Ambea : Interim report Q4 2021

We make the world a better place, one person

at a time.

Year-end report January-December 2021

Sales growth and continued favourable demand for elderly care

Fourth quarter October-December

• Net sales rose 8 per cent to SEK 2,988 million (2,764). Acquired growth was 4 per cent, exchange rates had a positive impact of 2 per cent on growth, and organic growth was 2 per cent.
• Operating profit (EBIT) totalled SEK 37 million (174).
• EBITA declined 66 per cent to SEK 69 million (200), repre- senting a margin of 2.3 per cent (7.3).
• Adjusted EBITA, which excluded items affecting compara- bility of SEK -145 million, rose 7 per cent to SEK 214 million (200). The adjusted EBITA margin was 7.2 per cent (7.3).
• Loss for the period totalled SEK -37 million (profit: 93)
• Loss per share was SEK -0.39 (earnings: 0.98) before and after dilution.
• Cash conversion was 148.1 per cent (141.4).
• Free cash flow totalled SEK 410 million (466).

Full-yearJanuary-December

• Net sales rose 4 per cent to SEK 11,478 million (11,083).
  Acquired growth was 2 per cent and organic growth 2 per cent.
• Operating profit (EBIT) totalled SEK 598 million (717).
• EBITA declined 14 per cent to SEK 712 million (829), repre- senting a margin of 6.2 per cent (7.5).

• Adjusted EBITA, which excluded items affecting compara- bility of SEK -145 million (-50), declined 3 per cent to SEK 857 million (879). The adjusted EBITA margin was 7.5 per cent (7.9).
• Profit for the period totalled SEK 237 million (359).
• Earnings per share were SEK 2.51 (3.80) before and after dilution.
• Cash conversion was 95.7 per cent (103.3).
• Free cash flow totalled SEK 1,139 million (1,270).
• The Board proposes a dividend of SEK 1.15 (1.15) per share for 2021

Significant events

• Ambea's subsidiary Stendi has been party to legal proceed- ings in Norway related to costs for temporary staff. The final judgement was pronounced during the quarter and Ambea subsequently reserved a further SEK 145 million during the quarter to cover similar expected claims. Of this amount,
  SEK 70 million has previously been announced. The amount has been recognised as an item affecting comparability.
  Read more on page 16.
• After the end of the quarter, the acquisition of Christi- nagården and Yxe Herrgård was completed. Read more on page 10.

Consolidated key figures

	2021	2020		2021	2020
SEK million	Oct-Dec	Oct-Dec	∆%	Jan-Dec	Jan-Dec	∆%
Net sales	2,988	2,764	8	11,478	11,083	4
EBITA*	69	200	-66	712	829	-14
Operating margin, EBITA (%)*	2.3	7.3		6.2	7.5
Adjusted EBITA*	214	200	7	857	879	-3
Operating margin, adjusted EBITA (%)*	7.2	7.3		7.5	7.9
Operating profit/loss, EBIT*	37	174	-79	598	717	-17
Operating margin, EBIT (%)*	1.2	6.3		5.2	6.5
Profit/loss after tax	-37	93	-140	237	359	-34
Earnings/loss per share before dilution, SEK	-0.39	0.98	-140	2.51	3.80	-34
Earnings/loss per share after dilution, SEK	-0.39	0.98	-140	2.51	3.80	-34
Cash conversion (%)*	148.1	141.4		95.7	103.3
Free cash flow*	410	466	-12	1,139	1,270	-10

• Alternative performance measures. For reconciliation of financial statements to IFRS, see Note 8, for purpose and definition, see ambea.com/investor-relations/reports-and-presentations/interim-reports

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COMMENTS FROM MARK JENSEN, PRESIDENT AND CEO

Sales growth and continued favourable demand for elderly care

During the year, Ambea achieved its best sales ever, despite these unique times for us and society. This result was made possible by the skills and commitment of our employees and the trust we have gained from our clients. In the fourth quarter, demand for elderly care also continued to grow, a trend that lasted for most of the year.

Care receivers' experience of Ambea is a key measure of how we have succeeded with our business. In the fourth quarter, all divisions conducted Care Receiver Surveys. The results were consistently high, with clear increases in overall satisfaction for Vardaga, Altiden and Stendi and a stable high score for Nytida. Stendi stood out in particular, with an increase in overall satisfaction from 83 per cent to 92 per cent.

