Risks and uncertainties

Sanoma’s strategic aim is to grow through acquisitions primarily in Learning, but to a lesser extent also in Media Finland. In Learning, Sanoma is looking for growth opportunities in K12 learning services with the current focus on synergistic in-market acquisition opportunities i.e. expanding its K12 offering in the current operating countries. In Media Finland, Sanoma is interested in synergistic acquisitions in the chosen strategic focus areas of news and feature, entertainment or B2B marketing solutions. However, Sanoma may not be able to identify suitable M&A opportunities or suitable targets may not be available at the right valuation. Even if suitable M&A opportunities were identified and feasible, there are several risks related to M&A transactions. M&A risks may relate to unidentified liabilities of the target companies or their assets, changes in the market conditions, the inability to ensure the right valuation and effective integration of acquisitions or that the anticipated economies of scale or synergies do not materialise. Future M&A transactions may also be financed with debt, increasing Sanoma’s overall indebtedness, which may, in turn, adversely affect the availability, costs or other terms of future financing. Regulation of M&A activity by competition authorities may, among other things, also restrict or delay the Group’s ability to engage in M&A transactions.

In 2023, the Group announced a few small transactions, including e.g. the acquisition of Marva Media’s regional news media business in Southwest Finland. The success of the recent acquisitions largely depends on the timely and efficient integration of the business operations, processes and ways of working. The process of integrating the acquired businesses into Sanoma’s existing businesses involves uncertainties, and there can be no assurance that Sanoma will be able to integrate the businesses in the manner or within the timeframe anticipated and achieve the anticipated benefits of the acquisitions.

To focus its business on areas where it has clear competitive advantages and leading market positions, the Group has divested its non-core businesses in recent years. For example, in 2023 the Group completed the divestments of the Supla audiobooks business in Finland and the early morning newspaper delivery business in the Southern Finland region, Early Bird. At the very beginning of 2024, Sanoma divested its small exam preparation business in Germany, Stark, which had become part of the Group in connection to the acquisition of Pearson’s local K12 learning content business in Italy in August 2022, as well as its majority holding in Netwheels Oy. Sanoma may divest additional businesses in order to further focus its operations, or for other reasons. Any future divestments may be affected by many factors, such as the availability of bank financing to potential buyers, interest rates and competitors’ capacity, all of which are beyond the Group’s control, and may also lead to exposure to indemnity claims. There can be no assurance that the Group will succeed profitably in the divestment of certain assets or that such divestments will be possible on acceptable terms, or at all. Such divestments may also require attention from the Group’s management, taking its attention away from the management of ongoing business.

Sanoma is mitigating these risks by actively maintaining its industrial networks, proactively seeking potential targets, working with well-known parties in transaction processes and following its internal policies and procedures in the decision-making, organisation and follow-up concerning M&A transactions. Despite this, there can be no assurance that the acquisitions will be successful and that Sanoma will achieve its strategic aim of acquisition-based growth.

In learning, digital and blended (print and digital) learning materials, methods and platforms have gradually been gaining ground. Blended learning materials are seen to optimally support learning outcomes, although the usage of digital learning tools has continued to increase across most markets. In the learning material distribution services, the shift towards digital is being paralleled by a move from renting and selling books towards subscription-based commercial models, most notably in the Dutch market. Both of these trends and/or their acceleration or slowdown may have an effect on the operational performance, financial performance and/or financial position of Learning. In addition, Learning is, by nature, subject to seasonal fluctuation, with most of the sales and earnings accrued during the second and third quarters when the new school year starts, which further increases the pressure to be able to respond to changes in a timely manner.

On top of the key trends and market fluctuations over the last years, generative AI has been introduced to the market, providing Learning both opportunities and uncertainties. Applications of generative AI may bring efficiency gains in core processes related to, for example, method creation and software development. In learning content, generative AI provides opportunities for personalisation, underpinning the value of curated, high-quality content published and owned by Sanoma, albeit potentially adding competitive pressure. As the speed in which new technologies develop and penetrate the market is uncertain, there can be no assurance that Learning’s development work would keep it ahead or aligned with market trends.

