AcadeMedia Stock

Welcome to AcadeMedia Q1 2026 Conference Call. [Operator Instructions] Now I will hand the conference over to the speakers. CEO, Marcus Stromberg; and CFO, Petter Sylvan. Please go ahead.

So thank you very much, and welcome to this presentation of the first quarter of AcadeMedia for me and Peter. And of course, the school year is always a fantastic time for us when we start with new students. And we have also traveled around and opened up a lot of new schools in Sweden and made a lot of acquisitions that we will tell you more about, but the first quarter is, as we always say, a small quarter, but it's important that you could see that the growth continues in a stable way with around 14% growth in the quarter and the profit increase with 18%.

So the start of this full year is very stable and good and continue that development that we have had before. The driver this quarter is the preschool and the international development, but also the compulsory scores and the added dedication. If you look at the added dedication, it's very interesting to see the increased demand in vocational training and the driver of change of the labor market that has also improved the volumes when it comes to avert dedication.

And we have also seen the piece of results in Sweden, and it's very important to make early efforts when it comes to literacy and also when it comes to math. And if we look at the numbers, we will comment on that a little bit longer in the presentation, but -- we have very good results when it comes to reading. We have continued with acquisition, both with -- in Netherlands, that is an important market for us, both with preschools and also continue to dive new schools and we have also completed acquisition in Poland that we could continue and tell you a little bit more about further on in the presentation.

And if you look at the next slide to look at this number and -- and if you look at the PSA results all over Europe, you could see that 1 of the key question is that you should start with reading. The PSA questions is about reading in a good way. And we have really made a lot of efforts to improve the literacy outcomes in the early child grade. So in grade 1, we now are at 93%. We always aim for 100%, but today, it's 93%. So if you look at the quality results, we have better quality results, lower cost for the society. We have better if you compare with national tests -- we have a good grading and also the exam results when they come from the students is also very good. So the quality is stable in AcadeMedia.

And then if we look at acquisition, we have made a lot of acquisitions over the year, more focused on the international development. And as you all know, we are target at to have 50% of the revenue should be outside the Swedish school system and we have completed acquisitions in Poland and also in Netherlands. And we think that both Poland and U.K. will be a very interesting market for us. And also, we will continue to grow in Germany and also in Netherlands, but this gives a good view of AcadeMedia's development.

And if you look at AcadeMedia over a year, we think it's important to look at this slide. You could meet a lot of companies that talk about the future, but we have also presented a very good historical development over here with 18% current EBITDA development over time, and we think that is also promising when you look into the future. And you can also see in the next slide how we perform when you look at our target that 50% should be outside the Swedish school voucher system, and that is development that we should things should continue because we have now opened up 2 great good platforms in Poland and U.K. Okay.

Thank you, Marcus. I'll take you over here, and this is Petter. Good morning, everyone. We will -- I will start to talk about an update of the regulatory landscape, which remains an important topic here for the sector, of course. And the final part of the school voucher inquiry covering upper secondary school was presented last week. The proposed 6% deduction that was presented for a compulsory scope remains while upper secondary school would not be subject to a deduction of similar type.

And both of these proposals, which are #3, there striking over in the slide, these are proposals that remain subject to political and legislative processes and both timing, potential financial impact remains uncertain as the first proposal was not taken forward by the former government. So as of today, we don't have any real indication that this will be legislation. The current focus for us are mainly now on the profit regulation, which we have talked about for a number of quarters, which we will be enforced from July 2027 and the principle of publicity, which will be enforced from the beginning of January '27.

And most of the proposed restrictions from the former government are manageable for AcadeMedia, both these 2 processes will increase administration to some extent, but the impact is considered manageable. And as we have concluded, this may also accelerate consolidation and benefit larger operators with established systems. So please continue with [indiscernible]. Now we'll start to talk about the financial update.

And as Marcus has mentioned, we have a solid start to the year with student numbers increasing by 7.4% and this was slightly lower than initially expected due to the delayed consolidation of one of the acquisitions the Kids & Co in Poland. Net sales increased by 14.1% to SEK 4.7 billion, and this is including organic growth of 4.8%. Adjusted EBITA increased by 18.1% to SEK 250 million, and the margin improved to 4.6%. Preschool and International was the main earning driver. Free cash flow also improved significantly, reaching SEK 195 million compared to last year's negative SEK 111 million.

Next slide, please. And the bridge here shows adjusted EBITA increased from last year's SEK 182 million to SEK 215 5 million, as I as mentioned. And preschool and international provide the largest positive contributor. [indiscernible] School also improved and also supported by one major acquisition, the Prolimpia. Upper secondary school was weaker due to relocation costs and quality initiatives. And within adult education, it was the high vacational education on labor market services, which has had a positive impact on operations.

Next slide, please. And on a rolling 12-month basis, net sales increased by 8.6% to SEK 20.9 billion, while adjusted EBITDA increased by 16.4% to SEK 1.5 billion. The margin reached 7.4% and remains within the 7% to 8% target range. Free cash flow increased to SEK 1.6 billion. Please continue. And now we move over to the segment reporting, and I will start to talk about the Preschool International. Net sales increased by 73.9% to 2.0 million, driven by acquisitions, international expansion and M&A. Adjusted EBITA improved to SEK 32 million from last year's and the improvement was supported by acquisitions, temporary lower personnel costs due to vacation timing and improved efficiency in Swedish preschools. Two acquisitions added 43 units during the quarter. Kids & Co in Poland was completed after the period and therefore not included in the quarterly results.

Moving on to Compulsory Schools segment. Net sales increased by 17.8% to SEK 1.1 billion, while adjusted EBITDA increased by 28.6% to SEK 63 million. The Prolink acquisition supported volumes, sales and earnings. Part of the earnings improvement reflects timing effects from vacation uptake and deferred material purchases and should not be extrapolated. Continued upper secondary school segment. Student numbers were broadly unchanged, a slight uptick of 0.2%, while net sales increased by 1.6%. Adjusted EBITDA decreased to SEK 250 million from SEK 75 million and the margin declined to 4.1%.

The decline was related to relocation costs new client poolings and quality initiatives introduced during the previous academic year. Continued adultfication, Net sales increased by 5% to SEK 442 million, and adjusted EBITDA increased by 7.6% to SEK 85 million. The margin improved to 19.2% and roaming 12 months adjusted EBITDA has now improved for 13 consecutive quarters. The improvement was driven by higher education and labor market services. And it's also worth noting that Q1 is normally the seasonal peak for this segment.

We now move on to the financial position, and we'll talk about cash flow investments and the financial position overall and start with free cash flow and investment. On the rolling 12 months free cash flow, it's amounted to SEK 1.6 billion of net sales and the increase was linked to new openings and expansion units. Strong free cash flow can fund current operations and a substantial part of continued growth, while longer 6 acquisitions may require external financing.

Move on to financial position and net debt, excluding IFRS 16, increased to SEK 2.1 billion, mainly due to acquisitions and although we have had a significant increase of M&As, leverage increased to only 1.0x adjusted EBITDA, which means that we are well below the maximum target of. Continue to next growth and profitability related to the financial targets. And as we can see, with 5.4% in and the adjusted EBIT margin of 7.4%. We are well within both these 2 profitability measures.

As mentioned, the leverage excluding IFRS 16, 1.0 or it's well below 3%. And we have just recently now proposed a dividend of SEK 2.8 million. per share to the Annual General Meeting. So the group is currently delivering within all quantified financial targets. And this concludes the presentation, and we'll now open up the floor for questions.

[Operator Instructions] The next question comes from Philip Ekengren from Nordea.

So thank you, operator. So just trying to understand the strong result in preschool and international. How much of the result is attributable to the international expansion -- and does the international business follow a similar seasonal pattern, a Swedish business? And how should we think about the dynamics of the one-off effects in this quarter moving forward?

So the improvement in our earnings of this first quarter compared to the year was in the Preschool and International was largely attributable to the acquisition that we completed during the last 12 months. And several of these operations we have acquired has remains open in July. So they don't have a similar negative revenue effect that we have in the current operations. So that is one of the main reasons.

Even though we also have an organic improvement in most of our operational business and not the least in the Swedish operation, as mentioned, the main positive effect is through this contributed acquisitions and mainly that they don't -- that they are more open in the quarter than the others. So as a consequence, you should not view this change in profit margin profitability in this quarter as a trend shift, but rather for a full year, we consider margin in line with the previous year to be a reasonable expectation.

Perfect. And then on upper secondary slightly different dynamics there down SEK 15 million year-on-year. Could you separate the temporary relocation costs from sort of recurring premises and quality costs. Could you say something about that? And how should we think about the dynamics of earnings moving into the rest of the year?

Yes. So for the relocation and opening costs were both costs that are one-off related cost for the campus as we open, 3 of them and also the actual cost relocated them. And they are quite substantial, I would say, at least half of this effect is related to them. So on the other hand, you have a running rate of quality measures that we have taken during the last year, not the least for the cost libraries and the start of the libraries and the change of program planned in '25. So there is an underlying higher cost level, but not at all, as I mentioned, as the effect you see in the quarter stand-alone.

But in a similar matter, as I described from the Preschool International, if you view it from a full year perspective, we expect that the margin should be in line with previous year. That is as we expect as early in the beginning of the year now.

Very clear. And then if I may, just squeezing in 1 last question here. You highlighted some strong organic growth in Germany. How much of this comes from filling existing capacity versus new openings? And what is the main constraint of sustaining that growth going forward?

We don't quantify that split, but we have a similar pattern of openings now in the quarters in Germany as we have had in the recent years. And we have a similar utilization rates. So we don't see any change in the utilization rate compared to previous year than existing. We don't see any major change in openings. So it's a stable development.

The next question comes from Jonny Jin from SEB.

A couple of questions from me as well. I want to start a little bit on the cash flow. I mean you mentioned that cash flow benefited from this. Yes, reversal effect from Q4, but even adjusted for that, if I recall you correctly, I think you mentioned some SEK 210 million in your last call. So even adjusted for that, it looks unusually strong for Q1, so I mean, can you just add some words here? What is driving that? And yes, what should we expect going forward?

But it's -- as it has been sometimes positively and sometimes negatively in the quarter. There is -- the main difference is calendar effects and this time in Sweden for how we see, in this case, how we received state compensation for quality improvement programs in the quarter. And they can easily fall just in the shift of the quarter positively or negatively on that date what happened here.

So underlying there isn't any positive or negative change of the working capital profile. And perhaps worth to mention there isn't any negative effect from the profile for the acquisitions we have entered, they are adding a similar profile as the operation as.

Can just a follow up on the upper second there. I think maybe I missed it, but when can we expect sort of the margin to normalize from this? I already later this year? Or how did you say that?

We will see -- we expect a step-by-step normalization of margin during the year. So I think -- I believe you gradually will see it during the year. At one, as an effect of that, we don't have the onetime relocation effects that we had this quarter, and two, that we gradually balance the cost to the current operational level.

