SanomaWSOY's Interim Report, Jan. 1 - Sept. 30, 2001

SanomaWSOY's Q1-3 net sales rose by just under 4% to EUR 1,077.4 million. The Group's profit before extraordinary items totalled EUR 45.0 million (1-9/2000: EUR 112.9 million); and operating profit, EUR 45.6 million (60.4 million). Net sales for the full year are projected to rise by nearly 20%, driven by the CIG acquisition. Operating profit for 2001 is also expected to increase, by around a fifth.

*) Amortisation on consolidated goodwill

Outlook

The overall uncertainty affecting the economy has been reflected in SanomaWSOY's various businesses, particularly in the form of reduced media advertising. These have fallen back by nearly 4% since the beginning of the year, and no improvement is expected for the remainder of the year.

We project that SanomaWSOY's net sales for 2001 will increase by nearly 20% compared to 2000. The majority of this increase will come during the last quarter from the acquisition of CIG. Comparable growth on 2000 will be around 3%.

If economic developments in Europe do not weaken significantly during the rest of the year, we project that SanomaWSOY's full-year operating profit will be around a fifth higher than in 2000. The main driver behind this will be the CIG businesses acquired from VNU, which typically enjoy strong sales and performance during the last quarter. Comparable growth on 2000 is projected to show a clear decline. The bulk of the benefit of the Group's extensive measures that have been introduced to adjust to changing market conditions will come in 2002.

In line with our earlier projection, we estimate that SanomaWSOY's profit before extraordinary items will be clearly weaker than in 2000, as asset management-related income will be significantly lower than the exceptionally good level seen last year. The goodwill amortisation and financing costs associated with the CIG acquisition will also have a downward impact on the Group's result during the last quarter. The integration of CIG's operations with those of SanomaWSOY has progressed well.

Net sales

SanomaWSOY's net sales during the first three quarters of 2001 totalled EUR 1,077.4 million (1-9/2000: EUR 1,040.4 million), an increase of just under 4% driven by increased sales in all sectors. Acquisitions and divestments contributed around EUR 35 million, giving a comparable growth figure of just over 1%.

Result

SanomaWSOY's operating profit totalled EUR 45.6 million (60.4 million). Sanoma's operating profit was negatively impacted by a fall-off in advertising sales, a damages case that is being appealed, and higher newsprint costs. Programme costs at TV channel, Nelonen, and a higher level of goodwill depreciation contributed to an increased loss at SWelcom. Investments in eLearning had a slight downward impact on WSOY's performance. Operating profit at Helsinki Media and Rautakirja increased. The Group has initiated various cost-saving measures to take account of the changing market situation.

SanomaWSOY's EBITA totalled EUR 55.3 million (67.2 million). R&D expenses booked as costs totalled EUR 17.7 million (19.4 million).

The Group's profit before extraordinary items totalled EUR 45.0 million (112.9 million). The drop of EUR 53.1 million in net financial income to EUR - 0.6 million was a major factor. Financial income was particularly high during the first half of 2000 as a result of the sale of a large number of technology shares. Earnings per share were EUR 0.16 (0.56).

Market developments

Economic growth across the Euro area has slowed during 2001. Projections published after the terrorist strikes in New York in September indicate that Finland's GDP will grow by only around 0.5% this year, compared to nearly 6% in 2000. Consumer confidence remains relatively good, but is weaker than in 2000.

Advertising expenditure fell by around 4% during the first three quarters of the year. TV advertising declined by around 8% and newspaper advertising by 4%. The growth in magazine advertising slowed to 0.5%. Cinema advertising increased by 30%, while the strong growth seen in Internet advertising fell to 1%. Retail trade volumes (excl. car sales) rose by 5.5%, despite the economic downturn, according to the Federation of Finnish Commerce and Trade.

The CIG acquisition

In July, SanomaWSOY and the Dutch-based media and information group, VNU, signed an agreement under which SanomaWSOY agreed to acquire VNU's Consumer Information Group (CIG) for EUR 1,250 million (enterprise value). The transaction was completed, as planned, at the beginning of the fourth quarter, on October 1.

