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

In January 2018 Sanoma announced an intention to divest its Belgian women’s magazine portfolio

– Net sales of the divested business was EUR 81 million and operational EBIT EUR 7 million (EBIT margin 8.1%) in 2017. – The divested business is consequently classified as Discontinued operations in this presentation. – All income statement related quarterly and FY figures presented in this report, including corresponding periods in 2016, cover Continuing operations only and exclude Discontinued operations, unless

• therwise stated.

Before we start: Adjustments and Discontinued operations

2017 Full-Year Result 2

In July 2017, Sanoma divested its Dutch FTA TV operations, SBS, for a net cash consideration of EUR 237 million

– As a result of the transaction Sanoma recognised a non-cash capital loss of EUR - 308 million. – The total impact of the transaction on the Group’s net result is EUR -286 million. – All income statement related quarterly and FY figures presented in this presentation for 2017, including corresponding periods in 2016, are adjusted for the SBS divestment unless

• therwise stated.

Complete financial performance is presented in FY 2017 Results. Financial Statements 2017 are to be published on 28 February 2018.

2017 Full-Year Result 3

• Profitability improved by 21%

– Operational EBIT EUR 181 million (2016: 150) – Operational EBIT incl. SBS EUR 178 million (2016: 165), EBIT margin 12.4% – Driven by strong profitability improvement in Media Finland and lower Other costs

• Net sales were stable

– EUR 1,327 million (2016: 1,322)

• Major changes in our business

portfolio finalized

• Operational EPS improved by 56%

– EUR 0.72 (2016: 0.46)

• Leverage down to 1.7 (2016: 3.2)

– Below the long-term target level of <2.5

• Proposed dividend EUR 0.35 per share

– To be paid in two instalments, EUR 0.20 on 4 April and EUR 0.15 on 1 November (estimated)

• Outlook for FY 2018

– Net sales adjusted for structural changes slightly below 2017 – Operational EBIT margin around 14%

Highlights FY 2017: Solid operational EBIT improvement

FY 2017

Operational EBIT improved by 21%

4 2017 Full-Year Result

Operational EBIT by SBU in 2017

MEUR

• Operational EBIT improved to EUR 181 million,

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

• Media BeNe’s operational EBIT stable while

margin improved to 15.6%

• All three SBUs absorbed a significantly larger

part of overall Group costs (booked in Other in 2016)

67 50 57

• 24

68 66 57

• 10

Media BeNe Media Finland Learning Other 2016 2017

Media BeNe

Year of finalizing portfolio change

• Net sales were EUR 437 million (2016: 459)

– Decline mainly due to the divestment of Kieskeurig.nl while subscription sales grew

• Operational EBIT margin improved further to

15.6% (2016: 14.7%)

• Major changes finalized

– FTA TV operations, SBS, divested in July 2017 – Intention to divest Belgian women’s magazines announced in January 2018, expected closing by the end of Q2 2018 – Streamlined back-office organisation reflecting lower complexity of the business

• New CEO Marc Duijndam started on

1 Jan 2018

2017 Full-Year Result 5

NU.nl – reach and user engagement at all-time- high

19% 33% 17% 31%

Advertising sales Subscription sales Single copy sales Other *

* Other sales mainly include press distribution and marketing services, custom publishing, event marketing and books.

Composition of net sales 2017

> 300mn

Video views annually

49%

Coverage of Dutch population (13+ y)

> 7mn

Unique visitors a month

Finnish measured media advertising markets

6

Q4 16 FY 16 Q1 17 Q2 17 Q3 17 Q4 17 FY 17

Newspapers

• 4%
• 4%
• 9%
• 12%
• 12%
• 10%
• 11%

Magazines

• 12%
• 9%
• 7%
• 12%
• 9%
• 1%
• 6%

TV 1%

• 1%
• 6%
• 7%
• 4%
• 4%
• 5%

Radio

• 4%

3% 4% 0% 8% 4% 4% Online * 15% 13% 8% 1% 10% 12% 7%

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. 2017 Full-Year Result

Media Finland

Significant profitability improvement

2017 Full-Year Result 7

• Net sales were stable and amounted to

EUR 571 million (2016: 581)

• Share of non-print sales continued to grow

representing 44% (2016: 42%) of net sales

• Operational EBIT improved by 33% to

EUR 66 million driven by continued cost and 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 HS subscriptions

Total number of subscriptions

46% 37% 8% 9%

Advertising Subscription Single copy Other *

Composition of net sales 2017

* Other sales mainly include marketing services, custom publishing, event marketing, books and printing services.

