 13.5 14.8 free sheet advertising. The advertising sales of Sanoma Lehtimediat’s Return on investment (ROI), % 15.8 14.2 regional newspapers remained at the previous year’s level and circulation sales increased. Sanoma Kaupunkilehdet merged its public trans- Average number of employees 526 501 port free sheets Metro and Uutislehti 100. The renewed Metro became Average number of employees 482 457 Finland’s fourth largest newspaper in terms of readership. Sanoma (full-time equivalents) Digital, a company focusing on online business, expanded its product board of directors’ report report of directors’ board portfolio and increased clearly its advertising sales. Net sales from other operations, mainly comprising internal services, • Sanoma Entertainment’s operating profi t increased clearly. 9 were EUR 152.5 (152.6) million. At printing house Sanomapaino, outside • Nelonen Media increased its viewing shares; especially Jim has sales of printed products were up by over 10%. strengthened its position signifi cantly. In 2008, Sanoma News’ investments in tangible and intangible assets • A new TV channel called Liv will be launched in February. totalled EUR 19.6 (17.7) million, and consisted mainly of investments in digital business and replacement capital expenditures. The most sig- In 2008, Sanoma Entertainment’s net sales increased by 7.6%, totalling nifi cant acquisition of 2008 was the acquisition of a majority holding EUR 157.1 (146.0) million. This clear increase in net sales was brought in Suorakanava, whose services include, e.g., the Rakentaja.fi website. about in particular by the new TV and radio channels and the growth of Welho. Adjusted for changes in the Group structure, the Division’s sanoma learning & literature net sales grew by 4.2%. Advertising sales accounted for 52% (54%) of Sanoma Entertainment’s net sales. Television advertising declined in Sanoma Learning & Literature is a signifi cant European educational October–December thus decreasing the net sales of Sanoma Entertain- publisher off ering a broad range of printed and digital educational ment by 3.6% in the fourth quarter of the year. In October–December, materials and services to support the learning processes of children and Division’s net sales were EUR 41.0 (42.5) million. young people. The Division, operating in nine countries, is also Finland’s Net sales from broadcasting operations in 2008 were EUR 88.9 (83.2) leading book publisher and has growing international language service million. The increase was largely due to new channels. According to TNS operations. Gallup Adex, Finnish television advertising grew by 2%. Nelonen Media’s combined share of all television advertising was 29.5% (29.3%). The television channels of Nelonen Media increased their viewing shares, 1–12/ with their combined commercial viewing share reaching 29.6% (26.8%) Key indicators, EUR million 1–12/ in 2008. The viewing of Jim, launched in February 2007, increased the 2008 2007 most. Another free, new television channel called Liv is due to launch in Net sales 390.0 322.5 February 2009. 53.2 Radio Rock and Radio Aalto have continued to strengthen their mar- Operating profi t excluding non-recurring items 44.5 ket shares. Radio Rock had an average of 750,000 listeners each week. % of net sales 13.6 13.8 Radio Rock is the market leader among males aged 20–44. According Non-recurring items -7.6 to the Association of Finnish Broadcasters, national radio advertising in Operating profi t 45.6 44.5 2008 grew by 9.4%, and Nelonen Media’s radio stations have increased 11.7 their market share to 11.8%. % of net sales 13.8 Net sales from other operations increased clearly in 2008 due to Balance sheet total 661.1 585.0 Welho’s strong pay TV and broadband sales. Pay TV business was Capital expenditure 15.6 7.7 boosted by investments focused on off ering more High Defi nition (HD) Return on investment (ROI), % 9.6 10.4 channels. The range of broadband options also increased. The usage of 3 221 Sanoma Entertainment’s online casual gaming sites increased clearly Average number of employees 2 769 during the year. Average number of employees 2 737 2 345 In 2008, Sanoma Entertainment’s investments in tangible and intan- (full-time equivalents) gible assets totalled EUR 13.5 (14.8) million, most of which was allocated to the development of Welho’s cable network and services. There were no major acquisitions in 2008. The most signifi cant acquisition of the • Educational publishing sales increased clearly, with especially the new comparable year was the purchase of the Urheilukanava channels. Nowa Era and e-learning company YDP in Poland performing well. In 2008, Sanoma Entertainment’s operating profi t increased clearly, • Language services expanded through the acquisition of translation by 9.6%, totalling EUR 17.3 (15.8) million. This increase was driven by company Interverbum. improved profi tability due to the growth of broadcast operations and the • General literature performed well, partly as a result of the literature positive development of Welho. The operating profi t did not include non- awards won by WSOY’s authors. recurring items. The operating profi t for October–December was EUR 4.1 (5.4) million. Towards the end of the year, the operating profi t was Sanoma Learning & Literature’s net sales in 2008 increased by 20.9% impacted by the decline of television advertising sales. Radio advertis- and totalled EUR 390.0 (322.5) million. Both the educational publishing ing continued to increase clearly also during the last months of 2008. and publishing grew. Net sales adjusted for changes in the Group struc- In line with its strategy, Sanoma Entertainment focuses on its core ture grew by 5.1%. A total of 62% (62%) of the Division’s net sales came businesses: television, broadband services and consumer entertain- from outside of Finland. In October–December, the Division’s net sales ment services. Sanoma Entertainment continues to develop its digital grew by 28.6% to EUR 88.0 (68.5) million. Most growth in the fourth content and media solutions business, invest resources in the develop- quarter came from Polish e-learning operations of YDP. ment of its online services and in its viewing and listening shares. Educational publishing’s net sales increased to EUR 259.4 (197.7) In 2009, Sanoma Entertainment’s net sales and operating profi t million. Most growth came from Poland, both from new educational excluding non-recurring items are expected to be at the previous year’s publishing operations of Nowa Era, consolidated at the end of the fi rst level. quarter as well as from the existing e-learning business of Young Dig- ital Planet, which was able to deliver government tenders in the fourth quarter. In the Netherlands, the net sales were almost at the comparable year’s level. Educational materials to primary and secondary schools performed well, but sales of ancillary businesses like the edutainment board of directors’ report report of directors’ board products decreased sligthly. In Finland, sales of educational materi- 10 als were almost at the previous year’s level and the new edutainment product series Oppi & Ilo was received positively in the market. Net sales increased clearly in Belgium, with especially the Flemish market growing. Net sales grew also in Hungary, where both NTK and Perfekt won government contracts. Net sales in publishing grew to EUR 104.2 (97.3) million mainly due to sanoma trade increased sales of language services. General literature sales were at the previous year’s level. Sales of domestic fi ction and non-fi ction developed Sanoma Trade is a retail specialist with operations in seven countries well, boosted by two literature awards, Finlandia Prizes, won by WSOY’s and whose business is based on a thorough understanding of custom- authors in the fourth quarter. However, sales through direct channels in ers’ needs and on strong concepts. Sanoma Trade’s success is built on all Nordic countries were under pressure and expectations for the future over 200 million annual sales contacts, in which the consumer is present were revised in the third quarter. A restructuring project in Bertmark’s at kiosks, bookstores or movie theatres. Sanoma Trade’s press distribu- and Weilin+Göös’ multi-volume book and annual yearbook businesses tion operations serve publishers and retailers. was started to safeguard the future profi tability of the publishing. Busi- ness information, especially the language services, performed well. Partly the increase of sales is due to new operations acquired by translation and localisation company AAC Global both in 2007 and 2008. Lan- 1–12/ Key indicators, EUR million 1–12/ guage services is one of the growth platforms in the Sanoma Group. 2008 2007 Net sales from other operations, mainly printing, totalled EUR 49.8 866.6 (51.1) million. Net sales 849.3 Sanoma Learning & Literature’s investments in tangible and intangi- Operating profi t excluding non-recurring items 45.1 52.4 ble assets totalled EUR 15.6 (7.7) million in 2008. They mainly comprised % of net sales 5.2 6.2 ICT investments and improvement of real estate. The most signifi cant Non-recurring items 3.2 acquisitions were those of the Polish educational publisher Nowa Era 45.1 and the Swedish language service provider Interverbum. In the compa- Operating profi t 55.6 rable year, the most signifi cant transaction was the acquisition of Trans- % of net sales 5.2 6.5 lation Services Noodi. Balance sheet total 559.2 565.0 The Division’s operating profi t excluding non-recurring items grew Capital expenditure 33.8 28.4 by 19.5%, to EUR 53.2 (44.5) million. Operating profi t included EUR 7.6 Return on investment (ROI), % 16.5 20.9 (0.0) million of non-recurring expenses related to write-off s and other restructuring costs of multi-volume and yearbook operations. Operating Average number of employees 8 396 7 886 profi t in 2008 grew by 2.4% and amounted to EUR 45.6 (44.5) million. Average number of employees 6 633 6 234 Sanoma Learning & Literature’s operating loss excluding non-recurring (full-time equivalents) items in October–December totalled EUR 11.6 (6.6) million due to new educational publishing operations, which strengthened the seasonality of the Division. • Net sales from kiosk operations were all-time high; the net sales of In 2008, the educational publishing business improved its operating the whole Sanoma Trade division also grew. result signifi cantly with the new Polish operations contributing the most • Movie theatres again attracted a record number of customers. to the growth. In publishing, business information and general literature performed well, but write-off s and restructuring costs in Bertmark’s In 2008, Sanoma Trade’s net sales increased by 2.0%, totalling EUR and Weilin+Göös’ direct sales decreased operating result in publishing. 866.6 (849.3) million. Net sales increased clearly in kiosk operations and Results in other operations were below the comparable year. movie operations. Net sales adjusted for changes in the Group struc- The Division’s business is very seasonal. Profi t in educational pub- ture increased by 2.9%. Of Sanoma Trade’s net sales, 33% (34%) came lishing is mainly accrued in the second and third quarters. The acquisi- from outside Finland. In October–December, Division’s net sales of EUR tion of Nowa Era adds to growth in the educational publishing business 239.3 (241.1) million were in line with the comparable period. Kiosk and and therefore strengthens seasonality in the Division. movie operations also enjoyed success in the fourth quarter. However, Sanoma Learning & Literature continues to focus on further interna- the decline in press distribution and bookstore sales slowed down the tionalising its educational business, expanding language services and increase in net sales. maintaining market leadership in Finnish general literature publishing. Net sales from kiosk operations increased to EUR 409.4 (385.5) mil- In 2009, net sales and operating profi t excluding non-recurring items lion. Finnish R-kiosks had their best year in history. Kiosks increased of Sanoma Learning & Literature are estimated to decrease slightly from their net sales and customer numbers as a result of marketing invest- the previous year’s level. The development of net sales and operating ments. Net sales from kiosks continued to rise in the Baltic countries. profi t is also strongly aff ected by the exchange rates of Sanoma Learn- The R-kiosk product range was actively developed during the year. In ing & Literature’s operating countries. addition, during the year the R-kiosk chain expanded in Russia and also to Romania, where the fi rst R-kiosks opened their doors in July 2008. Net sales from press distribution were EUR 241.5 (245.5) million. Net sales in Finland increased slightly despite the fall in tabloid sales. Point- board of directors’ report report of directors’ board of-sale (POS) marketing company Printcenter did extremely well. Press distribution also increased its net sales in Estonia, Lithuania and Russia. 11 In Romania, net sales remained at the previous year’s level. The Dutch press distribution market has shrunk, which decreased the net sales of Aldipress. The eff iciency improvement programme initiated at Aldipress in the autumn of 2007 is progressing. The net sales of bookstores were EUR 139.2 (140.3) million. The net sales shares and holdings of the comparable period included the annual volume business divested in May 2008. Bookstore net sales increased in both Finland and Estonia. Trading in Sanoma shares was active in 2008. For more information on The net sales from movie theatres increased to EUR 94.3 (85.5) mil- Sanoma’s shares and shareholders, stock option schemes, treasury lion. Sales increased in Finland, Latvia and Lithuania, and movie admis- shares and management ownership, see the Shares and shareholders sions continued to grow. Movie theatres in Finland broke the all-time section, p. 57–63, as well as Notes 20 and 31. For key indicators, see p. 3. box off ice record in November. New multiplex theatres were opened in Finland and Lithuania. The viewing experience was diversifi ed by the personnel latest 3D technology and new alternative content, such as sports and cultural events. In 2008, the average number of persons employed by the Sanoma In the comparable period, net sales from other operations totalled EUR Group was 21,329 (2007: 19,587; 2006: 18,434). In full-time equivalents, 10.4 million, consisting of the multi-purpose arena in Hamburg divested the number of Group employees averaged 18,168 (2007: 16,701; 2006: in October 2007. 15,732). Sanoma Magazines had an average of 6,280 (5,623) employees, In 2008, Sanoma Trade’s investments in tangible and intangible assets Sanoma News 2,808 (2,716), Sanoma Entertainment 526 (501), Sanoma totalled EUR 33.8 (28.4) million, and focused mainly on new multiplexes, Learning & Literature 3,221 (2,769) and Sanoma Trade 8,396 (7,886). ICT projects, as well as the expansion of the dispatch department. The The average number of employees in the Parent Company was 99 (92). most important acquisitions of the year included minority shares in the The number of employees increased, for example, as a result of acquisi- Latvian movie theatre operator Forum Cinemas and Lithuanian press tions and investments in new businesses. distributor Impress Teva, and the acquisition of the Russian kiosk chain The total payroll and benefi ts paid to Sanoma employees in 2008, KP Roznitsa. In the comparable period, the most important acquisitions including the expense recognition of options granted, amounted to EUR were Printcenter in Finland, and the kiosk and press distribution compa- 575.5 million (2007: 533.0; 2006: 482.9). nies Press Point International and HDS CIS in Russia. Due to the rapidly declining general economic situation, Sanoma In 2008, Sanoma Trade’s operating profi t excluding non-recurring News initiated a rationalisation programme in January 2009. In addition items decreased by 13.9%, totalling EUR 45.1 (52.4) million. In the com- to a variety of cost-saving measures, the Division expects to reduce its parable period, the operating profi t included a total of EUR 3.2 million workforce by 100–200 employees through voluntary severance pack- in non-recurring items from the sale of the multi-purpose arena, other ages. Negotiations involving smaller staff reductions have also been ini- real estate and the restructuring of Dutch press distribution operations. tiated in other parts of the Group. In 2008, operating profi t decreased by 18.8%, totalling EUR 45.1 (55.6) million. Operating profi t for October-December excluding non-recurring board of directors, auditors and management items was EUR 14.7 (18.2) million. Operating profi t for the fourth quarter was particularly aff ected by cost increases in several businesses. The AGM of 1 April 2008 confi rmed the number of Sanoma’s Board mem- Operating profi ts from kiosk operations and press distribution were bers at ten. Board members Robert Castrén, Jane Erkko and Paavo Hohti down. The results were above all aff ected by investments in Russia and were re-elected, and Rafaela Seppälä was elected as a new member to Romania. In addition to investments, the operating profi t of press distri- the Board. The Board of Directors of Sanoma consists of: Jaakko Rau- bution was also impacted by smaller distribution volumes in the Nether- ramo, Chairman; Sari Baldauf, Vice Chairman; and Robert Castrén, Jane lands. The result of the bookstores was burdened by the relaunch costs Erkko, Paavo Hohti, Sirkka Hämäläinen-Lindfors, Seppo Kievari, Rafaela of the online store. Operating profi t from movie operations remained at Seppälä, Hannu Syrjänen and Sakari Tamminen as members. the comparable period’s level. The AGM re-appointed Pekka Pajamo, APA, and Sixten Nyman, APA, In addition to the home markets of Finland and the Baltic countries, as his deputy, and chartered accountants KPMG Oy Ab, with Kai Salli, Sanoma Trade’s expansion and development eff orts will also focus on the APA, acting as the Auditor in Charge, as the auditors of the Company. emerging economies of Russia and Central Eastern Europe. Sanoma Trade’s During the year Sanoma experienced many changes in senior man- goal is to achieve a strong position in these countries and participate actively agement. On 1 January 2009, the Executive Management Group (EMG) in the development of the local newspaper and magazine markets. comprised Hannu Syrjänen (Chairman), Eija Ailasmaa, Jacques Eijkens, In 2009, Sanoma Trade’s net sales and operating profi t excluding Kim Ignatius, Timo Mänty, Anu Nissinen and Mikael Pentikäinen. Anu non-recurring items are expected to be at the previous year’s level. Nissinen was appointed President of Sanoma Entertainment and member of the EMG on 25 February 2008, following the retirement of Tapio dividend Kallioja. Kim Ignatius started as the Sanoma Group CFO and member of the EMG on 1 August 2008 following the retirement of Matti Salmi, Sen- On 31 December 2008, Sanoma Corporation’s distributable funds were EUR ior Vice President, Finance and Administration. Erkki Järvinen, President 656.9 million, of which profi t for the year comprised EUR 187.2 million. and CEO of Sanoma Trade, announced on 24 October 2008 he would be pursuing other interests. Timo Mänty was appointed to his position as The Board of Directors proposes to the Annual General Meeting that: of 1 January 2009. board of directors’ report of directors’ board • A dividend of EUR 0.90 per share, or in total an estimated EUR 146.8 In addition to the new CFO, the following people joined Sanoma’s Cor- 12 million, shall be paid porate Centre Management Group (CCMG) during the year: Chief Human • A sum of EUR 0.5 million shall be transferred to the donation reserve Resources Off icer Ben Tiesnitsch as of 1 June 2008, Chief Legal Off icer, and used at the Board’s discretion Group Legal Aff airs, Merja Karhapää as of 1 August 2008, and Chief Strategy • The amount left in equity shall be EUR 509.6 million. Off icer (CSO) Sven Heistermann as of 4 August 2008, following the retire- In accordance with the Annual General Meeting’s decision, Sanoma paid ment of Senior Vice President, Group Legal Aff airs and M&A Kerstin Rinne. out a per-share dividend of EUR 1.00 for 2007. Sanoma conducts an For more information on corporate governance, such as the election of active dividend policy and primarily distributes over half of the Group the Board of Directors and provisions of the Articles of Association, see result after taxes in dividends. the Corporate governance section, p. 70–73. board authorisations tising to decrease in 2009. The rapid decline of media advertising and consumer confi dence can aff ect the Group result. The AGM held on 1 April 2008 authorised the Board of Sanoma to decide Sanoma’s stable business, strong balance sheet and current loan on the repurchase of the Company’s own shares. The Board decided on 1 agreements ensure the Group’s fi nancial position, if the uncertainty in April 2008 to deploy the authorisation and the repurchases of own shares the fi nancial markets continues. commenced on 12 June 2008. In addition, the Board had a valid authori- Defi nitions of key indicators are presented on p. 56. sation to increase the share capital issued by the AGM on 4 April 2007. Under the authorisation, the Board decided on 19 December 2008 on the issuance of Stock Option Scheme 2008. For more information on board authorisations, see the Shares and shareholders section, p. 57–63. other resolutions by the agm

The AGM decided to amend Article 1 (the Company’s business name and domicile) of Sanoma’s Articles of Association as proposed by the Board. The Company’s new business name is Sanoma Oyj in Finnish, Sanoma Abp in Swedish, and Sanoma Corporation in English. The Company’s registered oﬀ ice continues to be in Helsinki. The new name was adopted on 1 October 2008. At the same time, the names of divisions were harmonised. The Group now consists of the following divisions and reporting segments: Sanoma Magazines, Sanoma News (formerly Sanoma), Sanoma Enter- tainment (formerly SWelcom), Sanoma Learning & Literature (formerly SanomaWSOY Education and Books) and Sanoma Trade (formerly Rau- takirja). seasonal fluctuation

The net sales and result of Sanoma Magazines, Sanoma News and Sanoma Entertainment are particularly aff ected by the development of advertising. Advertising sales are infl uenced, for example, by the number of newspaper and magazine issues published during each quarter, which varies annually. Television advertising in Finland is usually strongest in the second and fourth quarters. The exact date of Easter has an impact on the net sales accumulated from newspapers and distribution when comparing quarters in these businesses on a year-to-year basis. Educational publishing accrues most of its net sales and results during the second and third quarters. A major portion of the net sales and results in retail are, on the other hand, generated in the last quarter, particularly from Christmas sales. Of course, the number of shopping days and, for example, the distribution of holidays over diff erent quarters also impact the net retail sales between quarters. Seasonal business fl uctuations infl uence the Group’s net sales and operating profi t, with the fi rst quarter traditionally being clearly the lowest. significant risks and uncertainty factors

Management of business risks and the opportunities associated with them is included in the daily responsibilities of Sanoma’s management. The management takes calculated risks in order to ensure that the Com- board of directors’ report report of directors’ board pany develops its business as successfully as possible. The most signiﬁ cant risks and uncertainty factors Sanoma is facing 13 are described in the Financial Statements, p. 74–76, together with the main principles of risk management. The most signiﬁ cant uncertainty factors of the current year are related to the growth of media advertising and consumer spending, as well as the development of currency exchange rates. Due to the general economic uncertainty, reliable estimates on, for example, the development of media advertising in the Group’s various markets are not available. Sanoma expects media adver- Consolidated income statement

EUR million Note 1.1–31.12.2008 1.1–31.12.2007

Net sales 3 030.1 2 926.3 Other operating income 4 97.1 95.2 Materials and services 1 367.4 1 308.9 Personnel expenses 5, 31 702.8 646.5 Other operating expenses 6 588.8 572.7 Depreciation and impairment losses 10–12 231.9 149.7 Operating proﬁ t 236.3 343.8 Share in result of associated companies 4.9 12.4 Financial income 7 18.9 9.2 Financial expenses 7 69.9 44.9 Result before taxes 190.3 320.4 Income taxes 8 -69.4 -74.4 Result for the period 120.8 246.1

Attributable to:

Equity holders of the Parent Company 115.7 242.8 Minority interest 5.1 3.2 Earnings per share for result attributable to the equity holders of the Parent Company: 9 Earnings per share, EUR 0.72 1.47 Diluted earnings per share, EUR 0.72 1.46 consolidated income statement consolidated

14 Consolidated balance sheet

EUR million Note 31.12.2008 31.12.2007

assets Non-current assets Tangible assets 10 510.4 498.7 Investment property 11 10.2 9.5 Goodwill 12 1 491.6 1 432.8 Other intangible assets 12 379.7 379.6 Interest in associated companies 13 69.9 75.2 Available-for-sale ﬁ nancial assets 14 20.6 15.9 Deferred tax receivables 8 36.6 42.4 Trade and other receivables 5, 15 41.0 37.9 Non-current assets, total 2 560.0 2 492.1

Current assets

Inventories 16 173.2 170.7 Income tax receivables 24.9 25.9 Trade and other receivables 17 409.1 415.4 Available-for-sale ﬁ nancial assets 14 0.5 0.1 Cash and cash equivalents 18 110.9 88.1 Current assets, total 718.7 700.2 assets, total 3 278.7 3 192.3

equity and liabilities

Equity 19 Equity attributable to the equity holders of the Parent Company Share capital 71.3 71.3 Premium fund 187.6 Treasury shares -37.5 -51.6 Fund for invested unrestricted equity 192.7 Other reserves 0.1 Translation diﬀ erences -25.2 11.4 Retained earnings 1 018.9 1 127.1 1 220.1 1 345.9 Minority interest 17.0 18.3 Equity, total 1 237.1 1 364.2

Non-current liabilities

Deferred tax liabilities 8 106.2 103.9 Pension obligations 5 37.9 45.2 6.0 Provisions 21 8.8 balance sheet consolidated Interest-bearing liabilities 22 449.0 328.1 15 Trade and other payables 23 34.6 28.3

Current liabilities

Provisions 21 10.9 7.8 Interest-bearing liabilities 22 633.6 553.4 Income tax liabilities 11.7 8.4 Trade and other payables 23 751.7 744.3 Liabilities, total 2 041.6 1 828.1 equity and liabilities, total 3 278.7 3 192.3 Changes in consolidated equity

EUR million Equity attributable to the equity holders of the Parent Company

Fund for invested Share Premium Treasury unrestricted Other Translation Retained Minority Equity, capital fund shares equity reserves differences earnings Total interest total

Equity at 1 Jan 2007 70.9 181.0 6.9 17.6 1 029.3 1 305.7 17.0 1 322.7 Change in translation -6.2 -6.2 0.3 -5.9 diﬀ erences Other items -0.7 -0.7 -0.7 Items recognised directly -6.2 -0.7 -6.9 0.3 -6.6 in equity, total Result for the period 242.8 242.8 3.2 246.1 Total recognised -6.2 242.1 235.9 3.5 239.4 income and expenses

Unregistered usage 0.1 2.4 2.6 2.6 of share options Conversion of capital notes 0.0 1.7 1.7 1.7 Acquisition of treasury -51.6 -51.6 -51.6 shares Use of share options 0.1 2.5 2.6 2.6 Expense recognition of 5.5 5.5 5.5 options granted Dividends paid -156.7 -156.7 -2.1 -158.8 Change in minority 0.0 0.0 interests Other changes -6.9 6.9 Equity at 31 Dec 2007 71.3 187.6 -51.6 0.1 11.4 1 127.1 1 345.9 18.3 1 364.2

Equity at 1 Jan 2008 71.3 187.6 -51.6 0.1 11.4 1 127.1 1 345.9 18.3 1 364.2 Change in translation -36.6 -36.6 -0.9 -37.5 diﬀ erences Other items -1.7 -1.7 -1.7 Items recognised directly -36.6 -1.7 -38.3 -0.9 -39.1 in equity, total Result for the period 115.7 115.7 5.1 120.8 Total recognised income -36.6 114.1 77.5 4.2 81.7 and expenses Unregistered usage of -2.4 -2.4 -2.4 share options Acquisition of treasury -47.6 -47.6 -47.6 shares Cancellation of treasury 61.6 -61.6 shares

changes in consolidated equity changes in consolidated Use of share options 0.0 2.4 5.1 7.5 7.5 Expense recognition of 16 5.0 5.0 5.0 options granted Dividends paid -160.8 -160.8 -3.5 -164.3 Change in minority -3.1 -3.1 -2.1 -5.2 interests Donations -1.7 -1.7 -1.7 Transfer of premium fund -187.6 187.6 Other changes -0.1 0.1 Equity at 31 Dec 2008 71.3 -37.5 192.7 -25.2 1 018.9 1 220.1 17.0 1 237.1 Consolidated cash ﬂ ow statement

EUR million Note 1.1–31.12.2008 1.1–31.12.2007

Operations Result for the period 120.8 246.1 Adjustments Income taxes 69.4 74.4 Financial expenses 7 69.9 44.9 Financial income 7 -18.9 -9.2 Share in result of associated companies -4.9 -12.4 Depreciation and impairment losses 231.9 149.7 Profi t on sales of non-current assets -34.2 -41.3 Other adjustments -40.1 -44.6 Change in working capital Change in trade and other receivables -18.5 -38.6 Change in inventories -0.5 -19.0 Change in trade and other payables, and provisions 3.6 11.9 Interest paid -53.4 -38.2 Other fi nancial items -4.5 -1.8 Taxes paid -70.2 -93.8 Cash fl ow from operations 250.3 227.9