CIG had net sales of EUR 816 million in 2000 and an EBITDA of EUR 143 million. SanomaWSOY-CIG's combined pro forma net sales and EBITDA for 2000 totalled EUR 2,264 million and EUR 313 million. The transaction has generated around EUR 1,150 million of goodwill, which will be amortised over 20 years.

Following the acquisition, SanomaWSOY has set up a new magazines group known as Sanoma Magazines, responsible for the operations of CIG and Helsinki Media and based in The Netherlands. Theo Bouwman, previously a member of VNU's Executive Board, has been appointed President and CEO of the new group and its Dutch parent company, and a member of SanomaWSOY's Management Group. Eija Ailasmaa of Helsinki Media has been appointed Executive Vice President of Sanoma Magazines.

The Extraordinary General Meeting of Shareholders held in August authorised SanomaWSOY's Board, for a period of one year from the Extraordinary General Meeting, to decide to increase the Company's share capital through one or more stock issues, one or more convertible loan issues, and/or the issue of stock options, on condition that the new shares to be offered for subscription as part of any stock issue or against convertible loans or stock options shall be Series B shares, and that the combined number of such shares shall be a maximum of 29,104,319 shares, and that the Company's share capital shall be increased as a result by a maximum of EUR 12,514,857.17.

The CIG acquisition has been financed through senior bank loans totalling around EUR 1 billion and a convertible capital note valued at EUR 200 million, which has been traded on the Helsinki Exchanges since September 6. The issue price was set at 99% and a fixed annual interest of 5.25% is paid on the principal. Beginning on January 2, 2002, holders of subordinated notes will be able convert them into a maximum of 15,713,387 Series B SanomaWSOY Corporation shares at a price of EUR 15.91 a share. Following the settlement of the CIG transaction, the Group has outstanding credit lines totalling EUR 308 million (100 million). The Group has initiated hedging measures to protect its interest-related risk following the transaction.

Other key events

In July, Rautakirja subsidiary, Finnkino, signed a letter of intent to acquire a 90% holding in a Lithuanian cinema company, UAB Vingio kino teatras. The transaction was completed in September.

L.J. Jouhki, a member of SanomaWSOY's Board of Directors, resigned in July for health reasons. The Extraordinary General Meeting held in August elected Robert Castrén to the Board to replace him to serve for the remainder of the term of office that will end at the 2002 Annual General Meeting.

SWelcom's Movie Channel launched its new terrestrial digital pay-TV services in August, initially offering a selection of forthcoming programmes free of charge to viewers. This decision was based on the poor availability of desktop boxes and the uncertainty surrounding the distribution charges that could be imposed by cable-TV companies. WSOY also announced that, as the basis for starting operations of its Learning Channel (Koulukanava) does not exist at the moment, the channel would not be launched. WSOY opened its Web-based Opit eLearning environment in October.

In September, Rautakirja increased its 35% holding in Narvesen Baltija SIA, a Latvian kiosk and press distribution company, to 50%.

SanomaWSOY's wholly owned subsidiaries, Kirjatuki Oy and Sanomain Huoneisto ja Kiinteistöholding Oy, were merged with the Group's Parent Company, SanomaWSOY Corporation, in September. The planned merger of Tiikerijakelu Oy was not implemented.

Balance sheet and financial position

The Group's consolidated balance sheet increased by around 17% to EUR 1,671.8 million (1,429.2 million) as of the end of September. Consolidated shareholders' equity (excluding the convertible capital note) totalled EUR 784.7 million (808.7 million), and equity per share, EUR 5.67 (5.85). The Group's equity ratio excluding the convertible capital note was 56.3% (67.8%), and including the note, 68.8%.

The Group's financial position is strong. The book value of financial asset securities, cash, and bank as of September 30 totalled EUR 479.2 million (318.7 million), and their market value, EUR 511.6 million (388.7 million). Interest-bearing liabilities totalled EUR 419.5 million (160.6 million). The Group's financial position changed significantly following the completion of the CIG acquisition.

