SanomaWSOY's Interim Report 1 January - 30 September, 2002

SanomaWSOY's operating profit in January - September was EUR 75.8 (45.6) million and EBITA was EUR 148.6 (59.0) million. In the third quarter, net sales were EUR 549.5 (353.8) million and operating profit was EUR 19.1 (15.4) million. The acquisition cost of VNU's magazine operations acquired in 2001 will decrease after the purchase price adjustments from EUR 1,251 million to some EUR 1,206 million.

SanomaWSOY's net sales and operating profit will grow significantly in 2002, as the net sales and operating profit generated by the operations acquired from VNU will have a positive impact on the consolidated figures for the full year instead of one quarter. Operating profit before amortisation, in particular, will grow strongly. Development will remain slightly below the Group's earlier forecast, however, since the growth in media advertising expected during autumn 2002 did not materialise and some of the positive impact of the streamlining programmes initiated in the Group's divisions will not be felt fully in 2002. Typically the last quarter of the year is SanomaWSOY's best in terms of business performance.

The Group's net sales are now expected to grow to slightly over EUR 2.3 billion. Operating profit is expected to grow significantly, by some 20%. Net sales

SanomaWSOY's net sales grew by 56% in January - September 2002 and amounted to EUR 1,685.0 (1,077.4) million. This growth was largely due to the integration of magazine operations with the Group at the beginning of October 2001; these include the present Sanoma Uitgevers, Sanoma Magazines Belgium, Sanoma Magazines International and Aldipress. SWelcom, WSOY and Rautakirja also increased their net sales. Comparable net sales rose by 1%. Result

The Group's operating profit improved by 66% in January - September and totalled EUR 75.8 (45.6) million. Gains on the sales of assets and the integration of new magazine operations contributed to this increase. EBITA (operating profit before amortisation of goodwill, consolidated goodwill and immaterial rights) was EUR 148.6 (59.0) million.

SanomaWSOY's profit before extraordinary items was EUR 48.7 (45.0) million. Profit after taxes amounted to EUR 6.7 (29.9) million and earnings per share were EUR 0.00 (0.16).

The Group's cash flow from operations totalled EUR 88.9 (61.3) million. Cash flow per share was EUR 0.64 (0.44). Investments

SanomaWSOY's investments in January - September totalled EUR 73.9 (126.9) million. The biggest investments related to the Sanomala printing unit. R&D expenditure recorded as expenses totalled EUR 12.7 (17.7) million. Market situation

The Research Institute of the Finnish Economy, ETLA, forecast in September that GDP will increase this year by 1.2% in the Euro area and by 1.9% in Finland. According to Statistics Finland, consumers' confidence in the Finnish economy in September was appreciably stronger than a year ago. While consumers had reservations about the prospects of the Finnish economy as a whole, they expressed strong confidence in their own financial position.

Media advertising in Finland decreased by 2% in January - September according to Gallup Mainostieto. Advertising grew by around 1% in July but then declined by the same amount in August, and in September advertising volumes were broadly the same as the previous year. Newspaper advertising declined by 4% in January - September while TV advertising increased by 3%. Magazine advertising fell by 2%. Magazine advertising decreased also in the Netherlands, but increased in Belgium, Hungary and Romania.

The Finnish retail market grew by 4% during the first eight months of the year. Rautakirja merger

In September SanomaWSOY's and Rautakirja's extraordinary general meetings of shareholders approved the merger plan approved by the Boards of Directors of SanomaWSOY and Rautakirja, according to which Rautakirja will merge into SanomaWSOY. The intended time for the registration of the implementation of the merger is 1 March 2003.

According to the merger plan, Rautakirja's shareholders will receive a merger consideration of 5.3 new SanomaWSOY B-shares for each Rautakirja A- or B-share held by them. The merger will enable full usage of the Group's resources in international expansion projects and simplify the ownership structure. It will give more flexibility in possible internal reorganisation of the business and restructuring of the Group while enhancing efficiency in financing and capital planning.

