Sanoma Oyj · OMXHEX:SANOMA
Sanoma Oyj — Non-Deal Roadshow (June 2019)
60 slides from Sanoma Oyj's roadshow presentation, June 2019
Slide 1: A leading European learning and media company
Roadshow presentation May-June 2019 A leading European learning and media company
Slide 2: Content
Content Sanoma in brief p. 3 Our strategic and financial priorities p. 9 Acquisition of Iddink p. 19 Q1 2019 financials p. 28 Appendices p. 38 2 Roadshow presentation May-June 2019
Slide 3: Sanoma in brief
Sanoma in brief 3 Roadshow presentation May-June 2019
Slide 4: A leading European learning and media company
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 4 Roadshow presentation May-June 2019
Slide 5: 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 6: Learning: A leading position in some of the world's best education systems
Learning: A leading position in some of the world’s best education systems Printed and digital learning methods and digital learning platforms for K12 Integrated product development & design and #2 in Sweden scalable technologies 22% market share World-class learning and teaching design skills
Slide 7: Media Finland: Strong brands on all media platforms reaching 97% of all Finns weekly
Media Finland: Strong brands on all media platforms reaching 97% of all Finns weekly #1 #1 #1 #1/2 #1 #1/2 in news in in radio in TV in festivals in online magazines and concerts classifieds 45% 20% 5% 20% 5% 5% Share of net sales in 2018 Unique reach and measurable impact for B2B customers 7 Roadsh
Slide 8: Media Netherlands: Leading local media brands in digital and print
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 reach with focus on cost
Slide 9: Our strategic and financial priorities
Our strategic and financial priorities 9 Roadshow presentation May-June 2019
Slide 10: Share of more stable subscription and learning business has increased
Share of more stable subscription and learning business has increased 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 Adverti
Slide 11: Our profitability has improved and margin is above the top tertile industry benchmark
Our profitability has improved and margin is above the top tertile industry benchmark In 2018, earnings improved in all Operational EBIT SBUs: EUR million 14.9% 13.6% Learning – Finland continued to perform well 11.3% in the curriculum change – Successful start of the business development progra
Slide 12: Our business has a characteristic annual seasonality pattern
Our business has a characteristic annual seasonality pattern Our quarterly financial performance is Operational EBIT EUR million strongly affected by the seasonal pattern of the Learning business – Most of net sales and earnings are accrued during Q2 and Q3, ie. close to the beginning of the schoo
Slide 13: 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 Currently approx. 50% 100 Assumptions for key cash 50 flow elements for 2019 Businesses acquired in 2018 0 Lower net financing costs Lower IAC in continuing -50 operations
Slide 14: Leverage at the long-term target level allowing acquisitions
Leverage at the long-term target level allowing acquisitions At the end of Q1 2019 Net debt Net debt to adjusted EBITDA 2.0 (2017: 2.0) EUR million – Increase of 0.5 due to implementation of IFRS 16 Net debt EUR 531 million (2017: 439) – Increase of EUR 184 million due to IFRS 16 Long-term targe
Slide 15: 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 16: 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 17: 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 18: A leading European learning and media company
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 18 Roadshow presentation May-June 2019
Slide 19: Acquisition of Iddink
Acquisition of Iddink 19 Roadshow presentation May-June 2019
Slide 20: Iddink provides Sanoma Learning a platform for future growth
Iddink provides Sanoma Learning a platform for future growth Sanoma announced its intention to acquire Iddink on 11 December 2018 Iddink’s net sales were EUR 141 million and operational EBITDA was EUR 27 million in 2017 – Purchase price EUR 277 million, representing an EV / Operational EBITDA mu
Slide 21: Iddink in brief
Iddink in brief Iddink strengthens Sanoma’s Net sales EUR 141 million and operational EBITDA position as a leading European EUR 27 million (incl. rental book depreciation of learning company EUR 16 million) in 2017 Operations in the Netherlands, Belgium and Spain In the Dutch market, Iddink pr
Slide 22: Together Sanoma and Iddink have potential to develop education experience