Profits made on the sale of securities dropped to EUR 20.3 million (54.4 million), and net financial income totalled EUR 37.7 million (73.5 million). Financing costs totalled EUR 38.3 million (21.1 million). Write-downs on financial asset securities and exchange rate changes totalled EUR 30.3 million (16.7 million). Interest payments on liabilities totalled EUR 8.0 million (4.4 million).

Investments

The Group's gross investments totalled EUR 126.9 million (118.2 million). The largest of these covered increasing Sanoma's ownership of Infosto to 100%, printing machinery projects at Sanoma sites, and the remodelling of the Group's premises on Ludviginkatu in Helsinki.

Shares

SanomaWSOY paid a dividend of EUR 0.47 (0.45) for 2000.

A total of 71,908 SanomaWSOY Series A shares were traded during the first three quarters of the year, and 2,778,410 Series B shares. Series A shares were traded at an average price of EUR 13.09 and Series B shares at an average of EUR 12.48. The three-quarter high for Series A shares was EUR 16.50, and the three-quarter low, EUR 10.22. The comparable figures for Series B shares were EUR 15.00 and EUR 9.60 respectively. Total share turnover was EUR 35.6 million.

SanomaWSOY's market value as of September 30, excluding 7,187,276 Series B shares held by the Group, was EUR 1,390.3 million (2,273.7 million).

Personnel

The average number of people employed by the Group's various companies totalled 14,051 (13,340). Converted into full-time positions, this was equivalent to 11,031 (10,287).

HELSINKI MEDIA

Magazine publishing

Net sales at Helsinki Media rose by 4% between January and September, to EUR 118.7 million (114.5 million). Subscription revenue, news stand sales, and advertising sales all developed positively, while book sales came in at below the good level achieved in 2000.

Helsinki Media's operating profit improved to EUR 10.8 million (5.1 million), driven by good performance at associated company, Hansaprint, reduced depreciation, and a refund of social security payments. Helsinki Media's EBITA totalled EUR 11.0 million (5.3 million).

Investments totalled EUR 4.6 million (1.7 million). The largest single investment was the acquisition of a 60% holding in Suomen Rakennuslehti Oy, a publisher of construction and real estate titles.

Despite the fall-off in the growth of advertising, in line with the general downturn in the economy, Helsinki Media performed well. Advertising revenue increased by 6%; this compares to an overall growth in magazine advertising in Finland over the same period of only 0.5%. Helsinki Media's share of magazine advertising rose to 20% between January and September. IT-related advertising has reacted rapidly to economic fluctuations, while advertising in women's and family titles has continued to develop positively.

Helsinki Media's share of news stand sales volumes rose to 20.4% between January and September. Circulation figures published in March showed that Helsinki Media continues to be Finland's largest magazine publisher, with a 32% market share. A national media study published in September indicated that the total number of readers of Helsinki Media titles has risen by 4.5% and stands at around 6.8 million.

The first three quarters of the year were good for the Magazines Unit, and advertising sales increased, particularly in respect of Cosmopolitan and the Gloria family of titles. The revamp of the family magazine, Kodin Kuvalehti, was well-received by both readers and advertisers, and news stand sales have increased by 32%. Circulation and advertising revenue at the health and fitness title, Hyvä Terveys, both rose strongly. Publication of the men's lifestyle magazine, MG, was terminated in September because of poor demand.

Comics were the best performers in the Children's and Juvenile Entertainment Unit. Circulation at Aku Ankka (Donald Duck) developed well, and circulation for 2001 as a whole is estimated to be around 282,000 (2000: 273,000). Aku Ankka, which celebrated 50 years of publication earlier this year, is Finland's most widely read weekly. Other comic titles also performed well. Book sales, in contrast, come in at below last year's levels, largely as a result of the weaker children's book club market.

The portfolio of Helsinki Media's B-to-B activities and IT titles, which has been the responsibility of the Business Media Unit since April, was extended through the acquisition of Stellatum Oy's public agency directory business in March and a 60% holding in Suomen Rakennuslehti Oy in July. WebSalesleads, an online version of Salesleads, was launched.

Helsinki Media's full-year net sales are projected to increase by around 4%, driven by both advertising and subscription revenue. IT advertising has fluctuated and growth projections have been cut as a result, while women's magazine advertising has developed positively. Helsinki Media's profitability is projected to continue to improve.