In connection with the merger, Rautakirja's operations will be incorporated into a new Rautakirja Oy that will continue operations on the present basis. In the merger, SanomaWSOY will issue not more than 33,551,120 SanomaWSOY B-shares, of which not more than 18,773,018 shares will be issued to SanomaWSOY subsidiaries Sanoma Corporation and Werner Söderström Corporation as merger consideration. Those of Rautakirja's existing shareholders that are external to SanomaWSOY Group will receive a merger consideration of not more than 14,778,101 shares that after the merger will represent about 8.25% of the total number of SanomaWSOY A- and B-shares. SanomaWSOY Corporation will receive no merger consideration in the merger for those Rautakirja shares that it owns directly. SanomaWSOY Group's consolidated goodwill will not increase as a result of the merger. Other key events

SanomaWSOY continued its strategy of selling its non-core assets during January - September. In the first quarter of the year Sanoma Magazines Finland sold its directory-publishing unit Blue Book and SanomaWSOY Corporation sold some of its real estate holdings. In the second quarter Sanoma Magazines sold its shares in British business unit BEAP, a crossword puzzle magazine publisher, and Sanoma's subsidiary Startel sold its 33.4% holding in Ecovision AB as well as its StarDesk and StarWeb operations. During the summer and autumn Sanoma's subsidiary Arnedo Oy sold 11.0% of the share capital of Ilkka-Yhtymä Oyj, after which its holding in the company decreased to 23.1%.

SanomaWSOY acquired VNU's magazine operations in 2001. The purchase price adjustments related to the sale and purchase agreement were settled finally in October 2002. Under the terms of the agreement, the acquisition cost, including consulting fees, will decrease to some EUR 1,206 million. The corresponding acquisition cost in SanomaWSOY's financial statements for 2001 was EUR 1,251 million. The goodwill on the transaction will be amortised over 20 years. As a result of the final settlement the annual goodwill amortisation will decrease by some EUR 2 million. Dividend

SanomaWSOY's annual general meeting in April decided to distribute a dividend of EUR 0.51 per share for the financial year 2001. The date of record for the dividend payment was 12 April 2002, and the dividend was paid on 19 April 2002.

The signatories of SanomaWSOY's shareholders' agreement, who together hold more than 50% of all shares and votes in SanomaWSOY, have agreed to vote for and in all other ways support SanomaWSOY deciding at its annual general meeting in 2003 to distribute a dividend of at least EUR 0.26 per share for the financial year 2002. Balance sheet and financial position

SanomaWSOY's consolidated balance sheet totalled EUR 2,722.3 (1,671.8) million at the end of September. Shareholders' equity excluding capital notes was EUR 749.6 (784.7) million. The equity ratio including capital notes continued to increase during the third quarter and reached 41.2%. Capital notes have a positive impact of 7.9 percentage points on the equity ratio.

The Group's interest-bearing liabilities continued to decrease as a result of positive cash flow and, including the capital notes, amounted to EUR 1,217.7 (425.8) million at the end of the period. The book value of securities and cash totalled EUR 151.4 (479.2) million and their market value was EUR 161.4 (511.6) million. The book value of shares at the end of the review period was EUR 58.8 (121.3) million and their market value was EUR 68.0 million. Net debt was EUR 1,066.3 million. Net debt will continue to decrease during the fourth quarter.

The Group's net financial expenses for January - September amounted to EUR 27.1 (0.6) million. Financial income totalled EUR 58.0 (37.7) million and financial expenses EUR 85.1 (38.3) million. Most of the financial income, EUR 31.8 (17.9) million, was generated from gains on the sales of shares. The Group's share portfolio was realised as planned during the review period. However, owing to the difficult market situation, fewer shares were divested in the third quarter than during the beginning of the year. Financial expenses mainly comprised interest expenses on interest-bearing liabilities, EUR 48.9 (8.0) million, and decreases in the value of securities, EUR 31.5 (28.8) million. Shares

A total of 61,974 SanomaWSOY A-shares and 4,825,198 B-shares were traded during the first nine months of the year. The total share turnover during the review period was EUR 57.5 (35.6) million.

Series A-shares were traded at an average price of EUR 12.17 and B-shares at an average price of EUR 11.76 in the January - September period. The high for the A-shares was EUR 13.40 and the low EUR 9.70. The corresponding figures for B-shares were EUR 13.63 and EUR 8.66.