Growing demand for elderly care

Toward the end of the year, the impact of the ongoing pandemic once again increased. Despite the high level of community transmission, I can safely say that the incidence of severe illness in our units is very rare. In elderly care, all care receivers have been offered a third vaccine dose in good time, which has effectively reduced the risk of severe outcomes. This is obviously gratifying, because it provides security for our care receiv- ers, their loved ones and our employees. Demand for elderly care placements in Sweden also rose in the fourth quarter, a trend that lasted for most of the year. The coronavirus will probably continue to affect society for some time to come and in Ambea, we consider this one of several risks that we, as an organisation, must continue to manage and learn lessons from.

Increased net sales

In the fourth quarter, net sales rose 8 per cent to SEK 2,988 million (2,764). Adjusted EBITA was SEK 214 million (200).

Nytida, our disability care operations, opened a new LSS-residential facility in Skara. During the quarter, Nytida acquired Christinagården and Yxe Herrgård in Lindesberg and Nora.

The units have 116 care placements and we are now welco­ ming more than 100 employees to Ambea. The units were acquired after the end of the quarter. The fourth quarter is a weaker quarter seasonally, while last year's comparative figures were affected by coronavirus-related grant income.

Both demand and occupancy increased in Vardaga, which had a positive impact on earnings during the quarter. In Novem- ber, Villa Fridsbo opened in Löddeköpinge with 60 apartments. As we see continued long-termdemand for nursing homes, we have several new residential facilities under construction and our portfolio of new residential facilities is constantly evolving.

"Demand for elderly care

placements also rose in the fourth quarter, a trend that lasted for most of the year."

During the quarter, Stendi was informed that the Supreme Court of Norway will not hear the case related to costs for temporary staff. Ambea became party to this legal proceeding through the acquisition of Aleris Omsorg. The ruling thereby establishes a precedent for similar legal cases and Ambea subsequently reserved an additional SEK 145 million, which was charged to the fourth quarter. Of this amount, SEK 70 million has previously been announced. Otherwise, Stendi has continued its efforts to strengthen profitability by reviewing capacity, and we expect to see results in the first six months of the year.

In Denmark and Altiden, the strategic focus on social care and nursing homes has continued, while we are terminating home

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COMMENTS FROM MARK JENSEN, PRESIDENT AND CEO

care contracts. We are continuing to develop our business to create a strong platform for further growth through both acquisitions and organic development.

One of the top employers in Sweden

During the quarter, Ambea was named one of the top employers in Sweden in a survey conducted by Universum. Ambea was ranked 33 and was the only social care company among the fifty top ranked companies. This contrasts with commonly held views of the care industry. The result is particularly gratifying­ because our employees took part in the survey. The survey measures how satisfied employees are with their employer and career opportunities, and whether they would recommend their employer to a friend. In addition, we were also included on the Allbright Foundation's report of compa­ nies listed on the Stockholm exchange with gender-equal representation on boards and in management teams.

One of our strategic focus areas is to develop the best employees in the industry, and I see both of these placements as proof that our investments in leadership, regular employee surveys and skills development are yielding results.

Skills supply a key issue

Skills supply will be a major challenge for the entire welfare sector in the coming years. An ageing population increases the need for care which means, in turn, that many new social care workers will be needed.

According to the Swedish Association of Local Authorities and Regions (SKR), the recruitment need during the 2019-2029 period will be nearly half a million employees. According to the National Association of Local Authorities in Denmark, 70 per cent of municipalities lack qualified elderly care employees,

and approximately 50 per cent of municipalities are experien­ cing social care-related challenges. In a situation like this, a recognised and established brand with proud and committed employees is a major asset for attracting new employees.

At the same time, we are building a well-functioning structure in the Group with clear concepts, educational frameworks and our own training organisation Lära, which means we are well- equipped to develop the skills of our current employees and attract new employees. This also means that we can help our clients with competence-raising initiatives, which is a service that is continuously evolving.

We are working together to create enough safe and secure care for everyone

In 2022, our efforts to improve margins will continue, while also seeking complementary acquisitions and opening new residential facilities. Finally, I would like to address all of the care receivers, loved ones and clients who have been in contact with Ambea's units during the ongoing pandemic: We thank you for your trust and we will continue to move towards the realisation of our vision: We make the world a better place, one person at a time.