Investments Acquisition of tangible and intangible assets -113.3 -88.6 Operations acquired 3 -157.0 -49.1 Associated companies acquired -0.2 -0.6 Acquisition of other holdings -5.1 -0.1 Sales of tangible and intangible assets 12.7 23.8 Operations sold 3 46.0 83.7 Associated companies sold 0.7 0.3 Sales of other companies 2.5 0.9 Loans granted -19.8 -4.4 Repayments of loan receivables 8.8 3.9 Sales of short-term investments 0.5 0.0 Interest received 7.4 5.5 Dividends received 7.5 7.6 Cash ﬂ ow from investments -209.3 -17.2

Cash ﬂ ow before ﬁ nancing 41.1 210.7

Financing Proceeds from share subscriptions 5.1 5.2 Minority capital investment/repayment of equity 1.0 -0.1 Acquisition of treasury shares -48.2 -51.0 Change in loans with short maturity -53.8 101.5 consolidated cash flow statement cash flow consolidated Drawings of other loans 525.1 295.5 17 Repayments of other loans -264.6 -403.1 Payment of fi nance lease liabilities -2.8 -2.5 Dividends paid -164.3 -158.8 Donations/other profi t sharing -0.5 -0.4 Cash fl ow from fi nancing -3.1 -213.7

Change in cash and cash equivalents according to cash fl ow statement 38.0 -3.0 Eff ect of exchange rate diff erences on cash and cash equivalents 0.1 -1.7 Net increase(+)/decrease(-) in cash and cash equivalents 38.1 -4.7 Cash and cash equivalents at 1 Jan 72.4 77.1 Cash and cash equivalents at 31 Dec 18 110.5 72.4

Cash and cash equivalents in the cash fl ow statement include cash and cash equivalents less bank overdrafts. 18 notes to the consolidated financial statements Sanoma.com or fromtheParent Company’s headoff fi Helsinki. of theParent Company’s registeredoff ish publiclimitedliabilitycompanydomiciledinHelsinki. Theaddress countries. Sanoma hasoperations in20countries. leader inkioskoperations andpressdistributioninFinlandtheBaltic and Finland’slargestbookpublisher, andSanoma Trade isthemarket Learning &Literature isasignifi isengagedinthefi Entertainment Sanoma News istheleadingnewspaperpublisherinFinland,Sanoma Sanoma MagazinesisoneoftheleadingEuropean magazine publishers, ber 2008,aswell asSICandIFRICinterpretations. IFRSreferstothe adhering torelated IAS andIFRSstandards, eff Standardsance withtheInternational FinancialReporting (IFRS)while Sanoma hasprepareditsconsolidatedfi consolidated financialstatements basis ofpreparation of Sanoma Group’sfi corporate information consolidated fi 1. Accounting policiesfor fi Notes totheconsolidated nancial statementstobedisclosed. nancial statements Copies oftheconsolidatedfi On 10February 2009,Sanoma’s BoardofDirectorsapproved these The Sanoma Group’sParent Company,Sanoma Corporation, isa Finn- ve divisionsoperate inversatilefi nancial statements nancial statementsareavailable at cant European educationalpublisher eld ofelectronicmedia,Sanoma ice isLudviginkatu 6–8,FI-00130 nancial statements inaccord- ective at31Decem- ice. elds ofmedia. • • • consolidated fi tations have becomeeff The followingamendmentsandrevisedstandardsIFRICinterpre- • rial impactontheGroup’sfi interpretation, whichbecameeff No newstandardsbecameeff new andamendedstandards sion assetsandpension obligations.Althoughtheseestimates arebased used whendetermining thevaluation ofdeferred taxes aswellpen- intangible assets, forexample. Inaddition,management judgementis tion cost,anddeterminingtheestimated usefullivesfortangibleand used whenmakingimpairmenttesting calculations,allocatingacquisi- During thepreparation ofthefi period. amountsofincomeandexpensesduringthereporting reported assets andliabilitiesatthedateof thefi amountsofassetsandliabilities,disclosure contingent reported the managementtomake estimatesandassumptions thataff Preparing thefi other keysourcesofestimation uncertainty significant accounting policiesand management judgementinapplying themost policies. statedin theaccounting historical costconventionsunlessotherwise Standards andcompanylaw. dated fi European UnionRegulation No.1606/2002.Thenotestotheconsoli- under theFinnishAccounting Act anditsregulationsinaccordancewith approved standardsandtheirinterpretationsapplicablewithintheEU

been endorsedbytheEU. are eff the reclassifi amendmenttothestandard.According tothisamendment further 15 October2008.InNovembertheeff targeted atfi eff tion ofFinancialInstruments(theamendmentwas retrospectively ment andIFRS7FinancialInstruments:Disclosures–Reclassifi Amendments toIAS 39Financialinstruments:Recognition andMeasure- been adoptedbytheEU. ments meantbytheinterpretation.Thisinterpretationhasnotyet period ortheprecedingperiodsGroupdidnothave anyagree- ConcessionArrangements. IFRIC 12Service Duringthereporting the separate fi on accountingfortransactions involvingownequityinstrumentsin Theinterpretationgivesguidance are acquiredfromexternalparties. the company’sownequitytransactions andtheequityinstruments tation clarifi IFRIC 11IFRS2GroupandTreasury ShareTransactions. Theinterpre- on theGroup’sbalancesheet. Implementation ofthisinterpretationhasnothadanymaterialimpact the requiredminimumcontributionscannotbereturnedtoentity. efi the minimumfundingrequirementsaff Requirements andtheirInteraction. Theinterpretationexplainshow IFRIC 14IAS 19ThelimitofaDefi Financial statementsarepresentedinmillionsofeuros,basedon t assetsorliabilities.Additional liabilityisonlytoberecognisedif ective from1July2008toNovember2008).Theadjustmentwas nancial statementsarealsoinaccordancewithFinnishAccounting ective fromthat dateonwards. Thelatteramendment hasnot esaccountingtreatmentoftransactions thatarepaidby nancial statements: cation offi nancial statements inaccordancewithIFRSrequires nancial institutionsandwas endorsedbytheEUon nancial statements. ective in2008buthadnoeff nancial assetsthataremadeafter1November nancial statement: nancial statements,such estimateswere ective during2008.ThefollowingIFRIC ective in2008,didnothave anymate- ned Benefi ective datewas adjustedbya ecttheamountofdefi nancial statements,andthe t Asset, MinimumFunding ect onSanoma’s ned ben- ect the ect ca- ment judgement are presented, if necessary, in the notes in question. ment judgementarepresented,ifnecessary,inthenotesquestion. notes tothefi the functional currency at the exchange ratethe functionalcurrency attheexchange prevailing onthebalance date. Assets andliabilitiesonthebalancesheet datearetranslated into ratethe functionalcurrency attheexchange quotedonthetransaction Company’s functionalandpresentation currency. solidated fi stances relevant tothatsubsidiary(thefunctionalcurrency). Thecon- refl Items ofeachsubsidiaryarerecognised usingthecurrencythatbest foreign currencyitems consistency withtheGroup’saccountingpolicies. tion, theGroupcompanies’fi balance sheetsandnotestothefi dating theParent Company’sanditssubsidiaries’incomestatements, The consolidatedfi consolidation principles actual resultsmayultimatelydiff on themanagement’sbestknowledgeofcurrenteventsandactions, into accountinaccordancewiththeobligation. ownership inasubsidiary,theconsolidationhastaken theownership tion costmethod.IncaseswheretheGroupiscommittedtoincreasing has control.Intra-group shareholdingsareeliminatedusingtheacquisi- an interestofmorethan50%votingrights,oroverwhichitotherwise and companiesinwhichtheParent Companyhas,directlyorindirectly, consolidation method. other ownersareaccountedforusingtheline-by-lineproportionate tions. of associatedcompaniesincludesthegoodwilloriginatedfromacquisi- is disclosedseparately afteroperating profi equity method.TheGroup’sshareoftheassociatedcompanies’result trol overtheentity.Associated companiesareaccountedforusingthe obtainingsignifi voting rightsorotherwise infl business byrecognisingthemattheirfair value. acquisition costisallocatedtotheassetsandliabilitiesofacquired have notbeenadjustedretrospectively. Onthedateofacquisition, fair value onthedateofacquisition,butacquisitionspriortothat sitions. Acquisitions carriedoutafter1January 2004aremeasuredat date onwhichsaidcontrolceased. subsidiaries areincludedintheconsolidatedincomestatementuntil the dateonwhichcontrolwas transferred totheGroup,anddivested solidated fi consolidated fi gins anddistributionofprofi the balancesheetwithinequity. equity attributabletominorityinterestispresentedasaseparate item in pany andtominorityinterestispresentedintheincomestatement Impairment testingisillustrated laterintheaccountingpoliciesand Foreign currencytransactions ofthegroupentities aretranslated to The consolidatedfi Companies acquiredduringthefi Associated companiesareentities inwhichtheGrouphassignifi Sanoma usestheacquisitioncostmethodwhenaccountingforacqui- Intra-group transactions, receivables andliabilities,intra-group mar- Profi Joint venturescontrolledjointlybytheGroupwithoneorseveral uence. Signifi ects theeconomic substanceoftheunderlyingeventsandcircum- t fortheperiodattributableto equityholdersoftheParent Com- nancial statementsarepresented ineuro,whichistheParent nancial statementsfromthedateoftheiracquisition,or nancial statements. Other uncertainties relatedtomanage- nancial statements.Otheruncertainties nancial statements. cant infl nancial statementshave been preparedbyconsoli- nancial statementsinclude Sanoma Corporation uence isbasedonaholdingofover20%the nancial statementswereadjustedtoensure ts within theGroupareeliminatedin er fromtheseestimates. nancial statements.Priortoconsolida- nancial yearareincludedinthecon- cant infl cant t. Thebalancesheetvalue uence butnotcon- cant not have subsidiariesincountrieswithhyperinfl acquisitions priorto1January 2004arerecognisedineuro. on thebalancesheetdate.Goodwillandvalue adjustmentsrelatedto entity andaretranslated rate intoeurousingtheexchange prevailing on anacquisitionarepresentedasassetsandliabilitiesoftheacquired in retainedearnings,aspermittedbyIFRS1. of thecapitalgainorloss. translation diff under shareholders’equity.Whenaforeignentityissold,cumulative subsidiaries’ andassociatedcompanies’balancesheetsarerecognised ence undershareholders’equity. rateresulting exchange diff rate currencyrates intheincomestatementandbalancesheet ance sheetdate.Theprofi rateperiod andbalancesheetsusingtheexchange quoted onthebal- into eurousingtheaverage rates exchange quotedforthefi aries, associatedcompaniesandjointventures)have beentranslated cial incomeandexpenses. and liabilitiesdenominatedinforeigncurrenciesarerecognisedfi rate diff tions arerecognisedasadjustmentstosalesandpurchases.Exchange ratesheet date.Anyexchange diff for impairment. resulting fromacquisitions. company’s netassets.Goodwillrefl ofthe acquisitioncostoverthefairsents theexcess value oftheacquired and liabilitiesattheirfair value onthedateofacquisition.Goodwillrepre- method, wherebytheacquisitioncost isallocatedtotheacquiredassets Acquired subsidiaries areconsolidatedusingtheacquisitioncost goodwill andother intangible assets the Sanoma Group. credited totheincomestatementoverasset’susefullife. equipment arerecognisedasareductionoftheasset’sbookvalue and sate. Governmentgrants plantand relatedtothepurchaseofproperty, necessary tomatchthemwiththecoststheyareintendedcompen- nised intheincomestatementonasystematicbasisoverperiod Grants fromthegovernmentorothersimilarpublicentitiesarerecog- government grants systems. management controlandinternalreporting isbasedon ment inothereconomicenvironments.Segmentreporting graphical segmentwithinaneconomicenvironmentdiff business segments.Inasimilarmanner, therisksandreturnsofageo- inonebusinesssegmentarediff and services areas aresecondarysegments.Risksandreturnsrelatedtoproducts The businesssegmentsareSanoma’s primarysegments;geographical segment reporting During the reporting yearorprecedingfi During thereporting As of1January 2004,thegoodwillandfair value adjustmentsarising Translation diff rateExchange diff The incomestatementitemsofthenon-eurogroupentities(subsidi- Goodwill is not amortised accordingtoplan butitisannuallytested Goodwill isnotamortised The natureandextentofgovernmentgrants arenotmaterialwithin isdescribedinmoredetailNote2. Segment reporting erences resultingfromthetranslation ofinterest-bearing assets erences are recognised in the income statement as part erences arerecognisedintheincomestatementaspart erencesrecordedbefore1January 2004arerecognised erences resultingfromthetranslation offoreign t fortheperiodistranslated intoeurobysepa- erence isrecognisedasatranslation diff erences relatedtobusinessopera- ects e.g.expectedfuturesynergies nancial year, theGroupdid erent fromthoseofother ation. er fromaseg- nancial nan- er-

19 notes to the consolidated financial statements 20 notes to the consolidated financial statements as amortisation. as amortisation. TV programmes inintangibleassetsandtheirexpenditureisrecorded ment date. useful lifeonthebasisofbestknowledgeavailable ontheassess- ple, inlightofhistoricaldataandmarket position,anddeterminesthe Group assessestheexpectedusefullifeofintangibleright,forexam- some publishingrights.Withregardtotheacquisitionofnewassets, determined forintangiblerights,theusefullifecannotbe impairment testing.Althoughexpectedusefullivescanprincipallybe accordingtoplanbutaresubjectanannual mined, arenotamortised expected usefullife. overtheasset’s ble assetsareinitiallymeasuredatcostandamortised legal rights–andiftheirfair value canbereliablymeasured. Intangi- these assets–i.e.,theyareidentifi ognised separately fromgoodwilliftheassetsfulfi repairs andmaintenancecostsare expensed asincurred. efi it isprobablethattheGroupwillderive additionalfutureeconomicben- assets inthebalancesheet. Lease premises’renovation expensesaretreatedasothertangible • • • of PPEarebasedontheestimatedusefullivesandare: lated depreciationandanyimpairmentlosses.Theperiods plantandequipment(PPE)aremeasuredatcostlessaccumu- Property, property, plantandequipment stances. ment lossesrecognisedforgoodwillarenotreversedunderanycircum- amount theassethadbeforerecognisingimpairmentlosses.Impair- able amount.However, impairmentlossesarenotreversedbeyondthe arises fromachangeintheassumptionsusedtocalculaterecover- allocating ittotheGroup’scashgenerating units. by determiningthepresentvalue ofestimatedfuturecashfl fl of eithertheasset’snetsellingpriceorvalue inusebasedonfuturecash Intangible assetswithindefi goodwill hasbeenallocatedaretestedforimpairmentatleastonceayear. indication ofimpairment.Thosecashgenerating units(CGU)forwhich The carryingamountsofassetsarereviewedwheneverthereisany impairment testing Note 12. Goodwill andotherintangibleassetsaredescribedinmoredetail • • ows.Impairmenttestsareprincipallycarriedoutonacashfl

ts andthatthecarryingamountcanbereliablymeasured.Ordinary Amortisation periodsforintangibleassetswithfi Amortisation The Grouprecognisesthepurchaseofbroadcastingrightstofi Intangible assets,forwhichtheexpectedusefullivescannotbedeter- Intangible assetsacquiredinabusinesscombinationmustberec- Major renovations areonlyincludedintheassets’carryingamount if 3–10years Other tangibleassets 2–20years 10–50years Machinery andequipment Buildings andstructures Impairment testingisdescribedinmoredetailNote12. Previously recognisedimpairmentlossesofassetsarereversedifthis The testassessestheasset’srecoverable amount,whichisthehigher maeilrgt 2–40years 3–20years Other intangibleassets Immaterial rights nite useful lives are also tested annually. nite usefullivesarealsotestedannually. able, orbasedoncontractual orother nite usefullivesare: l thecriteriasetfor owbasis ows and ows lms and the productivevalue method. whosefairsmall properties value theGroupdeterminesinternallyusing Group’s ownjudgement.Investmentinsharesconsistsofanumber the when necessary,theviewsofrealestateagentsareusedtosupport pally basedonthevaluations ofexternalcertifi and areaplanning.Thefair values arenotprinci- ofinvestmentproperty the natureofre-rentabilityaswelldevelopmentenvironment period, otherconditionsofleasecontract, thelocationofpremisesand risk ofproductivevalue methodtakes intoaccounte.g.the termoflease in themarket, market andtheycorrespondtotheproperties’ value. The tive valuedealscarriedout methodoronthebasisofsimilarproperty fi divided intolandorbuildings. not inSanoma’s ownuse.Basedontheirnature,suchshareholdingsare andhousingcompanies ings, landandinvestmentinsharesofproperty separate includebuild- iteminthebalancesheet.Investmentproperties isinitiallymeasuredatcostandpresentedasa Investment property toearnrentalyieldsorforcapitalappreciation. holds theproperty areclassifi Properties investment property the productandmake thesale. normal courseofbusiness,lessestimated costsnecessarytocomplete Net realisablevalue ofthe istheestimatedsellingprice,receivedaspart duction costsandfi includes thepurchaseprice,direct productionwages, otherdirect pro- the average costmethod.Theoffi Inventories arestatedatthelowerofcostornetrealisablevalue, using inventories cial leaseliabilities. payments arerecognisedasinterestexpensesandrepaymentoffi payments. Theassetsaredepreciatedduringtheleasetermand based ontheestimatedpresentvalue oftheunderlyingminimumlease Finance leasesarerecordedatthecommencementofleaseperiod leases andcapitalisedasassetsliabilitiesfortheleaseperiod. has alltherewards andrisksofownership,areclassifi plantandequipment,wheretheGroupsubstantially Leases ofproperty, leases tion method. consolida- companiesareconsolidatedusingtheproportionate property aremeasuredatcost.Majormutual subject todepreciation.Properties depending onwhichhasmorerelevance. Investmentsinsharesarenot heldbySanoma foritsownuse,areclassifi part, andhousingcompaniesthatare,forthemost Investments inproperty and housingcompanies other investmentsinproperty sheet liabilitiesinthenotestofi total futureminimumleasepaymentsarepresentedasoff company isalessor. nancial statements.Fair values aredeterminedbyusingtheproduc- The fair valueispresentedinthenotesto ofinvestmentproperties The Grouphasnoleasesclassifi Operational leasesarechargedtootheroperating expensesandthe xed productionoverheads totheirsubstantialextent. iftheGroupmainly ed asinvestmentproperty ed asfi nancial statements. nishedgoodsandworkinprogress nance leasesinwhichaGroup ed realestateagentsbut, ed aslandorbuildings, ed asfi -balance- nance nan- prise bothnon-currentandcurrentliabilities. cost usingtheeff have anymaterialeff measured. Theseassetsarethuscarriedatcostandinvestmentsdonot investments, andthefair value oftheseinvestmentscannotbereliably shareholders’ equityandrecognisedintheincomestatement. investments aresold,anychangeinfair value isderecognisedfrom shareholders’ equityifthefair value canbereliablymeasured.When are measuredatfair value andanychangeinfair value isrecognisedin number ofassetsnotrelatedtobusinessoperations. Theseinvestments by theGroupareclassifi months fromthebalancesheetdate.Allnon-currentinvestmentsheld assets unlesstheintentionistoholdinvestmentforlessthan12 sifi are eitherdeterminedtobeavailable-for-sale orforwhich otherclas- amounts dueaccordingtotheoriginaltermsofreceivables. there isjustifi realisable value. Animpairmentoftrade receivables is recordedwhen non-current fi cost.Receivablesare measuredatamortised arepresentedascurrentor of payments.Theseassetsareunlistedandnotheldfortrading. Assets on thetax rate eff taxes andchangesindeferredtaxes. Taxable profi taxable profi The incometax chargepresentedintheincomestatementis based on income taxes liabilitiesinthebalancesheet. under short-term its withamaturityoflessthanthreemonths.Bankoverdrafts areshown Cash andcashequivalents depos- includebankaccountsandshort-term cash andequivalents cial riskmanagementprinciplescanbefoundinNote26. requirements ofIAS 39.AmoredetaileddescriptionoftheGroup’sfi shown inothercurrentreceivables andliabilitiesinthebalance sheet. nised asfi ured attheirfair value. Changesinthefair value ofderivatives arerecog- Group didnothave anyderivatives inuse. rates andinterestrates. Duringthefi interest rate swaps, inorder tohedgeagainstfl Sanoma canusederivative instruments,suchasforward contracts and derivatives andhedgeaccounting assets andfi Group holdsloansandotherreceivables, available-for-sale fi Financial instrumentsareclassifi financial instruments Changes inthetax rate arerecordedaschanges indeferredtax inthe carrying amounts, usingtax rates enactedon thebalancesheetdate. ences arisingbetween thetax basesofassets andliabilitiestheir cation isnotapplicable.Theseassetsareincludedinnon-current financial liabilities are borrowings that are stated at amortised financial liabilitiesareborrowingsthatstatedatamortised Available-for-sale fi available-for-sale financialassetsarenon-derivative assetsthat loans andother receivables areassetswithafi Deferred tax assetsandliabilitiesarerecordedontemporary diff The Sanoma Groupdoesnotapplyhedgeaccountingaccordingtothe Derivatives areinitiallyrecognised atcostandsubsequentlymeas- nancial itemsinthe incomestatement.Derivative contracts are t forthefi nancial liabilities at amortised cost. nancial liabilitiesatamortised nancial assets.Trade receivables arecarriedattheexpected ed evidencethattheGroupwillnotbeabletocollectall ective ineachcountry. ective interestrate method.Financialliabilitiescom- ect ontheconsolidatedbalancesheet. nancial period,adjustmentsforpreviousperiods’ nancial assetsdonotcontainpubliclytraded ed asavailable-for-sale andmainlyconsistofa ed inaccordancewithIAS 39.The nancialyears2008and2007, the uctuations in exchange uctuations inexchange t fortheperiodisbased xed ordefi nite series nancial nan- er- number ofstockoptions. actual expenseattheendofvestingperiod. of outstandingstockoptionsistaken intoaccountwhenrecordingthe period. Theestimateisadjustedwhennecessaryandthefi number ofstockoptionsoutstandingattheendrespectivevesting option fair values. Thefair values arebasedontheestimatedtotal Sanoma usestheBlack–Scholesoption-pricingmodeltomeasurestock to personnelexpensesbydivisionovertheinstrument’svestingperiod. November 2002andnotvestedpriorto1January 2005. to alloptionsschemes,inwhichthehave beengranted after7 The Sanoma GrouphasappliedIFRS2Sharebasedpaymentsstandard stock options able estimateoftheamountthisobligationcanbemade. outfl structive obligationasaresultofpasteventsanditisprobablethatan Provisions arerecognisedwhentheGrouphasapresentlegalorcon- provisions are classifi accordance with local requirementsandlegislation. Pension schemes The Group’spension schemesindiff pensions forcommercialorprofi service incurred beforethecompanybegins tomake useofthenewproduct/ aswellextendingitsbusiness.R&Dexpenses aremainly or services, sale, orfundamentallyimprovingthefeaturesofitsexistingproducts for pany incurswiththeaimofdevelopingnewproductsorservices R&D expensesareexpensedasincurred. research anddevelopmentexpenses sales andonlyitscommissionisrecognisedinnetsales. sales includecommissions.Pressdistributionistreatedascommission raterelated exchange diff derive fromsalesnetofdiscountsgranted, indirecttaxes andsales- hasbeenrendered.Net sales arerecognisedoncetheservice services ognised asrevenueatthetimeoftheirdeliverytocustomers.Sales of Sales ofgoodssubjecttosubscription(magazines/newspapers)arerec- and thesellernolongerhaspossessionof,controlover, thegoods. rewards relatedtogoodsownershiphave beentransferred tothebuyer Revenue fromthesaleofgoodsisrecognisedwhenrisksand revenue recognition businesses. losses carriedforward andthefair valuation ofassetswhenacquiring depreciation diff foreseeable future.Themostsignifi recognised inthatrespectassuchdistributionisnotprobablewithinthe tax liabilityonundistributedretainedearningsofsubsidiarieshasbeen which thedeductibletemporary diff it appearsprobablethatfuturetaxable profi income statement.Deferredtax assetsarerecognisedtotheextentthat Note 20providesamoredetaileddescriptionofthetreatmentand Stock optionsaremeasuredatfair value onthegrant dateandcharged R&D expenditurereferstocostschargedexpensesthatthecom- ow ofresourceswillberequiredtosettletheobligation,andareli- ed into twocategories:defi erences, defi erences. Net salesgenerated bycommission ned benefi table purposes. cant temporary diff erence canbeutilised.Nodeferred erent countries arearranged in t pensionplans,subsidiaries’tax ned contributionplansand t willbeavailable against erences relateto nal number

