Annual Report 2009 Epo RT 2009

sanoma annual R annual report 2009 epo RT 2009

TIJDSCHRIFT VAN HET JAAR!

Het Blad van boordevol leesplezier en letterpret enVos Haas

The Ribbon ties the different parts of sanoma together and for its own part supports their actions. the ribbon is born of the continuum logo. the continuum symbol crystallises sanoma’s three values of creativity, reliability and dynamism. creativity is highlighted in the symbol’s three- dimensional nature and the sense of movement this creates. reliability is highlighted in the gold and blue colours used. dynamism is highlighted in the energy contained in the movement underlying the symbol. sanoma corporation, p.o. box 1229, 00101 helsinki, finland, tel. +358 105 1999, sanoma.com sanoma annual R annual report 2009 epo RT 2009

TIJDSCHRIFT VAN HET JAAR!

Het Blad van boordevol leesplezier en letterpret enVos Haas

Sanoma Magazines is a leading European publisher of consumer magazines and digital Sanoma uitgevers (the Netherlands) media that actively reaches out to a potential audience of almost 290 million consumers. Sanoma Magazines Belgium Sanoma Magazines operates in 13 countries, AND CEO 39% combining the strongest international ILASMAA

A Sanoma Magazines Finland brands with leading local titles. IJA

E The Division focuses on nurturing its key RESIDENT

P brand portfolio for further development, Sanoma Magazines International whilst actively exploring new opportunities EuR 1 111.2 million in changing media landscape.

Sanoma Corporation Sanoma Magazines B.V.

Helsingin Sanomat President and CEO Hannu Syrjänen President and CEO Eija Ailasmaa Sanoma News is Finland’s leading Ludviginkatu 6–8 Jachthavenweg 124, 1081 KJ Amsterdam Ilta-Sanomat newspaper publisher, whose printed P.O. Box 1229, 00101 Helsinki, Finland P.O. Box 90484, 1006 BL Amsterdam INEN OINI and digital products are strongly present Tel. +358 105 1999, fax +358 105 19 5028 The Netherlands 15% in the everyday life of the Finnish Sanoma.com Tel. +31 20 851 2100, fax +31 20 851 2149

ENTIK ä Sanoma Lehtimedia EKKA S audience. Sanoma News publishes Sanomamagazines.com RESIDENT P NEN national and regional newspapers and Chief Strategy Officer Sven Heistermann ä

IKAEL P Sanoma Kaupunkilehdet (Free sheets)

will be P it is one of the most significant digital RJ M EuR 428.9 million Tel. +31 23 556 6445, fax +31 23 556 6440 Sanoma News Ltd media operators in Finland. President Mikael Pentikäinen

As of 1 April 2010 Acting President President of 1 April 2010 Acting As Sanoma Digital Finland Chief Financial Officer Kim Ignatius Töölönlahdenkatu 2, Helsinki ANN u Sy

H Tel. +358 105 19 5120, fax +358 105 19 5128 PL 95, 00089 Sanoma, Finland

CEO Tel. +358 9 1221, fax +358 9 122 4809

AND Chief Legal Officer Merja Karhapää Sanomanews.com Tel. +358 105 19 5053, fax +358 105 19 5058 Sanoma Entertainment offers TV and radio operations Sanoma Entertainment Ltd electronic and entertaining experiences. President Anu Nissinen The Division has commercial TV and Cable TV and broadband internet 5% radio operations and it offers cable TV Group Communications Ludviginkatu 6–8 Tel. +358 105 19 5062, fax +358 105 19 5068 P.O. Box 1019, 00101 Helsinki, Finland u N ISSINEN RESIDENT and broadband services. The newest P

AN [email protected] Tel. +358 10 707 1111, fax +358 10 707 7008 Online services EuR 157.1 million business of Sanoma Entertainment RAMO PRESIDENT focuses on online casual gaming. Sanomaentertainment.com Au Net sales EuR 2 767.9 million Net Office of the Chairman Sanoma Learning and Literature B.V.

R AAKKO Chairman Jaakko Rauramo CEO Jacques Eijkens Erottajankatu 11 A Statenlaan 1 P.O. Box 1229, 00101 Helsinki, Finland P.O. Box 99, 5201 AB ‘s-Hertogenbosch

CHAIRMAN J Sanoma Learning & Literature Tel. +358 105 1999, fax +358 105 19 5508 The Netherlands Learning operates in 10 countries across Europe Tel. +31 73 628 7528 and is a leading European provider of IJKENS learning materials and solutions in print Language services 12% Rautakirja Corporation (Sanoma Trade) CEO and digital format. The Division has President and CEO Timo Mänty quES E growing international language service

AC Koivuvaarankuja 2 J Literature & other operations and it is also the leading EuR 345.1 million P.O. Box 1, 01641 Vantaa, Finland general literature publisher in Finland. Tel. +358 9 852 81, fax +358 9 853 3281 Rautakirja.fi, Sanomatrade.com

SANOMA ANNuAL REPORT 2009 Sanoma Trade is a retail specialist operat- Managing Editor Texts

Kiosk operations ing in eight countries. The Division serves Jaana Nissinen Katariina Hed, Markus Illukka, Satu Jussila, Anna Financial Statements 2009 is its customers in 230 million sales contacts CEO Karjalainen, Mari Mattila, Heidi Melkas, Gregory published separately in PDF Trade services at kiosks, bookstores and movie theatres Production Moore, Risto Pennanen, Matti Remes, Marianna format. Both the Annual Report AND 29% annually. Sanoma Trade’s strengths lie Sanoma Magazines Finland, Salin, Wif Stenger, Anna Tuominen, Otto utti and Financial Statements are in thorough understanding of customers’ Custom Publishing available at Sanoma.com.

IMO Mä NT y Bookstores needs and solid concepts. The Division’s Pictures T Design Erik Buis, Sari Gustafsson, Outi Kamutta, A printed version of the Annual

RESIDENT trade services business offers logistic and

P Grapina Graphics, Petteri Rautio Kimmo Mäntylä, Tomasz Nowicki, Ari Ojala, Report can be ordered from Group Movie operations marketing services, and the entire chain of Markku Ojala, Samuli Pulkkinen, Pekka Sakki, Communications either via email EuR 827.8 million below-the-line advertising. Printed by Juha Salminen, Heikki Saukkomaa, [email protected] Lönnberg Print & Promo Tomasz Szwejer, Markus Wahlroos or by phone +358 105 19 5062. sanoma annUaL REPoRT 2009 Contents

Key figures 4

ManageMent review 6

MarKet overview 8

strategy 10

what we do 14 Sanoma is where we operate 16 sanoMa Magazines 18

sanoMa news 22 a strong European media company. sanoMa entertainMent 26 sanoMa Learning & Literature 30

We operate in over 20 countries, offering sanoMa trade 34 an inspiring working environment for personneL 38 environMent 42 20,000 people. Our net sales were Corporate responsiBiLity 44 Board of direCtors 46

EUR 2,767.9 million in 2009. Measured eXeCutive ManageMent group 48 in net sales, Sanoma is among the divisionaL ManageMent groups 50 top 15 media companies in Europe. finanCiaLs Sanoma's shares are listed on the are available in pdf format at Sanoma.com Nasdaq OMX Helsinki. Our diversified business portfolio consists of products and services for consumers and corporate customers. We meet the changing needs of our customers and cover the requirements of our business environment by constantly developing our products and services. This also ensures sustainable growth and profitability. Sanoma’s strengths include its leading position in chosen businesses and markets, strong brands and competitive products. We offer millions of people information, education, entertainment and experiences, every day, in their own languages, respecting local cultures.

3 sanoma annUaL REPoRT 2009 Key figures

Solid result in a difficult environment

In 2009, Sanoma was able to deliver a solid result despite the challenging economic situation. Sanoma’s financial position is stable and the cash flow is at a good level. Efficiency improvements executed in 2009 will improve Sanoma’s results in 2010.

Key indicators

2009 2008 %

Net sales, EUR million 2 767.9 3 030.1 -8.7

Operating profit excluding non-recurring items, EUR million 229.5 295.7 -22.4 % of net sales 8.3 9.8

Operating profit, EUR million 195.4 236.3 -17.3 % of net sales 7.1 7.8

Result for the period, EUR million 107.1 120.8 -11.4

Capital expenditure, EUR million 83.4 109.9 -24.2

Return on investment (ROI), % 8.9 10.7

Net debt, EUR million 958.1 971.6 -1.4

Equity ratio, % 41.4 40.0

Net gearing, % 79.4 78.5

Dividend payout ratio, % * 122.0 125.1

Effective dividend yield, %* 5.1 9.8

P/E ratio 24.0 12.8 87.7

Market capitalisation, EUR million 2 536.5 1 479.7 71.4

Average number of employees 20 625 21 329 -3.3

Number of employees at the end of the period (full-time equivalents) 16 723 18 453 -9.4

* Year 2009 proposal of the Board of Directors

4 KEY fIgURES

net sales, eur million

Sanoma’s operating profit excluding non-recur- operating profit excluding ring items in 2009 amounted to EUR 229.5 million. A year non-recurring items, eur million ago, when the market decline started, Sanoma was able to quickly react and focus on improving the efficiency of ´ its operations. At the end of 2009, Sanoma had more than ´

1,700 employees (fTE) less than a year ago due to restruc- ´ turing in different divisions. Several efficiency improvement ´ programmes were completed during the year to strengthen Sanoma’s competitive position as well as safeguard profit- ´ ability and cash flow. Sanoma conducts an active dividend policy and primarily pays out over half of the group result after taxes in dividends. The Board’s proposal for the year 2009 dividend is EUR 0.80 i.e. 122% from the group’s result after taxes. Cash flow from operations, eur million

´ In 2010, Sanoma’s net sales are expected to increase and the operating profit excluding non-recurring items ´ is estimated to improve slightly. The outlook is affected ´ by the overall economic development in our countries of ´ operation, and in particular by the development of advertising and private consumption. There is no fast recovery in ´ the advertising market in sight, although there have been some positive signals in Sanoma’s main markets. That is why efficiency continues to be in our focus. At the same time, we invest in further developing our operations. earnings/share, eur

´ .

´ average share price and turnover, 2009 ´

. . . . . .

dividend/share, eur

´ .

´ ´

´ . . . . . .

Turnover, shares Average price, EUR * Year 2009 proposal of the Board of Directors

5 sanoma annUaL REPoRT 2009 ManageMent review

Everything from news to entertainment must be based on reliability.” Jaakko Rauramo

Progress through commitment

Chairman of the Board Jaakko Rauramo and President and CEO Hannu Syrjänen believe that a strong will to make things happen and a commitment to collaboration are Sanoma’s strengths in the face of new challenges. In the next few years, Sanoma will focus on increasing and further developing its online business.

