Cedergrenska AB (publ)

I welcome Niklas Pålsson. You are the founder and working board member. Welcome. Thank you very much. It's great to be here. You are working hard. Let's start by looking at the figures for the fourth quarter. your revenue increases by 52.1% to over 367 million kronor. Is this in line with your expectations?

Yes, I would say that this is mainly in line with the expectations, and of course driven by the acquisitions, the summaries that have taken place over the past year. The largest of them all is Apprendere Skolor AB, which came in here at the change of year. And before that, Nyköpings University of Education and Psychology came in last summer. So these activities make the growth as strong as they are. And in addition to that, we have also had preschools that I think have performed, because you asked a little about the expectations. It's been really fun to see that despite small children and tough demographics, the fact that the students have returned to our preschools to a greater degree than we had thought, is also helping to drive the revenue.

Another thing that struck me when looking at the figures for the fourth quarter is that Your EBITDA margin goes up to 9%. Here you have a goal between 6-8% and that is up from 7.4%. How have you managed this?

I would say that there are three things that have been very important to drive this margin improvement. If you start, you have to go back two years when we launched the 20 million saving program, which was a consequence of a tough year with a lot of inflation-driven costs that caused the marginals to fall to just over 4%. That program of 20 million will take time in the school world, but it will have full effect soon two years later. So it has been very important. Then I think the commitment to effective support functions and above all Our commitment to internal food and local healthcare, which has successfully been built out during the last year, has helped to drive both the quality and the efficiency. And then as a third point, which is very exciting, it would not have been possible to deliver a 9% EBITDA margin in the fourth quarter if it hadn't been for the successful integration of ABB into CD Grenska's business. Many were unsure of where the underlying profitability was, and how fast it would go, and what synergies they could come up with. And this quarter really shows the potential that exists in this context. And that we, as soon as we thought we could, could show it to the market. So it feels fun.

And if we look at the whole year, the revenues increased from 907 million last year to 1,232 billion. millions approximately. It's quite a big development.

Exactly, but it only follows the pace we have, the plan we have for this commercial and partly also organic growth ambitions we have. We are a company, one must not forget, we are a company that has grown in the last five years by just over 20% on average per year. And it looked like that before that measurement period as well. We are a growth company in this sector and will be. So this is just following the plan.

Similarly, the EBITDA margin is 7.6% all year round, that is the upper range of your target. Is this your target for Blygsa?

I don't think so. I think 7.6 is a good level and it feels really good and luxurious to be able to be there because it creates incredible opportunities to take on both quality assessments and challenges from higher requirements in connection with the regulations and revisions we see in the private school industry right now. So it's a very safe place to be. At the same time, over time, we will be between 6 and 8. So 7.6 is a bit above that. And I think that Our goal is to be more in the middle of that range in the long run. That said, it's been a great year, and it gives us all the opportunities to develop our business in the future.

EBITDA rose to around 94 million SEK from previously 56 million SEK. How proud are you of this result?

I am very proud and it is a very important level to follow. I even think that if you lower your gaze a little to our goodwill-adjusted net profit, because it will be a benchmark for our investors in a completely different way in the future, given how we connect it to our distribution. So I am very proud that we are now at levels in goodwill-adjusted net-to-win, which makes it possible for market-wise, I think, for those who have chosen to invest in Swedish schools through CD-Grenska, and at the same time, of course, a lot of good resources back to the business as well. But there are very nice levels to be on.

I can mention the net result with repeated goodwill deductions, which went up to 71,650,000. Exactly. You have also given a forecast for the year 2025-2026. Tell us about that.

First of all, why do we give a prognosis? Because we see a security, a predictability in how this year will be shaped. And I think there is a good signal value in it. We did the same thing last year at this time. We also laid ourselves on a minimum level, at least 6% EBITDA margin. Now it became 7.6, but we want to lay the groundwork for investors to feel more secure with the expectations you can have on the CD border. If we take a look at this year, as you said, we have a prognosis of at least 6% EBITDA margin. With the revenue growth we also see, it gives a goodwill-justified net profit that should give at least 5.30% in EPS, given that we will also calculate the 10% repurchased shares that we have that we're done with in our resale program. I think that prognosis is a way to work to train investors and show what kind of company we are, what we have for predictability, what we have for security in our model, in our structure. So it's a very valuable tool.