Together Sanoma and Iddink have potential to develop education experience and drive continuous improvement Together, Sanoma and Iddink Modular content, integrated into the information system Data for optimal method development will develop seamless digital solutions for the benefit of the whole ed
Slide 23: 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 24: Acquisition valuation and funding
Acquisition valuation and funding Valuation Funding Cash and debt free purchase price Committed acquisition finance in place EUR 277 million ‒ EUR 250 million 4-year term loan EV/EBITDA multiples ‒ Annual EUR 50 million instalments from – 10.3x operational EBITDA (incl. rental Q3 2020 and EUR
Slide 25: Acquisition expected to be closed by the end of Q3 2019
Acquisition expected to be closed by the end of Q3 2019 The transaction is subject to customary closing conditions, including – The approval of competition authorities – Completion of works council consultation procedures at Iddink Sanoma announced on 17 April that the Dutch ACM is, as part of t
Slide 26: 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 26 Roadshow presentation May-June 2019
Slide 27: Acquisition of Iddink fits well in Sanoma's growth strategy
Acquisition of Iddink fits well in Sanoma’s growth 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
Slide 28: Q1 2019
Q1 2019 28 Roadshow presentation May-June 2019
Slide 29: Q1 2019 highlights
Q1 2019 highlights ’ Net sales Operational EBIT Operational EBIT Free cash flow Net debt / Adj. excl. PPA excl. PPA, margin EBITDA M€ 248 M€ 10 4.1% M€ -41 2.0 (2018: 262) (2018: 10) (2018: 3.9%) (2018: -44) (2018: 2.0) Solid start to the year – Net sales grew in Learning and declined in the media
Slide 30: Operational EBIT stable in Learning and Media Finland
Operational EBIT stable in Learning and Media Finland Operational EBIT excl. PPA by SBU Stable development in Learning EUR million and Media Finland -16.3 Profitability of Media Learning Netherlands declined -17.2 – Lower net sales partially offset 14.2 Media Finland by good cost containment of
Slide 31: Learning: Net sales and earnings stable
Learning: Net sales and earnings stable Net sales grew to EUR 31 million (2018: 29) Operational EBIT excl. PPA – In the Netherlands, a large spring order received at the EUR million end of March in 2019 instead of April in 2018 19.5% 20.6% 20.7% 19.7% – First quarter structurally small 16.6% 54
Slide 32: Advertising market continued to be under pressure
Advertising market continued to be under pressure Finnish measured media advertising markets Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 Newspapers -7% -12% -8% -13% -12% -11% Magazines -5% -2% -3% -10% -7% -5% TV -7% -1% 1% 1% 1% 0% Radio 7% 4% 2% 11% -4% 4% Online * 2% 2% 2% 3% 7% 3% Total market -2% -2%
Slide 33: Media Finland: Digital subscription sales of HS and Ruutu+ continued to grow
Media Finland: Digital subscription sales of HS and Ruutu+ continued to grow Net sales were EUR 132 million (2018: 137) Operational EBIT excl. PPA EUR million – Advertising sales declined primarily in print and TV in line with the market 14.7 % – Total subscription sales declined due to the 13.2 %
Slide 34: Media Netherlands: Net sales and profitability declined partially due to divestments
Media Netherlands: Net sales and profitability declined partially due to divestments Net sales amounted to EUR 85 million (2018: 96) Operational EBIT excl. PPA – Half of the decline due to divestments EUR million – Advertising sales impacted by changes in Scoupy product portfolio as well as market
Slide 35: Rolling free cash flow continued to be on a good level
Rolling free cash flow continued to be on a good level Free cash flow was EUR -41 million Free cash flow (2018: -44) EUR million + Implementation of the IFRS 16 150 standard improved the free cash flow by EUR 6 million 100 ‒ Settlement of rental contract related to Discontinued operations in 50 Be
Slide 36: Balance sheet ratios impacted by IFRS 16
Balance sheet ratios impacted by IFRS 16 Q1 18 Q1 19 IFRS 16 impact Net debt EUR million Net debt 439 531 +183.5 Net debt / Adj. EBITDA 2.0 2.0 +0.5 Long-term target < 2.5 Equity ratio 34.1% 35.3% -4.6pp 2.0 Net financial items increased to EUR -5 million (2018: -3) due to IFRS 16 impact 864 847 5
Slide 37: Outlook for 2019 unchanged
Outlook for 2019 unchanged In 2019, Sanoma expects that the Group’s Comparable net sales will be in-line with 2018 Operational EBIT margin excl. PPA * will be around 15% (2018: 15.7%). The outlook is based on an assumption of the consumer confidence and advertising market development in Finland