“Considering the circumstances, “Increasing efficiency will remain important. we can be pleased with our performance in 2009. It will also offer great leverage when the economy Adjusting to the economy was challenging for eve- recovers,” Syrjänen points out. ryone, but collaboration carried us through,” says Syrjänen believes that Sanoma is ready for Rauramo. He thanks Sanoma’s personnel for their new challenges. The changing media business exceptionally strong performance in difficult times: requires hard work, endurance and creative solu- “Instead of stagnating, we were able to create new tions. “Structural changes in our divisions will solutions and make many improvements.” continue. We still need to focus on selected areas.” According to Syrjänen, the company suc- ceeded in responding to the rapidly changing Sanoma will further develop and market. “Although we focused on cost cutting in increase its online business according to its 2009, we never compromised our future perform- strategy, based on the cumulative expertise and ance. We still have muscle.” customer knowledge of its five divisions. “Publishing companies around the world are Strong market positions and the wide fervently seeking to increase revenue from online product portfolio helped Sanoma navigate eco- content,” says Rauramo. “This is an important nomically challenging times. Most of the Sanoma issue and an international trend in the media group’s revenue comes directly from consumers, business.” which is a less cyclical stream of income than According to Syrjänen, many studies show that advertising. consumers are now more willing to pay for high-

6 MANAgEMENT REvIEW

Although we focused on cost cutting in 2009, we never compromised our future performance.” Hannu Syrjänen

quality online content, such as local news services. “Collaboration is traditionally based on selling Customised media monitoring services may also and buying,” Syrjänen says, “but it will deepen as offer new opportunities in the consumer market. old operating models are replaced with new ones “These examples show that publishing com- that benefit both partners.” panies are finding new solutions that may develop The group changed its name to Sanoma in into profitable business models. News alone is not October 2008. According to Syrjänen, the more and probably will not be enough.” consistent division names have contributed greatly to a unified corporate culture – even Technology advances in leaps and more so than expected. “The new brand has had bounds, which also presents new business a major effect on collaboration within Sanoma. opportunities. Consumers will have digital read- People are realising that we cannot live in silos.” ing devices for newspapers, magazines and books. This is probably causing fundamental An effective name also helps foster inves- but positive change for the content producers. tor and customer relations. Rauramo emphasises Telecommunication, information technology and that reliability and high quality are the core of television are merging, which will bring living Sanoma’s brand. images to all devices. “Everything from news to entertainment must “I believe, however, that print media will be based on reliability. Our customers must know remain strong,” Rauramo says, “but this will that they can turn to Sanoma whenever they need require a deep understanding of the new era and reliable, high-quality content.” changes in editorial content, advertising sales and five years from now, Rauramo envisions, cost structures.” The need for reliable, high-qual- Sanoma will be a considerably larger and more ity content will remain high. focused company. It will also be more interna- According to Rauramo, Sanoma should take tional, because growth will mainly come from a broader view of the type of talent and com- outside finland. In addition to its current markets, petence it needs. “We should be more open,” the company is likely to seek growth in new geo- he says, ”to hiring new media experts who graphical areas. are perfectly at home in the online world. This “Asia is interesting,” Rauramo says. “five alone, however, is not enough. Competence also years from now, we will probably operate in one or includes the ability to identify real and profitable more Asian countries.” business opportunities.”

Business collaboration in the rapidly changing world requires new and innovative solutions.

7 sanoma annUaL REPoRT 2009 MarKet overview

Seven media market trends to watch

Media companies possess special insights into the evolving behaviours of their readers and viewing audiences. These insights can be leveraged to create value. The following extracts are from an interview with Annet Aris.

Creativity-centralisation tension: facebook, specialised communities like parental The creative part of any magazine operation, book sites seem to offer income possibilities from mem- publisher, newspaper or television company must berships and working with the influential people in remain decentralised, because the people creating the network. the content need to be as close as possible to their audience and free to interact. In contrast, media Changes in the advertising ecosystem: companies no longer need to be decentralised or With my students, I speak of an advertising eco- tied down to local markets. They can share com- system consisting of consumers, media companies, mon backbones and structures to save costs and media agencies and advertisers. Media placement evolve with their markets. This tension needs to be was once largely an afterthought and the objective understood throughout every multinational media of the ad buy was to blanket radio, television, maga- organisation. zines and newspapers with as much advertising as needed to reach the target audience. In the highly Unexpected growth opportunities: fragmented digital world, media is as strategically Mature markets offer pockets of growth. Several important as the ad message itself. segments are poised to take off, such as mobile Media companies need to forget about just advertising and video On Demand (vOD) models. selling a page or time slots, and say to advertisers, Market leaders, too, can grow through consolida- “If you use this media mix, it will have this much tion. The traditional concern about the dominance impact in terms of brand awareness and willing- of local players is now less relevant as consumers ness to purchase the product.” They must provide can easily access news and opinions from across considerably more information about who is being the globe via many channels. reached and the impact of the advertising. The huge growth potential of emerging markets, In chaotic media landscapes, strong brands which are now opening up, is attractive. These new will be extremely important. Most people are markets remain volatile, so media companies must exposed to thousands of advertising messages be prepared to manage the accompanying risk. every day; just getting through requires reaching The long-accepted view that brand loyalties are people at the exact moment and context they are formed in one’s youth and that older people take most open to the message of the ad. Media com- longer to adapt to the digital world seems to be out- panies have a huge advantage in these changed dated. The cohort now turning 50 is wealthier and circumstances. more open to new things than former generations. Online social networks can be extremely valu- vOD and the role of media companies: able for media companies in figuring out what is A significant shift away from linear viewing to going on in the lives of consumers. Although it video On Demand has been triggered by catch-up remains unclear how this translates into a profit- television, which is already quite popular in many able business model for general networks like markets.

8 MARKET OvERvIEW

In the highly fragmented digital world, media is as strategically important as the ad message itself.” Annet Aris

few people are self-selectors. Our tastes in There is an increasing tension over who Annet Aris is Adjunct Profes- music, for example, are strongly influenced by gets the revenues generated by digital content. sor of Strategy at the INSEAD International graduate our peers or what we are exposed to in the media. Discussion in the industry is focused on how rev- Business School. She serves This same rule applies to on-demand video. enues should be shared between content provid- on the Boards of Sanoma and the Dutch telecoms regulator Today’s business isn’t so much about offering a ers and aggregators, such as search companies, OPTA. She co-wrote, with huge database of videos as providing guidance to cable and telecom players and device manufactur- Jacques Bughin, the book help people find a film or show to their taste, even ers, who have direct access to the customer. The Managing Media Companies, Harnessing Creative Value. if they have never heard of it. good news is that thanks to improved targeting Advertising has a place in the vOD model as and metrics, and pay-for-performance models, it offers viewers an acceptable choice − pay for there will be higher return-on-investment from ad-free programming or watch ads and get the advertising, and thus greater motivation to adver- programme free. Ads can be targeted specifically tise. This revenue growth can be shared between as the one-on-one relationship with the viewer is aggregators and content providers. It is not inevi- in place, and the advertiser can be precise about table that aggregators will take value from content the frequency of ads and thus a higher spend. providers as they can create value for advertisers by working together. There will naturally be a Mobile: We are quite close to mass adoption of struggle over who gets how much, but the size of handheld media. The key drivers are availability of the pie overall should increase. cheap smartphones, flat rates for data access and large communities of developers creating applica- focus on revenue mix: The downturn tions for the platform. has been hardest on companies with ad-driven for media companies, smartphone revenues models. Single copy sales have been less affected might be easier to generate than with the internet. as many have been able to raise prices slightly. Mobile content can be based on simple payment Companies that emphasise subscriptions have models agreed with the operator. As you know come out best, with some even increasing sales. where people are, ad messages can be adapted to The recession has also accelerated the digital the occasion. Phone users, in turn, see ads more transition of advertisers that were already active as a personal service. in the digital world. There is a frustratingly widespread notion that local mobile advertising will somehow be a boon to hole-in-the-wall pizzerias. Perhaps. But Sanoma is a major player in finland and small local advertisers represent a small slice of the Netherlands, the most digitised markets in advertising potential; about half of the world’s Europe, and is thus at the forefront. With its focus advertising volume is handled by just a few dozen on strong brands, a diverse product portfolio and companies! extensive online experience, it is well poised to grow as economic expansion resumes. A good Aggregators vs. content providers: revenue mix of advertising, single copy sales, While daily printed media will survive, media subscriptions and retail is vital for stability during companies must follow the big trend and concen- this transition phase, which is exactly the time trate on providing value-added content that goes to build position. deeper than a typical newswire story.

9 sanoma annUaL REPoRT 2009 strategy

Innovation in focus

There will always be need for information, entertainment, education and communities. Sanoma caters to these needs with its products and services using a variety of platforms. These platforms may change over time, but the basic needs remain.

Our strategy for the coming years is shaped Strategic priorities of our businesses: by four major themes. firstly, we monitor very closely the timing Magazines: We will continue to grow in print and and extent of economic recovery in our operat- digital media by taking good care of the core maga- ing countries and will act accordingly. Secondly, zine business, becoming a stronger digital player, as with all media companies, our actions will be and focusing on strategy-supporting restructurings shaped by the continuing transition to digital and ongoing organisational development. media. Thirdly, we have identified a clear need to find new sources of growth, both in terms of busi- newspapers: We will actively develop our nesses and geographical areas. finally, we will business to maintain attractive cash flows and further optimise our portfolio in order to finance profitability while ensuring a controlled migration growth within our chosen business areas. to online. We will do this by gaining market share, continuous product development and laying the Our strategic goal is to be one of the lead- foundations for new revenues. ing media companies in Europe, with a focus on sustainable growth and profitability. Learning solutions and language services: We will constantly strengthen our position as a leading European provider of learning solutions Our strategic objectives are to: and build a distinctive provider of language services. We will reach these positions by M&A and • Be the market leader in our chosen businesses organic growth. We shall create competitive edge and markets through innovation together with our customers and renewing our internal business processes. • Balance our business portfolio of B2C and B2B products and services by focusing on maga- online: We will strongly develop and expand our zines, news, learning solutions and online online business and aim to double our consumer business media online revenues by 2012.

• Strengthen our focus on organic growth and tv & entertainment: We aim at becoming a create an innovation management system market leader in the evolving commercial Tv landscape and at further internationalising our • Restructure our business operations according business. to changing customer needs retail: We will create innovative retail concepts • Develop our organisation further and exploit and focus on further developing our kiosk opera- synergies across the group tions and trade services.

10 STRATEgY Mission To be the market leader in satisfying people’s needs for information and education and for an easier and happier life

vision To be the media company of opportunities and operational excellence

Strategic goal

To be one of the leading media companies in Europe, with a focus on sustainable growth and profitability

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

11 sanoma annUaL REPoRT 2009 strategy

Online strategy – a growth platform for Sanoma

the online consumer media busi- trols its strongest market shares on online classifieds and market- ness has been a clear success story in finland, estonia and hungary, places, and sanoma entertainment is for sanoma. in the past three years, whereas the largest absolute online internationalising its growing gaming revenues have almost tripled. even revenues are generated in the operations. during the global recession and cuts netherlands. in the netherlands, going forward, our aim is to in advertising budgets through- sanoma Magazines holds a broad double our consumer media online out the industry, sanoma’s online portfolio of highly profitable online revenues by 2012 via organic growth advertising business has experienced assets, for example the Startpagina.nl and acquisitions. to achieve this continuous growth. directory as well as the Nu.nl online target, sanoma’s strategic focus in sanoma’s online footprint spans news service. sanoma news focuses the consumer online media space is several countries. the group con- on its news websites as well as to innovate and acquire strong traffic

Long-term financial targets

As Sanoma strives for sustainable success, our to carefully manage our balance sheet and target long-term financial targets stay the same as for a net debt to EBITDA ratio below 3.5 and an in previous years. Our long-term growth target equity ratio within 35% to 45%. remains to grow net sales faster than the growth We are confident that our strategy as well of gDP in our main operating countries and to as the recovery of the economies in many of our achieve an EBIT margin of 12%. We will continue main markets will enable us to reach our targets.

Long-term financial targets Target level 2009 2008

EBIT margin, % * 12 8.3 9.8

Net debt/EBITDA < 3.5 2.6 2.1

Equity ratio, % 35–45 41.4 40

gearing, % < 100% 79.4 78.5

Capital expenditure, EUR million < 100 83.4 109.9

Net sales growth, % faster than gDP growth in main operating countries -8.7 3.5

Consumer media online revenues EUR 240 million by 2012 120

Dividend, % Over half of group result after taxes distributed in dividends ** 122.0 125.1

* Excluding non-recurring items ** Year 2009 proposal of the Board of Directors

12 STRATEgY

positions which can be effectively monetised. embedded in a large We aim to network of traffic-generating sites, our group-wide investment priorities double our are in transaction-related proper- ties, including comparison sites and consumer media classifieds as well as casual gaming platforms and selected verticals. online revenues Concurrently our online experts are by 2012.” constantly screening the markets for the latest trends and new opportuni- Sven Heistermann ties to further build market leading positions in the online domain.

Risk management

While executing strategy, Sanoma and its divi- Sanoma is also working on introducing a new sions and subsidiaries are exposed to numerous innovation management system in 2010. It will risks and risk taking opportunities. Carefully provide further focus to the group’s innovation managing business risks and the opportunities efforts and provide the right tools and incentive associated with them is a core element in the daily systems to foster more ambitious organic growth. responsibilities of Sanoma’s management. This will complement our existing practices of To further enhance Sanoma’s capability of closely monitoring technological developments managing risks, in 2009 Sanoma updated its Risk and changes in consumer preferences, and allow Management Policy and introduced a renewed us to better collaborate with a network of partners risk management process, which is integrated into when developing new products and services. the management, strategic planning and internal control processes. The output from the updated Please read more at process is being used to manage risks in the Sanoma.com (About Us > Corporate governance). rapidly changing business environment Sanoma operates in. Many of the identified risks relate to the changes in customer preferences. Ongoing digi- tisation has been the driving force behind these changes for some time, and Sanoma has defined action plans in all divisions on how to best address the changes. Related to this development is the possibility of new entrants being able to better utilise such market disruptions and thereby gaining market share from Sanoma’s established businesses. Other relevant risks include those related to successful execution of acquisitions and divestments as well as financial risks.