SanomaWSOY's market capitalisation at the end of September, excluding shares held by the Group, was EUR 1,337.4 (1,390.3) million. The number of B-shares held by the Group was 7,187,276, representing 4.94% of the share capital and 1.23% of the votes. The conversion period of convertible capital notes issued in 2001 began on 2 January 2002. No notes were converted by the end of the review period. The imputed conversion price of a share is EUR 15.91.
SANOMANewspaper publishing and printing

Sanoma's net sales in January - September amounted to EUR 326.2 (346.6) million. The 6% decrease in net sales was mainly due to the decline in media advertising. According to Gallup Mainostieto, money spent on newspaper advertising in Finland decreased by 4% in January - September and on job advertising by 30%. Advertising revenue generated some 49% of Sanoma's total net sales. Sanoma's advertising revenue decreased in January - September. Circulation revenue increased slightly while exports of printed products decreased.

Sanoma's operating profit, EUR 30.6 (30.3) million, improved slightly compared to the previous year despite the decline in net sales. Enhanced efficiency and lower paper costs reduced expenses by EUR 20 million. Higher gains on the sales of assets boosted profit but the lower share of Rautakirja's result, EUR 3.6 (4.9) million, weakened the performance. The result of Sanoma's own operations improved by EUR 2.3 million. EBITA was EUR 35.9 (35.3) million. The previous year's comparable figure includes damages of EUR 3 million, which were booked as Helsingin Sanomat's expenses.

Investments totalled EUR 31.8 (59.2) million and were mostly related to the Sanomala printing unit.

The weak media market depressed Helsingin Sanomat's net sales, which declined by 6% in January - September. Advertising revenue fell by 9%, mainly due to a decrease in job advertising. Circulation revenue grew by one per cent. Operating profit improved considerably and cost-saving measures cut expenditure by 7%. There are several ongoing projects for enhancing efficiency in the unit. The impact of these on result will be felt this year and also more so in coming years. Helsingin Sanomat's circulation this year is projected to be somewhat lower than last year, when exceptional news events boosted circulation towards the end of the year. According to National Readership Survey, the number of readers has remained at broadly the same level.

Ilta-Sanomat's net sales for the first nine months of the year declined by 2% although the unit's operating profit for January - September improved. Advertising revenue grew by 5% while circulation dropped below the record figure it reached in 2001. Ilta-Sanomat's market share of newsstand sales of tabloids was 61.5% in the first three quarters of the year. The publishing rights of Veikkaaja Magazine were transferred to Sanoma at the beginning of September. Ilta-Sanomat, Veikkaaja, Keltainen Pörssi, and Palsta will in future be integrated into the IS business unit.

Kymen Lehtimedia's net sales declined by 11% in January - September. Revenue from printing fell to half of last year's level due to a decrease in exports to Russia. New printing orders from Russia are unlikely because of the lower local price level. Circulations of daily newspapers continued to decline but circulation revenue increased compared to last year, largely due to price increases at the beginning of the year. The number of newspaper readers has also remained much the same according to National Readership Survey. Advertising revenue remained the same as the previous year. Operating profit remained largely unchanged despite the decline in net sales and profitability improved compared to last year. Expenses were reduced by 13% mainly due to lower capacity.

Infosto's net sales decreased by 12% but the unit's operating profit improved significantly. These developments were largely the result of focusing on developing consumer-to-consumer products and services. Infosto also focused on improving cost-efficiency. Keltainen Pörssi's circulation revenue reached the previous year's level, largely due to price increases, although circulation volumes decreased slightly owing to intensified competition and tighter markets. The paper's advertising revenue also reached the previous year's level.

Startel's net sales declined by 18% in the review period and advertising revenue decreased significantly. Operating loss was reduced by one fifth, however, largely as a result of the sale of the holding in Ecovision and divestment of the StarDesk and StarWeb operations. After the review period Startel announced a development and profitability program. The program is estimated to improve Sanoma's result annually by some EUR 1.5 million from 2004 onwards.

Esmerk's net sales continued to grow despite the unfavourable business conditions.

