Ambea : interim report Q1 2021

Interim report

January-March 2021

Secure elderly care with completed vaccinations

The first quarter January-March

• Net sales declined 3 per cent to SEK 2,727 million (2,811). Acquired growth was 0 per cent, exchange rates had a nega- tive impact of 1 per cent on growth, and organic growth was -2 per cent.
• Operating profit (EBIT) totalled SEK 125 million (144).
• EBITA declined 12 per cent to SEK 152 million (173), corre- sponding to a margin of 5.6 per cent (6.2).
• Adjusted EBITA, which excludes items affecting compara- bility, decreased 19 per cent to SEK 152 million (187). The adjusted EBITA margin was 5.6 per cent (6.7).
• Profit for the period totalled SEK 46 million (62).
• Earnings per share were SEK 0.49 (0.65) before and SEK 0.49 (0.65) after dilution.
• Cash conversion was 77.5 per cent (79.2).
• Free cash flow totalled SEK 172 million (148).

Significant events

• During the quarter, Ambea estimates the negative impact of the COVID-19situation to be about SEK 100 million on net sales and SEK 40 million on EBITA. The negative impact includes loss of income due to lower rates of occupancy primarily in elderly care, higher costs for personal protective equipment (PPE) and sick leave, and government support received.
• The negative effects of the coronavirus pandemic on the company are expected to continue in 2021. In the second quarter, the negative impact is estimated to be SEK 90-100 million on sales and SEK 40-50 million on EBITA.
• During the quarter, Mark Jensen took office as Chief Execu- tive Officer.
• During the quarter, Ambea completed the acquisition of six units with LSS operations in Sweden from LSS Omsorgen. After the end of the quarter, the acquisition of EKKOfonden's care operations in Denmark was completed. Read more on pages 6 and 8.

Consolidated key figures

	2021	2020			2020
SEK million	Jan-Mar	Jan-Mar	∆%	R12	Jan-Dec
Net sales	2,727	2,811	-3	10,999	11,083
EBITA*	152	173	-12	807	829
Operating margin, EBITA (%)*	5.6	6.2		7.3	7.5
Adjusted EBITA*	152	187	-19	844	879
Operating margin, adjusted EBITA (%)*	5.6	6.7		7.7	7.9
Operating profit/loss, EBIT	125	144	-13	698	717
Operating margin, EBIT (%)*	4.6	5.1		6.3	6.5
Profit/loss after tax	46	62	-25	343	359
Earnings/loss per share before dilution, SEK	0.49	0.65	-25	3.64	3.80
Earnings/loss per share after dilution, SEK	0.49	0.65	-25	3.64	3.80
Cash conversion (%)*	77.5	79.2		102.4	103.2
Free cash flow*	172	148	16	1,295	1,270

• 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/

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Interim report January-March 2021

Comments from Mark Jensen, President and CEO

Secure elderly care with completed vaccinations

The impact of the COVID-19 pandemic continued in the first quarter, and restrictions were once again tightened due to a third wave of the coronavirus. At the same time, the vaccination rollout continued, and our elderly care units were given top priority, which stabilised the situation and was very positive from a human perspective - for our care receivers as well as our employees. As the new CEO of Ambea, I am proud to see how our employees continue to work tirelessly in the best interests of our care receivers, by adhering to strict procedures to prevent the spread of the virus and providing warm, professional care.

In the first quarter, the estimated impact of the COVID-19 situation was about SEK -100 million on sales and SEK -40 million on earnings. In Stendi, the impact was considerably greater than in preceding quarters, while the impact on other divisions was in line with, or slightly lower than, preceding quarters.

In the first quarter, net sales amounted to SEK 2,727 million (2,811). Sales were lower year-on-yeardue to lower occupancy resulting from the COVID-19 situation and the leap day in 2020. Organic growth was a negative 2 per cent.

