Sanoma Oyj · OMXHEX:SANOMA

Sanoma Oyj — Non-Deal Roadshow (March 2020)

66 slides from Sanoma Oyj's roadshow presentation, March 2020

  1. Slide 1: Two strong businesses, Learning and Media Finland, ready for growth

    Two strong businesses, Learning and Media Finland, ready for growth Roadshow presentation, March 2020

  2. Slide 2: Contents

    Contents  Sanoma as an investment p. 3  Learning as a business p. 14  Media Finland as a business p. 23  Acquisition of Alma Media’s regional news media business p. 30  FY 2019 financials p. 38  Appendix p. 53 2 Roadshow presentation March 2020

  3. Slide 3: Sanoma as an investment: two strong businesses, focus on growth and dividends

    1. Solid net sales and profitability 2. Sanoma Learning Growing business with strong digital SANOMA AS AN INVESTMENT: footprint and benefits of scale Two strong businesses, 3. Sanoma Media Finland focus on growth and Leading cross-media offering with stable dividends net sales and improving profitab

  4. Slide 4: Well-balanced business portfolio with 55% of earnings from learning

    We have a well-balanced business portfolio with 55% of earnings from the learning business Net sales ≈ 1,050m€ * Operational EBIT excl. PPA ≈ 150m€ * 8% Other Sanoma Learning A growing European-based Non-print learning company offering 18% advertising 45% Learning blended learning solutions, platfor

  5. Slide 5: Both learning and media have an important role in society

    Both learning and media have an important role in society Learning Media  Our modern learning methods and platforms  Journalistic content supports freedom of speech support teachers in developing the full potential of and independent information gathering every student  Local entertainment contri

  6. Slide 6: Sanoma Learning, a growing European education company

    Sanoma Learning, a growing European education company… Hybrid learning Operations in materials and digital platforms 10 for teaching and ≈20% 350 countries administration oper. EBIT employees in margin excl. tech PPA * Serving ≈500m€ 1,400 15m students net sales * employees 6 Roadshow presentation M

  7. Slide 7: Strong digital footprint and benefits of scale

    …with strong digital footprint and benefits of scale  Growing net sales and solid profitability: Net sales close to 500m€ and Operational EBIT margin excl. PPA around 20% in 2020 (est)  Leading market positions in digitally advanced markets: Serving 15m students in 10 European countries  Excellen

  8. Slide 8: Media Finland, the leading cross media company

    Media Finland, the leading cross media company… Strong, independent 12.0% oper. EBIT media for generations margin excl. PPA 1,800 employees to come 577m€ 50% 97% non-print weekly reach net sales 8 Roadshow presentation March 2020 All figures for FY 2019

  9. Slide 9: Stable net sales and improving profitability

    … with stable net sales and improving profitability  Stable net sales: 580 m€, 50% non-print  Improving profitability: Operational EBIT margin excl. PPA 12.8% (LTM Sep 2019)  Solid positions in news & feature, entertainment and B2B marketing solutions: weekly reach of 97% of all Finns  Simplifie

  10. Slide 10: Highly synergistic acquisition supporting growth of digital news subscriptions

    Highly synergistic acquisition supporting the growth of Sanoma’s digital news subscriptions in Finland Sanoma has signed an agreement (Feb 11, 2020) to acquire Alma Supporting Media Sustainable Media’s regional news media future for business in Finland with net sales of Finland’s long- Growing term

  11. Slide 11: M&A headroom of 400m€ with solid pipelines in both businesses

    As a Group, we have M&A headroom of 400 m€ with solid pipelines in both businesses Headroom for acquisitions M&A focus areas Using our scale and capabilities in learning design, technology and services to Learning  Enter new geographies Solid M&A  Expand offering in existing markets pipelines in 4

  12. Slide 12: Leverage will improve with the divestment of Media Netherlands

    Our leverage will improve with the divestment of Media Netherlands Key ratios Long-term target 31 Dec 2019 Net debt / adj. EBITDA < 2.5 2.7 Expected to return to the long-term target level after closing of the Media Netherlands Equity ratio 35-45% 30.5% divestment. Increasing dividend Dividend payou

  13. Slide 13: Growing dividend supported by good profitability and solid cash flow

    Growing dividend supported by good profitability and solid cash flow Dividend per share Sanoma aims to pay an increasing € dividend, equal to 40–60% of annual free cash flow 60% Dividend yield 40% 5.3% 0.10 0.20 0.35 0.45 0.50 0.76 0.63 0.77 0.86 -0.18 as of 31 Dec 2019 2015 2016 2017 2018 2019 * Fr

