The President and CEO, Mr. Rob Kolkman, will now review the events and performance of Sanoma for the financial year 2024. Mr. Kolkman, welcome.
Thank you, and good morning, everybody. It is my great pleasure to present to you today the overview of 2024 for Sanoma. As mentioned, I will be doing that together with Pia Kalsta, our CEO of the media business, as well as Kirsi Harra-Vauhkonen, who is our Managing Director for our learning business here in the Nordics. Together, we'll try to bring to life to you what actually is behind all the numbers that you've seen in our reports and also what I will be presenting in the slides today. When I was here a year ago, I highlighted that we would firmly stick to the clear strategies that we have both in media and learning. That's very much what we have continued to focus on.
Further strengthening that leading position in K-12 in education across Europe, as well as successfully doing the transformation, the digital transformation here of media in Finland. If I look at two sort of key indicators of that, that really speak to that, it is these two, which is around the fact that we really reach almost all Finns every week when you think about our radio, our TV, our high-quality independent journalism, the newspapers, and the events. Across Finland, that is a really phenomenal reach we have, and Pia and the team continue to build on that further. You see some examples today of what that means. The same applies on the learning side.
If you step into that classroom across Europe, you would really see millions of students and teachers that use our methods, our content, our blended learnings, as we call it, across Europe. That's about 25 million students and their teachers every single day. I think that highlights the role we try to play in trying to make a difference in the everyday life of millions of people. We also set clear targets for the mid and the longer term as an organization. You see them reflected here. We've made continued progress on those across the year.
If you think about the increasing profitability, both Learning and Media Finland, you see the improved margins here. For learning in particular, it's been an important year to step forward towards the 23% margin that we will reach from 2026 onwards. I'll touch on that a little bit more in a minute. You also see the focus here around improving our cash flow generation.
That has taken a big step forward in 2024 as well, from EUR 105 million-EUR 145 million. That, of course, has two key impacts. That is, on the one hand, the fact that we really have managed to strengthen our balance sheet and therefore being able to continue on our strategy, including the acquisitions that we think are important around K-12. As well, of course, this is an important metric for our dividend policy. If we now zoom in a bit more on 2024 in itself, here you see the split, which on the revenue side, 57% came from learning. On the profitability, that is 76%. That, of course, reflects the transition we are going through as an organization to increasingly be focused on that core foundational educational years for students across Europe.
You see a couple of the key elements mentioned here on the top line, which was slightly declining due to the discontinuation of the low-value distribution contracts. But we saw at the same time good growth as well in other parts of our education business. I'll touch on that in a minute. The higher margin is indeed reflected here as well for both our businesses. That continues to be a key focus, same as the cash flow, as I mentioned. You see that reflected here overall, including the improved profitability as a result of this. As already mentioned, the consequence of that is that the board proposes the EUR 0.39 dividend for this year. Very important topic has been around the sustainability. You've seen a lot of reporting on that in our materials that we provided to you.
In essence, what we are focused on across Sanoma are actually two key parts to it. You see them mentioned here. On the one hand, it's all about inclusive learning, making sure that we really try to support the teachers wherever we can so that they can spend as much time as possible with the students for all the different needs they have so that they can reach their curriculum objectives, again, in the core primary secondary education. We do research on that every year towards the teachers. They really highlight how important that is to them and how much it supports them in their day-to-day work in the classroom. The second part is, of course, around our media business and the role we play in independent high-quality journalism.
I think it's fair to say that is more important than ever in the current geopolitical climate. That's very much also a focus. You see several examples in our reports on that as well. Both Kirsi and Pia will bring these elements to life a bit more in a minute too. Clearly, everything we do depends on the people we have in the organization. We continue to focus very much on that. How can we further develop the staff we have? How can we really make sure that they get into their strengths? That is also reflected in our continued good performance around the employee experience index that you see mentioned here. Last but not least, we also continue to make progress on the emission targets that we have set as reflected in the report as well.
Let me now zoom in a bit on both learning and media with some specific comments and then go into more specific with Kirsi and Pia. I already highlighted the key trend there on the top line. But we also saw good growth, particularly in Poland and the Netherlands, which was offsetting the logical decline we saw in Spain at the end of the curriculum change. As you recall, that was a big growth in the year before. Of course, these trends also are reflected in our operational EBIT. There you also saw the lower paper and personnel cost having a positive impact too. Clearly, we had a small divestment here that had some consequences to the numbers as well.