21 notes to the consolidated financial statements 22 notes to the consolidated financial statements • • • aged bythepensionfundsareclassifi as wellforsupplementarypensionschemes.Alloftheschemesman- Groupcompanies, responsible forthestatutorypensioncovercertain Employees’ Pensions Act), theGroupalsohaspensionfundsinFinland requirements beforetheeff tions, buttheyarenotyeteff IASB andIFRIChave issuedthefollowingstandardsandinterpreta- new standards andamendmentsunderifrs defi Group’s foreignunitsemploybothdefi no obligation to pay further contributions. no obligationtopayfurther incurred, andoncetheyarepaidtoinsurance companiestheGrouphas sion fundsandinsurance companies. tion schemes,andtherelatedpensioncoverismanagedbybothpen- the defi 10% ofthegreaterpresentvalue ofthepensionobligationswithin the remainingaverage period ofemploymenttotheextenttheyexceed plan basedonthecalculationsofauthorisedactuaries. as expensesfortheremainingworkinglivesofemployeeswithin bonds. Pension expensesunderthedefi est rates thatarebasedonhigh-qualitycorporate bondsorgovernment of thedefi cost.Thepresentvaluegains orlossesaswellpotentialpastservice less thefair value oftheplanassetsandnetunrecognised actuarial pension assetsrepresentthepresentvalue offuturepensionpayments credit method.Withinthedefi plans isdeterminedseparately foreachschemeusingtheprojectedunit ance sheetasper1January 2004. lated actuarialgainsorlossesarerecognisedintheIFRStransition bal- has appliedtheexemptionpermittedbyIFRS1,wherebyallaccumu-

adopted inthe EU. Theamendmentofthestandardhasnotyetbeen controlling parties. theamountofinvestedcapitalbynon- when thelossesexceed of thelossforperiodcanalsobeallocated tonon-controllinginterest with theparentcompany.Theamendmentalsospecifi non-controlling interesttoberecordedinequityifthecontrolremains The amendedstandardrequirestheeff ments (eff IAS 27(Amended2008)ConsolidatedandSeparate FinancialState- fi of thisrevisedstandardhasnomaterialimpactontheconsolidated ofthecostthatasset.TheGroup estimatesthatapplication part to theacquisition,constructionorproductionofaqualifyingassetas requires anentitytocapitaliseborrowingcostsdirectlyattributable ods beginningonorafter1January 2009).Theamendedstandard IAS 23 (Revised 2007)BorrowingCosts(eff equity. presentation oftheincomestatementandchangesinconsolidated mates thatapplicationofthisrevisedstandardwillmainlyimpactthe annual periodsbeginningonorafter1January 2009).TheGroupesti- IAS 1(Revised 2007)PresentationofFinancialStatements (eff The presentvalue oftheSanoma Group’sobligationofdefi Contributions underdefi Actuarial gainsorlossesarerecognisedintheincomestatementfor ned benefi nancial statements. ned benefi ned benefi ective forannualperiodsbeginningonorafter1July 2009). t plans.InadditiontoTELinsurance policies(basedonthe t plan,andthefair value oftheplanassets.TheGroup t obligationisdeterminedbyusingdiscountinter- ective date. ned contributionplansareexpensedas ective andtheGrouphasnotappliedthese ned benefi ned ned benefi ed asdefi ned benefi t plan,pensionobligationsor ects ofalltransactions witha ective forannualperi- t anddefi ned benefi ned t planarerecognised es thatashare ned contribu- t plans.The ned benefi ective for t • • • • • • • • • • •

adopted theseamendments. rial infl ards. TheGroupestimatesthatthese amendmentsdonothave mate- comprises several minorchangesandtechnicalrevisionstostand- periods beginningonorafter1January 2009).Thisannual procedure Improvements toIFRS(mostofthechangesareeff cial statements.TheEUhasnotyet adoptedthisinterpretation. ble forfi beginning onorafter1January 2009).Theamendmentsareapplica- ary, JointlycontrolledEntityorAssociate (eff Separate FinancialStatements –CostofanInvestmentinasubsidi- standards IAScial reporting 27(Amended2008)Consolidatedand IFRS 1(Amended2008)First-timeadoptionofInternationalFinan- in theEU. ments. Theamendmentofthestandardhasnotyetbeenadopted estimates thatithasnoimpactontheconsolidatedfi 2009). TheamendmentrelatestohedgeaccountingandtheGroup Measurement (eff IAS 39(Amended2008)FinancialInstruments:Recognition and been adoptedintheEU. fi mates thatthenewamendmenthasnoimpactonconsolidated annual periodsbeginningonorafter1January 2009).TheGroupesti- 1 (Amended2008)PresentationofFinancialInstruments(eff IAS 32(Amended2008)FinancialInstruments:PresentationandIAS mates thisinterpretationtohave noeff annual periodsbeginningonorafter1July2009).TheGroupesti- IFRIC 17Distributions ofNon-cashAssets toOwners (eff fi estimates thisinterpretationtohave noeff for annualperiodsbeginningonorafter1January 2009).TheGroup IFRIC 16Hedges ofaNet InvestmentinaForeign Operation (eff this interpretation. the Group’sfuturefi The Groupestimatesthisinterpretationtohave nomaterialeff (eff IFRIC 15Agreements fortheConstructionofReal EstateOperation statements. amendment hasnomaterialimpactontheconsolidatedfi beginning onorafter1July2008).TheGroupestimatesthatthenew IFRIC 13CustomerLoyalty Programmes (eff segment. current primaryreporting to accountsandtherewillbenostructural changescomparedtothe that theadoptionofstandardwillmainlyhave animpactonnotes periods beginningonorafter1January 2009).TheGroupestimates IFRS 8(Revised 2008)Operational segments(eff not yetadoptedthisamendment. purchase priceispaidoradditionalsharesareacquired.TheEUhas loss inthoseperiodswhichnewbusinessisacquired,thedeferred nesses. Thestandardisestimatedtohave animpactonprofi amount ofgoodwillfromacquisitionsandresultsondisposingbusi- that theadoptionofrevisedstandardwillhave animpactonthe periods beginningonorafter1July2009).TheGroupestimates IFRS 3(Revised 2008)Businesscombinations(eff accounts in2009. studying thepossibleimplicationsofthisamendmentonGroup’s periods beginningonorafter1January 2009).TheGroupiscurrently IFRS 2(Amended2008)Sharebasedpayments(eff amendment. on theGroup’sfi nancial statements.Theamendmentofthe standardhasnotyet nancial statements.TheEUhasnotyetadoptedthisinterpretation. ective forannualperiodsbeginningonorafter1January 2009). uence ontheGroup’sfi rst-timeadoptersandthereforetheydonothave anyeff nancial statements.TheEUhasnotyetadoptedthis ective forannualperiodsbeginningonorafter1July nancialstatements.TheEUhasnotyetadopted nancial statements.TheEUhas not yet ectontheGroup’sfuturefi ect ontheGroup’sfuture ective forannualperiods ective forannualperiods etv fr annual for ective ective forannual ective forannual ective forannual nancial state- nancial etv for ective ective for nancial ect on ective t and t nan- ect which willbestronglydeveloped. thefastestisseeninlanguageservices, business services, growth Finland’s leadingbookpublisher. InSanoma Learning &Literature’s Netherlands, Finland,Hungary,BelgiumandPoland. TheDivisionisalso thelearningofchildrenandyoungpeople inthe materials tosupport publisher thatoff Sanoma Learning &Literature isasignifi Sanoma Learning&Literature Division’s latestbusinessareaisonlinecasualgaming. operations, andWelho, Finland’slargestcabletelevisionoperator. The business unitsincludeNelonen Media,primarilyfocusedonbroadcast television, radio, onlineandmobiledevices.Sanoma Entertainment’s off Sanoma Entertainment Sanoma Entertainment mary aswellprintingservices. ers withbusinessinformation,photoagency,newsanalysisandsum- among others.Inaddition,Sanoma News providesitscorporate custom- ness, whichincludesFinland’sleadingclassifi newspapers andfreesheets.Sanoma News alsoinvestsindigitalbusi- in theNordicregion,Divisionpublishesnationalandregionaldaily lives oftheirreaders.InadditiontoHelsingin Sanomat, thelargestdaily products inbothprintanddigitalformathave astrongpresenceinthe Sanoma News istheleadingnewspaperpublisherinFinland,andits Sanoma News gary andBulgaria. is aleadingonlineplayerandcontentproviderintheNetherlands, Hun- expanding itsbusinesstodigitalmediaplatforms.Sanoma Magazines ofmagazinebrands,ing itsstrongportfolio Sanoma Magazinesisrapidly includes licensed,well-knowninternationaltitles.Inadditiontopublish- also magazines compriseconceptsandtitlesofitsown,buttheportfolio lishers, operating in13countries.ThemajorityoftheDivision’s344 Sanoma MagazinesisoneofEurope’s largestconsumer magazinepub- Sanoma Magazines a retailbusinessmodel. is mainlyb-2-bbusiness.Sanoma Trade, ontheotherhand,operates on TV andbroadbandbusiness.Sanoma Learning &Literature’s business Sanoma News for fornewspaperproductsandSanoma Entertainment segments: Sanoma Magazinesisresponsibleformagazineproducts, andcirculationsales,isdividedintothree ness, basedonadvertising is basedonbusinessmodelandproductdiff Sanoma Learning &Literature andSanoma Trade. Thesegmentation divisions: Sanoma Magazines,Sanoma News, Sanoma Entertainment, The primarysegmentsoftheSanoma GroupcomprisetheGroup’sfi business segments 2. Segmentinformation ers abroadrange of both printanddigitaleducational experienceson ers consumersentertaining cant European educational erences. Themediabusi- ed advertising service, service, advertising ed ve not allocatedtosegments. includes Sanoma Corporation andrealestatecompaniesas wellastaxes In additiontotheGroupeliminations column,unallocated/eliminations Unallocated/eliminations itiuinoeain ev ulsesadrties distribution operations publishersandretailers. serve present atkiosks,bookstoresormovietheatres.Sanoma Trade’s press on over200millionannualsalescontactsinwhichtheconsumeris customer’s needsandstrongconcepts.Sanoma Trade’s successisbuilt The Division’sbusinessisbasedonathoroughunderstandingofthe Sanoma Trade isaretailspecialistwithoperations insevencountries. Sanoma Trade EUR million operating profit 2008 EUR million salesnet 2008 sanoma trade sanoma trade & literature sanoma learning & literature sanoma learning 866.6 45.1 45.6 390.o 1 246.8 85.7 157.1 17.3 sanoma magazines sanoma magazines 474.7 57.3 sanoma entertainment sanoma entertainment sanoma news sanoma news

23 notes to the consolidated financial statements 24 notes to the consolidated financial statements the locationoftargetentity. not allocatedtogeographical segments.Goodwillisallocatedaccordingto investments bythelocationofassets.Investmentsinsubsidiariesare tries. Segmentincomeisstatedbycustomerlocation,andassets segments andcompriseFinland,otherEUcountriesnon-EUcoun- The Sanoma Group’sgeographical assecondary segmentsarereported geographical segments (full-time equivalents) Average numberofemployees Cash fl Liabilities Total assets Interest inassociatedcompanies Goodwill Capital expenditure companies Share inresultofassociated Operating profi impairment losses Depreciation and Internal netsales External netsales Divisions 2008,EURmillion Capital expenditure companies Share inresultofassociated Operating profi losses Depreciation andimpairment Internal netsales External netsales Divisions 2007,EURmillion (full-time equivalents) Average numberofemployees Cash fl Liabilities Total assets Interest inassociatedcompanies Goodwill ow fromoperations ow fromoperations t t Magazines Magazines Sanoma Sanoma 8. 5. 5. 3. 5. 4923278.7 1491.6 -409.2 13.8 556.1 75.8 639.9 3030.1 272.0 156.8 0.0 24.6 453.1 790.9 73.7 1 882.0 372.8 1 031.6 155.5 467.2 1 243.8 3. 7. 4. 0. 7. 072926.3 -0.7 771.3 304.5 142.5 473.4 1 235.4 0. 4. 5. 6. 5. 4823192.3 1432.8 -438.2 13.9 556.3 70.8 566.5 204.2 157.2 24.1 443.8 65.1 1 906.6 1 054.6 0. 441. 644. 4. 250.3 -45.4 2041.6 134.5 42.4 400.7 46.4 231.9 312.9 1.2 19.7 104.1 84.4 32.5 240.7 102.9 13.4 848.7 42.9 30.3 111.7 3 9 8 3 3 418168 94 6633 2737 482 2491 5 731 7. 9. 652763346. 1828.1 63.1 343.8 373.4 -0.7 237.6 86.5 55.6 194.9 44.5 872.6 15.8 67.6 160.9 6 1 5 4 3 616701 86 6234 2345 457 2411 5 169 171500076069.9 109.9 0.5 6.0 236.3 -14.6 33.8 0.7 45.1 15.6 0.0 45.6 13.5 1.5 17.3 19.6 61.7 57.3 26.8 85.7 669. 082. 65-16227.9 75.2 -51.6 90.5 -1.1 46.5 1.3 5.7 22.8 149.7 28.4 0.3 0.9 20.8 7.7 0.9 92.8 33.4 14.8 2.2 96.6 10.4 17.7 67.0 39.5 20.6 31.3 34.2 . . . . . 014.9 -0.1 0.4 -105.2 0.0 75.8 0.0 17.2 0.2 1.6 4.5 7.5 3.1 . . . 807. -109.6 78.0 18.0 3.5 7.4 2.7 . . . . . 0112.4 -0.1 3.5 0.1 0.1 0.4 8.4 Sanoma Sanoma News News Entertainment Entertainment Sanoma Sanoma Sanoma Sanoma iln non-eu finland 9 6 5% 46% 49% Learning & Learning & Literature Literature Sanoma Sanoma eucountries Sanoma Sanoma other Trade Trade Unallocated/ Unallocated/ lmntosConsolidated eliminations lmntosConsolidated eliminations countries bined impactontheGroupassets andliabilitieswas minor. Thecom- under onepercentoftheGroup’s total balancesheet,andtheircom- in March.Theacquisitioncostofeach individualacquisitionremained million, was theacquisitionofPolish educationalpublisherNowa Era EUR 67.5 million).Thelargestsingle transaction, amountingtoEUR62.5 In 2008,Sanoma Group’sacquisitionstotalledEUR190.7 million(2007: acquisitions in2008 3. Acquisitions anddisposals Cash fl Cash andcashequivalents ofoperations acquired and advance payments Change inacquisitionliabilities Acquisition cost New goodwillfromacquisitions rateExchange diff Minority interest Liabilities, total Assets, total acquired at31Dec,EURmillion Specifi Capital expenditure Total assets Net sales EUR million Geographical segments2007, Capital expenditure Total assets Net sales EUR million Geographical segments2008, Current liabilities Non-current liabilities Other currentassets Inventories Other non-currentassets Intangible assets Tangible assets cation ofassetsandliabilities ow fromoperationsacquired erences andotherchanges iln OtherEUcountries Finland iln OtherEUcountries Finland 1. 9. 4. 8403192.3 2926.3 -864.0 0.0 146.3 152.2 2295.8 1343.8 1 614.1 1 430.4 8. 9. 3. 9003278.7 3030.1 -940.0 0.0 133.6 163.0 2398.6 1407.7 1 686.5 1 459.5 892. . . 90.5 0.0 3.2 28.4 58.9 083. . . 109.9 0.0 3.3 35.8 70.8 157.0 4. 42.0 143.4 44.6 108.5 9. 67.5 190.7 1. 1.1 -12.9 -20.6 -13.8 -54.2 -6.9 -20.6 -33.6 1. -8.0 -11.3 -10.4 -22.4 2008 8020.7 28.0 22.4 72.2 26-2.0 -2.6 . 0.4 6.0 2.3 4.1 1.2 6.9 2007 49.1 pany’s website B.V., apublisher ofmotormagazinesintheBeneluxcountries.Thecom- immaterial rights. tion, animpairmentlossofEUR13.3 million,was recognisedon Netinfo’s At theend oftheyear, afterasignifi December 2008,thenetsalesofNetinfo amountedtoEUR1.6million. of theacquisitioncostwas allocatedtotheseimmaterialrights.InJuly– in theacquisition,consistoffourseparate onlinesites.EUR13.3million balance sheetasgoodwill.Theimmaterialrightsthatwereindentifi acquired byEUR14.9million,andthisamountwas recordedintheGroup thefairsition cost,EUR28.6million,exceeded value ofthenetassets ing toa100%ownershipshareasof1July2008.Thecompany’sacqui- by theyear2011.Netinfo hasbeenconsolidatedwiththeGroupaccord- Magazines Internationalhasagreedtopurchasethe18%minorityshare Info.BG AD,Bulgaria’sleadinginternetcompany.Furthermore, Sanoma Mood forMagazinesamountedtoEUR16.5million. the Groupresultasanassociatedcompany.In2008,netsalesof increase intheownership,MoodforMagazineswas consolidatedinto the companyrecordedagoodwillofEUR16.7million.Before53% in January. InconnectionwiththeacquisitionofMoodforMagazines, its shareintheDutchmagazinepublisherMoodforMagazinesby53% tional andcommercialsynergies. acquisitions amountedtoEUR48.8million.Goodwillconsistsoffunc- sion amountedtoEUR94.0million,andthegoodwillrecordedon mentioned above. sales oronoperating profi the Group’sfi 13.1 millionin2008.Iftheacquiredentitieshadbeenconsolidatedwith sition dateamountedtoEUR101.9millionandonoperating profi bined eff In August, Sanoma Uitgevers acquired100%ofEuropean Auto Trader In July,Sanoma MagazinesInternationalacquiredan82%shareinNet oftheSanomaSanoma Magazinesdivision,increased Uitgevers,part The acquisitioncostsofnewbusinessesinSanoma Magazinesdivi- Non-EU countries Non-EU countries ect oftheacquisitionsonGroup’snetsalessinceacqui- gures fromthebeginningofyear, theimpactonnet Autotrader.nl t wouldnothave beenmateriallyhigherthan isoneofthelargestsitesforsecond-hand cant worseningofthemarket situa- lmntosConsolidated Eliminations lmntosConsolidated Eliminations t EUR t ed

25 notes to the consolidated financial statements 26 notes to the consolidated financial statements know how ofthepersonnelrelatedtoacquisitionNowa Era. will consistsmainlyoftheknowledgePolish educationalmarket and acquisition costs,theremaininggoodwillwas EUR78.3million.Good- acquisition costsofatotalEUR75.1million.After theallocationof holding inNetwheels Oyfrom20.1%to55.8%. amounted toEUR1.8million.Inaddition,Sanoma News increasedits ownership share.InJune–December2008,thenetsalesofSuorakanava Suorakanava hasbeenconsolidatedwiththeGroupaccordingtoa100% assets andliabilitiesisshownintheaccompanyingtable. specifi in March–DecemberitsnetsaleswereEUR44.5million.Amoredetailed recorded atEUR62.5million.Nowa Era employssome400people,and of thePolish educationalpublisherNowa Era. Theacquisitioncostwas and remodelers.Thecompany’sbestknownwebsiteis forhomebuilders Oy, theleadingFinnishproviderofonlineservices synergies withexistingonlineservices. lion. GoodwillfromSuorakanava’s acquisitionconsistsoftheexpected lion, andacorrespondingincreaseingoodwillamountedtoEUR8.6mil- nies weremergedwithAdria Media. parenting magazinepublisherMamaMediad.o.o.Thelattertwocompa- publisher Damjana Vjencanjad.o.o.,andinSerbiabyacquiringthe in Croatiabytakingover100%ofthesharesweddingmagazine share intheDutchgamingsiteInsidegamerB.V. TheDivisionexpanded sites, division included,e.g.,thepurchaseoftwohomeanddecoration web- cost correspondingtoanownershipshareof100%was recorded. ownership percentageasof1June2008.SomeEUR4millionacquisition consolidated withtheGroupfi a Russian magazinepublisher, whosefi sales ofthecompanyamountedtoEUR4.2million. in connectionwiththetransaction. InAugust–December 2008,thenet was EUR24.6million,andagoodwillof10.0millionwas recorded cars intheNetherlands. TheacquisitioncostofEuropean Auto Trader In earlyMarch,Sanoma Learning &Literature fi The Sanoma Learning &Literature divisionrecordednewbusiness In June,Sanoma News acquiredamajorityholdinginSuorakanava The acquisitionsoftheSanoma News divisiontotalledEUR14.4mil- Other acquisitionsofloweracquisitioncostbytheSanoma Magazines In June,Sanoma MagazinesInternationalacquiredOOOLux Media, cation oftheimpactNowa Era’s consolidationontheGroup’s Leadz.nl and Woonwebsite.nl nancial statementaccordingtoa100% , aswellpurchaseofaminority nancial statementshave been nalised itsacquisition Rakentaja.fi

. would nothave beenmateriallyhigherthanmentioned above. the beginningofyear, theimpact onnetsalesoroperating profi acquired entitieshadbeenconsolidated withtheGroup’sfi relatedtotheacquisitions. Ifthe lion, whichincludestheamortisation sales amountedtoEUR28.3millionandonoperating profi eff under onepercentoftheGroup’stotalbalancesheet.Thecombined was minor. Theacquisitioncostofeachindividual acquisitionremained impact ofeachindividualacquisitionontheGroupassetsandliabilities during theyearweresmallconsideringsizeofGroup,and In 2007, Sanoma’s acquisitionstotalledEUR67.5 million.Theacquisitions acquisitions in2007 Latvia. utor UAB ImpressTeva andinthemovie theatre SIAForum Cinemasin Trade. Minoritybuyoutswere carriedoutintheLithuanianpressdistrib- company KPRoznitsa intheRostov regioninSouthernRussia bySanoma garian educationalpublisherNemzeti Tankönyvkiadó Rt(NTK). & Literature purchasedtheremaining25%minorityshareinHun- an average totalofabout60 employees.At yearend,Sanoma Learning combined netsalesofthecompanieswereEUR4.1million,andtheyhad Localisation UKLtd.InAugust–December ABandInterverbum 2008,the sation andlanguagetraining AB,Interverbum companyInterverbum ices businessthroughtheacquisitionofSwedish translation, locali- In August, Sanoma Learning &Literature expandeditslanguageserv- ect of theacquisitionssinceacquisitiondateonGroup’snet Other 2008 acquisitions of lower acquisition cost included the kiosk Other 2008acquisitionsofloweracquisitioncostincludedthekiosk Goodwill Acquisition cost Net assets Liabilities, total Assets, total assets, NowaEra,EURmillion Specifi Cash fl of acquiredunit Cash andcashequivalents Costs attributabletotheacquisition Purchase pricepaidincash Current liabilities Other non-currentliabilities Deferred tax liabilities Other currentassets Inventories Other non-currentassets Intangible assets Tangible assets cation ofacquirednet ow fromtheacquisition Fair value 2. -28.9 -21.9 -26.3 -21.9 53.5 54.6 62.5 20.3 13.0 34.2 0.5 13.0 12.3 61.4 66-6.6 -6.6 . -8.6 7.8 . -0.5 3.8 2.1 1.0 2.1 5.3 1.0 2.7 8.2 0.4 acquired unit t EUR0.3mil- amounts in amounts in gures from gures Carrying Carrying t Rosetta HoldingB.V. inMay.Rosetta manages within thesalesandmarketing operations oflanguageservices. capabilities ofawell-trained workforceaswellconsiderable synergies assets recordedattheacquisitionweregoodwill.Goodwillrepresents Sanoma Learning &Literature aftertheacquisition.Themostsignifi to EUR9.3million,ofwhich8.5millionwas consolidatedwith the nameofAAC NoodiOy.The company’snetsalesin2007amounted businesses inFinlandtotheacquiredcompany,whichoperates under acquisition, AAC Globaltransferred alltranslation andlocalisation-related localisation, documentationandcorporate communications.After the companyprovidingtranslations,ish technicalcommunicationsservice sion, acquired100%ofTranslation NoodiOy.isaFinn- Services press distributioninFinland. of the estimatedsynergiesinlogisticsandmerchandisingservices gible assets,goodwillanddeferredtax liabilities.Goodwillisbasedon and liabilitiesrecordedattheacquisitionwerecontract-based intan- Printcenter groupemployed213people.Themostsignifi with Sanoma Trade aftertheacquisition.At thetimeofacquisition, EUR 12.6millionin2007, ofwhichEUR11.2millionwas consolidated andproducts.ThenetsalesofPrintcentergrouptotalled ing services 100% ofPrintcenterOy,whichspecialisesinpoint-of-salemarket- master a.s. (the Czech Republic) and Älypää Oy (Finland), among others. master a.s.(theCzech Republic) andÄlypää Oy(Finland),amongothers. sitions ofBelegger.nl B.V. (theNetherlands), JokFoe N.V. (Belgium),Website- (acquiredin2006)andsmalleracqui- minority ofLáng KiadóésHoldingZrt other backoff as wellestimatedsynergiesinmarketing, callcentreoperations and goodwill. Goodwillisrelatedtoexpanding theoperations tonewmarkets acquisition weretechnology-basedintangibleassets,trademark and News aftertheacquisition.Themostsignifi million in2007, ofwhichEUR0.0millionwas consolidatedtoSanoma pany employs14people.Net salesofthecompanyamountedtoEUR2.0 is theleadingmarket placeforusedandnewcarsinEstonia.Thecom- increased itsholdinginEstonianAuto24 to 85%inDecember. infrastructure TVoperations. ofSanoma Entertainment’s sales,crosspromotionand chase ofbroadcastingrights,advertising tax liabilities.Goodwillrepresentsestimatedsynergieswithinthepur- customer-based intangibleassets,trademarks, goodwillanddeferred most signifi inAugust−December.consolidated withSanoma Entertainment The panies totalledEUR8.0millionin2007, ofwhichEUR4.4millionwas Thecombinedsalesoftheacquiredcom- channels focusingonsports. names ofUrheilukanava andUrheilu+kanava. Thechannelsarenational Suomen Urheilutelevisiopractises commercialTVbusinessunderthe alreadyowned17.55%.lutelevisio Oy,ofwhichSanoma Entertainment FinlandOyowns49.9%ofthesharesSuomenOy. SportUp Urhei- marketing ofilsemedia’sonline operations. liabilities. Goodwillrepresentsestimatedsynergieswithinthesalesand on theacquisitionwereintangibleassets,goodwillanddeferredtax after theacquisition.Themostsignifi lion, ofwhichEUR2.4millionwas consolidatedtoSanoma Magazines WorkMATES.nl SchoolBANK.nl from meeting placeforformerschoolmatesintheNetherlands. Apart Ilse media, part oftheSanoma Magazinesdivision,acquired100%of Ilse media,part In March,AACoftheSanoma Learning Global,part &Literature divi- In February, Sanoma Trade’s pressdistributionbusinessacquired The Ilta-Sanomat business unit, part oftheSanomaThe Ilta-Sanomat News businessunit,part division, In August, Finland acquired100%ofSportUp Sanoma Entertainment Other acquisitions in 2007 comprised the purchase of the remaining Other acquisitionsin2007comprised thepurchaseofremaining cant assetsandliabilitiesrecordedontheacquisitionwere ice functions,among others. . Thecompany’snetsalesin2007totalledEUR4.2mil- , Rosetta managesthewebsites cant assetsandliabilitiesrecorded cant assetsrecordedonthe SchoolBANK.nl DienstMAKKERS.nl cn assets cant , apopular Auto24.ee cant cant and

below. The combinedeff inHamburg.zle magazinesandmulti-purposearenaproperties action. back Komunikáción andrecordedagainofEUR7.0 milliononthistrans- sold its65%holdingintheHungarianonlineauctionsiteSanoma Pay- 23.5 milliononthesale.InDecemberSanoma MagazinesInternational distributor R.C.V. B.V. Entertainment TheGrouprecognisedagainofEUR In January 2008,Sanoma MagazinessoldallthesharesinDutch disposals assets. assets. Inadditiontothose,capital gains includedordinarysalesoffi The mostsignifi 4. Otheroperating income The mostsignifi and liabilities,EURmillion Specifi Total Other Other rentalincome Rental incomefrominvestmentproperty Capital gains Other operatingincome,EURmillion Cash fl Cash andcashequivalents ofdisposals payments Change inreceivables fromsalesandadvance Sales price Net resultfromsalesofoperations translation diff Minority interestandaccumulated Liabilities, total Assets, total Other currentassets Inventories Non-current assets Current liabilities Non-current liabilities cation ofdisposedassets ow fromdisposals cant capitalgainswererelated to thesaleofnon-core ect ofthedisposalsonbalancesheetispresented erences cant operations divestedin2007wereDutchpuz- 2. -11.6 -6.8 -24.2 -24.1 2008 2008 97.1 46.6 13.6 36.2 46.0 47.2 0769.2 30.7 0322.0 30.3 86.0 40.6 12-12.4 -1.2 -4.9 -0.1 0.6 . 16.1 0.8 9.7 0.1 . -0.4 0.0 0.1 0.5 2007 2007 95.2 38.5 12.9 43.2 83.7 96.5 0.6 xed