The advertising market developed more weakly than anticipated and no upturn in media advertising is envisaged over the next few months. Sanoma's full-year net sales are expected to decrease by some 5% from last year due to the prolonged decline in newspaper advertising. Despite extensive cost-saving measures, operating profit is estimated to remain below that for 2001. As a consequence, Sanoma needs to adapt its operations to the prevailing market situation and to continue implementing cost-cutting measures. Sanoma's top priority is to improve long-term profitability with efficient cost management and a leaner structure. SANOMA MAGAZINES Magazine publishing and press distribution

The comparable financial information for the first three quarters of 2001 includes only the figures of Sanoma Magazines Finland.

Sanoma Magazines' net sales for January - September amounted to EUR 711.7 (118.7) million. Magazine advertising declined in Finland and the Netherlands but grew in Belgium, Hungary and Romania. Advertising revenue generated some 23% of Sanoma Magazines' net sales.

Operating profit for January - September was EUR 37.5 (10.8) million and EBITA totalled EUR 94.5 (11.5) million. Operating profit was boosted by the divestment of Sanoma Magazines Finland's Blue Book business unit in March and the sale of the British crossword puzzle publishing unit BEAP in April.

Investments totalled EUR 13.8 (4.6) million and were mostly related to Sanoma Uitgevers' projects (SAP) and Aldipress.

The Dutch-based Sanoma Uitgevers generated net sales of EUR 335.4 million. Net sales grew more slowly than predicted due to the downturn of the Dutch market. Both advertising and circulation revenue declined in the first three quarters of the year. In June, Sanoma Uitgevers announced it was initiating a reorganisation of the company. The aim is to reduce the company's fixed costs by EUR 15 million per year, but the results for 2002 and 2003 will be weakened by the non-recurring costs of the restructuring.

Aldipress generated net sales of EUR 159.3 million in January - September. A new distribution centre was opened in Duiven, and a new line for processing returns started operating in Amsterdam.

Sanoma Magazines Finland's net sales amounted to EUR 118.5 (118.7) million. Net sales were boosted by favourable development of circulation and newsstand sales but weakened by declining advertising revenues and falling book sales due to the sluggish economy, the divestment of the Blue Book unit and the cessation of Sköna Dagar.

Sanoma Magazines Belgium's net sales for January - September were EUR 111.2 million. Both advertising and circulation revenue developed well, and the number of advertisement reservations also increased compared to last year.

Sanoma Magazines International, which operates in Hungary, Slovakia, the Czech Republic, Romania and Croatia, generated net sales of EUR 69.0 million. Eastern European countries did not suffer from the economic downturn to the same extent as Western European countries, but advertising revenues remained lower than predicted in the Czech Republic and Croatia. Two new magazines, TV Story and Bobo, were launched in Romania. National Geographic was launched successfully in the Czech Republic in September. Women's fashion magazine Elle was launched in Croatia in October.

Sanoma Magazines is expected to reach net sales of some EUR one billion and achieve an EBITA ratio of around 12. Operating profit is forecast to be below 6% due to significant goodwill amortisation.

SWELCOM Electronic media

SWelcom's net sales grew by 2% in January - September and amounted to EUR 61.8 (60.4) million. The success of HTV's broadband Internet service enhanced net sales. Nelonen's advertising sales decreased slightly compared to the previous year but returned to growth in the third quarter of the review period. Advertising revenue represented some 56% of net sales.

Operating loss decreased considerably and amounted to EUR 14.1 (18.8) million. The main reasons for the decrease were the halving of Nelonen's licence fee as from 1 July 2002 and cost reductions in the unit, cost savings from refocusing 2ndhead's operations, and growth in HTV's broadband Internet services. The result was weakened by the share of operating loss of the associated company Suomen Urheilutelevisio Oy (a digital sports channel). SWelcom's EBITA was EUR -11.9 (-16.7) million.

SWelcom's investments totalled EUR 5.5 (9.4) million. The biggest investments related to the construction of HTV's cable network and development of a cable modem system to meet demand.

Nelonen's advertising sales turned to moderate growth during the third quarter. Net sales for January - September, however, fell slightly below the figure for the comparable period last year and totalled EUR 35.3 (35.9) million. Sales of advertising time amounted to EUR 34.4 (35.4) million. Operating loss was reduced by 19%.