Consumer Information Group

The figures for CIG are indicative and have been calculated following SanomaWSOY's accounting principles, which differ from those of VNU.

Net sales at the Consumer Information Group, which has been part of SanomaWSOY since October 1, totalled in excess of EUR 600 million during the first three quarters of 2001. The group's operating profit totalled approximately EUR 65 million.

Circulation revenues in The Netherlands were slightly up on 2000. Tougher conditions, particularly on the advertising market, put margins under pressure. Internet activities were particularly affected. Extra costs were also incurred related to the introduction of SAP and the Euro. Net sales at Aldipress were at 2000 levels, while operating profit was down, as a result of lower revenues from special events and products, such as the Olympics and Pokémon, and changes in the revenue mix.

Circulation sales in Belgium were slightly down on 2000, a development that affected all the main titles. Advertising sales performed better, but have moved down since August.

Net sales in CIG's other markets were up on 2000, but growth in sales and profits was held back by a slower-than-expected advertising market, particularly in the Czech Republic and Hungary. Competition in the Czech Republic has increased, and CIG's mass titles there, which represent a major part of the portfolio, are more susceptible to the economic downturn currently under way than glossy, special interest magazines. Cost-cutting measures have been introduced in both Hungary and the Czech Republic, including a small number of redundancies in the latter.

The last quarter of the year is traditionally a strong one for CIG's businesses.

CIG activities have been combined with those of Helsinki Media to form Sanoma Magazines as of October 1, which will be reported on according to standard SanomaWSOY practice from the fourth quarter of 2001 onwards. Sanoma Magazines publishes 299 magazines in nine European countries.

SANOMA

Newspaper publishing and printing

Net sales at Sanoma rose over 2% to EUR 346.6 million (338.2 million). Comparable net sales fell slightly, in line with the general market situation. A study by Gallup Media indicates that job advertising in Finland has fallen by 14% compared to last year, and by as much as 35% in the autumn. Ilta-Sanomat, Taloussanomat, and Infosto, now wholly owned by Sanoma, all contributed to increased net sales.

Sanoma's operating profit fell 29% to EUR 30.3 million (42.7 million), as a result of factors such as the decline in advertising revenue at Helsingin Sanomat, a charge of EUR 3 million booked to cover the costs of a fine imposed by the Helsinki District Court, and higher newsprint costs. Sanoma's holding in Rautakirja contributed EUR 4.9 million (4.2 million). Sanoma's EBITA totalled EUR 34.5 million (45.2 million). Sanoma has launched various cost-saving measures; the benefit of these will be felt mainly in 2002.

Investments rose to EUR 59.2 million (44.2 million). Increasing Sanoma's holding in Infosto to 100% was the single largest project. Investments also included printing plant modernisation and IT projects. Sanoma acquired a 60% holding in the picture agency, Compad Oy, in February; and a 25.01% holding in St. Petersburg-based ZAO Smena, publisher of Smena, between March and August. In October, after the end of the reporting period, Infosto acquired Free Ad Production Oy, which publishes Palsta, a free ad title.

Net sales at Helsingin Sanomat dropped by 4%, and the unit's operating profit was also down. The depressed nature of the advertising market was strongly reflected in job advertising, a major component of Helsingin Sanomat's media sales (2000: 25%), which fell 7% between January and June and 35% between July and September. The increased uncertainty in the wake of the WTC terrorist attack in September was reflected in a further downturn in advertising by airlines and travel agencies in particular. The advertising space bought by the new retail centres that have been opened recently in Greater Helsinki has somewhat compensated for the weaker overall advertising market. Helsingin Sanomat's position as Finland's number-one media has continued to strengthen.

Circulation at Helsingin Sanomat fell back by 2-3%. The paper's target of restoring daily circulation to 2000 levels was achieved in October. Circulation for the year as a whole will be slightly below than 2000, however, because of the weaker early part of the year. The latest Kansallinen Mediatutkimus study indicates that Helsingin Sanomat has 1,198,000 readers and the paper's NYT weekly supplement, 1,034,000 readers.

