WERNER SÖDERSTRÖM OSAKEYHTIÖ-WSOY - PDF

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T G E O D A T A W S M O S A K E Y H T I Ö W S O Y N H NT I BÖ E W SR O GY W E E R NR E NR W E R & N EG R T S EÖ D K E RN S OT R LÖ MI LS T TR ÖA M J OA S AS K TE YO H TL I Ö E K I V I R A N T A M O S A

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T G E O D A T A W S M O S A K E Y H T I Ö W S O Y N H NT I BÖ E W SR O GY W E E R NR E NR W E R & N EG R T S EÖ D K E RN S OT R LÖ MI LS T TR ÖA M J OA S AS K TE YO H TL I Ö E K I V I R A N T A M O S A K E Y H T I Ö W S O Y TH T G I Ö E OW S DO Y A WT E AR NW E RS N E RN N BE R E SR Ö GD E WR S ET RR Ö NM W S T & R ÖG M T O E S AK K NE Y OH T L I ÖI WERNER SÖDERSTRÖM OSAKEYHTIÖ-WSOY ANNUAL REPORT 1997 WERNER SÖDERSTRÖM OSAKEYHTIÖ WSOY The 119th year of operations INFORMATION TO SHAREHOLDERS ANNUAL GENERAL MEETING The Annual General Meeting of Werner Söderström Osakeyhtiö WSOY will be held on Tuesday 28 April 1998 at 3.00 p.m. at Hotel Marski, Mannerheimintie 10, Helsinki, Finland. Shareholders wishing to attend the meeting are kindly requested to notify their participation by Friday 24 April p.m. INTERIM REPORTS The interim report for 1 January to 30 April 1998 will be published on Tuesday 16 June 1998 at 9.00 a.m. and the Interim Report for 1 January to 31 August 1998 on Thursday 15 October 1998 at 9.00 a.m. WERNERI WSOY Group s in-house magazine is published three times in 1998, during week 13, 26 and 43, and mailed to the shareholders registered addresses. The magazine can also be ordered from the editors, tel or fax SHARE REGISTER; SHAREHOLDERS REGISTER The share register and shareholders register of the company are maintained by the Finnish Central Securities Depository Ltd (Suomen Arvopaperikeskus Oy). Any changes in shareholder information should be notified to the registrar or the bank administering the shareholder s book-entry account. CONTENTS INFORMATION TO SHAREHOLDERS 1 WSOY GROUP Milestones in the history of the WSOY Group 2 WSOY Group today 3 WSOY GROUP IN BRIEF 4 WSOY IN BRIEF 5 PRESIDENT S REVIEW 6 FINANCIAL STATEMENTS 31 December Report by the Board of Directors Administration 12 Income statements 13 Balance sheets 14 Sources and application of funds 16 General accounting principles 17 Notes to the financial statements 18 Proposal of the Board of Directors for distribution of profits 22 Auditors report 23 Statement by the Supervisory Board 23 WSOY Group key financial indicators 24 Information on WSOY s shareholders 26 Profitability evaluation criteria 27 Calculation of key indicators 28 WSOY GROUP ADDRESSES 29 WSOY S BOARD OF DIRECTORS 30 WSOY GROUP ORGANISATION 1 March WSOY GROUP 2 MILESTONES IN THE HISTORY OF WSOY GROUP December 18, 1878 is counted as Werner Söderström Osakeyhtiö s birthday. On that date Werner Söderström an 18-year old schoolboy from Porvoo sent out for distribution the last copies of J.O. Åberg s work Pohjanmaan helmi which he had published and printed. The printing house owned by Werner s family had been founded by his father already in October The company which had become known as Werner Söderström s Printing House was incorporated as a limited liability company WSOY and Otava joined their magazine publishing activities and established Yhtyneet Kuvalehdet Oy which today publishes 30 magazines WSOY acquired Kirjapaino F.G. Lönnberg Ab (printing house) WSOY established Suuri Suomalainen Kirjakerho Oy (book club) together with Otava and Tammi publishing companies. The current membership exceeds 242, WSOY was listed on the Stock Exchange and launched its first public issue of shares WSOY acquired the majority in Avset Oy, whose production business is continued by Tuotantotalo Werne Oy WSOY increased its share capital from FIM 50 million to 75 million by a scrip issue to shareholders Antero Siljola was appointed President and CEO WSOY s share capital was increased from FIM 75 million to 100 million by a share issue directed to friends of literature WSOY and Amer Group Ltd established joint ventures Ajasto Osakeyhtiö and Kiviranta Oy WSOY acquired Amer s stakes in Ajasto Osakeyhtiö and Kiviranta as well as Amer s publishing business run by Weilin+Göös, as well as the operations of Kustantajien asiakaspalvelu Oy and the shares of Bertmark Media AB and Oy Kustannusperintä Förlagsinkasso Ab. WSOY s share capital was increased from FIM 100 million to 120 million and at the same time the nominal value of WSOY share was changed into FIM WSOY acquired Teknolit Oy, Geodata Oy and Gummerus book club Johanna. Ajasto Osakeyhtiö acquired all the assets of the Swedish Esselte Chrono AB and the Norwegian :Emil Moestue as WSOY and Otava joined their press printing operations and established Acta Print Oy. WSOY GROUP TODAY WSOY s head office and book printing activities are in Helsinki and its book printing companies in Porvoo and Juva. The subsidiaries run the following operations: Lönnberg Painot Oy today consists of three autonomous business units: F.G. Lönnberg, serigraphy printing house Mainos ja Etiketti and