Full-Year Result 2017 Susan Duinhoven , President and CEO Markus Holm - PowerPoint PPT Presentation

Full-Year Result 2017 Susan Duinhoven , President and CEO Markus Holm , CFO & COO 8 February 2018

Before we start: Adjustments and Discontinued operations In July 2017, Sanoma divested its Dutch In January 2018 Sanoma announced an FTA TV operations, SBS, for a net cash intention to divest its Belgian women’s consideration of EUR 237 million magazine portfolio – As a result of the transaction Sanoma – Net sales of the divested business was EUR recognised a non-cash capital loss of EUR - 81 million and operational EBIT EUR 7 million 308 million. (EBIT margin 8.1%) in 2017. – The total impact of the transaction on the – The divested business is consequently Group’s net result is EUR -286 million. classified as Discontinued operations in – this presentation. All income statement related quarterly and FY figures presented in this – All income statement related quarterly presentation for 2017, including and FY figures presented in this report, corresponding periods in 2016, are including corresponding periods in 2016, adjusted for the SBS divestment unless cover Continuing operations only and otherwise stated. exclude Discontinued operations, unless otherwise stated. 2 2017 Full-Year Result Complete financial performance is presented in FY 2017 Results. Financial Statements 2017 are to be published on 28 February 2018.

Highlights FY 2017: Solid operational EBIT improvement   Profitability improved by 21% Operational EPS improved by 56% – – Operational EBIT EUR 181 million (2016: 150) EUR 0.72 (2016: 0.46) – Operational EBIT incl. SBS EUR 178 million  Leverage down to 1.7 (2016: 3.2) (2016: 165), EBIT margin 12.4% – Below the long-term target level of <2.5 – Driven by strong profitability improvement in Media Finland and lower Other costs  Proposed dividend EUR 0.35 per share  Net sales were stable – To be paid in two instalments, EUR 0.20 on 4 April and EUR 0.15 on 1 November (estimated) – EUR 1,327 million (2016: 1,322)  Outlook for FY 2018  Major changes in our business – portfolio finalized Net sales adjusted for structural changes slightly below 2017 – Operational EBIT margin around 14% 3 2017 Full-Year Result

FY 2017 Operational EBIT by SBU in 2017 MEUR Operational EBIT improved by 21% 68 67 66  57 Operational EBIT improved to EUR 181 million, 57 50 margin to 13.6%  Earnings growth driven by strong profitability improvement in Media Finland  Learning EBIT stable with higher investments and development costs related to creating new learning methods -10  Media BeNe’s operational EBIT stable while -24 margin improved to 15.6%  All three SBUs absorbed a significantly larger part of overall Group costs (booked in Other in Media BeNe Media Finland Learning Other 2016) 2016 2017 4 2017 Full-Year Result

Media BeNe Composition of net sales 2017 Year of finalizing portfolio change 19% Advertising sales 31% Subscription sales Single copy sales Other *  Net sales were EUR 437 million (2016: 459) 33% 17% – Decline mainly due to the divestment of Kieskeurig.nl while subscription sales grew * Other sales mainly include press distribution and marketing services, custom publishing,  Operational EBIT margin improved further to event marketing and books. 15.6% (2016: 14.7%) NU.nl – reach and user engagement at all-time-  Major changes finalized high – FTA TV operations, SBS, divested in July 2017 – Intention to divest Belgian women’s magazines announced in January 2018, expected closing by > 7 mn 49 % > 300 mn the end of Q2 2018 – Streamlined back-office organisation reflecting Unique visitors Coverage of Video views lower complexity of the business Dutch population a month annually (13+ y)  New CEO Marc Duijndam started on 1 Jan 2018 5 2017 Full-Year Result

Finnish measured media advertising markets Q4 16 FY 16 Q1 17 Q2 17 Q3 17 Q4 17 FY 17 Newspapers -4% -9% -12% -12% -11% -4% -10% Magazines -9% -7% -12% -9% -6% -12% -1% TV -1% -6% -7% -4% -5% 1% -4% Radio 3% 4% 0% 8% 4% -4% 4% Online * 13% 8% 1% 10% 7% 15% 12% Total market * 0% 1% -3% -5% -2% -1% -3% Source: Kantar TNS, Media advertising trends 12/2017 * Quarterly figures excl. online search, Full year numbers are based on a larger amount of data than quarterly numbers and include online search. Total market includes other smaller categories such as cinema and outdoor advertising. 6 2017 Full-Year Result