Last year, I highlighted Program Solar, which was really and is really about making sure we benefit from the scale we have created in learning. I'm pleased to say that we have made really good progress on that and effectively materially have completed all the key steps we were intending to take so that puts us in the best possible position, especially from 2026 onwards, to see that reflected in our margins as well. If I then go to Media Finland, there the trends that we've seen now for a number of years really continue.
That means we see good growth in digital. Actually, on the subscription side, that, as you can see here, means that we grow in overall subscriptions, clearly with the trend being that the digital ones are offsetting the decline in print. Advertising, there you see the same trend with digital increasing and newspaper and TV declining, resulting in an overall still slightly decline there.
Some portfolio changes here as well had an impact on the numbers that we presented. The operational EBIT, very much the same kind of development from the top line. On top of that, the continued focus on cost efficiency that Pia and the team are doing and have been doing successfully for many years, which is, of course, very important in this transitional phase that we see on the media side. All that led to a real continued progress in deleveraging the balance sheet. We are very pleased with that result. Of course, it's a consequence of the results we've achieved as a team overall, especially if you think about the cash flow improvement as well.
You see that reflected here, especially in the net debt over adjusted EBITDA being at a level of 2.2 at the end of the year, which is significantly below our long-term target. We also took important steps to improve the maturity of our external debt. There are two things to highlight there. On the one hand, the revolving credit facility that we have extended to 2027, and also the social bond of EUR 150 million that we executed in September. Both of those are important steps in lengthening the maturity. Few words on the cash flow improvement. That has been a key focus, as you know, for us as management. I'm pleased to say that really has improved significantly in 2024. We also expect that to continue to improve in years to come.
The drivers there are, of course, the same that I already highlighted, which is around the operational results being higher, the lower investment levels in learning, partly already driven by Program Solar, but also lower investments and lower taxes. The flip side of that is we still have higher financing costs in the comparable years. As I said, we continue to focus on this and therefore also expect further improvement on this in 2025. Taking all this into consideration, the board proposes the dividend of EUR 0.39, as already highlighted in those three equal installments. Before we now go to both businesses and go a little bit deeper and bring it to life, I would like to share a few insights on how we at Sanoma look at the important topic of AI across both our businesses, media and learning.
I think the key element to stress here is that for us, the human oversight, so making sure we do it in the right way, always have a human responsible for whatever we then deliver to our students, to the teachers, or to the consumers of our media, that is a very important key factor there. If you look at the technology, the opportunities are, of course, enormous, both on the learning side and on the media side. They're around the axis, the way we look at it, of productivity gains, but also, of course, product innovation over time. In learning, that very much is around personalized education. So make it more and more specific for the students on an individual level so you really help them to reach their educational goals.
In media, you also see here a wide range of topics mentioned, including the news summaries, of course, and making our journalists as productive and as efficient as possible so they really have more and more time to also spend on the high quality that they deliver. But rather than me talking about that more, let's have a short video in which we show you some of the examples from 2024 and also currently in 2025.
Sanoma provides responsible AI solutions to deliver value for our customers. AI Anni is the first AI-assisted virtual DJ in the Finnish radio. It now boosts the afternoons on the radio channel Loop. Anni tells what music is going to play next in a program that did not have a host before. [Foreign language] Purple Disco Machine.
Article Summaries was one of the first journalistic uses of AI in Sanoma's news media. The summary, drafted by AI and reviewed by journalists, provides a quick overview of the story to the readers. With its Learning Teacher Toolkit, educators can use AI to generate materials like quizzes, lesson plans, and ask for inspiration, with teachers always having the final say, editing and reviewing. Our AI-powered speech coach will help students improve their speaking skills by using the tool to practice at their own pace. To make our employees' work more efficient, we have started using a generative AI platform to support content creation workflows and translations in Sanoma, while GitHub Copilot assists developers with coding. Sanoma continues to innovate with AI, providing trustworthy content and solutions curated by human experts to ensure a positive impact on society.
So I hope that gives a bit of a feel for what is going on around AI within our business. There was a lot of enthusiasm around this. I think it's fair to say it's also early days, of course. We would like to bring it to life to you now a bit more with zooming in on both learning and media. Let's start with the learning part. For that, I invite Kirsi to come to the stage.