Understood. Then one on adult education. I mean it had a very strong start to the year with labor markers up 30%. And Yes, very strong EBITDA margins here. So could you maybe elaborate sort of how confident are you on the outlook given the strong start of the year for the rest of the fiscal year? Can you say a little bit more labor in to comment there?

Yes. So we don't -- as we have said, it's more volatility in the debt dedication in our other segments. But having said that, since a number of years, we have established that longer programs that has lost less volatility and a lot less related to the unemployment rate. contribute to the majority of the revenues and is also our growing part. As we continue in this quarter to have the momentum as we have we closed last year, and we don't see any change at the time being.

I think it's a good reason to believe that for the current year that we are in, we will most likely continue to have these volumes, if nothing dramatic happens even if it, for instance, will be step-by-step a decline of unemployment. So that's the general view. And I think if the volumes stay at the similar level that we have today. The actual profitability will be an effect of how efficient we are to fill the classes, the right classes and how efficient we are to allocate the cost.

And having said that, we can also see that -- and you know that Asian that -- we have said in the past that our target range of profitability is 9% to 11%. We are way higher than that. Last year, we were at 13.8% or 7%. And we think it will be difficult to increase the profitability this year from that rate. If we can keep it or perhaps slightly decline, I think that is realistic, given that we take quality measures.

Understood. Sounds fair. Then I just have 1 final from my end. Do you have sort of any early indications for the 2027 school large uplift across the upper secondary and compulsory school units? And do you think it's likely that this will sort of cover the expected way and postinflation, you see or -- do you have any yes. Comments there? .

No, we don't have any indications yet. What we can conclude based on facts, you can also see what the current inflation rate level is and at least not. It's not significantly high. Most likely, we expect that school vouchers, if nothing else will reflect the inflation rate more or less in all our countries. But the plus/minus, now it's too early to say.

The next question comes from [indiscernible] from ABG Sundal Collier.

So further on the question about upper secondary, you have just opened the campuses. Can you say anything about the occupancy rate today and how long until they reach its target?

They are full Yes, but we have good utilization from the beginning, actually. And a couple of them, we also transfer existing programs that we have and other them together. So it's not like we need to fill up from the first grade.

And secondly and finally, you mentioned temporarily lower personnel costs from higher vacation utilization. Can you quantify the effect in the quarter? And maybe which quarter deposit reverse?

Which segment did you relate to know, to upper secondary.

And can you repeat the question? I didn't hear it. .

You mentioned in the report temporarily lower personnel costs from higher vacation utilization. So if you can quantify the effect .

But we don't quantify it. But as I think I guided generally and as Marcus has said before, Overall, this is a quarter that is limited in size for our revenue and profitability generation. And and you have these kind of effects of indication and so that can have an unproportionally high positive or negative effect. And I don't think you should -- you shouldn't deviate too much of the potential outcome from the year based on the variances, but rather listen to what is our view for the full year.

[Operator Instructions] The next question comes from Karl-Johan Bonnevier from DNB Carty.

Yes. Marcus and Petter 3 from me as well, please. Looking at your commentary now that education et cetera, how do you see the stability in the plateau or in the portfolio of contracts you have for the is there a large of transitions going on? Or is it a largely stable platform? .

There is a similar pattern to that as it has been the previous year. There are continuous transitions of programs or municipality-based tenders that we win a lose, but we don't see any major profile change as expected this year. .

When it comes -- if I just comment on 1 thing because what I think is interesting is that we see a little increase when it comes to vocational programs. And we see that, that is very positive because a lot of municipalities now asks us for tenders when it comes to vocational training. And they also are looking for quality tender processes. So it's not so much about just lowest price that we don't like. They ask us for quality tenders.

So hopefully, we have the right position in the fantastic town of Boras. We just won a tender. And you could say that Boras is a small town, but I think that's a good sign that we really could win these sort of tenders. And we have 1 brand that is called mobile that is focusing on just occasional training. So far, they have developed very well.

And in that segment, it's where you all benefit from slightly longer programs, if I understand it right, or.

Yes, we also have longer program. And 1 very interesting area is also to train people that works as nurses in elderly care. And we both have a lot of schools that train the teenagers to go into this area, but we also have very good brands that retrain people also. So hopefully, this segment will have good development this year.

And when you look at the component that is, say, driving a lot of the month labor market services, is that normally, historically, I remember that coming out of election periods, labor market, that part of it this seems to be going away after an election that being inflated ahead of an election is -- that's a part of the company say what's happening here as well? Or do you think?

Exactly. That was what used to happen, but it doesn't happen like that anymore. And why I don't -- I can't tell you that. But -- but you could see that the part that is the labor market program is quite small from our revenue, and it was so small if you compare it with what we call this Ikecola, that is much bigger. It's almost 10x what you -- the number of students that the labor market is buying. But what we have seen, if you go back maybe 6 months or something like that, the number of students has increased a lot. -- the tenders that is coming out is also increasing.

And it's a sort of -- when you look at this highly priced specialized programs they have increased with the labor market. And I think that is the right thing to do because if you have very expensive vocational program, you shouldn't use Ecosul, you should use the labor market. So maybe the education system is dividing in a very positive way for us because then we could get the right prices when we go to the labor market and they have folks on quality.

And if you have the little broader vocational program, you could use your case cola. So far, it's very positive. And we also have this online program to retrain people and we have contracts with the bigger cities for many, many years. So the mix of different programs in adult vacation is good for the moment. .

Excellent. And when we widened the scope of the adult education also to outside Sweden? What are your first experience with the platforms you now have in Norway, Holland Netherlands and Germany.

If you go to Norway, very positive. It's a great team. They have focused on to make more acquisitions and -- and so the same development, you could say that in Sweden, and we really think it's a good team. When it comes to EBA, it's a little bit more like bars. They apply. It's like an ordinary sort of occasional school. And so far, I think they follow the plan in a good way.

And now we're looking into the small part in Poland and in U.K., I think it's a little bit early to say much about it. But you could say that the market is very, very big. The market is very big. But so far, we are very small. But -- so we work a lot with that to understand the market, see if we could do more acquisitions, if we could start greenfield, but the adult part of AcadeMedia International, I think it will grow.

Excellent. And put your brain a little on the preschool side as well. Your U.S. peer bright horizon had quite a hiccup on Friday looking at the share price and one of the things we talked about was the enrollment trends. I'm not sure how does it look for you when you're looking at -- you're obviously not fretting too many markets with brighter Horizon, but when you look at your own footprint, how do you see the international enrollment?

So when it comes to bright rise, if you asked about that, I think you have to look into the U.S. market and it's a lot of the payment in U.S. is private and you pay maybe $25,000, $30,000 in New York, $50,000 a year. And of course, if you could work at home, it's better to have your children at home because so it cost you so much money. And this has affected Bright Horizon and KinderCare a lot in U.S. Bright Horizon in U.K., they have quality issues. So they so it's a big operator, but they have a lot of quality issues in the U.K., and that has affected them a lot, and maybe they have focused too much on profit.

I don't know that I think we have a very good position in Cambridge and London. And I think the team that we have just acquired is very focused on quality. -- build taking step by step. So I think we have a good position. And the overall picture when it comes to utilization is much bigger. And I got a question this morning in the television. And if you look at the capacity utilization in Norway and in Sweden, it is fantastic. I think we have -- we have the best numbers when it comes to children in Norway that we have ever had.

And in Sweden, even if it's tough with the demographic development, the numbers looks great. And that's because we have worked with this for many, many years. We have closed the right units. We have increased units where the municipality has closed down units. So you have to be on top of things, but so far, the biggest market is okay. What will happen in Germany, we have to look into that, but the need is still very big. -- still very big of new places, but -- you have to look into Berlin in a good way because the number of children -- the number of places has increased a lot in Berlin, but in not failure, and also in Bian,I think it's in the big need of new places. And the same situation in Holland, also big new places.

Excellent. Maybe a follow-up on that. When I looked in your annual report, you give the utilization numbers for the preschools in the different countries. And I saw Finland sliding from 88% to 80% during the last fiscal year. And also maybe if you could comment a little about how you manage an operation in Netherlands if you have a capacity utilization of 54%. I understand the business or the change in the market.

That's good questions, good questions. And if you look in Netherlands, we are not a concern when it comes to less capacity utilization when you look at these numbers because you are paid per hour. That is the system. So it could be a Friday when you don't have children, but then you have to have temporary employees -- so you match the need of children with the number that you paid to the south.

And if you look at the acquisitions that we have made with moms and Kinder on I think we have good management that could handle this sort of more volative capacity. When it comes to Finland, I think there is the country where we struggle most with the capacity utilization and they could learn a lot from Norway and from Sweden, and we are working a lot with that for the moment. But that is something that we have to work harder with.

There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Thank you very much. Do you want to comment on?

We had a couple of questions in the shaft. The first question is a slightly low integration process in coal. And I think you mentioned this is now resolved and on track. I'm a bit uncertain there. It might be a misunderstanding. What we described is that we have -- it took a little bit longer time to make the actual closing from the signing. We're talking about weeks, so fall out of this quarter. and the closing was October 1. And we haven't started to integrate it yet. So as you probably understand, it's on track from closing date, but it just has happened.

In the upper secondary additional cost premises and colleague, can you develop on this and what do you estimate this to be fully implemented and fully cost? I think we have already commented that from the analyst questions. When would it make sense from Carl here to separate the Swedish business and the international business, perhaps you would like to comment that, Marcus.

You mean in the international segment. .

Yes. Would it make any sense to separate the Swedish business from the international business?

So of course, we are working with that. So that could be -- and if you look at the history of AcadeMedia, we have taken these sort of steps where we have separated and take it in the natural way. When we will do it, I can't answer that, but we are -- we are moving to that position where we maybe have to report this in another way.

But the most important is that we have the focus, the management have the right focus and we have the right focus, both on the intentional development and also the Swedish part. So how we report it is a secondary question. I understand that you want transparency, but we don't want to change things for just to change things. We want to take it step by step. So looking ahead, maybe a year, I think we will report also in another way.

Was that all the questions? So then we say for your time, we sure a good day. Thank you very much. Bye-bye.

Welcome to AcadeMedia Q3 (sic) [Q4] 2026 Conference Call. [Operator Instructions] Now I will hand the conference over to the speakers, CEO, Marcus Strömberg, and CFO, Petter Sylvan. Please go ahead.

So, good morning, everybody, and welcome to this presentation of our Q4 report, and we will also sum up the full year for AcadeMedia. And this time of the year is really fantastic for AcadeMedia. We have all the school starts in Sweden, and we plan the school start international. And we have never had so many students, children, parents choosing our school. And when you talk about election, there are elections in different countries every fourth year. We have election every year, and a lot of parents choose our schools.

