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Board of Directors' report and financial statements 2017

The Board of Directors approved the report at 21st March 2018.

Board of Directors' report and financial statements 2017, read the e-book (also printable).

Balance sheet

Income statement

Cash flow statement

Key figures

Board of Directors’ report

Yle’s missionFunding of Yleisradio’s operationsOperating environmentOperational development in 2017PersonnelOperating result and financial positionOutlook for 2018

Yle’s mission

Yleisradio’s mission is based on the Act on Yleisradio Oy (Finnish Broadcasting Company) (1993/1380), which was most recently amended in July 2017 (436/2017).

Section 7: Public service
Yle is responsible for making a diverse and comprehensive range of public service television and radio programmes and related additional services available for all Finns on equal terms. These and other content within the public service duties shall be provided in public communication networks both at national and regional levels.
In particular, public service broadcasting shall:
1) support democracy and everyone’s opportunity to participate by providing a wide variety of information, opinions and debates, as well as opportunities to interact;
2) produce, create, develop and maintain Finnish culture, art and inspiring entertainment;
3) take educational and equality aspects into consideration in the programmes, provide an opportunity to learn and study, give focus to programming for children and offer devotional programmes;
4) treat in its broadcasting Finnish-speaking and Swedish-speaking citizens on equal grounds and produce services in the Sámi, Romany and sign languages as well as, where applicable, in the languages of other language groups in the country;
5) support the preservation of Finnish cultural heritage, tolerance, equality and cultural diversity and provide programming for minority and special groups as well;
6) promote cultural interaction and provide programming directed abroad;
7) broadcast official announcements, for which further provisions shall be issued by decree, and make provision for television and radio broadcasting in exceptional circumstances.

Section 7a: Cooperation
With its operations, the company shall promote freedom of expression, high-quality journalism and pluralism of the media.

Funding of Yleisradio’s operations

Laki yleisradioverosta (the Act on Public Broadcasting Tax) defines the grounds for and the amount of the public broadcasting tax, also known as the Yle tax. Finns aged 18 and over are required to pay the Yle tax. In addition, organisations engaged in business operations, vocational practice or agriculture in Finland are required to pay the Yle tax.

The amount of a person’s Yle tax depends on the taxpayer’s annual income. In 2017, the tax was is 0.68% of the total earned and capital income in a calendar year. The minimum amount was EUR 70, with the maximum being EUR 143. The Yle tax was not collected if the annual income of a pensioner was less than EUR 10,294 and if that of an employed person was less than EUR 11,044. For people with an annual income of EUR 21,029 or more, the amount of the Yle tax was EUR 143.

The Yle tax rate of organisations is based on their taxable income. The Yle tax is not collected from organisations with a taxable income of less than EUR 50,000. The Yle tax rate is EUR 140 for organisations with a taxable income of EUR 50,000. Beyond EUR 50,000 in taxable income, the Yle tax is EUR 140 + 0.35 %, with the maximum annual total of the tax being EUR 3,000. The maximum amount of the tax applies to organisations with a taxable income of EUR 867,143. The Yle tax is tax deductible for limited liability companies.

The tax is collected only from organisations engaged in business operations. The State and its agencies, municipalities, joint municipal authorities, parishes and other religious communities, limited liability housing companies and non-profit organisations are exempt from the Yle tax for organisations.

Changes to Yle’s mission and funding

The amendments to the Act on Yleisradio Oy (Finnish Broadcasting Company) proposed in June 2016 by the parliamentary working group on Yle, led by MP Arto Satonen, became effective on 15 July 2017. The amendment makes the Administrative Council the decision-maker concerning the company’s strategy. Previously, the strategy decisions were made by Yle’s Board of Directors.

As proposed by the working group led by MP Satonen, no index increase in accordance with Section 3 of the Act on the State Television and Radio Fund was applied in the funding received by Yle in 2017 and 2018. The funding received by Yle has remained unchanged in 2014–2018.

In June 2017, the parliamentary working group on the Act on Public Broadcasting Tax, led by MP Kaj Turunen, proposed that the Act be amended to exclude approximately 400,000 people with the lowest income from the liability to pay the Yle tax. In addition, the working group proposed that in 2019, Section 3 of the Act on the State Television and Radio Fund be applied in its original meaning in the funding received by Yle; in other words, an index increase would be applied to the company’s funding.

In November 2017, the Parliament approved the amendment to the Act on Public Broadcasting Tax as proposed by the parliamentary working group, and the amendment became effective at the beginning of 2018. The structure on the Yle tax payable by private individuals changed at the beginning of 2018. Now individuals pay a 2.5% tax on the portion of their income that exceeds EUR 14,000. The maximum amount of the tax also increased from EUR 143 to EUR 163.

The amendment excluded approximately 390,000 people with the lowest income from the liability to pay the Yle tax. All people with a salary income of EUR 14,750 or more are liable to pay the tax. Previously, this threshold was EUR 11,044 per year. In terms of pension and social benefits income, the payment threshold increased from the previous EUR 10,294 to EUR 14,000.