Slide 38: Appendix
Appendix 38 Roadshow presentation May-June 2019
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: 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 41: 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 42: 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 43: Overall market remains stable while individual markets fluctuate driven by local reforms
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 44: 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 45: 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 46: 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 FI Scoupy FI N.C.D. NL FI 2016 2017 2018 2019 AAC Global HeadOffice Sanoma SBS Women’s Head LINDA. FI FI Baltics NL magazines Office NL Autotrader.nl Kieskeur
Slide 47: Group key figures Q1 2019
Group key figures Q1 2019 EUR million Q1 2019 Q1 2018 EUR Q1 2019 Q1 2018 Net sales 248.2 261.6 Operational EPS, continuing Operational EBIT excl. PPA 10.1 10.3 operations 0.01 0.02 margin 4.1% 3.9% Operational EPS 1 0.01 0.03 EBIT 11.9 8.4 EPS, continuing operations 0.05 0.02 Result for the period
Slide 48: Learning: Quarterly key figures
Learning: Quarterly key figures EUR million Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Net sales 31.4 39.8 136.3 108.3 28.9 Operational EBIT excl. PPA -16.3 -16.9 54.2 44.5 -17.2 margin -51.9% -42.6% 39.8% 41.1% -59.3% EBIT -18.2 -20.0 52.1 42.4 -18.4 Capital expenditure 3.8 6.8 5.2 4.3 3.5 Average number of emp
Slide 49: Media Finland: Quarterly key figures
Media Finland: Quarterly key figures EUR million Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Net sales 131.6 144.5 150.7 146.2 137.0 Operational EBIT excl. PPA 14.2 17.1 22.1 19.3 13.5 margin 10.8% 11.8% 14.7% 13.2% 9.9% EBIT 10.0 9.9 19.8 20.5 11.6 Capital expenditure 0.7 1.1 0.7 0.5 1.8 Average number of employ
Slide 50: Media Netherlands: Quarterly key figures
Media Netherlands: Quarterly key figures EUR million Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Net sales 85.3 113.8 106.0 108.4 95.8 Operational EBIT excl. PPA 13.4 24.4 19.3 20.3 15.6 margin 15.8% 21.4% 18.2% 18.7% 16.3% EBIT 21.5 13.4 19.1 8.7 16.9 Capital expenditure 0.9 0.8 0.3 0.3 0.9 Average number of emp
Slide 51: Group Operational EBIT excl. PPA
Group Operational EBIT excl. PPA * EUR million Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 EBIT 11.9 0.6 88.9 70.6 8.4 168.5 Items affecting comparability (IACs) 4.6 -17.0 -2.1 -9.2 0.2 -28.2 Purchase price allocation (PPA) amortisations -2.7 -2.6 -2.6 -2.4 -2.1 -9.6 Operational EBIT excl. PPA 10.1 20.2 93.
Slide 52: Operational EBIT excl. PPA by SBU 1/2
Operational EBIT excl. PPA by SBU 1/2 Quarterly comparison figures for 2018 Learning EUR million Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 EBIT -18.2 -20.0 52.1 42.4 -18.4 56.1 Items affecting comparability (IACs) -1.1 -2.2 -1.3 -1.3 -0.4 -5.1 Purchase price allocation (PPA) amortisations -0.8 -0.8 -0.8 -
Slide 53: Operational EBIT excl. PPA by SBU 2/2
Operational EBIT excl. PPA by SBU 2/2 Quarterly comparison figures for 2018 Media EUR million Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 Netherlands EBIT 21.5 13.4 19.1 8.7 16.9 58.0 Items affecting comparability (IACs) 8.9 -10.3 0.5 -10.8 2.0 -18.5 Purchase price allocation (PPA) amortisations -0.8 -0.7 -
Slide 54: 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 Q1 2019: – Lease agreements are recognised in Operational EBITDA MEUR +6.3 the balance sheet as right-of-use assets and
Slide 55: Debt facility signed in February extended the maturity profile
Debt facility signed in February extended the maturity profile Gross external debt EUR 576 million (2018: 458) at the end of Q1 2019 Debt structure Maturity profile EUR million, 31 March 2019 EUR million, 31 March 2019 – Including lease liabilities of EUR 184 million according to IFRS 16 On 4 Fe
Slide 56: Largest shareholders
Largest shareholders Largest shareholders Holding by category 30 April 2019 Number of shares 2.2% 1. Jane and Aatos Erkko Foundation 39,820,286 24.4% 18.2% 14.5% 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 Seppälä 10
Slide 57: 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 58: Financial Reporting in 2019; Adjustments and restatements
Financial Reporting in 2019 25 July Half-Year Report 2019 25 October Interim Report Q3 2019 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 ma
Slide 59: 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 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