So, I will just give a short summary of the quarters. You can take the next page. And we can say that this quarter and this year has been a very good year for AcadeMedia. We have increased the turnover. We have increased the profit. We have a lot of organic growth, as you can see in the numbers, and we have a very stable position to continue to grow. And we see improvement when it comes to quality in all parts of AcadeMedia, and they have also been a part of improving the earnings. We see improvement of earnings in all our different segments.

And we have also had focus on the international strategy of AcadeMedia. So, we've made three acquisitions in the period. And after the period, we have continued. And what is maybe interesting to see now that we have opened up two new countries, both Poland and U.K., and we have continued to grow and develop in our existing market. And in Sweden, we have opened up four more sports schools, and that is also something that we really believe in the future.

So, the fourth quarter, a record quarter for AcadeMedia, driven by quality, driven by investment and a stable and good development. And as I started to mention, quality is really focus for AcadeMedia. And what we see when people could choose, when parent could choose, quality is also a driver for growth. And one thing that is debated a lot in Sweden, not so much in other countries because they have other system is about the grading. And I must say that AcadeMedia has the best grading. We are more accurate to grading than the municipality schools. So, it's check when it comes to grading.

We also have developed the numbers when it comes to qualified teachers. So, you could say that we have better numbers when it comes to the teachers, qualified teachers in math, Swedish, English. And the overall picture that we are on the same level as the municipalities. And the third area here is something that we are really interested in, how do we perform when it comes to the socioeconomic weaker students. And we made a report just before the summer, and it was a very good result because that we could say that we really outperformed a lot of the work that other schools when it comes to these children. So, good principals, good teachers, it's possible to have good results even at socio weak economic schools.

And the number, if you go to the school inspection and see how do we came out from the different inspection that they are doing, we also performed in a very good way. AcadeMedia outperforms on almost every key quality metric. And I must also mention reading. That is one area that we really had focused on, and we keep on improving the number of students, children that could read in early stages.

And one question that I could get also is how big is this sector? And you could say that it's around 430,000 children that go to independent schools. We're talking about 1 million parents year after year after year after year, choosing independent schools. And if you look in the bigger cities, we are talking about 50% of the students in upper secondary that go to independent operators. So, in Stockholm, Gothenburg, Malmö, Helsingborg, Örebro, a lot of the bigger cities, we have 50% of the share that is private. And in Stockholm, 25% is AcadeMedia's market share. And if we go to primary schools, it's around 25%. So, you have to keep in mind when you look at this sector, it's a big sector, it's an important sector. And when the students make their choice, they choose independent schools.

And we have also continued to have this acquisition strategy. So, this is an illustration of that AcadeMedia they have a long history of making acquisition. So, that's a little bit unique with AcadeMedia is that we could grow through small bolt-on acquisition, big mergers, new starts, but this picture shows the number of acquisitions that we have done. And we have taken care of the brands. We have improved the brand. We have made them better tomorrow than they were when we made the acquisition. And that is real value creation. And we have also managed to do that international.

And if we look at some of the acquisitions that we have done now, we have entered the U.K. market. And we have followed preschools in the U.K. for many, many years. We have met a lot of companies. And we think that Chestnut is a very interesting platform. It was reasonable valued, but very enthusiastic management. And they really wanted to be a part of us, and now they recommend us to others, and they also have new starts that is being planned. So, a good platform to start to learn the U.K. market.

And then we also have entered Poland. And Poland and the company, KIDS&Co is people that we have known for 5 years. We have met them, visited the schools, spend a lot of time together. And we think that the right time to take this step into Poland is now. So, we will continue to grow in Poland, new starts, bolt-on acquisitions. And we also, in September, now start a primary school, not just the preschools in Poland. And as you, all of you know, Poland is an interesting market coming in Europe.

And also to make some extra bolt-on acquisition. And I think Netherlands is quite interesting because we started with Winford, a company that we've known for a long time. We then went to preschools. We entered the Adult Education. And this is a sort of bolt-on acquisition when it comes to Winford. So, schools come to us, we try to make them better working together with Winford. So, this is a small but interesting acquisition.

And if you look at the profit, and we have a very stable margin, stable profit development, and we have really a focus and the driver here is all of the segments, but of course, international development and the adult education is really driving the performance here. And I must say that the transformation that we have done when it comes to Adult Education is quite interesting. And we have also started to have Adult Education outside Sweden. And one key, what we are working against is that 50% should be the business that is Adult Education and international business. And here, the development has been really, really, really good. And if you look into the acquisition, it's even better than these numbers. So, you can see that we are now passing 40%, around 41%. And if you look pro forma of the acquisition that we have done, it's even higher. So, we have the target of 50%, and we have a lot of possibilities coming in the platform countries that we just acquired.

Thank you, Marcus. I take over, and good morning, everyone. Petter Sylvan here. So, I will start to give an update of the regulatory landscape in Sweden. And as we see on this page, the school voucher inquiry has been withdrawn. We have talked about that before. And while the principle of publicity and the profit regulation remain or has just been passed as laws. And for AcadeMedia, for both these reforms, we estimate that it will have a limited financial impact. However, of course, it will be a significant administrative change and burden for us to manage.

We have estimated before that fulfilled requirement of the principle of publicity will require investments in IT-related systems up to SEK 25 million. And at the time being, we have one FTE that is managing to give you a quantified indication of what it means in terms of headcount. For the other reform, the profit regulation, it is to be seen, but we think operational changes will be limited for large actors as us. And we continue to assess that the greater regulatory complexity may contribute to further consolidation in the sector, which could favor larger providers as us with established compliance capabilities. So, please go to the next slide.

So, as Marcus mentioned, we conclude a great year with a record fourth quarter. Net sales increased by 10.6% to SEK 5.7 billion, while adjusted EBITA increased by 16.2% to SEK 552 million. And the adjusted EBITA margin improved to 9.8% from 9.3% last year. Student numbers increased by 5.2% and organic growth was 10.2% in the quarter. All segments contributed to the improvement in earnings with the international operations serving as the primary driver. Free cash flow amounted to SEK 354 million compared with SEK 532 million last year. And this lower cash flow was primarily driven by an acquisition-related payments in the quarter and to a much less degree, timing of municipal payments.

Okay. Let's continue to the next page. We see that the main contributor to the year-on-year earnings improvement in the quarter here and the Preschool International delivered the largest positive contribution. They added SEK 43 million in the adjusted EBITA. And the improvement was driven by increased volumes and revenue in Germany, together with improved efficiency in Norway. Compulsory School added SEK 40 million, supported by the annual school voucher revision and acquisitions. Upper Secondary School contributed SEK 12 million, primarily due to lower rental costs and improved capacity utilization. Adult Education added SEK 10 million, supported by higher vocational education and labor market services. Group costs increased by SEK 10 million compared with the same period last year.

We can continue to the next page. Turning to the full year's picture. We delivered both growth and a clear improvement in profitability. Net sales increased by 7% to SEK 20.4 billion, while adjusted EBITA increased by 15.3% to SEK 1.5 billion. The adjusted EBITA margin improved to 7.4% from 6.9% and was within our financial target range of 7% to 8%, and that's the first year since a couple of years back that we are within our profitability margin. Earnings after tax increased by 19.2% to SEK 1.1 billion. Free cash flow amounted to SEK 1.3 billion, up 14.2% year-on-year. And overall, earnings grow materially faster than sales, resulting in a margin improvement of 0.5% for the year.

So, now we move on to Page 17, and we will look at each segment. So, if you continue. And we start with Preschool International. The number of children increased by 8.1%, driven by international expansion, while net sales increased by 16% to SEK 2.3 billion. Adjusted EBITA increased by 24.9% to SEK 216 million and the margin improvement to 9.5% from 8.8%. The improvement in profitability was largely driven by increased volumes and higher school voucher funding in Germany, together with temporary lower cost levels in Norway. We had 4 acquisitions, which summarized to 30 new units, and this continued to support growth during the period.

Next, Compulsory School. The student numbers increased by 8.3% and net sales increased by 12.9% to SEK 1.4 billion. The acquisition of Prolympia had a positive impact on student numbers, sales and earnings. The adjusted EBITA increased by 13.2% to SEK 129 million, while the margin remained stable at 9.5%. The quarter, therefore, combined acquisition-driven growth with maintained profitability.

We move on to Upper Secondary and student numbers increased by 0.6% and net sales increased by 3.1% to SEK 1.5 billion, supported by more students and the annual voucher provision. Adjusted EBITA increased by 6.5% to SEK 197 million, and the margin improved to 12.7% from 12.3%. The result benefited from lower rental costs following the lower rent indexation, reduced costs for leased computers and improved capacity utilization.

And we now move on to Adult Education. They continue to improve its profitability in the quarter. Net sales increased by 5.3% to SEK 478 million, while adjusted EBITA increased by 27% to SEK 47 million. The adjusted EBITA margin improved to 9.8% from 8.1%. The improvement was mainly attributable to higher volumes in labor market services and municipal Adult Education. On a rolling 12-month basis, profitability has now improved for 12 consecutive quarters with an adjusted EBITA margin of 13.7%. As previously communicated, the second half of the reporting year include more completed courses, resulting in lower capacity utilization with the main impact in the fourth quarter.

We now move on to the financial positions on the group, and let's start with the free cash flow on Page 22. AcadeMedia maintains a strong cash generation. Free cash flow before expansion investments amounted to approximately SEK 1.3 billion for the year, and this corresponds to 62% of adjusted EBITDA. Increase in other external CapEx is driven by acquisitions that were completed in Q3 and Q4. Maintenance CapEx amounted to approximately 1.4% of net sales following an increase in new openings and expansion units compared with previous years. The strong cash generation supports investments in existing operations and continued growth. Larger acquisitions may still require external financing.

Let's continue to next slide, the financial position and leverage. And it remains strong despite the acquisitions that we have completed during the year. The net debt, excluding IFRS 16, amounted to SEK 1.9 billion compared with SEK 953 million last year, and the increase is mainly an effect of acquisitions completed during the year. Leverage, excluding IFRS 16, was 0.9x adjusted EBITDA compared with 0.5x last year. And this remains well below our financial target of a maximum of 3x. Property-related lease liabilities amounted to SEK 12 billion, and the book value of the properties was SEK 1.6 billion at the end of the year. Key message here, the balance sheet retains substantial financial flexibility after a year of active M&A.

And finally, if we flip to the next page, our performance against the financial targets. The adjusted EBITA margin was 7.4%, which is, as I mentioned, well within the range, target range of 7% to 8%. Revenue growth according to the target definition was 5.8%, and this is also within the target range of 5% to 7%. Leverage, excluding IFRS 16, was 0.9x, well below the maximum level of 3x. And with that, we conclude the presentation, and we open up for questions.

[Operator Instructions] The next question comes from Jonny Jin from SEB.