There has been a lot of news from you. There has also been news that your goal is to switch to IFRS as a teaching standard in the fourth quarter of the fiscal year 2025-2026. Why are you doing this and why are you aiming for the top of the stock market?

I think it's a natural step for CD Grenska as a company to take this step. We want to challenge ourselves all the time and be at a place where there are high requirements on that we have order and order, that we meet the toughest requirements in terms of insight and reporting. I also think that one can externally expect from a company that works with socially-critical functions, such as schools in this case, that we will be on the marketplace where there is the greatest regulation and the greatest insight. And I also think, backing up a bit and looking at what will become of companies in the future, then perhaps we have grown the first north list a bit. Not only in the turnover and profit we make, but that we make profit, that we can to see and process our business, that we have stable cash flows, stable divisions. It also feels like it's time for us to look further into that development as a stock-noted company. And then I will add that I think there have been, we have received signals that you want to see more actors within the social-critical companies on the main list. They are there today, but the group is quite small. There is, as I understand it, an interest to get involved in these companies and understand this industry, and you welcome them. and want the CDN to take a place here, which we want to do because we have high ambitions, we want to be another player in that group of companies and then the main list is the right place to be.

Absolutely. You have also had more shareholders lately. The main list means greater exposure and that you reach out to more investors. How important is it for you with shareholding?

It's very important, and I think it's a natural part of a company's development. A number of founders founded this 15 years ago, and we're still a big part of the company. We understand that over time, this needs to be normalized a bit. With our growth ambitions, we don't know what opportunities we'll be given when it comes to distribution. I think that we need to be open to the fact that we want to broaden our own base, both private individuals and institutions. And we hope from the bottom of our hearts that we as an attractive company with good quality in our school operations are the main reason for this to happen. But of course, I think the goal with the main list and everything we have done lately with the professional management and our overcapitalization, with our ability to give prognoses that help investors, the stable distribution, everything we do is pieces of the puzzle in creating this company that I hope the result is that we also get a wider base of shareholders.

Another important detail here is your division. It's not that long since you came up with a new division policy. Can you tell us what it looks like on the division side now?

I think it's really fun because if we reverse the band a year ago, we told the investors that they could expect Cedric to handle the whole issue of an optimal capital structure in a more professional way. And we have done a lot of things since then to deliver on that goal. A one-off division, a resale program, we finance our growth in a completely new way in collaboration with Danske Bank, compared to what we could have done earlier. And we can now finally go into the new issuance policy with a third of our net profit, which is also a piece of the puzzle to get the optimal capital structure. So for me it feels like it's very important to live up to what you have promised to take in this balance calculation issue. And I think we have delivered on that point and I am proud and happy for it.

Interesting. You mentioned food earlier. You started as a very good investment. You acquired a company that was good at this. Now you have also expanded with another facility. Can you tell the viewers what this means? What capacity do you have now and what does this mean for CD Granska?

I think that our internal commitment to food, through the daughter company Cd Enska Mat, is very important. It comes hand in hand with our similar commitment to local health care and possibly other areas as well. But if we're talking about food specifically, From the 1st of August, we will have access to a large kitchen in Sollentuna, which means that we can greatly increase the number of children and students from Cedrienska who get Cedrienska food. It will increase by nearly 8,000 daily portions. With 10,000 children and students, we have made it very far to ensure that everyone gets Cedrienska food. It's a lunch product, a school lunch that we know has a much higher quality, a much higher business quality than what we could get from the external suppliers we had. It's a product that is completely without half-finished products, it's food made from scratch. And when you also do your own management, you don't have to worry about the Moms situation, you don't have to pay for a profit that will end up in an external supplier's pocket, then we notice that we can get this win-win situation with better quality for the students and an efficiency that will benefit the whole company. I can give you a nice example, since you're interested in this question. When we have gone into Swedish food at one of our high schools, and I don't have to mention which one, because this is how it looks at most places where we launch Swedish food, then you can go from around 65 percent of the children eat at school every day, the rest go out and eat maybe in the city or somewhere. That figure rises to 80 percent, in principle, when we have implemented the Swedish food concept. We also get good feedback from the students that they seem to like this and they seem to stay in school, eat this food and it benefits the school so much.