27 notes to the consolidated financial statements 28 notes to the consolidated financial statements reconciliation ofdefinedbenefitplans accounting policies(Note1). insurance companies.Pension schemesaredescribedinmoredetail voluntary pensioncoverhasbeenarranged through pensionfundsor through FinnishTELsystemandpensionfunds.Inaddition,some and legislation.InFinlandthestatutorypensioncoverishandledboth Pension schemesarearranged inaccordancewithlocalrequirements The Sanoma Grouphasvarious schemesforpersonnel’s pensioncover. employee benefits sented inNote31.Share-basedpaymentsaredescribed20. Wages, salariesandothercompensationsforkey managementarepre- 5. Personnel expenses signifi sion costsarepresentedinthefollowingtables.Inaddition,most Group hasnootherdefi prepared byexternalactuaries.Inadditiontopensionplans,theSanoma calculations fortheGroup’sdefi Defi The reconciliationofnetpensionobligationsandbreak-downpen- Total Other socialexpenses Pension costs,defi Pension costs,defi Expense recognitionofgranted options Wages, salariesandfees Personnel expenses,EURmillion Net obligationtotal Pension assets Pension obligations in thebalancesheet,EURmillion Pension obligationsandpensionassets Total cost Unrecognised pastservice Unrecognised actuarialgains(+)andlosses(-) Defi Fair value ofplanassets Present value offundedobligations the balancesheet,EURmillion Net defi cant actuarialassumptionsarepresented. ned benefi cit(+)/surplus(-) intheplan ned benefi t plansexistbothinandoutsideFinland.Theactuarial ned benefi ned contributionplans t pensionobligationsin ned benefi t plans ned benefi ned t plans. t pension planshave been -358.0 397.7 702.8 570.6 -24.8 2008 2008 2008 12.6 25.3 37.9 12.6 39.7 65.3 54.5 -2.4 7.4 5.0 -385.5 373.0 646.5 527.5 -12.5 2007 2007 2007 41.5 26.6 18.6 45.2 26.6 60.6 47.4 -2.4 5.5 5.5 The Sanoma Group’sestimatedcontributionstothedefi expected tobeavailable inthefi it candiff can have impactsonthelevel ofcontributionsfor2009,andtherefore pension fund,thecoverage ofanydefi plans for2009areaboutEUR21million.WithregardtoSanoma’s Dutch Total Eff Past cost service Actuarial gains(-)andlosses(+) Expected returnonplanassets Interest cost costs Current service statement, EURmillion Pension costsrecognisedintheincome Obligations at31Dec Benefi Eff Past cost service Contributions byplanparticipants Actuarial gainsandlossesonobligation Interest cost cost Current yearservice Obligation at1Jan Movements inobligations,EURmillion Actual returnonplanassets,EURmillion Total Actuarial gains/lossesonplanassets Expected returnonplanassets ect of curtailments andsettlements ect ofcurtailments ect of curtailments andsettlements ect ofcurtailments er fromearlierestimates.Theexact contributionamountis ts paid fromfunds rst halfof2009. cit as required by local legislation cit asrequiredby locallegislation 397.7 373.0 -39.1 -62.8 -12.7 -23.7 2008 2008 2008 23.7 20.0 11.6 20.0 11.6 -4.7 -0.8 -1.6 1.9 2.4 6.2 7.4 1.9 ned benefi ned 373.0 351.1 -10.0 -24.5 2007 2007 -21.7 2007 17.7 10.6 21.7 17.7 10.6 -0.4 -2.9 -2.8 -0.9 -3.6 3.4 3.5 5.5 3.4 t included ontheplanassetsareoccupiedbyGroup. ling EUR9.0million(2007:19.2million).Noneoftheproperties Fair value ofplanassetsincluded investmentsinSanoma sharestotal- to planassets Experience adjustments to obligations Experience adjustments in theplan Defi Fair value ofplanassets obligations Present value offunded pension obligations Present value ofunfunded EUR million and previousannualperiods, The amountsforthecurrent Total Cash Other items Properties Money market instruments Bonds anddebentures Equity instruments Plan assetsbymajorcategories,% Fair valueofplanassetsat31Dec Settlements Benefi Contributions byplanparticipants Contributions tofundsbytheemployer Actuarial gains/lossesonplanassets Expected returnonplanassets Fair value ofplanassetsat1Jan EUR million Movements inplanassets, cit(+)/surplus(-) ts paidfromfunds -358.0 397.7 -64.8 2008 39.7 -4.2 355-7. -343.5 -375.8 -385.5 7. 5. 341.5 351.1 373.0 2. 0815.6 -0.8 -24.6 1. 2. -1.1 -24.6 -12.5 0720 2005 2006 2007 . 8730.9 18.7 3.6 358.0 385.5 100.0 -12.7 -62.8 2008 2008 18.4 23.7 14.4 58.6 23.1 -0.1 5.9 0.3 2.2 1.4 100.0 385.5 375.8 2007 -10.0 -24.5 2007 58.1 26.9 17.5 21.7 0.1 5.1 2.7 7.1 0.9 0.0 5.0 target assetallocationoftheplan. is developedbasedonlong-termreturnsforeachassetclassandthe returns oftheassetclass.Aweightedaverage expectedlong-termrate ing intoaccountthelong-termlevelofriskassetandhistorical each assetclass,along-termreturnassumptionisdevelopedtak- each pensionfundandthevarious classesoftheinvestedfunds.For mated tobeearnedbasedonthelong-terminvestmentstrategy of The expectedreturnonplanassetsissetatthelong-termrate esti- consulting services related tomatterssuchascorporateconsulting services transactions. audits incountries withnooff Sanoma’s auditor. was Otherservices paidtoauditorsfor, e.g.circulation In 2008,KPMGOyAb,afi to EUR4.1million(2007:2.0million). Research anddevelopmentexpenditurerecordedasexpensesamounted 6. Otheroperating expenses of personnel,years Expected remainingworkingyears Turnover ofpersonnel,% Expected futurepensionincreases,% Expected futuresalaryincrease,% Expected returnonplanassets,% Discount rate, % at 31Dec Principal actuarialassumptions Total Other services Tax counselling Certifi Statutory audit Audit fees,EURmillion Total Other Off andmarketingAdvertising Rents Operating costsofinvestmentproperty Losses onsales Other operatingexpenses,EURmillion ice andICT expenses cates andstatements rm ofAuthorised PublicAccountants, actedas icial national circulation audit in place and for icial nationalcirculation auditinplaceandfor .−. 0.0−2.1 1.3−3.0 3.0−9.0 2.0−9.0 4.0−6.5 4.0−6.5 5.0−5.3 5.3−5.3 588.8 219.1 201.4 −24−23 3−22 0−20 3−20 2008 2008 2008 85.7 80.4 2.8 1.1 0.0 0.2 1.4 0.2 1.9 572.7 210.0 207.4 2007 2007 2007 81.2 71.9 2.4 0.8 0.0 0.2 1.4 0.2 1.9

29 notes to the consolidated financial statements 30 notes to the consolidated financial statements .Fnnilies8.Incometaxes anddeferredtaxes 7. Financialitems Total Expenses Other operating income Net sales included inoperatingprofi Exchange rategainsandlosses Total Financial expensestotal Other fi rateExchange losses atcost amortised Interest expensesfromfi Financial incometotal Other fi rateExchange gains Interest incomefromloansandreceivables fi Dividend incomefromavailable-for-sale Financial items,EURmillion nancial assets nancial losses nancial income nancial liabilities t, EURmillion -51.0 2008 2008 69.9 12.0 56.3 18.9 -1.4 1.6 3.3 6.0 7.8 1.8 0.2 1.6 0.0 2007 -35.7 2007 44.9 41.4 -0.1 -0.1 -0.3 0.4 1.0 2.5 9.2 0.3 2.0 5.5 1.4 Tax calculatedat(Finnish)statutoryrate rates, EURmillion Income taxreconciliationagainstlocal Tax relatingtopreviousaccountingperiods from previouslynon-recordedtaxable losses Adjustment todeferredtax receivables tax receivable hasnotbeenrecorded Loss fortheperiodwhichadeferred Deductible depreciation Other non-deductibleexpenses and impairmentlosses Non-deductible depreciation Non-taxable income Tax basedontax rate ineachoperating country Eff countries Income taxesintheincomestatement Other items change intax rate Change indeferredtax dueto Tax expenseintheincomestatement Other changeindeferredtax Change indeferredtax duetochangeintax rate Income taxes frompreviousperiods Income taxes onoperational income Income taxes,EURmillion ect ofdiff erent tax rates intheoperating -17.4 2008 49.5 21.6 16.2 48.5 69.4 2008 -1.1 -0.9 -2.7 -0.8 69.4 68.0 -2.7 0.0 1.2 3.7 2.9 1.2 2007 2007 74.4 68.1 83.3 82.7 74.4 -2.0 -9.8 -0.6 -0.6 -2.9 -2.0 0.1 8.2 5.0 0.8 1.0 0.1 0.2 carried forward ofsubsidiaries. judgement. Theseunrecognisedreceivables related mainlytotax losses recorded intheconsolidatedbalance sheetbasedonmanagement’s receivables ofEUR3.9million(2007:9.9million)have notbeen Due tounlikely useoftax benefi on tangiblenon-currentassets Impairment losses Tax lossescarriedforward Provisions Internal marginininventories Deferred taxreceivables and liabilities2007,EURmillion Deferred taxreceivables Total Other items Pension assets,defi and otheruntaxed reserves Depreciation diff Fair value adjustmentsinacquisitions Deferred taxliabilities Total Other items Pension obligations,defi tangible non-currentassets Impairment losseson Tax lossescarriedforward Provisions Internal marginininventories Deferred taxreceivables and liabilities2008,EURmillion Deferred taxreceivables Total Other items Pension assets,defi capitalnote of convertible Equity component and otheruntaxed reserves Depreciation diff Fair value adjustmentsinacquisitions Deferred taxliabilities Total Other items Pension obligations,defi erence erence ned benefi ned benefi ned benefi ned benefi t plans t plans ts inthecoming years, deferredtax t plans t plans 0. 321. 30-. 106.2 -2.5 -3.0 10.9 -3.2 103.9 1 Jan 1 Jan 52-. . . 42.4 12.4 0.1 0.0 12.0 0.0 -2.8 21.0 -2.5 -0.2 33.1 45.2 -0.3 -7.9 45.5 14.9 0.1 10.7 -1.9 36.6 14.0 19.9 -0.5 -0.4 7.1 0.0 -3.0 0.5 -0.3 0.0 -0.3 1.7 10.9 1.1 -0.2 0.1 -6.5 19.4 -6.1 33.6 0.7 2.0 46.1 -1.7 42.4 -6.1 12.7 12.4 12.0 15790019.4 103.9 0.0 -1.0 33.6 0.1 0.1 46.1 -1.2 3.4 0.1 5.4 7.9 3.4 96.2 0.5 11.5 -3.2 32.9 47.1 . . . 4.9 0.0 12.7 1.7 0.1 2.0 1.7 0.2 0.0 0.0 4.7 0.0 6.6 7.4 -0.2 5.2 0.4 0.0 1.9 1.6 1.6 1.7 1.5 1.9 -0.6 1.8 4.9 0.4 -0.1 0.1 -0.3 1.7 2.0 1.7 At At in theincome in theincome statement statement Recorded Recorded dividends. to earnings,forwhich tax paymentwouldbe realised whendistributing seeable future.Theseunrecognised deferredtax liabilitieswere related in consolidatedfi undistributed retainedearningsof subsidiaries hasnotbeenrecognised Deferred tax liabilityofEUR4.2million(2007:2.6million) on Operations Operations acquired/ acquired/ sold sold gures assuchdistributionisnotprobablewithin fore- in taxrate in taxrate Change Change Translation Translation and other and other items items 31 Dec 31 Dec At At

31 notes to the consolidated financial statements 32 notes to the consolidated financial statements the period. share isdeterminedastheaverage market priceofthesharesduring cover theissueofnewsharesattheirfair values. Thefair value ofthe shares, becausethereceivedfundsfromexercisedoptionsdonot market value oftheshare.Thedilutingeff Options have adilutingeff age numberofsharessothatoptionschemesaretaken intoaccount. Diluted earningspershareiscalculatedbyadjustingtheweightedaver- 9. Earningspershare Diluted earningspershare,EUR Diluted average numberofshares,thousands Eff thousands Weighted average number of shares, earnings pershare,EURmillion Profi Diluted earningspershare Earnings pershare,EUR thousands Weighted average numberofshares, of theParent Company,EURmillion Result attributabletotheequityholders Earnings pershare ect ofoptions,thousands t usedtodeterminediluted ect whentheexercisepriceislowerthan ect isthenumberofgratuitous 160 909 160 901 160 901 115.7 115.7 2008 2008 0.72 0.72 8 164 827 165 863 164 827 242.8 242.8 1 036 2007 2007 1.47 1.46 At theendoffi plantandequipment 10. Property, EUR million Property, plantandequipment2007, Carrying amountat31Dec2008 and impairmentlossesat31Dec Accumulated depreciation rateExchange diff Reclassifi Impairment lossesfortheperiod Depreciation fortheperiod Decreases, disposalsandacquisitions impairment lossesat1Jan Accumulated depreciationand Acquisition costat31Dec rateExchange diff Reclassifi Disposal ofoperations Decreases Acquisition ofoperations Increases Acquisition costat1Jan EUR million Property, plantandequipment2008, Carrying amountat31Dec2007 and impairmentlossesat31Dec Accumulated depreciation rateExchange diff Reclassifi Impairment lossesfortheperiod Depreciation fortheperiod Decreases, disposalsandacquisitions and impairmentlossesat1Jan Accumulated depreciation Acquisition costat31Dec rateExchange diff Reclassifi Disposal ofoperations Decreases Acquisition ofoperations Increases Acquisition costat1Jan cations cations cations cations nancial periodthecommitments foracquisitionsoftangible assetswereEUR0.0million(2007: EUR3.1million). erences erences erences erences and water and water Land Land 024285438. . 1123.4 2.3 83.8 564.3 432.8 40.2 992011984. . 498.7 5.8 43.1 159.8 1060.0 250.1 5.8 39.9 99.2 552.2 363.0 39.9 062251674. . 510.4 1.4 49.2 166.7 252.5 40.6 06382560167141122.8 1.4 116.7 1060.0 586.0 5.8 378.2 99.2 40.6 552.2 363.0 39.9 01-44-63-. . -91.0 0.0 -0.2 -16.3 -74.4 -0.1 03-. . . 641.8 -6.4 4.6 6.2 -2.2 -0.3 01-. 27-. . -4.8 0.0 -1.3 -2.7 -0.7 -0.1 . 29-45-. . -39.6 63.4 0.0 9.9 -2.2 13.1 -34.5 31.2 -2.9 9.1 0.0 0.2 . . 02-. . -0.2 0.0 -0.1 -0.2 0.1 0.0 . . . . . 12.4 81.3 0.1 2.4 3.1 15.8 4.4 49.3 4.4 13.3 0.5 0.4 Buildings and Buildings and structures structures 128-9. 5. -561.3 -56.1 -392.4 -112.8 157-1. 6. -612.4 -67.4 -419.2 -125.7 128-9. 5. -561.3 -56.0 -551.0 -392.4 -112.8 -46.9 -389.9 -114.2 1. 4. 1. -66.4 -10.2 -43.6 -12.6 1. 4. 82-65.7 -8.2 -42.8 -14.6 634. . 58.4 2.1 40.0 16.3 01-. -1.7 -24.5 -0.3 -1.8 -1.6 -20.3 -0.1 -2.1 061. 1213.9 -1.2 15.7 -0.6 0202-. -2.9 -0.3 -3.0 0.0 0.2 -0.1 -0.2 -0.2 . . . 650.0 -6.5 1.6 4.6 0.4 . . . 2.5 -0.4 0.7 -0.7 1.7 0.0 0.1 0.3 . . . 0.2 0.0 0.2 2.2 0.0 0.0 0.1 1.6 0.5 Machinery and Machinery and equipment equipment 07-0.7 -0.7 tangible tangible assets assets Other Other amnsTotal payments amnsTotal payments Advance Advance

33 notes to the consolidated financial statements 34 notes to the consolidated financial statements * 11. Investmentproperty Reclassifi Investment property2007,EURmillion Fair valuesat31Dec2008 Carrying amountat31Dec2008 losses at31Dec Accumulated depreciationandimpairment Decreases losses at1Jan Accumulated depreciationandimpairment Acquisition costat31Dec diff Exchange Decreases Acquisition ofoperations Acquisition costat1Jan Investment property2008,EURmillion Total Machinery andequipment Buildings andstructures Carrying amountofassetsleasedbyfi Fair values at31Dec2007 Carrying amountat31Dec2007 losses at31Dec Accumulated depreciationandimpairment Decreases losses at1Jan Accumulated depreciationandimpairment Acquisition costat31Dec Reclassifi Disposal ofoperations Decreases Acquisition costat1Jan ctosbtenivsmn rpryadonrocpe rpry andowner-occupiedproperty cations betweeninvestmentproperty cations erences * nance leaseagreements,EURmillion adadwtrBidnsadsrcue Total Buildingsandstructures Land andwater adadwtrBidnsadsrcue Total Buildingsandstructures Land andwater 445319.7 5.3 14.4 514920.0 4.9 15.1 05-. -0.7 -0.2 -0.5 05-. -0.8 -0.3 -0.5 -0.2 -0.1 -0.1 . . 10.2 3.6 6.6 . . 1.2 15.6 0.6 8.9 0.6 6.6 . . 9.5 2.9 0.3 15.6 16.0 8.9 6.6 9.3 6.6 0.3 15.8 6.8 9.3 6.6 2008 38.7 36.5 56-5.6 -6.0 -5.6 -6.0 60-6.0 -6.0 -6.0 -6.0 . 0.4 0.4 2.2 2007 33.1 30.9 2.2 12. Intangibleassets the CityofVantaa was completedintheautumnof2008,andVantaa town planhave beenfi Keimola MotorStadium area. plans designedtofacilitate theconstructionofaresidentialareain potential siteforproductionfacilities. 2000’s. Sanoma Corporation acquiredthelandareain1980’sasa dential useinthedispositionplanpreparedbyCityofVantaa inthe in theoldmotorstadium,mostofwhichhasbeenallocatedforresi- the CityofVantaa, VillageofKeimola (Finland).Thislandareaislocated the realestatemarket values. been usedwhendeterminingthefair values. Estimates are equivalent to real estatebusinesstransactions inthemarket. Nooutsidevaluator has either theproductivevalue methodorusingtheinformationonequal The fair valueshave ofinvestmentproperty beendetermined byusing The necessary plans and surveys aswellstudiesneededforthe The necessaryplansandsurveys Sanoma Corporation andtheCityofVantaa have jointlydrawn up includealandareaofsome45The investmentproperties hectaresin Exchange rateExchange diff Reclassifi Disposal ofoperations Decreases Acquisition ofoperations Increases Acquisition costat1Jan Intangible assets2008,EURmillion Carrying amountat31Dec2008 and impairmentlossesat31Dec Accumulated depreciation rateExchange diff Reclassifi Impairment lossesfortheperiod Depreciation fortheperiod Decreases, disposalsandacquisitions and impairmentlossesat1Jan Accumulated depreciation Acquisition costat31Dec cations cations erences erences nalised in2007. Thecityplandraft preparedby Goodwill 9. 2. 582. 1871.3 22.0 35.8 321.9 1 491.6 5. 3. 0. 202411.0 22.0 2309.0 102.2 17.0 730.3 82.4 1 556.5 773.3 1 436.3 4. 4654223.3 5.4 74.6 143.4 2. 1. 06-39.9 -0.6 -18.7 -20.7 6. 484-6400-539.8 -84.1 0.0 -66.4 -0.3 -408.4 -64.9 -22.0 -61.8 34-3. 5. . -496.5 -148.3 0.0 -6.1 -54.0 -1.5 -439.1 -0.7 -3.4 -147.3 -2.5 -1.0 -1.4 . . . 5.3 0.5 4.4 0.4 Immaterial rights cantly increasethefair market value ofthelandareainfuture. the landareaheldbyCompany. be conveyedequals50%oftheresidentialbuildingrightspermittedto in compensationforcivilengineeringcosts.Thesizeofthelandareato shall conveytotheCityofVantaa residentialzonedlandinthesaidarea City Councilapprovedtheplanon19January 2009.Sanoma Corporation 1. 26115.8 -2.6 118.4 7. 1. -80.7 -10.2 -70.5 461. . 73.5 4.6 14.3 54.6 381719-0.4 1.9 1.7 -3.8 The Companyestimatesthattheapproval ofthecityplanwillsignifi . . 0.5 0.1 0.4 Total no rentalincome Investment property, rental income Investment property, property, EURmillion Operating expensesofinvestment Other intangible assets payments Advance 2008 0.2 0.1 0.1 Total 2007 0.3 0.2 0.1 -

35 notes to the consolidated financial statements 36 notes to the consolidated financial statements key assumptionsvary fromtheestimates. ing ittotheGroup’scashgenerating units(CGUs). basis bydeterminingthepresentvalue offuturecashfl Impairment testingofassetsisprincipallycarriedoutonacashfl goodwill andimpairment testing ment testing. lion (2007:0.0),ofwhichEUR58.6millionwas recognisedduetoimpair- Impairment lossesofgoodwillfortheperiodamountedtoEUR61.8mil- which isoneofthe key assumptions.Capitalexpenditure isestimatedto the estimateddevelopmentoftotal costsaff Price developmentofasinglecost item hasnomaterialimpactwhereas tions andprofi rates,business environment.Estimateson futuregrowth market positions usedinthestrategic plansonthelong-term development ofthe ture, whichareapprovedbymanagement, aswellontheassump- mates arebasedonstrategic plansinlinewithcurrentoperational struc- EUR 6.2million(2007:0.2million). losses fortheimmaterialrightswithindefi ject toannualimpairmenttesting.Duringthefi indefi Magazines division,andnousefullifehasbeendetermined.Assets with All theseassets,mainlypublishingrights,arerelatedtotheSanoma with indefi EUR 11.3million). of immaterialrights(fi Calculations ofthevalue inusecoverafi Actual cashfl At theendoffi Of totalimmaterialrights,thecarryingamountofintangibleassets Carrying amountat31Dec2007 losses at31Dec Accumulated depreciationandimpairment rateExchange diff Reclassifi Impairment lossesfortheperiod Depreciation fortheperiod Decreases, disposalsandacquisitions losses at1Jan Accumulated depreciationandimpairment Acquisition costat31Dec rateExchange diff Reclassifi Disposal ofoperations Decreases Acquisition ofoperations Increases Acquisition costat1Jan Intangible assets2007,EURmillion nite useful lives are not amortised accordingtoplanbutaresub- niteusefullivesarenotamortised nite usefulliveswas EUR47.0 million(2006:EUR57.0 million). cations cations keytability levelsarethemostimportant assumptions. ows maydiff erences erences nancial periodthecommitmentsforacquisitions lmrightsincluded)wereEUR16.5million(2006: er fromtheestimatedcashfl ve-year period.Cash fl nite useful livesamountedto ectstheprofi nancial yearimpairment ows andallocat- Goodwill 3. 3. 851. 1812.4 16.9 28.5 2309.0 334.2 17.0 1 432.8 2198.5 82.4 19.6 773.3 86.4 1 436.3 696.5 1 396.0 tability level, tability ows incase 202. . 64.3 0.0 22.3 42.0 0106000.5 -496.5 0.0 -437.8 -6.7 0.0 -54.0 -4.4 0.0 -439.1 0.6 -60.3 -3.4 0.0 -0.1 -374.0 -4.0 -3.4 -3.0 -2.6 -1.3 . 7. 83-80.9 -2.4 -8.3 -19.2 -5.9 -1.1 -72.6 -2.1 0.0 -12.1 3.3 -6.0 2.2 0.0 ow esti- ow Immaterial euro zone. and 8.7%forcashgenerating unitswhichmainlyoperate outsidethe those cashgenerating unitswhichmainlyoperate withintheeurozone, weighted average costofcapital, inviewofcountryandbusinessrisks. varies from0%to5%. each divisionandcashgenerating rate unit.Theterminal growth used able atexternalsourcesofinformationaswellthecharacteristics of projectionsbycountry avail-estimated bytakingintoaccountgrowth rate Thegrowth is management’s assessmentonlong-termgrowth. on theeurorates atthetimeofimpairmenttesting. be comprisedofnormalreplacements.Foreign rates exchange arebased rights 421. . 78.8 4.4 10.2 64.2 The discountrate usedinimpairmenttesting2008was 7.3% for The discountrate appliedtothecashfl rateThe terminalgrowth usedinthecalculationsisbasedon 13-. 11-4.0 -1.1 -1.6 -1.3 . 201121.2 1.1 12.0 8.0 . . 4.5 4.2 0.3 Other intangible assets amnsTotal payments Advance ow isbasedontheGroup’s • • • • ing amounthasbeenassessedasfollows: The amountbywhichtheunit’srecoverable itscarry- amountexceeds cash generating unitswithsignifi discount rate werethekey assumptions usedinimpairmenttestingof developmentofprofi Estimates onlong-termgrowth, * immaterial rights intheGroupincomestatement December 2008. recorded atotalofEUR78.6million in impairmentlossesongoodwilland unit haddeclinedbelowtherecoverable amountoftheunit,Group the carryingamountofSanoma MagazinesInternational business based onmanagementforecasts and futurecashfl country-specifi Magazines Internationalandseparately forthegoodwill associatedwith impairment testwas performedforthecash-generating unitSanoma will associatedwiththisbusinessareahadbeenimpaired.Thegoodwill above reasons,therewereindicationsinDecember2008thatthegood- considerably againsttheeuroinlastmonthsof2008.Dueto tries andRussia withtheGroup’sfi ratesthe exchange usedinconsolidatingtheoperations inCEEcoun- incomegeneratedcially theadvertising inthesecountries.Inaddition, market conditions.Thegeneral hasaff economicuncertainty outlookofthesebusinesseshasweakenedshort-term duetochangesin zine andonlinebusinessinCentral EasternEurope andRussia. The itsrecoverableunit’s carryingamounttoexceed amount. reasonably possiblechangeinakey assumptionwouldnotcausethe As forSanoma MagazinesNetherlands, accordingtomanagement,a

Onlyintangibleassetswithindefi over 50% exceeds signifi over 50% exceeds clearly exceeds 21–50% equals moderately exceeds 1–20% 0% Sanoma MagazinesInternationalisresponsiblefortheGroup’smaga- Sanoma MagazinesBelgium Educational publishing Sanoma MagazinesInternational Sanoma MagazinesNetherlands amounts ofgoodwill2008 of cashgeneratingunitswithsignifi Carrying amountinrelationtorecoverable Total Others (10units) Sanoma MagazinesBelgium Educational publishing Sanoma MagazinesInternational Sanoma MagazinesNetherlands signifi useful livesofcashgeneratingunitswith Goodwill andintangibleassetswithindefi cant carryingamounts2008,EURmillion c Russian andCentral EasternEuropean publishingrights cantly cant carryingamountsofgoodwill. nite usefullives nancial statementshave weakened cant carrying exceeds signifi exceeds signifi exceeds nite ow projections.As tability leveland exceeds clearly exceeds ected espe- cantly cantly equals recognised intheconsolidatedfi million (2007:EUR10.3million).Nolossesinassociatedcompanieswere Carrying amountofassociatedcompaniesincludedgoodwillEUR6.6 13. Interestsinassociatedcompanies highly sensitivetothepotentialnegativeeff fi carrying amount to exceed itsrecoverablecarrying amounttoexceed amount. sonably possiblechangeinakey assumptionwouldnotcausetheunit’s itsrecoverablecarrying amounttoexceed amount. ably possiblechangeinakey assumptionwouldnotcausetheunit’s count rate. nant factors ofprofi The key criticalassumptions includethedevelopmentofdetermi- nancial statementsarerecordedattheirnetfair value, thisvalue is As forSanoma MagazinesBelgium,accordingtomanagement, area- As foreducationalpublishing, accordingtomanagement,areason- Since Sanoma MagazinesInternational’sassetsandliabilitiesinthe Carrying amountat31Dec Translation diff Decreases andotherchanges Increases Dividends Share inresult Carrying amountat1Jan EUR million Interests inassociatedcompanies, Goodwill 9. 701538.7 47.0 1 491.6 erences 1. . 216.0 110.1 244.6 194.0 774.0 0.0 2.6 0.0 40.9 3.6 216.0 107.5 244.6 153.1 770.4 rates currencyexchange anddis- tability, growth, gures. Intangible assets ects ofdiff * 2008 69.9 75.2 erent variables. erent -0.1 -4.6 -5.7 0.2 4.9 2007 12.8 75.2 68.2 -0.2 -6.2 Total 0.1 0.4