Net sales at Ilta-Sanomat rose by 12% and profitability improved significantly compared to last year. This improvement was driven by higher news stand sales, together with the cover price increase introduced at the end of last year. Ilta-Sanomat's share of the total volume of news stand sales in the quality tabloid segment was 61.8%. Advertising revenue remained at 2000 levels, and sales of news stand copies increased by 2% compared to 2000.

Net sales and operating profit at Kymen Lehtimedia declined as a result of reduced print exports to Russia. Net sales fell by 7%. Higher paper prices introduced at the beginning of the year made winning new print customers difficult. The circulation of Kymen Lehtimedia's dailies fell slightly, although readership levels remained unchanged. Lehtikanta Oy, a printing company based in Kouvola, plans to make 13 people redundant, while Kymen Sanomalehti Oy has decided to lay off its entire workforce for 12 days. The impact of these measures will be felt over the next few months and during next year.

Circulation revenue at Infosto Mediat's Keltainen Pörssi title reached last year's level, despite a slight fall in circulation resulting from the growth in the popularity of the paper's online edition, tougher competition, and the uncertainty in the car sales market. Advertising revenue at Keltainen Pörssi grew by 11%, and Infosto Mediat's operating profit also improved.

Net sales at Startel rose by 8% and the size of the unit's operating loss was cut. The strong growth that had been seen in net sales levelled out in the third quarter, largely as a result of softer advertising sales at Taloussanomat. Net advertising sales at Taloussanomat nevertheless rose by 15%, and the paper's circulation continued to grow.

Sanoma's full-year net sales are projected to come in at 2000 levels. Growth projections have been corrected downwards as a result of continued weaker economic prospects and the strong decline in media advertising. Ilta-Sanomat, Startel, and Infosto are expected to see increased net sales.

Sanoma's operating profit is projected to be clearly below that recorded in 2000, despite cost-cutting implemented during the latter part of the year. The fall-off in media advertising, particularly in job advertisements in Helsingin Sanomat, the rise in newsprint prices, and the decline in print exports, will all contribute to this. Sanoma's performance will also be impacted negatively by long-term development projects, higher depreciation, and the fine imposed on Helsingin Sanomat.

SWELCOM

Electronic media

Net sales at SWelcom rose by 11% and totalled EUR 60.4 million (54.5 million), driven in particular by Helsinki Television's Welho broadband Internet service and Internet development and maintenance projects carried out for other parts of the SanomaWSOY Group.

SWelcom recorded an operating loss of EUR 18.8 million (10.3 million), reflecting Nelonen's programme expenditure, the goodwill depreciation associated with increasing SanomaWSOY's holding in the channel, and the fact that Swwap's figures have been consolidated with SWelcom's since October 1, 2000. SWelcom's EBITA was negative and totalled EUR - 16.8 million (- 9.8 million).

Investments totalled EUR 9.4 million (24.7 million). The largest of these were accounted for by the continued development of Helsinki Television's cable system and its interactive potential, and development work on the company's cable modem environment. The comparative figure for 2000 includes SanomaWSOY's decision to increase its holding in Nelonen.

Nelonen has emerged as Finland's third-largest advertising media in terms of net sales. The channel's net sales remained at 2000 levels, despite a nearly 8% reduction in the overall TV advertising market. Advertising revenue totalled EUR 35.4 million (35.3 million). The channel's operating loss increased by 11%. Nelonen's daily reach totalled 41% (39%), and its weekly reach 72% (69%). The channel has decided not to spin off its news and current affairs programme production into a separate subsidiary during 2001.

Helsinki Television's net sales rose by 16% and profitability continued to improve clearly. As of the end of September, over 216,000 households were connected to the company's cable system, which is now virtually completely upgraded for interactive use. A total of around 9,000 new households will be connected to the system in 2001. As of the end of September, the Welho broadband Internet service had nearly 17,000 subscribers.

Digital-TV broadcasting began in Finland on August 27. SWelcom's Movie Channel and CANAL+ decided to start broadcasting their new terrestrial digital pay-TV services by initially presenting a selection of forthcoming programmes free of charge to viewers. The decision on the start date for full pay-TV digital broadcasting will be taken by the end of November. Nelonen's digital broadcasts began as planned. SWelcom is also a shareholder in a new digital sports channel (Urheilukanava).

