Sanoma Corp Unsp/Adr

We had a solid first half of the year, and today the President and CEO Rob Kolkman and CFO Alex Green will represent the results. After the presentation, we will have a Q&A session. We will first take questions from here at Sanoma House. Please use the microphone. We will then hand over to the telephone line if there are any further questions, and then you can also use the chat function for questions. After the presentation, a recording will be available on our website. With this, I would like to invite Rob on stage, please.

Thank you, Kaisa, and good morning. It's my pleasure to present the half-year results to you. They are really solid first six months results. And most importantly, the message today is we are on track for that full year step change in adjusted operating profit. So as always, what I would like to do is share with you a few highlights overall, then zoom in on the learning side and media separately. And then after Alex's presentation on the financials, I will come back and give a bit more insights from our perspective on the full year guidance as well. So if you look at the first six months, then the net sales in learning grew, and that was driven already by learning material sales in the Netherlands. It was continuing growth in Poland. Of course, the Visent Vivas acquisition that we did earlier in the year is starting to contribute as well. And on the flip side, the advertising had an adverse impact if you think about Media Finland's net sales. So I'll touch on all these elements more specifically. One key element that we highlight today is it's always very difficult to see exactly how orders and sales fall between the quarters, particularly in a year when there is a lot of curriculum change. And we've indicated that before and we thought it's important to bring that to life to you a bit more this particular time around because it is about 15 million that we have seen move from, let's say, very late June into early July. So the orders were there very end of June, and they then were delivered early July. So obviously they go then into quarter three. So I'll give a bit more specifics on that in a minute, but I think that's an important one to keep in mind when you look at the underlying figures. If you look at the profit side, we're very pleased with how that is progressing. So if you take into account that sales phasing that I highlighted, we of course also, as indicated during the quarter one results, seen additional investments in sales and marketing costs, particularly, of course, ahead of the curriculum renewals in Poland and Spain. And despite that pressure on the top line, we've seen an improved performance again in Media Finland. Free cash flow, of course, reflects the higher investments. And we also indicate that for the full year, we expect the free cash flow to grow moderately, weighted, given the type of year it is, to Q4. And Alex will highlight a bit more on that in a minute as well. Leverage is at its seasonal peak, as it always is around this time of year. That, of course, includes, as you're all very familiar, the hybrid bond repayment and, of course, also the Visa & Vivas acquisition. Visa & Vivas has a very similar profile when you think about it in cash terms, so therefore also more negative cash in the first part of the year. Deleveraging, we very much expect that to resume, of course, in H2 with that increased free cash flow as well. And the outlook unchanged, given the decisive quarter ahead of us. But I will give a bit more on that after Alex's presentation. Let me now zoom in on learning first. That's what you can see here. So the net sales actually increased, as I highlighted. That's already showing that strong growth in the learning content sales in the Netherlands. As a reminder, of course, for the full year in quarter three, you will see that last 40 million of the distribution business flowing out of it. But here you can get a glimpse, of course, of the real performance that we see on the learning content side. Poland, the numbers here are still reflecting mostly the smaller part of the business, but really nicely growing, the digital platform sales, because all the curriculum sales effectively, the vast majority of that, will happen in quarter three. I already touched on the sales phasing. Just to give that a little bit more flavor, if you think about what happens there in practical terms is, if you take Spain as an example, some of the regions make fairly late decisions on how exactly they're going to distribute the funding which methods, not so much methods, but which kind of grades they will do. And then, of course, that then triggers the ordering. So the orders do come in, but they come in then later. And in Italy, where there's not so much a curriculum change, it's much more to do about the fact that you can have late ordering from one or two of the key distributors there. So that's what's happening. And we, of course, have seen, if you look at July, we've seen those orders being delivered now as well in July. So very much in line with what we would expect. Vision Vivas had about 7 million on the top line impact in a positive way since we acquired that. If you look at the adjusted operating profit, 29 million versus 28, so more or less stable, positive impact of that higher net sales, that includes Vis and Vivas, and then the higher sales and marketing costs, approximately 8 million that we indicated, of course very much in Poland and Spain. So that really is more salespeople, more advisors going to the schools, going to the teachers to help them make decisions around the new methods that come to market, or the renewals. We also indicate very much on track to deliver the adjusted operating profit margin of above 23% for the full year. And that's, of course, to do with benefiting in quarter three in particular from that increased scale and all the growth that we have been preparing for. So the core message here is one of we are very positive around being on track for that full year step change in earnings. And I would actually like to bring it to life a little bit more with zooming in on some of the markets. And that's what you see here. So just to show you a bit of the size of it all, we have more than 60 new learning methods that have been published. The cycle in every market is the same, but the timing is a little bit different. So if you take Sweden and Finland, then of course, the vast majority of the orders are in. We see really good growth in Sweden. You might recall that we also expect that with the additional funding that is there. So it's a small market, but we see that really performing very well. In the Netherlands, the growth that we see there is also driven by new monotone and math methods in the market there. In Italy, in sector education, our new math method is performing well. And in Spain, if you think about the curriculum renewal and refunding there, our renewal of the flagships here is really received well in the market. And in Poland, just as a reminder, we've seen very good response to our new offering, but it's of course also supported by about 20% increase in the government textbook funding for parts of the market. So really solid, good signals there, putting us in a really good spot to deliver on that growth in quarter three. On the acquisition side, we've done three acquisitions, as you know, so far in 2026. The most recent one being FluentB in Poland in July, really helping us with more offerings towards those 2 million digital users we have in that market that we reach directly, parents and, of course, the students. And this is an AI-powered digital learning capability that we're adding. So we see real opportunity also longer term, more broadly, but specifically already in Poland to grow focused also going directly to the students and the parents outside of the classroom to support their learning that they also do in the classroom. Vis and Vivas has done the acquisition in April. That's now in the numbers. We're very happy with how that's progressing. The focus there as well is very much on the start of the school year. And Mr. Chet in the Netherlands, again, helps us with the scale we already have in the Netherlands. And both Mr. Chet and Fluent B are, of course, really good examples of how we also add to our more and more personalized learning offering across Europe. The AI teacher assistant that we introduced earlier in the year in seven of our markets has been received very well. And these type of acquisitions help with that overall. And actually, the first group of teachers that are using and have been using the AI teacher assistant, as you can see here, 88% of that first group found the materials comparable or better than their own. So in other words, it really helps them in preparing for their lessons in their classrooms. And we will continue with that raw light, of course, from the new school year onwards as well. AI Student Assistant very much also progressing. We, of course, have elements already in our offering, and that will become more and more an offering that we have as well to all schools across Europe. Let me now go to the media side. So there I think it can really be described as another solid quarter with also continued very robust cost containment. So if you look at the net sales, there we see the digital subscriptions continuing to grow, offsetting that decline in print. And if we were to look a bit further and deeper down, we see across the product range, good solid development in the number of subscriptions. So that's important and it's continuing. Year on year, there's always an element of what phase of the year do you compare it to, what are there with regard to some specific offerings, for example, around support last year. So there's always the comparison is always a bit difficult if you look at quarter to quarter, but underlying it is continued strong growth in the digital subscriptions. Advertising sales, as you're all aware, is the softer part still of the market. And like all of you, we were also encouraged to see the more positive market developments in June. Of course, early days, but that is, of course, one of the indicators that also the market there at least is picking up on the advertising side. events has two sides to it. We did, after last year, decide to organize fewer events, but the events that we did hold have not only been, as they always are, high quality and well received, if you think about the program and the lineup, et cetera, but also this year with improved profitability. So last year I was happy with the quality of the events, but less so with the financial side. This year the quality has been very good, the attendance has been very good, and also the results are very good on the profitability side this year too. So compliments to the team for achieving that. Then the other parts are the ones that you, of course, recognize the longer term trends. So the lower paper printing distribution costs and also some phasing in this quarter on the TV programming costs. So a bit lower there. So all that offsetting and a little bit more the impact of the lower advertising sales. So a solid quarter and really in a strong position to deliver on that step change in the second half of the year. I would like to now hand over to Alex to talk a bit more about the financials, and then I will be back to share a bit more insights around our outlook for the year. Alex.