Couple of questions from my side. I want to start with the cash flow and the change in working capital is negative in this quarter, which is a little bit unusual given your seasonal pattern. And I know that you attribute this to two things, partly the acquisition payments completed after balance sheet date and secondly, the calendar of payment in the international business. So, my first question is basically, what was the sort of effect from acquisition payments in the quarter? If you could maybe help us quantify that first effect, please?

So, the effect from the acquisition related was SEK 140 million. So, that contributed to the main difference compared to last year. That's the -- your first question.

Yes. That's clear, SEK 140 million from the acquisition. And then secondly, the calendar effect in the international business, could you also, yes, quantify that effect as well? And also elaborate if this is sort of a pure calendar effect this year? Or is it more sort of a structural shift we should expect in cash flow as you grow the international business?

It's directly to the Norwegian business. And there, they have the majority of the municipality payment, most is paid by municipalities or the significant part, but a significant sum of their payment is made in the end of quarters. And when we close the year, we always get a higher degree than the rest of the year. So, we used to have this swing effects that differ year-by-year, specifically in Norway. So, last, the difference compared to last year related to this, depending on the municipalities pay on the other side of the quarter or the end of the quarter, the difference this year was minus SEK 70 million. But it could also flip the other way around and be positive in the next year.

Understood. Understood. So, maybe that sort of temporary this year and will normalize coming quarters, I expect.

Yes, exactly. If you look over years, it would normalize between the years.

So, it's very important to say that there is no change in the way that the cash flow is developing in the company. It just depends on these two questions and when you get paid.

Understood. That was very helpful. And then moving on to a quick question here on the adult business. I mean now we also see some signs of stronger economy in Sweden here. So, do you see sort of signs of lower volumes in the adult business now? Or how has the new fiscal year started for you in the adult business specifically?

No, we continue to see still strong volume development in the Adult Education. And as you know, Jonny, we had a significant increase of programs that we were allotted in the beginning of the year. Now they are to be signed up in the start of the school year, and we only have positive signs, although we don't finalize yet how many students they actually will apply. But we have a good momentum in the beginning of the start of the year, and we still conclude that the unemployment rate is high, and we don't see any change in that as of today.

So, maybe, Jonny, there is one thing that you should look at also, and it's the application to university and higher education in Sweden. And that was top level in this spring. We have never seen so many applications, but the number of students that could start were taking down. So, there are a number of students that couldn't start to university. So, you have a lot of people that want to retrain. And a lot of these people are looking at vocational schools because they are shorter and they help you in a better way to job and you don't take so much study loans. So, the driver, I think, when it comes to Adult Education, upskill, reskill, it's not just unemployment, it's the change in the labor market.

Yes. Understood. Sounds promising. We'll see. Then just one final question for me is more of sort of a clarification question. And I think you mentioned in the report that your preliminary student enrollment figures for the upcoming year is up 8% year-over-year. Is that purely organic? Or is it total including M&A?

It's total including M&A.

Okay. That's clear. And, sort of, if you would give a proxy to what is organic of that?

We don't disclose that at this time of the year. We used to disclose later during the year, the actual number of, no, we don't disclose the number of students. No, no.

I see this as cumulative figures. I mean we used to disclose how much the voucher increases are per segment and so later during the year, but we never used to disclose exactly which student how they...

[Operator Instructions] The next question comes from Karl-Johan Bonnevier from DNB Carnegie.

Just to continue on the last topic, the 122,100 students you see starting in your school. I understand, is Poland included in that? Or is that just the structure awaiting the clearance of the competitive authorities in Poland?

Poland is not included.

But that would add, say, 2,000 to 3,000 more students if that comes through?

That's correct.

Excellent. And...

It's just, you know, Karl-Johan, we always -- when we report children, it's full-time equivalents. So, if there are 2,000 Polish students, there won't be full-time equivalents in our reporting when you read the numbers until we have held them for 1 year.

Excellent. And just on Poland then, I saw you talk about the number of places KIDS represent. What is the utilization of that when you are looking at the places?

The utilization rate?

Yes. No, I think you talked about there was 3,000 places in KIDS, Poland, but obviously, that is not the number of students, I guess.

No, exactly. I honestly don't know the utilization rate. I don't know if anyone knows. We can check it up and return if you like.

But the overall picture when it comes to Poland, it's a little bit like how it was in Germany. We have a lot of families that need preschool to get to work and the unemployment rate is, in fact, quite low in Poland. So, the demand of preschool is high. But you see also the same development as it was in Germany because if you take the older children from 4 to 6, they in the East state went to the Kindergarten as it's called, it's the same name in Poland. But when it comes to the lower age group, almost no one go to preschool. So, if you, we have a lot of schools, we take the children from early ages and then they continue with us. So, the demand in Poland is something that we really believe in. And we also see middle class that want to invest in education.

And understand -- do I understand it right that Kids have quite a good density of preschools in the larger cities in Poland?

When it comes to the older age groups, it's the same as in Germany in what we call Kindergarten. But to be honest, the quality there is quite bad. And it is as in East Germany because if you visit the kindergarten in East Germany, you don't want to take your children there. So, we see modern families wanted a good preschool and we have -- I think we could present them for a very good offer.

And coming back to the student numbers. Earlier, Marcus, you have alluded a little to how you see the start-up of the Upper Secondary segment in that. Do you see stable students base starting in the new year compared to last year? Or is there a growth in the first year students?

I think I can't comment on that. But as you know, we have invested a lot in campuses. And I must say that the situation is very good so far. So, I'm not sleeping bad over Upper Secondary.

Sounds excellent. Then just one more question. Looking at the strong development in Preschool International with the margins coming up quite substantially during the last fiscal year. Is that mainly a situation where you have closed the gap now between the performance of the Swedish unit and the international units? Or what is happening underlying?

The underlying reasons are multiple, and we started to talk about them in the beginning of last year that we had the various plans in the various countries for improvements. In Finland, they are restructuring work from the restructuring that came from at a low profitability, and they developed according to plan. In Norway, we have been -- we had renegotiated the leases to a significant degree to much favorable terms. And we've also been better compensated during the year for pensions.

In Germany, there was a time lag of the voucher compensation and the inflation cost, which have had in all countries, but the delay has been most severe in Germany. And during last year, we got most fully compensated in Germany. So, at one hand, we conclude that we ended the year margin-wise in the International segment pretty much as we expected and also gaining some contributions from synergies in average from the acquisitions.

Looking forward for this year, we think this will be more of a consolidation year. We will need to spend quite significant time to consolidate the number of acquisitions we have done internationally. And then furthermore, we don't start the year with these improvement conditions that we had last year. So, we will defend our margin for the year to come, but we don't expect any similar margin increase.

Good to hear. Good to know. Just one final, group cost, there was quite a substantial increase in Q4. Is that a new level? Or was there some sort of temporary things in there?

The group cost?

Yes.

Yes, the group cost increased by SEK 3 million. And while it is increase and notable, one can debate if it's substantial, we will always expect an increase in the group overall cost. And one is that some of those increase to a high degree relates to our international expansion. But having said that, specifically in the Q4, we had -- most of the difference is related to one-off related restructuring costs of layoffs and change of position personnel.

One final I saw as well. Looking at the U.K. and Polish market entry, does those acquisitions also include any properties? Or is that all in lease properties?

For both of them, there are only leases, no properties.

There are no more questions at this time. So, I hand the conference back to the speakers for any written questions and closing comments.

So, thank you very much for your question, and you can always call us if you have any complementary questions. So, thank you very much. Have a good day.

Welcome to AcadeMedia Q3 2026 Conference Call. [Operator Instructions] Now I will hand the conference over to the speakers, CEO, Marcus Strömberg; and CFO, Petter Sylvan. Please go ahead.

So good morning, everybody, and welcome to this call that we will present our interim report of the third quarter, and we are in the middle of the preparation in the last time of the school year. So it's really a fantastic time for us. And we also now deliver a strong report with a stable development, focus on the future that we could do with AcadeMedia. And I will take a few starting notes, and then I will hand over to Peter to present the financial results. .

And if we try to sum up the third quarter, as I mentioned, it is a strong and stable quarter. We have followed our strategic focus, and we have delivered a lot of acquisitions. We have this target where we should be 50% out of the Swedish schools. And we have really, really worked with this during this quarter, just during the quarter and also after the quarter.

We have announced 5 different acquisitions in the international strategy and 1 in Sweden. And if you look at the number, we continue to grow in a good way and also the financial stability has also performed in a good way. And we see good positive performance from the international operation from the Adult and from Primary schools. We could continue.

And of course, one key for us is the quality in the business. And one way to look at this is to look at the Swedish [indiscernible] inspector's quality reviews. And I must say that AcadeMedia performs very well. If we comapare with the total sector, we see strong activities from the Swedish schools inspection, and we think that, that is very positive for the schools in Sweden. But as you see from this slide, we perform in a very good way.

And if we continue then and look at what have AcadeMedia done in the history. So this is not really what I talk a lot about. I've been working with the company for 20 years. But we have been, as you all know, very good develop brands, to create organic growth, to give trust to the parents and the children but we are also a very good company to make acquisitions. And if we look back around 15 years, we have made 75 acquisitions, a lot of them in Sweden, but also a lot of acquisitions international. And I must say that I don't want -- I want to be humble. That's part of my person, but I must say that we are maybe the best to acquire education companies in Europe. And if you look at all of these companies that we have acquired, we also have the performance to develop the quality, the growth in the different brands. So AcadeMedia is a strong company when it comes to acquisitions.

And then we also have expanded in different countries. So it's not so easy as to start the business in other countries. We see a lot of Swedish and other companies try to build up markets in other countries. And we build our ability to start with strong relations. If we look at the management team that we have in Germany and the Netherlands, we have known them for many, many years, and then we start with this platform acquisitions. And over the year, we have developed a very strong business now in 4 different countries. And we also have focused both in Poland and in the Netherlands. And what we think is the right thing to do now when we have built up this strong management teams that it's time to grow. Then it's time to make more acquisitions. And that is what you see now in Germany, in the Netherlands because we have a strong presence. We have a strong platform to continue to grow from.

And then we -- of course, we have focused on the international. That is our road map, but we have also made one acquisition in Sweden. This is a company that I personally know for 20 years. It has been some illness among the owners and they wanted to find a new owner, and we are very happy that AcadeMedia is the new owner of Prolympia, very well-performing schools. They have 10 schools, more than 4,000 students, a long queue in all of their schools. So they are really good schools. But they also have this profile that is missing at AcadeMedia when it comes to sports and health.

And we think that, that is the right focus to build a group of schools with this platform. And we hope that this could be the base of this. We want to maybe change some of our scores in this profile, and we think that this will create also attractiveness. We see that it will be more challenging when it comes to demographic development in some of the cities in Sweden. And we think that these schools, they really have the right position.