37 notes to the consolidated financial statements 38 notes to the consolidated financial statements * ** * Figuresfromfi Figuresfor2008notavailable bythedateofcompletingfi Figuresfromfi sanoma trade sanoma magazines EUR million Most signifi sanoma trade sanoma magazines EUR million Most signifi Current liabilitiestoassociatedcompanies Non-current liabilitiestoassociated companies Current receivables fromassociatedcompanies associated companies Non-current receivables from against associatedcompanies,EURmillion Outstanding receivablesandliabilities associated companies from Receiving ofservices Purchases ofgoodsfromassociatedcompanies toassociatedcompanies Rendering ofservices Sales ofgoodstoassociatedcompanies EUR million Associated companytransactions, (Magazine publishing,theCzechRepublic) Stratosféra sr.o. Sanoma MagazinesInternational (Magazine publishing,theCzechRepublic) Stratosféra sr.o. Sanoma MagazinesInternational Jokerit HC Hansaprint Sanoma MagazinesFinland Jokerit HC Hansaprint Sanoma MagazinesFinland cant associatedcompanies2007, cant associatedcompanies2008, nancial year1.5.2006–30.4.2007 * ** nancial year1.5.2007–30.4.2008 * * (Sports activity,Finland) (Sports (Printing,Finland) (Printing,Finland) (Sports activity,Finland) (Sports 2008 2008 13.7 26.6 3.4 0.2 1.5 0.5 0.0 nancial statementsofSanoma 2007 2007 16.1 28.1 1.8 2.2 1.8 0.7 0.1 0.5 fteGop sesLaiiisNtslsProfi Netsales Liabilities Assets of theGroup,% fteGop sesLaiiisNtslsProfi Netsales Liabilities Assets of theGroup,% Participation Participation related party arrangementsrelated party withassociatedcompanies. In 2008and2007, therewerenoothersignifi with associated companies other related party transactions loan receivables. based onmarket interestrates. Long-term receivables mainlyincluded based ontheGroup’seff toassociatedcompaniesare Sales ofgoodsandrenderingservices 644. 901. -0.4 1.6 14.3 14.2 19.0 1.8 42.2 36.4 3.9 30.0 40.0 644. 921. -0.9 0.9 12.2 12.8 20.2 19.2 1.3 42.8 219.8 36.4 4.1 35.9 30.0 173.1 40.0 ective market prices,andinterestonloansis cant transactions orother t/loss t/loss ** * 15. Trade andotherreceivables, Assets have beenvalued atcostlesspotentialimpairmentlosses. were non-listedsharesforwhichfair values couldnotbe reliably defi shares, andtheGroupdoesnotintendtoselltheseassets.Theseassets Available-for-sale fi 14. Available-for-sale fi The fair values ofreceivables donotsignifi the market interestrates and onpredeterminedrepaymentplans. amounts ofreceivables. Theinterestsonloanreceivables arebasedon Trade receivables, seeNote26 Pension assets,seeNote5 Total Pension assets Advance payments Accrued income Loans andotherreceivables non-current, EURmillion Trade andotherreceivables, Total Available-for-sale fi Available-for-sale fi Available-for-sale fi Trade receivables Total Loan receivables Receivables fromassociatedcompanies Other receivables Loan receivables non-current ** nancial assetsmainlyincludedinvestmentsin nancial assets,current nancial assets,non-current * nancial assets, EURmillion nnilast 16.Inventories nancial assets cantly diff er fromthecarrying 2008 41.0 25.3 2008 21.1 20.6 0.0 6.7 4.1 3.8 1.0 1.5 1.5 0.5 2007 2007 37.9 18.6 16.0 15.9 0.5 7.2 4.4 6.3 0.9 1.8 1.8 0.1 ned. to refl the fi EUR 8.9million(2007:1.5million)was recognisedasimpairmentin rying amountsofreceivables. in creditlossesasexpensesontrade receivables. The GrouphasrecognisedatotalEUR10.4million(2007:6.7million) business activities andincludede.g.agencycommissions accruals. Most signifi accrued income * 17. Trade andotherreceivables, Trade receivables, seeNote26 The fair values ofreceivables didnotsignifi Total Advance payments Other inventories Finished products/goods Work inprogress Materials andsupplies Inventories, EURmillion Total Advance payments Accrued income Loans andotherreceivables current, EURmillion Trade andotherreceivables, nancial year. Thecarryingamountofinventorieswas writtendown current Total Loan receivables Accrued income Trade receivables Receivables fromassociatedcompanies Otherreceivables Loan receivables Trade receivables ect itsnetrealisablevalue. cant itemsunderaccruedincomewererelatedtonormal * cantly diff 173.2 119.1 409.1 295.6 2008 2008 er fromthecar- 39.9 12.4 22.1 60.8 29.6 1.0 0.7 0.2 0.0 0.1 0.1 1.0 170.7 120.6 415.4 292.5 2007 2007 35.5 13.0 23.6 53.8 44.1 1.1 0.5 2.2 1.1 0.2 0.9 1.4

39 notes to the consolidated financial statements 40 notes to the consolidated financial statements culated parvalue oftreasuryshareswas EUR1,059,552.10. EUR 47.6 millionanditisdisclosed asadeductionfromequity.Thecal- Thecostoftherepurchasedtreasuryshareswasfrom stockexchange. During thefi treasury shares accountable parisinuse.Theshareshave beenfullypaid. lion (2007:EUR300.0million).Theshareshave nonominalvalue andno The maximum EUR300.0mil- amountofsharecapitalcannotexceed 19. Equity values donotdiff maturity under3months.Average andthefair maturityisveryshort Deposits includeover-nightdepositsandmoneymarket depositswith 18. Cashandcashequivalents Conversion ofcapitalnotes Acquisition oftreasuryshares Usage ofstock-options options Unregistered usageofshare At 1Jan 2007 Share capital Total Deposits Cash inhandandatbank in thebalancesheet,EURmillion Cash andcashequivalents At 31Dec2008 Transfer betweenfunds Invalidation ofshares Acquisition oftreasuryshares Usage ofstock-options options Unregistered usageofshare At 31Dec2007 nancial periodtheGroup hasrepurchased2,984,097shares er signifi cantly fromthecarryingamounts. All shares ubro hrs huad EURmillion Numberofshares,thousands 6 9 24510667. 3. 9. 226.4 192.7 -37.5 71.3 160666 -2425 163 091 6 1 25713107. 8. 5. 207.3 251.9 -51.6 187.6 71.3 181.0 163140 -2577 70.9 165 717 164957 164 957 3163166. 61.6 61.6 3136 -3 136 3 3 . . . 5.9 -0.8 3.3 1.7 1.8 2.6 2.6 2.4 -2.4 0.1 1.7 -0.1 232 2.5 0.0 278 2.4 0.1 109 0.1 232 333 278 317 109 333 317 Treasury shares Total 294- 8 4. -47.6 -51.6 -47.6 -51.6 -2984 -2 984 -2577 -2 577 110.9 2008 15.6 95.3 2007 88.1 78.7 9.5 ognised tosharecapitalaccording tosomespecifi ofsharesubscriptionpricewhichisnotrec- investments andthatpart Fund forinvestedunrestrictedequity includesotherequityrelated fund forinvestedunrestricted equity solidating foreigncompanies. Translation diff translation differences Total Bank overdrafts Cash andcashequivalents inthebalancesheet in thecashfl Cash andcashequivalents capital Share erences includethoseitemsthathave arisenwhencon- Premium ow statement,EURmillion 176187.6 -187.6 fund Treasury shares unrestricted invested Fund for qiyTotal equity cdecision.According 110.5 110.9 2008 -0.5 -15.7 2007 72.4 88.1 or inthetermsandconditionsofCompany’sstockoptionschemes. ownershipoftheCompany, rights carriedbytheshares,proportional and itdidnothave anyeff tion inthepremiumfundwas taken intoeff date totheCompany’sfundforinvestedunrestrictedequity.Thereduc- reduced bytransferring allthefundsinpremiumfundonAGM as investedunrestrictedequity. share subscriptionsbasedontheGroup’soptionplanswillberecognised to theAGM decisionon1April2008,allofthesubscriptionpricesfrom The dividendfor2006was 0.95pershare(record date11April2007). * Group byadecisionoftheBoardDirectors. 2007. Stock optionsaregranted tothemanagementofSanoma issued onthebasisofanauthorisationreceivedatAGM of4April the AGM of30March2004 and Stock OptionSchemes2007and2008 Option Scheme2004issuedonthebasisofanauthorisationreceivedat basis ofanauthorisationreceivedattheEGM of21 August 2001,Stock Sanoma hasfouroptionschemes:Warrant Scheme2001issuedonthe 20. Stock options

The dividendisdeductedfromtheexercisepriceannually. for2007was 1.00pershare(recorddate4April2008). According totheAGM decisiontheCompany’spremiumfundwas Initial exerciseprice,EUR by oneoption The numberofsharesexercised Maximum numberofoptions Basic information Options Number ofpersonsat31Dec2008 at 31Dec2008,years Remaining expirytime date (expiration) End ofexerciseperiod, date (vesting) Beginning ofexerciseperiod, Exercise priceat31Dec2008,EUR Exercise priceat31Dec2007,EUR Exercise priceat31Dec2006,EUR Exercise priceat31Dec2005,EUR Dividend adjustment ect onthenumberofCompanyshares, * * * * 01.073.120 01.093.121 01.013.121 01.0330.11.2014 30.11.2013 30.11.2012 30.11.2011 30.11.2010 30.11.2009 30.11.2008 30.11.2007 .120 .120 .120 .120 .120 .120 .121 1.11.2011 1.11.2010 1.11.2009 1.11.2008 1.11.2007 1.11.2006 1.11.2005 1.11.2004 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1700000 1500000 1500000 1500000 1500000 1500000 1500000 1 500000 edrdRnee . . . . . 5.9 4.9 3.9 2.9 1.9 0.9 Rendered Rendered ectwithoutcompensation, 01 01 01 04 04 04 072008 2007 2004C 2004B 2004A 2001C 2001B 2001A 00 .01.11.22.5------12.25 --- 24.26 23.25 25.21 19.12 23.25 17.81 19.92 9.30 19.61 10.03 11.50 12.74 .874 59 72 14 42 42 ------24.26 --- 24.26 25.21 21.40 22.35 17.27 18.22 15.96 16.91 7.45 8.40 8.18 9.13 e e e e e e e Yes Yes Yes Yes Yes Yes Yes Yes 11111111 3 7 7 1 5 287 256 213 177 170 132 0 0 .51.61.72.02.62.612.25 23.26 23.26 20.40 16.27 14.96 6.45 options andtrading with2001Bshareoptionsendedon30November cial period,totalof788054Sanoma sharesweresubscribedwith2001B 2007 andwith2004Boptionson1November2008.Duringtheﬁ 2001C optionson1November2006,with2004A on theMainListofNASDAQ OMXHelsinki on1November2005,with were subscribedwith2001Aoptions.Trading with2001Boptionsbegan tion endedon30November2007. Atotalof609,450 Sanoma shares Helsinki on1November2004andboththetrading andsharesubscrip- entirety infundforinvestedunrestrictedequity. decision oftheAGM of1April2008,theexercisepriceisrecognisedinits dividend isdeductedfromtheexerciseprice.Inaccordancewith November−December ofeachyearwithanaddition20%.Theannual option schemesistheaverage priceofSanoma sharesasquotedin options couldbeissued.Theexercisepriceinallthreestagesofboth (2004C). Ineachstockoptioncategoryamaximum of1,500,000stock 2004/2005 (2004Astockoptions),2005/2006(2004B)and2006/2007 2004 stockoptionshave beengranted inthreestages:attheturnof options), 2002/2003(2001B)and2003/2004(2001C).Correspondingly, been granted inthreestages:attheturnof2001/2002(2001Astock entitling theholdertooneSanoma share.2001stockoptionshave Both schemescompriseamaximum 4,500,000stockoptions,each warrant scheme2001andstockoption2004 Trading in2001AoptionsbeganontheMainListofNasdaq OMX

nan-

41 notes to the consolidated financial statements 42 notes to the consolidated financial statements been cancelled. distributed andreturned2001A,2001B2001Cstockoptionshave ing toafuturedecisionoftheBoardDirectorsSanoma. Thenon- to Sanoma’s fully-ownedsubsidiaryLastannet Oytobeusedaccord- options. Thenon-distributedandreturnedoptionsarecancelledorgiven 2008. Bytheendof2008nosharesweresubscribedwith2001Cshare ** between NovemberandDecember 2008(2004B). * unrestricted equity. forinvested November 2013.Theexercisepriceisrecognisedinreserve subscription periodfor2007stockoptionswillbe1November2010−30 basis ofastockoptionwas EUR 23.26 on31December2008.Theshare exercise price.Thus,thepriceofasharesubscribedforon dend orotherdistributionofunrestrictedequityisdeductedfromthe date ofadoptiontheoptionscheme,was EUR24.26.Theannualdivi- original exercisepriceof2007stockoptionson19December2007, the total of1,500,000neworexistingsharesheldbytheCompany.The stock options,whichentitletheirholderstosubscribeforamaximum The Stock OptionScheme2007comprisesamaximum of1,500,000 stock optionscheme2007 Theweightedaverage priceofSanoma sharebetween January andNovember2008(2001B),duringtheyear(2001C 2004A)a Vesting periodbegins atgrant dateandendswhen exercise periodbegins. Granted duringtheperiod Non-distributed at1Jan Outstanding at1Jan Exercised at1Jan Cancelled at1Jan Returned at1Jan Granted at1Jan Changes in2008 Options options at31Dec2008 The numberofunvested Non-distributed at31Dec Outstanding at31Dec Exercised at31Dec Cancelled at31Dec Returned at31Dec Granted at31Dec Expired duringtheperiod period, EUR share duringtheexercise Weighted average priceof Exercised duringtheperiod Cancelled duringtheperiod Returned duringtheperiod * ** 9 0 1 0 7 0 6 0 6 0 0 0 7 5 3 5 9317600 1335750 1371450 405 100 1300 900 1049980 1168300 450020 609 450 1165600 890 550 1172500 1112100 691 000 7881850 0 1331450 405100 261926 1280900 1148300 447300 609 450 1145600 890 550 1172500 1112100 691 000 6005 0 8009 0 4 0 1 0 3 0 715000 0 138400 119400 140600 93200 88000 59 400 443100 76 000 0 0 42 000 84500 93200 88000 59400 76 000 01 01 01 04 04 04 0720 Total 2008 2007 2004C 2004B 2004A 2001C 2001B 2001A 040476046202110185001323850 0 168550 261100 6561824 0 436200 447600 10400 1331450 1238900 0 1063800 1052400 1084500 790774 0 0 040476042303850269034201860000 364250 266950 318500 6934900 472300 1335750 1233050 427600 1181 500 10400 1027700 1072 400 0 1084500 0 0000010 0 788 054 54 49 49 02 ------14.9610.21 15.40 2 720 0000001 000000 0002 0 0004 0 3 5 1435750 1335750 40000 20000 20000 20 000 found inSanoma’s insiderregisteratSanoma.com Changes inownershipofmanagementduringthefi tables. InformationonthemanagementownershipispresentedinNote31. for 2008stockoptionswillbe1November2011–302014. equity isdeductedfromtheexerciseprice.Thesharesubscriptionperiod 31 December2008,paiddividendsorotherdistributionofunrestricted tion of20%.Thus,theexercisepriceastockoptionwas EUR12.25on OMX Helsinki between1November–31December2008withtheaddi- ume-weighted average priceofaSanoma shareasquotedbyNASDAQ use atalaterstage.Theexercisepriceof2008stockoptionisthevol- to Lastannet Oy,afully-ownedsubsidiaryoftheCompanyforpossible and itssubsidiaries.Theremaining364,250stockoptionsweregiven 1,335,750 stockoptionsto287seniormanagersofSanoma Corporation 2008 theBoardofDirectorsSanoma Corporation decidedtodistribute 1,700,000 neworexistingsharesheldbytheCompany.On19December options, whichentitletheirholderstosubscribeforamaximum totalof The Stock OptionScheme2008comprisesamaximum of1,700,000stock stock optionscheme2008 000001 000001 More specifi 6107 0 3 0 271900 138400 77400 56 100 c informationontheoptionsispresentedfollowing 8 0 3 5 3 5 3750300 1335750 1233050 181 500 . nancial yearcanbe 659 430 871 376 745 670 742 950 788 054 nd 2 720 0 ** * with thelifetimeofoptionperiod. fl ** * eidadteeecs rc sbsdo h ttsa 1Dc20. period andtheexercisepriceisbasedonstatusat31Dec2008. period andtheexercisepriceisbasedonstatusat31Dec2007. uctuations byusingmonthlyobservationsduringaperiodcomparable Figureswerecalculatedasweightedaverage fi Theexercisepriceatthebeginningofperiodisstatus31Dec 2007.Dividendadjustmenthasbeentaken intoaccoun Volatility hasbeenestimatedonthebasisofhistoricalshareprice The exercisepriceatthebeginningofperiodisstatus31Dec 2006.Dividendadjustmenthasbeentaken intoaccount and theweightedaverageexerciseprices Changes inoptionsduringtheperiod Expired duringtheperiod Exercised duringtheperiod Returned duringtheperiod Granted duringtheperiod Outstanding at1Jan Granted at1Jan Fair value total,EUR Expected dividends Probability ofreturnedoptions Volatility Maturity, years Interest rate Exercise price Average priceofshare Number ofgranted options Black–Scholes model Most signifi Outstanding at31Dec Granted at31Dec * , ** cant assumptionsin * * * * * 2 213885 1 435750 gures. 23.2% 12.88 6.7% 3.1% 082007 2008 9.52 5.8 --- 4 413696 1 345250 21.0% 24.27 18.42 6.9% 4.2% 6.0 --- of options 3 0 84 6 2 19.28 17.81 6561824 7881850 24.26 16.97 18.49 16.48 17.06 1345250 6022428 6 934900 6536600 8 626600 12.89 19.44 18.90 1 435750 6 561824 7 190850 Number 082007 2008 8 5 .560247.99 20.77 650204 150100 6.45 22.67 788 054 271 900 2 .05508.18 5550 0.00 2 720 EUR 5.5million). In 2008atotalofEUR5.0millionhasbeenrecordedasexpenses(2007: ingly, nofair value ofSanoma 2001Astockoptionshasbeencalculated. before 7November2002,have notbeenrecognisedasexpenses.Accord- of Directors.According toIFRS,thoseoptionsthathave beengranted the vestingperiod.Thegrant dateistheofdecisionBoard grant dateandthefair value isrecognisedaspersonnel expensesduring Scholes valuation model.Thefair value ofoptionsisdeterminedatthe The fair value ofstockoptionshasbeendeterminedusing theBlack– determination offairvalue Exercise price, EUR * of options Number t duringthe duringthe Exercise price, EUR **

43 notes to the consolidated financial statements 44 notes to the consolidated financial statements visions arenotmaterialattheGrouplevel. of provisionswas duetore-evaluating realisedexpenses.Individualpro- prised expenseprovisionsforcommonbusinessactivities.Cancellation restructuring oftheSanoma Magazinesdivision.Otherprovisionscom- Restructuring provisionsweremainlyrelatedtonormalbusiness Provisions werebasedonbestestimatesthebalancesheetdate. 22.Interest-bearingliabilities 21. Provisions Total Current Non-current EUR million Carrying amountsofprovisions, At 31Dec2008 Other changes reversed Unused amounts Amounts used Increases Translation diff At 1Jan 2008 EUR million Changes inprovisions, erences Restructuring provisions 17-. -6.1 -4.4 -6.7 -2.9 -1.7 -3.8 . . 16.8 8.7 8.2 . 141.0 -1.4 12.7 2.4 -0.6 7.7 16.6 -0.6 10.3 5.0 0.0 6.3 rvsosTotal provisions Other 2008 16.8 10.9 6.0 2007 16.6 7.8 8.8 recognised directlyasexpensesduetotheinsignifi mercial papersarevaluedcostandtransaction atamortised costsare grammes, whichareusedtoarrange fi theshort-term Sanoma Corporation hasdomesticandforeigncommercialpaperpro- commercial papers 4.6% (2007:4.2%). as expensesduringtheloanperiod. nifi valued atnominalvalues. Thetransaction costsoffacilities arenotsig- advance, ispresentedinits entiretyinnon-currentliabilities.Loans are oftheloans,whichrepaymentplanisnotdefi The portion cated revolvingcreditfacility andbilateral facilities granted bybanks. The Group’sloansfromfi loans fromfinancialinstitutions from thecarryingamounts. The fair values ofinterest-bearingliabilitiesdonotdiff cant when considering the amortised costandaremainlyrecognised cant whenconsideringtheamortised The average interestrate fi forloans,excluding EUR million Interest-bearing liabilities, Pension loans Loans fromfi Current fi Total Other liabilities Finance leaseliabilities Pension loans Loans fromfi amortised atcost Non-current fi Total Total Other liabilities Finance leaseliabilities Commercial papers nancial liabilitiesamortisedatcost nancial institutions nancial institutions nancial liabilities nancial institutionsmainlyconsistofsyndi- cant infl nance leases, was 1 082.6 449.0 409.4 152.4 633.6 474.4 2008 35.5 er signifi er nancing. Com- nancing. 3.9 0.2 3.0 3.7 uence. 328.1 293.5 881.4 553.4 527.8 2007 30.6 17.2 ned in cantly 3.8 0.1 3.2 2.7 2.5 The mostsignifi finance leaseliabilities and leasedmovietheatrepremisesoftheSanoma Trade division. Future fi Total More than5years 1–5 years Not morethan1year Present valueofminimumleasepayments Total More than5years 1–5 years Not morethan1year Total minimumleasepayments Finance leaseliabilities,EURmillion nance charges cantitemsunderfi nanceleaseswererelatedtopremises 2008 15.1 39.2 20.9 15.0 54.3 27.7 21.0 3.3 5.5 2007 12.2 33.8 18.4 12.8 46.0 23.7 17.8 2.7 4.5 23. Trade andotherpayables alty liabilitiesandaccrualsrelatedtonormalbusinessactivities. Accrued expensesmainlyconsistedofaccruedpersonnelexpenses,roy- accrued expenses Total Other fi Advances received Accrued expenses Non-current Trade andotherpayables,EURmillion amortised atcost amortised fi Short-term Current Total Total Advances received Accrued expenses Total Other liabilities Non-current toassociatedcompanies Total Other liabilities Trade payables Current toassociatedcompanies Otherliabilities Trade payables nancial liabilities amortised atcost nancial liabilitiesamortised nancial liabilities 751.7 182.7 277.9 193.9 786.3 2008 34.6 21.4 97.2 6.0 7.2 3.4 0.0 3.4 744.3 182.3 283.2 200.4 772.6 2007 28.3 19.3 78.4 8.0 0.9 1.8 0.7 1.1 0.5 0.5

45 notes to the consolidated financial statements 46 notes to the consolidated financial statements (2007: EUR7.0 million)ofjointventures’contingentliabilities. centage. TheGroup’stotalcontingentliabilitiesincludeEUR5.4million consolidationmethodaccordingtoownershipper- the proportionate Group’s fi litigation oradministrative proceedingswouldnotmateriallyaff that itsgrossliability,ifany,underanypendingorexistingincidental primarily arisinginthenormalcourseofourbusiness.Sanoma feels odically involvedinincidentallitigationoradministrative proceedings proceedings duringthefi The Sanoma Grouphadnomajorongoinglitigationoradministrative disputes andlitigations collateral mainlytolocalpostoff million (2007:EUR1.5million).Pledged fi Pledges forowncommitmentsincludedpledgedfi 25.Operating leaseliabilities 24. Contingentliabilities Contingent liabilitiesofjointventureshave beenincludedbasedon Total Total Other items Royalties Operating leaseliabilities(Note25) Other commitments Total Guarantees other companies Contingencies incurredonbehalfof Total Guarantees associated companies Contingencies incurredonbehalfof Total Other items Pledges Mortgages Contingencies forowncommitments Contingent liabilities,EURmillion nancial positionorresultsofoperations. nancial yearorprevious year. TheGroupisperi- ices fordistributioncosts. nancial assets aregivenasa nancial assetsEUR1.4 366.2 325.5 263.8 2008 38.1 23.6 10.5 10.5 30.1 23.7 0.2 0.2 0.4 6.0 380.4 345.9 275.8 ect the 2007 42.9 27.2 26.4 20.2 7.9 7.9 0.1 0.1 0.4 5.8 2.5 million(2007:EUR3.2million). Total leasepaymentstobereceivedincludedsubleaseofEUR liabilities. Operating liabilitiesincludebothpremisesandotheroperating lease to bereceivedbymaturity,EURmillion Non-cancellable minimumleasepayments by maturity,EURmillion Non-cancellable minimumleaseliabilities Total Later than5years 1–5 years Not laterthan1year Total Later than5years 1–5 years Not laterthan1year 263.8 146.1 2008 2008 59.8 57.9 6.9 0.1 4.5 2.3 275.8 127.8 104.1 2007 2007 43.9 7.5 0.8 4.9 1.8 before taxes. * purposes. rate andfl manages itsexposuretointerestrate risksbyusingamixoffi TheGroup and loanmarginsassociatedwiththeGroup’sportfolio. The Group’sinterestrate risksmainlyrefertochanges inmarket rates interest rate risks ury operations isaimedatensuringexternalfi liquidity andexternalhedgingoperations. Thecentralisation oftreas- sions, theunitisresponsibleformanagementofexternalfi on acentralised basis.Operating totheGroupdivi- asacounterparty The GroupTreasury unitisresponsibleformanagingSanoma’s treasury 26. Financialriskmanagement increase ininterestrates. Thesensitivityrepresentstheeff management aimstohedgetheGroupagainstmaterialrisks. is exposedtointerestrate, currency,liquidityandcreditrisks.Itsrisk approved theunit’sguidelinesinGroup’sTreasury Policy. Sanoma eff favourable terms,optimisedcashmanagement,cost-eff the fi operating withseveral banksandactivelymonitoringdevelopmentsin ing. Meetingthisaimisbasedonco-operating closely withintheGroup, good creditrating withtheaimofensuringsourceslow-costfi term fi which substantiallyreducesliquidityrisks.TheGroupmanagesitslong- instruments whoseuse,eff risks. Interestrate sensitivity iscalculatedbyassumingaonepercent icient fi icient The Sanoma Grouphasastrong,steadyandpredictablecashfl In itsfi Consequently, theGroupasawholeisexposedtorather lowfi Total Fixed-rate loans Floating-rate loans Loan portfoliobyinterestrate,EURmillion Interest sensitivity,EURmillion Average rate, % Average duration, years Value, EURmillion fl Interest ratesensitivityof oating-rate loans nancial market. nancial risksbymaintainingafi oating-rate loans.Derivatives canalsobeusedforhedging nancial riskmanagement,theGroup usesvarious fi nancial riskmanagement.Sanoma’s BoardofDirectorshas ects andfair values areclearlyverifi * nancial structureequivalent toa nancing onfl 1 042.2 1 082.6 1 042.2 2008 2008 40.4 ectiveness and 8.6 5.1 0.2 ect onprofi exible and exible xed- able. nancing, 843.2 881.4 843.2 nancial nancial 2007 2007 38.2 nanc- 7.2 4.3 0.4 ow, t liquidity risks question. however, have aneff rateschange ofexchange inCentral EasternEurope andRussia may, ofeurosinnet salesandonthebalancesheet.Asignifi high portion rial currencyrisksconcerningoperational businessduetotherelatively evant toitsoperations. TheGroupisnotcurrentlyexposedtoanymate- with businessoperations. Ithedgesagainstmaterialcurrencyrisksrel- apply specifi and EasternEuropeTheGroupdoesnot restricthedgingopportunities. tries mentionedabove.Thelessadvanced currencymarkets inRussia Translation risksconsistofforeigncurrencybalancesheetsincoun- Russian rouble,theHungarianforint,Polish zlotyandtheCzechkoruna. consolidated netsales,comingmainlyfromsalesdenominatedinthe euros. Thenon-euroareabusinessoperations accountforabout15%of The bulkoftheGroup’scashfl currency risks credit lines. includeliquiditiesandunused the next12months.Thecashreserves mustaccountforaminimumof10%netsalespredicted reserves on a12-monthrollingforecast. risks aremonitoreddaily,basedonatwo-weekforecast,andmonthly ment programmes extendingoveranumberofcalendar years.Liquidity aswellrunningbalancedloanrepay- credit limitsandassetreserves risks byensuringsuff and workingcapitaladequacy.Sanoma aimstominimiseitsliquidity investmentfi Liquidity risksareassociatedwithdebtservicing, among others. keycertain fi ments includecommoncovenantsrelatingtothepositionofcreditors, facilities isexpiringinApril2009.TheGroup’sfi portion ing in2012andEUR662millionismaturing2013.Theuncommitted Out ofEUR802millioncommittedfacilities, EUR140millionismatur- In linewiththeSanoma Group’sTreasury Policy, theGroup’scash Current accountlimits Commercial paperprogrammes Bilateral uncommittedfacilities Bilateral committedfacilities programmes in2008,EURmillion The Group’sfi c tools tohedgeagainsteconomicpolicyrisksassociated nancial indicators and the use of pledges and mortgages, nancial indicatorsand theuseofpledgesandmortgages, nancing ect onthegoodwillofbusinessesinareas icient income fi ow fromoperations isdenominatedin nancing andmaintainingadequate of limits Amount 0. 325.6 150.0 402.0 800.0 300.0 802.0 2742.2 42.7 nancingagree- credit lines Unused nancing cant