  14. Slide 14: Learning as a business

    Learning as a business

  15. Slide 15: We focus on learning services for K12

    We focus on learning services for K12 Education K12 Higher Corporate Life-long Pre-school Key Market Sectors Primary Secondary Vocational education learning learning School infrastructure  ICT and other equipment  Distribution & Maintenance services Learning services  Content: materials and metho

  16. Slide 16: From publisher into an integrated provider of learning services

    We have grown from a publisher into an integrated provider of learning services… Commercial contact Net sales * 480m€ Teachers Administrators Learning services Content: blended materials and methods 55% Material distribution 30% Digital platforms for teaching 5% .me Digital platforms for administrat

  17. Slide 17: Customer base grown by 50% to about 15 million students

    … and grown our customer base Germany & France 16.7 mn students by 50% to about Spain 6.4 mn students 15 million students Poland 4.7 mn students Netherlands 2.8 mn students Belgium 2.0 mn students Creation of blended materials and methods Digital platforms for teaching Sweden 1.8 mn students Digital

  18. Slide 18: Strengthened positions through acquisitions in the last year

    We have strengthened our positions through acquisitions in the last year  In 2019, we have invested 300m€ and extended our footprint significantly through acquisitions  As a result of the recent acquisitions, we have direct access to school administrators, who manage a broader budget than our trad

  19. Slide 19: Learning method market stable, significant growth in Poland and Netherlands

    Long-term learning method market stable, but significant growth in the Polish and Dutch markets in 2020-2021 The Polish market grows as Market value*, indexed to 2019  In 2020 three out of the eight grades of all Primary schools will exchange their 1.25 textbooks to updated methods, and in 2021 as

  20. Slide 20: Conversion from single product to subscription model

    Increasing attractiveness of K12 learning services with conversion from single product to subscription model Successfully introduced in the Dutch market From… …to Benefits for all the traditional model each a subscription model with annual fee per  For students, more up-to- product sold separately

  21. Slide 21: Sanoma Learning built through M&A to approximately 500m€

    Sanoma Learning has been successfully built through M&A to approximately 500m€ business… Tammi (Sanoma Pro) Iddink Finland the Netherlands, Sanoma Belgium, Spain WSOY Van In Sanoma Utbildning Essener Finland Belgium Sweden the Netherlands 1999 2004 2008 2011 2016 2019 Malmberg Nowa Era De Boeck ITS

  22. Slide 22: Readiness to continue to grow through M&A

    … and we have readiness to continue to grow through M&A  Using our scale and capabilities in learning design, technology and services – To enter new geographies in K12 – To expand our offering in existing markets  With the “High Five” business development program we have achieved scale benefits in

  23. Slide 23: Media Finland as a business

    Media Finland as a business

  24. Slide 24: Simplified organization into three core businesses

    We have simplified our organization into three core businesses  Sustainable demand  Our strong history and position Leading in domestic,  Our proven track record in independent journalism News & feature successful digital transformation  Growing market Leading entertainment  Unique combination

  25. Slide 25: Helsingin Sanomat subscription base growing for third consecutive year

    Subscription base of Helsingin Sanomat, the largest daily newspaper in Finland, growing for third consecutive year Number of digital-only subscriptions at HS now Growth in HS subscription base 1-2% annually above 100k 400k  Appealing digital experience has attracted also younger subscribers 33%  E

  26. Slide 26: Digital transformation reduces net sales but increases contribution per subscriber

    Digital transformation reduces net sales but increases contribution per incremental subscriber  Acquiring an additional subscriber Net sales per additional … but contribution increases * for digital instead of printed news subscription * reduces… will Indexed – Generate half the net incremental 150

  27. Slide 27: Ilta-Sanomat has stable net sales through increasing digital advertising

    The tabloid Ilta-Sanomat has stable net sales through increasing digital advertising  Digitalisation has increased the Net sales split print vs. digital 42m reach significantly site visits a week – strong growth – Reaches the whole of Finland and in 2019 often audiences who don’t currently subscrib

