Sanoma Corp Unsp/Adr

Good morning, everyone, and welcome to Sanoma's full year 2025 results presentation. My name is Kaisa Urasma. I'm heading investor relations and sustainability at Sanoma. In 2025, our adjusted operating profit and free cash flow improved, and this was driven by learning. And today, President and CEO Rob Kolkman and CFO Alex Green will tell you more about our results and the outlook for 2026. After the presentation, we will host a Q&A session. We will first take questions from here at Sanoma House. Please use the microphone. Then we will hand over to the telephone line, and then you can also use the chat function in the webcast platform. After the presentation, the recording of the whole event will be available on our website. With this, I would like to hand over to Rob, please.

Thank you, Kajsa. And good morning, everyone. It's my pleasure to present the full year results 2025 to you today. And indeed, the results show improvement in the adjusted operating profit and free cash flow. And that's now really ahead, of course, of the step change we expect for 2026. So let me, as per usual, zoom in on the total numbers first, and then go both learning and media more specifically. And today, I will come back after Alex's presentation to actually go more specifically into 2026 and our expectations there. If you look at the total numbers, then a lot of this was, of course, already very visible in the results in the quarter three, as quarter three is such a big quarter for us. So trends very firmly are the same, which is around the net sales having that impact due to the discontinuation of the low value learning material distribution contracts and the lower advertising sales in line with what we saw already. Really good. growth on the adjusted operating profit, going to 188 compared to 180 the year before. And that also indicates higher margins in both learning and media Finland. Free cash flow continues to improve, not a 10% improvement year on year. And that's driven by the elements you see here. So besides the higher earnings, also some lower financing costs and working capital movements. And Alex will zoom in on that a little bit more in a minute. As a result of this, we see really good continuation of the deleveraging of the balance sheet that now improved to 1.8, which is, of course, a good position to be in ahead of the repayment of the hybrid bond that we also reconfirmed today. As a result of these numbers, the board is proposing a dividend of 42 cents, which is up 3 cents or 8% year on year, to be paid in the usual three equal installments. As mentioned, I will come back to the outlook, but this is now really indicating the step change that we see for the coming years with regard to growth and profitability. So that means for 2026, net sales expected to be between 1.29 billion and 1.34 billion, and our adjusted operating profit taking that step up to between 205 and 225, up from 188 this year. I'll touch back on that at the end of the presentation. I would also like to come back to the slide that I showed at the Capital Markets Day, which is of course now updated for the full year impact of our results, which shows the successful delivery on our key focus areas, which as a reminder was of course to do with improving our profitability, both in learning and in media, improving the free cash flow, and as a result of that, the deleveraging of the balance sheet. And you see that here, learning in the last couple of years, coming from 18.7% to 20.4%. And this year, as we've indicated, going clearly above 23%. And Media Finland, in what still is a tough economic environment, of course, you see the improvements there from 6.7% to 8.8%. And then the cash flow, as indicated as well, really strongly already growing ahead of the growth that we expect in the EBIT going forward. So from 105 a couple of years ago to 160. And as mentioned, a significant deleveraging of the balance sheet as a result of that. Let me now zoom in on learning first and then media. So in learning, very much, of course, the trends continued for the full year. Quarter four is a small quarter, as you all are aware. Good to highlight there that the growth in learning content sales was indeed partially offsetting the lower distribution that we indicated. And within that, if I zoom in a little bit more, then you see really good growth in the Netherlands, about 9% growth on the learning content sales, and that's driven by new product launches and also improving market position. If you look at Poland, yes, Poland and Spain were both at the lower end of the cycle. But in Poland, we were very pleased to see that there was this strong growth in our digital platform sales. And as we call that, supported by B2C demand, which effectively means also selling directly to the parents and students with services and content. And then the impact of this discontinuation of the distribution contracts was about 25 million. If you then look at the profit side for learning, that improved for the full year, both in absolute terms as well as in margin, to the 20.4% and 152 million. Reasons for the improvements are, of course, partly top-line driven, the higher share of learning content sales, which is higher margin, compared to the low value distribution, and also a slightly more digital sales mix. So very much a continuation of what you already saw in quarter three. Also, good to see that we have program SOLAR successfully completed, as indicated as well in the Capital Markets Day, which already helped us a bit in these numbers, but of course really sets us up for significant operating leverage in the years to come, starting in 2026, when our volumes go up as well. And in 2025, we also saw lower paper and printing costs in learning, and that, of course, is mostly volume-driven. Let me now zoom in on media. And in media, there we of course see the longer-term trend of the digital transformation continuing, meaning the move to digital away from print. And if you then look at it, our digital subscriptions partially offset the lower advertising sales in the year itself. If you look at the subscription sales, really good growth there. Another year of good growth with Root2+. And the digital new subscriptions also grew. So very much confirming this path of digital transformation. On the advertising side, there you do see, for the market as a whole, and also for us, that that is still a tough market environment, and also the advertising sales declined for the full year, driven by lower TV and newsprint advertising. As a reminder, the majority of that in our case was also to do with the ending of that reselling contract for a third party, which, relatively speaking, for advertising was lower margin. And then on the other sales, there is some decline on the external printing services. If you then see how that is reflected in the profit, we are very pleased to see that the profit continues to improve in margin terms, so 8.8% compared to 8.2% a year ago. And that's driven partly by growth in digital subscriptions, also lower paper printing distribution cost here, which is largely volume, some lower TV programming cost, and then, of course, adversely to that, the impact of the advertising sales. But overall, me and the team have done another year of a really good cost containment and cost focus that also supports this improvement in margin. All this... Results to the board proposing the dividends that I already mentioned of 42 cents per share, 3 cents up or 8% up year on year, about 68 million in cash. In the old terminology, that is a 43% payout. If you include the lease payments, which is a new way of looking at the cash flow to better reflect our real cash, it's 53%. And Alex will touch on that in a minute a bit more as well. And as mentioned, the usual three equal installments is proposed, and here you see the specific dates of that. Let me now hand over to Alex to talk through the financials, and then I will come back to give more color to the 2026 expectations. Alex.