Thank you, Rob. Good to be here with you again today. So let's start, as always, the financials with the Q2 earnings position, which is relatively stable and also in the unit, slightly down in learning, slightly up in media Finland. So if I start with The learning side, we had a positive profitability mix coming in, first of all, with the higher learning content sales that we talked about offsetting lower distribution sales. We also have the Vives, Viscence Vives, sorry, acquisition included here as well, which As it's a similar business of a smaller scale to us, it has the same sort of quarterly profile, so it started being profitable in the back end of Q2, and that's included. And then offsetting this, we have, as mentioned, the higher sales and marketing costs in Poland and Spain, the Q2 element of that being five million. We had three million in Q1, five in Q2, slightly more than we had indicated before, but reflecting the opportunity we had to generate a good, solid high season in Q3. And then again, also the impact of the sales phasing of 15 million, which has moved to early Q3. And as Rob said, has been substantially completed and delivered in this early part of Q3 already. So that netted there to roughly stable, slightly down. Media Finland signed, as we saw. We saw improved profitability of the events, albeit with fewer events, but very successful there. We also have the lower printing paper and distribution costs, you know, so connected to the closure of the temporary plant last year. Some timing of TV programming costs and all that positive impacts which offset the lower advertising sales. Earnings Per Share Corp Unsp-Adr Corp Unsp-Adr If I move to free cash flow and so as always in this for this period of H1, it is seasonally negative and it's actually slightly lower than last year, reflecting the higher investments. And so you can see there on the top right that we go from 68 to 73 with a Lower EBITDA, which includes those sales and marketing costs ahead of the curriculum renewals, in a sense, a sort of in-year investment, which drives value in the second half of the year. And we also see some higher investments in terms of the TV programming spend in Media Finland. Vives is in there as well. And then we have some small positives. which including the tax timing of tax payments there of a full year level we expect to grow from the 129 million of last year so to grow moderately to increase versus that and and as mentioned this will be weighted to q4 given so the timing of some of our sales being a little bit later particularly in southern europe that pushes some of the receipts into the into the early mid part of q4 In terms of our leverage, so leverage always at this time of year is at its peak. So we're at 3.0, which reflects both the hybrid bond repayment in March and also the acquisition and the debt related acquisition of Vicents Vives at the end of April. So going forward in H2, that's when the leverage sort of restarts as the cash flow becomes positive. Expect that to come right down so that the end of the year will be well below our long-term target of 2.5. Maybe not quite as low as the December last year because it takes a little bit of time to completely reset on the hybrid bond, but it will be substantially below the 2.5 target. And finally, we talked about before the ESG progress and just wanted to highlight some further recognition of something which we're very proud of. And so here you can see in the Time magazine and Statista, we've been included in the world's most sustainable companies and also our S&P Global Corporate Sustainability Score has improved. So a nice feedback in terms of the efforts we're making to have our positive impact. And with that, I'll invite Rob back to the stage to continue.