Prior evaluation

In February 2017, the Administrative Council decided to carry out a prior evaluation in accordance with Section 6 a of the Act on Yleisradio on the online and personalisation services of Yle’s regional news. The prior evaluation was requested by Finnmedia, the Federation of Finnish Media Industry. In the same context, the Board of Directors also commissioned a survey on personalisation from the Communication Research Centre CRC of the University of Helsinki.

According to the prior evaluation and the surveys conducted in connection with it, Yle’s regional news service and the personalisation of the company's content services will not have significant negative impact on the market and there are no grounds for restricting text-based regional news.

Finnmedia, The Federation of Finnish Media Industry, which represents commercial media companies, announced on 21 June 2017 that it had requested the EU Commission to investigate whether the public funding received by Yle for media content in text format constitutes a state subsidy prohibited under the EU rules. According to Yleisradio’s estimate, the investigation process by the EU Commission could take several years.

Operating environment

Media regulation

The EU regulation on Crosscross-border portability of online content services became effective in July 2017 and it will be applied starting from April 2018. Portability means that EU citizens will have the opportunity to follow online content provided in their home countries while temporarily residing in another EU state.

Fee-based services, such as C More and Netflix, are obligated to provide their services for use during the subscriber’s temporary stay in any EU country. Providers of free-of-charge services, such as Yle, can decide whether they offer this opportunity. Yle has decided to make Yle Areena online service available to Finns within the EU in 2018.

Media economy

The value of the mass media market has decreased since the beginning of the 2010s, but the decline seems to have halted in 2016. At the end of 2017 Finnmedia estimated that the overall turnover of the media industry will remain at the previous year’s level. The ending of the steep decline in turnover means that the outlook of the media industry is better than it was just a few years ago.

According to Finnmedia, the turnover of radio and television operations grew 3.8 per cent in the third quarter of the year from the year before. The growth was attributable to the increase in advertising sales in commercial radio.

The change in the use of media by Finnish consumers is also reflected in media advertising.

According to Kantar TNS, media advertising remained at the previous year’s level in 2017. A total of EUR 1,217 million was used in advertising, with online advertising accounting for nearly a third of this amount. The shares of online and outdoor advertising increased, whereas the shares of newspaper and television advertising decreased.

Online advertising is still dominated by international internet giants. According to the annual statistics by IAB Finland, the share of Google and Facebook of internet advertising sales in Finland was 49 per cent in 2017. Facebook grew its advertising sales the most during the year, whereas Google’s market share declined.

The combined advertising sales of these internet giants was 15 per cent of all advertising sales, in other words EUR 181.5 million.

Media use

Finns’ media use habits have changed with the popularity of different digital services. Media use by the young is changing the fastest. The young and older age groups use the media quite differently: the young are more focused on using the media online, whereas the older age groups still prefer traditional media, such as newspapers, radio and television.

The media day was 20 minutes longer than in the previous year. In the first half of 2017, Finns spent nearly eight hours a day following the media. On the scale of the entire population, the share of media use was most increased in video services, social media as well as fee-based streaming and internet-based video-on-demand services. The use of domestic online TV services increased 19 per cent from the previous year.

Finns watched TV an average of 2 hours 48 minutes per day in 2017, which is slightly less than in the previous year. Likewise, radio listening declined slightly: the time spent on it per day was an average of 2 hours 56 minutes.

The number of smart devices in households is growing continuously. In 2017, 36 per cent, or one third, of the households of consumers 15–74 years of age had smart TVs. Ninety per cent of the households own a computer, 89 per cent a smart phone, and 62 per cent a tablet device.

Media technology

The focus areas of media technology development include improving the personal usage experience in online services through recommendations and customisation, as well as data collection and analysis. During the year, artificial intelligence and machine learning were also highlighted in technology development.

The established TV viewing and radio listening have helped maintain the status of broadcast networks as the most important distribution networks. The growing consumption of services on various terminal devices emphasises the importance of different distribution networks in the media use of the citizens.

In 2017, highlighted media use technologies included augmented reality (AR) as well the new phenomenon of news journalism provided in a dialogue format used in messaging services, as well as different service contents, or chatbots.

Operational development in 2017

Yle has continued to carry out content-related and structural reforms to address the changes in media use, technology and working culture. Yle’s new strategy drives the operations strongly towards digital renewal.

The Administrative Council and the company’s Board of Directors participated in the preparation of the strategy in joint seminars and workshops in spring 2017. The strategy outlines the company’s operations, and the Board of Directors uses it as a basis of Yle’s broadcasting policies and the most important reforms for the coming years.

In connection with the strategy process, the Administrative Council consulted specialists and requested statements from media operators and various organisations, among others. After further preparation by the Board of Directors, the Administrative Council approved the proposal for the new strategy on 24 October 2017.

Strategic focus areas

In the coming years, Yle will focus on strengthening a sense of community and interaction as well as on the quality and accessibility of content and services in its programming. Yle’s strategy also highlights bold and agile renewal, competence development, effectiveness and responsible operations. In the new vision, Yle aims to become the most important medium for Finns.

In the coming years, the company will reallocate 15–20 per cent of its resources to new focus areas, such as programming intended for the young and young adults. In 2018, Yle will allocate approximately EUR 25 million to new contents, development of online services and investments supporting these.

