AcadeMedia AB (publ)

So good morning everybody and welcome to this presentation of Academedia Q2 result and I will take the presentation together with Petter Sylvan and I will start with a few remarks and the second quarter we think it's a very stable solid quarter and in line with our strategy The Q2 quarter is usually a quarter where nothing so much happens, but we think that this quarter has been really, really good. And if we look at the sales, it has been affected by FX effects because of the changes in currency, but the growth is around 5.5% if you adjust it for FX effect. And the EBIT is developing stable and good in all our segments. But the real driver behind this is the international group and adult education. And if you look at adult education, we also have a very good result when it comes to the We have strengthened our position when it comes to higher vocational education and we increased the market share and just this vocational education is very important for us. We think that is a positive step and we keep and improve our market shares. And we have also continued to make acquisitions. We have a very solid and stable balance sheet, so we made an acquisition of a group in Germany and we also announced this morning that we make an acquisition in in Finland with the Bolton acquisition of a group of English-speaking preschools in Finland and we think that is very positive and we have had a very tough time in the recent years when it comes to the increase of voucher and decrease of cost because of inflation and post effects of the inflation but when we look at 2026 we think it's very positive that now the school voucher is up 3.4 percent And that is a little bit higher than the salary increase. And if we look at the lease contracts, it's more than double up. So that is also finally, it's a stable year when we are looking at 2026. And then if we continue to make some short remarks, we are very proud of Vitra. Vitra has been a grand part of the compulsory group for many years and they get really top results from the school inspection and we just want to highlight that because Vitra is also a school that is working with some of the social, economic tough areas in Sweden and they perform really, really well. They also put the right grades and we really want to to show you that Vitra is important to improve school results in Sweden. And then if we look at this difference between the natural test and the actual grade, that is a question that we get a lot because it has been in the media debate in Sweden. And we just want to focus and give you this information that Academia is performing very well when it comes to these results. Better than the average in Sweden. And we have also improved the differences over years. So we can say without no doubt that we are very good at setting the right grades. And then if we look at this higher educational sector, and this is a very important part of the adult education, important for Sweden because we still have high unemployment rate. And every year you get the number of school places and programs that you could run the coming years. So this is very important for us. And the result in this year's result was very good for us. The number of places was up, and we increased our market share, and the total number of places was also up. So the overall result when it comes to the vocational education was very positive for Academedia's adult education, and this will also help us the coming year. And this just gives you the picture of the historical development of Academiedia's performance, because we have stable profitability, stable over a year, and now we also improved the international group. So the role in 12 numbers is positive, and the result in this quarter was up, both margin, revenue, and in all segments, in fact, also. And our international strategy and the roadmap for Academedia, we have had this focus for many years now, and we have built a very solid and good platform internationally, both in Finland, both in Norway, in Poland. We are starting to look into Poland. In Germany, we have a stable platform. In the Netherlands, we have a stable platform. And if we look at the numbers here now, we are a little bit above 40%. of the revenue that is outside the Swedish gold system, and we are aiming for 50%. And this is a target that we will reach through organic growth, but also mainly through acquisitions. And we have a good pipeline, a lot of discussions that we will be working with 2026. Now I hand over to Petter.