But here I have to ask, I myself have had a number of children who have gone to school where they have rarely been satisfied with the food. You read in the media about bad food at home and other such interventions. How can you succeed so incredibly well with this?

Basically, it's about a philosophy that we at Cedegren will stand for when it comes to collaboration, and which has been very well received by the CEO, David Ebbesen, at Cedegrenska Mat. He doesn't see school food as an external product that lives in its own bubble and should only be there between certain times. Han jobbar med skolmaten integrerat som en viktig del av hela skolgången så att han samarbetar väldigt mycket med rektorerna, biträdande rektorerna, pedagoger överlag med vetskapen om att blir skolmaten bra om barnen stannar kvar, äter där, får näringsriktig mat and that it is done in a context where the school management and the teachers motivate the children to work for this to be good, then the whole school wins. So I think that his attitude is linked to our value of working in collaboration with the various functions that have created success.

A lot is going your way, the feeling. Do you see any goals of concern in the sky?

No, it would be like this. We all in our industry, because it was so recently, we remember how these surprising, powerful inflation changes became a problem for all of us two, three years ago. And of course, even though we We know that our industry still has a hard time dealing with how income and costs are structured. If something were to happen there, it would be something that one should keep an eye on. Personally, I don't see any of that on the horizon, but I'm not an expert on inflation either, so maybe I shouldn't talk about it. But it's something we're keeping a close eye on, with knowledge of how it looked last when this affected the industry.

Since the integration with Apprendere skolor AB has gone so well, it can be said that a lot of risk has been reduced in your company. How has the work with the introduction of the Skärgårdsgymnasium in Norrtälje?

Yes, it's going really well. Now it's a smaller business, so it's less of a risk. But I'd say it's been a joy to see that start. We've had a fantastic collaboration with the principal, her management group and the meetings we've had with the teachers. It feels like the two months we've had together have been longer than what you might have done in some other individual schools that you have incorporated into the collaboration. So a very positive start there. And we can also note that the choice of high school that happened in the middle of the discussion and so on. Now we see the outfall, now year one is coming to that school and it looks better than expected, which is also joyful and safe for the new owner that we are then.

Can you tell us about your business strategy and how far you are thinking about changing it?

Our business strategy is very focused on taking in one to two businesses during a year for integration to happen as perfectly as possible and with the right type of risk and so on. And that's where we are. It's actually a pleasure to see that we have many good dialogues. The plan from now on feels solid. And what has happened lately with these increased investigations that have taken place around the Swedish school, which has accumulated increased requirements, increased regulation, new legislation. I notice, we notice that there is increased interest among many actors to make contact with, for example, CD Granska. And I have the feeling that for many of those who understand that in this environment with tougher requirements, their baby, their school work, will need to be in a context with stronger muscles, where you can solve these challenges together with others. For many of them, I notice that Sedvinska is a first-hand choice for what they want their work to be able to go further with. And I'm proud of that trust in the dialogues we have. And then things have to take their time. But there is no reduced pace. The dialogues continue and it feels exciting to look forward.

If we were to look forward one year, what would you hope to be able to tell?

I think that if we look forward to one year, I think that the most important thing we can talk about there, which I hope will also happen, is that we really get to see how all these investigations in our industry have also led to new legislation that has also been decided on before the next national election. And how we all as citizens can see that there are strong improvements in the regulations for Swedish schools. and how that will lead to a rebuilt trust for the entire private school industry. Because we have to be clear that this is the most important thing in five to ten years. As for our predictability and our investments, it is that we regain trust. for Swedish free school. And I think we will be a good bit on the way there in a year, if everything goes as it now looks to do with power cuts and new regulations. I hope that we go into a choice where the school issue, because of this, is no longer top two, top three. But as we can see now, some indications are falling quite sharply. There was someone here recently who showed that maybe it was the sixth most important issue now before the election. And that it happens for the right reasons. That you simply as a citizen see that they take these things. So let's give it a chance, let them get that trust, because so many good things happen on an improved platform for Swedish free school.

That's a good conclusion. Niklas Poulsson, Co-President of Arbeta, thank you for your contribution.

Thank you very much.