Jan Feb March April May June July Aug Sep Oct Nov Dec

> 387,000

2017

28 % 14 % 3 % 55 %

Hybrid Digital Services Print

2017 Full-Year Result 8

Learning

Net sales growth of 13%

• Net sales grew to EUR 320 million (2016:

283)

– 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

• Operational EBITDA improved by 13%

– Positive impact of well managed cost innovations and net sales growth

• Operational EBIT was stable

– Higher development costs as well as increased depreciation and amortisation due to higher investments and acquired De Boeck assets in Belgium 31% 29% 17% 16% 7%

Poland Netherlands Finland Belgium Sweden

Net sales by country 2017 Composition of net sales 2017

The Board proposes a dividend of EUR 0.35

• For 2017, Board proposes dividend of

EUR 0.35 (2016: 0.20) per share

– 55% of operational cash flow less capex – To be paid in two instalments, EUR 0.20 on 4 April and EUR 0.15 on 1 November

• Dividend policy:

Sanoma aims to pay an increasing dividend, equal to 40–60% of annual cash flow from operations less capital expenditure.

When proposing a dividend to the AGM, the Board of Directors will look at the 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.

• 0.20

0.00 0.20 0.40 0.60 0.80 1.00 2013 2014 2015 2016 2017

• Oper. CF - capex / share

DPS

55% Dividend development 2013-2017

EUR

9 2017 Full-Year Result

Sanoma in 2018 and beyond

10

Continued focus

• n customer,

profitability & cash flow

• Follow the

customer

• Constant cost

innovations

• Restructuring

costs to decrease

• Cash conversion

to increase

Increasing focus

• n growth
• Market and

geographic expansion in Learning

• Highly

synergetic bolt-

• n acquisitions

Major portfolio changes completed

• Smaller

portfolio adjustments in

• ur core

businesses still to be expected – part of normal

• peration

All this resulting in

• Improved

profitability

• Stronger cash

generation

• Increasing

dividend

• Equity ratio and

leverage within long-term target

Solid base with improved profitability and leverage within the long-term target range

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

2017 Full-Year Result 13

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%

• f 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%

• f net sales

0.5%

• 1.4%

13.6% 11.3% Operational EPS 0.00

• 0.09

0.72 0.46 56%

Solid operational EBIT improvement

150 181 SBS 15 1 16 14 FY 2016 Media BeNe Media Finland Learning Other & Elim. FY 2017 Media BeNe + Cost innovations across the board, incl. streamlining of back-office post SBS

• Lower sales, especially B2B due to the

divestment of Kieskeurig.nl Media Finland + Growth in HS and Ruutu subscription sales + Cost innovations, esp. distribution + Lower fixed costs + One-off corrections of EUR 4 million in Q1 Learning + Strong sales growth + Good overall cost management

• Higher development costs, esp. in Poland
• Increased depreciation and amortisation

following higher investments and acquisitions Other + Changes in internal allocations bringing a higher share of the overall costs to SBUs + Cost reductions EUR million

2017 Full-Year Result 14

Free Cash Flow (12 mr) on a good level

FY 2017

+ Higher EBITDA + Significantly lower financial cost

• Restructuring costs
• Higher taxes paid
• Working capital change

* Exceptional positive working capital change in Q4 2016

Free cash flow = Cash flow from operations less cash capex, incl. SBS and Discontinued operations

2017 Full-Year Result 15

*

• 100
• 50

50 100 150 Quarterly 12mr

802 845 930 852 801 823 855 766 786 864 847 519 392 1 2 3 4 5 6 7 200 400 600 800 1,000 1,200 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Dec 17