And if you look at the long-term development when it comes to AcadeMedia, we are so proud to see that we have stable financial performance, we continue to grow, we continue to follow our strategy when it comes to the international development, and all of our segments now have a very strong position. You can see -- on the next slide, you can see the performance when it comes to the number of -- the percentage of the companies that is outside Swedish schools, and we have also a strong pipeline when it comes to make acquisitions. And our focus here now is to enter Poland, U.K. and also to continue to grow in existing markets.

So thank you very much, and I will hand over to our political expert now.

Thank you, Marcus, and good morning, everyone. Yes. So let's start to talk a bit about the political situations and investigations that we have at hand right now. As we mentioned in the last earnings call, the Swedish government presented a legislative proposal to extend the principle of publicity to include all independent educational providers in January, and the legislation is now expected to be adopted in January 2027, the beginning of next year. And under this proposal, the public will have the right to request access to documents from our operations on essentially the same basis as the public authorities. And all requested documents will be subject to confidentiality assessment and formal decisions we require in cases where information is not disclosed.

So we are closely monitoring the legislative process, and we are preparing for implementation to meet the requirements in January '27. And at this stage, we estimate that the implementation will result in a one-off cost of approximately SEK 25 million. The ongoing implications, however, are assessed to be manageable within existing financial frameworks and it's not expected to have any material impact on the operating margins. And then there is some update regarding the profit inquiry. There has been recent negotiations between the ruling parties and still ongoing as far as we know. We expect the legislative proposal in June followed by parliamentary vote before the election with the new rules expected to enter into force in 2028.

So that's the update about the investigation, and we can continue to next Page 10. And then I, once again, would like to highlight how we invest the podcast, which is available wherever you get our podcast. And for instance, in the latest episode, we look further into our international business together with [indiscernible], who is Director of International Operations, and he developed his thoughts on our international M&A. The purpose of the podcast is to engage with Swedish investors and other stakeholders through short focused episodes, delivering clear insights in just 10 to 15 minutes. And thus far, we have released about or 8 episodes. So please continue.

Let's talk about the financials now. As Marcus outlined earlier, we achieved a solid growth of 6.6% year-on-year. Preschool and international segment together with primary schools and Adult education contributed to the positive development. a secondary, we have a softer performance were expanded library, staff following new legislation had a negative impact on the result. Additionally, our adjusted EBITDA margin increased to 8.2% compared to last year's 7.7%. And this means that we were reaching SEK 438 million in absolute terms up from SEK 386 million. The increase in profit has translated into higher free cash flow.

Now turn to Page 12. In the Pre-School and International segment, the increase of SEK 44 million was positively impacted by increased volumes and revenue in Germany and a temporary lower cost in Norwegian operations. The Compulsory School segment is up SEK 10 million year-over-year, and the Upper Secondary School segment saw a decrease in earnings of SEK 12 million, and this was primarily attributable to increased personnel costs due to expanded LIBOR staff. Following this new legislation and lower rental cost and improved capacity utilization had, on the other hand, a positive effect.

Adult Education continues to report strong results driven by increased volumes in higher vocational education and labor market services and group cost increase compared to the same period last year. Nonrecurring items affecting comparability amounted to SEK 3 million. And there was acquisitions and integration costs of SEK 30 million and there was a reversal of provision for contingent consideration amounted to SEK 27 million plus. So please continue. The 12-month rolling net sales continued to grow and amounted to SEK 19.8 billion, the roaming for a month adjusted EBITDA amounted to SEK 1.440 million and corresponding to a margin of 7.3% within our profitability target of 7% to 8%. And we continue to have a solid free cash flow.

Slide 14, please, and let's look at the quarter's development with each segment. So let's go to the preschool first and International on Page 16. So the number of children increased by 11.3%, and our growth was primarily driven by international expansion. The international operations account for more than 30% of the group total sales. The net sales increased by 11.3% year-over-year, positively affected by acquisitions. Currency changes had a negative impact of 3.5% and the organic growth was 10.4%. Adjusted EBITDA was SEK 169 compared to SEK 125 last year. And this improvement was largely driven by increased volumes and higher school voucher funding in the German operation as well as temporarily lower cost levels in the Norwegian operations.

If we now move on to compulsory schools. On next page, we note a minus 1.4% decrease in student numbers. Adjusted for units that are to be closed, the number of students decreased by 0.7%. And corresponding figure for the country as a whole is 1.0%. Net sales rose by 3.4%, primarily explained by the annual school voucher additions and adjusted EBITA grew by 11.6% year-over-year, reaching SEK 96 million. This is corresponding to an adjusted EBITA margin of 7.9%.

Please move on to Page 18 for Upper Secondary School segment. The number of students grew here by 0.5%. We saw a stable growth in sales, while profitability was somewhat softer year-over-year, with an adjusted EBITA of SEK 127 million compared with last year's SEK 139 million. Adjusted EBITDA margin was 8.1%. The decrease is primarily attributable to higher costs related to the purchase of literature and the expansion of library staff, partly offset by lower rental costs and improved capacity utilization, which then had a positive effect.

And then we continue to Adult education segment, where we continue to see strong performance with profitability now improving for the 11th consecutive quarter. Sales increased by 6.7% to SEK 495 million, up from SEK 465 million, mainly attributable to higher volumes in higher vocational education and labor market services. Adjusted EBITA came in at SEK 67 million, up 19.6% year-over-year. The adjusted EBITA margin amounted to 13.5%, up from 12% in the same period last year. You have to remind, the second half year includes more courses that are completed, resulting in a lower capacity utilization. This mainly affects the fourth quarter to come.

Please continue to next page, financial position, and we look at the free cash flow and investments on page 21. The free cash flow for the last 12 months amounts to SEK 1.444 million, the free cash flow as a percentage of EBITDA is 74%. Maintenance CapEx as a percentage of sales continued to decline. This is a consequence of fewer new openings and expansion.

We continue to next page, 22, the financial position. Net debt, excluding IFRS 16, increased by SEK 508 million compared to last year with a leverage ratio, excluding IFRS 16 at 0.9%, still well below the financial target of less than 3. Increase in net debt-to-EBITDA DA is mainly explained by the acquisitions made during the quarter.

And finally, on Page 23, our financial performance against targets. Our last 12-month organic growth, including small bolt-on acquisitions and 5.6%. Within our financial target of 5% to 7% growth. Our adjusted EBITA margin amounted to 7.3% within our target range of 7% to 8%, and our former profitability target of adjusted EBIT, which is typically 20 basis per lower than adjusted EBITDA, this would also have been within the target range. The leverage ratio of 0.9 remains well below the required vessel of 3, leaving further room for acquisitions when opportunities to come.

And with these words, we end the presentation, and we open up for questions.

[Operator Instructions] The next question comes from Philip [indiscernible] from ABGSC.

Yes. First of all, the regional operations for a as benefiting from, I think you write temporary lower cost levels. Could you please quantify the size of this effect in Q3? And then also perhaps comment a bit on when that is set to normalize?

Yes. There is a mix of cost that is temporarily lower. There it's slightly lower pension than expected. There is significantly lower sickness leave rates, which we think -- which is good, but we don't think that it's on a sustainable level, and there are some cost of maintenance that we think will be delayed and we would rather be in the fourth quarter. So the margin improvement compared to last year for the whole segment is 1.4%. And roughly, as we described in the last quarter, we expect that the underlying profitability increase is rather like 1%. So 0.4%, 0.5% is more temporary effect and phasing effect and mainly attributed to Norway. And most of that is that will come negatively in the next quarter.

That's helpful. And then perhaps on German volumes. So both German volumes and vouchers continue to drive the segment growth here or at least margin improvement. How should we think about the run rate margin in Germany once acquisitions are fully treated on perhaps a year or 2 out?

Could you repeat the question, please?

Yes, sorry. So how should we think about the run rate margin in Germany a few years out when recent acquisitions are fully integrated? Yes, perhaps a comment on German margins underlying.

We have done an uplift in margin in several of the countries and not the least in Germany. And we separate the operations in the preschool German operation and the school operation. In school, mostly of the acquisitions we make are margin positive to the segment. And we also see potentially good integration improvements within 1, 2 years for these acquisitions. For the preschool, there has been a significant part of the up during this year. So we don't -- yes, we think it will probably -- we will sustain the margin, but we don't expect similar uplift next year as we have had this year. .

The next question comes from Johnny Jin from SEB. .

I want to start with a quick clarification of Philips previous question on a temporary lower cost in the quarter. Is SEK 10 million fair to assume is that the magnitude we are talking about in the quarter? .

If you do the math, I think 0.4%, 0.5% in the segment as more temporary positive effect. I think that would be something around 10 [indiscernible], yes. .

Okay. I just want to clarify. Then on the upper secondary school segment, that margin took a rather big leg down here on EBITDA margin, it down 110 bps year-over-year, and you are currently running at a 8.4% EBITDA margin rolling 12 months basis here. So is that all of the representable level going forward ahead? Or can we expect a further decline?

On an LTM level, we don't expect a further decline. I think that if we look at it year-to-date, we have talked about for the last, yes, for the quarter since the beginning of the year that there will be a margin pressure due to the reforms in the secondary -- we have also said that upper secondary comes from a long history of profitability in the range between 8% and 9%. And we are the high utilization rates and high efficiency rates that they come from our view from a relatively high level. So we have had the expectation that we should be able to hopefully sustain the margin compared to last year if we look for the full year. But realistically, I said that perhaps it will be a couple of percentage points lower. That might -- what we might end for the year, we will see. And then for the next year to come, our best expectation is that we will sustain the margin from this level going forward. We don't have any additional known reforms or so at the time being that we put further pressure.

Good. Then moving to the...

So I lap up a secondary. So we have really performed fantastic when it comes up the second year over 20 years. So we are the biggest operator in Sweden. We have 25% of the students in Stockholm Malmo and [indiscernible] we have handled a lot of different challenges. But if you look at the coming year, I think the key driver will be vocational training because we see a higher number of students going into vacation training. And of course, if you look at what the municipality has done, so they have shut down a lot of the vocational schools, but we have kept these course.

We have practice. We have locking. We increased the number of students, and these schools are more profitable. And if you look at the coming year, I have the strong belief that we will take benefit of that we have kept our locational brands. So the portfolio that AcadeMedia have for the moment is very strong because we have a platina program. And the other thing that we are doing is that we are investing in our campuses. And this is really among the best upper-single group that we see in Sweden. We invest now in Stockholm. We invest in Malmo. We invest in Gothenburg, and this will also take us into the future because the students want to go to these scopes. So even if we always have to handle challenges, regulations. So we have done this all over the years. But for the moment, I think we have a strong portfolio of reps.

Understood. Now moving to the adult segment here. I want to ask a question about organic growth. Organic growth start to uptick here in the quarter sequentially. What is driving that, would you say? And how should we think about the sort of longevity of that growth level? .

