AcadeMedia AB (publ)

Welcome to the Acaday Media Q4 Report 2024-2025. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speakers, CEO Marcus Strumberg and CFO Peter Sylvan. Please go ahead.

So good morning everybody and thank you very much for your time and we will spend now a few minutes to introduce you and present our Q4 report and it will be me, Marcus and Petter that will make this presentation. And this time of the year is really a great year for time for Academedia. We meet a lot of new students, we start our schools, it's a very exciting and very good time. and when we sum up this year we can say that we have had a very good a very stable development in academia during 24 25 and the end of the year q4 was in the same line as overall this year we have kept on growing we had made a lot of international expansion all the segments are developing in a positive way and that is very positive also when we look into the future. we have also focused on quality and we have made a lot of investment also handed the demographic challenges in our mature markets and when we look at the preschool where we have entered swimming lessons for free we are traffic lessons for free a lot of focus on reading and all of these quality efforts had created this growth When we look at the number of students has grown about 7% the year we have behind us. And when we look at the start, we think that the start of this new school year has also been very stable with the growth of around 3%. When we look now at this year, the board also will propose an increased dividend to 225 krona per share and the board also intend to propose a voluntary share redemption program or buyback program to the annual meeting that will be in November. And we also want to highlight some of our quality efforts and we look at specific on the reading. So in sweden we measure the results in when they are at level three but we have focus on year and level one and if we look at this number our early efforts our training programs on the teachers our focus on new methods has really improved the way that the children learn how to read and when we look at the numbers now of course we have the target to achieve 100 but we are now at 90 of the children in first grade that can read and that is a good step for us and we attempt to continue this development And if you look at Academedia, so a lot of company talks about the future, we could also show our history. And to have focus on stability, to grow profitability, to increase the profit, to make the company more stable, that has really been core for us. And as we look at this number, we have increased 90% carg EBIT over these years. And one important strategy for us is to continue to develop the international part of Academedia. And we have announced this target that it should be 50% of the revenue that should be outside Sweden including the adult education. And we made two acquisitions just before summer. both in Germany and in the Netherlands. And we think that we have a good list of prospects. We have a strong balance sheet that we could continue to grow and go aboard this target. And with this introduction, I also want to comment a little bit about politics and We are very used to handle the politics situation in the different countries, both in Finland and Norway and Germany and so on. And this is a picture that just shows the situation in Sweden, because we have had a lot of different proposals. I think it's around 10 proposals that is on the table for the government in Sweden now. And it's three proposals that is focused on the situation that we are in independent sectors. It is the profit inquiry, it is the school voucher inquiry, and it's also the principle of publicity to be more transparent as a sector. And if we look at these three, we have made a picture that tries to explain where in the political phase is these different inquiries. And if we look at the first one, We are just after the phase that we have had the information for what has been the comments from different sort of organization. And now it's about to be negotiated. And we think that the profit inquiry will have a proposal to the government around springtime 2026. That is our best guess for the moment. If we look at the school voucher, we are not still in this consolation phase. So it's nothing new information to talk about. And it's very important also to say that even if the government will talk about the profit inquiry during the spring, it will be operating in 2028. So the timetable in these inquiries are quite long. And we can see the same, we have also commented on the principles of publicity, and here we also are in the same phase as the profit inquiry. So it's a long process, it takes a lot of time, and some of these, we think, will be proposed to the government and parliament in the spring. And we could answer some questions if you have any questions around this after Petter's presentation.