Hybrid bond 100 M€ (lhs) Net debt M€ (lhs) Net debt / Adjusted EBITDA * (rhs)

Leverage below the long-term target level

16 * Adjusted EBITDA: 12-month rolling operational EBITDA, where acquired

• perations are included and divested operations excluded, and where

programming rights and prepublication rights have been raised above EBITDA on cash-flow basis

• Net debt to adjusted EBITDA* at 1.7 at the

end of 2017 (2016: 3.2)

• EUR 237 million from SBS divestment was

used to reduce debt

• Net debt EUR 392 million at the end of

2017 (2016: 786)

• Equity ratio recovered to 38.5% being

within the long-term target range of 35–45%

2017 Full-Year Result

200 50 149 17 2

Bond 3.5% Term loan CPs Other loans Bank account limits

Lower financing costs

• Net financial items decreased to

EUR -23 million (2016: -37)

• Average interest rate down to 2.1%

(2016: 2.8%) in 2017

• EUR 200 million of Bond 2017 was repaid

in March, using commercial papers and bank financing

17

Debt structure EUR million, 31 December 2017

2017 Full-Year Result

• Effective 1 January 2018
• The impact of IFRS 15 on the Group’s net sales, net result and balance sheet is considered insignificant,

although the phasing over individual quarters will be affected, mainly in Learning

• Sanoma will disclose restated financial figures for 2017 in a separate release during Q1 2018

IFRS 15: Revenue from contracts with customers

2017 Full-Year Result 18

Coming up in 2018

28 February

Financial Statements 2017

22 March

AGM 2018

27 April

Q1 2018 Interim Report

7 June

CMD 2018 Helsinki

24 July

Half-year Report 2018

27 October

Q3 2018 Interim Report

2017 Full-Year Result 19

Q&A

2017 Full-Year Result 20

Appendix

Sanoma in 2017 Media BeNe Media Finland Learning

Net sales

EUR 1,327 million EUR 320 million EUR 571 million EUR 437 million

Non-print sales

45% (EUR 525 million) 45% (EUR 144 million) 44% (EUR 251 million) 30% (EUR 129 million)

Operational EBIT margin

13.6% Around 18% Around 12% Around 16%

Magazines Online & mobile Other Distribution 100 200 300 Newspaper TV&radio Online & mobile Magazines Other 100 200 300 Poland Netherlands Finland Belgium Sweden 50 100 150

Net sales 2017 (EUR million) Net sales 2017 (EUR million) Net sales 2017 (EUR million)

2017 Full-Year Result 22 Group and Media BeNe figures include Continuing operations only and are adjusted for the SBS divestment.

EUR million 10–12/2017 10–12/2016 1–12/2017 1–12/2016

Net sales 301.5 375.6 1,433.4 1,554.4 Operational EBITDA 45.6 83.2 393.8 445.1 Operational EBIT 1.6

• 0.4

178.2 164.9

Items affecting comparability

16.8

• 22.0
• 417.2

42.0 Operating profit 18.4

• 22.4
• 238.9

206.9

Total financial items

• 7.6
• 13.3
• 23.3
• 37.2

Result before taxes 11.0

• 37.7
• 260.9

167.3

Income taxes

3.1 5.8

• 39.4
• 44.6

Result for the period from continuing operations 14.0

• 31.9
• 300.3

122.7

Result attributable to: Equity holders of the parent company

14.2

• 31.6
• 163.8

117.5

Non-controlling interests

• 0.2
• 0.3
• 136.6

5.2 Earnings per share, continuing operations 0.09

• 0.20
• 1.01

0.69 Operational EPS, continuing operations 0.00

• 0.08

0.71 0.50

Reported income statement

Continuing operations, not adjusted for the SBS divestment

Full-Year 2017 Result 23

EUR million 10–12/2017 10–12/2016 Change, % 1–12/2017 1–12/2016 Change, % Net sales 301.5 305.4