With the continued development of alternative forms of media, particularly digital media, the Group’s media businesses and the strength of its media brands depend on its continued ability to identify and respond to constantly shifting consumer preferences and industry trends, as well as its ability to develop new and appealing products and services in a timely manner. Ongoing digitalisation is currently the driving force behind many of these changes, and the increasing use of mobile devices is changing the way people consume media. Print news media consumption is transforming to digital channels and viewing time of free-to-air television is decreasing while online video-on-demand (VOD) consumption is increasing. The demand for advertising derived from printed media has also been in decline in recent years as advertisers shift to digital channels, and this trend is expected to continue. However, even the digital advertising ecosystem is changing. For example, advertisers’ preference for performance-based advertising or the deprecation of third-party cookies may result in changes in business models related to the sales of digital advertising.

In Media Finland, generative AI provides significant opportunities for productivity improvements and possibilities to accelerate technology development. Generative AI also supports journalism in creating new content and formats to reach more audiences and enhances customer communication and services. Risks with generative AI include misuse of the Group’s data and content. AI advancements also pose risks to media brand trust by creating seemingly credible content or increasing the volume of AI-generated content that starts to compete with curated content. In the Group, generative AI risks are mitigated by having up-to-date AI principles and employee instructions, the right technology in place upfront, and by closely following market developments. Sanoma has several ongoing projects within productivity, content production and customer communication that enable it to capture potential upsides and mitigate potential risks of generative AI.

To mitigate these risks, Sanoma is continuously developing digital and hybrid learning and media products and services. In addition, Sanoma maintains close and long-term relationships with schools, teachers and governing bodies and typically sells digital solutions and printed materials together. The wide cross-media offering provides Sanoma with a solid foundation to constantly develop its diverse offering to advertisers. However, there can be no assurance that Sanoma will be able to adjust to and meet the changes in consumer preferences, industry trends and technological developments in the future. Failure to respond to market changes by developing and/or adopting new products and services, through both established and new platforms, on a competitive and profitable basis may result in the Group losing market share in its established businesses to competitors.

The learning and media markets in which the Group operates are highly competitive and include many regional, national and international companies. In media, competition is affected by the level of consolidation within the Group’s markets as well as by the development of alternative distribution channels, especially for digital products and services offered by the Group. Competition may arise from large international media companies entering new geographic markets or expanding the distribution of their products and services to new distribution channels. Risks may arise if competitors are faster than the Group to adopt new technologies, such as generative AI and alternative forms of media or digital destinations, catering to both consumer and advertiser needs. Additionally, consolidation within relevant markets may increase existing competition or give rise to new entrants in the market. In Learning, there is a similar risk stemming from large international media companies, digital entrants, educational technology companies, open educational resources, user-generated content or digital tools. Furthermore, Learning is exposed to competition also from traditional publishers in different countries.

To mitigate these risks, the Group’s ability to compete effectively will require continuous efforts by the Group in, among other things, sales and marketing, cost innovation and investment in technology to respond to changes in the markets. Although the Group currently holds strong positions in its key markets, there can be no assurance that it will be able to maintain these positions or that these positions will enable the Group to compete effectively in the future.

 The Group’s operations are subject to various laws and regulations in the countries in which the Group operates and changes in such laws and regulations could have a material effect on Sanoma’s ability to conduct its business effectively. For example, changes in education or digital platforms-related regulation could have a material effect on Sanoma’s commercial propositions, technology or content investment needs, or financial performance. Although legislation related to learning is typically country-specific, which limits the magnitude of said risk at the Group level, Sanoma faces an increased legislative risk in Poland and Spain, both of which are large markets and where broad or abrupt education-related legislative changes could have a material effect on Learning. The introduction or delay, pace, scope and timing of changes in education-related legislation, or their reflections in public educational spending, in the markets in which Sanoma operates – most notably in Poland or Spain, but potentially also other markets – may also influence the performance of Learning as a whole. In media, any adverse developments affecting the freedom of the press or source protection could have an adverse effect on the performance of Media Finland.

Changes in taxation as well as in the interpretation of tax laws and practices may have an effect on the operations of the Group or on its financial performance (e.g. value-added tax (VAT) applicable to Sanoma’s printed, digital and hybrid products).

Tightening of consumer protection-related laws may necessitate the amendment of some consumer media sales business models. Furthermore, the deterioration of publishers’ and broadcasters’ copyright protection or increase in legal obligations (such as reporting or monetary obligations) towards original authors of copyright protected works affects the Group’s ability to provide its customers with new products and services and may increase costs or impact the valuation of balance sheet items related to acquiring and managing copyrights.

