Sanoma Oyj · OMXHEX:SANOMA
Sanoma Oyj — Non-Deal Roadshow (November 2019)
60 slides from Sanoma Oyj's roadshow presentation, November 2019
Slide 1: Roadshow presentation November-December 2019
Roadshow presentation November-December 2019 A leading European learning and media company
Slide 2: Save the date: Analyst and Investor Update
SAVE THE DATE Analyst and Investor Update 18 December 2019 at 8.30-12.30 EET incl. breakfast and lunch at Kämp Symposion in Helsinki Presentations by the Group CEO and CFO will provide more information especially on the Learning business and its financials after the Iddink acquisition Invitations to
Slide 3: Sanoma as an investment
SANOMA AS AN INVESTMENT: Growing A leading European learning and dividends media company Strong and Continued balanced focus on business selective portfolio growth Solid Equity ratio profitability and leverage and improving within long- cash flow term target 3 Roadshow presentation November-December
Slide 4: Sanoma in 2018
Sanoma in 2018 Learning Net sales 2018 EUR 313 million Poland Netherlands 46% Finland Belgium NET SALES 19.5% Sweden EUR 1,315 million 0 50 100 Media Finland NON-PRINT SALES Newspaper EUR 579 million 45% Online & Mobile 49% TV/Radio Magazines OPERATIONAL EBIT MARGIN 11.9% Other 14.9% 0 100 200 Media
Slide 5: Learning: A leading European learning company
Learning: A leading European learning company ▪ Printed and digital learning methods and digital #1 in Finland learning platforms for K12 0.6 million pupils ▪ Integrated product development & design and #2 in Sweden scalable technologies 1.3 million pupils ▪ World-class learning and teaching design
Slide 6: Media Finland: Strong brands on all media platforms
Media Finland: Strong brands on all media platforms reaching 97% of all Finns weekly #1 #1/2 #1 #1/2 News and feature Entertainment: TV, radio, Lifestyle Classifieds festivals and concerts magazines 55 % 30 % 10 % 5% Share of net sales Unique reach and measurable impact for B2B customers 6 Roadshow
Slide 7: Media Netherlands: Leading local media brands
Media Netherlands: Leading local media brands in digital and print reaching 70% of all Dutch every week Blockbuster Online news & Special interest magazine brands data business magazine brands - 5 out of 10 leading - #1 local player in online - Smaller titles magazine brands news reaching ½ of the w
Slide 8: Our strategic and financial priorities
Our strategic and financial priorities 8 Roadshow presentation November-December 2019
Slide 9: Balanced business portfolio
Balanced business portfolio ▪ Higher share of more stable Group net sales by category subscription and learning sales ▪ Lower exposure to more 14% 15% volatile advertising sales 10% 9% – Finland ¾ of the Group’s advertising sales (MEUR 250) 28% print Advertising 26% 36% 72% non-print – The Netherlan
Slide 10: Improved profitability
Improved profitability Outlook for 2019 Operational EBIT (published on 13 September) EUR million 14.9% 13.6% In 2019, Sanoma expects that the 11.3% Group’s comparable net sales will be in line with 2018 and operational EBIT margin excluding 7.4% PPA will be above 15% (2018: 6.2% 4.8% 15.7%). The out
Slide 11: Our business has a characteristic annual seasonality pattern
Our business has a characteristic annual seasonality pattern ▪ Our quarterly financial performance is Operational EBIT excl. PPA EUR million strongly affected by the seasonal pattern of the Learning business – Most of net sales and earnings are accrued during Q2 and Q3, i.e. close to the beginning o
Slide 12: We are targeting a higher cash conversion
We are targeting a higher cash conversion Our mid-term cash conversion * Free cash flow target is 60–70% EUR million 150 ▪ At the end of 2018 approx. 55% 100 Assumptions for key cash 50 flow elements for 2019 ▪ Businesses acquired in 2018 0 ▪ Lower net financing costs ▪ Stable working capital -50 ▪