In 2018–2020, Yle will increase the volume of domestic procurement and service purchases by approximately 30 per cent, which follows the policies defined by the parliamentary working group and the new Act on Yleisradio Oy (Finnish Broadcasting Company).

Significant new development projects will include the regional reform, services for the young, and the radio reform. Yle will also continue building an online service in Areena for live broadcasts in order to improve broadcasting of sports contents, among other things.

In addition, Yle will use data in a more versatile manner when designing and publishing contents and services in order to better meet the needs of different user groups.

Building programming on TV, radio and online

The number of Yle’s broadcast channels on TV was reduced to three, when the programming of the Yle Teema channel and the Swedish-language Yle Fem channel joined a shared channel slot in April 2017. This has increased content cooperation between all channels and made it possible to broadcast the Presidential Independence Day Reception in two languages and to transfer the first broadcast of Strömsö Swedish-language life style programme to Yle TV1. Strömsö is rebroadcast on Yle Teema and Fem. This change has also reduced duplicate planning and programming and the number of reruns.

The brands of the TV channels and Yle Areena online service and the structure of programming were updated during the autumn as part of the overall reform. The aim is to clarify the division of work between the TV channels, Yle Areena and the new Nuorisomedia youth media.

Yle’s youth services YleX (on radio) and Yle Kioski (on TV, Yle Areena online service and social media) joined forces during the year to better reach 15–29-year-olds. Yle Kioski will expand from news and current affairs to a general medium for young adults, and YleX will become a premium music media brand by 2020.

On the radio, Yle will continue to broadcast on four Finnish-language and two Swedish-language FM channels. The traditional FM radio continues to be the primary platform for radio listening, but mobile listening with smart phones increased considerably in 2017.

The radio channels on the whole and their programming will be assessed in the Radio2020 project. Fine-tuning the channels’ music and content profiles continued. Yle Puhe, which focuses on talk-radio programming, pursues the 30–40-year-olds target group, in particular, and will add discretionary music content to the channel starting from February 2018. The Swedish-language youth channel YleX3M was also overhauled.

Yle closed the separate radio applications and centralised live and recorded audio to Yle Areena. Listeners were the most interested in audio content specifically created in podcast format, in which Yle will further develop programming.

To strengthen the position of audio, Yle also works in cooperation with third parties. Yle continues to operate in Radiosoitin Suomi Oy, a radio sector associated company, whose Radiot.fi site is developing strongly. A new application to be tested in 2018 will be the first Finnish-language voice-operated media service. The Teevee.fi service operated by associated company Platco was discontinued.

Online development and improved user experiences

Yle continued to invest in the development of mobile and online services. Yle Areena’s search and personal recommendation functions were improved for easier accessibility of content.

Among the main online services, the renewed yle.fi front page was opened in June. Its number of visitors increased by 20% by the end of the year. A completely new yle.fi smart phone application was released in November, and it was downloaded 100,000 times during the first month.

The use of the personalised news application Newswatch doubled from the previous year. The focus of the development of the application was on personalised notifications in particular, which are also visible on the smart phone lock screen.

A new version of the Yle Areena for Children application was also released, with improved accessibility to both the favourite programmes and programmes for special groups, such as hearing-impaired children. Plenty of catalogue programmes were purchased for Yle Areena for Children, which makes it possible to watch the programmes on Areena even months after the TV broadcast.

By the end of the year, the number of registered Yle IDs was 750,000, which means that the target of one million IDs was not yet met. Yle aims to improve personalised service and content development by means of the Yle ID. Active use of the services while logged in also did not reach the 15 per cent target.

Yle will continue measures to increase logged-in use in Yle Areena, the yle.fi front page and in the news and current affairs services, in particular, in 2018. Concurrently, Yle will continue to prepare for the requirements of the EU’s General Data Protection Regulation (GDPR), which will take effect in the spring 2018.

Yle will use data analytics to better understand the needs and preferences of different target groups. Work has been carried out to replace retroactive reporting with real-time data and continuous visualisation and modelling of data. This development work has made it possible for all Yle employees to have access to the company’s customer relationship goal data. The intention is to further increase the data-driven approach in publishing, among others.

Yle also continued the development steps to test new technologies. Yle Beta, the research incubator and network run by Yle, creates innovative technology applications for the media sector. In 2017, the network funded promising pilots in the fields of artificial intelligence, robotics, voice control, virtual reality (VR) and augmented reality (AR).

Yle participates in the international and EU-funded MeMAD project, which will seek methods for using artificial intelligence in the media sector in video materials, translation and subtitling, in particular, within the next three years.

Yle Lab, a development network for product development and release planning, has also supported pilots into VR, AR and 360 video.

Investments in content and journalism

Yle has successfully invested in the development of new contents and services for strategic age groups, in particular. The reach has increased in the under 45-year-old group and in network services. Among the entire population, the reach of Yle’s contents and services was 76% daily and 93% weekly, which was more than last year.

The greatest efforts of the year included the municipal elections and the very extensive programming on the radio, television and online for Finland’s 100th anniversary. They included extensive cooperation between different content units.

News and Current Affairs compiled its journalistic principles in writing for the first time. This work involved the entire staff.