Internet and mobile service specialist Swwap Oy initiated statutory employee consultation procedures with a number of its personnel in September, linked to the current economic and market situation affecting its businesses and its internal reorganisation plans. These discussions are expected to result in a reduction of 15 to 20 in the unit's personnel numbers. Discussions will be concluded this year.

SWelcom's net sales for the full year are projected to be in the order of EUR 86 million, and its operating loss in the order of EUR 26 million. SWelcom will continue to keep its costs in check and its investments in line with the market situation. Net sales and operating profit at Nelonen are expected to remain at 2000 levels. These projections are dependent on the development of the overall TV advertising market.

WSOY

Publishing, printing, and calendars

Net sales at WSOY rose by around 6% to EUR 146.0 million (138.1 million). Adjusted to take account of acquisitions and divestments, net sales increased by 5%. The pace of increase slowed slightly during the third quarter. Publishing recorded the largest growth, around 6%.

WSOY recorded an operating profit of EUR 12.3 million (14.0 million). The good performance in traditional publishing had a positive impact, while eLearning-related investments had a downward impact. Rautakirja contributed EUR 6.5 million (5.5 million) to the result. WSOY's EBITA totalled EUR 14.3 million (16.0 million).

Investments totalled EUR 10.9 million (22.6 million). The largest projects were the increase in WSOY's holding in Young Digital Poland S.A., a major developer of multimedia products and learning solutions for language teaching, to 49% made at the beginning of the year, and replacement investments in the printing area. WSOY has agreed to acquire a majority holding in Young Digital Poland in 2004.

The market for general literature continued to develop favourably, although at a somewhat slower pace than during 2000. WSOY's sales rose by 6%. Sales to bookshops increased by only 2%, but the order-book for the Christmas season is encouraging. Book club sales as of the end of September were up 14%, driven by the rise in members to over 200,000.

Sales of Weilin+Göös' multi-volume publications were well below those last year, although new titles sold well. Performance-enhancement measurements are being introduced. The order book at Bertmark, a publisher of annual publications in the Nordic region, was up by 13%.

WSOY's comprehensive school textbooks for the 2001/2002 school year have done well, and full-year sales are projected to be up around 9%, further strengthening WSOY's strong market share. The market for textbooks for high school and college students developed more weakly than expected, although WSOY's market share remained unchanged. Sales remained at 2000 levels.

The Opit eLearning environment, the main project of eLearning specialist, eWSOY, was opened in October, and the first digital products designed for younger children were launched. The first agreements have been signed with a number of schools, and the market is expected to attain commercial significance in one or two year's time. WSOY decided not to launch its Learning Channel because of the current limitations of the digital-TV environment.

Sales of business books produced by the Special Publishing Unit, which has been renamed WSOY Business Information, continued to develop well. Sales of IT publications and eLearning products produced by the Docendo Group, however, suffered from weak demand, particularly in Sweden. Docendo has continued its reorganisation begun in the spring to adapt to this weaker market. In October, WSOY increased its holding in Everscreen Mediateam Oy from 25% to 64%. In connection with this, Everscreen acquired Docendo Finland Oy's and Docendo Sverige AB's eLearning business. The year has gone according to plan at location information specialist, Genimap Oy, and the synergy benefits resulting from the merger will see the company's performance improve compared to 2000.

Performance at the Printing Unit was weaker than during the comparable period in 2000, but remained good despite the increased uncertainty in the industry as a whole. Market prospects are reasonable, but clearly weaker than last year. The largest investments made were a new hard cover line at WS Bookwell's Porvoo site and a new A0 four-colour offset unit at Lönnberg Painot.

Performance in the Calendar Unit at Finnish-based Ajasto continued to be good, and that at the loss-making units in Norway and Sweden improved. Efforts continued to improve performance in Norway. The Calendar Unit is projected to show a clearly better operating profit performance than last year and record a modest profit.