13 sanoma annUaL REPoRT 2009 what we do

Diversified media group

Sanoma’s wide business portfolio provides diverse content for consumers and corporate customers. Our various divisions offer complementary products and services, ensuring that our customers’ needs are met both now and in the future. inspires informs connects

Sanoma has hundreds of well-known in Central Eastern Europe and Russia constitute product and service brands that are leading in one of Europe’s largest magazine publishers and a their own area. Trusted brands offer information, major digital media company. Its largest market is entertainment and education to tens of millions of the Netherlands. Sanoma Magazines is the market people each day. These brands include Sanoma’s leader in eight countries. own trademarks as well as international licenced products, and are a valuable asset to us. Sanoma News The group changed its name to Sanoma in The leading newspaper publisher in finland, October 2008, and the divisions adopted con- Sanoma News consists of Helsingin Sanomat, sistent names. The new names have enhanced Ilta-Sanomat, Sanoma Lehtimedia, Sanoma free company spirit and present a clearer picture of the Sheets and Sanoma Digital finland, among others. company to the outside world. Sanoma News is showing robust growth in digital Magazines create the largest share of the media. Its national and regional newspapers and group's net sales comprising 37% of the total, free sheets are market leaders in their areas. while retail and distribution comprise nearly one third. The growing share of digital media now Sanoma Entertainment represents 12% of total net sales. Sanoma’s electronic business division offers services through multiple channels, including The Sanoma group consists of five divisions: television, radio and online. Nelonen Media operates several television and radio channels. Welho, Sanoma Magazines finland’s largest cable operator, offers diverse pay Sanoma Uitgevers in the Netherlands, Sanoma Tv and broadband services. Sanoma games, a Magazines Belgium, Sanoma Magazines finland growing unit, provides online and casual gaming and Sanoma Magazines International operating services.

14 WHAT WE DO

net sales by division, eur million

157 345 429 828 1111

Sanoma Magazines 5% 12% 15% 29% 39% Sanoma News Sanoma Entertainment Sanoma Learning & Literature Sanoma Trade operating profit excluding non-recurring items by division, eur million

21 28 41 43 113

8% 11% 17% 18% 46% inspires informs connects

net sales distribution, % Sanoma Learning & Literature A European leader in learning materials and Advertising solutions and the leading provider of lan- 21% Magazines 37% sales guage services in the Nordic markets. Sanoma Learning & Literature is aiming for growth in attractive learning and language markets. The Division operates in 10 countries. In finland, Retail 21% Sanoma Learning & Literature is the strongest book publisher in general literature. Retail and 27% distribution

Sanoma Trade Subscription 17% sales In finland, Sanoma Trade runs R-kioski, Suomalainen Kirjakauppa, Lehtipiste and finnkino – respectively, the largest kiosk chain, Newspapers 13% Single copy 14% bookstore chain, press distributor and movie sales theatre chain in the country. The Division is the market leader in kiosk operations, trade Learning materials services and movie operations in the Baltic and solutions, 11% countries. Sanoma Trade also is the leading books Digital 12% press distributor in the Netherlands. media

Other 11%

Printed learning materials and solutions, 11% Distribution 5% books sales

15 sanoma annUaL REPoRT 2009 where we operate

Operating in Europe

Sanoma has witnessed strong internationalisation during its existence. Our 20,000 talented employees create a corporate culture where the joint know-how is utilised in the best possible manner. Sanoma operates now in more than 20 countries, respecting their local cultures. Our wide business portfolio combined with a leading position in several countries provide us with a stable foundation for future growth.

The media business is undergoing a Change moves us forward. for exam- transition. The ability to change is crucial to media ple, the increased convergence in the media companies, and employees need broad-based business is reflected in closer collaboration among competence and a new mindset. At Sanoma, we Sanoma’s different divisions. We have established are constantly developing our selection of prod- a future Media Team to co-ordinate collaborative ucts and services. Our values are creativity, reli- projects related to, for example, online business in ability and dynamism. These are essential as we the field of consumer media. strive to make information more accessible, learning more inspiring and experiences more memora- Sanoma is well-positioned to further ble. Although the means and media change, develop its growing and profitable businesses. the basic needs remain the same. Combined with efficient distribution, our market leadership, high-quality products and services, as well as our ability to really listen to our customers, help us reach our goal: to be one of the leading net sales by geographic area, eur million European media companies – a company of opportunities and operational excellence.

The diversified Sanoma has expanded 2009 257 462 625 1424 to new markets over the years and now operates 9% in over 20 countries. Nearly half of our net sales 17% 23% 51% come from outside finland. Our roots are deep in Russia, the media cultures of the countries in which we Other The Ukraine finland countries Netherlands and CEE operate. Many of our products have long been 50% market leaders and well-known brands in their 20% 22% areas. 9%

2008 262 609 655 1504

16 WHERE WE OPERATE

The main operating countries

1 9 16 Belgium Lithuania slovenia • digital media • kiosk operations • digital media • learning materials and solutions • movie operations • magazines • magazines • trade services 17 ukraine 2 10 Bulgaria the netherlands • magazines • digital media • digital media 18 • magazines • learning materials and solutions the united Kingdom • magazines • business information services 3 Croatia • trade services • digital media 11 • magazines poland In addition, Esmerk operates in • learning materials and solutions finland, france, germany, Malaysia, 4 the Czech republic Russia, Sweden and the United 12 • digital media romania Kingdom. AAC global operates in • magazines • digital media Denmark, finland, Norway, Sweden, • kiosk operations the United Kingdom and Russia, and 5 estonia • magazines Bertmark in Norway and Sweden. • bookstores • trade services • kiosk operations 13 • movie operations russia • trade services • digital media • kiosk operations 6 finland • magazines • bookstores • trade services • broadband internet 14 • digital media serbia • general literature books • digital media • kiosk operations • magazines • language services 15 • learning materials and solutions slovakia 6 • magazines • magazines • movie operations • newspapers • printing plants 5 • trade services 13 • Tv and radio 8

7 9 hungary • digital media 18 • learning materials and solutions 10 • magazines 11 1 8 Latvia • kiosk operations 4 17 • movie operations 15 • trade services 7 16 12 3

17 sanoma annUaL REPoRT 2009 sanoMa Magazines

A solid and future-proof performance

Sanoma Magazines outperformed the market in many countries in 2009, although sales and profits were down. The Division’s portfolio comprises some 300 magazines, including top local magazine brands and worldwide household names, as well as an expanding digital media business.

“I am very happy we have been able to better when times are tight,” observes Ailasmaa. manoeuvre in a very solid way through this most “Consumers and advertisers cannot afford to be challenging year ever,” says eija ailasmaa, unpleasantly surprised, so they put their trust in President and CEO of Sanoma Magazines. “This leading, reliable brands. In our Western markets, has been a historic year globally, drastically we have leading positions with 35%–45% market changing many strategic agendas.” share. Here our performance suffered in a limited As she sees it, 2009 was a “fantastic proof of way, and we even managed to grow our subscrip- our strategy in action: focus on key brands, main- tion base.” Sanoma Magazines gained market taining a leading market position and building on share, especially for major women’s titles such as a geographically balanced portfolio that incorpo- Me Naiset and Libelle. “And we have been able to rates a future digital dimension.” keep up our digital revenues at the previous years’ level,” adds Ailasmaa, “so we did well.” “This year has proven that market Still, it is clear that slumping gDPs and cur- leaders and strong brands succeed relatively rencies influenced advertising sales, especially in

Desired magazines and digital media!

18 SANOMA MAgAzINES

This year has proven that market leaders and strong brands succeed relatively better when times are tight.” Eija Ailasmaa

Central Eastern Europe and Russia. Yet Sanoma while in Hungary it boosted its top position in Sanoma Magazines invests Magazines was decisive in contingency planning digital media by acquiring Olcsobbat.hu, a popular Sanoma Magazines nurtures its core brand portfolio for all the countries. comparison site. The Division was able to further by investing in quality About two dozen magazines were folded. grow its digital business base through selective improvements and product extensions that allow its Others were published less frequently to cut costs. acquisitions also in other countries. media to blossom further. ”It might sound like a lot, but they were small We have recently invested titles and not likely to have a good future after Meanwhile Sanoma Magazines was building substantially in women’s weekly Margriet by adding the recession,” explains Ailasmaa. “And it is a a common platform for key processes such as sub- more content and pages and proof of our dedication to focus on our key brands, scription bases and the financial back office. “We updating the layout. As a safeguarding their performance – in many cases basically moved our finnish processes to leverage result, one of the favourite magazines of Dutch women these brands have boosted their market share as a significant ICT investment in the Netherlands through many years has a result.” Important streamlining of operations and we are now expanding it to other countries, been able to improve its performance significantly. included the reorganisation of Sanoma Magazines Belgium first, because the solution fits big busi- Belgium and the closure of the felicitas hostess nesses with the same characteristics and proc- organisation in the Netherlands. esses,” explains Ailasmaa. “And we have continued Due to a variety of actions the number of to invest in our people as well. We made true on our employees in the Division decreased by more than strong belief that media is a people business by 700. “By taking painful but necessary measures continuing to develop our management talent and we have created more efficient basis for the their leadership skills. Looking at our performance, future,” says Ailasmaa. we have made the right choices.”

“We have adapted quickly and strongly. “Regarding our future,” Ailasmaa I am proud of our people. They have proven continues, “the most important step that we took themselves to be champions in recession fighting, this year was setting up a new organisation for and that is paying off.” our digital media activities, building on successes in Bulgaria, Hungary and the Netherlands. The Despite the general economic woes organisation is being led by Michiel Buitelaar, in Central Eastern Europe, there were bright spots Chief Digital Media. We are a quality content in the region as well. Sanoma Magazines became producer that is strongly committed to expanding the leading magazine publisher in Romania, our current position. That is why we are keen to

19 sanoma annUaL REPoRT 2009 sanoMa Magazines

develop future possibilities, in magazines as well can quickly respond to new conditions and one-off as on digital platforms.” events. “And we are very well positioned to profit With the digital media organisation in place, from our position in digital media,” she adds. “The the idea is to consolidate the knowledge base latest technological developments in e-readers from various countries, leveraging know-how and might even bring magazines and stand-alone some assets cross-border. The lead countries in digital services more back together again. for us it this respect are the Netherlands, Bulgaria and means that we will continue to nourish our current Hungary, where the Division has strong stand- media portfolio to be able to expand it even further. alone internet businesses. At the same time we will explore new opportunities Sanoma Magazines innovates Sanoma Magazines is actively In addition, Ailasmaa believes that many of the that are provided by developments in the market exploring new opportunities Division’s strong print brands can be developed and technology. Nurture and explore is one of our provided by technological with new digital offerings. “We are building vertical strategic themes for the coming period.” developments. We have launched mobile websites con- services around areas where we have strengths, “But first we have to deal with the recovery of nected to our magazines, and such as cars, parenting, home deco and celebri- the advertising market. That will also take time,” websites like Startpagina.mobi are piloting with narrowcast- ties,” she says. This is part of the Division’s maga- Ailasmaa continues. “fortunately consumer ing at transport hubs, and zine plus concept, which also includes extensions spending did not fall too steeply, but we still have have scored our first hits with such as events, product licensing, DvDs and books. to be very strict with costs in 2010. I am glad smart phone applications. Both the AutoWeek as well as the Ailasmaa is confident about the future of maga- that in 2009 we have proven ourselves up for the FN.hu apps have reached the zines, predicting they will remain strong in the challenge.” top spot in the iTunes store in the Netherlands and Hungary coming years. She notes that trends in this market respectively. change slowly, while magazines are dynamic and Please read more: Sanomamagazines.com

Sanoma Magazines

Sanoma Uitgevers Sanoma Magazines Sanoma Magazines Sanoma Magazines (the Netherlands) Belgium finland International

• Mood for Magazines • EPN International • Suomen Rakennuslehti • Central Europe • Sanoma Digital • Jervi • Egmont Kustannus • Sanoma Budapest The Netherlands • SBPP • Hansaprint • Sanoma Magazines Praha • Woonbeurs Amsterdam Printing • Sanoma Magazines Slovakia Consumer fairs • South East Europe • Netinfo (Bulgaria) • Sanoma Bliasak Bulgaria • Sanoma Hearst Romania • Sanoma Magazines Ukraine • Russia and CIS • Independent Media Sanoma Magazines • Adriatic Region • Adria Media Ljubljana • Adria Media Serbia • Adria Media zagreb

reach of our magazines reach of our digital media in top 3 magazine countries in 2009 in top 3 digital media countries in 2009

Sources: finland: National Readership Survey, The Netherlands: NOM Print Monitor 51% 64% 70% 71% 77% 80% and STIR, Belgium: TNS Media, Hungary: NRC, Bulgaria: gemius. The methods of measurement Belgium The Netherlands finland Hungary Bulgaria The Netherlands may differ by country.