In journalism, more in-depth programming that provides background for topics was added. Since the terrorist attack in Turku in August, preparedness to react to extensive and sudden news events was improved through a new concept. In the spring 2017 municipal election, Yle successfully used artificial intelligence, or the Voitto (‘Victory’) robot, which compiled a piece of news on the result in every Finnish municipality.

Regional renewal

Yle’s Finnish-language regional operations will be significantly renewed over the next two years. The renewal will concern personnel, technical production equipment and facilities. The aim is to strengthen the presence of journalists in the field and to produce both regional and national content more extensively in different parts of Finland. The new operating method will be piloted in southwestern and southeastern Finland from March 2018 onwards.

In 2017, a new regional media desk was established in Mediapolis Creative Centre in Tampere to support journalism in the regions.

New culture initiatives

The production process of concerts at the Helsinki Music Centre was renewed, and now each concert by the Finnish Radio Symphony Orchestra generates high-quality content for online, radio and television broadcasting simultaneously.

National and international cooperation in culture was strengthened by renewing the cooperation agreement with the Finnish National Opera and Ballet. The public broadcasting companies SVT (Sveriges Television) in Sweden and NRK (Norsk Rikskringkasting) in Norway were new cooperation partners and began broadcasting Yle’s music content in Sweden and Norway, respectively.

The Nordic public broadcasting companies decided on a shared strategy concerning drama, which will considerably increase cooperation on drama production and programme exchange. The aim is to increase the competitiveness of Nordic drama. The aim is for each company to have exclusive rights for twelve months to screen Nordic drama.

Successes among the Nordic programme purchases in Yle’s programming included, in particular, the popular youth series Skam (from Norway) and other drama series intended for wide audiences. Finnish productions which obtained large viewer bases included Uusi päivä drama series, SuomiLOVE family programme, Sohvaperunat true TV programme on viewers’ comments and a new series about former president Urho Kekkonen.

The new youth series Nörtti: Dragonslayer666 made a breakthrough by exceeding one million views in Yle Areena. Nörtti and the Sekasin series about mental health issues among the young raised plenty of international interest, and the Sekasin format obtained a sales agreement in Germany at the end of the year.

Yle’s international sales increased by more than 20% during the year. Netflix bought the global rights to the Kuinka Katkaista Kierre (Breaking the cycle) series about correctional services. The first season of Eränkävijät on hunting and fishing today in Finland has been sold to more than 30 countries, and the animated children's series Albi Lumiukko (Albi the Snowman) has been downloaded millions of times on China’s biggest online video platform (IQYI).

Sports agreements

The value of the broadcasting right agreements signed by Yle in 2017 was approximately the same as that of corresponding previous agreements. In addition, Yle Sport has licensed its winter sports broadcasting rights concerning the World Cup events in Nordic sports organised outside Finland to the commercial media company MTV Oy.

In autumn 2017, Yle announced the successor agreements to the next football World and European Championships as well as the next three World Championships in athletics. The qualification matches of the Finland national football team were replaced by the qualification matches of the Finland national basketball team on a four-year contract, which will cover three championship games and two qualifications. A new concept in international top football, for which Yle signed an agreement with Viasat, was piloted to replace the Champions League. The agreement is also a new initiative for cooperation with commercial media.

Building a service including live broadcasts and the related text, programme information, data and video content in Yle Areena online service started in summer 2017. The service will be used for sports programming, in particular, such as broadcasts from the PyeongChang 2018 Olympic Winter Games. Yle agreed on sharing the television broadcasting rights of the Olympics with the US Discovery as early as in the previous year.

Sports highlights in 2017 included the Nordic World Ski Championships in Lahti and the World Figure Skating Championships; Yle also provided an international signal for both of these. The games of the Finland national basketball team at the World Championship qualifications and the World Championships in Athletics in London gained a considerable number of viewers and brought Finns together, in accordance with Yle’s strategy.

Open drama archives

An agreement between Yle and the copyright organisations added a wealth of archived programmes in Yle Areena online service in 2017. More than 760 TV programmes and 560 radio drama programmes were published.

According to the agreement, all significant drama programmes produced in earlier days by Yle for the radio and TV will be made available in Yle Areena in the period 2017–2022. The value of the agreement is several millions of euros, and the agreement involves nine unions and organisations representing artists.

Discussion about Yle’s independence and organisational changes

Considerable changes characterised the beginning of the year in News and Current Affairs. Discussion concerning how the Prime Minister of Finland was covered in the news and Yle’s journalistic independence continued to be lively after the turn of the year. Yle’s Board of Directors and the responsible editors decided in February 2017 to commission an external audit into the matter.

The audit was performed by Olli Mäenpää, professor of Administrative Law at the University of Helsinki, who was given a broad authority to inspect Yle’s programming operations, including publishing and programme decisions. In his report dated on 15 May, Mäenpää stated that there is room for development in Yle's journalistic management and decision-making, although, as a rule, they function appropriately.

In November 2017, the Council for Mass Media in Finland issued a condemnatory resolution on Yle in the matter with votes 6–6, with the Chairman's vote being decisive.

In May, the Board of Directors requested CEO Lauri Kivinen to submit improvement proposals in order to develop the organisation and the working culture. The responsibilities in News and Current Affairs operations had already been overhauled at the turn of the year. One of the proposed measures was the Journalistic Academy focusing on journalistic training, which Yle founded in 2017.