Slide 13: Leverage temporarily above the long-term target level
Leverage temporarily above the long-term target level At the end of Q3 2019 Net debt ▪ Net debt to adjusted EBITDA 2.8 (2018: 1.6) EUR million – Increase of 0.9 due to Iddink acquisition – Increase of 0.4 due to implementation of IFRS 16 ▪ Net debt EUR 798 million (2018: 392) Long-term target < 2.5
Slide 14: Growth opportunities through M&A across businesses
Growth opportunities through M&A across businesses Focus on selective Learning * growth › Core business in › Core business › Adjacent business current markets in new markets in current markets › Synergistic bolt-on acquisitions Media Finland › Entertainment › Organic growth initiatives › News, featu
Slide 15: We are fully committed to our dividend policy
We are fully committed to our dividend policy ▪ A dividend of EUR 0.45 per share for 2018 Dividend per share – 58% of free cash flow (excl. one-off costs related to the EUR divestment of Belgian women’s magazine portfolio) – Paid in two parts: EUR 0.25 in April and EUR 0.20 in November 60% Dividend
Slide 16: Media and learning have a meaningful role in society
Media and learning have a meaningful role in society Media Learning ▪ Journalistic content supports freedom of speech and ▪ Our modern learning methods support teachers independent information gathering in developing the full potential of every pupil ▪ Local entertainment contributes to shared value
Slide 17: Acquisition of Iddink
Acquisition of Iddink 17 Roadshow presentation November-December 2019
Slide 18: Iddink in brief
Iddink in brief Iddink strengthens Sanoma’s ▪ Net sales EUR 142 million and operational EBIT excl. position as a leading European PPA EUR 20 million in 2018 learning company ▪ Operations in the Netherlands, Belgium and Spain ▪ In the Dutch market, Iddink provides educational platforms and services b
Slide 19: Iddink fits well in our M&A strategy
Iddink fits well in our M&A strategy Focus on selective Learning * growth › Core business in › Core business › Adjacent business current markets in new markets in current markets › Synergistic bolt-on acquisitions Media Finland › Entertainment › Organic growth initiatives › News, feature and lifesty
Slide 20: Iddink provides Sanoma Learning a platform for future growth
Iddink provides Sanoma Learning a platform for future growth ▪ Sanoma becomes a leading educational platform and service provider in the Netherlands – Increases the scale for investments in customers and platforms – Enables development of seamless digital learning solution for pupils, parents, teach
Slide 21: With Iddink, our business portfolio becomes more balanced towards Learning
With Iddink, our business portfolio becomes more balanced towards Learning The acquisition increases the Sanoma Group share of Learning in Sanoma’s Net sales by category Operational EBITDA* by SBU business portfolio Other ▪ Higher share of more stable 14% 13% 32% 29% Media 9% 8% Single copy Netherla
Slide 22: Valuation and funding
Valuation and funding ▪ Cash and debt free purchase price EUR 277 million ▪ EV/EBITDA multiples – 10.3x operational EBITDA (incl. rental book depreciation of EUR 16 million) – 6.4x reported EBITDA ▪ Acquisition closed on 13 September 2019 ▪ Paid by EUR 250 million 4-year term loan – Annual EUR 50 mi
Slide 23: Sanoma Learning is successfully built through M&A
Sanoma Learning is successfully built through M&A Iddink Malmberg Netherlands Tammi (Sanoma Pro) Finland Netherlands, Belgium, Van In Belgium Sanoma Utbildning Sweden Spain 2018/ 2004 2008 2011 2016 2019 Nowa Era Poland De Boeck Belgium 23 Roadshow presentation November-December 2019
Slide 24: Iddink's key quarterly income statement figures
Iddink’s key quarterly income statement figures Preliminarily adjusted for IFRS, unaudited EUR million Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 Net sales 20.6 18.9 23.8 82.5 18.8 16.6 141.7 Incl. Group internal sales 7.9 0.2 0.3 4.9 11.6 0.1 16.9 EBITDA 9.0 8.1 6.8 16.9 7.6 8.4 39.7 Depreciation an