Thank you, Rob. And good to be here with you again today. Let's start the financials with, as usual, with the Q4 earnings position, as you see here. Pretty stable year on year at minus 27, but in each business there is some offset. So on the learning side, coming through from the sales, we see an increase coming from the growing platform, digital platform sales in Poland. offsetting the lower sales in Spain, which is mainly phasing because they came more in Q3 rather than Q4. And in the media Finland business, the weaker advertising sales we saw in Q4 with the market down is offset by the continued growth in the digital subscription sales, particularly Route 2+, and also lower costs both on the paper side and also in TV programming costs. Excuse me. If I move to the financial table and focus on the right hand side you can see there the increase in adjusted operating profit which leads to the adjusted EPS increase you see towards the bottom. IACs at a high level of 106 for 2025 substantially because of the Manu plant closure and also the the non-cash impairment of the IDINC learning materials intangible asset coming in there, the remainder being relating to a number of strategic development projects. If you look further down, the net financial items, a dramatic drop, so 24 million this year versus 33 last year with both lower debt levels and also lower average interest rates leading to the result for the period there of 20 million. Moving on to the free cash flow, and as usual at the year end, we show you the walk at the top right here. Free cash flow improving to 160 million from 1.45 last year, and you can see the impact coming from the performance, the lower interest rates in the financial items I just mentioned, and continuous improvement in working capital here, offsetting the increase in tax, which has got some phasing elements in terms of between the years. And on the bottom right, we show also the new definition of free cash flow that we're going to use starting from 2026. So the 2025 number was 129 versus the 160. So roughly 30 million of lease payments, lease liabilities in there. You can see there on the trend, it's a fairly stable amount as the line follows. And so we will going forward use that definition as announced at the Capital Markets Day. Moving to the net debt and the leverage, you can see there our new target of 2.5 that we announced before, and we're at 1.8 coming down from the sort of mid-year peak. So well below that target with net debt coming down to 486 million. We also announced that we would no longer consider the equity ratio a target, so we wouldn't highlight it here, although we'll continue to report it. But for the period now, it's at 47.1%, so increasing... versus last year and well within our sort of discontinuing target range. Looking at the debt maturity profiles, so as we were announced we were going to, we signed a syndicated term loan in December 2025 of 220 million. That has a slightly more than three year period, so it actually matures in March 2029 with extension options. We drew down a half of it in December to help repay the term loan that we took out for the Pearson acquisition. We will withdraw or draw down the remaining amount in March to refinance as part of the refinancing of the hybrid bond, which we announced that we confirmed this morning that we were going to repay at the reset date in March 2026. So nothing else maturing in 2026, although the rolling credit facility is maturing in 2027, but our plan is to actually start the refinancing that later this year. And finally, very proud to stand here and confirm that we were awarded CDP Climate A-list status recently in December. So only learning company there, one of only 11 Finnish companies. So hugely proud to stand here on behalf of the team and say that. And all our other ESG ratings have also improved or remain on a very good level. So this is a key part of who we are and we're very pleased with this. With that, I'll hand back to Rob to talk more about the future.