Data is an increasingly essential part of Sanoma’s business, putting privacy and consumer trust at the core of the Group’s daily operations. Regulatory changes and new guidance by authorities or regulatory enforcement actions regarding the use of consumer or cookie data for commercial purposes could, therefore, have an adverse effect on Sanoma’s ability to utilise data in its business. For example, the proposed regulation of the European Parliament and of the Council concerning the respect for private life and the protection of personal data in electronic communications and repealing Directive 2002/58/EC (Regulation on Privacy and Electronic Communication) may require consent for telesales for subscriptions and may also have a negative impact on cookie-related usage and thus demand for digital advertising. This would have an effect on business-to-consumer media sales and business-to business advertising in both the news and VOD-businesses.

The Group may also be faced with the risk of overregulation on the European or national levels, or different, potentially tighter national interpretations of the EU-level regulation in its operating countries. In particular, this risk is seen to relate to sustainability, compliance, intellectual property rights, data protection, digital transformation, consumer protection, accessibility and artificial intelligence (AI). Regarding AI, the EU has reached a political agreement on the proposed AI Act, expected to come into effect in 2026 and potentially having some impacts on certain products of Learning.

To mitigate these risks, Sanoma aims to anticipate any changes by closely monitoring the regulatory developments and adapting its business models accordingly. However, implementing changes to its business models in order to adapt to new regulations is likely to impose additional costs and may take time. Violations of any applicable laws or regulations could also result in penalties and fines.

The general economic and political conditions in Sanoma’s operating countries and overall industry trends could influence Sanoma’s business activities and operational performance. In addition to the increasing global risks, including geopolitical unrest, the fluctuating costs and supply of global commodities, such as energy, and overall inflation, general economic conditions may be affected by various additional events that are beyond Sanoma’s control, such as natural disasters or pandemics. Although Sanoma’s diversified and well-balanced business portfolio to a certain extent mitigates this type of risk, it may cause disruption to Sanoma, its employees, markets, suppliers and customers, which could have a material adverse effect on Sanoma’s business, operating model, financial condition and/or results of operations.

In general, long- and mid-term cyclicality associated with the performance of Learning relate to the development of public and private education spending especially during curriculum renewals, and may affect the demand of Learning content year-on-year. Moreover, changes in the overall economic environment can affect Learning’s cost base, particularly the cost and availability of paper and printing, as well as of personnel. Such changes could also affect demand in segments, where the parents or students themselves (rather than the government or schools) pay for learning materials. e.g. by increasing the demand for second-hand books. Such segments constitute a minority of Learning’s business.

In Media Finland, risks associated with business and financial performance typically relate to advertising demand and consumer spending. A significant proportion of the Group’s sales is derived from advertising sales in magazines, newspapers, television, radio and digital media as well as circulation sales of printed media. Both of these sources of income are sensitive to changes in the general economic environment and consumer confidence, with advertising sales being historically somewhat more sensitive to economic downturns than circulation sales, particularly in subscription sales. Moreover, changes in the overall economic environment can affect Media Finland’s cost base, particularly the cost and availability of paper and printing, as well as of personnel and distribution costs. In addition to increasing Media Finland’s direct operating costs, higher cost inflation may have an adverse indirect impact on the demand for its products and services.

Changes in the geopolitical situation, particularly in Finland, could have an indirect impact on the business operations and financial performance of Sanoma’s businesses in Finland.

Sanoma’s diverse business portfolio and actions to manage the risks and costs related to prevailing and expected economic conditions, partially mitigate these risks. In 2023, approx. 57% (2022: 52%) of Sanoma’s net sales was derived from learning, approx. 20% (2022: 22%) from single copy or subscription sales, approx. 3% (2022: 4%) from print advertising, approx. 12% (2022: 14%) from non-print advertising and approx. 7% (2022: 7%) from other sales.

Changes in the general economic conditions may be reflected in Sanoma’s operational and financial performance. Cost inflation may continue to have some impact on Sanoma’s operating costs. The availability of newsprint paper, the paper quality most used by Sanoma, has recently remained at a good level. Weakened confidence among Finnish consumers, impacted by the war in Ukraine as well as inflation and high interest rates, may have an adverse impact on the demand for Media Finland’s products and services. In addition, the weakening of the euro against main currencies, including the U.S. dollar, may increase the cost of the goods and services Sanoma buys in currencies other than euro (e.g. hosting and TV content) and poses a risk to Sanoma’s financial performance, albeit part of the currency transaction risk is hedged with forward contracts. Sanoma can partly mitigate these impacts on its financial performance through, for example, costs management actions. These include Program Solar in Learning, which is expected to bring an annual EUR 55 million benefits from 2026 onwards. Failure in implementing the cost savings actions related to Program Solar may have an impact on Sanoma’s financial performance in the coming years.