47 notes to the consolidated financial statements 48 notes to the consolidated financial statements agreements. Collaterals receivables, arerequired fromcustomersinfranchising cases,suchasadvertising cable agreementsandincertain policies relatedtoinvestments.TheSanoma Grouphasnomajorcredit tofi ers andothercounterparties Group’s Treasury Policy specifi Sanoma’s creditrisksareassociatedwithitsbusinessoperations. The credit risks For trade receivables andotherreceivables, seeNotes15and17. Total Trade payables andotherliabilities Other interest-bearingliabilities Finance leaseliabilities Commercial paperprogrammes Loans fromfi Maturity offi Total Trade payables andotherliabilities Other interest-bearingliabilities Finance leaseliabilities Commercial paperprogrammes Loans fromfi EUR million Financial liabilities, Total More thanoneyear Past due121−360days Past due31−120days Past due1−30days Not due The agingoftradereceivables,EURmillion nancial institutions nancial institutions nancial liabilities,EURmillion es creditrating requirementsforcustom- nancialtransactions, aswellGroup 9. 0. 4. 1851.5 444.2 1 407.3 1 395.1 Capital 1. 1. 1. 9. 9. 298.1 537.6 298.1 857.5 298.1 537.6 539.0 312.5 527.8 318.5 478.4 311.7 312.5 1014.0 444.2 312.5 478.4 569.8 474.4 561.8 923. 943. 3933.9 33.9 33.8 39.4 39.4 39.2 . . . . . 8.1 8.1 8.1 7.2 7.2 7.2 Capital with 20 2007 2008 interest rs maretNtGosIpimn Net Impairment Gross Net Impairment Gross 0. 1. 296.6 -10.5 307.1 8. . 8. 0. 01200.1 -0.1 200.2 187.0 0.0 187.0 3. 5575771. 161407.3 21.6 16.1 7.7 7.5 15.5 1 338.9 75-. 311. 257.5 21.0 61.4 -2.5 -1.0 -0.3 10.0 22.1 61.7 13.1 41.6 51.0 -4.4 -1.5 -0.2 17.5 43.1 51.3 9. . . . 0711312.5 1.1 569.8 10.7 4.0 0.6 0.3 1.0 0.3 5.3 0.3 293.8 4.5 478.4 560.4 0921 0121 0321−Total 2014− 2013 2012 2011 2010 2009 . 433984-. 3.5 -4.9 8.4 3.9 -4.3 8.2 ...... 7.2 39.4 3.4 13.1 0.1 5.0 1.8 5.0 0.9 5.3 0.3 5.4 0.7 5.6 rmlmt oa Capital Total from limits Undrawn 082007 2008 lected. Theagingoftrade receivables isinthefollowingtable. ated withtheirbusinesses. Group’s operational unitsassumeresponsibilityfor creditrisksassoci- risk concentrations becauseofitswide,globalcustomer base.The The carryingamountsbestimplicatetheamountthatwillbecol- 7. 9. 3. 1735.2 539.0 1196.2 1 179.5 Capital with 0. 89293.5 -8.9 302.4 interest rmlmt Total from limits Undrawn TV andbroadband 478.4 or previousyear. The Sanoma Grouphadnoderivative contracts during thefi The Sanoma Groupdoesnothave anoff 27. Derivative instruments 45.4%) andnetdebt/EBITDA 2.1(2007:1.6). is lessthan3.5.Theequityratio on31December2008was 40.0%(2007: level fortheequityratio isbetween35−45% andfornetdebt/EBITDA it capital structurewhichrepresentsagoodinvestmentgrade. Thetarget The Group’slong-termobjectivewhenmanagingcapitalistomaintaina capital riskmanagement Total Cash andcashequivalents Interest-bearing liability Net debt,EURmillion icial creditrating. 1 082.6 972.0 110.6 2008 nancial year nancialyear 881.4 793.3 2007 88.1

49 notes to the consolidated financial statements 50 notes to the consolidated financial statements 28. Mostsignifi Sanoma MagazinesFinlandLtd, Helsinki Sanoma MagazinesFinland Sanoma Men'sMagazinesB.V., TheNetherlands Mood forMagazinesB.V., TheNetherlands Leadz B.V., TheNetherlands Kieskeurig B.V., TheNetherlands Insidegamer B.V., TheNetherlands ilse mediaB.V., TheNetherlands Sanoma UitgeversB.V., TheNetherlands Sanoma MagazinesNetherlands Websitemaster a.s,TheCzechRepublic OOO UnitedPress,Russia Sanoma MagazinesSlovakia s.r.o., Slovakia Sanoma MagazinesPraha s.r.o., TheCzechRepublic Sanoma Hearst Romania s.r.l., Romania Sanoma Hearst Prague B.V., TheNetherlands Sanoma BudapestKiadóiRészvénytársaság, Hungary Net Info.BGAD,Bulgaria LLC Lux Media,Russia Independent MediaB.V., TheNetherlands Sanoma MagazinesInternationalB.V., TheNetherlands Sanoma MagazinesInternational N.V. UitgeversMaatschappij,Belgium JERVI N.V., Belgium Sanoma MagazinesBelgiumN.V., Belgium Sanoma MagazinesBelgium B.V. Aldipress,TheNetherlands Aldipress Independent MediaHoldingB.V., TheNetherlands Sanoma MagazinesB.V., TheNetherlands sanoma magazines Most signifi Taloussanomat Oy, Helsinki Suorakanava Oy,Pori Skillnet Oy,Jyväskylä Sanomapaino Oy,Helsinki Sanoma Lehtimedia Oy,Anjalankoski Sanoma Kaupunkilehdet Oy,Helsinki Sanoma DigitalOy,Helsinki Sanoma Data Oy,Helsinki AS Sanoma Baltics,Estonia Oikotie Oy,Helsinki Netwheels Oy,Helsinki Lehtikuva Oy,Helsinki Lehtikanta Oy,Kouvola Ilta-Sanomat Oy,Helsinki Helsingin Sanomat Oy,Helsinki Esmerk Oy,Helsinki AÜ Autoportaal, Estonia Sanoma News Ltd,Helsinki sanoma news Suomen Rakennuslehti Oy,Helsinki cant subsidiariesat31Dec2008 cant subsidiaries * * * Parent Company holding, % 0. 100.0 100.0 0. 100.0 100.0 100.0 100.0 company holding,% Sub-Group’s parent 0. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 0. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 0060.0 60.0 holding, % Group 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 90.0 51.0 51.0 55.8 90.0 85.0 65.0 60.0 82.0 55.0 * Parent companyofthesub-group OOO TKPressexpo,Russia Suomalainen Kirjakauppa Oy,Helsinki Suomalainen.com Oy,Helsinki R-Kiosk Romania S.A.,Romania R KioskEesti AS, Estonia OOO R-Kiosk,Russia Printcenter Oy,Helsinki OOO PressPoint International,Russia UAB LietuvosSpaudos VilniausAgentura, Lithuania AB LietuvosSpauda, Lithuania AS Lehepunkt, Estonia OOO KPRoznitsa, Russia UAB ImpressTeva, Lithuania Hiparion DistributionS.A.,Romania OOO HDSCIS,Russia UAB Forum Lithuania CinemasHomeEntertainment, UAB Forum Cinemas,Lithuania SIA Forum Latvia CinemasHomeEntertainment, SIA Forum Cinemas,Latvia Forum CinemasLtd,Ukraine AS Forum Estonia CinemasHomeEntertainment, AS Forum Cinemas,Estonia Finnkino Oy,Vantaa Apollo Raamatud AS, Estonia Rautakirja Ltd,Vantaa sanoma trade Young DigitalPlanet S.A.,Poland WSOY OppimateriaalitOy,Helsinki WS BookwellOy,Porvoo Weilin+Göös Oy,Helsinki Vulcan SP. z.o.o.,Poland Uitgeverij Van InN.V., Belgium Tankönyvmester Kft,Hungary Suomalainen.com Oy,Helsinki Perfekt Gazdasági Tanácsadó, Hungary OktatóésKiadóZrt., NTK-Perfekt Hungary Zrt, Nowa Era Sp. z.o.o.,Poland Nemzeti Tankönyvkiádo Rt,Hungary L.C.G. MalmbergB.V., TheNetherlands UKLimited,TheUnitedKingdom Interverbum LocalizationInterverbum Aktiebolag,Sweden AB,Sweden Interverbum AAC GlobalOy,Helsinki Sanoma InvestB.V., TheNetherlands Werner Söderström Ltd,Helsinki sanoma learning&literature Älypää Oy,Espoo Suomen UrheilutelevisioOy,Helsinki Sanoma Television Ltd,Helsinki Ltd,HelsinkiSanoma Entertainment sanoma entertainment Most signifi cant subsidiariesat31Dec2008 * * Parent Company holding, % 0. 100.0 100.0 100.0 100.0 100.0 100.0 0. 100.0 100.0 company holding,% Sub-Group’s parent 0. 100.0 100.0 100.0 100.0 100.0 100.0 0. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 00100.0 50.0 51.0 51.0 67.5 95.3 67.5 95.3 90100.0 100.0 100.0 70.0 99.0 50.0 99.0 70.0 100.0 98.8 55.1 55.1 holding, % Group 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 96.0 51.0 51.0 51.0 90.7 90.0 90.0 80.0 52.5

51 notes to the consolidated financial statements 52 notes to the consolidated financial statements 29. Joint ventures 30. Related party transactions 30.Related party ownership. Personnel fi are presentedinthefollowingtableasconsolidatedwithproportionate solidation method.Aggregate assets,liabilities,netsales andnetresult Joint ventureshavecon- beenconsolidatedusingtheproportionate 29. Jointventures OOO PublishingHouseIndependentMedia,Ukraine ZAO BusinessNews Media,Russia OOO AlpinaBusinessBooks,Russia Independent MediaHoldingB.V. sanoma magazines at 31Dec2008 Most signifi (full-time equivalents) Average numberofemployees Net resultfortheperiod Expenses Income Net assets Current liabilities Non-current liabilities Current assets Non-current assets Joint ventures,EURmillion SIA Preses Serviss, Latvia SIA PresesServiss, SIA PresesApvieniba,Latvia Narvesen BaltijaSIA,Latvia sanoma trade Egmont Kustannus OyAb,Tampere Sanoma MagazinesFinland AKN CV, TheNetherlands Sanoma Uitgevers Magyar Elöfi Sanoma BliasakBulgariaA.D., Hearst-Sanoma BudapestKft,Hungary Adria MediaHoldingGmbH,Austria Sanoma MagazinesInternational OOO Fashion Press,Russia zetöi Kft.,Hungary cant jointventures gures includethetotalfi gure forthecompanies. Participation of 144.6 160.9 2 993 2008 16.3 26.5 39.9 57.5 13.4 the Group% 4.6 135.8 152.5 2 278 2007 16.6 26.7 41.4 60.3 11.4 49.3 49.3 50.0 50.0 25.0 30.0 50.0 50.0 50.0 50.0 50.0 33.3 50.0 3.6 calculations inNote5. are describedinmoredetailaccountingpolicies(Note1)andpension plans, transactions arenotmaterial.Pension withthoseparties funds sickness fundandemployees’profi includepensionfunds, In addition,theSanoma Group’srelatedparties sented inNote28andthemostsignifi of thejointcontrolagreement.Themostsignifi onthebasis those shareholdersarenotconsideredtoberelatedparties transactionsjoint venturesarenotpresentedasrelatedparty because ate consolidationmethod.Thetransactions oftheothershareholders’ dated fi transactionsas relatedparty becausetheyareeliminatedintheconsoli- actions withintheSanoma Groupandjointventuresarenotpresented Transactions withassociatedcompaniesarepresentedinNote13.Trans- agement. Remuneration forkey managementispresentedinNote31. dent andCEO, PresidentsofthedivisionsandCorporate Centreman- companies andjointventuresaswellmembersoftheBoard,Presi- includesubsidiaries,associated The Sanoma Group’srelatedparties transactions existduringthefi defi indicate relatedparty The Sanoma Grouphadnoothersignifi gures. Jointventureshave beenincludedusingtheproportion- nitions orwithwhichsignifi nancial year. t-sharing funds.Besidespension cant jointventuresinNote29. which cant related parties, cant subsidiariesarepre- cant related party cant relatedparty benefi * 31. Managementcompensation,benefi Figuresincludetheremuneration thathasbeenpaidforassignmentshandledbythosepersonsduringtheperiod.Remuneration i Total Ben Tiesnitsch(asof1June2008) Matti Salmi (until31July2008) Kerstin Rinne(until31August 2008) Mikael Pentikäinen Anu Nissinen(asof25February 2008) Merja Karhapää (asof1August 2008) Tapio Kallioja (until31March2008) Erkki Järvinen Nils Ittonen Kim Ignatius(asof1August 2008) Sven Heistermann (asof4August 2008) Jacques Eijkens Eija Ailasmaa Group Management Total Sakari Tamminen Rafaela Seppälä(asof1April2008) Robin Langenskiöld (until1April2008) Seppo Kievari Sirkka Hämäläinen-Lindfors Paavo Hohti Jane Erkko Robert Castrén Sari Baldauf,ViceChairman Jaakko Rauramo, Chairman Board ofDirectors Hannu Syrjänen President andCEO ownership, 2008 remuneration and Management ts. Optioncostsincludeduringmembership.TheGrouphadnooutstandingreceivables orloansfromthemanagement. * * Remuneration (EUR 1000) 1 207 1 616 0 991 3 301 4 3125 0 0005 0 0006 0 60000 60000 50000 50000 100000 50000 50000 131302 107 23142 948 81 0 20000 1200 11673370 68 10000 12273371 700 54 824 15 68 68 248213 68 127845 7000 67 68 87 Number of shares 0003 0 0003 0 0003 0 15000 30000 30000 30000 40000 30000 37000 30000 37000 37000 37000 30000 50 000 21 088 0 0003 0 40034000 34000 34000 30000 1 600 9 0003 0 00030000 30000 30000 30000 1 199 8 0 0 0 00030000 30000 7000 6000 6000 280 ts andownership Option costs ER100 01 04 04 04 072008 2007 2004C 2004B 2004A 2001C (EUR 1000) 0003 0 7003 0 37000 37000 37000 37000 30 000 0003 0 7003 0 70034000 30000 37000 30000 37000 30000 37000 30 000 37000 30 000 0 0 0 0 0 15000 6000 5 000 5000 5000 5 000 0 0 0 0 50015000 15000 6000 6000 5000 4 000 0002 0 0003 0 30000 30000 34000 20000 34000 20000 34000 20 000 10000 10 000 Number ofstockoptions 00010000 10 000 ncludes fringe

53 notes to the consolidated financial statements 54 notes to the consolidated financial statements amount tosome60%ofhisaverage salaryfromthelasttenfullcalen- age of60,unlessitisspecifi According tohisexecutivecontract, Hannu Syrjänen willretireatthe other benefitsofthemanagement year canbefoundintheSanoma’s insiderregisteratSanoma.com. Changes inownershipofsharesandstockoptionsduringthefi or debtstothemanagement. The remuneration includesfringebenefi * Thefi Total Matti Salmi Kerstin Rinne Mikael Pentikäinen Tapio Kallioja Erkki Järvinen Nils Ittonen Jacques Eijkens Eija Ailasmaa Group Management ownership, 2007 remuneration and Management Total Sakari Tamminen Robin Langenskiöld Seppo Kievari Sirkka Hämäläinen-Lindfors Paavo Hohti Jane Erkko Robert Castrén Sari Baldauf,ViceChairman Jaakko Rauramo, Chairman Board ofDirectors Hannu Syrjänen President andCEO gures includetheremuneration thathasbeenpaidforthedutiesperformed bythepersonsresponsibleforthemduringperi * * cally agreed otherwise, and his pension will andhispensionwill cally agreedotherwise, Remuneration (EUR 1000) ts. Optioncostsincludeforthemembershipperiod.TheGrouphad nooutstandingliabilities 9 1168 2 794 231 1 431 7 3125 0 0005 0 00060000 50000 50000 50000 50000 23142 870 95001 0 20000 15000 1200 5000 12273371 100000 200 58 80000 824 58 59 61 248213 59 127845 7000 57 51322 58 73 78 Number of shares 0001 0 0003 0 0003 0 30000 30 000 30000 30000 30000 15000 50 000 9 5003 0 0003 0 30 000 30000 34 000 30000 34000 30000 34000 15000 37000 30000 37000 12500 37000 37000 30000 1 199 15000 1 600 6 088 nancial Option costs ER100 01 01 04 04 04 2007 2004C 2004B 2004A 2001C 2001B (EUR 1000) competition clause. of 30months’salary.Theseverance payissubjecttoafi agreement endsduetoatakeover bid,severance payistheequivalent is endedbecauseofgrossprocedurebythePresidentandCEO. Ifthe severance payequals18monthsofhissalary,unlesstheagreement period ofnotice(bothfromthePresidentandCompany),his dar years. The President and CEO’s service issubjecttoasix-month years. ThePresidentandCEO’s service 0 0003 0 00030000 30000 30000 30000 3 000 0003 0 7003 0 37000 37000 37000 37000 30 000 0003 0 7003 0 37000 37000 37000 37000 30 000 Number ofstockoptions 0001 0 40034000 34000 10000 10 000 xed-term non- od. have asignifi rial impactonthefi events forwhichadjustmentstheperiodwouldhave hadanymate- Sanoma managementdoesnothave knowledgeofanysignifi 32. Events afterthebalancesheetdate No sucheventshave arisenafterthebalancesheetdatethatwould cant impactontheGroup’sfi nancial statements. nancial position. cant

55 notes to the consolidated financial statements Deﬁ nitions of key indicators

Return on equity (ROE), % Result for the period = x 100 Equity total (average of monthly balances)

Return on investment (ROI), % Result before taxes + interest and other ﬁ nancial expenses = x 100 Balance sheet total - non-interest-bearing liabilities (average of monthly balances)

Equity ratio, % Equity total = x 100 Balance sheet total - advances received

Net gearing, % Interest-bearing liabilities - cash and cash equivalents = x 100 Equity total

Earnings/share (EPS) = Result for the period attributable to the equity holders of the Parent Company Adjusted average number of shares on the market

Cash ﬂ ow/share = Cash ﬂ ow from operations Adjusted average number of shares on the market

Equity/share = Equity attributable to the equity holders of the Parent Company Adjusted number of shares on the market at the balance sheet date

Dividend payout ratio, % Dividend/share definitions of key indicators = x 100 Result/share 56

Market capitalisation = Number of shares on the market at the balance sheet date x share price on the last trading day of the year

Effective dividend yield, % Dividend/share = x 100 Share price on the last trading day of the year

P/E ratio = Share price on the last trading day of the year Result/share

Interest-bearing net debt = Interest-bearing liabilities - cash and cash equivalents Sanoma is included in the Consumer Discretionary sector index of Shares and shareholders NASDAQ OMX Helsinki, as well as in the OMX Helsinki Cap, OMX Hel- sinki and OMXH25 indices. In addition, the share is included in several Dow Jones STOXX indices (e.g., Total Market Index, Media, Nordic, Global and 600). For a complete list of the STOXX indices in which the Sanoma share is included, see Stoxx.com. Sanoma’s share has been listed since 1 May 1999. The shares are entered in the book-entry securities system operated by Euroclear Fin- land Ltd.

treasury shares

At the end of the year 2008, the Company held a total of 2,425,000 Sanoma shares, representing 1.49% of the Company’s shares and votes. The shares held by Sanoma have no accountable par; however, the calculated par value of the treasury shares held by the Company was EUR 1,059,552.10. Sanoma began repurchasing its shares on 10 August 2007 under the 2007 AGM authorisation. On 1 April 2008, the AGM issued a new authorisation to repurchase the Company’s own shares and the share buybacks under this authorisation started on 12 June 2008. In 2008, Sanoma repurchased, under these authorisations, a total of 2,984,097 of the Company’s own shares. On 7 February 2008, Sanoma’s Board decided to cancel all treasury shares held by the Company, a total of 3,136,000 shares, equal to 1.9% of the Company’s shares and votes. The cancellation did not aﬀ ect the Company’s share capital. The cancellation was entered into the Trade Register on 18 February 2008. After the review period, on 10 February 2009, Sanoma’s Board of Direc- share information tors decided to cancel all treasury shares held by the Company. The cancellation did not aﬀ ect the Company’s share capital. It was entered into According to Sanoma’s Articles of Association, the Company’s minimum the Trade Register on 19 February 2009. After the cancellation, Sanoma share capital is EUR 50,000,000 and the maximum is EUR 300,000,000, retains the authority to repurchase a further 7,620,000 of its own shares within which limits the share capital may be increased or reduced with- under the current AGM authorisation. out amendment of the Articles of Association. On 31 December 2008, Sanoma’s registered share capital amounted board authorisations to EUR 71,258,986.82 and the number of shares was 163,090,651. Dur- ing 2008, Sanoma’s share capital increased by EUR 137,146.26 due to The AGM held on 1 April 2008 authorised the Board of Sanoma to decide share subscriptions with stock options. Changes in share capital can be on the repurchase of the Company’s own shares, valid until the AGM found at Sanoma.com. of 2009. A maximum of 8,285,000 shares could be repurchased, cor-

Sanoma has one share series, with all shares entitling the holders responding to 5.1% of the Company’s shares and voting rights at the shares and shareholders to equal voting and shareholder rights. Shares in Sanoma or securi- end of March 2008. These treasury shares will not be repurchased in 57 ties entitling one to said shares do not have any redemption or approval proportion to the shareholdings of the existing shareholders. They will clauses, or other transfer restrictions. be repurchased with the Company’s unrestricted equity at the market price at the time of repurchase on NASDAQ OMX Helsinki. However, the listing of share and options minimum repurchase price of a share is the lowest market price in public trading and the maximum repurchase price is the highest price quoted Sanoma’s share (SAA1V) and the Company’s 2001C, 2004A and 2004B in public trading during the authorisation period. The Board decided on 1 stock options are listed on NASDAQ OMX Helsinki (Large Cap, Consumer April 2008 to deploy the authorisation and the repurchase of own shares Discretionary Sector). commenced on 12 June 2008.