First-quarter EBITA declined 12 per cent to SEK 152 mil- lion, a result of the COVID-19 situation. In addition, the leap day had a positive impact on earnings in the preceding year. The COVID-19 situation had a negative impact on Vardaga's earnings, which was partly offset by government grants and operational improvements. The number of new-starts has been reduced or delayed, following careful consideration of the changing market conditions due to the ongoing pandemic. We will carefully analyse how and when to best increase capacity, based on demand from the municipalities after the pandemic. The occupancy rate has stabilized during the first quarter and even though there is high uncertainty related to the amount of time needed to return to normal levels, it is clear on a long term perspective that the demand is as big as before the pandemic. Nytida's earnings were negatively impacted by lower demand in the Individual and Family segment. LSS operations are the core of Nytida's service offering and showed stable demand in the first quarter. Stendi's earnings improved year-on-year, despite the clearly negative impact of the pandemic in Norway.

During the quarter, Frederiksberg Municipality awarded Altiden a management contract for two nursing homes with a total of 220 beds. The first nursing home is taken over in June 2021 and the second during the first quarter 2022. Altiden also opened a group home with five care placements. After the end of the first quarter, Altiden completed the acquisition of EKKO- fonden's care operations, further accelerating the redirection of Altiden towards residential care. Our first Danish nursing home under own management (Altiden FRIBO) in Holte, north of Copenhagen, will commence operation in June 2021.

During the quarter, Nytida completed the acquisition of six care units from LSS Omsorgen, which have continued to perform favourably since the transfer date with stable rates of occupancy and high quality. Nytida also opened a group home

with five care placements.

The effects of the COVID-19 situation on our operations are expected to continue, mainly in the form of lower occupancy in the second quarter of 2021. We expect the negative impact to be SEK 90-100 million in sales, and SEK 40-50 million in EBITA. The year-on-year increase was largely attributable to a reduction in government grants in both Norway and Sweden.

We are now finalising our analysis and working to ensure that we learn lessons from the pandemic. We see further potential for strengthening secure and personalised care for the elderly and will contribute to constructive discussion on future improvements. The supply of trained staff especially in the categories assistant nurse and certified nurse along with competence development are two of the biggest challenges ahead. It is vital that the different stakeholders in society cooperate to be able to cater for this.

We will accelerate our efforts to prevent a loss of social capital due to the pandemic. Many family members have had to take on a great deal of responsibility during the pandemic when loved ones in need of extensive care have remained in their homes. Here we need to work together with our clients to ensure that those in need also gain access to the right care now. Both care receivers and loved ones can feel complete confidence in the day-to-daylife at our units, and the qualified care we provide. As a high-quality partner to municipalities, we stand ready to welcome more care receivers and relieve the daily challenges facing municipalities.

I am looking forward to meeting more employees out in the units and to developing our role as a partner in the growing demographic challenge to meet the increasing need for care with fewer resources. Always in the care receiver's best interests, and always guided by our vision to make the world a better place, one person at a time.

Mark Jensen

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Interim report January-March 2021

Group

First quarter

Net sales

Net sales declined 3 per cent to SEK 2,727 million (2,811). Acquired growth was 0 per cent, exchange rates had a negative impact of 1 per cent on growth and organic growth was -2per cent year-on-year.In the year-earlierquarter, sales were positively impacted by the leap day.

Net sales in Own Management amounted to SEK 2,052 million (2,085), down 2 per cent year-on-year,the result of lower occupancy rates and a lower level of occupancy due to the COVID-19 situation.

Net sales in Contract Management amounted to SEK 608 million (666). The year-on-year decline in sales was impacted by contracts previously handed back in Vardaga, Stendi and Altiden. Nytida reported a positive deviation year-on-yeardue to previously won contracts.

Net sales in Staffing rose 12 per cent to SEK 67 million (60).

Earnings

EBIT declined 13 per cent to SEK 125 million (144), corresponding to a margin of 4.6 per cent (5.1).

EBITA declined 12 per cent to SEK 152 million (173). The EBITA margin was 5.6 per cent (6.2). EBITA for the quarter was negatively impacted by lower occupancy due to the COVID-19 situation and ongoing new-starts. In the preceding year, EBITA was positively impacted by the leap day.

Net financial items

Net financial expense was SEK -67 million (-64) for the quarter.

Income tax

Tax expense for the period was SEK 12 million (18), corresponding to an effective tax rate of 20 per cent (22).