  28. Slide 28: Leading positions in entertainment and full-range portfolio

    In entertainment, we have leading positions and benefit from the full-range portfolio Our market TV & video Radio & audio Live events positions #1-2 #1 #1 Examples of our brands Benefits of the full-range Content formats, e.g. The Voice of Finland and The Best Singers portfolio Appealing to the loca

  29. Slide 29: 75% of advertising sales is non-print

    75% of advertising sales is non-print News & feature ≈ 290m€ Entertainment ≈ 170m€ Total advertising sales ≈ 250m€ * B2B print 20% B2B digi 20% B2B 70% 75% Non-print B2C 60% B2C 30% Print 25% Profitability in comparison to above below SBU average * Incl. magazines and classifieds in addition to news

  30. Slide 30: Acquisition of Alma Media's regional news media business

    Acquisition of Alma Media’s regional news media business Announced on 11 February 2020

  31. Slide 31: Alma Media's regional news media business

    Alma Media’s regional news media business  Net sales of 94m€ and adjusted EBITDA of approx. 20m€ * in 2019 – Subscriptions are approx. 60% and advertising is approx. 40% of total net sales – Majority of print advertising sales comes from regional advertising – typically more stable than national pr

  32. Slide 32: Highly synergistic acquisition supporting growth of digital news subscriptions

    Highly synergistic acquisition supporting the growth of Sanoma’s digital news subscriptions in Finland Sanoma has signed an agreement (Feb 11, 2020) to acquire Alma Supporting Media Sustainable Media’s regional news media future for business in Finland with net sales of Finland’s long- Growing term

  33. Slide 33: Learnings and successes at Helsingin Sanomat supporting combined digital growth

    Recent learnings and successes at Helsingin Sanomat supporting combined digital growth  Number of digital-only subscriptions at HS is now above 1-2% annual growth in HS subscription base 100k, equalling more than 27% of total subscription base – Total number of subscriptions grew for the third year

  34. Slide 34: Attractive valuation for highly synergistic bolt-on acquisition

    Attractive valuation for highly synergistic bolt-on acquisition  Enterprise value of 115m€, including 42m€ of net Pro forma adjusted EBITDA debt and advances received (end of 2019) m€  EV / Pro forma adjusted EBITDA multiples – 5.8 incl. impact of the delivery outsourcing agreement * – 3.5 incl. n

  35. Slide 35: Independence of regional titles will continue after the acquisition

    Independence of the strong regional titles, led by dedicated Editors-in-Chiefs, will continue after the acquisition The acquisition will include:  Alma Media Kustannus Oy – Leading regional newspapers Aamulehti (founded in 1881) and Satakunnan Kansa (founded in 1873) – Thirteen smaller newspapers i

  36. Slide 36: Funding, transaction costs and closing

    Funding, transaction costs and closing  Sanoma will finance the acquisition through existing debt facilities  Transaction and integration costs of approx. 6m€ to be booked as IACs in Sanoma Media Finland’s 2020 result  The transaction is subject to customary closing conditions, including approval

  37. Slide 37: Evaluating strategic options for online classifieds business

    Evaluating strategic options for Sanoma’s online classifieds’ business  Sanoma has decided to evaluate strategic options for Net sales growth and profitability improvement Oikotie Ltd., a leading online classifieds player in m€, pro forma Finland – The leading Finnish online classifieds sites in re

  38. Slide 38: FY 2019 Financials

    FY 2019 Financials

  39. Slide 39: 2019 was a year of transformation

    2019 was a year of transformation 400m€ headroom Growing the learning business Two strong for M&A with four acquisitions businesses, Learning and Media Finland, ready for Divestment of Sanoma Media growth SBU-level Netherlands announced in targets for December comparable net sales growth and profita

  40. Slide 40: FY 2019: Net sales grew and profitability improved

    FY 2019: Net sales grew and profitability improved ’ Net sales Operational EBIT Operational EBIT Free cash flow Net debt / Adj. excl. PPA margin excl. PPA EBITDA 913m€ 135m€ 14.8% 131m€ 2.7 (2018: 891) (2018: 123) (2018: 13.8%) (2018: 109) (2018: 1.4)  Net sales grew as a result of acquisitions; 

  41. Slide 41: Earnings improved in Learning and were stable in Media Finland

    Earnings improved in Learning and were stable in Media Finland Learning Operational EBIT excl. PPA by SBU  Earnings improved significantly as a m€ result of acquisitions and High Five business development programme 73 Learning Media Finland 64  Stable net sales and earnings 69 Media Finland Other