At the end of May, editor-in-chief Atte Jääskeläinen resigned from his position at the mutual agreement of the Board of Directors and management so that the preconditions of Yle's News and Current Affairs are safeguarded and the unit can fully focus on its work. The Board of Directors appointed Marit af Björkesten, director of the Swedish-language unit Svenska Yle, the acting director and executive editor-in-chief starting from 1 June 2017. After the recruitment round in the autumn, the Board of Directors appointed Jouko Jokinen as the new director and acting editor of Yle’s News and Current Affairs. He started in his new position in November.

In autumn 2017, Yle created the position of an audience ombudsman. The person selected for the position is Sami Koivisto, who started his work at the beginning of November. In the same connection, the title was changed to audience engagement manager. The main focus of the position will be on increasing transparency in Yle’s operations and enhance the dialogue between the company and its audiences.

New technology, cooperation and operating methods

Yle has been developing its operations through diverse partnerships in content as well as in distribution and technology. The negotiations with the commercial media progressed, and Yle launched several cooperation projects with newspaper publishing houses. Yle has increased links from its own site to other media content, and also cooperated with the commercial media during the election. In November 2017, Yle reinstated its customer relationship with STT (Finnish News Agency) with a one-year contract, whereas the Swedish-language service was discontinued as STT ended it at the end of the year.

Yle will switch to a rolling approach in the planning, forecasting and decision-making in building its programming. This will enable increased flexibility and efficiency in the allocation of resources throughout the year. The gradual implementation of the content and production planning system continued in spring 2017, and a new, cloud-based financial and procurement system was implemented in autumn 2017.

In information management, Yle continues to switch to a cloud-based IaaS infrastructure. This will provide added flexibility in the operations and enable agile development and using artificial intelligence in online services, in particular.

Yle continued the preparations for switching to High Definition in the antenna network in March 2020, which will mark the end of the basic-quality SD broadcasts. In the production technology, the HD transfer was completed during the year, and the productions of Yle news and sports will switch to HD quality in January 2018.

Yle will continue to reduce the number of facilities and to streamline the use of the premises. The facility changes in the Radio and TV Centre in Pasila, Helsinki are progressing as planned and are scheduled to be completed by 2020. The objective of the property strategy is that going forward, Yle will operate only in properties it owns in Pasila, Helsinki, and elsewhere the premises will be rented.

Personnel

Number of personnel and employment relationships

At the end of the year, Yle had 2,786 permanent employees with monthly pay, which is 165 fewer than at the end of 2016. Including all employment contracts with monthly or hourly-based pay, the average total number of person-years was 3,119, which represents a decrease of 150 person-years from the previous year.

Statutory labour negotiations were carried out in nearly all units during the year, affecting hundreds of employees. The most extensive negotiations took place at the Yle Production and Design department (under Yle Operations) due to the change in the operating model of the production services. As a result of the negotiations, the staff of Yle Production and Design was reduced by a total of 115 people in Pasila, Helsinki and Mediapolis, Tampere.. The employment relationships of approximately 60 employees were terminated due to production and financial reasons. Other reductions were attributable to retirement or transfers to other positions within the company. Part of the staff reductions will take place in 2018.

The other statutory labour negotiations conducted during the year concerned primarily changes to positions and organisations for renewed operating models of the units. The Swedish-language Svenska Yle terminated the employment relationships of seven people, but later on nearly all of them could be offered new jobs. The employment relationships of a total of 70 people were ended through termination for production and financial reasons in 2017.

In 2018, the number of personnel is likely to remain approximately at the same level as in the previous year.

Collective labour agreements concerning Yle’s staff were agreed on for the two-year agreement period that began on 1 December 2017. Salary increases followed the general trend.

Personnel development and well-being at work

Digitalisation still has a powerful impact on competence development. In 2017, special focus was on a networked operating method, learning together, as well as developing the operations through experimenting and listening to the audiences. Several hundreds of Yle employees attended agile working culture coaching and events.

Development focus areas also included journalistic competence and managerial skills. Renewal was promoted by internal job rotation, which will be increased further. Competence was also strengthened by means of deliberate external recruitments, which focused on skills required in the digital age.

By the Board of Directors’ decision, Yle launched a company-level well-being programme in spring 2017. The programme defined the goals, responsibilities and indicators related to well-being at work as well as key measures to promote well-being at work.

The ‘A Good Day at Work at Yle’ survey carried out in the autumn mapped personnel experiences of their daily work, work atmosphere as well as managerial work and management. The total score of the survey was slightly higher than in the previous year; on a scale of one to five, it was now 3.74.

The equality plans were updated in 2017. The plan highlights equality in recruitment, internal rotation, and salaries, in particular.

Yle has a zero tolerance policy towards discrimination, bullying in the workplace, and other types of unprofessional behaviour. The company has operating models in place for prevention and problem intervention.

Operating result and financial position

In the following chapters the comparison figures in parentheses are from 2016. For income statements and other figures involving accumulation, the comparison figures are for January–December 2016. For the balance sheet and other one-time figures, the comparison figures are for the previous balance sheet date (31 December 2016).

