AcadeMedia AB (publ)

Good morning everybody and welcome to this Q1 interim report from Academedia that also represents the new school year for us. I will just start to make some initial remarks and then I will hand over to Katarina to go through the numbers. This school year has started in fact in a very good way and what is very positive is the organic growth of the company. We have continued to grow more than 5% when it comes to students and we have also had an organic growth of more than 6% and this gives us a turnover growth of more than 10%. And of course we have invested a lot in organic growth and we have also developed our campuses, we have built one unique position when it comes to vocational training both at upper secondary level and also at the adult level. We have continued our international expansion and in fact now 26% of the revenue is outside Sweden. We have continued to start organically with preschools, six preschools in Germany this school year start and we plan to start around 15 this year. And we have also had an accelerated acquisition strategy with bolton acquisitions in sweden we have invested in a private paid school group in the netherlands added education in germany and we have also acquired one of the most well-known education brand in sweden that is bearish that is totally private paid and this is also a way to develop our strategy and the way to the roadmap 2030 that we are working against The board has also proposed a voluntary share redemption program and this is also very important for us because we think that the share price don't reflect the position that the company has for the moment and with this program we hope to have a share that we can use to continue our international development. And with that remarks I will hand over to Katarina and she will go through the numbers.

Thank you. I'm Katarina Wilson and I will walk you through our first quarter, which is a seasonally small quarter of our new financial year 23-24. So moving on to page three, highlights quarter one. Strong growth, as Michael said, number of children and students grew by 5.1% and net sales grew by 10.5%. with growth in all segments except in the adult education segment, where volumes in the municipal business is still coming down somewhat, but at a slower pace. Organic growth, including smaller Bolton acquisitions, was 6.5%, and the acquisition of Favesset in Germany and Wynford College in the Netherlands contributed 3% to the growth. Changes in currency impacted positively 0.5% in the quarter. Despite continued high inflation, adjusted EBIT was in line with last year, 151 million, and the adjusted margin decreased to 4.4%. This quarter is the third quarter where we've seen the full effect of inflation, including increased rental costs, about 35 million in the quarter compared to last year. And in addition to inflation and increased rent, we're also seeing the annual salary revision from September of 4.1% impacting this quarter, where we will see the full effect from the annual salary revision in the next quarter. Compensation for high cost levels will come in January 2024 with the annual school voucher revision. Electricity cost decreased in the quarter compared to last year and we also received electricity support from the government in total 20 million. Items affecting comparability minus six relates to transaction cost as well as insurance compensation related to a fire in a compulsory school in the last financial year. Cash flow is normally negative at the beginning of a new school year related to working capital. And the free cash flow in the quarter was somewhat more negative than last year, minus 127 million, due to lower prepaid income in Norway. And this is entirely a calendar effect. So moving on to page five, rolling 12 months, which differs only really with one quarter from full year 22-23 numbers. Net sales rolling 12 months amounts to 15.9 billion and adjusted EBIT to 965 million and the adjusted EBIT margin 6.1%. And free cash flow is solid at 729 million. So jumping to page eight, development in the quarter by segment and starting with the preschool segment. and this segment has changed name to preschool and international segment reflect the recent additions winford college with compulsory in secondary schools in the netherlands media design academy adult education in germany both of these acquired in this quarter and if i was set acquired last year with compulsory in upper secondary schools in germany The number of children increased by 14.5% with growth in all countries, except in Sweden, where three preschools closed in the quarter. And if we adjust for these closures, the number of children increased also in Sweden. Growth was driven by acquisitions and six new preschools that started in Germany in the quarter. And the plan in Germany is to start 15 new preschools during this full year. Net sales increased by 21.8% compared to last year and the organic growth was 10.3% adjusted for the acquisitions and that contributed 9.8% and currency development had a positive effect of 1.7%. Adjusted EBIT and margin were somewhat higher than last year, though this first quarter usually is a small quarter. Higher operating costs in all countries, driven by inflation, rental costs. Also, we had in this quarter higher maintenance costs in Norway with 7 million, and this is also entirely timing