Financial Risk Management

Under all circumstances, the Group seeks to maintain adequate liquidity, which depends on a number of factors. The Group’s liquidity risk relates to servicing debt, financing investments and retaining adequate working capital. Sanoma aims to minimise its liquidity risks by ensuring sufficient revenues, maintaining adequate committed credit limits, using several financing institutions and forms of financing, and spreading loan repayment programmes over a number of calendar years. The Group’s Treasury Policy sets minimum requirements for liquidity reserves.

There can be no assurance that the Group will be able to maintain a sufficient level of liquidity or that the Group will be able to obtain, on a timely basis or at all, sufficient funds on acceptable terms to provide adequate liquidity in the event that cash flows from operations, unused committed credit line and cash reserves prove to be insufficient. Negative changes in economic environment could affect the Group’s profitability and cash flow in a manner that could adversely impact the Group’s ability to comply with financial covenants in loan agreements. Failure to comply with the financial covenants could lead to the acceleration of loans. Failure to generate additional funds, whether from operations or additional debt or equity financings, may, for example, require the Group to delay or abandon some or all of its strategy initiatives, including its strategic aim of acquisition-based growth, which could have a material adverse effect on the Group’s business, financial condition or results of operations. In addition, any future adverse developments, such as a deterioration in the financial markets and a worsening of general economic conditions, may adversely affect Sanoma’s ability to borrow additional funds as well as the cost and other terms of the funding. For example, global financial markets have experienced, and may continue to experience, significant volatility and liquidity disruption, for example, due to unrest or wars, or geopolitical risks like trade wars and tariffs, which may adversely affect Sanoma’s funding costs and access to funding and ultimately affect Sanoma’s ability to finance its operations.

A more detailed description of the funding and liquidity risks and their management is available in the Consolidated Financial Statements, Note 5.2.

The Group’s interest rate risk is mainly related to changes in the reference rates and loan margins of floating rate loans in the Group’s loan portfolio. The Group manages its exposure to interest rate risk by ensuring that the interest duration of the gross debt of the Group is within a certain time range approved by the Board of Directors as part of the Group’s Treasury Policy. The Group may also manage its exposure to interest rate risk by using a mix of fixed rate and floating rate loans or by utilising interest rate derivatives.

The total amount of external interest-bearing debt (excl. IFRS 16 liabilities) declined during the year and amounted to EUR 400 million as of 31 December 2025 (2024: 456). The share of fixed rate loans was 38%, amounting to EUR 150 million. As at 31 December 2025, the Group did not have any interest rate derivatives. As a result of the floating rate loans, a significant rise in interest rates would lead to an increase in financial expenses limiting, for example, the Group’s ability to pay dividends. For example, one percentage point increase in interest rates for the loan portfolio as at 31 December 2025 would cause a EUR 2.1 million (2024: 2.6) increase in Sanoma’s net financing costs. A failure to manage interest rate risk may have an adverse effect on the Group’s financial condition.

A more detailed description of the interest rate risks and their management is available in the Consolidated Financial Statements, Note 5.2.

The majority of the Group’s cash flow from operations is denominated in euros. However, the Group is exposed to some transaction risk resulting from cash flows generated from sales and expenses denominated in other currencies. Group companies are responsible for monitoring and hedging material transaction risks related to their business operations in accordance with the Group’s Treasury Policy. The Group’s transaction risks are not material. In 2025, the majority of them were related to internal loans and procurement of IT services in US dollars, while purchases of TV programming rights in US dollars have materially reduced. The Group has selectively entered into forward contracts as a means of hedging against significant transaction risks.

Internal funding transactions within the Group are mainly carried out in the functional currency of the subsidiary. Group Treasury is responsible for monitoring and hedging the currency risks related to intra-group loans. Derivative instruments are used to hedge future cash flows, hence changes in their value will offset changes in the value of cash flows at the time they are paid or received. The materialisation of any of these risks could have an adverse effect on the Group’s earnings and cash flow directly, and there can be no assurance that the hedging of these risks is sufficient. As at 31 December 2025, the Group had hedged intra-group loans and purchases of TV programming rights in US Dollars totalling EUR 20.7 million (2024: 16.6). If the hedged currencies weakened by 10% against the euro at the year-end date 31 December 2025, the change in the value of forward contracts would have decreased financial expenses for 2025 by EUR 2.1 million (2024: 1.7). If the currencies strengthened by 10% against the euro, financial expenses would have increased by EUR 2.1 million (2024: 1.7).

The Group is also exposed to translation risk resulting from converting the income statement and balance sheet items of foreign subsidiaries into euros. A significant change in exchange rates may have an effect on the value of the businesses in Poland, Norway and Sweden. For the year ended 31 December 2025, business operations outside the euro area accounted for 13.6% (2023: 13.1%) of consolidated net sales and mainly consisted of revenues in Polish złoty, Norwegian krone and Swedish krona. The Group did not hedge against translation risk in 2025, in accordance with the Group’s Treasury Policy approved by the Board of Directors.