20 sanoMa Magazines Laid-back and current The leading finnish women’s magazine continues to strengthen its position.

net sales, eur million Laid-back, current, fun and open- all its fascinating forms through peo- minded – this is how readers describe ple in finland and around the world. ´ Me Naiset magazine. these same the more smoothly a story runs on ´ descriptions are found in the brand the pages of the magazine, the more manual, which means that the maga- behind-the-scenes work it represents. ´ zine is reaching its content-related “it is important that the entire organi- ´ goals. sation shares the understanding of the content guidelines have also this,” pollari says. ´ fostered financial success: although the magazine believes that high- advertising sales generally decreased quality content is the primary way in the media in 2009, Me Naiset was of ensuring reader satisfaction. “our proud to report growth – not only in subscription renewal rate, which we advertising but also in subscription regard as the most important indicator, and single copy sales. has increased rapidly. when a reader publisher anne Koski attributes renews her subscription, we know this success to determined and con- we have done something right,” says operating profit excluding sistent work that began with a major anne Koski. non-recurring items, eur million reorganisation in 2002, at which point in 2006, Me Naiset reached market ´ the magazine concept was defined leadership in circulation. in 2009, it with great care. the magazine concept, became also the leading finnish paid ´ however, has since been updated magazine in advertising sales, meas- ´ several times. ured both in pages and euros. according “we need to differentiate ourselves to Koski, single copy sales are high, ´ from trends rather than simply fol- suggesting growth in the future as well. ´ low them,” says editor-in-Chief riitta pollari has no intention of slowing pollari. the magazine’s strong market down: “we will continue to respond to position and basic structure allow to reader feedback, because it’s one of take the necessary risks. “experimenting our most valuable assets. Luckily, we means success for us, and not having have a direct, open relationship with the courage results in failure.” our readers, and the internet has made Me Naiset increasingly covers communication even easier.” personnel * social topics, exploring everyday life in

* At the end of period (fTE)

net sales by business, eur million

199 211 212 493

18% 19% 19% 44%

Sanoma Magazines Netherlands Sanoma Magazines Belgium Sanoma Magazines International Sanoma Magazines finland

21 sanoma annUaL REPoRT 2009 sanoMa news

All ears, in tune with the customers

The evolving media landscape requires a stronger focus on the customer. New and upgraded products, improved services and enhanced efficiency – this is how Sanoma News meets ever more diversified media needs of its customers.

Driven by the internet, the massive The changed media landscape requires media transformation is still in its early stages. a stronger focus on the customer. In media sales, Nonetheless, customer behaviour has already for example, product organisations are adopting a changed profoundly: consumers and advertisers customer-oriented approach: based on individual use a greater variety of media more widely – customer needs, sales professionals offer solutions a single medium seldom meets all customer that cover several media instead of a single one. needs anymore. “Rather than a revolution, this is an evolution. A creative approach allows Sanoma News to We are enhancing our operations, step by step,” offer a wider range of more diverse products and says Pentikäinen. services. This involves fearless innovation, con- Collaboration increases efficiency. Centralised tinuous product improvement, inventive product investments cut costs, as do the new competence combinations and increased collaboration among centres that provide services for Sanoma News as employees. well as other divisions. “The media transformation affects all our These centres include the Online Performance employees – in editorial offices, sales organisa- Unit, which serves all Sanoma News' units in tions and printing plants alike. At the same time, search engine marketing and optimisation, web it offers excellent opportunities to work together analytics and usability development. Information to implement a common strategy,” says Mikael technology is also managed centrally; this has pentikäinen, President of Sanoma News. reduced costs and increased transparency.

Taking news into the new era!

22 SANOMA NEWS

Quality journalism will always be our main purpose.” Mikael Pentikäinen

Rapidly changing customer expectations “Instead of focusing on what to manage, Sanoma Outlet boosts require faster learning and innovation throughout we will increasingly focus on how to manage,” online advertising Display-based online adver- Sanoma News. Pentikäinen says. tising enjoyed great success The quality tabloid Ilta-Sanomat upgraded its Sanoma News has compiled guidelines for in 2009. This is partly because of Sanoma Outlet, products and reformed its mode of operation in supervisors. a performance-based online 2008. The online financial daily Taloussanomat “We discussed and deliberated on what inspir- advertising sales system that was integrated into Ilta-Sanomat as an independ- ing leadership means and how best to provide was launched in summer with highly promising results. Its ent brand in 2009, which has improved col- feedback. We also reflected on our corporate features include automated laboration and enhanced performance. However, culture – what it does and does not include.” optimisation that ensures the most significant change of the year was the good leadership was needed in early 2009, visibility in the best possible advertising spaces with transformation of Helsingin Sanomat. during a difficult period of adjustments. Sanoma maximal results. “The successfully revamped layout was but News implemented cost cutting and launched a small part of the whole. Reshaped operating employee negotiations on downsizing. models and differentiated content for different “I am pleased that we were able to adjust our channels were equally if not even more important operations to the challenging economy. We were aspects,” Pentikäinen emphasises. also able to create something new in the proc- Joining forces helps produce more diverse ess, which makes me particularly happy. We have content for consumers. Sanoma Lehtimedia, for transformed all our products over the past couple example, established a virtual news desk for three of years,” Pentikäinen says. of its local newspapers: Kouvolan Sanomat, Etelä- The recession hit the media market hard, but Saimaa and Kymen Sanomat. Sanoma News took rapid action. The necessary adjustments created higher cost cutting than Innovation requires a new type of leader- expected, and the profitability improved in late ship that is more about managing people than 2009. managing tasks. Employees must also be offered a more diverse choice of career paths.

23 sanoma annUaL REPoRT 2009 sanoMa news

Sanoma News is undergoing a systematic to develop additional fee-based services. Helsingin change that is leading-edge, even in an interna- Sanomat already has more than 100,000 sub- tional comparison. Predicting the future is impos- scriptions that combine the print newspaper with sible, but it is crucial to stay attuned to change. digital services. Major challenges include integrating new dig- Technology keeps changing, and so does cus- ital and print products seamlessly into the existing tomer behaviour. But one thing will never change: selection. Pentikäinen believes that print newspa- “Quality journalism will always be our main pers will hold their position for years despite the purpose. We will continue to write well, offering Radio Helsinki escalating media transformation. our readers reliable and thoroughly researched rules the airwaves “We must have the courage to develop digital information as well as intelligent entertainment,” Radio Helsinki won Radio of the Year award for the sixth products, even though they may affect our print Pentikäinen promises. time in the annual Industry products. Understanding and meeting customer Awards gala event for finnish needs is essential to solving this equation,” Please read more: Sanomanews.com music professionals. Radio Helsinki was also deemed Pentikäinen points out. the best in 2001, 2003, Although the media market suffered from Mikael pentikäinen is appointed Senior Editor- 2005, 2007 and 2008. reduced sales in 2009, the sales of many digital in-Chief and Publisher of Helsingin Sanomat products increased. This illustrates the depth and as of 1 April 2010. Acting President of intensity of the transformation. Sanoma News will be pekka soini. Paid online services are a big question mark to the industry, but Sanoma News is well-positioned

Shared services: Sanoma News Sanoma Online Ad Sales Sanoma News Outbound Online Performance Unit

Esmerk Helsingin Ilta- Sanoma Sanoma Sanoma Digital (Business Sanomat Sanomat Lehtimedia Kaupunkilehdet finland information)

• Helsingin Sanomat • Ilta-Sanomat • Regional papers • free sheets • Marketplaces Daily newspaper Tabloid • Etelä-Saimaa • Metro • Direct Sanoma Data • Radio Helsinki • veikkaaja • Kouvolan Sanomat • vartti (IT operations) Local radio station Sports and betting Kymen Sanomat weekly • • Local papers • Taloussanomat financial information Sanomapaino (5 printing plants in finland)

sanoMa news' weBsites are inCreasingLy popuLar. Iltasanomat.fi, one of the most visited online services

in finland, had an impressive 1,929,639 unique visitors in a single week in mid-November 2009. HS.fi, the Helsingin

Sanomat online service, has more than 1.3 million unique visitors each week. Huuto.net, the largest and most popular

online auction service in finland, reached its all-time high with 531,891 unique visitors in the first week of 2010.

24 sanoMa news

Channeling the news stream Helsingin Sanomat has completely transformed its mode of operation.

net sales, eur million in november 2009, the readers of and editorial meetings take a multi- Helsingin Sanomat opened a revamped channel approach. “news is a stream, ´ newspaper. introduced on the news- not a pond,” Meriläinen says. ´ paper’s 120th anniversary, the new the online editorial staff shares layout was but one aspect of the pro- offices with the news staff, drawn ´ found transformation finland’s leading from the former local news and

´ newspaper has undergone in a little domestic news departments. the staff over two years. supervisors work around the central ´ “everyone’s job description desk in the spacious editorial offices, changed,” says editor-in-Chief reetta within shouting distance of each other Meriläinen. according to her, the pur- and the supervisors of the photo and pose of the transformation is to ensure graphics editors. a strong position in a world where the new working methods news is available quickly, easily and increased efficiency, and for a good rea- free of charge. son: at the end of the year, the editorial operating profit excluding “we needed to determine what staff numbered 270, down by nearly 50 non-recurring items, eur million type of editorial staff would be able to employees from the beginning of the ´ produce meaningful content for the year. the transformation, however, was full range of our products: newspaper, launched before the current recession. ´ online service, radio, mobile service and, “we were lucky,” says Meriläinen. “we in addition, supplements and books.” had ample time to make changes that ´ the newspaper and its online later proved unavoidable.” ´ service, HS.fi, now have clearly defined the transformation was intended to roles that complement one another create a better and even more interest- ´ instead of competing. writers choose ing Helsingin Sanomat. reader opinions an angle and approach based on where of topics and viewpoints are surveyed and when the article will be published. systematically in, for example, reader nearly a hundred journalists from panels, and members of the public are the print edition attended training in more often interviewed for articles. online writing. they now work flexibly “a newspaper should serve as a link for both versions of the newspaper, between citizens and decision-makers.” personnel *

* At the end of period (fTE)

net sales by business, eur million

78 92 144 240

14% 17% 26% 43%

Helsingin Sanomat Other businesses Other publishing Ilta-Sanomat

25 sanoma annUaL REPoRT 2009 sanoMa entertainMent

High-quality content, multichannel enjoyment

Sanoma Entertainment brings together consumers and advertisers on television, radio and the internet. This multichannel environment calls for new operating models, but success is still based on compelling content.

“Online Tv can bring an additional 20% Talent, for example, attracted online visitors who viewers to a popular television series,” says anu wanted to see how their favourite contestants nissinen, President of Sanoma Entertainment. fared each week. “Many programmes include Sanoma Entertainment’s product offerings multiple elements. Their role in different chan- include six television channels, two radio channels nels is considered early in the planning stage,” and a cable and broadband operator. This mul- says Nissinen. tichannel approach presents great opportunities, allowing the Division to serve consumers at times Products still determine success. that best suit their needs. It also offers advertisers Sanoma Entertainment launched Ruutu.fi, which a multichannel route to customers. offers free access to episodes of television series In this new environment, viewers and visi- and additional content from popular radio and tors build active communities around television television programmes. This online Tv service is programmes. The highly popular Finland’s Got off to a strong start.

Electronic entertaining experiences!