Net sales by segment January-March 2021

2%

6%

31%

27%

34%

Vardaga

Nytida

Stendi

Altiden

Klara

Net sales by contract model January-March 2021

2%

23%

75%

Profit for the period

Profit for the period totalled SEK 46 million (62), corresponding to earnings per share of SEK 0.49 (0.65) before dilution and SEK 0.49 (0.65) after dilution.

Own management

Contract management

Stang

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Interim report January-March 2021

Cash flow

	2021	2020		2020
SEK million	Jan-Mar	Jan-Mar	R12	Jan-Dec
Adjusted EBITDA	357	376	1,644	1,663
Adjustment for non-cash items	-3	-8	19	13
Change in working capital	-71	-56	88	103
Cash flow from investments in fixed assets	-11	-28	-104	-120
Operating cash flow, including investments to increase capacity	272	283	1,647	1,658
Net interest paid	-65	-60	-258	-253
Tax paid	-37	-62	-58	-83
Reversal of items affecting comparability	0	-14	-36	-51
Free cash flow	171	147	1,295	1,271
Acquisition/disposal of shares and participations	-64	-103	-65	-105
Cash flow from financing activities	-85	-5	-1,258	-1,178
Other	0	0	0	0
Cash flow for the period	22	38	-28	-12
Operating cash flow, excluding effect of IFRS 16	56	92	821	857
Free cash flow, excluding effect of IFRS 16	6	-4	658	648

Free cash flow for the period amounted to SEK 171 million (147). The year-on-year increase in free cash flow was mainly the result of lower tax expense, and cash flow from investments in fixed assets.

Financial position

	2021	2021	2020	2020	2020	2020
	31 Mar	31 Mar	31 Mar	31 Mar	31 Dec	31 Dec
SEK million		excl. IFRS 16		excl. IFRS 16		excl. IFRS 16
Net interest-bearing debt*	8,845	2,807	8,217	3,284	8,375	2,672
Rolling 12 months adjusted EBITDA*	1,644	810	1,571	831	1,663	862
Net debt/Rolling 12 months adjusted EBITDA	5.4	3.5	5.2	4.0	5.0	3.1

At 31 March 2021, net interest-bearing debt amounted to SEK 8,845 million (8,217) or 5.4 times 12 months adjusted EBITDA. Indebtedness, excluding the effect of IFRS 16, declined SEK 477 million to SEK 2,807 million, or 3.5 times (4.0) 12-months adjusted EBITDA.

• Alternative performance measures. For reconciliation of financial statements to IFRS, purpose and definition, seeambea.com/investor-relations/reports-and-presentations/

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Interim report January-March 2021

Vardaga

At Vardaga's just over 100 residential care facilities across Sweden, we offer elderly care where every day is as meaningful as the next. Every one of our nursing homes, short-term accommodation units, home care and day services offers a high level of expertise and a safe environment. Our employees ensure quality of life and safety for every care receiver.

The quarter

Net sales declined 5 per cent year-on-year to SEK 859 million (909).

Net sales in Own Management amounted to SEK 554 million (561), down 1 per cent, due to lower occupancy rates and thereby a weaker level of occupancy in Vardaga's units.

Net sales in Contract Management amounted to SEK 305 million (348). The 12 per cent decline was due to previously terminated contracts.

Adjusted EBITA declined 48 per cent to SEK 25 million (48). During the quarter, earnings were adversely impacted by lower occupancy rates due to the coronavirus pandemic and costs related to the previous opening of new units. During the quarter, Vardaga received retroactive reimbursement of approx. SEK 20 million for additional costs incurred due to the COVID-19 situation.

The adjusted EBITA margin was 2.9 per cent (5.3). The lower margin was the result of lower occupancy due to the COVID-19 situation.

Vardaga adjusted EBITA margin RTM %

14
12
10
8
6
4
2
0	Q2	Q3	Q4	Q1
Q1
		2020		2021

Total Vardaga

Mature units

	2021	2020	∆		2020
SEK million	Jan-Mar	Jan-Mar	%	R12	Full-year
Net sales	859	909	-5	3,447	3,497
Adjusted EBITA*	25	48	-48	131	154
Operating margin, adjusted EBITA (%)*	2.9	5.3		3.8	4.4
Operating margin, adjusted EBITA mature units (%)*	7.2	9.8		8.4	9.1

* Alternative performance measures.

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