Data is an increasingly essential part of Sanoma’s products and services in both Learning and Media Finland. The Group holds large volumes of personal data, including that of employees, customers and, in its digital learning businesses, students and teachers. Sanoma is subject to the General Data Protection Regulation ((EU) 2016/679, “the GDPR”), which sets strict requirements for implementing data subject rights, and for companies to demonstrate their accountability for complying with the regulation. Non-compliance with the GDPR in Sanoma’s business and operations, or potential inadequacy of the data protection processes and practices may cause problems, difficulties or additional costs to Sanoma. Any infringement of the GDPR could adversely affect Sanoma’s reputation. Furthermore, under the GDPR, a national data protection authority is vested with the power to impose corrective actions, such as temporary or definitive bans on processing, and to impose administrative fines for breaches of the GDPR up to EUR 20 million or 4% of the total worldwide annual turnover of a company. The Directive on privacy and electronic communications 2002/58/EC also imposes requirements for online data collection and use. There have been various authority enforcement actions across the EU since 2021 regarding consent practices for the use of cookies and similar identifiers. While these, along with the expected ePrivacy Regulation, are benefiting the media and advertising industry in the long-term by creating a level playing field for small media players, in the short-term they could also have a negative impact on media through additional costs. Although Sanoma runs a privacy programme that monitors development and enforcement of privacy regulations, there can be no assurance that such measures will be successful in ensuring compliance with privacy laws, which could lead to penalties, significant remediation costs and reputational damage to Sanoma. In addition, Sanoma is exposed to potential data breaches resulting from unauthorised or accidental loss of or access to personal data managed by Sanoma or by third parties processing data on Sanoma’s behalf. For example, Sanoma’s or its third-party suppliers’ systems could be vulnerable to unauthorised access, misuse, breaches due to employee error or malfeasance, computer viruses, attacks by hackers or other similar threats. Data is key in the development of Sanoma’s products and services, as it enables content and learning services to be better tailored to the needs of customers, such as by providing individualised learning paths and even more compelling media content. Continuing the use of data in the future is dependent on maintaining the trust of customers, and potential data breaches could significantly undermine this trust.

To mitigate these risks, Sanoma’s key privacy implementation processes include conducting privacy impact assessments, data lifecycle management, negotiating data processing agreements with third parties, information security measures to protect data, data breach management procedures and the implementation of data subject rights. However, there can be no assurance that data breaches will not occur despite these efforts to prevent such breaches or, in the event that breaches occur, that Sanoma will be able to mitigate the effects of such a breach. This could lead to reputational damage which could ultimately lead to Sanoma’s inability to effectively compete for future business and to potential cancellations of existing contracts.

Functioning and reliable information and communications technology systems are integral to the Group’s businesses and operations. The systems include online services, digital learning platforms, video-on-demand platforms, newspaper and magazine subscriptions, advertising and delivery systems, as well as various internal systems for production control, customer relations management and supporting functions. Information and communications technology security risks may relate to confidentiality, integrity and/or the availability of information, as well as to reliability and compliance of data processing. The risks can be divided into physical risks, such as fire, sabotage and equipment breakdown, and logical risks, such as information security risks, including increased threat of malware and cyberattacks, hacking of personal data or other sensitive data assets, and employee or software failure. Additionally, the fragmentation of the data landscape and legacy systems or failure in meeting customer needs or local requirements when developing or harmonising the digital offering could cause a delay or hinder the Group’s digitalisation.

To mitigate these risks, Sanoma has continuity and disaster recovery plans in place for its critical systems and clear responsibilities regarding information and communications technology security. Information security controls include the use of threat intelligence capabilities, cyber security incident detection capabilities, identity and access management solutions, log management capabilities and the use of external information security audits. Sanoma’s insurance programme provides partial coverage for insurable information security risk. Although Sanoma has several information security control measures in place, there can be no assurances that such measures will be adequate to prevent failures of one or more of the Group’s essential information and communications technology systems, which could cause disruptions to its business and reputational damage resulting from possible data breaches.

A broad network of third parties in a wide variety of countries plays an integral role in Sanoma’s daily operations. Third-party suppliers in Sanoma’s value chain include, among others, technology solution and service providers, paper, print and logistics suppliers as well as content providers for both Learning and Media Finland. Therefore, risks relating to the availability, price, quality, security and delivery schedules of third-party suppliers are material for Sanoma’s operations. These include, during recent years, the increased use of external cloud-based services, the functioning of which is strongly dependent on the usability and accessibility of global internet connections.