Trading codes Sanoma share 2001C stock options 2004A stock options 2004B stock options

NASDAQ OMX Helsinki SAA1V SAA1VEW301 SAA1VEW104 SAA1VEW204 Startel SAA1V SAA1VEW301 SAA1VEW104 SAA1VEW204 Bloomberg SAA1V FH SAA1V301 FH SAA1V104 FH SAA1V204 FH Reuters SAA1V.HE SAA1VEW301.HE SAA1VEW104.HE SAA1VEW204.HE In addition, the Board has a valid authorisation to increase the share Including the non-distributed or returned 2001C, 2004A, 2004B, capital. According to the authorisation issued by the AGM on 4 April 2004C, 2007 and 2008 stock options held by Sanoma subsidiary Las- 2007, the Board may decide, until the AGM of 2010, on the issue of tannet Oy, the potential combined dilution eff ect of the stock option new shares, the transfer of treasury shares and the granting of special schemes on 31 December 2008 would be 9,200,000 shares, accounting rights entitling to shares. The authorisation does not exclude the right for 5.3% of the post-conversion shares and votes. of the Board of Directors to decide on a directed share issue. With this authorisation, and as a result of the use of special rights, the Board is stock options authorised to decide on the issuance of a maximum of 82,000,000 new shares and the transfer of a maximum of 5,000,000 treasury shares. In Sanoma has four stock option schemes in place: a directed share issue, a maximum of 41,000,000 shares may be issued • Warrant Scheme 2001, authorised by the EGM of 21 August 2001. or transferred. With this authorisation, the Board is authorised to issue a • Stock Option Scheme 2004, authorised by the AGM of 30 March maximum of 5,000,000 stock options as part of an incentive programme 2004. within the Company. Under this authorisation, Sanoma’s Board decided • Stock Option Scheme 2007, authorised by the AGM of 4 April 2007. on 19 December 2008 to issue the stock option scheme 2008. • Stock Option Scheme 2008, authorised by the AGM of 4 April 2007. During the review period, the authorisation by the AGM of 4 April 2007 for repurchase own shares was in force. The authorisation allowed The stock option schemes cover all of Sanoma’s divisions and the Group’s the repurchase of a maximum of 8,200,000 Company shares. These Parent Company. Stock options have been and will be distributed to the shares were not to be repurchased in relation to the holdings of existing management of the Sanoma Group in accordance with the decisions of shareholders. They were repurchased with the Company’s unrestricted the Board of Directors. On 31 December 2008, under Warrant Scheme equity at the market price at the moment of repurchase - however, in 2001 there were, in total, 1,084,500 stock options outstanding and 138 such a way that the minimum repurchase price of a share was the low- senior managers at Sanoma held these 2001 options. The number of est market price in public trading and the maximum repurchase price outstanding 2004 stock options was 3,281,600, and they were held by was the highest price noted in public trading during the authorisation 251 senior managers. The number of options outstanding under Stock period. The share repurchases commenced on 10 August 2007, and the Option Scheme 2007 was 1,233,050, held by 257 senior managers. The authorisation remained valid until 1 April 2008. number of options outstanding under Stock Option Scheme 2008 was 1,335,750, held by 287 senior managers. The remaining 2001C, 2004A, number of shares and options 2004B, 2004C, 2007 and 2008 stock options have been allocated to fully-owned Sanoma subsidiary Lastannet Oy, and the Sanoma Board of Directors will decide on their issuance at a later date. The Board of Directors may extend the group of parties entitled to Number of shares at 31 Dec 2008 stock options, or decide on the issuance of stock options in connection with corporate transactions or recruitment. In the event the stock option Number of shares at 31 Dec 2008 163 090 651 holder’s contract of employment or service terminates before the begin- Adjusted average number of shares 160 900 511 ning of the share subscription period, he or she will be required to off er Total number of treasury shares 2 425 000 the stock options back to the Company, without receiving compensation Number of outstanding shares * 160 665 651 for any value increment related to these stock options. However, this does not apply to those whose employment or service contract is ren- Number of shares if all stock options dered no longer eff ective for reason of retirement or death. issued were converted into shares The 2001C tranche of Warrant Scheme 2001 as well as the 2004A and 2004B tranches of Stock Option Scheme 2004 are listed on NASDAQ Number of outstanding shares at shares and shareholders 160 665 651 OMX Helsinki. The subscription period for 2001B stock options ended 31 December 2008 on 30 November 2008, and their listing on NASDAQ OMX Helsinki was 58 2001C stock options 1 084 500 ended on 24 November 2008. In 2008, there were a total of 826,859 2004A stock options 1 072 400 new shares subscribed with stock options, of which 292,462 with 2001A 2004B stock options 1 027 700 stock options and 534,397 with 2001B stock options. New shares subscribed for with stock options entitle the subscribers to all shareholder 2004C stock options 1 181 500 rights from the date of entry of the increase in share capital into the 2007 stock options 1 233 050 Trade Register. 2008 stock options 1 335 750 Information on stock options held by Sanoma’s Board of Directors and Number of outstanding shares, diluted, Group Management can be found in Note 31. A daily update on insider 167 600 551 at 31 December 2008 holdings in traded stock options can be found at Sanoma.com. More detailed information on the terms and conditions for these schemes * Does not include treasury shares held by the Company. (e.g., subscription prices and periods) can be found in Note 20.

Shares to be subscribed for on the basis of the stock options issued would account for 4.1% of all Sanoma’s shares and votes, if all of these stock options were exercised. share performance average share price and turnover, 2008

Trading in Sanoma shares was active in 2008. The number of Sanoma 25 000 000 25 shares traded totalled 100,271,123 (92,576,174) in 2008. Traded shares accounted for 62% (56%) of the average number of shares in issue dur- 20 000 000 20 ing the year. Sanoma’s total stock exchange turnover was EUR 1,500.2 15 000 000 15 (2,014.5) million. In 2008, the volume-weighted average price of a share was EUR 10 000 000 10 14.84, with a low of EUR 8.31 and a high of EUR 19.87. On 31 December 2008, Sanoma’s market capitalisation, excluding treasury shares held 5 000 000 5 by the Company was EUR 1,479.7 (3,196.2) million, with Sanoma’s share closing at EUR 9.21 (19.63). 0 0 1 2 3 4 5 6 7 8 9 10 11 12

turnover, shares average price, euro

average share price and turnover, 2004–2008 *

25 000 000 25

20 000 000 20

15 000 000 15

10 000 000 10

5 000 000 5

0 0 1/2004 1/2005 1/2006 1/2007 1/2008

turnover, shares average price, euro shares and shareholders sanoma share against indices, 2004–2008 * 59

250

200

150

100

0 2004 2005 2006 2007 2008

sanoma omx helsinki benchmark cap omx helsinki omx helsinki consumer

* Prior to the share series combination in 2006, Sanoma had two share series. The graph includes the development of Series B shares. The latest share prices and information on trading can be found at Sanoma.com. dividend/share eur dividend policy

2.00 Sanoma follows an active dividend policy and primarily pays out over half of the Group’s result after taxes in the form of dividends. 1.50

* The Board of Directors proposes a dividend of EUR 0.90 (EUR 1.00) per share for 2008.

1.00 0.90 shareholders 0.50

On 31 December 2008, the Company had 18,753 shareholders, with for- 0.00 eign holdings accounting for 10.9% (11.4%) of all shares and votes. 2007 2005 2008 2006 2004 shareholder agreements

The Board of Directors is unaware of any eﬀ ective agreements related to earnings/share eur holdings in Sanoma shares and the exercise of voting rights.

2.00 management shareholdings

1.50 On 31 December 2008, the combined holdings in the Company shares of members of the Board of Directors, the President and CEO, and the 1.00 bodies they control (as referred to in Chapter 1, Section 5 of the Finn- 0.72 ish Securities Market Act) accounted for 7.49% (7.70%) of all shares and 0.50 votes. If all outstanding, non-distributed and returned stock options were to be converted into shares through subscriptions and the Board 0.00 members exercised all of their subscription rights, the combined holdings of the Board members and President and CEO (including the bod- 2007 2005 2008 2006 2004 ies they control) would account for 7.28% of the total post-conversion number of shares and votes, provided that no other changes occur. More detailed information on the holdings of the Board of Directors cash flow from eur and Group Management can be found in Note 31 and on the Group’s web- operations / share site. 2.00 Sanoma’s guidelines on insider trading can be found on page 73 and

1.56 on the Group’s website. 1.50 major changes in shareholdings 1.00 There were no major changes in share ownership in 2008, and Sanoma 0.50 did not issue any ﬂ agging announcements. shares and shareholders

60 0.00 2007 2005 2008 2006 2004

equity/share eur

10.00

7.50 7.59

5.00

2.50

0.00 2007 2005 2008 2006 2004

* Proposal of the Board of Directors to the AGM major shareholders at 31 december 2008

Shareholder Shares, total Of shares and votes, %

1 Erkko Aatos 37 483 619 22.98 Erkko Aatos 25 680 076 15.75 Oy Asipex Ab 11 803 543 7.24 2 Langenskiöld Robin 12 273 371 7.53 3 Seppälä Rafaela 11 673 370 7.16 4 Helsingin Sanomat Foundation 6 001 570 3.68 5 Ilmarinen Mutual Pension Insurance Company 3 669 295 2.25 6 Alfred Kordelin Foundation 3 615 325 2.22 7 Mandatum Life Insurance Company Limited 2 710 945 1.66 8 Varma Mutual Pension Insurance Company 2 576 925 1.58 9 Sanoma Corporation 2 425 000 1.49 10 Foundation for Actors' Old-Age Home 2 249 357 1.38 11 The WSOY's Literature Foundation 2 075 000 1.27 12 Svenska litteratursällskapet i Finland r.f. 2 054 000 1.26 13 The State Pension Fund 2 000 000 1.23 14 The Finnish Literature Society (SKS) 1 915 318 1.17 15 The Finnish Cultural Foundation 1 654 690 1.01 16 Aubouin Lorna 1 268 970 0.78 17 Noyer Alex 1 268 965 0.78 18 Oy Premiere Holding Ab 1 210 000 0.74 19 OP-Delta Fund 1 157 254 0.71 20 Kaleva Mutual Insurance Company 988 026 0.61 Total 100 271 000 84.48

Nominee registrations, total 14 035 153 8.61

Shareholders are grouped according to the direct holdings of individual shareholders and the shares held by their investment companies and are stated as aggregate amounts and speciﬁ ed by category. The shareholdings of companies belonging to the same group are both stated as aggregate

amounts and speciﬁ ed by category. A list of the major shareholders (updated monthly) can be found at Sanoma.com. shares and shareholders

61 shareholders by sector at 31 dec 2008

Sector Number of shareholders % Number of shares %

Companies 1 176 6.27 21 296 674 13.06 Financial and insurance institutions 102 0.54 10 236 295 6.28 Public entities 55 0.29 11 920 015 7.31 Households 16 725 89.18 71 180 705 43.64 Non-proﬁ t organisations 570 3.04 28 109 164 17.24 Foreign registrations 112 0.60 3 800 410 2.33 Nominee registrations 13 0.07 14 035 153 8.61 Total 18 753 99.99 160 578 416 98.46

On Sanoma ownership 1 0.01 2 425 000 1.49 On joint account 87 235 0.05 Number of shares on the market 163 090 651 100.00

shareholders by sector (% of shares and votes)

households 43.64

shares and shareholders 17.24 non-profit organisations

public entities 7.31 2.33 foreign registrations

financial and insurance institutions 6.28 8.61 nominee registrations

companies 13.06 0.05 1.49 on sanoma ownership on joint account shareholders by number of shares owned at 31 dec 2008

Number of shares Number of shareholders % Number of shares %

1–100 4 412 23.53 281 367 0.17 101–1 000 10 609 56.57 4 410 725 2.70 1001–10 000 3 198 17.05 9 290 643 5.70 10 001–100 000 429 2.29 12 577 935 7.71 100 001– 105 0.56 134 017 746 82.17 Total 18 753 99.99 160 578 416 98.46

On Sanoma ownership 1 2 425 000 1.49 On joint account 87 235 0.05 Number of shares on the market 163 090 651 100.00

shareholders by number of shares owned (% of shares and votes)

10 001–100 000 7.71 82.17 100 001– shares and shareholders

63 1001–10 000 5.70

1.49 on sanoma ownership

101–1 000 2.70 0.17 0.05 on joint account 1–100 Parent Company income statement, FAS

EUR million 1.1–31.12.2008 1.1–31.12.2007

Other operating income 14.7 4.4 Personnel expenses 11.9 7.2 Depreciation and impairment losses 1.3 0.9 Other operating expenses 13.6 11.2 Operating proﬁ t (loss) -12.1 -14.9 Financial income and expenses 106.9 172.0 Result before extraordinary items 94.8 157.1 Extraordinary items 80.6 99.1 Result before appropriations and taxes 175.4 256.2 Appropriations -0.1 0.0 Income taxes 11.9 10.6 Result for the year 187.2 266.8 parent company income statement company parent

64 Parent Company balance sheet, FAS

EUR million 31.12.2008 31.12.2007

assets

Non-current assets

Intangible assets 3.0 3.4 Tangible assets 9.2 11.0 Investments 1 779.1 1 765.9 Non-current assets, total 1 791.2 1 780.3

Current assets

Long-term receivables 1.3 0.7 Short-term receivables 499.0 348.0 Securities 0.1 1.6 Cash and cash equivalents 49.1 17.0 Current assets, total 549.5 367.3 assets, total 2 340.7 2 147.6

equity and liabilities

Shareholders' equity

Share capital 71.3 71.3 Premium fund 171.5 Treasury shares -37.5 -51.6 Fund for invested unrestricted equity 176.6 Retained earnings 330.7 288.1 Proﬁ t for the year 187.2 266.8 Shareholders' equity, total 728.2 746.0

Appropriations 0.3 0.2

Provisions 3.6

Liabilities parent company balance sheet company parent Non-current liabilities 400.0 290.0 65 Current liabilities 1 208.6 1 111.4 equity and liabilities, total 2 340.7 2 147.6 Parent Company cash ﬂ ow statement, FAS

EUR million 1.1–31.12.2008 1.1–31.12.2007

Operations

Result for the period 187.2 266.8 Adjustments Income taxes -11.9 -10.6 Appropriations 0.1 0.0 Extraordinary items -80.6 -99.1 Financial income and expenses -106.9 -172.0 Depreciation and decrease in value 1.3 0.9 Profi t on sales of non-current assets -1.5 -0.4 Profi t of mergers -7.3 Change in working capital Change in trade and other receivables 0.0 -2.0 Change in trade and other payables, and provisions 3.3 0.0 Interest paid -74.6 -60.5 Other fi nancial items -2.5 -0.2 Group contributions 133.9 130.1 Dividends received 134.8 195.0 Taxes paid -25.6 -38.6 Cash fl ow from operations 149.7 209.4

Investments

Acquisition of tangible and intangible assets -0,7 -2.0 Acquisition of other holdings -5,1 -0.4 Sales of tangible and intangible assets 2,2 0.4 Sales of other investments 2,4 Loans granted -251,0 -75.0 Repayments of loan receivables 63,5 106.1 parent company cash flow statement cash flow company parent Interest received 50,2 39.9 66 Cash ﬂ ow from investments -138,5 69.1

Cash ﬂ ow before ﬁ nancing 11,2 278.5

Financing

Proceeds from share subscriptions 5.1 5.2 Purchase of treasury shares -48.2 -51.0 Change in loans with short maturity -43.4 64.8 Drawings of other loans 655.4 450.5 Repayments of other loans -373.0 -630.8 Dividends paid -160.8 -156.7 Donations/other profi t sharing -0.5 -0.4 Cash fl ow from fi nancing 34.6 -318.5

Change in cash and cash equivalents according to cash ﬂ ow statement 45.9 -40.0 Net increase(+)/decrease(-) in cash and cash equivalents 45.9 -40.0 Cash and cash equivalents at 1 Jan 2.9 42.9 Cash and cash equivalents at 31 Dec 48.7 2.9 Parent Company Parent Company shareholders’ equity contingent liabilities

Shareholders’ equity, EUR million 2008 2007 Contingent liabilities, EUR million 2008 2007

Restricted equity Contingencies incurred on behalf of Group companies Share capital at 1 Jan 71.3 70.9 Guarantees 107.8 93.7 Increase in share capital 0.2 Total 107.8 93.7 Unregistered use of stock options 0.1 Share capital at 31 Dec 71.3 71.3 Contingencies incurred on behalf of associated companies Premium fund at 1 Jan 171.5 164.9 Guarantees 10.5 7.9 Increase in share premium 6.6 Total 10.5 7.9 Transfer to other funds -171.5 Total 118.2 101.6 Premium fund at 31 Dec 171.5 Restricted equity 31 Dec 71.3 242.7 Sanoma Corporation had no derivative contracts during the ﬁ nancial year Unrestricted equity or previous year. Treasury shares at 1 Jan -51.6 Purchase of treasury shares -47.6 -51.6 Cancellation of treasury shares 61.6 Treasury shares at 31 Dec -37.5 -51.6

Fund for invested unrestricted equity at 1 Jan Transfer to other funds 174.8 Increase in fund for invested 1.8 unrestricted equity Fund for invested unrestricted equity 176.6 at 31 Dec

Retained earnings at 1 Jan 554.8 445.2 shareholders’ equity and contingent liabilities company parent Dividends -160.8 -156.7 67 Cancellation of treasury shares -61.6 Other changes -1.7 -0.4 Retained earnings at 31 Dec 330.7 288.1

Proﬁ t (loss) for the year 187.2 266.8 Unrestricted equity 31 Dec 656.9 503.3 Total 728.2 746.0

Further information on share capital is presented in Note 19 to the Finan- cial Statements.

Distributable earnings, EUR million 2008 2007

Treasury shares -37.5 -51.6 Fund for invested unrestricted equity 176.6 Retained earnings 330.7 288.1 Proﬁ t (loss) for the year 187.2 266.8 Total 656.9 503.3 Board’s proposal for distribution of proﬁ ts and signatures

At 31 December 2008, Sanoma Corporation’s distributable earnings total EUR 656,898,620.11, of which the proﬁ t for the year is EUR 187.215.196.47.

The Board of Directors will propose to the Annual General Meeting that • a dividend of EUR 0.90 per share shall be paid EUR 146,781,585.90 * • the following amount shall be transferred to the donation reserve and used at the Board’s discretion EUR 500,000.00 • shareholders’ equity shall be set at EUR 509,617,034.21

No essential changes have taken place in the ﬁ nancial status of the Company after the ﬁ nancial year. The Company’s liquidity is good and according to the Board of Directors the proposed dividend will not compromise the Company’s liquidity.

* The dividend will be paid to shareholders registered with the Shareholder Register maintained by Euroclear Finland Ltd on the record date set by the Board for payment of the dividend, Monday 6 April 2009. The Board will propose to the Annual General Meeting that the dividend will be paid on Wednesday 15 April 2009.

Signatures to the Financial Statements and the Board of Directors’ Report

Helsinki, 10 February 2009

Jaakko Rauramo Sari Baldauf Chairman Vice Chairman board’s proposal for distribution of profits and signatures board’s

Robert Castrén Jane Erkko Paavo Hohti

Sirkka Hämäläinen-Lindfors Seppo Kievari Rafaela Seppälä

Hannu Syrjänen Sakari Tamminen Auditors’ report to the annual general meeting Opinion on the consolidated fi nancial statements of sanoma corporation In our opinion, the consolidated fi nancial statements give a true and fair We have audited the accounting records, the fi nancial statements, the view of the fi nancial position, fi nancial performance, and cash fl ows of report of the Board of Directors, and the administration of Sanoma Cor- the Group in accordance with International Financial Reporting Stand- poration for the year ended on 31 December 2008. The fi nancial state- ards (IFRS) as adopted by the EU. ments comprise the consolidated balance sheet, income statement, cash fl ow statement, statement of changes in equity and notes to the Opinion on the company’s fi nancial statements consolidated fi nancial statements, as well as the Parent Company’s bal- and the report of the Board of Directors ance sheet, income statement, cash fl ow statement and notes to the fi nancial statements. In our opinion, the fi nancial statements, together with the consolidated fi nancial statements included therein, and the report of the Board of The responsibility of the Board of Directors Directors give a true and fair view of the fi nancial performance and fi nan- and the President and CEO cial position of the company in accordance with the laws and regulations governing the preparation of the fi nancial statements and the report of The Board of Directors and the President and CEO are responsible for the the Board of Directors in Finland. The information in the report of the preparation of the fi nancial statements and the report of the Board of Board of Directors is consistent with the information in the fi nancial Directors and for the fair presentation of the consolidated fi nancial state- statements. ments in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the fair presentation of the Opinion on the discharge from liability Parent Company’s fi nancial statements and the report of the Board of and disposal of distributable funds Directors in accordance with laws and regulations governing the preparation of the fi nancial statements and the report of the Board of Direc- The consolidated fi nancial statements and the Parent Company’s fi nan- tors in Finland. The Board of Directors is responsible for the appropriate cial statements can be adopted and the members of the Board of Direc- arrangement of the control of the company’s accounts and fi nances, and tors and the President and CEO of the Parent Company can be discharged the President and CEO shall see to it that the accounts of the company from liability for the period audited by us. The proposal by the Board of are in compliance with the law and that its fi nancial aff airs have been Directors regarding the disposal of distributable funds is in compliance arranged in a reliable manner. with the Finnish Limited Liability Companies Act.

Auditors’ responsibility auditors’ report auditors’ Our responsibility is to perform an audit in accordance with good au diting practice in Finland, and to express an opinion on the Parent Company’s 69 fi nancial statements, on the consolidated fi nancial statements and on Helsinki, 10 February 2009 the report of the Board of Directors based on our audit. Good auditing practice requires that we comply with professional ethical requirements and plan and perform the audit to obtain reasonable assurance KPMG OY AB whether the fi nancial statements and the report of the Board of Directors are free from material misstatement and whether the members of the Board of Directors and the President and CEO have complied with the Finnish Limited Liability Companies Act. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements and the report of the Board of Directors. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of mate- Pekka Pajamo Kai Salli rial misstatement of the fi nancial statements, whether due to fraud or Authorised Public Accountant Authorised Public Accountant error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements and the report of the Board of Directors. The audit has been performed in accordance with good auditing practice in Finland. We believe that the audit evidence we have obtained is suff icient and appropriate to provide a basis for our audit opinion. 70 corporate governance Group level. corporate governance principlesandoperational policies defi Sanoma’s divisionsoperate withinthe scopeofstrategies, goalsand systems,andpolicyguidelines. bility, commonplanningandreporting organisational structure,well-defi Group-wide co-operation projects. responsible fortheGroup’sstrategic control,corporate functionsand ture andSanoma Trade. Sanoma Corporation, theParent Company,is Sanoma News, Sanoma Sanoma Learning Entertainment, &Litera- The Sanoma Groupcomprisesfi corporate structure available ontheSecuritiesMarket Association’s websiteatCgcode.fi mation) canbefoundontheGroup’swebsite. ofassociation,releases, eventsandshareinfor- an investor(e.g.articles internal auditactivityandexternalaudit.Otherinformationrelevant to organisation oftheGroup’sriskmanagement,internalcontrolsystems, are approved,theywillbeupdatedatSanoma.com during2009. decided uponintheSanoma Boardanditscommittees.After thepolicies Audit Committeeresponsibilities).Thesepolicieswillbediscussedand fi in thenewCode,forcesinceJanuary 2009,requireSanoma torede- Parent Company’sBoardofDirectors.Sometherecommendations dation 10governingthetermofBoardmembers. by theSecuritiesMarket Association, ofRecommen- withtheexception Sanoma adherestothenewFinnishCorporate GovernanceCodeissued Corporate governance corporatene certain governancepolicies(suchasthepolicyon Management oftheGroupandits businessesisbasedonaclear More informationaboutthenewFinnishCorporate GovernanceCodeis Risk managementsection(p.74–76)containsinformationaboutthe Sanoma’s Corporate GovernancePrinciplesaredeterminedbythe ned areasofauthorityandresponsi- ve divisions:Sanoma Magazines, ned at the . posals, canbefoundontheGroup’swebsite. [email protected]. or proposalforthedecision,shouldbesentwellinadvance byemailto ers’ meeting.Therequest,togetherwithastatementofthereasons Meetings accordingtotheAct, bedealtwithbythenextSharehold- her proposal,inmattersthatfall withinthecompetenceofGeneral also, inwritingtothecompany’sBoardofDirectors,requestthathisor therein. pares matterstobediscussedthereandimplementsdecisionsmade The Sanoma BoardofDirectorscallstheShareholders’meeting,pre- • • • • • • • Matters decideduponbytheAGM include: months andnolaterthan17daysbeforethemeeting. circulated newspaperspecifi Notice oftheShareholders’meetingispublishedinatleastonewidely end ofthefi ciation. ofAsso-convening atleastonceayearinaccordancewiththeArticles The Shareholders’meetingisSanoma’s highestdecision-makingbody, Shareholders’ Meeting the BoardofDirectors,andPresidentCEO. Sanoma’s administrative bodiescomprisetheShareholders’meeting, administrative bodies longer thanoneyear inordertofamiliarise themselves withandcommit makes itnecessary forBoardmemberstosit ontheBoardforaterm three years.TheCompanyholdsthe viewthatthenatureofitsbusiness Board membershouldbeoneyear. ThatofaSanoma Boardmemberis be electedtotheBoardofDirectors. the ageof75,orwhowillturn75during hisorherprospectiveterm,may ofAssociation,the term.InaccordancewithArticles nopersonover of year term,anewmembershallbeelectedfortheremainingportion If aBoardmember’sseatbecomesvacant beforetheendofthisthree- the electionandendsafterthirdAGM followinghisorherelection. the Chairmanshallhave thecastingvote. more thanhalfofitsmembersarepresent.Intheeventatiedvote, as Boardmembers.Themeetingconstitutesaquorumwhen addition, amaximum oftwoemployeerepresentativesmaybeelected tors comprises5–11memberselectedbytheShareholders’meeting. In In accordancewithSanoma’s ofAssociation, Articles theBoardofDirec- Board ofDirectors

