Sanoma Oyj · OMXHEX:SANOMA
Sanoma Oyj — Non-Deal Roadshow (September 2019)
56 slides from Sanoma Oyj's roadshow presentation, September 2019
Slide 1: Roadshow presentation August-September 2019
Roadshow presentation August-September 2019 A leading European learning and media company
Slide 2: 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 2 Roadshow presentation August-September
Slide 3: 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 4: 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 #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
Slide 5: Media Finland: Strong brands on all media platforms
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 5 Roadsh
Slide 6: 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 reach with focus on cost
Slide 7: Our strategic and financial priorities
Our strategic and financial priorities 7
Slide 8: Share of more stable subscription and learning businesses has increased
Share of more stable subscription and learning businesses 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 Adver
Slide 9: Profitability has improved and margin is above 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 10: Characteristic annual seasonality pattern
… and 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, i.e. close to the beginning of the school year
Slide 11: 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 12: Leverage at the long-term target level allowing acquisitions
Leverage at the long-term target level allowing acquisitions At the end of Q2 2019 Net debt ▪ Net debt to adjusted EBITDA 2.2 (2018: 2.1) EUR million – Increase of 0.5 due to implementation of IFRS 16 ▪ Net debt EUR 578 million (2018: 473) – Increase of EUR 179 million due to IFRS 16 Long-term targe
Slide 13: 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 14: 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 15: 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 16: Acquisition of Iddink
Acquisition of Iddink 16 Roadshow presentation August-September 2019
Slide 17: 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 142 million and operational EBITDA was EUR 24 million in 2018 – Purchase price EUR 277 million, representing an EV / Operational EBITDA mu
Slide 18: Iddink reported financials for 2018
Iddink reported financials for 2018 According to Dutch GAAP Key income statement figures Key balance sheet figures EUR million 2018 2017 2016 EUR million 2018 2017 2016 Net sales 142 139 136 Non-current assets 181 187 196 Reported EBITDA 40 40 40 Current assets (incl. rental books) 66 62 64 Rental b
Slide 19: Iddink in brief
Iddink in brief Iddink strengthens Sanoma’s ▪ Net sales EUR 142 million and operational EBITDA position as a leading European EUR 24 million (incl. rental book depreciation of learning company EUR 16 million) in 2018 ▪ Operations in the Netherlands, Belgium and Spain ▪ In the Dutch market, Iddink pr
Slide 20: Together Sanoma and Iddink can 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 21: 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, funding and closing
Valuation, funding and closing ▪ 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 ▪ The Dutch ACM has on 29 August given its approval on the acquisition – Closing expected mid-
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 August-September 2019
Slide 24: H1
H1 2019
Slide 25: H1 2019 highlights
H1 2019 highlights ’ Net sales Operational EBIT Operational EBIT Free cash flow Net debt / Adj. excl. PPA excl. PPA, margin EBITDA M€ 602 M€ 91 15.1% M€ -41 2.2 (2018: 625) (2018: 92) (2018: 14.8%) (2018: -43) (2018: 2.1) ▪ Net sales were at the previous year’s level in Learning and Media Finland, d
Slide 26: Solid operational earnings across all SBUs in H1 2019
Solid operational earnings across all SBUs in H1 2019 ▪ Learning: Net sales and earnings H1 2019 Operational EBIT excl. PPA by SBU were stable EUR million ▪ Media Finland: Net sales were 27 stable as a result of acquisitions, Learning earnings improved slightly 27 ▪ Media Netherlands: Reported net 3
Slide 27: Learning Q2 2019: Good start to the year
Learning Q2 2019: Good start to the year ▪ Net sales declined slightly to EUR 105 million (2018: 108) Operational EBIT excl. PPA EUR million – Growth in Poland driven by launch of new niche products 19.5% 20.6% 20.7% 20.5% – In Finland, ending of a curriculum renewal in 2018, together 19.7% with som
Slide 28: Finnish advertising market grew largely driven by elections
Finnish advertising market grew largely driven by elections Finnish measured media advertising markets Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 ▪ Excluding the election impact, total market Newspapers -2% -7% -12% -8% -13% -12% -11% development for Q2 19 Magazines -2% -5% -2% -3% -10% -7% -5% was 1
Slide 29: Media Finland Q2 2019
Media Finland Q2 2019: Net sales grew as a result of acquisitions, earnings improved slightly ▪ Net sales grew to EUR 155 million (2018: 146) Operational EBIT excl. PPA – Growth in advertising sales attributable to good development EUR million in radio and digital, partially driven by elections 14.7