Thank you Marcus and good morning everyone. I will start with an update of the political reforms in Sweden. We have had three reforms currently, three major reforms currently proposed. It's the profit inquiry, the principle of publicity and the school voucher inquiry. The first report from the bottom, the school voucher inquiry, it has been announced since on time that the legislation proposal will be delayed until after the election. The principle of publicity has just recently come with a more detailed proposal. So I will talk a little bit more about that within a few minutes. And the profit inquiry, we are still waiting for a potential proposal to come in the near future here. Next page, please. On January 19, the Swedish government presented a legislative proposal to extend the principle of public access to all independent educational providers. The legislation is now expected to be adopted in January 2027, which is about one year earlier than previously anticipated. And under this proposal, the public will have the right to request access to documents from our operations on essentially the same basis as for public authorities. And all requested documents will be subject to confidentiality assessment and formal decisions will be required in cases where information is not disclosed. We are closely monitoring the legislative process and we have prepared for some time for an implementation. The ongoing implications, however, are assessed to be manageable within existing financial frameworks and in accordance with the principle of equal conditions. Next page, please. I strongly would like to highlight our investor podcast, which is available wherever you find your podcasts. And these episodes are in Swedish. For instance, in our latest pod, we did describe the proposal of public access legislation potential impact on academia more thoroughly. and the purpose overall of this podcast is to engage with swedish investors and other stakeholders through short focus episodes delivering clear insights in just 10 to 15 minutes this far we have released seven episodes and as i said you find it on all platforms for pods you can use the qr code here also next page please So let's start with the financial insights. As Marcus outlined earlier, we achieved a good growth of 4.1% year on year, and all segments contributed to the positive development. Additionally, our adjusted EBITDA margin increased to 6.6% compared to last year's 5.8%, reaching 345 million in absolute terms, up from 289 million. And the increased profit has translated into higher free cash flow. Now, turn to page 12. The improved adjusted EBITDA are evident across all segments as mentioned. In the preschool and international segment, the increase of 43 million is positively impacted by acquisitions, higher volumes and efficiency improvements in our international operations. The compulsory school segment is up 11 million year over year. The upper secondary school segment saw increased earnings of 5 million, primarily attributable to higher capacity utilizations. Earnings were negatively affected by purchase of literature together with increased costs for libraries. Adult education continues to report strong results driven by increased volumes in higher vocational educations. Group costs increased compared to the same period last year. We also have some non-recurring items affecting comparability, which amounted to 13 million. These are personal costs related to harmonization of employment terms within upper secondary education. Now turn to next page. The 12-month rolling net sales continue to grow and amounts to 19.5 billion. The rolling 12-month adjusted EBITDA amounted to 1.388 million, corresponding to a margin of 7.1%, which is within our profitability target of 7% to 8%. We continue to have a solid free cash flow. Okay, now let's look at the quarters development within each segment. And we then start with the preschool and international segment on page 16. So the number of children increased by 7.7%. Our growth was primarily driven by new preschool openings. The international operations account for more than 30% of the group's total sales. Net sales increased by 5.9% year over year, positively affected by acquisitions. Currency changes had a negative impact, 3.9%, and the organic growth was 7%. Adjusted EBITDA was 150 million, and the acquisitions during the first half year and last year contributed positively to the performance. Okay, move on to compulsory school on the next page. And we note 1.3% decrease in student numbers. Adjusted for units that are to be closed, the number of students decreased by 0.6%, primarily explained by lower number of children in the integrated preschools. Net sales rose by 2.9%, primarily explained by the annual school voucher revision. Adjusted EBITDA grew by 14.3% year-over-year, reaching 88 million. This is corresponding to an adjusted EBITDA margin of 7.2%. Move on to page 18, an upper secondary school segment. The number of students here grew by 0.5%. We saw a stable growth in sales, while profitability was somewhat softer year-over-year. with an adjusted EBITDA of 114 million compared with 109 million in the same period last year. Adjusted EBITDA margin was 7.3%. The increased result is primarily attributable to higher capacity utilization. Higher costs connected to purchase of literature and the expansion of library staff had a negative impact on the result. Okay, next slide 19 and adult education, where we continue to see strong performance with profitability now improving for the 10th consecutive quarter. Sales increased by 1.8% to 501 million, mainly attributable to higher volumes in higher vocational education and labor market services. adjusted EBIT A came in at 67 million up to 6.3% year over year. The adjusted EBIT A margin amounted to 13.4%, which is up from 12.8% in the same period as last year. In January, Academedia was awarded approximately 7,700 new study places, which is an increase of over 60% compared with the previous year. Okay, continuing to page 21, which is free cash flow and investments. And just in short, free cash flow for the last 12 months amount to 1.342 million. The free cash flow as a percentage of EBITDA is now 71%. Maintenance cap as a percentage of sales continue to decline. This is a consequence of fewer openings and expansion units. Okay, the financial position on the next page, net debt excluding IFRS 16 decreased by 288 million compared to last year with the leverage ratio excluding IFRS 16 at 0.4, well below the financial target of less than three. Even including property related lease liabilities, the net debt is lower. in the period repayment on revolving facility and credit line amounted to 491 million okay finally on page 33 here our financial performances against targets Our last 12 months organic growth, including small bolt-on acquisitions, stands at 5.3%, which is within our financial target of 5-7% growth. Our adjusted EBITDA margin is 7.1%, with an in-hour target range of 7-8%. Under our former profitability target of adjusted EBIT, that typically is 20 basis points lower than our adjusted EBITDA. As previously communicated, it would have been just below the target range. The leverage ratio of 0.4 remains well below the required threshold of 3, which leaves further rooms for acquisitions when opportunities occur. And with these words, I end the presentation and we open up for questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Johnny from Ginn. Please go ahead.

