A leading European learning and media company Sanoma in brief - PowerPoint PPT Presentation

Roadshow presentation March 2019 A leading European learning and media company

Sanoma in brief

SANOMA AS AN INVESTMENT: Growing dividends A leading European learning and 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

Sanoma in 2018 Learning Net sales 2018 Poland EUR 313 million Netherlands 46% Finland Belgium 19.5% NET SALES Sweden EUR 1,315 million 0 50 100 Media Finland NON-PRINT SALES Newspaper EUR 579 million 45% Online & Mobile TV/Radio 49% Magazines OPERATIONAL EBIT MARGIN 11.9% Other 14.9% 0 100 200 Media Netherlands Magazines EUR 424 million Online & Mobile 40% Other Distribution 18.1% 0 100 200 300 4 Roadshow presentation March 2019

Learning: Creating a European Champion in Learning Net sales splits 2018  Leading positions in countries with some of world’s best educational systems Sweden Poland  7% Solutions that drive higher learning outcomes, Belgium Print Non-print engagement and efficiencies 29% 17%  Scalable technologies to support leadership in the 54% 46% digital transformation 18% Finland of which app.  A clear strategy to become a European champion Netherlands 29% ½ hybrid Key figures 2017 Focus areas MEUR 2018 2017 2016  Organic growth in footprint markets  Net sales 313 318 283 Capturing synergies across borders Read more  Pursuing M&A in K12 and adjacent markets Operational EBIT 61 56 57 about the – Core business in current footprint markets Margin 19.5% 17.5% 20.1% acquisition – Adjacent business in current footprint markets of Iddink Capex 20 20 18 – Core business outside current footprint markets from p. 19 Personnel (FTE) 1,350 1,400 1,400 5 Roadshow presentation March 2019

Media Finland: Continuing to strengthen our market position Net sales splits 2018  Leading media company in Finland  Information, experiences, inspiration and entertainment Other Advertising through multiple media platforms: newspapers, TV, 14% Single copy radio, events, magazines, online and mobile channels Print Non-print 8% 43%  Reaching 95% of all Finns weekly 51% 49%  A trusted partner with insight, impact and reach for Subscription advertisers 35% Key figures Focus areas MEUR 2018 2017 2016  Improved competitiveness and profitability  Net sales 579 571 581 Strengthening positions in three areas: – Growing in entertainment Operational EBIT 69 66 50 – Transforming B2B offering and organization Margin 11.9% 11.5% 8.5% – Building on our unique position in the news media Capex 4 6 5 Personnel (FTE) 1,780 1,740 1,800 6 Roadshow presentation March 2019

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 Print Non-print 29% 34% and e-commerce 60% 29%  Content and customer data combined to develop successful marketing solutions for our clients 20% Other 11% Advertising  17% Reaching 12+ million consumers every month Single copy Key figures Focus areas MEUR 2018 2017 2016  Stable core business with >1.3m subscriptions  Net sales 424 440 459 NU.nl & data business will drive value creation through topline growth Operational EBIT 77 68 67  Strong profitability Margin 18.1% 15.5% 14.7%  Increasing cash conversion Capex 2 3 2 Personnel (FTE) 1,060 1,130 1,200 7 Roadshow presentation March 2019

Strategy and financial targets

We have reshaped our business in recent years… STT Iddink * Acquisitions FI NL, BE, ES De Boeck 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 BE BE Kieskeurig.nl Autotrader.nl NL NL Divestments Media Finland Media Netherlands Learning 9 Roadshow presentation March 2019 * Announced on 11 Dec 2018, closing expected in Q2-Q3 2019

…and achieved a more balanced business portfolio  Higher share of more stable Group net sales by category subscription and learning sales 14% 15%  Lower exposure to more 10% 9% volatile advertising sales 28% print – Finland ¾ of the Group’s Advertising 26% 36% 72% non-print advertising sales (MEUR 250) – The Netherlands ¼ (MEUR 84) 25% Subscription 23%  Overall focus on our 24% Learning stronghold positions in all 17% segments we operate in 2016, incl. SBS 2018 Learning Subscription Advertising Single copy Other 10 Roadshow presentation March 2019

Our profitability has improved…  Earnings improved in all Operational EBIT SBUs in 2018 14.9% EUR million 13.6% – More information on 2018 profitability development on 11.3% p. 30  EBIT margin above the top 7.4% tertile industry benchmark 6.2% 4.8% of 14% 155 119 84 150 181 197 2013 2014 2015 2016 2017 2018 Operational EBIT Margin, % Industry top tertile benchmark 11 Roadshow presentation March 2019

… 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, ie. close to the beginning of the school year  Strengthening of the events business in Media Finland further increases the weight of Q2 and Q3 in business activity and financial performance 4 20 8 76 73 80 71 81 91 18 -4 7 Q1 Q2 Q3 Q4 2016 2017 2018 2016 figures not restated for IFRS 15 12 Roadshow presentation March 2019

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  Stable working capital -100  Stable capex Quarterly 12mr 12mr adjusted * * Excluding one-off restructuring costs of EUR 17 million related to Discontinued operations Free cash flow = Cash flow from operations less capital expenditure 13 Roadshow presentation March 2019

Our leverage is at the long-term target level At the end of 2018 Net debt EUR million  Net debt to adjusted EBITDA 1.4 (2017: 1.7) 4  Net debt EUR 338 million (2017: 392)  Equity ratio 44.7% (2017: 38.2%) 3  Net financial items decreased to EUR -17 million (2017: -23) due to the lower amount of interest- 2 1.4 bearing debt  Average interest rate 2.5% (2017: 2.1%) 1 786 864 847 519 392 439 473 392 338  IFRS 16 (adoption as of 1 Jan 2019) is expected to 0 increase net debt by approx. EUR 200 million and Dec 16 Mar 17 Jun 17 Sep 17 Dec 17 Mar 18 Jun 18 Sep 18 Dec 18 net debt / adj. EBITDA by approx. +0.6 Net debt Net debt / Adjusted EBITDA 14 Roadshow presentation March 2019

Our balance sheet allows acquisitions * Growth opportunities 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 › News, feature and lifestyle › Organic growth initiatives › B2B › Active portfolio management Media Netherlands › News & data › Creating 360 media brands 15 Roadshow presentation March 2019 * Intention to acquire Iddink was announced on 11 December 2018. More information on p. 19-27.

We are fully committed to our dividend policy  The Board proposes a dividend of EUR 0.45 per Dividend per share share to be paid for 2018 EUR – 58% of free cash flow (excl. one-off costs related to the divestment of Belgian women’s magazine portfolio) – To be paid in two parts: EUR 0.25 in April and 60% EUR 0.20 in November 40% Dividend policy: Sanoma aims to pay an increasing dividend, equal to 0.20 0.10 0.20 0.35 0.45 40–60% of annual free cash flow. 0.14 0.76 0.63 0.77 -0.18 When proposing a dividend to the AGM, the Board of Directors will look at the general macro-economic environment, Sanoma’s current and 2014 2015 2016 2017 2018 * target capital structure, future business plans and investment needs as well as both previous year’s cash flows and expected future cash flows Free cash flow / share DPS Payout ratio affecting capital structure. * 2018 Board’s proposal 16 Roadshow presentation March 2019