Nelonen continued to strengthen its media offerings. Daily coverage rose to 42 (41)% and weekly coverage to 74 (72)%. According to Suomen Gallup Media's Intermedia survey, television viewing has increased in Finland and the time viewers dedicate solely to television is high.

SWelcom has applied for a multiplex C network operating licence for providing telecommunications network services through the terrestrial digital television network. SWelcom did not, however, apply for the television operating licences for terrestrial digital TV broadcasting that were tendered at that time. The Ministry of Transport and Communications will decide on issuing licences this autumn.

HTV's net sales grew by 25% in January - September. Operating profit improved compared to the corresponding period last year, largely due to growth in the sales of broadband Internet services. By the end of September, 228,000 households were connected to HTV's cable network. About 12,600 of these were new subscribers that were connected this year, and another 3,000 households will be connected to the cable network during the latter part of the year. Continued growth is expected in HTV's connections over the next few years. At the end of September, over 27,200 HTV customers had acquired a new broadband Internet connection.

The letter of intent to sell the holding in Suomen Urheilutelevisio became void in August. Negotiations on expanding the ownership of Urheilutelevisio continue.

Development of the TV advertising market in 2002 has been weaker than anticipated, and it will not be possible to reach targeted net sales by the end of the year. SWelcom's net sales are projected to grow by about 3% in 2002. Operating loss is expected to continue decreasing considerably. The halving of the TV licence fee will reduce Nelonen's costs by some EUR 2.6 million this year.

WSOY Publishing, printing and calendar operations

WSOY's net sales grew by 3% in January - September and amounted to EUR 150.2 (146.0) million. Most growth was generated by Publishing, which clearly outperformed the sluggish market with a 7% increase in net sales.

Operating profit was EUR 11.8 (12.3) million. This includes the share of Rautakirja's result, which declined to EUR 4.7 (6.5) million. Operating profit from WSOY's own operations, however, increased to EUR 7.2 (6.8) million. The result of WSOY's own operations was enhanced by cost reductions and streamlining, especially in new business operations. An additional amortisation of EUR 1.1 million on the goodwill related to Docendo Sverige AB was recorded in the result for the review period in view of the weaker market prospects for IT publishing. WSOY's EBITA was EUR 16.3 (15.2) million.

WSOY's investments totalled EUR 6.8 (10.9) million. The biggest investments in Printing were the replacement investment of offset printing machines for Ajasto and WS Bookwell. The Group increased its holding in subsidiaries by redeeming a 10% minority interest in Genimap Oy and increasing its holding in the digital printer plant Dark Oy by 10% to 90%.

Publishing increased its net sales to EUR 103.5 (97.2) million and operating profit to EUR 8.5 (6.9) million. General Literature increased its sales by 8% and expanded its market share. Children's books and juvenile books continued to be successful, but business books were clearly affected by the economic slowdown. The new publishing unit Johnny Kniga, which started operations in April, was well received. Book club sales and book club membership, 200,000, remained at the same level as the previous year but posted an improved result. WSOY retained its position in the competitive educational materials market. Outstanding orders by Weilin+Göös in Finland for multi-volume books increased by 24% while Bertmark Media's outstanding orders in Scandinavia rose by 13%.

Of the new companies operating in the publishing sector, Docendo Group, which specialises in IT books, and Everscreen, which provides eLearning solutions, were affected by the weak market situation in Sweden. Streamlining programmes improved the results of both companies compared to the previous year. Sales of the OPIT service, which supplies eLearning materials for schools, were buoyant and the number of users grew as expected. Young Digital Poland, an associated company that markets corresponding products in Central Europe, also performed well in its export market. The map and location-based service provider Genimap increased its net sales by 17% and the unit's result developed favourably.

Printing operations generated net sales of EUR 46.8 (46.2) million and operating profit of EUR 5.4 (5.4) million. Despite declining demand for the printing of both books and advertising products, the companies managed to maintain their capacity utilisation and good profitability. Their prospects for the rest of the year are also fairly good.