Hi, good morning, Marcus and Petter. A couple of questions from my side. I think I will start with the preschool segment. I mean, Morgan looks very strong in that segment. segment here in the quarter, and I think you mentioned some increased school voucher funding in Germany, which I think you haven't mentioned in previous quarters. as well as some temporary reduced vacation expenses in Sweden. So can you maybe elaborate a little bit on these line items respectively? And if there were any unusual timing effects that benefited the margin in this quarter? That's my first question.

So the factors that we mentioned in the report that contributes to the margin are the overall increased volumes, the highest school voucher in Germany, and a lower cost level in Norway. All of these three are sustainable changes, so to speak. However, we then also, as you mentioned, mentioned the temporary lower cost of vacations in Sweden. That is, as we mentioned, more temperate nature. So it's a facing effect.

Yes, but what is the effect from the temporary lower vacation expenses in Sweden in the quarter?

You mean how much financially? Yes. Okay, the financial effect is about 15 million Swedish kronor.

Fifteen.

Fifteen, yeah.

Yes, okay. And the higher voucher in Germany, is that our catch-up effect? We're seeing that now or did you have that in the previous quarter as well?

We had partially that in the previous quarter in Q1. It's more amplified in this quarter. But all in all, I think all of the factors are in line with the expectations of the improvements we have had for the margins this year for the preschool and international.

Okay, then moving to upper secondary school. I think you said in the last quarter that you expect some margin pressure from the GY25 reform. And I think you said that even if you increased efficiency, it wouldn't translate to high profitability during the year. Now, one quarter later, in this quarter, we can see that adjusted margin is up 10 bps here, year over year. So can you elaborate what happened and did you get any extra compensation for that?

You are talking about the upper secondary, right? Not the compulsory?

Yes, upper secondary.

Sorry, yeah, I heard you. I thought you talked about compulsory. So now upper secondary, that's right. Now, as we still continue to mention, we continue to have those increased costs that put the pressure on margin. But what counterbalance this is a higher capital utilization than we had expected. So there are two factors that balance each other. I also said that even though this margin negative effect quarter by quarter will be negative on the margin on the upper secondary school, these higher cost levels, I also said that we don't believe that it's a huge effect on the margin. I summarized that it will be difficult to increase the margin over the year in the upper secondary compared to last year's. but we will be happy if we can sustain the margin or perhaps a couple of percentage points below.

Okay, so these levels are representable going forward, would you say?

Excuse me?

The margins you do now in the upper secondary school segment, the adjusted EBITDA margin, that is representable going forward, would you say?

I mean, it depends what you mean with that, because you say we are increasing the margin from this quarter, 7.2 to 7.3, from last year, 7.2. So that will imply, that could be interpreted, that will imply that we would expect a higher margin year over year this year and last year. We don't expect, I think you should look at these two quarters combined, Q1, Q2. And if you look at them combined, you have a little margin deduction. And I think we continue to say what we have said before, that we would be happy, it might be possible to maintain the margin year over year, but we don't expect the margin increase for the full year.

Okay, moving to the adult segment, I have one question there. It looks like you are losing some organic momentum there in the quarter and earnings momentum compared to previous quarters. And we're now starting to see lower unemployment rates in Sweden, where I suppose that higher employment rates have benefited historically. So as this reverts, when do you expect that effect starting to hit your numbers or show in the numbers for you?

I mean, if the lower unemployment rates now previously have been seen, when would that be something that would have an effect in our operation? Is that your question?

Basically is that you mentioned higher volumes in adult segments and I suppose that is due to higher unemployment rates and now unemployment rates in Sweden is going down. So when do you expect that to show in your numbers?

Yeah, I understand. I think first question is, we have just seen just recent data that it's level out slightly going down. I think it's first to be seen if it's sustainably actually is going down. But we used to say that if it did go down sustainably, it probably will take a number of four to eight months or something until we had any clear effects on our volumes. There are some delays in the system. I would expect. Is that sufficient?

If you look at the adult education and compare the different parts with how this segment looked maybe six, seven years ago, it was more depending on the unemployment rate because then we had a lot of businesses with the labor market agency. Now it's a bigger part that is vocational program and that is that we commented in the report that we want a lot of these places and they are not so affected by the unemployment rate because they are almost like high schools and universities. A lot of people want to retrain So even if the unemployment will go down, it will not affect us so much as it did six, seven years ago, because now we have built a more solid ground.

