Presentation Q2 2022, August 17 2022 CEO Erik Brandt and CFO Martin Prytz Q2
Lumi Gruppen
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook Lumi Gruppen — a leading private education provider in Norway Attractive market position and financial characteristics Sonans — market leader within private candidate exams Oslo Nye Høyskole — National Student Survey: overall student satisfaction (2021) Oslo Nye Høyskole — National Student Survey: Online educational offer (2021) Top 1 Top 3 Top 1 Revenue 2021 (NOK million) Adj. EBIT 2021 (NOK million) Adj. EBIT% 2021 532 133 25%
LUMI GRUPPEN presentation Q2 223 The group consists of two main operating segments: Sonans and Oslo Nye Høyskole (ONH). Sonans is Norway’s market leader within high school private candidate exam preparation courses. ONH is a private university college, with a campus in central Oslo, and a strong online offering. High school private candidate exam preparation courses in Norway. Private university college with strong online offering and campus in Oslo.
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook Q2 as expected. Challenging quarters ahead due to post-Covid effects Digital shift and significant decline in application to higher education affects the private candidate market Revenue at NOK 134 million for the second quarter (0.2%) EBIT at NOK 39 million for the second quarter ( -19.1%) Cost measures totalling NOK 60-65 million to reflect online shift and decline in campus sales for the school year 2022/2023 New product offering named Live expected to offset lost revenue from closed campuses and to drive future growth Oslo Nye Høyskole with better performance compared to the higher education market with growth for the multi-year programmes
LUMI GRUPPEN presentation Q2 225 Operating Revenue Q2 and 2H (NOKm) Adj. EBIT Q2 and 2H (NOKm) 134 134 267 2H267-21Q2-22 Q2-21 2H-22 +0.2% -0.2% 39 48 59 77 Q2-21 2H-21Q2-22 2H-22 -19.1% -23.4%
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook
FinancialsLUMIGRUPPENpresentation Q1 227
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook Operating Revenues ended at NOK 134.4 for the second quarter Sonans(+0.2%) online revenue grew by 34.7% whiled campus revenue declined by 19.8% in line with the first quarter this year ONH revenue grew by 20.0% with 28.5% growth for online and 11.9% for campus. Online growth driven by the additional 2022 spring Priceintakeincreases implemented for Sonans with an average price increase of 10% for online and 3.5% for campus with full P&L effect from the school year 2022/2023 Continued growth for Oslo Nye Høyskole and online revenue for Sonans
LUMI GRUPPEN presentation Q2 229 Quarterly Operating Revenue (NOKm) Development in Operating Revenue Q on Q (NOKm) 134 134 ONH8 Q2-22 7 Q2-21 -15 SonansOnlineCampusSonans 134 Q2134-21Q2-22 +0.2%
ONH OpEx increased by NOK 2.6 million in the second quarter compared to last year, while revenues grew by NOK 7.7 million. This results in an EBIT margin expansion of 5.4% for the quarter, from 28.0% to 33.4% Cost measures implemented for Sonans and reported savings in personnel cost was NOK 4.7 million for this quarter. However, higher bad debt expenses increases operating expenses by NOK 3 million compared to last year Measures taken to reduce credit risk and future bad debt expenses
Adj. EBIT ended at NOK 38.5 million for the second quarter, down by 19.1% compared to Q2 21 and 23.4% for 2H 2022 vs. 2H in 2021
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook
Continued decline in campus sales and higher bad debt expenses affects EBIT margin
LUMI GRUPPEN presentation Q2 2211 Adj. EBIT (NOKm) and Adj. EBIT (%) Development in Adj. EBIT Q on Q (NOKm) 39 Q248-2128.6%Q2-22 35.5% -19.1% 48 39 8 RevenueONH8Sonans3OpExAdj.Q2EBIT-21 RevenueSonans 3 2 OpExONH NTECHGroup/ Depr.2 Amortization& Adj.Q2EBIT-22
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook Operating Revenue ended at NOK 88.0 million for the second quarter Growth(-7.5%) for online driven by higher volumes (i.e., online shift) and the effect of changes in commercial terms for online courses from January 1 2022 Total operating expenses increased by NOK 2.6 million in the second quarter compared to same period last year. This is due to higher marketing expenses, bad debt expenses and an IFRS adjustment of bad debt in Q2 21 Reported personnel savings in Q2 22 was NOK 4.7 million and total savings year to date for personnel expenses are NOKm 7.3 Additional measures will be implemented from 2H 2022 due to the continued decline in campus sales Sonans — Online revenue growth and personnel savings of NOK 4.7 million
LUMI GRUPPEN presentation Q2 2213 Operating Revenue (NOKm) “Clean EBIT” Q2 22Adj. EBIT (NOKm) 88 95 Q2-22 Q2-22 -7.5% 23 28 35 32 Q2-22 Q2-22Clean Q2-21 Q2-21Clean -34.6% -12.5% 35 32AdjustmentIFRS3Adj.Q2EBIT-21 Q2CleanEBIT-21 “Clean EBIT” Q1 21 23 28 2 3 Mkt.Exp.Adj.Q2EBIT-22 BadExp.Debt Q2CleanEBIT-22