  42. Slide 42: Learning: Net sales grew through acquisitions

    Learning: Net sales grew through acquisitions in 2019…  Net sales grew to 337m€ (2018: 313) through Net sales by country acquisitions m€ 107  In 2019, Iddink performed according to our 96 expectations 90 92 – Net sales 22m€ in Q4 2019 (2018: 25) and 157m€ (2018: 141) in FY 2019 56 57 – Of which gr

  43. Slide 43: Learning: stable on a comparable basis

    Learning: …while being stable on a comparable basis  Net sales growth in Belgium and Poland during curriculum renewals Organic growth  The Netherlands at the previous year’s leveI  Decline in Finland 15m +1m (2018: 6m) – Ending of the curriculum renewal in 2018 – Increasing share of digital learn

  44. Slide 44: Learning: Profitability improved

    Learning: Profitability improved in existing business and by Iddink acquisition Operational EBIT excl. PPA m€  Operational EBIT excl. PPA improved by 15% to 21.7% 73m€ (2018: 64) 21.5% 19.5% 20.6% 20.7% 20.5% 19.7% – Half of the improvement attributable to lower variable 57 16.6% 54 and fixed expen

  45. Slide 45: Media Finland: Continued growth in digital subscription sales

    Media Finland: Continued growth in digital subscription sales…  FY net sales stable at 577m€ (2018: 579)  Total number of HS subscriptions grew for the third year in a row and subscription sales for HS is at all-time-high Total number of  Monthly visits at IS.fi all-time-high in December subscrip

  46. Slide 46: Media Finland: stable profitability

    Media Finland: … and stable profitability  Operational EBIT excl. PPA stable at 69 m€ Operational EBIT excl. PPA (2018: 70) m€ + Improved profitability of the festival and events 14.7% 14.8 % business 13.0% 13.2% + Lower marketing, paper, distribution and other 22 11.8% 22 10.2 % operating costs 19

  47. Slide 47: On track towards long-term financial targets

    On track towards our long-term financial targets Key ratios Long-term target FY 2019 Learning Comparable net sales growth 2-5% 0% Operational EBIT margin excl. PPA 20-22% 21.7% Media Finland Comparable net sales growth +/-2% -2% Operational EBIT margin excl. PPA 12-14% 12.0% 47 Roadshow presentation

  48. Slide 48: Solid free cash flow

    Solid free cash flow  In 2019, free cash flow improved to Free cash flow 131m€ (2018: 109) m€ + Implementation of the IFRS 16 150 standard improved the free cash flow by 25m€ 100 + Lower taxes paid – 10m€ settlement of a rental contract 50 related to Discontinued operations divested in June 2018 in

  49. Slide 49: Net debt higher due to Iddink acquisition and IFRS 16

    Net debt higher due to Iddink acquisition and IFRS 16 Q4 18 Q4 19 IFRS 16 impact Net debt M€ Net debt 338 795 +188 Net debt / Adj. EBITDA 1.4 2.7 +0.4 Equity ratio 44.7% 30.5% -3.5%-p. Long-term target < 2.5  Acquisition of Iddink and IFRS 16 raised the net debt / Adj. EBITDA above the long-term ta

  50. Slide 50: 200m€ bond repaid in November

    200m€ bond repaid in November  200m€ bond was repaid at the end of November Debt structure m€, 31 December 2019 – Expected to significantly reduce financial expenses going forward Other liabilities  250m€ 4-year term loan was drawn in September 38 to finance the acquisition of Iddink  Net financi

  51. Slide 51: The Board proposes a dividend of 0.50€

    The Board proposes a dividend of 0.50€  The Board proposes a dividend of 0.50€ per share Dividend per share to be paid for 2019 € – Increase of 11% vs. 2018 – Representing a total of approx. 82m€  58% of free cash flow * 60%  To be paid in two parts 40% – 0.25€ on 3 April (record date 27 March) –

  52. Slide 52: Outlook for 2020

    Outlook for 2020 In 2020, Sanoma expects that the Group’s  Comparable net sales will be stable, and  Operational EBIT margin excl. PPA * will be around 15% (2019: 14.8%). The outlook was given on 7 February and does not include any assumptions related to the acquisition of Alma Media’s regional ne