Slide 25: Iddink key balance sheet figures
Iddink key balance sheet figures Preliminarily adjusted for IFRS, unaudited EUR million 30 Jun 2019 31 Dec 2019 Non-current assets (incl. rental books) 211.1 214.3 Current assets 26.4 25.6 Total assets 237.5 239.9 Total equity 83.7 85.4 Liabilities * 153.9 154.5 Total equity and liabilities 237.5 23
Slide 26: Q3
Q3 2019
Slide 27: Highlights of Q1-Q3 2019
Highlights of Q1-Q3 2019 ’ Net sales Operational EBIT Operational EBIT Free cash flow Net debt / Adj. excl. PPA excl. PPA, margin EBITDA M€ 974 M€ 184 18.9% M€ 56 2.8 (2018: 1,017) (2018: 186) (2018: 18.3%) (2018: 40) (2018: 1.6) ▪ Net sales were stable in Learning and Media Finland and declined in
Slide 28: Earnings improved in Learning and Media Finland in Q1-Q3
Earnings improved in Learning and Media Finland in Q1-Q3 ▪ Learning: Earnings grew in line Q1-Q3 2019 Operational EBIT excl. PPA by SBU with net sales and benefits of the EUR million “High Five” programme as well as more favourable business mix 85 Learning ▪ Media Finland: Solid earnings with 82 sta
Slide 29: Learning Q1-Q3 2019: Solid performance
Learning Q1-Q3 2019: Solid performance ▪ Net sales stable at EUR 275 million (2018: 274) Operational EBIT excl. PPA – Growth in Belgium and Poland driven by good demand, EUR million partially accelerated by curriculum renewals 20.6% 20.7% 20.5% 21.5% 19.5% – The Netherlands at the previous year’s le
Slide 30: Finnish advertising market stable for the first nine months
Finnish advertising market stable for the first nine months Finnish measured media advertising markets Q3 19 Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 ▪ In Q3 2019, the market declined by 2% Newspapers -12% -2% -7% -12% -8% -13% -12% -11% Magazines -8% -2% -5% -2% -3% -10% -7% -5% ▪ In Q1-Q3 2019, F
Slide 31: Media Finland Q3 2019
Media Finland Q3 2019: Digital subscription and advertising sales continued to grow, profitability improved ▪ Net sales declined slightly to EUR 147 million Operational EBIT excl. PPA (2018: 151) EUR million – Digital subscription sales of Ruutu+ and Helsingin Sanomat (HS) grew, partially compensati
Slide 32: Media Netherlands Q3 2019
Media Netherlands Q3 2019: Divestments had an impact on reported financials ▪ Net sales declined to EUR 87 million (2018: 106) Operational EBIT excl. PPA – Impact of EUR -14 million due to divestments * EUR million – Digital advertising sales and time spent of online news site 21.4% 20.9% NU.nl grew
Slide 33: Net debt higher due to Iddink acquisition and IFRS 16
Net debt higher due to Iddink acquisition and IFRS 16 Q3 18 Q3 19 IFRS 16 impact Net debt EUR million Net debt 392 798 +189 Net debt / Adj. EBITDA 1.6 2.8 +0.4 Long-term target < 2.5 Equity ratio 40.9% 33.8% -3.6pp ▪ EUR 250 million 4-year term loan (part of the syndicated facility signed in Februar
Slide 34: Good development of rolling free cash flow
Good development of rolling free cash flow ▪ Q1-Q3 free cash flow improved to Free cash flow EUR 56 million (2018: 40) EUR million + Implementation of the IFRS 16 150 standard improved the free cash flow by EUR 18 million 100 – EUR 10 million settlement of a rental contract related to Discontinued 5
Slide 35: EUR 200 million bond to be repaid at the end of November
EUR 200 million bond to be repaid at the end of November ▪ EUR 200 million bond to be repaid Debt structure Maturity profile at the end of November EUR million, 30 September 2019 EUR million, 30 September 2019 – To be replaced with more flexible Other loans Bond Term Loan debt instruments 7 200 – Ex
Slide 36: Second dividend instalment was paid on 4 November
Second dividend instalment was paid on 4 November ▪ Second dividend instalment of EUR 0.20 per share was paid on 4 November Dividend per share EUR ▪ Total dividend for 2018 EUR 0.45 per share – 1st instalment was paid in April – Payout ratio 58% of free cash flow (excl. one-off costs related to the