Slide 30: Media Netherlands Q2 2019
Media Netherlands Q2 2019: Divestments impacted reported financials, underlying business stable ▪ Net sales declined to EUR 94 million (2018: 108) Operational EBIT excl. PPA – Impact of EUR -12 million due to divestments of LINDA. EUR million magazine, Head Office content marketing operations in Bel
Slide 31: Firm development of rolling free cash flow
Firm development of rolling free cash flow ▪ H1 free cash flow, EUR -41 million Free cash flow (2018: -43), at the previous year’s EUR million level 150 + Implementation of the IFRS 16 standard improved the free cash flow 100 by EUR 12 million ‒ Improvement largely offset by the 50 settlement of ren
Slide 32: Solid balance sheet despite the IFRS 16 impact
Solid balance sheet despite the IFRS 16 impact Q2 18 Q2 19 IFRS 16 impact Net debt EUR million Net debt 473 578 +179 Net debt / Adj. EBITDA 2.1 2.2 +0.5 Long-term target < 2.5 Equity ratio 36.6% 37.2% -4.6 pp 2.2 ▪ Net financial items incl. the IFRS 16 impact – EUR -6 million (2018: -6) in Q2 19 – E
Slide 33: 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 34: Appendix
Appendix
Slide 35: 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 36: 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 37: 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 38: 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 39: 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 40: 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 41: 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 42: 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 43: Group key figures Q2 2019
Group key figures Q2 2019 EUR million Q2 2019 Q2 2018 EUR Q2 2019 Q2 2018 Net sales 353.4 362.9 Operational EPS, continuing Operational EBIT excl. PPA 80.8 82.2 operations 0.33 0.33 margin 22.9% 122.6% Operational EPS 1 0.33 0.34 EBIT 72.7 70.6 EPS, continuing operations 0.31 0.28 Result for the per
Slide 44: Group key figures H1 2019
Group key figures H1 2019 EUR million H1 2019 H1 2018 EUR H1 2019 H1 2018 Net sales 601.6 624.5 Operational EPS, continuing Operational EBIT excl. PPA 90.9 92.4 operations 0.34 0.35 margin 15.1% 14.8% Operational EPS 1 0.34 0.36 EBIT 84.6 79.0 EPS, continuing operations 0.35 0.30 Result for the peri
Slide 45: Group Operational EBIT excl. PPA
Group Operational EBIT excl. PPA EUR million Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 EBIT 72.7 11.9 0.6 88.9 70.6 8.4 168.5 Items affecting comparability (IACs) -5.2 4.6 -17.0 -2.1 -9.2 0.2 -28.2 Purchase price allocation (PPA) amortisations -3.0 -2.7 -2.6 -2.6 -2.4 -2.1 -9.6 Operational EBIT excl
Slide 46: Learning: Quarterly key figures
Learning: Quarterly key figures EUR million Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 Net sales 105.4 31.4 39.8 136.3 108.3 28.9 313.3 EBIT 41.3 -18.2 -20.0 52.1 42.4 -18.4 56.1 Items affecting comparability (IACs) -1.1 -1.1 -2.2 -1.3 -1.3 -0.4 -5.1 Purchase price allocation (PPA) amortisations -0.8
Slide 47: Media Finland: Quarterly key figures
Media Finland: Quarterly key figures EUR million Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 Net sales 154.5 131.6 144.5 150.7 146.2 137.0 578.5 EBIT 15.4 10.0 9.9 19.8 20.5 11.6 61.8 Items affecting comparability (IACs) -3.6 -3.1 -6.2 -1.4 1.9 -1.5 -7.1 Purchase price allocation (PPA) amortisations 1
Slide 48: Media Netherlands: Quarterly key figures
Media Netherlands: Quarterly key figures EUR million Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 Net sales 93.6 85.3 113.8 106.0 108.4 95.8 424.0 EBIT 17.6 21.5 13.4 19.1 8.7 16.9 58.0 Items affecting comparability (IACs) -0.9 8.9 -10.3 0.5 -10.8 2.0 -18.5 Purchase price allocation (PPA) amortisations
Slide 49: 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 Q2 2019 and H1 2019: – Lease agreements are recognised in MEUR Q2 2019 H1 2019 the balance sheet as right-of-use assets
Slide 50: Funding profile unchanged end of Q2 vs. end of Q1 2019
Funding profile unchanged end of Q2 vs. end of Q1 2019 ▪ Gross external debt EUR 607 million (2018: 507) at the end of Q2 2019 Debt structure Maturity profile EUR million, 30 June 2019 EUR million, 30 June 2019 – Including lease liabilities of EUR 179 million according to IFRS 16 ▪ Refinancing of th
Slide 51: Largest shareholders
Largest shareholders 30 June 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 Seppälä 10,
Slide 52: 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 53: Financial Reporting in 2019 Adjustments and restatements
Financial Reporting in 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 magazine portfolio. The divested b
Slide 54: 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 55: Roadshow presentation August-September 2019
55 Roadshow presentation August-September 2019
Slide 56: 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