Result

The operating result for the financial period was EUR 7.0 million (-2.9 million), and the result for the financial year was EUR 6.9 million (-2.9 million). The profit for the financial year ended up being slightly higher than forecast due to, among other things, the delayed development projects.

In accordance with the guidelines provided by the Administrative Council, the annual fluctuations in the company’s result must offset each other so that the financial standing remains balanced. The fluctuations in the result mainly arise from major sport events that are organised every two years.

Turnover and other operating income

Yle’s net turnover increased by 0.3% to EUR 472.3 million (470.9) from the previous year.

An amount prescribed in the Act on the State Television and Radio Fund, EUR 507.9 million, was transferred to the State Television and Radio Fund from the state budget. Yle applied for payments from this amount in accordance with its financing needs. Of the appropriation allocated to Yle, it paid 10% in value-added tax to the State, which translates into a total of EUR 46.2 million. The net revenue from the Yle tax was EUR 461.8 million, which was at the same level as in the previous year.

Other income included in turnover was EUR 10.5 million (9.2), including income from programme and service sales. The increase of 14.4% in income, compared to the previous year, was mainly attributable to the increased programme revenue.

Other operating income was EUR 2.7 million (2.3). The increase of 18.2% in income, compared to the previous year, was mainly attributable to the increased rental income and other income.

All income in total was EUR 475.0 million (473.2), of which the share of the income from the Yle tax was 97.2% (97.6).

Costs

Personnel costs amounted to EUR 222.6 million (232.1), and their share of all costs was 47.6%. Personnel costs decreased 4.1% from the previous year’s level due to both the reduction of personnel and the decrease in the social security expenses. Salaries and remuneration decreased by 2.6% to EUR 178.9 million (183.7). The pension costs amounted to EUR 35.4 million (37.4), and other social security expenses totalled EUR 8.3 million (11.1).

Depreciation, amortisation and reduction in value totalled EUR 76.4 million (77.1), decreasing by 0.9% from the previous year. Amortisation from broadcasting rights totalled EUR 51.2 million (50.1), and other amortisation and reduction in value totalled EUR 25.2 million (27.1).

Other operating costs totalled EUR 169.0 million (166.9). Other operating costs increased 1.2%.

Amortisation related to broadcasting and copyright fees and other expenses totalled EUR 88.0 million (82.0). Yle offered domestic programmes in its various media for a total cost of EUR 30.2 million (23.6). Broadcasting fees for sports and foreign programmes totalled EUR 21.0 million (26.4). In addition, Yle paid a total of EUR 36.8 million (32.0) in broadcasting fees, broadcasting right fees, rebroadcasting fees and other rights fees related to programmes.

The largest items in other operating costs included EUR 63.6 million (61.9) in external services, including information technology services, production services, property management services, repair, maintenance and other services.

Balance sheet

The balance sheet total decreased by 0.5% to EUR 249.2 million (250.5).

Assets

Investments and related operating costs totalled EUR 36.2 million, of which investments accounted for EUR 19.8 million.

A total of EUR 12.3 million of the investment and operating costs targeted development programmes and a total of EUR 23.9 million of them targeted maintenance investments.

The most significant development programmes concerned property development, repairing the House of Creativity at the Radio and TV Centre, completion of the operations planning and finance system (Ruori III), as well as the launch of the Radiopolku set of projects to replace end-of-life radio production units in the Radio and TV Centre in Pasila, Helsinki.

The most considerable investment, totalling EUR 13 million, was related to the development of online services.

Finnish and international broadcasting rights, which were previously under current receivables, were moved to the intangible assets group. The comparison data was changed to match the new practice.

Intangible rights amounted to EUR 48.4 million (47.1). Intangible assets totalled EUR 62.1 million (59.7).

Tangible assets amounted to EUR 81.9 million (89.5).

The amount of tangible and intangible assets decreased by 3.5% and stood at EUR 144.0 million (149.2) at year-end. The decrease was attributable to transfers of property, plant and equipment, scrapping of decommissioned assets and the larger amount of depreciation in relation to investments.

Investments totalled EUR 50.9 million (49.7). During the financial period, EUR 1.2 million was invested in the shares of the Kiinteistö Oy Technopolis Tohloppi Ltd. The largest items in investments are the Kiinteistöosakeyhtiö Mannerheimintie 13a limited liability housing company (EUR 43.0 million) and Helsinki Music Centre Ltd. (EUR 3.3 million).

Receivables totalled EUR 19.3 million (18.1). Non-current receivables totalled EUR 0.1 million (9.8). A receivable of EUR 9.8 million related to a divestment of a building, presented in non-current receivables in the previous year, was moved to current receivables.

The presentation method of broadcasting right fees included in current receivables in the previous financial periods has been changed. In accordance with the new practice, they are presented in intangible rights, and the comparison data has been changed to match the new practice. Current receivables stood at EUR 19.2 million (8.3).

Cash, cash equivalents and marketable securities stood at EUR 35.0 million (33.4).

Equity

At the end of the year, equity stood at EUR 134.8 million (128.0), including EUR 18.0 million (18.0) in restricted equity and EUR 116.9 million (110.0) in unrestricted equity. Yle’s equity ratio was 54.1% at year-end (51.1).

The company has 4,683,945 shares, all of which have equal rights.