Okay, thank you, Marcus. Good morning, everyone. I will talk about the financial development. And as Marcus started to explain earlier, we achieved a good growth of 5.4%. And this is with contributions from the acquisitions, yes, in the Netherlands, amounting to 1.1%. additionally our adjusted profit margin increased to 9.1 percent compared to last year 8.5 percent reaching 467 million in absolute terms up from 415 million and finally this increased profit has translated into higher free cash flow So let's continue and turn to the next page. The improved adjusted EBIT are evident across all segments. And in the preschool and international segment, the increase of 19 million is driven by positive contribution from the mentioned acquisition of YES. In the compulsory and upper secondary segment, we have a stable situation. And in adult education, continued to report strong results driven by high unemployment rate, and in particular, increased volumes in higher vocational educations. So that's the total overview. Let's jump to page 11 and look at the quarter's development within each segment. And we start with the preschool and international segment. The number here of children increased by 6.5%. Our growth was primarily driven by new preschool openings in Germany. The international operation account now for approximately 30% of the group's total sales. The net sales increased by 4.5% compared to last year's, and we had an organic growth of 5.18%. The difference there is the currency effect. Adjusted EBIT and margin increased compared to the previous year. This year's margins 8.6% was up from last year 8%. The adjusted operated profit increased to 169 million compared to last year's 151. And the improved result was mainly positive effect from the acquisition of JAS in the Netherlands as well as more children and higher compensation in Germany. Move on to the compulsory school on page 12. We now note a 4.8% increase in student numbers. Net sales rose by 9.7% driven by increased number of students and the positive impact of the annual school voucher revision. Adjusted EBIT and margin increased compared to the previous year. This year's margin reached 9.5% up from last year's 9.1% and the operating profit was 140 million compared to last year's 99%. The result and margin for the quarter were positively affected by acquisitions and expansion units. now we turn to upper secondary school on the next page and we there observe a 0.16 increase in student numbers the sales grow by 2.7 percent and this was driven by more students as well as the annual voucher revision the adjusted margin was stable and last year 12.2 percent is maintained this year and we last segment move on to the adult education page 14 and there is a 7.3% increase in sales and this is attributed to a high number of students in higher vocational education in particular. Adjusted EBIT increased to 34 million from previous year that was 23 and with a margin of 7.5% compared to 5.4% last year. The improvements in result was mainly attributable to increased volumes in higher vocational education. And service conducted by SCB, the Swedish Statistic Bureau, indicate that the unemployment rate in Sweden was 9% in May, which is historically high and is expected to maintain high at time being. The growth here is highly correlated to a higher unemployment rate in this segment. Okay, let's continue to page 16 and free cash flow and investments. Free cash flow for the last 12 months was closed the last year in absolute terms. The free cash flow as a percentage of EBITDA 62%. And the lower ratio compared to last year is mainly an effect of a change in network capital. The last four years, maintenance capitex as a percentage of sales, as we see in the picture to the right, has declined. This is a consequence of fewer new openings and fewer expansion units. Proceed to page 17, the financial position. Net debt excluding IFRS 16 decreased by 67 million compared to last year with leverage ratio excluding IFRS 16 as 0.5. Obviously well below the financial target of less than 3. And even including property-related lease liabilities, the net debt including is lower than last year. And this is due to low indexation, low number of new entry contracts in the quarter and FX effects. In the period, new loan agreements were signed with three banks, securing financing until 2028 with the possibility to extend until 2030. Obtaining long-term financing is essential for Academedia to successfully pursue its acquisition strategy that Markus talked about. This approach aligns with our objective to secure 50% of revenues from other sources than the Swedish school voucher. Okay, let's continue to the next page. and we now look at the overview of a full year and for the full year we achieve a good growth of 9.7 percent with contributions from the acquisitions amounting to 4.7 percent Additionally, our adjusted profit margin increased to 6.7% compared to last year's 6.3%, reaching 1.281 billion Swedish krona in absolute terms. And this is up from 1.097 billion Swedish krona. And all segments contributed to the improvement of operating margin and profits. And now turning to the next page and the full year's results visually. As I mentioned, the improved adjusted habits are evident across all segments. In the preschool and international segment, the increase of 57 million is driven by new openings and acquisitions, along with better school voucher compensation in Germany. And in the compulsory school, there has been a stable development with increase of EBIT 27 million, driven by contributions from the acquisition and expansion units. The upper secondary school has managed to increase its capital utilization and improve its cost control, leading to an improved EBIT of 47 million. And adult education finally improved by 54 million, and this was mostly driven by higher volumes in vocational education. And finally, on the next page, our financial performance against targets. Our organic growth, including small bulk acquisitions, stands at 9.2%, exceeding our financial target of 5% to 7% growth. Our adjusted debit margin of 6.7% falls below the target range of 7% to 8%, but we are slowly improving, rolling 12%, and are getting closer to our target. The leverage ratio of 0.5 remains well below the required threshold of 3 and leaves further rooms for acquisitions when opportunities occurs, as long as share redemption and or buyback programs. And with these words, I end the presentation and we open up for questions.