Media Finland Composition of net sales 2017 Significant profitability 9% Advertising improvement 8% Subscription 46% Single copy  Net sales were stable and amounted to Other * 37% EUR 571 million (2016: 581) * Other sales mainly include marketing services, custom publishing, event marketing, books and printing services.  Share of non-print sales continued to grow representing 44% (2016: 42%) of net sales  Operational EBIT improved by 33% to HS subscriptions > 387,000 EUR 66 million driven by continued cost and Total number of subscriptions process innovations  The total number of HS subscriptions increased throughout H2  Nelonen Media’s commercial viewing share on a good level and strong growth in the reach of the Ruutu VOD 2017 Jan Feb March April May June July Aug Sep Oct Nov Dec 7 2017 Full-Year Result

Learning Net sales by country 2017 Net sales growth of 13% 7% Poland Netherlands 31% 16% Finland  Net sales grew to EUR 320 million (2016: Belgium 17% 283) Sweden – 29% Growth was strongest in Poland with market share gain in a strongly grown market due to curriculum reform – Net sales grew also in Finland and Belgium Composition of net sales 2017  Operational EBITDA improved by 13% – Positive impact of well managed cost innovations and net sales growth 28 % Hybrid  Operational EBIT was stable Digital 55 % – Higher development costs as well as increased Services 14 % depreciation and amortisation due to higher Print investments and acquired De Boeck assets in 3 % Belgium 8 2017 Full-Year Result

The Board proposes a Dividend development 2013-2017 dividend of EUR 0.35 EUR 1.00  For 2017, Board proposes dividend of EUR 0.35 (2016: 0.20) per share 0.80 – 55% of operational cash flow less capex – To be paid in two instalments, EUR 0.20 on 0.60 55% 4 April and EUR 0.15 on 1 November 0.40  Dividend policy: 0.20 Sanoma aims to pay an increasing dividend, equal to 40 – 60% of annual cash flow from operations less capital expenditure. 0.00 -0.20 When proposing a dividend to the AGM, the Board of Directors will look at the 2013 2014 2015 2016 2017 general macro-economic environment, Sanoma’s current and target capital structure, future business plans and investment needs as well as both previous year’s cash flows and expected future cash flows affecting capital structure. Oper. CF - capex / share DPS 9 9 2017 Full-Year Result

Sanoma in 2018 and beyond Major portfolio Continued focus Increasing focus All this resulting in changes on growth  on customer, Improved completed profitability &  profitability Market and cash flow  Smaller geographic  Stronger cash  portfolio Follow the expansion in generation customer adjustments in Learning   Increasing Constant cost our core  Highly innovations dividend businesses still synergetic bolt-  Restructuring to be expected –  on acquisitions Equity ratio and costs to decrease part of normal leverage within  Cash conversion operation long-term target to increase Solid base with improved profitability and leverage within the long-term target range 10 2017 Full-Year Result

Outlook for 2018 Sanoma expects that the Group’s  Consolidated net sales, adjusted for structural changes, will be slightly below 2017  Operational EBIT margin will be around 14%.  The outlook is based on the assumption of the consumer confidence and advertising markets in the Netherlands and Finland being in line with that of 2017. 11 2017 Full-Year Result

Financials

Improvement both in operational EBITDA and EBIT levels EUR million Q4 2017 Q4 2016 Change FY 2017 FY 2016 Change Net sales 301.5 305.4 -1% 1,326.6 1,322.3 0% EBITDA 62.7 25.1 150% 345.7 359.3 -4% Items affecting comparability 17.1 -12.9 15.7 60.3 Operational EBITDA 45.6 38.0 20% 330.0 299.0 9% of net sales 15.1% 12.5% 24.9 % 22.6 % Amortisations related to TV programme rights -21.4 -21.0 2% -69.9 -66.1 5% Amortisations related to prepublication rights -6.0 -3.7 59% -22.6 -20.4 10% Other amortisations -13.0 -14.4 -9% -42.8 -47.9 -12% Depreciation -3.6 -3.2 12% -14.1 -15.0 -6% Operational EBIT 1.6 -4.3 138% 180.6 149.6 21% of net sales 0.5% -1.4% 13.6% 11.3% Operational EPS 0.00 -0.09 0.72 0.46 56% 13 2017 Full-Year Result