Sävypaino. These companies specialise in printing of high-quality advertising products, annual reports, art books, shop advertising materials and packagings. The President is Mr. Pekka Pätynen. Tuotantotalo Werne Oy supplies specialised technical production services to producers of TV, video and audio programs. The principal products are after-treatment of sound and video image, dubbing of animated cartoons, TV studio and film team services, computer graphics and animations. The President is Mr. Ari Parviainen. Ajasto Osakeyhtö is the leading calendar publisher in the Finnish market and exports calendars to the Nordic countries, the Baltic region and Russia, and imports Casio calculators and Zebra pens to Finland. Ajasto s Swedish subsidiary Chrono AB publishes calendars in Solna near Stockholm, and Ajasto s calendar publishing and printing subsidiary :Emil Moestue as is based in Oslo, Norway. Ajasto Osakeyhtiö s President is Mr. Olle Koskinen, Chrono AB:s President Mr. Gustaf Edström and :Emil Moestue as s President Per Moberg. Kiviranta Oy specialises in pre-media services for different media, e.g. high-resolution colour separation, picture handling and page layout. The President is Mr. Antero Vuorio. Weilin+Göös Group comprises Weilin+Göös Oy and Kustannusperintä Oy Förlagsinkasso Ab in Finland and the Nordic publishing company Bertmark Media AB including subsidiaries. Weilin+Göös Oy publishes and markets non-fiction with focus on multi-volume books. Bertmark s principal products are yearbooks published in Finland, Sweden, Norway and Denmark. The President of Weilin+Göös Oy is Mr. Juhani Mikola. He is also the President of Bertmark Media AB. Teknolit Oy is a leading publisher of computer literature in Finland with the highest net sales in its field. The President of the company is Mr. Mika Sahlman. Geodata transmits, sources, handles and publishes location and mapping data. Geodata Oy:s President is Mr. Sakari Viertiö. Werner Söderström Lakitieto Oy s product lines include series of legal literature; commentaries and manuals, current legal topics and a series dealing with legal principles and developments. WSLT s President is Mr. Raimo Ruottu. 3 WSOY GROUP IN BRIEF WSOY Group is a diversified communications company engaged in publishing and production of media products for the education, entertainment and benefit of people. The Group s business consists of publishing, production and investment activities. The Group has operations in Finland, Sweden, Norway and Denmark. WSOY GROUP S KEY FIGURES Change, % Net sales, MFIM 1, , Operating profit before depreciation, MFIM Operating profit, MFIM Profit before extraordinary items, MFIM Consolidated profit, MFIM Earnings per share, FIM Dividend per share, FIM 5.25* Dividend per earnings, % Equity per share, FIM Equity ratio, % Market capitalisation 31 Dec. 2, , Personnel, average 1,792 1, Personnel expenses, MFIM Net sales per person, FIM 1, * Board s proposal to the AGM WSOY GROUP S RESULTS BY INDUSTRY 1997* Net sales Net sales % of net sales Publishing, total Production, total Investment operations MFIM WSOY GROUP Net sales WSOY Subsidiaries Consolidated net sales WSOY GROUP Investments; depreciation MFIM Gross investments Depreciation WSOY GROUP:Operating profit before extraord. items MFIM % % Operating profit before depreciation, % Profit before extraordinary items, % Profit before extraordinary items, MFIM Operating profit before depreciation, MFIM ROI ROE WSOY GROUP ROI and ROE * The figures also include inter-company transactions. SUBSIDIARIES Weilin+Göös Oy Ajasto Osakeyhtiö Kirjatuki Oy Teknolit Oy Lönnberg Painot Oy Real Estate Companies Geodata Oy Tuotantotalo Werne Oy Werner Söderström Kiviranta Oy Lakitieto Oy Werner Söderström GmbH 4 WSOY IN BRIEF MFIM WSOY Sales Fiction Non-fiction Textbooks Production units, external Other operations WSOY Sales, published products MFIM Fiction Non-fiction Textbooks WSOY was established in 1878 and incorporated as a limited liability company in It has been listed on the Stock Exchange since According to the Articles of Association, WSOY operates in book publishing, graphic industry, supplies stationery products and educational materials and engages in other relating business. The objective of WSOY s publishing operations is to publish good literature to promote national culture. The objective of production is to be internationally competitive and operate profitably on the terms of the market. Active investment operations support corporate growth, competitive ability and strong market positions. WSOY s objective is to distribute one third of the corporate net profits. WSOY S KEY FIGURES Change, % units 1400 WSOY Publishing million units 60 WSOY Production Net sales, MFIM Operating profit, MFIM Profit before extraordinary items, MFIM Profit for the year, MFIM Personnel, average 975 1, SALES Fiction, MFIM Non-fiction, MFIM Educational materials, MFIM Production units, external, MFIM Number of titles, new editions Number of titles, repeat editions Books Magazines Advertising products NEW EDITIONS Number