  53. Slide 53: Appendix

    Appendix

  54. Slide 54: Divestment of Media Netherlands

    Divestment of Media Netherlands  On 10 December 2019, Sanoma announced it has signed an agreement to divest the strategic business unit Sanoma Media Netherlands  Media Netherlands is consequently reported as Discontinued operations in Sanoma’s 2019 financial reporting  Unless otherwise stated, al

  55. Slide 55: Sanoma in 2019

    Sanoma in 2019 Learning Media Finland NET SALES EUR 337 million EUR 577 million EUR 913 million 49% 53% NON-PRINT SALES 21.7% 12.0% 51% NET SALES 2019 NET SALES 2019 OPERATIONAL EBIT MARGIN Poland Newspaper 14.8% Netherlands Online & Mobile Finland TV/Radio Belgium Magazines Other Other 0 50 100 0 2

  56. Slide 56: Group key figures 2019

    Group key figures 2019 EUR million 2019 2018 EUR 2019 2018 Net sales 913.3 891.4 Average number of employees (FTE) 3,567 3,404 Operational EBIT excl. PPA 135.2 122.8 Number of employees at the end of margin 14.8% 13.8% the year (FTE) 3,953 3,410 EBIT 102.1 106.7 Result for the period 63.1 72.6 Divid

  57. Slide 57: 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 Q4 2019 and FY 2019: – Lease agreements are recognised in MEUR Q4 2019 FY 2019 the balance sheet as right-of-use assets

  58. Slide 58: Learning: Adjusted quarterly key figures

    Learning: Adjusted * quarterly key figures EUR million FY 19 FY 18 Q4 19 Q3 19 Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Net sales 336.7 313.3 61.4 138.4 105.4 31.4 39.8 136.3 108.3 28.9 EBIT 55.0 55.0 -19.3 52.0 41.0 -18.6 -20.3 51.8 42.1 -18.6 Items affecting comparability (IACs) -12.1 -5.1 -5.5 -4.4 -1

  59. Slide 59: Iddink reported financials for 2019

    Iddink reported financials for 2019 Preliminarily adjusted for IFRS, unaudited Key quarterly income statement figures FY Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 FY EUR million 19 19 19 19 19 18 18 18 18 18 Net sales 156.9 21.7 95.7 20.6 18.9 23.8 82.5 18.8 16.6 141.7 Incl. Group internal sales 16.5 0.1 8.3 7.9 0.2

  60. Slide 60: Media Finland: Adjusted quarterly key figures

    Media Finland: Adjusted * quarterly key figures EUR million FY 19 FY 18 Q4 19 Q3 19 Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Net sales 576.8 578.5 144.2 146.5 154.5 131.6 144.5 150.7 146.2 137.0 EBIT 54.9 59.3 11.9 19.0 14.7 9.3 9.3 19.2 19.9 11.0 Items affecting comparability (IACs) -10.0 -7.1 -1.7 -1.5

  61. Slide 61: Finnish advertising market stable in 2019

    Finnish advertising market stable in 2019 Finnish measured media advertising markets FY 19 Q4 19 Q3 19 Q2 19 Q1 19 FY 18 Q4 18 Q3 18 Q2 18 Q1 18 Newspapers -9% -10% -12% -2% -7% -11% -12% -8% -13% -12% Online incl. search and social media Magazines -7% -11% -8% -2% -5% -5% -2% -3% -10% -7% in 2019 T

  62. Slide 62: Largest shareholders

    Largest shareholders 31 December 2019 Largest shareholders Holding by category Number of shares 2.4% 16.8% 1. Jane and Aatos Erkko Foundation 39,820,286 24.4% 15.1% 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

  63. Slide 63: Analyst coverage

    Analyst coverage Carnegie Investment Bank Pia Rosqvist-Heinsalmi +358 9 6187 1232 Danske Markets Equities Panu Laitinmäki +358 10 236 4867 Inderes Petri Aho +358 50 340 2986 Kepler Cheuvreux Stefan Billing +46 8 723 5148 Nordea Sami Sarkamies +358 9 5300 5176 OP Financial Group Joonas Häyhä +358 10

  64. Slide 64: Financial reporting in 2020

    Financial reporting in 2020 Week 10 Financial Statements and Directors’ Report 2019 25 March Annual General Meeting 2020 29 April Q1 2020 Interim Report 24 July Q2 2020 Interim Report 29 October Q3 2020 Interim Report 64 Roadshow presentation March 2020

  65. Slide 65: 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

  66. Slide 66: 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

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