So if you look at the dedication, you have to think what is the key driver. What is driving the added dedication. And I would like to say that the main thing that is driving the added allocation is the change in the workforce in Sweden. And we have -- we have changes when it comes to very people at this high educated because of AI. We have people that is unemployed. So a lot of things is taking us to create growth when it comes to and education. And if you look at the applications now, to university and high schools in Sweden, it's all-time high. And when you have all-time high university, you also have all the vocational programs that we are running. So the overall picture is that we are really performing good.

We are taking advantages of the changes that is in the labor force, and we have the right brands, and we have also developed our online platform. So we are very positive when it comes to the [indiscernible] dedication in the coming years. But of course, you always have to struggle with tenders. You have to win that we trust among the students, but we have a very, very strong position.

Okay. Just one final from my end, and that's a clarification on the cost relating to the publicity principle here. I think you said SEK 25 million, if I could catch you correctly, when is that expected to hit your numbers? And will you charge everything in a single quarter? Or will it be a split between the coming quarters?

We expect that the absolute majority of absolute significant part of that amount will be made as investments in system, so that we activated and and will depreciate it over a couple of years, so a number of years. So you won't have any single quarter where we have a substantial effect.

Okay. So with the capitalization of development costs starting next quarter then or

Exactly. Now we have -- it hasn't started as capitalized cost. We have started that pose extend that is very reminded, but probably the capitalization will start in Q1 or so -- or Q1 of the Summer.

[Operator Instructions] The next question comes from Johan [indiscernible] sundian from DNB Carnegie.

First one from my side, it's on the earn valuations that you're doing in the quarter. Can you give some color, what kind of unit they are referring to? And if there's any particular kind of acquisition that hasn't performed according to plan, that we should be aware of?

So the earnout revaluation is related to the acquisition we made of Windfort. The school company acquired in Netherlands a couple of years ago. And what we are what it's relating to, they are following their plan or slightly better than the plan from an organic perspective, but part of this earn-out was related to significantly higher acquisition agenda, which hasn't been the focus in the business they have been there. It'd be much more organic focused and focused on the margin income. And therefore, we constituted that they will not repeat that scratch target, and therefore, we made that evaluation.

That's clear. And you've been talking a lot about the adult business throughout this call, and it seems pretty optimistic regarding both -- at least for a long-term outlook for the segment. But regarding short-term visibility, how much do you know and see for the fall as of now?

Here and now, we don't see any change in demand of courses. So we continue to have a good momentum, which yes. We hope to bring that with us in the beginning of will see. As you probably know and we talked about before, in January, we were locked a 20% increase of the programs for the autumn. So we have a good foundation for good program starts. That what we know so far.

And you should also -- you should really keep in mind when you look at the dedication that we have made a strategic shift when it comes to the different markets since 10 years ago. So for the moment, our most important market is what we call occasional program like university courses but sure. And we think that a lot of students will move over to this sector, and we we are the market leader here. And as I mentioned before, if you look at application to ordinary University in Sweden, I think it's 430,000 students applying to universities. And then it always is a spin over to these shorter courses. So if you look at the macro, it's very positive. And the next driver is the focus on vocational program. And we see that the labor market authorities are performing better now, they invest more in added in vocational training. Some of our competitors has done a quite poor job. So we take the tenders. And I think the focus on vocational program on adult that is from the labor market authorities will increase next year. And we have a very strong position when it comes to our brand that is called Mobil, really good performance.

Excellent. And you have a few years now, I talked about the margin corridor in the adult business being 9% to 11%, and you have been performing a bit above us for a time. Where do you think we should anticipate adult business perform next year, if we don't see any big kind of swings either to the downside or upside on volumes?

I think if we continue to have a stable growth in line with what we have had this year. We don't see any significant risks for the margin being depressed. So we've seen on rolling 12 months, this is the level we are at roughly within these volumes as so we don't necessarily see a significant change in in volumes. The downfall will, of course,

And maybe we should just comment short also on -- so we really believe in this more short-term MBA or university education program. So -- and we just want to make clear that we have invested in 2 very interesting acquisitions, first in [indiscernible], and it's not the steel brand. It's an education brand in Norway, and we have also invested in -- and this is contract is like bearings in Sweden. So we are starting our cluster with these sort of schools, and that is acquisitions. And we have also announced that we will invest in organic growth in Warsaw and in Liverpool. So we have high ambition when it comes to be more international, when it comes to the adult education also. And you can look at the company in France like Galileo that has worked with this for a few years. So we believe that here, we see potential for AcadeMedia.

Excellent. And then the final question from my side. It's on the Prolympia acquisition. When do you anticipate to have kind of approval from Swiss competition authorities for that acquisition to be close?

So I think, in fact, that we have already got it, but I don't think that we don't announce it. I look at [indiscernible]. But I spoke with owners. And I think it's clear, but I don't think that we are regulated to announce it when we get this -- I think I don't think so. So it continued to work according to plan. .

Because you write in the report that it's still subject to approval. .

I'm looking at it. But from my knowledge, we have got the approval, but maybe I should check it up, so I don't have dealt about it an item. So but I'm quite convinced that we have got this approval, but maybe we should comment on that, if we just check it up. But it should not be on a problem because we have a very small part of this compulsory segment. So we have never been concerned that we shouldn't get this okay from the authorities. .

Yes. That's clear. We can take that offline afterwards. Thanks a lot.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you very much for your questions. You can call us if you have any update question and I wish you all a very good day. Thank you. .

Welcome to the AcadeMedia Q2 Report '25/'26. [Operator Instructions] Now I will hand the conference over to the speakers, CEO, Marcus Stromberg ; and CFO, Petter Sylvan. Please go ahead.

So good morning, everybody, and welcome to this presentation of AcadeMedia Q2 results. 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 the 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 share. And we have also continued to make acquisition. 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 Finland with a bolt-on 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. When we look at 2026, we think it's very positive that now the school voucher is up 3.4% 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 Vittra. Vittra has been a brand 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 Vittra is also schools that is working with some of the socioeconomic tough areas in Sweden, and they perform really, really well. They also put the right grades, and we really want to show you that Vittra 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 AcadeMedia is performing very well when it comes to these results, better than the average in Sweden, and we have also improved the differences over here. So we could say without no doubt that we are very -- we're 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 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 AcadeMedia's performance because we have stable profitability, stable over a year, and now we have also improved the International Group. So the rolling 12 numbers is positive, and the result in this quarter was up both margin, revenue and -- talking all segments, in fact, also.

And our international strategy and the road map for AcadeMedia has -- 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 court 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.

And 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 3 reforms currently -- 3 major reforms currently proposed. It's the profit inquiry, the principle of publicity and the school voucher inquiry. First report from the bottom, the school voucher inquiry. It has been announced since some time that, that that 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 in a few minutes. And the property inquiry, we are still waiting for a potential proposal to come in the near future here.

Next page, please. So on January 19, the Swedish government presented a legislative proposal to extend the principle of public access to all independent educational providers. And the legislation is now expected to be adopted in January 2027, which is about 1 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 principal equal conditions.

Next page, please. I strongly would like to highlight our investor podcast, which is available wherever you find your podcast. And these episodes are in Swedish. For instance, in our latest pod, we did describe the proposal of public access legislation potential impact on AcadeMedia more thoroughly. And the purpose overall of this podcast is to engage with Swedish investors and other stakeholders through short focused episodes, delivering clear insights in just 10 to 15 minutes. This far, we have released 7 episodes. And as I said, you find it on all platforms, 4 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 EBITA margin increased to 6.6% compared to last year's 5.8%, reaching SEK 345 million in absolute terms, up from SEK 289 million. And the increased profit has translated into higher free cash flow.

Now turn to Page 12. The improved adjusted EBITA are evident across all segments, as mentioned. In the Preschool and International segment, the increase of SEK 43 million is positively impacted by acquisitions, higher volumes and efficiency improvements in our international operations. The Compulsory School segment is up SEK 11 million year-over-year. The Upper Secondary School segment saw increased earnings of SEK 5 million, primarily attributable to higher capacity utilization. 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 education. Group costs increased compared to the same period last year. We also have some nonrecurring items affecting comparability, which amounted to SEK 13 million. These are personnel costs related to harmonization of employment terms within Upper Secondary Education.

Now turn to next page. The 12-month rolling net sales continued to grow and amounts to SEK 19.5 billion. The rolling 12-month adjusted EBITA amounted to SEK 1.388 billion, 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 quarter's development within each segment. 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 of 3.9% and the organic growth was 7%. Adjusted EBITA was SEK 115 million, and the acquisitions during the first half year 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 a lower number of children in the integrated preschools. Net sales rose by 2.9%, primarily explained by the annual school voucher revision. Adjusted EBITA grew by 14.3% year-over-year, reaching SEK 88 million. This is corresponding to an adjusted EBITDA margin of 7.2%.

Moving on to Page 18 and 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 EBITA of SEK 114 million compared with SEK 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 a strong performance with profitability now improving for the 10th consecutive quarter. Sales increased by 1.8% to SEK 501 million, mainly attributable to higher volumes in higher vocationall education and labor market services. Adjusted EBITA came in at SEK 67 million, up to 6.3% year-over-year. The adjusted EBITA 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 SEK 1.342 billion. The free cash flow as a percentage of EBITDA is now 71%. Maintenance CapEx as a percentage of sales continued to decline. This is a consequence of fewer openings and expansion units.

Okay. The financial position on next page. Net debt excluding IFRS 16, decreased by SEK 288 million compared to last year, with the leverage ratio, excluding IFRS 16 at 0.4, well below the financial target of less than 3. Even including property-related lease liabilities, the net debt is lower. In the period, repayment on revolving facility and credit line amounted to SEK 491 million.

Okay. Finally, on Page 33 here, our financial performance is 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% to 7% growth. Our adjusted EBITA margin is 7.1% within our target range of 7% to 8%. Under our former profitability target of adjusted EBIT, that typically is 20 basis points lower than our adjusted EBITA. As previously communicated, it would have been just below the target range. The leverage ratio of 0.4x remains well below the required threshold of 3, which leaves further room for acquisitions when opportunities occur.

And with these words, I end the presentation, and we open up for questions.

[Operator Instructions] the next question comes from Jonny from Jin (sic) [ Jin from SEB ].

A couple of questions from my side. I think I will start with the Preschool segment. I mean the margin looks very strong in that 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 higher school voucher in Germany and a lower cost level in Norway. And all of these 3 are sustainable changes, so to speak. However, we then also, as you mentioned, the temporary lower cost of vacations in Sweden. And that is, as we mentioned, more temporary nature. So it's a phasing effect.

Yes. But what is the effect from the temporary lower vacation expense in Sweden in the quarter?

You mean how much financially?

Yes.

Yes. Okay. The financial effect is about SEK 15 million.

SEK 15 million.

SEK 15 million, yes.