of titles, fiction Number of titles, non-fiction Number of titles, educational REPEAT EDITIONS Number of titles, fiction Number of titles, non-fiction Number of titles, educational PRINTED PRODUCTS Printed books, million units Printed magazines, million units Printed advertising products, million units PRESIDENT S REVIEW 6 The favourable economic trend in Finland prevails. In 1997, the external balance of national economy developed very positively, and the overall production growth continued, while the relative growth rate of public indebtedness declined. Due to the heavy debt burden of the state economy the society is, however, unable to withstand crises. Although unemployment decreased in absolute terms, the unemployment rate remained regrettably high in spite of a slight recovery of domestic demand. Development in the industries represented by WSOY Group was satisfactory. Sales of general literature showed only a modest increase, and growth in the markets for educational materials lagged behind the previous year s growth rate. The market for multi-volume books seems to have reached a steady level of demand. The sales trend for multimedia products matched the high growth expectations of previous years. Demand for products of the graphic industry reflected the recovery of the domestic market. Also exports developed favourably especially to the Russian market. The most significant event of the year in the communications sector was the decision to merge Aamulehti-Yhtymä Oy and MTV Oy. From 1 April 1998, the two companies will form a new communications constellation called Alma Media Oyj. WSOY s associated company Yhtyneet Kuvalehdet Oy will be the second largest shareholder in Alma Media with a share of 13.3% of the votes. WSOY Group focused efforts on improving the efficiency of operations, while seeking growth possibilities. The most significant event was the completion of the strategic change in WSOY s production, known as the POJU project. The result improvement goal of FIM 30 million in production was achieved ahead of time, and competitiveness objectives were met. Various alternatives for growth and the required means to achieve it in the Group s publishing business were analysed in connection with the growth project. Three acquisitions were finalised in the latter part of the year: WSOY acquired the shares of Teknolit Oy, which publishes computer literature, and the shares of Geodata Oy which specialises in digital cartography technologies; Ajasto Osakeyhtiö acquired the share capitals of Swedish Chrono AB and Norwegian :Emil Moestue as. WSOY also acquired the business of Gummerus Kustannus Oy s book club Johanna. The possibility to join WSOY s and Kustannusosakeyhtiö Otava s magazine printing operations was studied in A decision was taken at the beginning of 1998 to establish Acta Print Oy which will become operative on 1 May The new company will specialise in printing of magazines and advertising products and its net sales will exceed FIM 300 million on an annual level. In this connection, WSOY and Otava also agreed on the principles for the redemption of the shares of their respective associated companies. WSOY Group s result development was positive, and profitability remained on a good level. The result trend is attributable to the improved efficiency of WSOY s business units and Weilin+Göös Group s strong performance. The costs for the reorganisation of production which encumber the result decreased from the previous year. WSOY Group s net sales declined by FIM 8.4 million from FIM 1,136.2 million in 1996 to FIM 1,127.8 million. The sales trend in WSOY s publishing divisions was below the industry average. All of WSOY s operating divisions exceeded their profitability targets. Consolidated profit before extraordinary items, appropriations and taxes showed a significant improvement for the second year running and totalled FIM million (182.2). The performance also exceeded the targets set for the year. The volume of trading in WSOY s shares on the Stock Exchange was normal. Kordelinin säätiö and Sanoma Osakeyhtiö increased their shareholdings in WSOY and today hold over 20% of its votes each. The price trend for the company s shares exceeded the general price trend of the Helsinki Stock Exchange. The market capitalisation of WSOY was FIM 2,552.8 million (1,439.4) at the year-end, and earnings per share FIM (11.98). The Group s operating conditions for 1998 are good. Recovery of the national economy continues, while at the same time the value added tax on books has decreased from 12% to 8%, and the collective agreements signed by the labour market parties promise a moderate cost development. The overall economic situation together with the development measures and acquisitions carried out by the Group create a good basis for the growth of corporate net sales. WSOY Group s performance is expected to show a moderate improvement in Growth of the publishing business, improved competitiveness of production, and personnel training are WSOY s strategic priorities. Good co-operation