Thank you, Rob. [Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language] W hat's your favorite food? I don't eat, but I can help you talk about your favorite food. What's your favorite dish? [Foreign language]
[Foreign language] I will hand over back to Rob.
Thank you, Kirsi, and hopefully this brought to life a little bit what we are doing across K-12 in Sanoma.
Obviously, when you think about making the scale work that we talk about, these kinds of technologies we do roll out across all the different markets that we operate in. This was a good example for Finland and Sweden. Thank you. Let's now go to the next important part of our business, of course, which is on the media side. For that, I would like to invit e Pia to the stage.
Thank you, Rob. [Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
I hand it back to Rob.
Thank you. Thank you, Pia. I hope you agree. There's a lot going on on the media side of the business as well. Some great developments and new product innovations too. Thanks, Pia. That concludes the review of 2024, and allow me to say a few words of looking forward into 2025, a little bit beyond, and the key points there. Of course, I will do that based on also the outlook we provided earlier this year, which we also reconfirmed today. You see the key elements mentioned here, which is that on the learning side, we continue to make good progress towards our profitability target in 2026 of over 23%.
In 2025, we're at the last year of some lower curriculum in our markets, particularly in Spain, but we see continued good growth in our markets in, for example, the Netherlands. We will continue with those discontinuations of low-value distribution contracts as well. Increasingly, you will see the effects of Program Solar, both in our cash flow and also in our results. That leads on the learning side to the slightly lower net sales and stable operational EBIT, so slightly improving margin there. On the Media Finland side, we continue to see that transformation that has been highlighted by myself and by Pia. That also means continuous modest growth on subscription, again driven by digital, and at the same time, we see still slightly lower B2B advertising sales, but with the same trends continuing there.
Pia and the team will continue also with the focus on cost efficiencies, which overall leads to a stable operational earnings expectation for this year. That overall leads to the outlook that you can see here around the EUR 1.28 billion on revenue to EUR 1.33 billion and between EUR 170 million and EUR 190 million on the EBIT. Let me highlight one other thing here, which is of course around the geopolitical uncertainty. I think you can see that all on a day-to-day basis. If you purely look at the U.S. tariffs, we are not impacted by those directly, but clearly, if you think about our advertising business, the uncertainty there does not help with the advertising business, but overall firmly within our guidance as highlighted here. Let me round off before opening up for questions with our continued focus on the long-term strategy for both businesses.
As I started off with, we will continue to focus on increasing our profitability, increasing our cash flow. We'll see learning go back to growth in the coming years, particularly from 2026 onwards, with also supported by the curriculum changes. That transformation that Pia highlighted again on the media side, we expect that to continue and if anything also go even faster. Because of the deleveraging of the balance sheet that we have achieved, we also firmly focus and continue to focus on value-adding M&A in the K-12 business that we have. All that while firmly, of course, keeping focused on the leverage equity ratio targets as well as the dividend, which remains a very important part of our investment story. With that said, I would like to hand back to the chair and open it up for questions.
Thank you very much.
[Foreign language]
[Foreign language]
There was a question about work-related accidents, incidents, the first one.
Yeah, the first one was the accident. So we have reported on everything that was relevant around that, which indeed was a limited number of accidents. So from that point of view, everything we had to report on that is in the sustainability report.
[Foreign language]
[Foreign language], Valtteri Tuominen, [Foreign language]
[Foreign language]
Thank you. A question on the IPR rights of actors and speech workers.
Yes, I hope it doesn't come as a surprise to you that we take those rights very, very seriously, because that's of course also the foundations of what our business is built on. So we do work to the best of our ability with everybody who also represents other rights, whether that's authors or actors or anybody in the creative space.
I think it's a very important point, and we're always looking to do that in the best possible way.
[Foreign language]
[Foreign language]
On the scalability of learning material.
Yeah, very important point, of course, because it goes to the heart of us benefiting from the scale we have created. To your specific point of do we do it ourselves, do we have other people doing it, that is indeed a mixture. Depending on the subject, it's either our own people developing it, or it is actual external experts, authors developing it.
And what we, of course, with the help of AI increasingly see, that it is more easy, in case you gave an example of that, to share our content across our different markets, but it still needs that adaptation that you also saw for the Swedish market.