Yes. Okay. And the higher voucher in Germany, is that now a 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 other factors are in line with the expectations of the improvements we have had for the margins this year for the Preschool 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 that -- I think you said that even if you increased efficiency, it wouldn't translate to high profitability during the year. Now yet 1 quarter later in this quarter, we can see that margin -- adjusted margin is up 10 bps here year-over-year. So can you maybe 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 school.

Sorry, yes, I heard you. I thought you talked about compulsory.

So no, upper secondary. That's right.

No, we still continue to mention, we continue to have those increased costs that put pressure on margin. But what counterbalanced is a higher capital utilization than we had expected. So there are 2 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 summarize 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 between -- it depends what you mean with that because you say -- we are increasing the margin from -- to this quarter, 7.3% from last year, 7.2%. So that will imply -- that could interpret 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 2 quarters combined, Q1, Q2. And if you look at them combined, you have a little margin reduction. 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 rate has benefited you historically. So as this reverse, when do you expect that effect starting to hit your numbers or show in the numbers for you?

You 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 segment, and I suppose that is due to higher unemployment rates. And now unemployment rate in Sweden is going down. So when do you expect that to show in your numbers?

Yes, I understand. I think first question is we have just seen just recent data that it level out slightly going down. I think it's first to be seen if it sustainably actually is going down. But we used to say that if it did go down sustainably, it probably will take a number 4 to 8 months or something until we have any clear effects on our volumes. There are some delays in the system, I would expect. Is that sufficiently or -- is it the case? I just -- yes, you can complement.

Should comment because if you look at the Adult Education and compare the different part with how this segment looked maybe 6, 7 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 comment in the report that we won a lot of these places, and they are not so affected by the unemployment rate because they are almost like high schools and university. A lot of people want to re-train. So even if the unemployment will go down, it will not affect us so much as it did 6, 7 years ago because now we have built a more solid[ route ].

Okay. 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 that you expect a lower margin ahead. And that's my question, when do you expect that to hit you?

It's difficult. That is not what we see today. We have a lot of application to the vocational training. So the adult segment is still positive.

The next question comes from Philip Ekengren from ABGSC.

So starting off just a follow-up to Jonny'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 SEK, 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 decline 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. And on the sort of principle of public or open or what we should call it, announced or presented in January, you talked of a one-off effect. Could you -- I mean, this is highly speculative from your side as well. I understand that. But could you -- and what sort of size do you think it will be because of that?

Yes, 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 a huge ERP without kind of risk, but rather a minor small midsized implementation of ERP in terms of size of money, if that makes any sense.

Yes. Got it. And then finally, perhaps going back to sort of the straight in adult again. Higher vocational 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 a little bit above our market share, but our overall market share is reflected in this what has happened now from the authorities. So of course -- 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 direction. 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.

The next question comes from Johan Lonnqvist Sunden from DNB Carnegie.

We talked a lot about the Adult business. 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?

The volumes look continuously strong. We don't see any negative -- even though we did discuss the just recent announced 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?

Yes. We have seen the ramp-up of costs. And I've said that, that might actually lead to a 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 rolling 12 margin outcome.

But maybe one thing, your eyes on when it comes to this year is the increase of the school voucher. I guess you have seen that -- 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, say, margins for the Swedish school operations during '26?

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

But are we talking about 100 basis points in Swedish school operations or it could be...

It will help us to maybe handle the cost increases that Petter mentioned. We will invest in libraries. We will invest more in teachers. We will invest more in books and so on 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 the right cost situation with the school voucher development.

Makes sense. And my final question is on the Preschool business, and we've talked a little bit about margins there. You have -- I think also in the last report, you highlighted that you have an 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 I don't -- 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 the vacation -- cost vacations.

[Operator Instructions] 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.

Welcome to AcadeMedia Q1 Earnings Call for 2025-2026. [Operator Instructions] [Operator Instructions]

Now I will hand the conference over to the speakers CEO, Marcus Strömberg; and CFO, Petter Sylvan. Please go ahead.

So thank you very much, and good morning to this report of AcadeMedia first quarter. And the first quarter, it is a small quarter, but it is an important quarter in AcadeMedia. And we are very pleased with the results of the first quarter. When we look at our numbers, a lot of students have attended our different schools. And I will just start to make some updates, and then, I will hand over to Petter Sylvan, and he will continue to go through the numbers.

And if you first look at the net sales, it's around 7% up, and most of it is organic. And what we look a lot of is the number of students. And last year, it was 7% up, and we continue with a good growth of 3.5%, and most of all, we are very pleased with the development when it comes to upper secondary where we have a record result when it comes to number of students.

And we also had this focus on quality and to act early. So the focus on reading, the focus on quality has also resulted in these good numbers. And we also have a proposal to the general assembly of the Annual General Meeting from the Board of Directors to make this -- continue with this voluntary share redemption programs of totally maximum SEK 400 million.

We have also revised our financial targets. It's very small changes, but I will update you on that in a few slides. So please continue. And this is something that we are really, really satisfied to talk more about, and it's our focus on reading. And we have always had a lot of focus on this, but we have really increased our efforts. We have trained teachers and a lot of collaboration with different parts to improve the reading in early ages.

And if we look at this number, this is a way to look how many of our students in year 1 is available to read according to the school authorities systems. And we are now at the level of 90%, and that is very pleased to see this. We, of course, want to achieve 100%, but this is a very good step at the right direction.

And then, if we continue to look at the next slide, please. So -- and this is when we talk about the revised and financial targets, and this is something that we have done to clarify the development of AcadeMedia. And if we look at the sales growth, we keep the target with 5% to 7%, and we are now at that range.

When it comes to profitability, we want to make a clarification that we will talk about EBITA instead of EBIT. And that's why we are really a company that is growing through acquisitions. And if we look at the companies that is working a lot with acquisitions, they have this target EBITDA. And the difference between the EBITDA and EBIT in AcadeMedia is very small. And we don't want to see this that we are decreasing our target. We are increasing the target, and we have a very strong pipeline when it comes to profitability. And when it comes to the capital structure, we keep the target. And maybe Petter could also comment on that a little bit more.

And on this slide, you see the different changes in the profitability, and we look at the first quarter. And if you look at the first quarter, you can see that we have improved the profitability compared with last year. And you can also see the differences in these 2 measures. And as I comment on, they are very, very small, and we will keep the target to be in the range of 7% to 8%.

And then, if we continue to look at our historical development, we really like to look at this picture because it shows that we have continued to grow our EBIT year-by-year in a very good way. And if you see this development, we want to keep it up through acquisitions and through improvement also in our mature market. So we have a long-term record of improving the profitability and the EBIT in the company.

And one of our most important targets now is to continue the international development. And during this quarter, we opened 500 new places in Germany. And what is fantastic with these places is that they are almost full at once. So the capacity utilization is 100%, almost less -- in less than 1 year.

And if we look at what we did just before the summer, we continued with acquisitions, both in Netherlands and in Germany. And for the moment, we have a quite strong pipeline where we want to continue with these international acquisitions. And we also have power to do these acquisitions because we have a low debt. It's around 0.6 to 0.7 of EBITDA, and Petter will comment on that in the coming slides.

And of course, in Sweden, we have this regulatory environment, and we are also moving into the election period in Sweden, where you get a lot of different proposals from different parties, but we just want to comment on the 3 important acquisitions -- 3 important proposals that is in Sweden for the moment. It is the profit inquiry, the school voucher inquiry and also the principle of the public. So it's about looking into the company in different ways. And we think that there will be a proposal during the spring in 2026. And they have these steps that we show in these pictures. And if you want to have any more explanation around this, you can ask us a question when we have this session with questions.

Thank you, Marcus, and good morning, everyone. Before I specifically about -- inform about the Q1 financials, I would like to inform about that we, a couple of days ago, launched our new podcast, which has the purpose to engage Swedish investors and other stakeholders through short, focused episodes delivering inside in just 10, 15 minutes. So it's AcadeMedia's investor pod. The podcast host is Charlotte Stjerngren, who is former Editor in Chief at EFN and analyst at DNB Carnegie in the past. This fall, we released 2 episodes, which first is Initiation of AcadeMedia with me as the podcast guest. And second is Behind the Political Statements with Henrik von Sydow, which is external affairs strategist at DNB Carnegie and a former member of the Swedish Parliament.

The purpose of the podcast is to offer transparent and accessible insights into AcadeMedia and helping investors to understand what are the opportunities and challenges for AcadeMedia going forward.

So let's continue to next slide. As Marcus outlined earlier, we achieved a good growth of 6.7% this quarter. And it's important to emphasize that this first quarter is a seasonally low quarter for AcadeMedia. And this is because part of the business are closed during the summer, which has an impact on net sales and profit. All segments, except the Upper Secondary School segment contributed to the positive development.

Additionally, our adjusted EBITA margin increased to 4.4% compared to last year's 4.3%, reaching SEK 182 million in absolute terms, up from SEK 166 million. And the increase in profit has translated into higher free cash flows.

Now turn to Page 10. The improved adjusted EBITA are evidenced across all segments, except the Upper Secondary School segment, as I mentioned. And in the Preschool and International segment, the increase of SEK 7 million is driven by a positive contribution from the acquisition of Yes! in Netherlands.

In the Compulsory School segment, it's up SEK 5 million year-over-year, and it's stable. The Upper Secondary School segment, we saw a lower earnings of minus SEK 5 million due to higher costs following new reforms for designation and including increased costs for libraries. And some of these costs are expected to persist throughout the financial year. Adult Education continues to report strong results, driven by high unemployment, and in particular, increased volumes in higher vocational education.

Let's move on to the next slide and the 12-month rolling results. The net sales continued to grow and amount to SEK 19.3 billion. The rolling 12-month adjusted EBITA amounted to SEK 1.3 billion, corresponding to a margin of 6.9%, just below our profitability target of 7% to 8%. We continue to have a solid free cash flow.

Next slide, and we can continue to the segment that's a couple of slides ahead, that's the first. And let's first look at the Preschool and International segment. The number of children increased by 8%, and our growth was primarily driven by new preschool openings as well as more school students in Germany and the acquisition of Yes! in the Netherlands. The international operations account for more than 30% of the group total sales.

The net sales increased by 9% year-over-year, and currency changes had a negative impact, minus 2%, and the organic growth was 7.5%. Adjusted EBITDA was 0, and the improvement reflecting -- the results reflect the segment's seasonal low. The positive effect from the contribution from the acquisition of Yes!.

On the 27th -- sorry, 25th of September, we announced the decision to establish over 500 new preschool places in Germany across 7 new units. We now have a pipeline of 2,000 to 2,500 new preschool places over the coming 3 years.

Okay. Let's move on to Compulsory School, and we note a 2.5% increase in student numbers. Net sales rose by 5.1%, driven by increased number of students and the positive impact of the annual school voucher revision. Adjusted EBITA grew by 11.4% year-over-year, reaching SEK 49 million, corresponding to an adjusted EBITA margin of 5.4%.