Obligatory provisions

The obligations arising from the employer’s liability components were previously presented in accrued expenses. The comparison data was changed to match the new practice.

Obligatory provisions stood at EUR 3.1 million (3.4), Provisions include pension provisions for retired Yle’s managers, obligations arising from the employer’s deductible payments, and other provisions.

Liabilities

Non-current liabilities amounted to EUR 35.7 million (41.3). Liabilities from credit institutions are primarily related to the change in Yle’s financing model in 2012 and the Helsinki Music Centre project in 2007. The volume of long-term liabilities decreased in accordance with the repayment schemes.

Current liabilities stood at EUR 75.5 million (77.8), consisting of short-term liabilities from credit institutions, accounts payables, other liabilities and accrued expenses and prepaid income. Accrued expenses and prepaid income totalled EUR 46.1 million (46.5), including primarily allocations related to personnel expenses.

Pension foundation

The financial standing of Yle Pension Fund remained strong. The solvency margin of the statutory Department B (Employees Pensions Act) was 147.6% (141.1). The pension foundation’s book net profits from investing activities amounted to EUR 33.5 million (38.5), and its pension-related payments totalled EUR 62.3 million (58.3). There is no liabilities deficit, but the company had a contribution liability of EUR 0.7 million to the pension foundation on 31 December 2017.

Internal monitoring

The purpose of internal monitoring is to ensure the efficiency of Yle’s operations, the reliability of information concerning its operations and compliance with the laws, regulations, internal principles and guidelines governing its operations.

Internal monitoring also serves to ensure that Yle’s strategy is implemented and its goals are achieved. Internal monitoring consists of principles based on Yle’s goals that guide its operations. These principles are implemented in practice through processes and guidelines.

Internal monitoring is part of Yle’s daily operations and involves all employees. The monitoring and assessment of operations in relation to goals and agreed principles – and the steering of operations based on such assessments – are an important part of internal monitoring.

Risk management

Risk management is part of internal monitoring and good governance at Yle. Risk management serves to ensure that the risks affecting the company’s operations are identified, assessed and monitored. In addition, risk management supports the achievement of operational goals and serves to ensure the continuity of operations. Risk management covers all levels and risk types of Yle’s operations.

Yle’s Board of Directors confirms the company’s risk management principles, which describe the scope and goals of risk management and the roles and responsibilities in risk management. In addition, the risk management principles describe how risks are identified, assessed and monitored.

The most important types of risks associated with Yle’s operations are strategic, operative, financial and development risks. Reputation risk is also considerable, and it is taken into consideration when assessing the impact of risks.

Strategic risks are assessed as part of the strategy process and operational planning. Strategic risks include risks related to the operating environment, programme offering and interest groups.

Operational risks are identified and assessed as part of daily work and case by case, if necessary. In addition, risk studies are carried out annually. Operational risks include risks related to the continuity and safety of operations, information security risks, property damage risks, compliance risks, and process risks.

Development risks include project operations risks and risks related to benefit objectives.

With the help of Internal Auditing, Yle’s Board of Directors, audit committee and CEO ensure that risk management is carried out in accordance with the risk management principles and related decisions.

Responsibility at Yle

Yle executes extensive social responsibility through its mission to provide public broadcasting services. Responsibility also includes ethical operating methods, financial responsibility for the effective use of the Yle tax and Yle’s role as a significant employer in the creative field.

The company has a company-wide Code of Conduct as well as a compliance programme for responsible operations, which aims to ensure compliance with laws, standards and ethical guidelines in the company. The programme is supported by personnel training, among other things.

The Compliance function is supported by an ethics team, which was established at the beginning of 2017. The team includes the head of responsible operations, HR, communicational and strategic functions director, as well as the representative of the business units, a personnel representative and the risk manager.

Yle operates an ethics channel, which personnel can use to report observed or suspected ethics violations, when needed. Only a few notifications have been submitted through the channel.

Yle updated its environmental responsibility programme for 2017–2020. The programme pays special attention to energy efficiency, reducing emissions generated by travel, as well as to more efficient waste management and recycling.

Yle’s corporate social responsibility is covered in greater detail on the company’s website at http://yle.fi/yleisradio (in Finnish) and svenska.yle.fi/bolaget (in Swedish). Information about the compliance programme for responsible operations and about the Code of Conduct is also provided in Yle’s Corporate Governance Statement (in Finnish and Swedish).

Administration and governance system

Annual General Meeting

The Annual General meeting of Yleisradio Oy was held on 12 May 2017. The Annual General Meeting adopted the financial statements for 2016 and discharged the members of the Board of Directors and the CEO from liability. In accordance with the Board of Directors’ proposal, the loss was transferred as a deduction to retained earnings and a dividend was not distributed.

Administrative Council

Yle’s Administrative Council has 21 members. The Parliament elects the members of the Administrative Council during the first session of the parliamentary term. Their term begins immediately after the election and lasts until the end of the following election.

The members of the Administrative Council must represent various fields of science, art, education, business and economics as well as various social and language groups.

The Administrative Council elects a Chairman and Vice Chairman from among its members. Kimmo Kivelä (Finns Party) was the Chairman and Arto Satonen (National Coalition Party) was the Vice Chairman.