Details aboutAGMs, suchas noticesforthemeetingsandBoard’spro- Under theFinnishLimitedLiabilityCompaniesAct, ashareholdermay electing auditorsanddeterminingtheirremuneration. as welldecidingonBoardremuneration Board memberstoreplaceoutgoingmembers, electing theBoard’sChairman,ViceChairmanand ofAssociationdeciding onamendmentstotheArticles determining thenumberofSanoma’s Boardmembers and CEO fromliability discharging themembersofBoardDirectorsandPresident using theprofi adopting thefi The AnnualGeneral Meeting(AGM) conveneswithinsixmonthsofthe According totheFinnish Corporate GovernanceCode,thetermofa A Boardmember’stermbeginsattheconclusionofAGM making nancialyearatatimestipulatedbytheBoardofDirectors. t shownonthebalancesheet nancial statements ed bytheBoard,noearlierthanthree • • • • • • • Sanoma’s BoardofDirectors: CEO Syrjänen iscurrentlyintheCompany’sservice. in thethreeyearspriortohismembershipofBoardandPresident stipulated inthecode:ChairmanRauramo was intheCompany’sservice and Hannu Syrjänen arenotdirectorsindependentoftheCompanyas are independentoftheCompany.OfBoardmembers,Jaakko Rauramo ent oftheCompany.Consequently,majorityBoardmembers Jane Erkko andRafaela Seppäläarealsonon-executivedirectorsindepend- shareholders, asstipulatedintheFinnishCorporate GovernanceCode. are non-executivedirectorsindependentoftheCompanyanditsmajor Hohti, Sirkka Hämäläinen-Lindfors, SeppoKievari andSakari Tamminen) the CompanycanbefoundinNote31. p.46–47anddetailsoftheirholdingsinbe foundintheAnnualReport, and Sari BaldauftheViceChairman.TheBoardmembers’detailscan upon theAGM in2011.Jaakko Rauramo istheChairmanofBoard that ofRobert Castrén,Jane Erkko, Paavo HohtiandRafaela Seppälä Lindfors, SeppoKievari andHannu Syrjänen upontheAGM in2010;and Tamminen willexpireuponthe2009AGM; thatofSirkka Hämäläinen- ten members.ThetermofJaakko Rauramo, Sari BaldaufandSakari bers areelectedeveryyear. adopted apractice wherebyapproximatelyone-thirdofitsBoardmem- to theGroup’soperations. Inordertosecurethecontinuity,Sanoma has redefi fi Committee, allofwhosepoliciesandresponsibilitieshave beencon- the Audit Committee,theCompensation CommitteeandtheEditorial tion totheExecutiveCommittee,Sanoma’s Boardcommitteesinclude authorised toappointothercommitteesasitdeemsappropriate.Inaddi- ofAssociation.meetings, inaccordancewiththeArticles TheBoardis The ExecutiveCommitteepreparesmattersfordiscussionatBoard duties andcompositionofboardcommittees eight times,withanaverage attendancerate of98%. ment processonaregularbasis.In2008,theBoardofDirectorsmet In ordertodevelopitsperformance,theBoardemploysaself-assess- present atallmeetings. (Vice Chairman)andHannu Syrjänen. at Boardmeetings,comprisesJaakko Rauramo (Chairman), Sari Baldauf totheBoardofDirectors. code. Thecommitteesregularlyreport rmed by theBoardofDirectors.TheAudit committeepolicywillbe

confi decides onmajorinvestments and itsdivisions confi decides onthemajorstrategic directionoftheGroupanditsdivisions determines theirremuneration Helsingin Sanomat porate CentreManagementGroupandtheSeniorEditors-in-Chief of are ExecutiveManagementGroupmembers,membersoftheCor- presidents andtheirdeputies,theParent Companyexecutiveswho appoints theGroup’sPresidentandCEO, hisorherdeputy,divisions’ of itsoperations ble fortheGroup’sadministration andfortheappropriateorganisation oftheFinnishLimitedLiabilityCompaniesAct, responsi- is, byvirtue Over halfoftheBoardmembers(Sari Baldauf,Robert Castrén,Paavo The currentBoard,electedbytheAGM of1April2008,comprises The Committeeconvenedseventimes in2008,withallmembers the executivecommittee,which prepares matterstobediscussed ned during2009tobetterrefl rms theGroup’sgeneral principlesbyissuingpolicyguidelines. rms andcontrolsthestrategic goalsandbudgetsoftheGroup ect thenewcorporate governance Hannu Syrjänen isSanoma’s PresidentandCEO. • • • • The personholdingthisoff of Directors. tors andinaccordancewithgeneral principlesconfi line withstrategic goalsandbudgetsapprovedbytheBoardofDirec- assumes independentresponsibilityfortheGroup’sdailyoperations, in Finnish LimitedLiabilityCompaniesAct. Sanoma’s PresidentandCEO The dutiesofthePresidentandCEO arealsoprimarilygovernedbythe Duties ofthePresidentandCEO Jaakko Rauramo ChairmanoftheBoard. isthepart-time • • • • • • by theFinnishLimitedLiabilityCompaniesAct andinclude,amongothers: The dutiesoftheChairmanBoardDirectorsaremainlygoverned duties ofthechairmanboarddirectors the meeting. Jane Erkko (ViceChairman),Paavo HohtiandSirkka Hämäläinen-Lindfors. dations. TheEditorial Committee comprisesSeppoKievari (Chairman), appointment ofSeniorEditors-in-Chief andanyotherpolicyrecommen- cies ofHelsingin Sanomat. Italsoprepareschangesinthesepolicies,the 93%. Chairman), Jane Erkko, SeppoKievari andJaakko Rauramo. neration policy,comprisesSari Baldauf(Chairman),Paavo Hohti(Vice matters relatedtomanagementremuneration andtheGroup’sremu- rate of95%. pany. Hämäläinen-Lindfors andRafaela Seppälä,allindependentoftheCom- Tamminen (Chairman),Robert Castrén(ViceChairman),Sirkka the limitsofgoverninglaws. TheAudit CommitteecomprisesSakari and internalauditworkaswelltheofindependentwithin systems, compliancewithSanoma’s Corporate GovernancePrinciples management, fi

pany’s divisions, unless otherwise agreed. pany’s divisions,unlessotherwise chairing theBoardofDirectors parentcompaniesoftheCom- Centre ManagementGroup chairing Sanoma’s ExecutiveManagementGroupandtheCorporate matters totheBoardanditscommittees the ChairmanofBoardDirectors)aswellpresentingthese preparing mattersfordiscussionatBoardmeetings(togetherwith the managementofGroup’sdailyoperations chairing theBoardandExecutiveCommitteemeetings. in co-operation withthePresidentandCEO preparing matterstobediscussedattheBoardmeetings, thestrategysupervising process organising evaluation oftheBoard’sactivities developing theworkingmethodsofBoardDirectors principles initsduties ensuring thattheBoardfollowsgeneral corporate governance In 2008thecommitteeconvenedonce,withallmemberspresentat the editorial committeehasthedutyofmonitoringeditorialpoli- In 2008itconvenedthreetimes,withanaverage attendancerate of the compensation committee,whichisresponsibleforpreparing In 2008thecommitteemetﬁ the auditcommitteeprepares,controlsandassessesGroup’srisk nancial reporting procedures,reliabilityofinternalcontrol nancialreporting ice isinchargeof: ve timeswithanaverage attendance rmed bytheBoard

71 corporate governance 72 corporate governance Seppo Kievari. Jaakko Rauramo (Chairman), Hannu Syrjänen (PresidentandCEO) and fees arepaidforattendingtheBoardmeetings. In addition,afeeofEUR1,000ispaidforeachCommitteemeeting.No • • • Board ofDirectors: The AGM of2008confi Board remuneration Group isprovidedinNote30. tion onthemanagement’srelationshipsandconnectionstoSanoma the remuneration paidcanbefoundinNote31.Moredetailedinforma- duties duringthefi only theremuneration andbenefi million (2007:EUR4.2million)inremuneration. This amountincludes and thoseintheCorporate CentreManagementGroup. the PresidentandCEO, membersoftheExecutive ManagementGroup executives. Intotal,theseniormanagementincludesSanoma’s Board, neration andbenefi pensation Committee’sproposal,theBoardofDirectorsapprovesremu- The AGM determinesBoard remuneration. InaccordancewiththeCom- remuneration holdings inNote31. p.50,andtheirshare- members arepresentedintheAnnualReport, pares matterstobediscussedatEMGmeetings.TheCVs oftheCCMG opment, GroupTreasury andGroupHumanResources. TheCCMGpre- CEO andCFO, thedirectorsofGroupLegal Aff Management Group Corporate tothePresidentandCEO. The Centrereport their shareholdingsinNote31. p.48–49,and of theEMGmembersarepresentedinAnnualReport, the CFO ofSanoma Corporation andthedivisions’presidents.TheCVs the highestdecision-makingbodyofdivisions. at Boardmeetings,co-ordinatestheGroup’smanagementandactsas Executive ManagementGroup In linewithSanoma’s Corporate GovernancePrinciples,theSanoma organisation ofgroup’smanagement

Board membersinvolvedinSanoma’s stockoptionschemesinclude Members: EUR5,500. Vice Chairman:EUR6,500 Chairman: EUR8,500 The remuneration toauditorsispresentedinNote6. In 2008,Sanoma’s seniormanagementreceivedatotalofEUR4.9 The Corporate theGroup’sdivisions.Directorsof Centresupports The EMGcomprisesthePresidentandCEO ofSanoma Corporation, ts payable tothePresident and CEO andothersenior nancial yearinquestion.Anitemisedstatementof rmed thefollowingmonthlycompensationfor (CCMG)comprises,inadditiontoPresidentand (EMG)preparesmatterstobediscussed ts paidtothesepersonsfortheir airs, GroupStrategic Devel- Corporate Centre Corporate Centre Group companies. other internalmanagementpositions,suchasBoardmembershipsin separate remuneration fortheirmanagementgroupmembershipor (2007: EUR870,300)inremuneration, bonusesandotherbenefi In 2008,PresidentandCEO Hannu Syrjänen receivedEUR947,700 and otherseniorexecutives Remuneration ofthePresidentandCEO years. amount tosome60%ofhisaverage salaryfromthelasttenfullcalendar age of60,unlessitisspecifi The severance payissubjecttoafi to atakeover bid,severance payistheequivalent of30months’salary. of grossprocedurebythePresidentandCEO. Ifthe agreementendsdue equals 18monthsofhissalary,unlesstheagreementisendedbecause notice (bothfromthePresidentandCompany),hisseverance pay senior executives’holdingscanbefoundintheNote31. 60,000 2008stockoptions.DetailsofthePresidentandCEO’s andother 2001C, 50,0002004A,2004B,2004C,60,0002007and by theSanoma BoardofDirectors.PresidentandCEO holds50,000 incentive andcommitmentprogramme. Stock optionsaredistributed oftheGroup’s option schemes.Thesestockoptionsschemesarepart months’ general wage. CEO is7months’general wage, andforotherseniorexecutivesitis5–6 to profi the basisofachievingstrategic objectives,especiallyobjectivesrelated Sanoma BoardofDirectors.For 2008,thebonuseswillbedeterminedon incentiveplanapprovedbythe bonuses accordingtotheshort-term CEO andotherseniorexecutives(so-calledgeneral wage), theyreceive In additiontotheremuneration andbenefi The PresidentandCEO andotherseniorexecutivesdonotreceive According tohisexecutivecontract, Hannu Syrjänen willretireatthe issubjecttoasix-monthperiodof The PresidentandCEO’s service oftheSanoma’s stock Most seniormanagementmembersarepart tability and growth. Themaximum tabilityandgrowth. bonusforthePresident cally agreed otherwise, andhispensionwill cally agreedotherwise, xed-term non-competitionclause. ts paidtothePresidentand ts. * security fi included inthepublicinsiderregisteronothercriteria. Management GroupmembersaswelltheBoardsecretaryarealso of Directors,theExecutiveManagementGroupandCorporate Centre and thedeputyauditor. BasedonadecisionmadebySanoma’s Board and CEO, her/hisdeputy,thecompanyauditor, theauditorincharge, Chairman oftheBoardDirectors,othermembers,President Those includedinSanoma’s publicinsiderregistercomprise,bylaw, the insider regulations ties andadepositoryreceiptcarryingentitlementtosecurities. SMA) whoseunderlyinginstrumentsaretheabove-mentionedsecuri- Chapter 10ofSMA),andotherderivative contracts (1b§,Chapter10of (1 §, Chapter10ofSMA),derivative contracts comparable tothem(1a§, referred tointheAct onTrading inStandardised Optionsand Futures ties entitlingtosaidsharesstandforstandardisedoptionsandfutures subscription rights).As defi bonds,warrants,(convertible stockoptions,bondswithwarrants, and securities entitlingtosaidsharespursuanttheSecuritiesMarkets Act specifi on circumstancesaff the timewhenmarketplace hasascompleteinformationpossible Sanoma’s regulations,insidersshouldtrade incompanysecuritiesat issued bytheNASDAQ OMXHelsinki insiderregulations.According to executives. opment andcommunications,aswellthesecretariestosenior businesses,fi important These personsinclude,amongothers,thoseresponsibleforthemost on the Group’s website. on theGroup’swebsite. The informationoninsiderholdingsandchangesthereinisupdateddaily requirements (Year-End Result andInterimReports). company’s statutoryfi securities, ifpossible,within28daysfollowingthedisclosureof transactthat theytimetheirorderstobuy,sell,orotherwise Sanoma same Sanoma securitieswithinsixmonths.Sanoma alsorecommends End Result. Sanoma recommendsthatinsidersdonotbuyorsellthe orthedisclosureofYear-disclosure oftheGroup’sInterimReport of theinsider’sjob,professionorduties. ofthenormalperformance unlessthisformspart tion totheotherparty ontradingthe otherparty insaidsecurity,nordiscloseinsideinforma- behalf,orbycounselling,directlyindirectly, his ortheotherparty’s bydisposingoforpurchasingSanoma securitiesonher/ another party inside informationinordertoobtainmaterialbenefi dential informationthatcanhave aneff

Sanoma securitiesrefertosharesinaSanoma Groupcompanyand Persons who,duetothenatureoftheirwork,regularlyreceivecon- In additiontopermanentinsiderregisters,Sanoma hasproject- Sanoma’s InsiderRegulations complywiththeInsiderGuidelines Euroclear FinlandLtd.maintains Sanoma Corporation’s insiderregister. Insiders maynottrade inaSanoma securityfor14dayspriortothe According toSanoma’s InsiderRegulations, aninsidermaynotuse c registersasdescribedintheNASDAQ OMXHelsinki insiderrules. * have beenincludedinthecompany-speciﬁ ecting thecompany’ssharevalue. nancial informationsubjecttoregularreporting nance, treasury,legalmatters,strategy, devel- ned intheSecuritiesMarkets Act, securi- ect onthepriceofaSanoma t forher-/himselfor c insiderregister.

73 corporate governance Risk management risk management Managing business risks and the opportunities associated with them is included in the daily responsibilities of Sanoma’s management. The management takes calculated risks in order to ensure that the Company develops its business as successfully as possible. The following sections illustrate the most signifi cant risks for Sanoma, those that could have a negative impact on Sanoma’s business activities, operations’ performance, or fi nancial status if realised. The risks are divided into those relating to the industry and those that could aff ect the Group’s business.

Risks related to the industry

economic trends

Normal business risks associated with the industry relate to developments in media advertising and consumer spending. Media advertising is sensitive to economic fl uctuations. Therefore, the general economic conditions of the countries in which the Group conducts operations and the economic trends of the industry infl uence Sanoma’s business activities and operational performance. A quarter of Sanoma’s net sales is derived from media advertising. The rapid weakening of media advertising and consumer confi dence will aff ect the Group’s results. Newspaper and TV advertising react fastest to changes in media advertising expenditure. Sanoma’s diversifi ed operations in various fi elds of media in 20 European countries balance the

risk management eff ects of market fl uctuations. Sanoma’s business areas are not exposed to any signifi cant political risks. 74 sensitivity analysis of sanoma’s costs technological development and changes in consumer preferences The bulk of Sanoma’s costs relates to personnel, advertising and marketing and paper. Changes in personnel expenses have the greatest sin- Rapid technological development, the diversifying use of the internet gle impact on Sanoma’s total costs. For example, a 1% change in person- and changes in consumer preferences have an impact on the develop- nel expenses equates to EUR 7.0 million per annum, and a 1% change in ment of the media sector. At the same time, the supply of digital content paper costs constitutes EUR 1.5 million per annum. services is growing and becoming more focused. Technological develop- Key factors infl uencing total costs and net sales are presented in the ment and changes in consumer behaviour may also aff ect the choices of following table. advertisers regarding the communication channels utilised.

Cost item Cost, EUR million Of total costs, % Of net sales, %

Materials and services 1 367.4 47.3% 45.1% Paper costs 148.7 5.1% 4.9% Other (such as transportation, 1 218.7 42.2% 40.2% purchased printing services and royalty payments) Personnel expenses 702.8 24.3% 23.2% Other operating expenses 588.8 20.4% 19.4% Advertising and marketing 201.4 7.0% 6.6% Rent payments 80.4 2.8% 2.7% Off ice and ICT expenses 85.7 3.0% 2.8% Others 221.2 7.7% 7.3% Depreciation and impairment losses 231.9 8.0% 7.7% Total 2 890.9 100.0% 95.4% Sanoma closely monitors technological development and changes in indication of impairment. The impairment losses on goodwill and other consumer preferences, and collaborates with technology companies to tangible assets for 2008 totalled EUR 83.8 million (2007: EUR 1.3 mil- develop new products and services to meet these changes for both its lion), and there were no indicators of other impairment losses. consumer and advertising customers. Technological development also Regarding risks associated with investment decisions, the Sanoma generates new opportunities for process development and in new dig- Corporate Governance Principles specify the approval procedures for ital business activities for multimedia companies such as Sanoma. The investments and acquisitions. The Group’s M&A Investment Policy strong development of online operations has also been chosen as one of defi nes the general principles of mergers and acquisitions. Various the focus areas in Sanoma’s strategy. administrative bodies discuss investments when addressing strategies, The wide array of products and services off ered by the Group reduces action plans and budgets. Final investment decisions are made on the the risks posed by technological development and changes in consumer basis of specifi c proposals, in accordance with authorisations governing preferences. approval of investments. A proposal for a major investment is submitted for the purpose of decision-making and monitoring, providing informa- Risks related to the Group’s business tion on its grounds and ROI calculations. intellectual property rights personnel

Key Intellectual Property Rights (IPRs) with regard to Sanoma’s products The Group’s successful performance depends on its personnel, and their and services are the copyrights, publishing rights, trademarks, business willingness to develop their competencies, as well as on their skills in names, domains, know-how, and e-business-related patents and utility developing appealing products and services in accordance with customer models owned and licensed by the Group. needs. Since Sanoma employs numerous professionals, it is estimated The acquisition, management and exploitation of Intellectual Prop- that the end of one key person’s employment would not have an adverse erty Rights involve risks associated with the continuity of rights and eff ect on the Group’s result or its ability to carry out its strategy. Recruit- their insuff icient protection or outside violations. The risk of unauthor- ing and retaining skilled and motivated staff may become more diff icult ised use of Intellectual Property Rights increases with the digitalisation in the years to come as a result of, e.g., changes in the age structure of a of media. population and intensifying competition for personnel resources. Sanoma manages these rights in accordance with the Group-wide Sanoma is responding to these challenges by continuously improv- Intellectual Property Rights policy and procedures. Because of the appli- ing its employee reward systems, in-house training programmes and

cation of appropriate protection, no material risks arise in relation to the opportunities for job rotation, among other things. In an eff ort to pre- risk management Group’s Intellectual Property Rights. pare for job market changes due to the ageing population, the Group has implemented e.g. successor plans. 75 information systems exceptional circumstances related The functioning and reliability of a number of ICT systems are integral to employees or other matters aspects of the Group’s business. These systems include newspaper and magazine subscription, advertising and delivery systems, as well It is possible that Sanoma’s business operations will be aff ected by as various production control and customer relations management sys- labour disputes. These disturbances may be caused by strikes among tems. Risks related to information systems may arise in connection with the Group’s own employees or by work stoppages or, for example, labour the confi dentiality, integrity or availability of information. These can be disputes aff ecting the Group’s suppliers. divided into physical risks (fi re, sabotage and equipment breakdown) and Paper used in printed products is the single most important raw mate- logical risks (related to data security, employees and software failure). rial of the Group. Paper purchases account for roughly 5% of annual Sanoma has carried out an assessment of the risks related to ICT sys- Group expenses. The Group’s divisions produce a wide variety of prints tems and specifi ed the system protection levels and the required backup with diverse paper grades. Despite its centralised paper purchases, systems. It has also established separate continuity plans for the sys- Sanoma manages risks associated with raw material availability and tems critical to the Group. prices by buying paper from several suppliers, on the basis of framework agreements valid for about 12 months. Good relations with paper suppli- acquisitions and investments ers also ensure that the Group receives paper in special circumstances.

In recent years, Sanoma has grown vigorously through acquisitions. financial risks Acquisitions may include a risk of the Group becoming aff ected by par- tial new market and operational environment risks in countries in which Sanoma is exposed to interest rate, currency, liquidity and credit risks. Sanoma has not previously had signifi cant operations. The acquisitions The Group has a strong, steady and predictable cash fl ow, which sub- also include risks related to integration of the new business, retention of stantially reduces liquidity risks. Sanoma manages its long-term fi nancial key personnel and achieving the targets set for operations. risks by maintaining a fi nancial structure equivalent to a good credit rat- As a result of acquisitions, the consolidated balance sheet on 31 ing, with the aim of ensuring sources of low cost fi nancing. Meeting this December 2008 included about EUR 1.9 billion in goodwill, publishing aim is based on close co-operation within the Group, operating with sev- rights and other intangible assets, most of which is related to maga- eral banks and actively monitoring developments in the fi nancial market. zine operations. In accordance with the International Financial Report- The Group mainly operates in the euro area, which essentially reduces ing Standards (IFRS), instead of goodwill being amortised regularly, it the infl uence of currency risks. A more detailed description of the Group’s is tested for impairment on an annual basis, or whenever there is any fi nancial risk management can be found in Note 26. group internal control systems, internal audit and external audit

The Sanoma Board of Directors confi rms Group goals, responsibilities and control principles, and monitoring methods to manage major, iden- tifi ed risks. The Group’s fi nancial performance is monitored on a monthly basis using a Group-wide operational planning and reporting system, which includes divisions’ management letters, the actualised income statements, balance sheets and key performance indicators, as well as fore- casts for the current fi nancial year and the rolling 12 months. Each year the Board of Directors elects the Audit Committee from among its members, which prepares, controls and assesses the Group’s risk management, fi nancial reporting procedures, independent audit and internal audit work, the reliability of internal control systems, and compliance with Sanoma’s Corporate Governance Principles, in accordance with the policy confi rmed by the Board of Directors. All Board members may attend Audit Committee meetings if they so wish. The Audit committee policy will be redefi ned during 2009 to refl ect the new Corporate Governance Code, eff ective as of 1 January 2009. Group Internal Audit Services reports direct to Sanoma’s President and CEO and co-operates with the Group and division management, the Audit Committee, and the Group’s auditors. It is responsible for internal audits involving assessment of the adequacy and eff iciency of risk management, internal control and governance processes. The scope of Group Internal Audit Services covers all of the Group’s organisational levels and subsidiaries. The department’s operations are steered by Sanoma’s

risk management Corporate Governance Principles and internal audit policy issued by the Audit Committee. The Audit Committee confi rms the annual internal 76 audit plan. In 2008, KPMG Oy Ab, a fi rm of Authorised Public Accountants, acted as Sanoma’s auditor in charge and received a total of EUR 2.8 million in remuneration, of which the statutory audit accounted for EUR 1.4 million. Other remuneration was paid to auditors for example for circulation audits in countries with no off icial national circulation audit in place and for consulting services related to matters such as taxation and corporate transactions. come toattendtheAGM. Shareholders owningSanoma sharesonFriday 20March2009arewel- Attending theAGM notice. advance ofthemeeting,sothatmattercanbementionedin shareholder sodemandsinwritingfromtheBoardofDirectorswell in petence oftheGeneral MeetingdealtwithbytheGeneral Meeting,ifthe shareholder shallhave therighttohave amatterfalling withinthecom- and ontheGroup’swebsite. and theBoardproposalsarealsopublishedasaStock Release Exchange per. Themeeting agendaisincludedinthenotice.Noticeofmeeting Notice oftheAGM ispublished inatleastonewidelycirculatednewspa- Notice oftheAGM sinki). Congress WingoftheHelsinki Fair Centre(Messuaukio1,00520Hel- will beheldonWednesday 1April2009at2:00pm(Finnishtime)inthe Sanoma Corporation’s AnnualGeneral MeetingofShareholders(AGM) annual generalmeeting Investing inSanoma In accordancewiththeFinnishLimitedLiabilityCompaniesAct, a dividend within theregistration timelimitto: representative. Shareholdersarerequestedtosubmitpossibleproxies pate intheAGM mayappointanauthorisedrepresentativeorstatutory within thetimespecifi the respectiveregulationsareapplied. +358 105195058.Regarding thenomineeregisteredshareholders, +358 105195021,[email protected], orbyfax 25 March2009.Registration canbemadeatSanoma.com, byphone kindly requestedtoregisterby4:15pm(Finnishtime)onWednesday Shareholders wishingtoattendandusetheirvotingrightsare Registration directly. Sanoma cannotmake thesechanges. tact informationarekindlyasked tocontacttheirownaccountoperator of optionrightswhowishtomake changestotheirpersonalandcon- holders andalistofoptionrights.Shareholders Euroclear FinlandLtdmaintainsalistofCompanysharesandshare- changes incontact information releases viaemailatSanoma.com. sanoma.com orbyphone+358105195062. canbeorderedviaemailcommunications@ sion oftheAnnualReport English. PublicationscanbeviewedonlineatSanoma.com. Printedver- areavailable andInterimReports The AnnualReport inFinnishand • • • in2009willbepublished: The Group’sInterimReports sanoma’s financialreporting during2009 intermediary bankstransferring thepayments. actual dividendpaymentdatewillbedeterminedbythepractices ofthe the dividendpaymentdatewillbe15April2009.OutsideFinland, Finland Ltd(formerNordicCentral SecuritiesDepositoryLtd).InFinland, entitled toadividend.TheshareholderslistismaintainedbyEuroclear Company’s listofshareholdersontherecorddate6April2009are per shareshouldbepaidfor2008.Allshareholdersregisteredonthe The BoardofDirectorsproposestotheAGM thatadividendofEUR0.90

Finland. 00101 Helsinki P.O. Box1229 AGM Sanoma Corporation Shareholders wishingtoattendtheAGM arerequestedtoregister Shareholders canalsoorderSanoma’s andother InterimReports mately at8:30am(Finnishtime). January−SeptemberInterim Report onFriday 6November, approxi- at 11am(Finnishtime) January−JuneInterim Report onThursday6August, approximately 11 am(Finnishtime) January−MarchInterim Report onThursday7May,approximatelyat ed inthenotice.Shareholdersnotabletopartici-

77 investing in sanoma Releases 2008

stock exchange and press releases 2008

3.1 SanomaWSOY’s Share Capital Increased 9.1 Sanoma Magazines Sells R.C.V. Entertainment to Entertainment One 7.2 SanomaWSOY to Cancel Its Treasury Shares 7.2 Anu Nissinen Appointed President of SWelcom 7.2 SanomaWSOY’s Year-End Statement 2007 7.2 SanomaWSOY’s Notice of Annual General Meeting 7.2 SanomaWSOY Renamed Sanoma 18.2 SanomaWSOY’s Share Capital Increased 27.2 The List of SanomaWSOY’s Releases in 2007 5.3 SanomaWSOY’s Annual Report 2007 Published 1.4 Decisions of SanomaWSOY’s Annual General Meeting 2.4 SanomaWSOY to Continue Purchases of Own Shares 9.4 Three New Directors Appointed to SanomaWSOY Corporate Centre 25.4 Sanoma Magazines Acquires Russian Publishing House Lux Media 28.4 Sanoma Magazines International to Acquire Net Info in Bulgaria 9.5 Interim Report 1 January−31 March 2008 21.5 SanomaWSOY’s Share Capital Increased 26.6 Exercises with SanomaWSOY’s Stock Options 29.7 Merja Karhapää Appointed Chief Legal Oﬀ icer of SanomaWSOY and Secretary to the Board of Directors 31.7 SanomaWSOY’s Interim Report 1 January−30 June 2008 13.8 Exercises with SanomaWSOY’s Stock Options 13.8 Sanoma Uitgevers Acquires Auto Trader

releases 2008 27.8 Development Plans for SanomaWSOY’s Keimola Land Area Finalised 1.10 Sanoma Brand Combines the Ten-Year Old Group 78 8.10 Exercises with Sanoma’s Stock Options 16.10 Sanoma Applies for Listing of 2004B Stock Options on NASDAQ OMX Helsinki 24.10 Rautakirja’s President Erkki Järvinen Takes up New Responsibilities 31.10 Interim Report 1 January−30 September 2008 31.10 Sanoma’s Financial Reporting During 2009 13.11 Exercises with Sanoma’s Stock Options 19.12 Sanoma Issues Fourth Stock Option Scheme 19.12 Timo Mänty Appointed President of Rautakirja

Press releases in grey

Releases can be found at Sanoma.com.

Sanoma announced on 2 April 2008 that it will continue the repurchases of own shares. The Company has authorised a brokerage company to communicate the acquisitions. Releases related to these share buybacks can be read on NASDAQ OMX Nordic website at Nasdaqomxnordic.com/news/. The authorisation to repurchase own shares is valid until the Annual General Meeting of 2009. Exane.com [email protected] tel. +442070399509 Andrea Beneventi Exane BNPParibas Evli.com [email protected] tel. +358947669314 Mikko Ervasti Evli Bank Eq.fi bengt.dahlstrom@eq.fi tel. +358968178610 Bengt Dahlström eQ Bank Db.com [email protected] tel. +358925252550 Manu Rimpelä Deutsche Bank,HelsinkiBranch Danskeequities.com [email protected] tel. +35810236 4867 Panu Laitinmäki Equities Danske Markets Cheuvreux.com nkristoff tel. +468723 5174 Niklas Kristoff Crédit AgricoleCheuvreuxNordic Carnegie.fi tuomas.ratilainen@carnegie.fi tel. +358961871235 Tuomas Ratilainen Carnegie InvestmentBank,Finland Branch Analyst coverage ofSanoma

[email protected]

ersson

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