We move on to next page, and Upper Secondary School segment, and the number of students grew by 0.8%. We saw a stable growth in sales, while profitability was somewhat lower over the year with an adjusted EBITA of SEK 65 million compared with SEK 70 million in the same period last year. The adjusted EBITA margin was 5.4%. And as I mentioned earlier, the earnings were negatively affected by initially higher costs for teaching materials due to new reforms, the so-called GY25 and libraries, and some of these are expected to persist throughout the financial year.

Okay. We continue to next slide, and we there see a continuously strong performance from the Adult Education segment with profitability now improving for the ninth consecutive quarter. Sales increased by 7.7% to SEK 421 million, and this was mainly attributed to higher volumes in Higher Vocational Education and also from revenue perspective, Labor Market Services.

Adjusted EBITA came in at SEK 79 million, up 12.9% year-over-year, and this resulting in a record high margin of 18.8%. And during the quarter, the Swedish economy showed early signs of stabilization, although the recession persists and unemployment remains elevated.

Okay. Continue to the next page, one more page, and we are at the free cash flow and investments. And free cash flow for the last 12 months amounts to SEK 1.222 billion. The free cash flow as a percentage of EBITDA was 67%. Maintenance CapEx as a percentage of sales continues to decline. This is a consequence of fewer new openings and expansion.

Next, the financial position. Net debt -- and you can move to the next page. Yes, you are right. Net debt, excluding IFRS 16, decreased by SEK 222 million compared to last year with a leverage ratio excluding IFRS 16 at 0.7x, well below the financial target of less than 3. Even including property-related lease liabilities, the net debt is lower than last year. This is due to low indexation, low number of new entry contracts in the quarter and FX effect.

You can continue to next. Finally, on Page 21, our financial performance against targets. We are -- for the last 12 months organic growth, including small bolt-on acquisitions, standing at 5.8% growth, and this is within the financial target that we have of 5% to 7%. Our adjusted EBITA margin of 6.9%, just short of our target range of 7% to 8%, but we are slowly getting closer. The leverage ratio of 0.7x remains, which is well below the required threshold of 3x. And as Marcus mentioned, leaving further room for acquisitions when opportunities occur.

And with these words, I end the presentation, and we open up for questions.

[Operator Instructions] The next question comes from Philip Ekengren from ABG SC.

So perhaps just start with a short elaboration on the rationale for the new targets and perhaps also a clarification on the new -- or what you call the new dividend policy. To me, it doesn't really sound like it changed, but could you just clarify that slightly?

Yes. Yes. We have done what we call the -- called small revisions, basically to either clarify what we find most important, EBITA, the fact that we are -- is an acquisition-driven company or with the dividend policy reflecting what we are doing and what we continue to aim to do.

And if I explain that further for EBITA, as Marcus described, the difference between EBIT and EBITA is very little for AcadeMedia, 0.1% to 0.2%, depending on what time and measures. And it's basically only that we find EBITA the absolute most used metrics for a company that is acquisition-driven at AcadeMedia. And therefore, long term, we find that more relevant to follow.

And I think that would it have been a greater difference in the change, then we also would have changed the target of 7% to 8%. Now, the difference is so small. So it doesn't make it relevant to change it to 7.1% to 8.1%, those kind of minor adjustments. So that's the reason behind that.

For the dividend policy, we can conclude that we have basically only strike over a few sentences in the current policy. We have had the policy that we make dividends of 30%, and that distribution could also be done using share redemption or buybacks and as part of fulfilling this 30%. But in reality, for a number of years, we have always -- or for a number of years now done the dividends at 30% or something around that on profit. And in addition to that, we have done the share redemptions for a couple of years.

And the total distribution we have done isn't reflecting what we say in the targets, so -- but changing this, we changed the language that we believe is common for most companies that do share buybacks or redemption programs that you have a dividend expressing the financial distribution we aim to do with dividends, i.e., the 30% of the profit.

And then, of course, the dividend is only made after we have secured the quality and after we have secured that we are having our maximum growth agenda for sales and financed. But then we continue as the same we have done now, that we make distribution of the dividend. And if there's still after that is excess capital available, then we will continue to do share redemptions or buyback programs. So it's basically just reflecting what we have done the last year, we aim to continue to do the years ahead.

Sounds more than reasonable. And then, just to kind of touch on politics here for a bit. I think we all appreciate your kind of time line of the proposals that are kind of set right now. But could you comment on what you're seeing in the sort of the start of the election year? We've seen the liberals being out stating that they want to ban profits in schools. Could you just comment slightly on that, please?

So if we start with the liberal party, of course, we are a little bit surprised of that because the liberal party has done very good things for the school system in Sweden. If we look at Björklund, who was a very good education minister, made a lot of good things, and now, they have one new proposal every day, so we are a little bit surprised of that, that is maybe a part of the election year. But we look at reality, and reality is what we believe that the Tidö parties will make sort of agreement. It will come with proposal next year. And we think that it will be some tough regulations. It will be when it comes to this, what we call, profit regulation, and it is something that we are quite used to working with in Norway and Germany. But we think it's possible to handle from our side, and we are well prepared to handle it. But we think that the Tidö government, they will give some proposals, the spring 2026, according to the slide that we showed you.

Sounds good. And then finally, maybe coming back a bit to the operational side of things, so in Upper Secondary School, I understood as kind of the costs are up due to more supplies. And Petter, if I quote you correctly, that is set to continue throughout the year. Could you specify that a bit and perhaps can you give some guidance on how much it will impact the remaining of the year?

We don't make specific forecast, but what we want to clarify is that the cost -- the reforms that are in place pretty much start to have the effect from the start of the school year, meaning now this quarter. And these are costs for instance for fulfilling the requirements on libraries, which means that you need to further develop libraries and higher personnel and similar.

And then, there are reforms for GY25, that is the program for how you set the grades. And this -- all of this will require resources that will persist during the year. I mean, it will not have a dramatic cost effect overall. But it will mean that we don't expect -- even if we would increase the efficiency in the upper secondary school, we don't think that will translate into further higher profitability during the year. We are -- we will be happy if we can try to defend or have a similar margin as last year.

Just a few words about up secondary because we had a fantastic year last year. As Petter mentioned now, we may make some investments. Some of them are one-off, you could say the investment in the new core system is a sort of one-off. But what you have to keep in mind when you look at Upper Secondary is that we have fantastic student numbers this August. And we are, in fact, at the all-time high level. So even if we invest a little bit more, we also have a lot of students. And I think our strategy when it comes to Upper Secondary are different brands, and they are performing very well. And we also see an increase in number of students going to vocational programs, and that is also very positive. So it's sort of more investment, but we also see results of what we have done.

The next question comes from Johan Lönnqvist Sundén from DNB Carnegie.

First one from my side, it's a little bit docking into Phil's question earlier on the kind of new targets. And just curious to hear, given your kind of new -- your new margin definition, the margin target definition, should we anticipate that PPA amortization should increase significantly ahead, i.e., that you will ramp up your M&A activity quite significantly compared to what we've seen over the last few years?

You can say, if we go back in history, we made a lot of acquisitions. But the reason is we have done acquisitions, of course, but we have also a lot of focus on organic growth when it comes to Germany and when it comes to Sweden investing in campus and so on, so -- but what we see now is that we have a low real debt. We have a lot of firepower. We have a good pipeline of acquisitions. So, of course, we would like to increase the acquisition pace. And that is also a signal that we want to send. So that's why we changed this from EBIT to EBITA. And it doesn't -- it's not about the numbers because the difference is very small. It's more about the single that we want to increase the pace when it comes to acquisition.

When you look at the pipeline, give some color on kind of split between smaller bolt-on acquisitions versus bigger platforms, potential geographies? What do you want to do? And what could be expected for us to see during, say, in the coming 6 months?

So what we would like to see is that we continue the growth in Germany when it comes to acquiring schools because we think that is the right thing to do in Germany. We will continue to open up new schools, but that is not the question you asked. So more schools in Germany. And we also see a very interesting development now in the Netherlands with a lot of different proposals that is coming to us. And we also look -- I think we mentioned that before that we look into Poland, and we look into U.K. So -- but the main focus, that is Germany and in the Netherlands. And of course, we also look in the countries that we have spoken about. .

And we have also spent some time together with the bigger operators in Europe, and Petter and I also spent a few days in the U.S. meeting some of the big operators over there. So what we have learned is that AcadeMedia, in fact, has a very interesting position at the international education market with a low debt. So the problem for a lot of our competitors is that they have high debt. So we think that the opportunities that will open up now is really something for AcadeMedia. We will be in key positions. So that's why we do these changes.

Okay. It sounds promising. And you not have any specific kind of target you want to deploy x amount of your cash flow this year to acquisitions or something like that.

No. No.

Okay. Cool. Then, if we go to a few nitty-gritty questions, maybe that's competitive to answer. Q1 tends to be impacted about kind of calendar effects and vacation outtake. It's possible to give some kind of comment on how that impacted Q1 and if that was a bigger headwind than normally in this year and how to kind of think about that as a kind of a reversal thing for the rest of the year?

No. We didn't have any unusual distribution of vacation effects this quarter compared to last year, so -- and that's the reason why we haven't even talked about it in the report.

Okay. And looking at the Adult Education business, now you're starting the year in a quite good way. You have earlier said that you should take on a little bit more cost in the Adult Education business during this year, which should give some headwind on the margin. What should be achievable this, year margin-wise? Maybe you were a little bit above trend in last year. But if you continue to have a high number of short courses, then margin should be high, right?

We would expect something lower than last year's margin. I mean, volume, hopefully, will increase in line with our growth target. And if we can have -- and if we had some costs for quality work, then margin will be somewhat lower. But surely, it could be a scenario where if it continues as it has opened up now in the first quarter, it could be a scenario where the margin is slightly above the long-term margin we have between 9% to 11%. So I can't be more specific than that right now, but it's kind of range indication of expectations.

And then, also, I mean, the little note we make that there are small positive signs, and you can read about them yourself, about more positive development of unemployment rates the last week in Sweden, a few positive signs for quite a long time, I mean, that might be a start of a change of the unemployment rate. And I wouldn't think if it looks -- as it looks like now, I wouldn't think it has that much effect here now this year, but within a year or so, this can, of course, have a major impact for the Adult Education.

Makes sense. And then on Preschools, where we had an uptick now in a quite small quarter, but you have this kind of improvement program in the Finnish platform acquisition and the vouchers has been lagging for some time in both Germany and Norway. Where do you expect your margin to end up during this year? And how much of an improvement could be kind of taken out?

We aren't specific about that. But I hope that we can reach our margin target for 7% to 8% this year. That's the hope, at least. And I think that the major positive contribution if that will happen, then will come from the Preschool and International. And that will probably be a summary effect from several countries to improve margin in Germany, Norway, Finland for various reasons, as you mentioned.

[Operator Instructions] There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you very much for your questions, and we wish you all a good day. Thank you very much.