26 SANOMA ENTERTAINMENT

Success is still based on compelling content.” Anu Nissinen

The cable and broadband operator Welho The multichannel approach calls for Nelonen hits the launched Welho Mix, a fully customisable pay Tv new operating models. “We need to offer carefully million-viewer mark More than a million finns, package. Customers can choose eight favourites considered and packaged services to our custom- an all-time high for Nelonen, from a total of more than 60 channels. ers and advertisers,” says Nissinen. “At the same watched the season finale of finland’s got Talent in In late 2009, Sanoma Entertainment and time, we must be able to meet the needs of differ- November 2009. This sea- viasat introduced Nelonen Sport Pro, a pay ent customers more precisely.” son’s winner was pantomime Tv channel that will greatly expand Nelonen New operating models present challenges, artist Miikka Mäkelä Media’s sports programming. The programming but Sanoma Entertainment has managed well. will include the finnish National Hockey League Nissinen praises her staff for rising to the occasion. finals, UEfA Champions League, MotogP World Sanoma Entertainment’s performance Championships and much more. improved substantially in 2009, owing to effective cost-saving measures, Nelonen Media’s To complement the successful Jim tel- successful multichannel strategy and Welho’s evision channel, Sanoma Entertainment launched excellent performance in the broadband market. the lifestyle channel Liv in the cable network in The Division intends to maintain this high level february 2009. With an initial one-year licence, in 2010. Liv began broadcasting on the terrestrial network in December 2009.

Operating mostly in finland, Sanoma The ratings for Radio Aalto improved after the Entertainment is also interested in international station adopted a repositioned focus. Radio Rock opportunities. International business has gained also enjoys an increasing number of listeners. momentum primarily through Sanoma games, New products and successful collaboration a new business unit specialising in online casual helped Nelonen Media reach an all-time high gaming. This unit already operates in Sweden and share in advertising. The company’s proportion of is seeking further expansion. all television advertising in finland rose to 32.6% International operations in the television in 2009, compared to 29.5% in the previous year. business would require acquisitions. Sanoma

27 sanoma annUaL REPoRT 2009 sanoMa entertainMent

Entertainment is open to opportunities that may deep understanding of the finnish viewers’ needs present themselves. is a strength that must be enhanced,” Nissinen points out. The fast pace will continue in 2010, Collaboration within the Sanoma group is as Sanoma Entertainment will launch many new increasing as well. Sanoma’s future Media Team, products and services. Welho will introduce a consisting of consumer media divisions' presi- 200 MB broadband connection in addition to the dents Eija Ailasmaa, Anu Nissinen and Mikael present 110 MB offering. Welho is also planning Pentikäinen, explores opportunities for more to launch commercial 3DTv services in 2010. efficient co-operation. In february 2010, Sanoma Nelonen Media is continually developing new Entertainment and Sanoma News combined their flourishing Ruutu.fi programme formats. finance and administration functions to improve Launched before the sum- New collaborations include innovative partner- collaboration and share best practices. mer holiday season in 2009, Ruutu.fi became the most ships. Many of the partners are multinational popular online Tv service in companies that need a strong local partner. “Our Please read more: Sanomaentertainment.com finland in just a few months. In November, visitors clicked the play button more than four million times. The revised concept for Radio Aalto also proved successful. In October, Sanoma Enter- tainment’s radio stations broke their previous records in advertising sales.

Sanoma Entertainment

Tv and radio Cable Tv and Online operations broadband internet services

• Nelonen Media • Welho • Nelonen Media online services • Nelonen • Sanoma games • Jim • Casual games • Liv • fantasy leagues • KinoTv • MMO games • Nelonen Sport • Nelonen Sport Pro • Radio Aalto • Radio Rock

operational indicators 2009 2008 Tv channels' share of finnish Tv advertising 32.6% 29.5%

Tv channels' national commercial viewing share 29.8% 29.6%

Tv channels' national viewing share 14.8% 14.1%

Number of connected households, thousands (31 Dec) 326 323

Number of pay Tv customers, thousands (31 Dec) 76 68

Number of broadband internet connections, thousands (31 Dec) 116 105

28 sanoMa entertainMent

Recommended for all ages gaming enjoys growth and looks for new opportunities abroad.

net sales, eur million sanoma entertainment has tapped into categories. the online environment for the growing interest for games, one of casual gaming sites differs from other ´ the fastest developing markets online. sites. it’s relaxed, fun, people have

´ the division first introduced the more time to spend there and they are online casual gaming site Pelikone.fi more active in familiarising them- ´ in autumn 2007, and followed it later selves with the ads, which is how the with the acquisition of Älypää.fi, a site sites generate revenue. ´ featuring quizzes and puzzle games. sanoma games has now moved ´ “everyone said the market is into fantasy sport games with the

crowded. we proved this wrong, in part creation of Liigapörssi.fi, developed in because we found an interest among co-operation with the finnish hockey women in our casual games,” says League and Ilta-Sanomat. for a fee, fernando herrera, director of gaming users create a hockey team by select- and online, sanoma entertainment. it ing actual players from the league is estimated that about 70% of casual within certain budget constraints and gamers in finland are women. track their team’s fortunes by follow- operating profit excluding Cross division co-operation with ing the performance of players in the non-recurring items, eur million sanoma news has also proven benefi- actual matches. ´ cial. Pelikone.fi is found on the tabloid with its launch in sweden, the site Iltasanomat.fi, while Älypää.fi is concept has now gone abroad. a fan- ´ part of the online version of finland’s tasy sport game Coach LeMat works in leading daily, HS.fi. co-operation with the swedish hockey ´ “to get Pelikone.fi going, we cre- League and the leading swedish daily, ´ ated a ‘youtube for flash games’ that Aftonbladet. More countries may follow. allowed people to upload their games “as people of all ages are play- ´ to the site for free,” explains herrera. ing games online these days,” says Pelikone.fi is currently the most herrera, with a smile, “we are con- popular gaming site in finland and has stantly looking for new ways to thousands of games under different accommodate their needs.”

personnel *

* At the end of period (fTE)

net sales by business, eur million

70 88

44% 56%

Tv and radio Other businesses

29 sanoma annUaL REPoRT 2009 sanoMa Learning & Literature

Local winners, shared experiences

Sanoma Learning & Literature is shifting the focus of learning and language services from offering products and services to offering a solution-based approach. This means better service for customers. The change also creates growth opportunities for business.

“The year 2009 was a twofold story,” says business was vulnerable to cost cutting measures Jacques eijkens, CEO of Sanoma Learning & by corporations. The finnish general literature Literature. “We were dealing with the recession market experienced pressure. while transforming our business portfolio to include Citing some of the bright spots in 2009, more solutions for learning and language services.” Eijkens mentions the strong growth in Poland, The Division’s core business is learning, where the educational publisher Nowa Era focused on learning materials and solutions in boosted its market share. Belgium, finland, Hungary, the Netherlands and “Poland reformed the entire curriculum of its Poland. Language services are provided through first levels in primary and secondary schools,” he AAC global in finland, Sweden, Denmark, Norway, says, “a huge change which Nowa Era very suc- the UK and Russia, and the general literature busi- cessfully anticipated with a completely new gen- ness through WSOY in finland. eration of learning solutions. This change enabled Each took steps forward in 2009 despite the Nowa Era to gain substantial market share, which difficult conditions. Sales of learning materials and now amounts to 25% of the total market.” solutions remained steady. The language service “We had more than 200 Nowa Era repre- sentatives on the road, visiting schools, talking

30 SANOMA LEARNINg & LITERATURE

In learning, our aim is to be among the top three in Europe.” Jacques Eijkens

to teachers, telling them how to implement these In general literature, it was a year of Innovative tools for education changes with dedicated products and services. major bestsellers: Stieg Larsson, Stephenie Young Digital Planet has developed a family of software This customer focused method reflects a broader Meyer and Dan Brown guaranteed a successful applications which allows change toward a more solution-based approach in year. Sofi Oksanen, the award-winning finnish- publishers to develop e-book content, writers to develop our learning business.” Estonian playwright and novelist made history interactive courses and schools and became a true national – and international to use educational software. “Teachers and schools are looking for – phenomenon. “WSOY launched her novel support in their management of the learning proc- Puhdistus (The Purge) in spring 2008. It won all ess,” continues Eijkens. “Content remains impor- the major book awards and stayed at the top of tant, but will be more and more widely available the bestseller lists during 2008 and 2009. What on the internet. What makes our solutions unique makes the phenomenon particularly encouraging is that the content can be personalised and will be is that we are here talking about serious quality embedded in our total offering. This really allows fiction.” the teacher to manage the learning process, espe- “WSOY’s foreign rights department made cially in the digital learning environment.” a major breakthrough by selling 140 finnish Language services, too, took a step for- titles to foreign publishers, much more than the ward. “We just established an AAC global office year before. Our foreign sales department has in Norway and the year before we acquired a been building up connections with publishers all leading Swedish language service provider with over the world for several years now, and that offices in Sweden, Denmark and the UK, so now approach is really paying off now!” we have stronger coverage in the Baltic Rim area,” says Eijkens. “It’s essential to be close to our customers!”

For better knowledge, competence, performance and wellbeing!

31 sanoma annUaL REPoRT 2009 sanoMa Learning & Literature

New technology, free online content and glo- corporations. “We support our customers in their balisation trends have provided new challenges multilingual communication needs, taking care and opportunities for the Division. "We believe that of all translation as well as language and cultural a customer-driven and solution-based approach training.” will definitely make the difference in our markets. “In learning, our aim is to be among the top Therefore we create new ways and opportunities three in Europe,” says Eijkens. “We’re now operat- for personnel’s development and innovation." An ing in five countries. Acquisitions and entering example of this is the Leaders-in-Learning train- new markets are on our agenda; they may have ing programme, where employees from different been put on hold during the recession year of business units created innovative products and 2009, but in 2010 we shall continue.” services offering clear potential for future growth. “In general literature, our target is to be One of the programme’s main objectives was to finland’s most exciting publisher; attractive for facilitate collaboration and knowledge sharing well-known authors and new talent, attractive between business units. for foreign publishers, attractive for all our sales channels and, of course, for all our readers.” The goal for language services is As for the coming year, Eijkens says: “We need to be the leading provider in the Baltic Rim area, to be cautious and prudent – we can’t assume it offering globalisation services for big international will be all sunshine!”

Joyful learning experiences Our online services offer a wide range of content and learning methods for millions Sanoma Learning & Literature of pupils, teachers and other professionals around Europe.

Language Learning Literature & other services

• Malmberg • AAC global • WSOY The Netherlands finland finland • Nowa Era Sweden • Bertmark Poland Denmark Norway, Sweden Norway NTK–Perfekt WS Bookwell (printing house) • The UK • Hungary finland Russia • WSOYpro • Kirjakeskus (logistic centre) finland finland • van In Belgium • Young Digital Planet Poland

net sales distribution

20% 80% 11% 89%

Services goods/books Digital Non-digital

32 sanoMa Learning & Literature

Personalised and efficient Malmberg’s new learning solution provides individual study paths for pupils and reduces workload for teachers.

net sales, eur million in the next 10 years, the educational it in the next day and waits for the landscape will change significantly. teacher’s comments.” ´ the change is being driven by the “we launched a project in 2007 ´ move to a digital society combined to build an e-learning platform that with a lack of teachers caused by the allows for the creation, management ´ approaching retirement wave of the and delivery of content specific to each ´ baby-boomers. secondary education levels. our goal Malmberg has developed a learning was a tool that allowed us to put all of ´ platform that serves as a teacher’s Malmberg’s relevant dutch learning workflow solution and aims to improve methods onto the platform.” learning outcomes by providing person- Malmberg’s learning solution cre- alised learning pathway for pupils and ates additional benefits in three key increase the efficiency of the teaching areas. first, it assists in student assess- process by reducing workload. ment. test results at the end of each operating profit excluding Malmberg Business unit Manager module are used to generate the appro- non-recurring items, eur million anne Bruinenberg explains, “in the priate study path for the next module. netherlands, 12 to 17 year olds are thus, slower learners get remedial ´ expected to do two to support and high-performing children

´ three hours of home- are challenged with extra tests and work a day on top of activities. this avoids the shortcom- ´ their six-hour school ings of the one-size-fits-all solution day. the traditional and guides each student to their goals ´ homework cycle with positive reinforcement. second, ´ means a pupil e-exercises are vetted to assure they

does an assign- teach the desired skill effectively. any ment, hands decision to use a simulation, process feedback or other approach in an assignment must be justified by the author as the best option for practis- ing the skill demanded by the exercise. personnel * finally, teachers retain full control of the process. they can monitor the ´ progress of a group or an individual student, and modify or add content ´ whenever the need arises. ´ “Looking back, we learned a lot and this project will definitely benefit ´ sanoma Learning & Literature over ´ the long run,” says anne Bruinenberg. the learning businesses in the division actively share knowledge and * At the end of period (fTE) experiences, which means that new concepts will be exploited in other companies and markets.

net sales by business, eur million

27 89 239

8% 25% 67%

Learning Literature and other businesses Language services

33 sanoma annUaL REPoRT 2009 sanoMa trade

Creating concepts for further growth

New concepts provide a foundation for further growth in Sanoma Trade. The new kiosk concepts have already reached the testing phase, and bookstores will soon follow suit. These changes offer new opportunities for customers, personnel and partners alike.