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook Operating Revenue ended at NOK 46.3 million in the second quarter Growth(+20%) driven by new programmes in combination with a higher share of recurring revenues from the multi-year programmes Online growing by 28.5% and campus by 11.9%. Additional admission in the spring for online, while there is only one admission for campus Operating expenses at ONH increased by NOK 2.6 million in the second quarter, representing the quarterly share of the full year effect of ramp-up costs EBIT margin expansion of 5.4% from 28.0% to 33.4% in the second quarter Oslo Nye Høyskole — 20% growth and lower ramp up costs this quarter boost EBIT margin
LUMI GRUPPEN presentation Q2 2215 Revenue (NOKm) Adj. EBIT (NOKm) Active studentsAdj. OpEx (NOKm) 46 39 Q2-22 Q2-21 +20.0% 28 26 Q2-22 Q2-21 +10.1% 16 11 Q2-22 Q2-21 +43.2% 877 Campus798 1,538Online1,751-9.0% +13.8% Q1Q1-21-22
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook Sonans Execute on the extended cost reduction programme to mitigate the effect of the decline in revenue for the school year 2022/2023 Current target is a reduction of NOK 60-65 million in Operating Expenses for the coming school year. More measures in pipeline, targeting additional cost savings for Sonans to balance out a significant share of the decline in sales ONH Cost control and margin protection for the second half of 2022 Contingency to off-set risk in the remaining part of the intake Financial Focus
LUMI GRUPPEN presentation Q2 2217
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook
Strategy & Operations LUMI GRUPPEN presentation Q1 2219
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook Stable growth in the market for higher education recent years — CAGR 3% from 2013 to 2019, 4% when including 2021 and 2022 Significant decline in applicants to higher education ( -13%) — 43% decline in students without a study programme offer — +9% higher share of the students who received an offer corresponding to their first choice Cancelled high school exams three years in a row — Likely that more students receives their diploma and higher average grades A strong labour market in Norway — Results in reduced demand for higher education A significant drop in applications for higher education in 2022
LUMI GRUPPEN presentation Q2 2221 HøyskoleOsloSonansNye Deliver on the extended cost programme and protect market position through high quality student outcome Accelerate the digital transformation and strengthen our leading position in the online Contingencysegmentplan given uncertainty for the remaining intake period Continue to deliver high student value through digital solutions and programme development
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook Significant cost measures to mitigate the effect of the ~30% decline in revenue for the school year 2022/2023 (vs. NOKm 349 in Accelerate2021/2022) the digitalization journey and strengthen our leading position in the online segment for private candidates Live has already recovered most of the lost sales from closed campuses and will enable a higher pace on the business Attractivetransformationfinancial metrics for digital platforms with limited investment cost and a more flexible cost base Final goal is a more lean, scalable and competitive business model that reduces the operational risk for Sonans going forward Sonans — Accelerate digitalization and strengthen leading online position
LUMI GRUPPEN presentation Q2 2223 Illustration of the expected development in the Sonans cost base for the school year 22/23 Strong online development for Sonans (as of week 31) 31 52 46 20222020 2021 66% 14% 274 214 199 60 15 LTM Cost Base `21/`22 MeasuresCostExecuted LTM Cost Base `22/`23 MeasuresCostWIP LTM Cost Base `22/`23 -22% -27%
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook Student intake for the school year 2022/2023 down 30% compared to last year per week 31 — Campus -43% Online and Live +14% Campus footprint will be reduced further already from next school year — Key to protect market position and transfer students to digital platforms or other campus — Strengthen larger campuses and online penetration Teaching quality and capacity will remain unchanged Sonans — The offering will be adapted to changed market conditions
LUMI GRUPPEN presentation Q2 2225 2022 2021 CampusOnline -30% Accumulated sales per week 31 for Campus and Online/Live Sales development per week in 2021 and 2022