The other members of the Administrative Council were Mikko Alatalo, Sirkka-Liisa Anttila as of 16 February 2017, Maarit Feldt-Ranta, Olli Immonen, Ilkka Kantola, Jyrki Kasvi, Jukka Kopra, Hanna Kosonen, Suna Kymäläinen, Eero Lehti, Mika Lintilä until 15 February 2017, Lea Mäkipää, Mikaela Nylander, Markku Pakkanen, Jaana Pelkonen, Jari Ronkainen, Matti Semi, Maria Tolppanen, Ari Torniainen, and Mirja Vehkaperä.

Jukka Kuusinen and Jari Niemelä (until 8 June 2017) as well as Hilla Blomberg (as of 8 June 2017) were the personnel representatives.

The Administrative Council convened nine times in 2017.

Board of Directors

Yle’s Board of Directors consists of five to eight members, who may not be senior managers at Yle or members of the Administrative Council. The Administrative Council elects the members of the Board. The Board shall represent sufficiently diverse expertise and both the Finnish and the Swedish-speaking language groups. The Administrative Council elects the Chairman and Vice Chairman of the Board. The term of the members of the Board is one calendar year.

In 2017, the members of the Board were Thomas Wilhelmsson (Chairman), Carina Geber-Teir (Vice-chairman), Heikki Hellman, Jussi Karinen, Lauri Kontro, Kirsi-Marja Laitinen-Blomster and Pauliina Mäkelä.

As of 2018, the members of the Board will be Thomas Wilhelmsson (Chairman), Carina Geber-Teir (Vice-chairman), Paulina Ahokas, Kai Huotari, Jussi Karinen, Lauri Kontro and Pauliina Mäkelä.

Journalist Arto Nieminen was appointed by Yle’s employees as their representative.

The Board convened 14 times in 2016.

The Board has appointed an audit committee as well as a nomination and remuneration committee from among its members.

In 2017, the members of the audit committee were Thomas Wilhelmsson (Chairman), Jussi Karinen, Pauliina Mäkelä and Arto Nieminen, who is a personnel representative. The other members of the audit committee are independent of the company.

The audit committee convened seven times in 2016.

In 2017, the members of the nomination and remuneration committee were Carina Geber-Teir (Chair), Kirsi-Marja Laitinen-Blomster, Heikki Hellman, and Lauri Kontro. All the members of the nomination and remuneration committee were independent of the company.

The nomination and remuneration committee convened nine times in 2017.

Chief Executive Officer

Lauri Kivinen (b. 1961), M.Sc. (Econ.), serves as CEO of Yle. On 25 January 2018, Lauri Kivinen announced he would resign from the position of CEO by the end of 2018. The Board of Directors has started recruiting a successor.

Organisation

Yle’s operations are divided into the following units: News and Current Affairs, Creative Content, Swedish Yle, Media, Operations and Joint Operations.

Yle has three content units. News and Current Affairs is responsible for news and current affairs operations and sport. The Creative Content unit is responsible for drama, factual content, culture and entertainment as well as programming for children and young people. Swedish Yle is responsible for all Swedish-language content.

The Media unit is responsible for profiling programming and publication channels and for coordinating television, radio and online content.

The Operations unit is responsible for the implementation of programme production and the development and management of production competence and partnerships. The unit is also responsible for the development of ICT and technical production and service platforms and the operation of the transmitter unit. In addition, it is responsible for Yle’s facilities.

The Joint Operations support the units in their operative functions and development. At the end of the year, the Joint Operations were reorganised into two departments: HR, Communicational and Strategic Functions as well as Finance and Personnel Services. The new organisation took effect on 1 January 2018.

Events after the balance sheet date

There were no events after the balance sheet date that would affect the evaluation of the financial statements.

Outlook for 2018

Yle’s public service remit and audience relationship

Yle will increase dialogue with Finns and ensure it is important in the everyday lives of different people. Excellent content and good personal service are keys to success. Strong confidence in and appreciation of Yle is based on its high-quality content and independent journalism.

The global competition will force Yle to work even harder to ensure the visibility and accessibility of contents. It will be challenging to make Finnish content stand out among the enormous volume of international programming.

Yle’s goal will be to improve the quality and accuracy of the data it receives about online audiences in order to increase the understanding of the preferences of different users.

Yle wants to be a trailblazer in utilising new kind of competence, such as smart data, artificial intelligence and agile working methods, in the media industry. In terms of technical solutions, we will increasingly rely on the cloud and IP technologies.

Financial outlook

The Yle tax to be remitted to Yle will remain at the previous year’s level in 2018. Turnover is estimated to remain at the same level as in the previous year. The result is expected to show a loss of approximately EUR -5 million, primarily due to the major sports events to be organised in 2018.

Board of Directors’ proposal for the use of profits

Yle’s operating profit for the financial year was EUR 6,898,639.08. The company’s unrestricted equity stood at EUR 116,859,303.54 at the end of the financial year.

The Board decided to submit the Board of Directors’ report and Yle’s financial statements for 2017 for the Administrative Council’s approval. In addition, the Board will propose to the Annual General Meeting that the profit for the financial year be transferred as an addition to retained earnings and that dividend not be distributed.