“We cannot be disappointed. Despite The goal is to introduce a new mindset: instead the recession, we made profits and our net sales of merely selling chocolate, books, movie tickets were nearly as good as those in the previous and other products, Sanoma Trade provides enter- year,” says timo Mänty, President and CEO of tainment, information and experiences. This opens Sanoma Trade. “Our performance in finland was up countless opportunities, and Sanoma Trade excellent, but Russia and the Baltic countries fell seeks to tap into the hidden potential in its millions short of expectations.” of customer encounters every year. But Mänty will not settle for merely restructur- ing unprofitable operations: many profitable con- The reform has already reached the cepts will be transformed as well. Concept devel- testing phase in kiosk operations, Sanoma Trade’s opment will remain the most substantial issue largest business. “The current concept for our in Sanoma Trade in 2010. “It’s difficult to achieve R-kiosks was created in the early 1990s. The world growth in the current economy, but we must has changed a great deal in 20 years, so it is high resume the upward trend after the recession.” time for a new concept,” Mänty says.

Convenience, entertainment and little extras every day!

34 SANOMA TRADE

We need to offer consumers entertainment, information and experiences.” Timo Mänty

The reform will revolutionise the idea of identical Concept development involves dozens of New dispatch centre for kiosk designs. Different locations require different people in different teams. The goal is to collect a new business opportunities Trade services' new dispatch services, and because the demand may vary greatly, wide range of ideas from the entire field. Mänty centre brings the efficiency, the company is testing several designs. Customer stresses the importance of raising innovation speed and accuracy of the operations to a new level. Its reactions will eventually determine their success. levels in all operations. He wants to enhance inno- three picking lines enable In its first stage, the reform only applies to vation by encouraging open discussion, commit- the handling of bigger press finland, but some of the ideas may prove transfer- ment and learning. volumes and also other product groups. able to other countries. National differences in consumption habits, however, are so significant Movie theatres have already become that nothing is a given. experience centres. Live broadcasts from the Metropolitan Opera in New York were the first Bookstores also need new service models step in this direction, and the opportunity to see for different types of locations. Presently, their Robbie Williams’ comeback concert live on the big offerings are basically the same, whether the screen sold out in an hour. finnkino has realised potential visitor base is 10 million or 30,000 people.

Bookstores want to broaden their service that movie theatres have many uses: the Payazzo concept from books to human needs. All employ- World Championships are an excellent example of ees need to adopt a new mindset if bookstores this – it’s not just movies that gather like-minded develop into, for example, entertainment centres. people together in a theatre. “This calls for the ability to see consumers' needs But nothing will replace movies. They continue in a new light. Our personnel are a great asset in to provide a solid foundation for all finnkino’s this respect,” Mänty says. operations.

35 sanoma annUaL REPoRT 2009 sanoMa trade

More strength to Sanoma Trade has reorganised its operations Concept development offersoppor- business development rapidly in its most challenging markets. The Divi- tunities for new partners. Movie theatres can Sanoma Trade's Estonian operations and brands were sion is combining its operations in Estonia to boost be used for testing events that have not been brought together to ensure marketing efficiency, enhance concept develop- arranged previously. Product offerings at book- the competitive ability of ment and cut costs. Sanoma Trade is considering stores may include innovative and surprising the organisation also in the future. A unified Rautakirja transferring this operating model to other countries products in the future – businesses need to think Estonia can offer its custom- as well. outside the box. ers a faster and more versa- tile concept development as The Division has closed down more than Kiosk operations are not limited by four well as a better product and 100 unprofitable kiosks, mostly in Latvia and walls. The electronic Oiva system, for example, service offering than before. Lithuania. The market situation, however, keeps has opened a whole new dimension: every year, changing in the Baltic countries. Demand has R-kiosks sell event tickets, transport tickets, recrea- clearly decreased in Latvia but increased in tional fishing licences and other electronic products Lithuania. In Estonia, movie operations have worth more than EUR 700 million. This makes the gained momentum, whereas kiosk operations R-kiosk chain finland’s largest online store. have suffered setbacks. “The sky is the limit. We haven’t even had time Sanoma Trade is carefully re-evaluating its to inform all companies of the opportunities we offer. operations in Russia, its toughest market. In It’s a communication challenge,” Mänty says. Romania, the newest market, the Division has completed the initial phase of operations. Please read more: www.Sanomatrade.com

Sanoma Trade

Kiosk operations Trade services Bookstores Movie operations

• R-kioski press distribution • Suomalainen Kirjakauppa • finnkino finland • Lehtipiste finland finland • Rautakirja Estonia finland • Yliopistokirjakauppa • Rautakirja Estonia R-kiosk • Aldipress finland forum Cinemas Estonia The Netherlands • Lukiolaisten Kirjakauppa Estonia • Narvesen Baltija • Rautakirja Estonia finland • forum Cinemas Latvia Lehepunkt • Reader’s Latvia • Lietuvos Spauda Estonia finland • forum Cinemas Lithuania • Preses Serviss • Suomalainen.com Lithuania • Rautakirja Russia Latvia R-kiosk • Rautakirja Estonia • Impress Teva Estonia Russia Lithuania • Apollo • Rautakirja Romania • Rautakirja Russia R-kiosk Russia • videoplanet Romania • Rautakirja Romania • filmipood Romania sales promotion • Printcenter finland

operational indicators 2009 2008 Number of customers in kiosks, thousands 194 692 212 171

Number of customers in bookstores, thousands 7 239 7 484

Number of customers in movie theatres, thousands 9 501 10 192

Number of copies sold (press distribution), thousands 350 186 383 289

36 sanoMa trade

net sales, eur million

operating profit excluding non-recurring items, eur million ´ A new era for R-kiosk ´

´ R-kiosks will adopt a new concept ´

´ that makes services and products more accessible to different customer groups.

rautakirja celebrates its 100th anni- – quick and convenient shopping, as personnel * versary in 2010 by introducing a new our brand promise puts it,” heino says. ´ concept for its r-kiosks. “this historic despite increased specialisation, change compares to the reform imple- approximately 80% of the product mix ´ mented 20 years ago, when traditional will remain the same in all kiosks. in ´ kiosks were replaced with walk-in addition, rapidly increasing electronic facilities,” says Jari heino, senior vice products allow the kiosks to offer a ´ president of Kiosk operations. wider selection of services. Customers ´ the reform is largely based on can load their travel cards, purchase what customers in different areas event tickets and prepaid cards and want to buy in kiosks: some kiosks collect deliveries from online stores – * At the end of period (fTE) have a high demand for take away many customers are already familiar products, and others for magazines or with these services. paperbacks. in some areas, r-kiosks personal, quick and friendly bring services closer to customers, service is a cornerstone of r-kiosk offering a quick and easy solution for operations. the 4 x t training pro- net sales by business, eur million shopping needs. the bases for evalua- gramme will continue in 2010. all of tion are many. the company is testing our 4,000 salespersons will complete different kiosk designs, which will be this training. 12388 222 411 further developed based on feedback. “our strong concept and the the first pilot kiosks were opened constant development of our offering in the helsinki metropolitan area in have proven to be effective solutions, 10% 15% 26% 49% late 2009, and all r-kiosks will adopt even in challenging economies. we a new look in the next few years. the are the market leader, and our new Kiosk operations carefully designed new concept is concept will provide an excellent Trade services based on several studies on purchas- foundation for sustainable growth in Bookstores ing behaviour. “Customers will have the future – for the next 100 years.” Movie operations easier access to the services they need

37 sanoma annUaL REPoRT 2009 personneL

People create success

Nearly all of Sanoma’s employees faced changes in their workplaces in 2009. This is one of the reasons why the Sanoma group has increasingly invested in good management and leadership skills.

Sanoma believes that success depends on opportunity to influence their work and profes- creative, reliable and dynamic people who work sional development. In practice, this is largely in an inspiring and supportive environment with a question of leadership and good manage- opportunities for professional development. ment practices,” says tuula Jokipaltio, Human The recession and market changes in 2009 Resources Development Director. forced the Sanoma group, among many other companies, to adjust its operations. Our total Training at the Sanoma Academy number of personnel decreased from 21,329 to increasingly focused on leading people instead 20,625 employees. The reductions concerned all of managing tasks. This was clearly reflected in divisions in almost all of our operating countries. the training programmes, such as the growth Sanoma provided support to those who left the Leader Programme for leadership development. group as well as to those who stayed. Even more The STEP training programme, on the other hand, than before, wellbeing at work was our main con- provides experts with self-leadership skills. sideration in issues concerning all employees. “We want to foster expertise, because devel- “In addition to fair treatment, wellbeing at oping as an expert offers an interesting career work presupposes that employees have the path option within Sanoma,” Jokipaltio says.

38 PERSONNEL

average number of employees personnel by division

´ Magazines

´ News

´ Entertainment

´ Learning & Literature

´ Trade

Sanoma Corp

full-time equivalents Headcount

Women Men

The international JUMP programme trains future ing professional skills, people create valuable from the left: Joose Palonen, experts and leaders; the third round started in networks and contribute to a consistent way of vesa Rantanen, Petteri Linnavalli, Ilkka Lomppi, 2009. “In the future, we will concentrate even working – the Sanoma way,” Jokipaltio says. Sini Kervinen, Agata zygadlo, more on international collaboration.” Agnieszka Mróz, Kasper Haikala and Merije groen The second Media Sales Trainee Programme The best ideas for competence development started in March 2009, shortly after the first one in Sanoma are often based on experiments in a was completed. guided by mentors and colleagues, single unit or division. According to Jokipaltio’s six future media sales professionals work in differ- estimate, good practices spread more widely and ent units within the Sanoma group, learning their smoothly every year. Sanoma also increasingly work through practice. The programme lasts for uncovers hidden expertise and potential. a year. “fine-tuning basic processes in human In addition, our divisions offer training pro- resources management offers enormous poten- grammes in different countries. “Sanoma has a tial, as does learning from what works best in tradition of investing in personnel development, different units,” says ritva vuorinen, Human and we strive not to compromise this principle Resources Director, Compensation and Benefits. during cost cutting programmes. While develop- She expects shared practices to enhance

39 sanoma annUaL REPoRT 2009 personneL

operational efficiency and support group-wide as part of the gossip 360° concept. Each winning goals. “Performance and development discussions team was awarded EUR 12,000, and all finalists translate these goals into individual level action.” were granted EUR 3,000. All employees are eligi- ble for the Sanoma Awards. The annual Sanoma Awards were granted to three teams that had considerably Sanoma promotes equality sys- contributed to the operational excellence of the tematically. One-third of all our personnel were Sanoma group. In 2009, the winning projects men in 2009, but men represented two-thirds were related to alternative programming for in management. “In leadership development movie theatres, innovative concepts for develop- programmes, however, the distribution has been ing online casual games into a significant busi- even for several years now,” Jokipaltio points out. ness, and brand extensions – a television channel, online portal and more – for a celebrity magazine

JUMP programme brings professionals together

”i was promoted a while ago the objective of the train- from this shared knowledge.” and felt a need to gather ing is to promote participants’ the JuMp programme is additional knowledge to leadership and managerial divided into four modules, succeed in my new job,” skills. for Buryakova, it was each designed to challenge says elena Buryakova, a success. “the programme the participants in different publisher of independent was not only about learning ways. “the owners of the Media sanoma Magazines. new things but also about modules were top managers she participated in sanoma summarising and structuring from sanoma. it really helped academy’s international the experience and knowl- me learn more about the JuMp training, a programme edge you already had, which group, particularly about its aimed at future managers i really enjoyed,” she says. “it structure and strategy,” elena and experts. “it was a great was also great to exchange Buryakova says enthusiasti- chance for me to join this pro- opinions with colleagues from cally. “the worst thing about gramme and share time with different organisations within the programme was that the Elena Buryakova a team of professionals.” the sanoma group and benefit time flew by so quickly!”