A more detailed description of the currency risks and their management is available in the Consolidated Financial Statements, Note 5.2.

The Group’s credit risks are related to its business operations, that is, the risk of the Group not being able to collect the payments for its receivables. Possible weakening of the economy, for example due to geopolitical risks or high inflation, may increase the Group’s credit risk, although potential concentrations of credit risk are offset by the Group’s diversified operations and the fact that no individual customer or group of customers is material to the Group. As part of the quarterly reporting, Sanoma reviews the potential changes on the expected credit losses and adjusts provisions accordingly if needed. In Learning, the credit risk of certain customers with a high-risk profile is partially covered by credit insurance. The Group’s operational units are responsible for managing credit risks related to their businesses.

Agreements Sanoma has entered into with financial institutions contain an element of risk of the counterparties being unable to meet their obligations, which could have a material adverse effect on Sanoma’s business and financial condition. The Group’s Treasury Policy specifies that financing, deposits and derivative transactions are carried out with counterparties of good credit standing and divided between a sufficient number of counterparties in order to protect financial assets. The Group has spread its credit risks efficiently by dealing with several financing institutions. Sanoma’s ability to manage its financial counterparty-related risks depends on a number of factors, including market conditions affecting its financial counterparties, and there can be no assurance that Sanoma’s measures will be successful in preventing the realisation of financial counterparty-related risks, which could have a material adverse effect on Sanoma’s business and financial condition.

A more detailed description of the credit risks and their management is available in the 2025 Consolidated Financial Statements, Note 5.2.

At the end of December 2025, Sanoma’s consolidated balance sheet included EUR 1,367.8 million (2024: 1,455.9) of goodwill, immaterial rights and other intangible assets. The majority of these are related to the Learning business. In accordance with IFRS, instead of goodwill being amortised regularly, it is tested for impairment on an annual basis or more frequently if there is any indication of impairment. Changes in business fundamentals could lead to further impairment, thus impacting Sanoma’s result, equity and equity-related ratios. Furthermore, as Sanoma’s strategic aim is to grow through acquisitions, material amounts of goodwill, immaterial rights and other intangible assets might be recorded on Sanoma’s balance sheet in connection with the completions of acquisitions and may be impaired in the future. In 2025, impairments of other intangible assets amounted to EUR 50.0 million (2024: 28.8) and mainly related to the decision not to participate in new, multi-year distribution tenders in the Dutch market. The impairment losses on goodwill, immaterial rights and other intangible assets for the year ended 31 December 2025, totalled EUR 53.4 million (2024: 32.9).

The Group’s businesses are exposed to seasonal fluctuation. For example, the Group’s Learning business has, by its nature, an annual cycle with strong seasonality. Most net sales and earnings are accrued during the second and third quarters, while the first and fourth quarters are typically loss-making. Shifts of single orders between quarters may have a material impact when comparing quarterly net sales and earnings on a year-on-year basis, and thus year-to-date figures typically provide a more comprehensive picture of Learning’s business performance and development. 

In the Media business, net sales and earnings are particularly affected by the development of advertising. Advertising sales are influenced, for example, by the number of newspaper and magazine issues published each quarter, which varies annually. TV advertising in Finland is usually strongest in the second and fourth quarters. The events business in Finland is typically focused on the second and third quarters.

Such seasonal fluctuations influence the Group’s net sales, operating profit and free cash flow and, thus, could have a material adverse effect on Sanoma’s business, financial condition or results of operations and impact the comparability of the quarterly financial information of the Group.

Sanoma’s tax burden depends on tax laws and regulations and their application and interpretation. Changes in them may increase Sanoma’s tax costs to a significant degree, which could have an adverse effect on Sanoma’s financial condition and/ or results of operations. In addition, Sanoma may, at times, be subject to tax audits conducted by national tax authorities. Tax audits or other auditing measures carried out by tax or other authorities could result in an imposition of additional taxes (such as income taxes, VAT and withholding taxes), which could lead to an increase in Sanoma’s tax liability.

Changes in taxation, as well as in the interpretation of tax laws and practices applicable to Sanoma’s products and services or their distribution, e.g. VAT, may have an effect on the Group’s operations or its financial performance. In 2023, Sanoma booked a total net amount of EUR 31 million of VAT claims for the years 2015−2018 and 2019−2021 concerning the treatment of VAT on certain magazines that were printed in multiple locations in Europe, and processed in and distributed through a centralised logistics centre in Norway, as IACs in Media Finland’s result. In August 2024, the Supreme Administrative Court rejected Sanoma’s application for permission to appeal the decision regarding the years 2015−2018. Sanoma had appealed the VAT decisions for the years 2019−2021 to the Tax Adjustment Board, which rejected the appeal in September 2025. The VAT regulations have changed as of 1 July 2021 and, thus, further claims related to the matter are not expected.

A more detailed description of the Group’s financial risks and their management is available in the 2025 Consolidated Financial Statements, Note 5.2.