Cedergrenska AB (publ)

Welcome to this live broadcast of the report Commentary with the education group CD Grenska. The board leader Niklas Poulsson is in the studio to answer my questions about activities and results in the quarter. The third quarter is the broken year of accounting, 2025-2026. Even you who are watching live can ask questions in the live chat. Niklas, welcome. Thank you, it's great to be here again. You are working hard with your growth. It looks very good on all levels. The share price has also started to climb. How would you describe the quarter?

I'm going to describe the quarter as you mentioned. It's a very, very stable quarter. I think it's fun and important for all external parties to see that when we no longer... Our growth is driven by this big apprenticeship acquisition. Because it has been done for a year. But now we're past that point. So what does our usual bread and butter... growth strategy. In summary, we are now tugging at 14% growth in revenue with very stable margins. So I think that's exactly where we're going to be. So a completely right margin level for the situation right now. We can come back to that later, why that is. And a completely right pace on smart connections that drive the top line.

If I connect this to your financial goals, then the growth rate in the quarter was 14.1, the goal is 10-15. EBITDA margin, where the goal setting is 6-8%, you came in at 8.2. And net debt against EBITDA, where the goal is twice, now it is at 0.5, so there is some room.

There is room for improvement. We work with the capital structure, so the debt will of course also be affected by the pace of acquisitions in the future. But since we have grown faster than we thought, we have been more profitable than we thought, the debt level is still very low. Maybe not optimal for where we should be financially. The margins are above our financial goals, but it's good that they do that. We need buffers and extra security for the future. It's a great way of working for the company.

What are your main driving forces? I know that school money has increased, but you've done other things as well.

I don't think it's... special magic or mystery that explains this, but it is still the fact that we are very, very careful with what we take our costs somewhere. I have mentioned at the meeting before that we, during a number of quarters now, have employed a lot of people. And maybe you have been a little worried about it. Do they know the situation? How will this affect the margins? I think we show this here that We have done just the right number of new employees, we have really strengthened in breadth and competence, but we have done it with caution and with a focus on stable margins. So it is this cost awareness that permeates everything from the board to the management and down to the directors. Doing the smart things for the schools and the students, but still having an understanding of where the whole thing ends. And then of course, It is driven by the fact that we are constantly entering new contexts with well-elected schools that fit in well with a good onboarding process. If we make the right choices with the contexts and they are integrated in a good way, then they will not weigh the margins, which they might otherwise do for growth companies that don't always make the best decisions on acquisition-driven growth. But I think what you're showing here is that we make good choices, we integrate them in the right way, and they actually contribute to driving up our margins, as it looks right now, rather than anything else.

Yes, I had just picked up that from the VD-word, where Lotta Smith writes in the VD-word that your acquisitions contribute to improving margins. Therefore, the forecast for the entire year is that 25-26% will remain, with an EBITDA margin of at least 7%.

So that's exactly what you said. Exactly, and it's obvious for everyone now. You said we were at 8.2% for nine months. And even if the fourth quarter can be a heavy quarter, take our largest segment, high school, where 60% of the turnover is. Of course, there are a lot of student activities and other costs that come in that quarter, which can mean a certain pressure on the margin. But quite obviously, we will be a bit over 7% when we sum up the whole year. So it feels really safe. And then we have to look into

In November, you announced the double acquisition of Kristina Skolan and Kristina Gymnasiet. But after that, you have been silent on the acquisition front. How does your pipeline look at desirable acquisitions?

Exactly. I've been in these interviews and felt so safe with the acquisition pipeline. And as you say, it's been quiet for a while. But absolutely, I stand firm with the fact that it looks good. And therefore, you can expect that that there will be more pieces of the puzzle to ensure the right level of growth in 2016-2017. Kristina School and Kristina Gymnasium that came in in January will contribute to growth next year, but there will be more pieces of the puzzle and when we are ready to announce it, we will announce it. If we look past the nearest time, I think that the pipeline will be even stronger in the coming years. And the interest in being part of CD Grenska is great to see.

Looking back, there has been one acquisition per six months. Is that a desirable pace for you, or will it change?

When we grow and become a bigger company, it's not like there are huge quality actors that we want to work with. So I think we can expect more opportunities if we want to maintain our 10-15% growth. I don't know exactly when and how it will look like, but the pace will probably increase in the future.

If we look at you as a company, you are on your way to IFRS to prepare for the exchange to the main list at Nasdaq.

How is this work going? It's going really well and I think it's good that you chose IFRS as the first entry in that. I take two priorities when it comes to short-term work towards the change of the list. To get all internal control at a level that is ready for the main list. And then we go over to IFRS. IFRS is incredibly important for the view of us as a growth company and how we are valued. If you go into any database to compare our valuation with other companies, you'll often find a PE valuation of 15-20 times the year's profit. That's because we're still in the old K3 valuation, and it's very hard to be there as a growth company when you compare with other companies on the stock exchange. I'll give you an example of why. We now deliver a goodwill-adjusted profit per share at 5.60 on nine months. The goodwill-adjusted net profit per share at 5.60 is where we with IFRS will have our reported profit in the future. If you add up the fourth quarter from last year, to list what the CD limit is on a yearly basis, you get two more kronor per share in net profit from the fourth quarter last year. In other words, in 12 months, we're at around SEK 7.60 in Mie Fares' reported net profit per share. That's a PE number below 6, maybe 5.80 at SEK 44. So of course, for us, and we still meet a lot of people who react that our PE looks very highly valued. And it's going to be very exciting to enter a world where we, with IFRS, will be able to show these reported figures around, at least now, in 12 months, around 760. Because it will be a different PE rating on our growth company than it has looked. So it's going to be exciting to be able to switch over to that. Yes, you're going from looking expensive to looking cheaper. We're still the same company, and that's just one way of looking at our value. We're a small company, and we notice that we get sold out sometimes because people don't have the time to look through the most obvious numbers. And that will be corrected when we go over 10% with the first quarter next fiscal year.