Slide 37: Outlook for 2019 improved on 13 September
Outlook for 2019 improved on 13 September In 2019, Sanoma expects that the Group’s ▪ Comparable net sales will be in line with 2018 ▪ Operational EBIT margin excl. PPA * will be above 15% (2018: 15.7%). The outlook is based on an assumption of the consumer confidence and advertising market developme
Slide 38: Appendix
Appendix
Slide 39: We adapt to a rapidly changing media landscape
We adapt to a rapidly changing media landscape Increasing time used on Video is used more Data is increasingly 1 2 3 media though mostly mobile and more important ▪ Constant growth in time spent ▪ Requires different ‘story telling’ utilizing ▪ Recommendations increase expertise from our media portfo
Slide 40: Learning: Creating a European Champion in Learning
Learning: Creating a European Champion in Learning ▪ Leading positions in countries with some of world’s best Net sales splits 2018 educational systems Sweden Poland ▪ Solutions that drive higher learning outcomes, 7% Belgium engagement and efficiencies 17% 29% Print Non-print ▪ Scalable technologie
Slide 41: Overall market remains stable while individual markets fluctuate
Overall market remains stable while individual markets fluctuate driven by local reforms ▪ Overall market value remains stable Overall market value expected to remain stable in the long term, with CAGR around Indexed to 2016 1,2 1% (2016-2020) ▪ Individual markets fluctuate according to reform cycle
Slide 42: Media Finland: Continuing to strengthen our market position
Media Finland: Continuing to strengthen our market position ▪ Leading media company in Finland Net sales splits 2018 ▪ Information, experiences, inspiration and entertainment Other Advertising through multiple media platforms: newspapers, TV, Single copy 14% radio, events, magazines, online and mobi
Slide 43: Media Netherlands: Focusing on profitability and cash flow generation
Media Netherlands: Focusing on profitability and cash flow generation ▪ Dutch consumer media operations and the press Net sales splits 2018 distribution business Aldipress ▪ Leading cross media portfolio with strong brands and Other Subscription market positions in magazines, news, digital, events 2
Slide 44: Major acquisitions and divestments since 2016
Major acquisitions and divestments since 2016 STT Iddink * Acquisitions De Boeck FI NL, BE, ES BE Scoupy NL Tutorhouse Kortingisleuk.nl Routa Oikotie FI Scoupy FI N.C.D. FI NL FI 2016 2017 2018 2019 AAC Global HeadOffice Sanoma SBS Women’s Head LINDA. FI FI Baltics NL magazines Office NL Autotrader.
Slide 45: Group key figures 2018
Group key figures 2018 2017 adjusted for the SBS divestment EUR million 2018 2017 EUR 2018 2017 Net sales 1,315.4 1,328.0 Operational EPS, continuing Operational EBITDA 326.3 328.5 operations 0.83 0.71 margin 24.8% 24.7% Operational EPS 1 0.84 0.74 Operational EBIT 196.6 179.0 EPS, continuing operat
Slide 46: Amortisations and depreciations included in Operational EBIT
Amortisations and depreciations included in Operational EBIT EUR million 2018 2017 Change Net sales 1,315.4 1,328.0 -1% Operational EBITDA 326.3 328.5 -1% margin 24.8% 24.7% Amortisations related to TV programme rights -56.6 -69.9 -19% Amortisations related to prepublication rights -23.3 -22.6 3% Ot
Slide 47: Group key figures Q3 2019
Group key figures Q3 2019 EUR million Q3 2019 Q3 2018 EUR Q3 2019 Q3 2018 Net sales 372.2 393.0 Operational EPS, continuing Operational EBIT excl. PPA * 93.2 93.6 operations 0.39 0.42 margin 25.0% 23.8% Operational EPS 1 0.39 0.42 EBIT 83.0 88.9 EPS, continuing operations 0.35 0.41 Result for the pe
Slide 48: Group key figures Q1-Q3 2019