Yeah, OK, we'll see. But I mean, when I talk effect for you, I mean, the margin in adult segment is already now above your target in that segment. So I suppose you expect a lower margin ahead. And that's my question. When do you expect that to hit you?

it's difficult that is nothing what we see today we have a lot of application to the to the vocational training so so the adult segment is is still positive okay yeah thank you we'll see and that was all for me thanks the next question comes from philip eckengren from abgsc please go ahead

Yeah, morning all. So starting off, just to follow up to Johnny's questions, and I apologize if I didn't get it, but could you specify the amount of the increased costs related to new literature following GY25 and also the increased library stuff? Could you split out the cost for it in sec, please?

No, we don't specify that. But as I said, if you look at the combined Q1 and Q2 in terms of margin, that's a little bit declined compared to last year's margin. I think it's 0.2 or 0.3 down or so. And as I said, I think that's close to our expectations for the full year that we in the best case we'll be able to sustain the margin over the year versus last year and in a more negative case we might have to lose the margin 0.2 0.3 or so okay got it thanks um and on the sort of principle of public or openness or what we should call it announced or presented in january

You talk of a one-off effect. Could you, I mean, this is highly speculative from your side as well, I understand that, but could you, in what sort of size do you think it will be, the cost?

Yeah, I understand. I mean, what essentially it means is that we will need to develop processes for the group. We will need to assign few dedicated resources and we will need to not the least have established functional IT support tools dedicated for this purpose and I think the major investment will typically be cost for running an IT project if you think of it as an IT project establishing these systems and processes and developing the systems and the size of that project and the terms of system I think it's my best guess is it's equal to establishing or changing an ERP but not you know a huge ERP without kind of risk but rather a minor small mid-size implementation of ERP in terms of size of money if that makes any sense

Thanks, got it. And then finally perhaps going back to sort of the straight and adult again. Higher vocational allocations from the Swedish state up 60% if I'm not mistaken. Why is that? What's the driver behind it? Why is it up so much?

So you could say that this is This is a little bit above our market share, but our overall market share is reflected in what has happened now from the authorities. But we really have the right programs, because what is important when you get these sort of places is that you have the right programs that will help the students to get jobs. and we always develop our programs into that directions so in this application we made good success with a good market share and of course we will we hope that we will continue to do that but the key is that we have the programs that will result in jobs and that is what we are focused on okay make sense that was all for me for now thanks

The next question comes from Johan Lankvist Sundhien from DNB Carnegie. Please go ahead.

Hi, Mark. Thank you for taking my questions. Hope you can hear me.

Yes, we hear you.

We hear you well. Excellent.

um we talked a lot about the adult business just just curious to hear your what you say about the visibility for the spring on volumes do you have decent visibility or how does things look like but the volumes look continuously strong we don't see any negative even though we did discuss the just recent around slight falling rate of unemployment it doesn't show any at all effects on our demand here and now so volumes continue to be good in all parts of the adult education demand is high and business is good and the cost ramp up that you talked about during the year is that still to come or

with the still high volumes that margin should be maintained on this high level?

We have seen the ramp up of costs and I've said that that might actually lead to margin reduction. I think that what we have seen is that the risk for any significant margin reduction isn't really there because the volumes is so good and strong. But on the other hand, margin is obviously leveling out. That's what we also see if you look at the Rogan 12. Margin outcome.

Maybe what your eyes on when it comes to this year is the increase of the school voucher. I guess you have seen that. So because if you compare with last year, we have a school voucher at the same level, but the cost development when it comes to leases was higher.

And how much of an impact can that be on the margins for the Swedish school operations during 2026?

It's difficult to say, but we ask for the comment and show you that that is what will happen in 2026.

But are we talking about 100 basis points of Swedish school operations?

It will help us to... to maybe handle the cost increases that Petter mentioned. Because we will invest in libraries, we will invest more in teachers, we will invest more in books and so on, so to really get the top quality, but the recent years we have been struggling with the high cost development and finally we have more of a right cost situation with the school voucher development.

Makes sense. And my final question is, it's in the preschool business, and we talked a little bit about margins there. You have in, I think it was in the last report that you highlighted that your ambition to reach 6% margin in the segment for the full year here, the fiscal year here. Strong performance here. Is there any reason why not to believe in the 6% ambition for the full year? Or have you hiked your target given the strong performance?

No, we don't have any higher targets. So, I mean, we have a strong performance in this quarter, but it will not reflect that margin increase expectation we have going forward, since part of that increase is real and substantial, and part of that is a phasing effect of this cost of vacations.

That's clear. I think you covered my other questions from previous speakers, so I get back in line. Thanks a lot.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

So thank you very much for listening and questions and have you all wish you all a good day. Bye bye.