Calendar operations generated net sales of EUR 17.1 (17.3) million and posted an operating loss of EUR 3.3 (3.6) million, due to the seasonal nature of the business. The full-year net sales anticipated on the volume of orders in hand will not grow significantly, but Calendar's result will improve due to the leaner cost structure.

WSOY's net sales are projected to increase by about 4% and operating profit to improve in 2002.

RAUTAKIRJA Kiosk operations, press distribution, bookstores, movie theatre operations, restaurant operations and eBusiness

Rautakirja's net sales increased by 6% in January - September and amounted to EUR 519.9 (491.9) million. Net sales grew in all operations, but growth was strongest in Movie Theatre operations and Restaurant operations. Comparable net sales grew by 2%.

Operating profit declined to EUR 20.6 (27.5) million. Comparable operating profit grew by 4%, however, as the figure for 2001 includes a profit of EUR 7.8 million on the sale of shares in the Norwegian company Narvesen. Operating profit increased most in Movie Theatre operations and Restaurant operations. EBITA was EUR 23.7 (30.4) million and earnings per share EUR 2.45 (3.30).

Rautakirja's investments totalled EUR 15.5 (23.8) million. The largest single investments were the acquisition of the remaining 50% shareholding in the Estonian magazine distribution company AS Lehepunkt in June and the construction project for a multiplex movie theatre in Lithuania.

Net sales from Kiosk operations increased to EUR 273.8 (256.7) million in January - September. The increase was largely attributable to changes in corporate structure in Latvia. Operating profit amounted to EUR 11.1 (11.3) million. R-kiosks posted an improved result both in Finland and Estonia, but this was weakened by higher goodwill amortisation on the increased holding in Latvian kiosk operations. In September, Rautakirja acquired the Jemma kiosk chain that operates in Greater Helsinki. Ten units in the chain were transferred to Rautakirja on 30 September 2002, and will be revised to R-kiosks during the latter part of the year. The chain generates net sales of some EUR 4 million per year.

Press Distribution increased its net sales to EUR 127.9 (122.4) million as a result of structural changes in Estonia and Latvia. Operating profit declined slightly and amounted to EUR 6.5 (8.1) million. Operating profit decreased in Finland but increased in Estonia. Latvian operations were still unprofitable. Rautakirja expanded its press distribution operations during the review period both in Estonia and Latvia. In Latvia, NB Logistika SIA, the new subsidiary of Narvesen Baltija SIA, which in turn is jointly owned by Rautakirja and the Norwegian company Reitan Handeln, started operating at the beginning of May. In June, Rautakirja acquired the remaining 50% of the share capital of the Estonian AS Lehepunkt, which was previously equally owned by Rautakirja and AS Ekspress Grupp.

Bookstores generated net sales of EUR 74.0 (73.7) million and posted an operating loss of EUR 1.3 (0.9) million. Operating loss increased in Finland but decreased in Estonia. Business is traditionally better in the latter part of the year.

Net sales from Movie Theatre operations grew to EUR 34.9 (31.6) million and operating profit to EUR 1.7 (0.2) million, largely due to good film offerings during the first part of the year. This trend is expected to continue during the latter part of the year. Operating profit increased in Finland, Estonia and Latvia. The construction of new cinemas in the Baltic countries progressed as planned, and the foundation stones of future multiplex theatres in Vilnius and Riga were laid during the review period.

Net sales from Restaurant operations grew to EUR 36.5 (31.6) million and operating loss declined to 0.1 (0.3) million. The growth in net sales was derived from newly integrated units. The favourable development of highway service areas improved the result.

Net sales from eBusiness totalled EUR 0.8 million and operating loss EUR 1.5 million. eBusiness operations was broken up in September and some of its activities were transferred to other businesses because its projects did not generate business as planned. In September, Rautakirja sold Dose, a business unit that specialises in entertainment games, with all its auxiliary activities. The transaction included two game stores operating in Helsinki and an online outlet.

Rautakirja's net sales are estimated to grow by about 4% in 2002. The result is expected to fall below the record performance in 2001, which included a profit of EUR 7.8 million on the sale of Narvesen's shares. The operating result will remain largely unchanged from the previous year's level assuming that sales over the Christmas season meet expectations.

Helsinki, 7 November 2002

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