• 1.3

1,326.6 1,322.3 0.3 EBITDA 62.7 25.1 150.4 345.7 359.3

• 3.8

Operational EBIT 1.6

• 4.3

138.1 180.6 149.6 20.7 % of net sales 0.5

• 1.4

13.6 11.3 Operating profit 18.4

• 20.3

190.4 187.9 198.6

• 5.4

Result for the period from continuing operations 14.0

• 30.1

146.6 125.8 116.9 7.6 Cash flow from operations * 93.0 83.1 12.0 140.9 141.2

• 0.2

Capital expenditure ** 10.2 11.2

• 9.6

36.4 30.5 19.3 % of net sales 3.4 3.7 2.7 2.3 Number of employees at the end of the period (FTE) 4,425 4,658

• 5.0

Average number of employees (FTE) 4,562 4,792

• 4.8

Earnings/share, EUR, continuing operations 0.09

• 0.20

144.5 0.77 0.67 13.6 Operational earnings/share, EUR, continuing operations 0.00

• 0.09

96.8 0.72 0.46 55.8 Cash flow from operations/share, EUR * 0.57 0.51 11.6 0.87 0.87

• 0.3

Key indicators

Full-Year 2017 Result 24 * Includes both continued and discontinued operations ** Including finance leases

Media BeNe – quarterly key figures adjusted for the SBS divestment

Full-Year 2017 Result 25

EUR million

Q4/17 Q3/17 Q2/17 Q1/17 Q4/16 Q3/16 Q2/16 Q1/16 FY/17 FY/16

Net sales 115.9 102.9 116.4 101.4 125.3 109.6 118.6 105.6 436.5 459.1 Non-print 40.4 26.0 35.5 27.3 44.5 30.3 34.7 26.7 129.2 136.1 Print 64.0 64.5 69.0 63.3 69.3 67.1 72.4 68.1 260.9 276.9 Other 11.4 12.4 11.9 10.8 11.5 12.3 11.5 10.8 46.5 46.1 Operational EBITDA 21.9 16.0 22.9 16.4 25.3 17.5 21.7 15.2 77.2 79.8 Operational EBIT 19.2 14.0 20.8 14.2 21.1 15.1 18.9 12.3 68.1 67.3 % of net sales 16.5 13.6 17.9 14.0 16.8 13.7 16.0 11.6 15.6 14.7 Number of employees (FTE)* 1,083 1,110 1,135 1,185 1,199 1,194 1,187 1,234 1,083 1,199

Media Finland – quarterly key figures

Full-Year 2017 Result 26

EUR million

Q4/17 Q3/17 Q2/17 Q1/17 Q4/16 Q3/16 Q2/16 Q1/16 FY/17 FY/16

Net sales 150.6 131.2 144.6 144.1 152.4 133.8 150.1 144.5 570.6 580.9 Non-print 67.7 55.2 64.4 63.6 65.2 53.4 64.3 59.2 250.9 242.0 Print 83.0 76.0 80.2 80.6 87.2 80.4 85.9 85.3 319.7 338.9 Operational EBITDA 35.5 35.4 42.2 42.9 36.0 33.3 38.2 35.9 155.8 143.4 Operational EBIT 10.0 14.1 22.5 19.0 9.3 10.2 19.0 11.0 65.7 49.5 % of net sales 6.6 10.8 15.6 13.2 6.1 7.6 12.7 7.6 11.5 8.5 Number of employees (FTE)* 1,703 1,691 1,853 1,718 1,718 1,749 1,907 1,794 1,703 1,718

Learning – quarterly key figures

Full-Year 2017 Result 27

EUR million

Q4/17 Q3/17 Q2/17 Q1/17 Q4/16 Q3/16 Q2/16 Q1/16 FY/17 FY/16

Net sales 35.2 152.7 100.3 31.7 28.0 124.7 97.1 32.9 319.9 282.6 Netherlands 7.9 28.2 38.2 17.8 6.5 25.8 42.4 19.7 92.1 94.4 Poland 10.3 79.8 5.6 4.3 8.0 50.1 8.2 4.5 100.0 70.8 Finland 6.9 10.6 31.8 3.7 5.5 14.5 24.9 3.2 53.0 48.1 Belgium 6.5 24.0 19.8 2.4 4.0 24.1 15.3 1.4 52.7 44.8 Sweden 3.6 10.2 5.2 3.5 4.3 10.2 6.5 4.1 22.5 25.1 Other and eliminations 0.0