effect. All in all, cost increases were offset by the annual school voucher revision. Items affecting comparability minus six related to transaction costs from acquisitions. Moving on to compulsory school, page 9. The number of students increased by 1.4%, but adjusted for restructuring units, the number of students increased by 2.4%. We also added two new schools in the quarter with an acquisition with 624 students in total. Net sales increased 7.1%. Also positively impacted by the annual school voucher revision from January, 5.3%, as well as 5 million in governmental electricity support. Adjusted EBIT was in line with last year, 51 million, and this is despite continued high inflation. The margin decreased to 6.4%. Inflation continued to impact operating costs and rent increased by about 10 million compared to last year, somewhat offset by lower electricity costs. The annual salary revision, 4.1% from September, affected the quarter by 2 million. And there's more positive items affecting comparability, plus 1 million related to insurance compensation for the fire last year. So upper secondary school, page 10. Student numbers increased by 2.7% and net sales increased by 7.5%. Growth is mainly coming from five units that have opened over the last three years, admitting 550 additional students, as well as from capacity expansion. The two campuses that opened last autumn has increased the number of students by 13% compared to last year and in total capacity utilization increased in this segment to 86.9% according to plan. Revenue increases also coming from the annual school voucher revision that was 3.9% from January and about 5 million in electricity support. Adjusted EBIT and margin decreased compared to last year due to higher operating costs caused by inflation. Rent increased by 20 million due to indexation and the annual salary revision for 0.1% from September affected the quarter by 5 million. About 30% of the upper secondary school segment schools operate in the greater Stockholm area, where the school voucher increase for 2023 was 1.8%. And this increase is not compensating for the current inflation, including the annual salary revision. However, Compensation for the high cost level will come in January 2024 with the annual school voucher revision where the preliminary indications from Stockholm indicates an increase by 3.4%. Moving on to adult education, page 11. Sales decreased by 3.2% due to continued lower volumes in the municipal business area where sales decreased but at a much lower pace by 13%. Capacity adjustment in this business area and cost cutting measures implemented last year are now showing effect and profitability increased. Sales in the labor market services business was in line with last year and volumes in the new matching contracts are still much below expectation. Demand for higher vocational education remains high and revenue increased by 7% and operating profit was in line with last year. In total, adjusted EBIT in this segment increased to 48 million and the margin increased to 13.2%. I would like to point out that the first quarter, like last year, is a seasonally strong quarter impacted by lower personnel costs due to vacation. And the assessment is that the adult education segment margin for the full year will be closer to the range. And as Marcus mentioned, after the close of the quarter, Bayes School of Communication was acquired. And this is one of the world's leading schools in the field of communication. And Bayes will strengthen the privately funded market. moving on to page 13 free cash flow and investments cash flow in the first quarter is normally negative related to working capital and the free cash flow in the quarter was somewhat more negative than last year minus 127 and as i mentioned this is due to lower prepaid income in norway entirely calendar effects Maintenance capex as a percentage of sales was 1.8% and this is the same level as last year. We saw a somewhat higher level in 21-22 where we had capex related to the new campuses that we opened last year. Page 14, the financial position remains strong. Net debt, including IFRS 16, was in line with last year, 1.3 billion. Leverage ratio, including IFRS 16, was lower than last year and well below the financial target of less than three. Net debt, including property-related lease liabilities, was higher than last year due to expansion in capacity and growth. Lease liabilities also increased from January 2023 due to indexation of rental costs, just over 400 million. And leverage, including lease liabilities, was 3.4 in line with last year. And with that, I would like to conclude page 15, financial performance versus targets. Organic growth, 6.5%, which is within our target, adjusted EBIT margin 6.1, which is below target, and the target on capital structure is met. The board is proposing, as we earlier communicated, a dividend of 1.75 per share, which is unchanged from last year. And the board is also proposing a voluntary share redemption program of not more than 275 million SEK with the intention to determine the redemption amount to a maximum of 30% above the volume weighted average share price. The proposal is that it will take place in February-March 2024 after the announcement of the second quarterly report. With that, I would like to open up for questions.

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