with the various constituent groups forms the cornerstone of WSOY Group s profitability. On behalf of the Board of Directors I wish to thank all the writers, personnel, customers and other co-operation partners of WSOY Group. Today the Group s good financial basis and competent personnel provide a strong basis on which to build future development. Helsinki, 17 March 1998 Antero Siljola Group President and CEO REPORT BY THE BOARD OF DIRECTORS 1997 Financial Statements 8 ECONOMIC DEVELOPMENT IN THE GRAPHIC INDUSTRY The estimated growth of the graphic industry s net sales was approximately 6 per cent from the previous year. Production volumes grew by slightly less than 3 % while the overall growth index of the industry exceeded 8 %. The annual volume index of 91.0 for the graphic industry indicates that the volume of production is still clearly below the 1990 level. This low ratio is mainly attributable to weak development of the daily press in recent years, and its considerable weight in the calculation of the index. However, the aggregate average volume of publishing and printing develops faster than printing as a separate operation. Price increases were more moderate than in the previous year. The index reflecting the price trend of graphic products rose by slightly less than 1.8 %, while the total industry change was 2.5 %. Prices of publishing products increased by 2.5 %, while at the same time ex-works prices of other printed products decreased by more than 1%. The estimated total growth of exports was approximately 9 %. Exports to Russia, the Baltic countries and the former CIS increased while exports for instance to Sweden and Denmark declined. NET SALES WSOY Group s net sales in 1997 totalled FIM 1,127.8 million (1,136.2) and were divided among the group companies as follows: Change MFIM % MFIM % WSOY Weilin+Göös Oy * Ajasto Osakeyhtiö * Lönnberg Painot Oy Other subsidiaries Total 1, , Inter-company sales Consolidated net sales 1, , * sub-group Sales of WSOY s domestic and translated fiction decreased to some extent from the previous year. Sales and market shares of juvenile books increased. The total sales of non-fiction decreased slightly in spite of the growing sales of dictionaries and business publications. Educational materials lost some market share due to the timing of new textbook series and the shorter than anticipated life cycles of some textbook series. The Production units external sales increased to some extent over the previous year. WSOY s sales were as follows: Change MFIM % MFIM % Fiction Non-fiction Educational materials Production units, external Other operations Total sales Sales adjustment items Total net sales The decrease in Weilin+Göös Group s consolidated net sales was partly attributable to the reduction of the product range of its parent company Weilin+Göös Oy according to plan. Ajasto Osakeyhtiö s sales decreased from the previous year as a result of the declining sales and price levels of calendars published in own production and custom-made calendars. Lönnberg Painot Oy s net sales continued to grow. Werner Söderström Lakitieto Oy started operation as publisher of legal literature. The consolidated income statement does not include the 1997 net sales of Teknolit Oy and Geodata Oy, acquired towards the end of the year. The Group s net sales generated outside Finland and exports totalled FIM million (218.0). RESULT WSOY Group s profitability was good during the review year. The profitability improvement is based on the reorganisation measures implemented in production, more efficient operating practices of the publishing divisions, and the successful activities of subsidiaries and joint ventures. The profitability of subsidiaries Weilin+Göös Oy, Ajasto Osakeyhtiö and Lönnberg Painot Oy was good. Consolidated operating profit before depreciation was FIM million (210.3) and represented 22.1 % (18.5) of total net sales. The parent company s operating profit before depreciation increased to 22.2 % (17.9) or to FIM million (124.9) of net sales. The non-recurring costs of FIM 24 million relating to pension payments in connection with the strategic reori- Financial Statements entation of production encumbered the 1996 result and the corresponding personnel termination costs burdened the 1997 result. The consolidated operating profit was FIM million (128.0), and the parent company s operating profit was FIM million (72.6). Depreciation on the Group s fixed assets in excess of plan amounted to FIM 2.7 million (7.6). WSOY Group s interest in the results of associates totalled FIM 68.0 million (54.3). The parent company s dividend income together with corporate tax credit (avoir fiscal) amounted to FIM 58.0 million (63.5). The consolidated finance net was FIM 57.6 million (54.2), and the parent company s finance net FIM 64.5 million (67.3). Consolidated profit before extraordinary items, appropriations and taxes totalled FIM million (182.6), and the parent company s corresponding figure was FIM million (13
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