• 0.1
• 0.2

0.0

• 0.2

0.0

• 0.3
• 0.1
• 0.4
• 0.6

Operational EBITDA

• 10.2

72.4 43.9

• 4.8
• 13.6

61.1 49.9

• 2.1

101.4 95.3 Operational EBIT

• 24.5

62.5 34.0

• 15.0
• 23.8

50.5 41.1

• 10.9

57.0 56.8 % of Net sales

• 69.8

40.9 33.9

• 47.3
• 84.9

40.5 42.3

• 33.1

17.8 20.1 Number of employees (FTE)* 1,358 1,379 1,397 1,448 1,439 1,426 1,431 1,364 1,358 1,439

Consumer confidence

Full-Year 2017 Result 28

• 40
• 30
• 20
• 10

10 20 30 40 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov 2013 2014 2015 2016 2017 Netherlands Finland

26.9 18.3

Largest shareholders

24.4 % 11.6 % 7.5 % 6.3 % 3.5 % 46.7 %

Jane and Aatos Erkko Foundation Antti Herlin Robin Langenskiöld Rafaela Seppälä Helsingin Sanomat Foundation Others 31 December 2017 Number of shares %

• 1. Jane and Aatos Erkko Foundation

39,820,286 24.4

• 2. Antti Herlin

(Holding Manutas Oy: 11.62%, personal: 0.02%) 19,036,800 11.6

• 3. Robin Langenskiöld

12,273,371 7.5

• 4. Rafaela Seppälä

10,273,370 6.3

• 5. Helsingin Sanomat Foundation

5,701,570 3.5

• 6. Ilmarinen Mutual Pension Insurance Company

3,572,220 2.2

• 7. Foundation for Actors’ Old-Age Home

2,000,000 1.2

• 8. Alex Noyer

1,908,965 1.2

• 9. The State Pension Fund

1,860,000 1.1

• 10. Lorna Auboin

1,852,470 1.1 10 largest shareholders total 117,335,852 71.7 Foreign holding * 31,367,490 19.2 Other shareholders 14,862,321 9.1 Total number of shares 163,565,663 100.0 Total number of shareholders 20,393 Institutional investors: around 70% of shares Private investors: around 30% of shares

*Including nominee registered shareholders

Full-Year 2017 Result 29

Analyst Coverage

Carnegie Investment Bank

Matti Riikonen

• tel. +358 9 6187 1231

Carnegie.fi

Danske Markets Equities

Panu Laitinmäki

• tel. +358 10 236 4867

Danskeequities.com

Full-Year 2017 Result 30

Handelsbanken Capital Markets

Rasmus Engberg

• tel. +46 8 701 5116

Handelsbanken.com/ capitalmarkets

Inderes

Petri Aho

• tel. +358 50 340 2986

Inderes.fi

Nordea

Sami Sarkamies

• tel. +358 9 165 59928

Nordea.com/markets

Pohjola

Kimmo Stenvall

• tel. +358 10 252 4561

Pohjola.fi

SEB Enskilda

Jutta Rahikainen

• tel. +358 9 6162 8058

Enskilda.fi

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. In some cases, such forward-looking statements can be identified by terminology such as “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of those terms or other comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Future results may vary from the results expressed in, or implied by, the forward-looking statements, possibly to a material degree. All forward-looking statements included herein are based on information presently available to Sanoma and, accordingly, Sanoma assumes no obligation to update any forward-looking statements, unless obligated to do so pursuant to an applicable law or regulation. Nothing in this presentation constitutes investment advice and this presentation shall not constitute an offer to sell or the solicitation of an offer to buy any securities of Sanoma or otherwise to engage in any investment activity.

Important notice

Full-Year 2017 Result 31

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