Group key figures Q1-Q3 2019 EUR million Q1-Q3 Q1-Q3 EUR Q1-Q3 Q1-Q3 2019 2018 2019 2018 Net sales 973.9 1,017.4 Operational EPS, continuing Operational EBIT excl. PPA 184.1 186.0 operations 0.73 0.77 margin 18.9% 18.3% Operational EPS 1 0.73 0.78 EBIT 167.7 167.9 EPS, continuing operations 0.71 0.7
Slide 49: Group Operational EBIT excl. PPA
Group Operational EBIT excl. PPA EUR million Q3 19 Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 EBIT 83.0 72.7 11.9 0.6 88.9 70.6 8.4 168.5 Items affecting comparability (IACs) -7.2 -5.2 4.6 -17.0 -2.1 -9.2 0.2 -28.2 PPA amortisations -3.0 -3.0 -2.7 -2.6 -2.6 -2.4 -2.1 -9.6 Operational EBIT excl. PPA 9
Slide 50: Learning: Quarterly key figures
Learning: Quarterly key figures EUR million Q3 19 Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 Net sales 138.4 105.4 31.4 39.8 136.3 108.3 28.9 313.3 EBIT 52.4 41.3 -18.2 -20.0 52.1 42.4 -18.4 56.1 Items affecting comparability (IACs) -4.4 -1.1 -1.1 -2.2 -1.3 -1.3 -0.4 -5.1 Purchase price allocation (P
Slide 51: Media Finland: Quarterly key figures
Media Finland: Quarterly key figures EUR million Q3 19 Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 Net sales 146.5 154.5 131.6 144.5 150.7 146.2 137.0 578.5 EBIT 19.7 15.4 10.0 9.9 19.8 20.5 11.6 61.8 Items affecting comparability (IACs) -1.5 -3.6 -3.1 -6.2 -1.4 1.9 -1.5 -7.1 Purchase price allocation
Slide 52: Media Netherlands: Quarterly key figures
Media Netherlands: Quarterly key figures EUR million Q3 19 Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 Net sales 87.4 93.6 85.3 113.8 106.0 108.4 95.8 424.0 EBIT 12.8 17.6 21.5 13.4 19.1 8.7 16.9 58.0 Items affecting comparability (IACs) -0.7 -0.9 8.9 -10.3 0.5 -10.8 2.0 -18.5 Purchase price allocatio
Slide 53: IFRS 16 impact on key ratios
IFRS 16 impact on key ratios ▪ Sanoma has adopted the new IFRS ▪ Main impacts related to the implementation of IFRS 16 standard 16 Leases standard as of 1 Jan 2019 on key ratios in Q3 2019 and Q1-Q3 2019: – Lease agreements are recognised in MEUR Q3 2019 Q1-Q3 2019 the balance sheet as right-of-use
Slide 54: Largest shareholders
Largest shareholders 30 September 2019 Largest shareholders Holding by category Number of shares 2.3% 1. Jane and Aatos Erkko Foundation 39,820,286 24.4% 17.4% 15.3% 2. Antti Herlin 19,506,800 11.9% (Holding Manutas Oy: 11.91%, personal: 0.02%) 3. Robin Langenskiöld 12,273,371 7.5% 4. Rafaela Seppäl
Slide 55: Analyst coverage
Analyst coverage Carnegie Investment Bank Pia Rosqvist-Heinsalmi +358 9 6187 1232 Danske Markets Equities Panu Laitinmäki +358 10 236 4867 Handelsbanken CM Rasmus Engberg +46 8 701 5116 Inderes Petri Aho +358 50 340 2986 Kepler Cheuvreux Stefan Billing +46 8 723 5148 Nordea Sami Sarkamies +358 9 530
Slide 56: Financial Reporting in 2020
Financial Reporting in 2020 7 February Full-Year Result 2019 Week 10 Financial Statements and Directors’ Report 2019 25 March Annual General Meeting 2020 29 April Interim Report Q1 2020 24 July Half-Year Report 2020 29 October Interim Report Q3 2020 56 Roadshow presentation November-December 2019
Slide 57: Adjustments and restatements
Adjustments and restatements ▪ All 2016-2018 figures presented in this presentation are for continuing operations only. – Sanoma announced on 16 January 2018 the intention to divest its Belgian women’s magazine portfolio. The divested business was consequently classified as Discontinued operations i
Slide 58: Disclaimer
Disclaimer The information above contains, or may be deemed to contain, forward-looking statements. These statements relate to future events or future financial performance, including, but not limited to, expectations regarding market growth and development as well growth and profitability of Sanoma
Slide 59: Roadshow presentation November-December 2019
59 Roadshow presentation November-December 2019
Slide 60: Please contact our Investor Relations
Please contact our Investor Relations: Kaisa Uurasmaa, Head of IR & CSR M +358 40 560 5601 E kaisa.uurasmaa@sanoma.com ir@sanoma.com www.sanoma.com