And the timeline when it comes to Lisbeth, how does that look?

I have to take care of it, because we're working on it. But there are many different parameters to take into account. I can just say that, so we can come back.

You can do that, and you don't have to do it yourself either. No. You have your business in four different segments. It's preschool with 800 children, elementary school with 3,300 students, high school with 6,200 students and adult education with 186 students. Could you say something about these four different segments and how they are developing?

Yes, if we start with preschool, I think it would be great to see that after having had a tough start on this year with fewer children than the previous year, there was now an improvement compared to last quarter. January, February, the enrollment of children. And I would say that many were very worried, given the low birth rate and how it would look at preschool. But I think we show here that we are clearly more stable than you might have thought a year ago when we got into this. And they do a fantastic job. We also have the right resources in the right place for the children, so we can, despite the difficult student or child situation, maintain a solid, fundamental profitability. That has been a positive surprise. There's not much to say about primary school. It's a lot driven by Kristina's school. It's exciting to see how the collaboration is starting. I hope I can come back and talk to you about how the Stockholm region, with the Tärby Free School, the Fredsborg School, the Margareta School and the Kristina School, find good students in this classical primary school. collaboration in the future, because that's our whole value and purpose. The gymnasium, I have to highlight what you also saw that Lotta highlighted in the CEO speech. It's really cool to see the organic growth of over 5% now, which seems to be the consequence of that gymnasium election that just shut down. We have been able to have more programmes, especially in vocational high schools. We have been able to hire more students in both existing and new programmes in vocational high schools. When we look at what it looks like for year one this fall, it is actually a pretty nice growth we see in the size of our high schools. And it is 60% of our turnover, so it is very important that this segment goes as well as it has done now in the high school election. The adult education is small. We have ideas, we're working on them. It's part of our three-year plan to develop that segment. Unfortunately, I can't point out anything that will change this in the short term. I hope we can get back to that question.

Thank you. On the 13th of May, a bill was submitted from the government with proposals for changes in the school law. What are these proposals for changes and which do you think are important?

If you look at it from a helicopter perspective, it's tough medicine for the industry. It's clearly an increased demand for us actors. It's a new legislation, if the bill is passed, it will be the final law. It's a new legislation that means that we will see that schools will get money back from the municipalities, if they haven't done their job properly. They can be prevented from doing value transfer, i.e. allocation, if they have not managed the quality in the right way, according to supervision. And generally speaking, a much tougher environment to act in with this legislation. It is challenging in one way, because we put more effort into meeting this legislation, but it is also probably necessary as part of changing the view of our entire sector, so that there can finally be a feeling that everything is in order. It's also unfortunate that a lot of smaller companies are being hit harder by the new requirements. It's unfortunate if too much of their school money goes to handling all these new laws and requirements. Because it will be misguided. It will risk going out over the children there. But for us big actors, I still feel that we can meet these laws that are coming. We don't see any reason to change our financial goals or in any other way see any drama in the commercial aspect. And I think, as a conclusion, there was concern. I met a lot of investors who also wondered about this, now that you've taken up the law enforcement report as well. They thought that when it came, it would possibly contain a number of rather stupid decisions, which would be driven purely by political principle. For example, that if you received a state budget, you would not be allowed to make divisions in any of the units. We don't see that type of proposal anymore in the legislation. So it's great that the balance is somewhat solid. Even though I think it's unfortunate that a lot of smaller companies have to spend too much time and energy on handling this. But that's not the final word yet. Maybe we can come up with a smarter solution for them. Let's hope so.

Yes, and the board's role is just to make sure that this follows the laws. And then we'll see what the government proposes in the end. Yes. Okay, then we'll leave that area there. You are also responsible for the CDG's investor relations. How does the interest look from the investor's point of view? And do you see any interesting trends in the owner's list?

Yes, that's a good question. It's been an exciting shift in the last six to nine months. The majority of the meetings I get to take during the quarter come from American, European and Norwegian people. investors rather than Swedes. It's quite an interesting shift actually. Partly you can also track it in the list of owners, like the changes that have taken place among the largest owners in Sweden lately. It's an interesting shift.

When you, as an IR officer, look at the list of owners, what do you want to achieve? Increase the distribution of owners so that you get more shareholders? Or do you want a few more? What is your dream scenario?

Since we're aiming at the top of the list, we need to broaden our ownership. It would be great to see a few thousand more shareholders join this journey. private individuals, less institutional investors, that we could get a lot, that we could broaden the knowledge. If you broaden the number of shareholders, you also broaden the knowledge of school Sweden and how free schools can be positive in the sector. So I think we have a goal to spread what we do, the knowledge of what we do.

Okay, there have not been any questions from your viewers. I assume that Niklas has been so clear that it was not necessary. But thank you very much for being with us today. See you in a quarter. And Niklas, thank you very much for all your clarifications. Yes, thank you very much. Fun to be here.