Mark Jensen

The Ambea Group is a market leader in social care in all three countries. We offer a wide range of services and treatment methods for children, young people and adults.

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ABOUT AMBEA

We are working together to create enough safe and secure care for everyone

Ambea is the leading care provider in Scandinavia. We work with the elderly, and people with disabilities or a need for psychosocial support. Our mission is to ensure quality of life for every person in Ambea's 900 units. Seeing and hearing them is the heart of our company.

But we also look up and see the world through the eyes of our clients - municipalities. Will they have enough resources in the years ahead? As the need for care grows sharply, financial pressures intensify and the shortage of care workers increases, smart solutions, partnerships and innovative solutions will be crucial. Ambea has a key role to play here.

We are a company that dares to test new ideas, strives for continuous improvement and continuously develops our units and our employees. We are big enough to make a difference and want to be a role model that works together with municipalities to create as much safe and secure care as possible from every valuable tax krona.

Always in the best interests of our care receivers. Always guided by our vision: We make the world a better place, one person at a time.

It's not a job for everyone. During the quarter, Stendi launch­ ed a campaign to increase the number of foster homes. A warm and honest campaign about the challenges, but also the rewards, for families that offer their home to a child in need. Traffic to the website increased by more than 100 per cent.

Our divisions		Sales per division	Sales per country
		9%	2%			9%
					32%
		25%				25%	66%
Our services					32%
• Elderly care
• Disability care				Vardaga			Altiden			Sweden
• Psychosocial support
			Nytida					Norway
• Qualified temporary care staff						Klara
				Stendi						Denmark
26,000	12,000	900	350
employees	care receivers			units				municipalities are
								our clients

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SUSTAINABILITY AND QUALITY

Sustainability and quality management in the fourth quarter

One of the top employers in Sweden

Ambea was ranked 33 on Universum's list of top employers in Sweden, and was the only care company among the top 50 companies.

The Top Employers in Sweden survey for employees in Swedish companies and organisations is carried out every year. The survey measures how satisfied employees are with their employers, based on criteria including loyalty and career opportunities, and whether they would recommend their employer to a friend. During the year, Ambea participated in the survey for the first time and for a few weeks over the summer, all employees were asked to respond to the survey.

High scores in all Care Receiver Surveys

Care receivers' experience of Ambea is a key measure of how we have succeeded with our business.

In the fourth quarter, Altiden, Stendi and Vardaga conducted their own Care Receiver Surveys, while Nytida took part in the SKR's national Care Receiver Survey.

The results were consistently high, with clear increases in overall satisfaction for Vardaga, Altiden and Stendi and a stable high score for Nytida.

Stendi stood out in particular, with an increase in overall satisfaction among care receivers from 83 per cent in 2020, to 92 per cent in 2021.

Reports and quality inspections during the quarter

SWEDEN

IVO inspections: The IVO performed twenty (20) inspections in the fourth quarter. The IVO performed six (6) inspections in Vard- aga. Four (4) cases were closed without any remarks, one (1) case was closed with some remarks. One (1) case is still open pending a decision. The IVO performed fourteen (14) inspections in Nytida during the quarter. Decisions have been issued for six (6) of these cases and two (2) were closed with remarks. Decisions are still pending for the IVO's inspections of other units in Nytida.

Lex Sarah: Five (5) Lex Sarah cases were lodged, four (4) by Nytida and one (1) by Vardaga. Decisions have been issued for three (3) of the cases from Nytida, which were closed without any need for further action, and decisions are pending for the remaining two (2) cases.

Lex Maria: Three (3) Lex Maria cases were lodged by Vardaga. A decision is pending.

Individual complaints: Eight (8) individual complaints are under investigation by the IVO, four (4) from Vardaga and four

(4) from Nytida, decisions are pending for all of these cases.

NORWAY

Regulatory inspections based on quality management: Two

1. inspections of Stendi's care services were carried out and both resulted in demands for measures, which were taken during the quarter. In the children's units, fifty-three (53) inspections were carried out in Q4, of which four resulted in de- mands for measures, and these were taken during the quarter.

DENMARK

Regulatory inspections based on quality management: Six

1. regulatory inspections were carried out in Altiden during the quarter, all with no remarks.

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