The expanding global supply chain risks that are a combination of, for example, geopolitics, the post-pandemic situation, the economic environment, high inflation and production factors may result in much tighter supply market conditions and availability concerns. The current global geopolitical and economic situation may also cause delivery delays and cost overruns. To mitigate the risks inherent in its supply chain, Sanoma has diversified its supplier base with a targeted selection of regional and local suppliers and developed response strategies should disruption materialise. Close cooperation with the suppliers helps Sanoma to assess and understand which suppliers are most at risk under different circumstances.

Sanoma utilises freelancers to support its own editorial staff in content creation. The status of freelancers and related copyright legislation development may vary by authority and country, but no individual case is estimated to become material unless it escalates to concern a large group of freelancers working for Sanoma. The development in the status of freelancers or the related regulation may, however, also increase the related costs.

In addition, certain advertising and marketing efforts are executed with the help of third parties. The advertising technology ecosystem consists of players, such as Google and Facebook, that have dominant market power, which may lead to an imbalance in their agreements with Sanoma. Sanoma participates in a class action by European publishers against Google regarding abuse of Google's dominant position in the advertising technology ecosystem.

Sanoma’s daily business is dependent on its ability to identify sources of supply that meet Sanoma’s standards and identified business, technology and sustainability requirements, although Sanoma is not dependent on any individual suppliers. To mitigate third-party-related risks, Sanoma follows the guiding principles of supplier risk management set out in the Group’s Procurement Policy, Supplier Code of Conduct and legal framework. Most significant suppliers are selected through competitive bidding and qualification processes. Suppliers and other third parties are subject to a Know Your Counterparty (KYC) process to identify any risks related to anti-bribery, sanctions regulations and other issues.

With suppliers most relevant to Sanoma’s business continuity, Sanoma has set up steering practices and supplier engagement to jointly mitigate identified risks. These include, for example, increasing the paper inventory and agreeing on steps to avoid problems with newspaper delivery. If any of the key suppliers had to be replaced abruptly, it could cause temporary business interruptions and/or increase costs.

Despite the processes and risk mitigation activities that Sanoma has in place, Sanoma may not be able to ensure that its suppliers or other third parties comply with all relevant regulations and its internal policies and standards, which could, for example, lead to legal processes and/or reputational damage. In addition, cooperation with third parties may expose Sanoma to certain data-related risks.

The Group’s products and services largely consist of intellectual property delivered through a variety of media. Key intellectual property rights (“IPRs”) related to Sanoma’s products and services are copyrights including rights to make the copyright protected works available to the public, trademarks, business names, domains and know-how owned and licensed by the Group. In addition, the Group conducts business in certain countries where the extent of effective legal protection and enforcement of IPRs may differ and, therefore, cause uncertainty. Moreover, despite trademark and copyright protection, third parties may copy, commercially exploit, infringe on or otherwise profit from the Group’s proprietary rights without authorisation. These unauthorised activities may be more easily facilitated by the Internet and generative AI tools. The scarcity of Internet and generative AI-specific legislation relating to trademark and copyright protection or enforcement of rights, as well as effective and concrete means to intervene with online IPR infringements, create an additional challenge for the Group in protecting its proprietary rights relating to its online business processes and other digital rights, and failure to protect its proprietary rights or IPRs could result in the loss or diminution in value of these rights. Sanoma also uses a high volume of third-party IPRs in its operations, which exposes it to possible infringement claims from third parties. Such claims could result in burdensome litigations and additional costs as well as adversely affect Sanoma’s reputation, which could, in turn, have a negative impact on Sanoma’s operations.

To mitigate these risks, the Group relies on copyright, trademark and other intellectual property laws as well as its Group-wide IPR Policy and procedures to establish and protect its proprietary rights in these products. However, there can be no assurance that the Group’s proprietary rights will not be challenged, invalidated or circumvented.

Operational disruption to the Group’s business may be caused by a major disaster and/or external threats that could restrict its ability to supply products and services to its customers, including potential disruption such as internet or energy availability in the Group’s main operating countries. The Group is exposed to various health and safety and environmental risks, such as natural disasters and hazards following climate change, that are beyond Sanoma’s control and that could cause business interruption and result in significant costs. External threats including, but not limited to pandemics, terrorist attacks, strikes and weather conditions, could affect the Group’s businesses and employees, disrupting daily business activities. Also, any failure to maintain high levels of safety management could result in physical injury, sickness or liability to Sanoma’s employees, which could, in turn, result in the impairment of Sanoma’s reputation or inability to attract and retain skilled employees.