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook New operating model to improve efficiency throughout the organization with key priority on sales and marketing excellency Reduce number of campuses, transfer students to Live, focusing on the larger campuses with student volume Merge classes to larger units, subjects with limited student volume only offered Live and Online Centralisation and digitalization of sale and other administrative Moretasks effective marketing through digital solutions and student engagement Sonans — Establishing a more lean and effective organization
LUMI GRUPPEN presentation Q2 2227
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook Oslo Nye Høyskole — Continues to perform better than the market for the school year 2022/2023 Successful expansion of new study programmes has resulted in a 11% growth in applicants so far in the cycle Solid investments in new programmes to drive future growth, 5 multi year programmes launched autumn 2021 Total signed contracts 6% behind last year as of week 31 driven mainly by a decline in single subject students — Bachelor +6% — Master +105% — Higher education market down 12.6%
LUMI GRUPPEN presentation Q2 2229 * For studies commencing autumn 2022 as of 20th of April for NUCAS and as of Week 31 for ONH NUCAS-12% 11% Oslo Nye Høyskole Total applicants* for higher education in Norway vs ONH per week 31 Solid growth in signed contracts for new programmes per week 31 2021752022204 New ExistingProgrammesProgrammes
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook Oslo Nye Høyskole — Student intake completed by mid-September Important sales period from 20th of July to mid-September — Around 70% of sales completed, remaining sales takes place from July to September Online students tend to apply later than campus students Students not admitted to public universities will look for other options Marketing efforts will continue Some uncertainty for the remaining intake due to the decline in students without an admission place
LUMI GRUPPEN presentation Q2 2231 MayJan JuneFeb Mar JulyApr Aug ApplicantsSepContracts Illustration of the intake cycle for ONH - 2021
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook Focus on growing the business further — Continue to building marketing and sales excellence — Key priority to increase number of students in multi year programmes Developing the digital offering — more and more Bachelor students attending online programmes Business model increasingly more effective and scalable through Continuedigitalizationtodevelop new programmes with a solid market potential Oslo Nye Høyskole — Continued programme development to drive student growth
LUMI GRUPPEN presentation Q2 2233
Accelerate the digitalization journey for Sonans and strengthen our leading position in the online segment for private candidates
Longer term, Lumi Gruppen believes that the market will normalise as the underlying fundamentals for the education sector are still strong when excluding post-Covid effects Risk of breach of bank covenant, discussions ongoing to allow necessary head room during the restructuring and transformation. Constructive dialogue so far Outlook
Introduction About Lumi Gruppen Executive Summary Financials Lumi OsloSonansGruppenNyeHøyskole Strategy & Operations OsloSonansNye Høyskole DisclaimerOutlook
Because of the challenging market conditions, Lumi Gruppen will accelerate the ongoing efficiency programmes during the second half of When2022.completed, the annualised operating cost base will be reduced by NOK 60-65 million. Target is to identify an additional NOK 20-25 million in savings to off-set most of the decline in revenues
This presentation includes forward-looking statements which are based on our current expectations and projections about future events. Statements herein, other than statements of historical facts, regarding future events or prospects, are forward-looking statements. All such statements are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements. As a result, you should not place undue reliance on these forward-looking statements.
The Group reports its financial results in accordance with accounting principles IFRS. However, management believes that certain alternative performance measures (APMs) provide management and other users with additional meaningful financial information that should be considered when assessing the Group’s ongoing performance. These APMs are non-IFRS financial measures, and should not be viewed as a substitute for any IFRS financial measure. Management, the board of directors and the long term lenders regularly uses supplemental APMs to understand, manage and evaluate the business and its operations. These APMs are among the factors used in planning for and forecasting future periods, including assessment of financial covenants compliance.
LUMI GRUPPEN presentation Q2 2235 Disclaimer
LUMI GRUPPEN presentation Q2 2236