40 PERSONNEL

work experience at sanoma personnel by country, 31 dec. 2009 from the left: Ria Savolainen, Boris Stefanov, Marije van Under 1 year Akkerveeken, Katarzyna Derenda, Karolina Leoniak, 1–4 years Sami Sykkö and Noora Al-Ani 44.3% finland, 9652 5–9 years

10–19 years

20–29 years

Over 30 years 11.9 The Netherlands, 2581

7.9 Russia, 1721

7.8 Hungary, 1703

personnel by age 4.9 Lithuania, 1064 Aged under 25 Men Women Aged 25–29 4.6 Estonia, 1010

Aged 30–39 4.3 Poland, 939 Aged 40–49

Aged 50–59 3.4 Belgium, 731

Aged over 60 2.4 Latvia, 526 2.2 Romania, 477

2.0 Bulgaria, 436

The Czech Republic, 163

Sweden, 155 type of employment Croatia, 152

Magazines Temporary Serbia, 113 Permanent News Ukraine, 113

Entertainment The United Kingdom, 61 Slovakia, 54 Learning & Literature Slovenia, 46 Trade Malaysia, 31 france, 15 Sanoma Corp germany, 15 Norway, 5 Denmark, 1

41 sanoma annUaL REPoRT 2009 environMent

Respecting the environment

Sanoma is a cutting-edge company with a heart for the environment. We closely monitor our environmental impact and seek to reduce our carbon footprint through modern and efficient operations.

Paper, our most important raw material, is Sanoma’s eight printing plants produce news- renewable, biodegradable and recyclable. Our papers, books and marketing materials. All opera- Paper Procurement Principles ensure that we use tions are based on efficient use of materials and responsibly produced paper. Our main environ- energy. Sanomapaino’s five newspaper printing mental impacts come from material and raw plants will implement an ISO 14001 environmental material use in our printing plants, product trans- management system and the related quality and portation and water and energy consumption. safety management systems in 2010. In 2009, we purchased 237,800 tonnes of paper: newsprint, magazine paper, book and fine Most of the electricity that we used paper and graphical board. Compared to the previ- in 2009 was consumed by printing plants and ous year our paper consumption decreased by Sanoma Trade’s operations, such as kiosks and some 10% because of reduced page counts during movie theatres. We managed energy use effi- the recession. We purchased paper from six sup- ciently in offices by adjusting heating, cooling pliers, with deliveries from 35 paper plants. and lighting.

Paper procurement makes a difference

as a major paper purchaser, Kaivonen is one of the commitment to the environ- responsibly. for one, the sanoma leads the way by people behind the sanoma ment,” she continues. “we origin must be legal and promoting sustainable for- group’s paper procurement decided to publish the prin- traceable. in addition to est use in all of its opera- principles introduced in ciples, because the need for sustainable forestry, the tions. “we require respon- october 2009. “we wanted corporate communication supplier must also commit sible wood procurement to establish a comprehen- about environmental issues to reducing the environ- from our suppliers. we also sive set of guidelines that has increased significantly mental impact of paper require that they consider specifies our environmental in recent years.” manufacturing. the sup- social issues,” says satu requirements. sanoma uses the guidelines ensure plier must also be socially Kaivonen, environmental these guidelines to moni- that the paper supplied to responsible – in other words, specialist at sanomapaino. tor its suppliers and their sanoma has been produced respect human rights and

42 ENvIRONMENT

sanoma’s paper usage, tonnes sanoma’s electricity consumption in finland, Mwh

´ Newsprint ´

´ Magazine ´

´ fine and book ´ paper, board ´ Book binding ´

´ ´

Includes the paper used in Sanoma’s printing plants as well Some 30% for printing operations and the rest for as the paper acquired for products printed elsewhere. premises and points-of-sale.

We seek to minimise environmental impacts Based on customer needs and a long- Did you know that: from transportation through carefully optimised time commitment to the environment, our book • One home-delivered news- deliveries. Sanoma Magazines handles all deliver- printing business, WS Bookwell, has introduced a paper causes approximately the same amount of CO2 ies for single copy sales jointly with other publish- web-based eco-calculator. Created in collaboration emissions as driving one ers. Sanoma Trade’s trade services collects unsold with WWf and the vTT Technical Research Centre kilometre by car magazines and newspapers, delivering them to be of finland, the calculator indicates how different • One week's newspapers recycled as raw material for paper and other prod- materials and production stages affect a book’s have the same sized carbon footprint as one wash by a ucts. Logistics is a special consideration in Sanoma carbon footprint, covering the entire life cycle from washing machine Trade’s kiosk operations as well. woodcutting to warehousing. It also expresses the • Taking a sauna causes a equivalent of a book’s carbon footprint in kilome- carbon footprint equivalent Responsible value chains require high tres driven by car. This innovation helps custom- to three weeks of home- delivered newspapers environmental awareness. Although not all-inclu- ers make sustainable choices. Source: Kungliga Tekniska sive, the carbon footprint helps determine which Högskolan phases of a product’s life cycle cause the heaviest environmental impact. The newspaper Helsingin Sanomat and the quality tabloid Ilta-Sanomat have started calculations of the greenhouse gas emissions from their print editions. The purpose is to better understand how newspaper production affects the environment and how this impact can be reduced.

comply with applicable management system, as newspapers when possi- Satu laws, regulations and inter- this system encourages ble and aims at increasing Kaivonen national agreements. companies to constantly the proportion of certified environmental cer- improve their environmen- fibre in its printing papers. tificates issued to forests, tal performance. “the paper procurement factories and supply chains naturally, environmen- principles will be reviewed are important in monitoring tal work involves more annually to ensure high these principles. sanoma than guidelines: the paper standards,” Kaivonen adds. gives priority to suppliers procurement principles of certified paper, because are included in contract please read more at the certification criteria lay obligations, and sanoma sanoma.com (About Us > the framework for sustain- will increase information Corporate Responsibility > able forestry. sanoma also exchange with suppliers. Environmental Dimension). favours suppliers with an the group uses recycled iso 14001 environmental fibres in magazines and

43 sanoma annUaL REPoRT 2009 Corporate responsiBiLity

Reliable content, responsible deeds

Responsibility is an integral part of our business operations. Corporate responsibility at Sanoma is founded on committed and considerate personnel management, transparent corporate governance and high-quality content.

Our publishing operations are based on We also supported the Clean Baltic Sea independence and freedom of speech, as defined project in finland by donating funds and adver- in our Business Principles. The content we create tising space in our media. In addition to contri- reflects Sanoma as a responsible media company. butions made by our business units, the Board Reliable information and high-quality content are of Directors donates part of Sanoma’s earnings more important than ever, as the internet contin- each year to projects and foundations supporting ues to make the media landscape more diverse. culture, free speech and journalism research. In 2009, the Annual general Meeting assigned EUR Sanoma’s businesses are involved in 500,000 for this purpose; the recipients included a broad variety of social projects. Our women’s the newly established Aalto University in Helsinki. magazines in Holland – Viva, Cosmopolitan, Marie Claire, Margriet, Libelle and MIND – frequently High-quality content for readers of all address United Nations Millennium Development ages is crucial. Sanoma has a long tradition of goals, such as gender equality and health in preg- promoting media literacy in schools by, among nancy. Despite the recession, Sanoma Magazines other ways, allowing children and teenagers to published the sixth Pink Ribbon magazine in the contribute to news stories. The World Association Netherlands and Belgium. The Dutch magazine of Newspapers and News Publishers (WAN- has already raised a total of EUR 3.7 million for the IfRA) awarded the tabloid Ilta-Sanomat a Jury Pink Ribbon foundation, an international breast Commendation in the World Young Reader Prize cancer charity. competition for its Obama Extra supplement; the jury described the supplement as fun and educa- We supported child welfare organisational. Published in february 2009, Obama Extra tions through several projects in finland. The Help was circulated in finnish schools. the Child campaign recruited volunteers for child protection organisations, and the Reading for Our personnel have many opportunities to Life programme, organised by Save the Children contribute to the common good. In Independent finland, provided textbooks for a hundred teenag- Media Sanoma Magazines in Russia, half of the ers living in difficult conditions, allowing them to employees regularly donate a portion of their sala- continue their studies beyond compulsory educa- ries to charities of their choice through an online tion. The daily newspaper Helsingin Sanomat service specifically tailored for the company. One helped launch the UNICEf Tap Project in finland, of these charities is good Deed, an organisation with 70 restaurants participating in the Helsinki helping the elderly. Through this organisation, metropolitan area. The donations were used for our employees can also donate their time to assist UNICEf’s water programmes. elderly in need.

44 CORPORATE RESPONSIBILITY

Corporate governance in the Sanoma Sanoma’s different divisions and operations group is based on a clear organisational structure, have more detailed guidelines. All of our newspa- specifically defined powers and responsibilities, pers, for example, have specific editorial directives and consistent planning and reporting systems that are consistent with our group-wide principles. and guidelines. The Board of Directors confirms all group-wide guidelines, such as Sanoma’s Please read more at business, management and risk management Sanoma.com (About Us > Corporate governance). principles. Sanoma offers its shareholders a stable dividend yield: as a rule, the group pays out over half of its result after taxes in dividends each year. good management and a long-term perspective helsingin sanomat are the key principles of financial responsibility. | tiistaina 2. kesäkuuta 2009

Our actions and operations are guided d3 by common ethical principles. Our Business Principles emphasise reliability, one of Sanoma’s three values. They also address the importance of treating all employees equally, offering independent content, respecting immaterial property rights and promoting good business practices in all of our markets. Ei vettä, rantaa rakkaampaa.

LAHJOITUKSET: AKTIA 405533-23387. MAKSUN SAAJA:WWW.PUHDASITAMERI.FI PUHDAS MERI -RAHASTO. KERÄYSLUPA: JOHN NURMISEN SÄÄTIÖ / ESLH, OKU 1377 A / 1.1.2009 - 31.12.2010

YHTEISTYÖSSÄ: HELSINGIN SANOMAT

1 SI P 1 45 sanoma annUaL REPoRT 2009 Board of direCtors

Board of Directors

from the left: Robert Castrén, Rafaela Seppälä, Hannu Syrjänen, Paavo Hohti, Annet Aris, Seppo Kievari, Jane Erkko, Jaakko Rauramo, Sakari Tamminen and Sirkka Hämäläinen-Lindfors

Jaakko Rauramo Annet Aris born 1941, M.Sc. (Tech.), D.Sc. (Tech.) h.c. born 1958, M.Sc. Land planning and (Helsinki University of Technology) operations research, MBA INSEAD

Chairman of the Board of Sanoma since Sanoma Board member since 1 April 2001, Chairman and CEO 2001–2005, and 2009. Term ends in 2012. member since 1999. Term ends in 2012. Serves as Adjunct Professor of Strategy Joined Sanoma group in 1966. Served as and Management at INSEAD since President and CEO of SanomaWSOY 1999– 2003. A visiting Professor at a variety of 2001, President of Sanoma Corporation European universities since 2004. 1984–1999 and Board member since Previously she worked for McKinsey & Co 1979, Sanoma Corporation’s Executive 1985–2003. vice President, general Manager of the Newspaper division and general Manager Board memberships, companies The complete list of all board at Sanomaprint, among others. Hansa Heemann Ag (germany) memberships, the share owner- (vice Chairman) ship information as well as stock Board memberships, companies options of Sanoma’s management Metso Corporation (finland) can be found at Sanoma.com. (vice Chairman)