Despite Sanoma’s operational policies, efficient and accurate process management and contingency planning, there can be no assurance that these will be sufficient in preventing any of the above-mentioned risks, or recovering from such risks. To mitigate potential hazard physical risks, Sanoma has continuity and disaster recovery plans in place for its critical systems and operations, but there can be, however, no assurance that these will be sufficient in preventing such risks from impacting Sanoma negatively. Sanoma’s insurance programme provides coverage for insurable hazard risks, subject to insurance terms and conditions, but there can be no assurances that Sanoma’s insurance coverage would adequately cover all or any of such costs, if such an incident were to occur, which could result in significant costs.

The Group’s success depends on having competent, skilled and engaged management and employees, and on their competencies and skills in developing appealing products and services in accordance with customer needs in a changing environment. Recruiting and retaining skilled and motivated personnel may become increasingly difficult as a result of various factors, including a shortage of skills in the labour market and intensifying competition for talent. In addition, Sanoma’s involvement in M&A transactions generally exposes it to the risk of employees, including senior management and other key employees, leaving before such projects are completed or the acquired businesses are integrated to Sanoma’s existing business. Also, cultural differences, resistance to change or uncertainty around the successful adaptation of new (hybrid and remote) working models may hinder the Group’s performance or transformation. Should the Group fail to attract, retain, develop, train and motivate qualified, engaged and diverse employees at all levels, it could have an adverse effect on the Group’s profitability and value creation, competitiveness and development of its business operations in the long-term.

To mitigate these risks, Sanoma aims to enhance a corporate culture that supports learning, innovation, creativity, diversity, managing continuous change, as well as ethical and efficient ways of working, for which the framework is set in Sanoma’s Code of Conduct and Diversity Policy. Sanoma measures employee engagement on an annual basis, and the results are also linked to executive and senior management remuneration.

Sanoma’s most significant environmental impacts derive from greenhouse gas emissions caused by the energy and materials used in Sanoma’s value chain, although Sanoma’s business is not highly carbon intensive. Due to the nature of Sanoma’s business, no material climate risks are expected to arise in the short-term. The availability and price of certified forest commodities and renewable energy pose some risk for Sanoma and changes in them may potentially have an adverse impact on the Group’s business and financial performance. In the long-term, Sanoma has identified low to medium impact risks related to carbon pricing mechanisms, brand and changing customer behaviour as well as increased severity and frequency of extreme weather events such as cyclones or floods. The effects of climate change are wide-ranging and may bring, for example, considerable social uncertainty, which may in turn cause risks that are currently unidentified.

Sanoma mitigates climate-related risks through its ambitious climate strategy and by developing sustainability together with its stakeholders and working alongside its suppliers to improve their sustainability performance by monitoring and collecting relevant data and using this to compare suppliers. To identify and control environmental and climate-related risks and opportunities, Sanoma evaluates them as part of its annual risk-assessment process. In addition, Sanoma analyses its climate-related risks and opportunities by using the Task Force on Climate-related Financial Disclosures (TCFD) framework, which is available in the Sustainability Report.

Sanoma operates in twelve European countries and both of its business segments use a wide network and variety of business partners that provide products and services. The business partners range from individual third-party content providers to international paper and print producers and cloud-service providers (more information on risk related to third-parties is available above under Operational risks). Sanoma is committed to conducting business in a legal and ethical manner in compliance with local and international laws and regulations applicable to its business as well as its Code of Conduct. Nevertheless, there is a risk that Sanoma’s employees or business partners may act in a way that violates human rights or anti-corruption and bribery laws and regulations or they may act unethically.

To mitigate these risks, all Sanoma employees, for example, must comply with Sanoma’s Code of Conduct, which supports the international standards on human rights and labour conditions and clearly prohibits all corruption and bribery. The requirements of the Code of Conduct are extended to Sanoma’s suppliers through the Supplier Code of Conduct. Sanoma aims to ensure compliance with measures such as a mandatory e-learning course on the Code of Conduct for all employees; however, there can be no assurance that Sanoma’s internal control measures will detect and prevent misbehaviour by individual employees or third-party suppliers. Breaches of applicable laws and regulations or corporate policies by Sanoma’s employees or business partners may lead to legal processes, sanctions and fines, as well as reputational damage affecting Sanoma’s operations, which could have a material adverse effect on Sanoma’s business, financial condition or results of operations.