[Foreign language] , Tiina Puukkoniemi, [Foreign language]
[Foreign language] Tiina Puukkoniemi [Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language] The chair of the HR committee, Mr. Julian Drinkall, will now go through the key elements of the remuneration report for 2024. Mr. Drinkall, welcome.
Dear Sanoma shareholders, my name is Julian Drinkall, and I am the chair of Sanoma's HR committee. In this role, I'd like to present to you Sanoma's remuneration report for 2024, focusing on the paid and earned remuneration of the President and CEO Rob Kolkman. The total compensation paid to the CEO amounted to EUR 1.3 million in 2024, as against EUR 1.4 million last year. The base salary and additional pension payment represented 54% of total remuneration, and variable performance-based remuneration accounted for 46%.
The short-term incentives accounted for a bit more than half of this and were based on 2023 performance. They were paid in cash in April 2024. The long-term share-based incentives accounted for a bit less than half of the performance-based remuneration. They were based on 2021 performance and amounted to 27,384 net shares and were delivered to the CEO in March of 2024. In addition, Rob Kolkman made an additional purchase of 15,000 Sanoma shares and has consequently fulfilled the minimum ownership requirement of 75,000 shares since March 2024. Next, I would like to introduce the remuneration earned by the CEO based on Sanoma's solid financial and sustainability performance in 2024. The remuneration earned by several other Sanoma executives for 2024 is linked to the same performance outcomes. The CEO's performance outcome for the STI 2024 was 124% in the range 50% - 150%.
The earned STI reward has been paid to him in April 2025. Based on the 2024 financial performance, the CEO earned 171,622 gross shares from the 2024 to 2026 PSP, where the performance period was one year, namely 2024. The earned shares are paid to him after taxes in the spring of 2027. The CEO's paid and earned remuneration has followed the remuneration principles defined in Sanoma's remuneration policy that was approved by the 2023 AGM. Finally, I would like to draw your attention to a renewal in Sanoma's long-term share-based incentives. Starting this year, the board has changed the performance period of the LTI to measure performance over three years, with separately set annual targets composed of the earlier one-year performance period, which was followed by a two-year vesting period.
This is done in order to support Sanoma's long-term value creation, to align the interests of the shareholders and the management, and to follow the market practice and proxy advisors' recommendations. On behalf of the HR committee, I would like to warmly thank Sanoma's employees and management for their commitment and hard work during 2024. I would also like to thank you as our shareholders for continued support.
[Foreign language]
[Foreign language] The pension payment, additional pension payment, is it in relation to the total earnings or in relation to the basic salary?
The measure here is against the remuneration of the CEO and the salary of the other employees as well.
[Foreign language] Thank you, Mr. Drinkall. [Foreign language]
[Foreign language] Juhani Mäkinen, [Foreign language]
[Foreign language]
[Foreign language]
[Foreign language], Juhani Mäkinen.
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language]
[Foreign language] I now invite the Chair of the Audit Committee, Mr. Rolf Grisebach , to present board proposals regarding remuneration and election of auditor and the sustainability auditor. Mr. Grisebach, welcome.
Thank you, Chair. Dear Sanoma shareholders, my name is Rolf Grisebach , and I've been the Chair of Sanoma's Audit Committee since the AGM 2024. I would like to present you the proposal of the board for the election and for the remuneration of the company's auditor and the sustainability auditor as prepared by the Audit Committee. Regarding the remuneration of both auditors, the board proposes that there will be paid in accordance with the invoice as approved by the company, which is in line with previous year practice.
For 2024, fees paid to the auditor for audit services were EUR 1.3 million, which was slightly lower than the year before. Fees paid for non-audit services increased to EUR 400,000. Those fees included, for example, fees related to the limited assurance of the new sustainability statement 2024. Regarding the selection of the auditor and the sustainability auditor, the board proposes that PricewaterhouseCoopers will act both as company's auditor as well as the sustainability auditor. According to PwC, Tiina Puukkoniemi will continue as the Lead Auditor with principal responsibility and as the Responsible Sustainability Auditor for Sanoma. PwC has acted as the group's auditor since the AGM of 2017, and Tiina Puukkoniemi as the lead since 2024. Thank you for your attention and approval.
Thank you.