46 BOARD Of DIRECTORS

Robert Castrén Sirkka Hämäläinen-Lindfors Hannu Syrjänen born 1957, B.Sc. (Econ.) born 1939, D.Sc. (Econ.), Doctor born 1951, B.Sc. (Econ.), Master of Laws h.c. (Econ. & Bus. Adm.) (Turku Sanoma Board member since 2001. School of Economics and Business President and CEO of Sanoma, Term ends in 2011. Administration) President and COO 2001–2005. Sanoma Board member since 2001. Serves as Sales Director at UPM- Sanoma Board member since 2004. Term ends in 2010. Kymmene Corporation. Held various Term ends in 2010. marketing positions with UPM-Kymmene Served Rautakirja Corporation Corporation and its predecessor, Served as member of the Executive 1989–2001 as President and CEO, Kymmene Oy, since 1991. Previously he Board of the European Central Bank vice President, and Executive vice worked for finnpap and Lamco Paper 1998–2003 and as governor and President and Deputy CEO. Previously Sales, among others. Served at Sanoma Chairman of the Board of the Bank of served as vice President at the TS Corporation’s Board as member 1994– finland 1992–1998, among others. group, vice President at Wihuri Oy and 1999 and vice Chairman 1999–2002. Managing Director of finnish Lawyers’ Board memberships, companies Publishing Oy. Investor AB (Sweden), Kone Corporation Jane Erkko (finland) (vice Chairman) Board memberships, companies born 1936 Ilmarinen Mutual Pension Insurance Company (finland) (Chairman), Orion Sanoma Board member since 1999. Seppo Kievari Corporation (finland) Term ends in 2011. born 1943

Served as member of Sanoma Sanoma Board member since 2003. Sakari Tamminen Corporation’s Board 1990–1999 and as Term ends in 2010. born 1953, M.Sc. (Econ.) vice Chairman of the Board of Helsinki Media Company Oy 1995–1999. Served Sanoma Corporation 1966– vice Chairman of the Board of Sanoma 2004 as President and Publisher since 1 April 2009. Sanoma Board mem- Board memberships, companies of Sanoma’s newspapers as well as ber since 2003. Term ends in 2012. Oy Asipex Ab (finland) Executive vice President of Sanoma Corporation and Editor-in-Chief of Serves as President and CEO of Helsingin Sanomat, among others. Rautaruukki Corporation. Served Metso Paavo Hohti Corporation 1999–2003 as Senior vice born 1944, Ph.D., Professor Board memberships, companies President and CfO, Executive vice Hämeen Sanomat Oy (finland) President and CfO, and Deputy to the Sanoma Board member since 1999. President and CEO. Previously served Term ends in 2011. as Executive vice President and CfO, as Rafaela Seppälä well as Senior vice President and Chief Serves as Managing Director of the born 1954, M.Sc. (Journalism) financial and Accounting Officer of Council of finnish foundations since Rauma Oy, as vice President, finance 2004. Served in the finnish Cultural Sanoma Board member since 2008. of Rauma-Repola Oy’s Engineering foundation 1980–2004. Previously Term ends in 2011. Industry, and as financial Manager served WSOY’s Supervisory Board of Metal Industry division of Oy W. as member 1991–1994 and as vice Served as President of Lehtikuva Oy Rosenlew Ab. Chairman 1994–1999. 2001–2004, Project Manager at Helsinki Media Company Oy 1994–2000, mem- Board memberships, companies ber of SanomaWSOY Board 1999–2003 Confederation of finnish Industries and member of Sanoma Corporation EK (Chairman), varma Mutual Pension Board 1994–1999, among others. Insurance Company (finland)

47 sanoma annUaL REPoRT 2009 eXeCutive ManageMent group

Executive Management group

Hannu Syrjänen Eija Ailasmaa Jacques Eijkens Sven Heistermann President and CEO, President and CEO, CEO, Sanoma Learning Chief Strategy Officer (CSO), Sanoma Corporation Sanoma Magazines B.V. and Literature B.V. Sanoma Corporation born 1951, B.Sc. (Econ.), born 1950, M.Pol.Sc. born 1956, B.Sc. (Econ.) born 1972, M.Sc. (Tech.) Master of Laws Member of the Executive Member of the Executive Member of the Executive Member of the Executive Management group of Sanoma Management group of Sanoma Management group of Sanoma Management group of Sanoma since 2000. Director of the since 2006. Director of the since 1 October 2009. since 1999, Chairman since Sanoma Magazines division. Sanoma Learning & Literature 2001. Sanoma Board member division. Served Booz Allen Hamilton as since 2001. Joined Sanoma group in 1973. Principal 1998–2008 leading projects Served as President of Sanoma Served as CEO of Malmberg related to strategy development in Served Rautakirja Corporation Magazines finland Oy 2001–2003 Investments 2001–2004 and communications, multimedia, inter- 1989–2001 as President and CEO, and Helsinki Media Oy 2000–2001, as Educational Information group (part net and high-tech industries. vice President, and Executive vice Executive vice President and general of vNU) 1998–2001. Joined Malmberg President and Deputy CEO. Previously Manager, Magazines at Helsinki B.v. in 1981 (part of Sanoma Learning served as vice President at the TS Media Company Oy 1998–2000. and Literature since 2004) and group, vice President at Wihuri Oy Previously served as vice President, served in various management and Managing Director of finnish Publishing at Sanoma Corporation’s and marketing functions. Lawyers’ Publishing Oy. Sanomaprint and Helsinki Media Company Oy, as Editor-in-Chief of Board memberships, companies Kodin Kuvalehti, and in various edito- Ilmarinen Mutual Pension Insurance rial positions at Ilta-Sanomat. Company (finland) (Chairman), The complete list of all board Orion Corporation (finland) Board memberships, companies memberships, the share owner- Huhtamäki Corporation (finland), ship information as well as stock Solidium Oy (finland) (vice Chairman) options of Sanoma’s management can be found at Sanoma.com.

48 EXECUTIvE MANAgEMENT gROUP

Kim Ignatius Timo Mänty Anu Nissinen Mikael Pentikäinen Chief Financial Officer (CFO), President and CEO, President, Sanoma President, Sanoma News Ltd Sanoma Corporation Rautakirja Corporation Entertainment Ltd born 1964, M.Sc. (Agriculture born 1956, B.Sc. (Econ.) born 1960, M.Sc. (Econ.) born 1963, M.Sc. (Econ.) and Forestry)

Member of the Executive Member of the Executive Member of the Executive Member of the Executive Management group of Sanoma Management group of Sanoma Management group of Sanoma Management group of Sanoma since 2008. and Director of the Sanoma since 2008. Director of the since 2004. Director of the Trade division since 1 January Sanoma Entertainment division. Sanoma News division. Served TeliaSonera 2000–2008 e.g. 2009. as Executive vice President and CfO. Served Sanoma Entertainment since Served the finnish News Agency as Previously worked as CfO and mem- Served Sanoma Trade as Senior vice 2001 as President of SW Television Editor-in-Chief and President 1999– ber of the Executive Board of Tamro President of Special Trade Division Oy (Welho) and as Marketing Director 2004. Previously served as Editor-in- Corporation, among others. 1998–2008. Previously served of Helsinki Televisio Oy. Previously Chief of Etelä-Saimaa 1996–1999 and as Managing Director of finnkino served Oy Sinebrychoff Ab as as Editor in political news of Helsingin Board memberships, companies Oy, Executive vice President of Marketing Director and Cultor group Sanomat 1992–1996. fruugo Oy (finland) Suomalainen Kirjakauppa Oy, vice as Deputy Product Manager, among President of Lehtipiste, Marketing others. Board memberships, companies Director and member of Executive Esan Kirjapaino Oy (finland), Board of Hartwall Oyj and in manage- The finnish News Agency (finland), rial capacity in Suomen Unilever Oy. Suomalainen Yhteiskoulu Corporation (finland) Board memberships, companies Revenio group Oyj (finland) Mikael pentikäinen is appointed Senior Editor-in-Chief and Publisher of Helsingin Sanomat as of 1 April 2010. Acting President of Sanoma News will be pekka soini.

49 sanoma annUaL REPoRT 2009 divisionaL ManageMent groups

Management groups of Divisions

Sanoma Magazines Sanoma Entertainment eija ailasmaa (Chairman), born 1950 anu nissinen (Chairman), born 1963 President and CEO, Sanoma Magazines President, Sanoma Entertainment Clarisse Berggårdh, born 1967 hans edin, born 1959 CEO, Sanoma Magazines finland President, Nelonen Media Michiel Buitelaar, born 1962 Johan flykt, born 1965 Chief Digital Media, Sanoma Magazines President, Welho Koos guis, born 1947 pia huhdanmäki, born 1969 CEO, Sanoma Magazines International Senior vice President, Administration, aimé van hecke, born 1959 Sanoma Entertainment CEO, Sanoma Magazines Belgium ari Kurenmaa, born 1967 dick Molman, born 1954 Senior vice President, CEO, Sanoma Uitgevers finance, Sanoma Entertainment walter van der schaaff, born 1958 CfO, Sanoma Magazines

Sanoma Learning & Literature Sanoma News Jacques eijkens (Chairman), born 1956 Mikael pentikäinen (Chairman), born 1964 CEO, Sanoma Learning & Literature President, Sanoma News (until 31 March 2010) Jyri ahti, born 1962 Senior Editor-in-Chief and Publisher, CSO, Sanoma Learning & Literature Helsingin Sanomat (as of 1 April 2010) Barend de graaff, born 1956 titta halme, born 1968 CfO, Sanoma Learning & Literature President, Sanoma Kaupunkilehdet Mark Marseille, born 1963 pekka harju, born 1962 CHRO, Sanoma Learning & Literature President, Ilta-Sanomat John Martin, born 1970 pia huhdanmäki, born 1969 COO, Learning Senior vice President, Administration, tuomo räsänen, born 1969 Sanoma News COO, Language Services Jarmo Koskinen, born 1961 President, Sanoma Lehtimedia ari Kurenmaa, born 1967 Sanoma Trade Senior vice President, finance, Sanoma News timo Mänty (Chairman), born 1960 pekka Laakeristo, born 1955 President and CEO, Rautakirja President, Sanoma Data Jari heino, born 1965 pekka soini, born 1957 Senior vice President, Kiosk Operations President, Helsingin Sanomat (until 31 March 2010) Liisi Jauho, born 1968 Acting President, Sanoma News (as of 1 April 2010) Senior vice President, Movie Operations Marja-Leena tuomola, born 1962 hellevi Kekäläinen, born 1953 Senior vice President, Business and Digital Senior vice President, Operations Development, Sanoma News finance and Administration, Rautakirja ismo vuoksio, born 1962 raimo Kurri, born 1953 President, Sanomapaino Senior vice President, Trade Services Jukka nikkinen, born 1962 Senior vice President, Business Development, Rautakirja Jarmo oksaharju, born 1961 Senior vice President, Bookstores

50 Divisions Businesses Share of Group net sales Divisions in brief

A Sanoma Magazines Finland brands with leading local titles. IJA

E The Division focuses on nurturing its key RESIDENT

P brand portfolio for further development, Sanoma Magazines International whilst actively exploring new opportunities EuR 1 111.2 million in changing media landscape.

Sanoma Corporation Sanoma Magazines B.V.

ENTIK ä Sanoma Lehtimedia EKKA S audience. Sanoma News publishes Sanomamagazines.com RESIDENT P NEN national and regional newspapers and Chief Strategy Officer Sven Heistermann ä

IKAEL P Sanoma Kaupunkilehdet (Free sheets)

will be P it is one of the most significant digital RJ M EuR 428.9 million Tel. +31 23 556 6445, fax +31 23 556 6440 Sanoma News Ltd media operators in Finland. President Mikael Pentikäinen

As of 1 April 2010 Acting President President of 1 April 2010 Acting As Sanoma Digital Finland Chief Financial Officer Kim Ignatius Töölönlahdenkatu 2, Helsinki ANN u Sy

H Tel. +358 105 19 5120, fax +358 105 19 5128 PL 95, 00089 Sanoma, Finland

CEO Tel. +358 9 1221, fax +358 9 122 4809

R AAKKO Chairman Jaakko Rauramo CEO Jacques Eijkens Erottajankatu 11 A Statenlaan 1 P.O. Box 1229, 00101 Helsinki, Finland P.O. Box 99, 5201 AB ‘s-Hertogenbosch

SANOMA ANNuAL REPORT 2009 Sanoma Trade is a retail specialist operat- Managing Editor Texts

IMO Mä NT y Bookstores needs and solid concepts. The Division’s Pictures T Design Erik Buis, Sari Gustafsson, Outi Kamutta, A printed version of the Annual

RESIDENT trade services business offers logistic and

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