WSOY's full-year net sales are projected to rise by 6%. The group's operating profit during the last quarter is expected to be an improvement on last year, and WSOY's full-year operating profit is projected to be at 2000 levels.

RAUTAKIRJA

Kiosks, press distribution, bookshops, cinemas, restaurants, and eBusiness

Net sales at Rautakirja rose around 6% to EUR 491.9 million (465.7 million). Comparable net sales rose by slightly over 3%. All the group's businesses increased their net sales.

Rautakirja's operating profit increased 19% to EUR 27.5 million (23.2 million), driven in part by the profit of EUR 7.8 million made on the sale of shares in Narvesen in January, booked as other business income. The operations-related operating profit fell slightly, as a result of new acquisitions. Rautakirja's comparable operating profit improved by 1.2%; and its EBITA totalled EUR 28.7 million (24.2 million).

Investments totalled EUR 23.8 million (19.6 million). The largest single project was the new multiplex cinema completed in Tallinn.

Net sales at kiosk operations rose by over 3% to EUR 256.7 million. All units recorded positive development, with the strongest growth being seen in Estonia. Operating profit, at EUR 11.3 million, was 4% down on 2000. Finnish-based R-Kiosk outlets recorded a performance comparable to 2000. Although the performance of Estonian-based kiosks and Veikkausrasti improved, both units continued to record a loss. Investments in Latvia had a downward impact overall.

Net sales in the press distribution business were up 6%, at EUR 122.4 million. The division's operating profit was up 5%, at EUR 8.1 million. Developments were positive in both Finland and Estonia. In June, Lehtipiste signed a letter of intent to launch cooperation in the distribution area with four Latvian publishers, but the agreement lapsed in September. Rautakirja increased its holding in Latvian-based Narvesen Baltija to 50% at the beginning of October, and Lehtipiste aims to develop press distribution activities in Latvia in cooperation with Narvesen and local publishers.

Net sales at bookshop operations rose by nearly 7% to EUR 73.7 million. The division's operating profit fell back more than 14%, and the division recorded an operating loss of EUR 0.9 million, reflecting the fact that bookshop profits are traditionally concentrated towards the end of the year.

Net sales at cinema operations increased by 3% to EUR 31.6 million, mainly as result of growth in Estonia, where the new 11-screen multiplex in Tallinn, opened in March, clearly exceeded targets. The division's new multiplexes in Finland also performed at virtually 2000 levels. The division's operating profit fell to EUR 0.2 million (1.1 million) as a result of a one-off write-down on an old cash register system. In July, Finnkino signed a letter of intent to acquire 90% of the Lithuanian cinema operator, UAB Vingio kino teatras. Projects to build multiplexes in Vilnius and Riga are under way.

Net sales at restaurant operations rose 8% to EUR 31.6 million. An operating loss of EUR 0.3 million was recorded. Despite the integration and remodelling costs associated with the take-over of Motorest outlets, these units turned in a profit. The Pizza Hut chain continued to record a loss.

Rautakirja's eBusiness division recorded net sales of EUR 0.1 million and a loss of EUR 1.1 million. Ferete signed an agreement with Fintoto Oy in August under which Ferete will launch the sale of Fintoto's products via the Internet as part of its Hyvä Veto service in summer 2002.

Rautakirja's minority holding in Jokerit HC contributed a loss of around EUR 1.1 million to Rautakirja's figures. Rautakirja's guarantees related to the multipurpose arena being built in Hamburg by D+J-Arena Hamburg, part of the Jokerit group, are limited to a maximum of DEM 60 million.

Rautakirja's full-year net sales are projected to increase by around 6% to some EUR 680 million. Despite investments and acquisitions, the performance of operational units is projected to remain at the level recorded in 2000. Taking into account profits on sales of securities already booked, Rautakirja's overall result is expected to be better than last year's.

Rautakirja published its interim report on November 5, 2001.

Helsinki, November 12, 2001

Board of Directors

SanomaWSOY Corporation

INTERIM REPORT TABLES

Figures are unaudited.

SANOMAWSOY CORPORATION

Raija Kariola
Vice President
Investor Relations and Group Communications

DISTRIBUTION
Helsinki Exchanges
Principal media