Interim report January-September 2021

Strong quarter with growing demand

Third quarter July-September

Net sales rose 7 per cent to SEK 2,912 million (2,732). Acquired growth was 4 per cent and organic growth 3 per cent.
Operating profit (EBIT) totalled SEK 316 million (264).
EBITA rose 18 per cent to SEK 344 million (291), corresponding to a margin of 11.8 per cent (10.7).
Adjusted EBITA, which excludes items affecting comparability, rose 8 per cent to SEK 344 million (319). The adjusted EBITA margin was 11.8 per cent (11.7).
Profit for the period totalled SEK 190 million (152).
Earnings per share were SEK 2.01 (1.61) before and after dilution.
Cash conversion was 52.1 per cent (70.8).
Free cash flow totalled SEK 186 million (274).

First nine months, January-September

Net sales amounted to SEK 8,490 million (8,319). Acquired growth was 2 per cent and organic growth 0 per cent.
Operating profit (EBIT) totalled SEK 560 million (543).
EBITA increased 2 per cent to SEK 642 million (628), corresponding to a margin of 7.6 per cent (7.6)
Adjusted EBITA, which excludes items affecting comparability, decreased 6 per cent to SEK 642 million (679). The adjusted EBITA margin was 7.6 per cent (8.2).
Profit for the period totalled SEK 273 million (266).
Earnings per share were SEK 2.90 (2.82) before and after dilution.
Cash conversion was 81.7 per cent (91.1).
Free cash flow totalled SEK 730 million (804).

Consolidated key figures

	2021	2020			2021 2020			2020
SEK million	Jul-Sep	Jul-Sep	∆%	Jan-Sep	Jan-Sep	∆%	RTM	Jan-Dec
Net sales	2,912	2,732	7	8,490	8,319	2	11,254	11,083
EBITA*	344	291	18	642	628	2	843	829
Operating margin, EBITA (%)*	11.8	10.7		7.6	7.6		7.5	7.5
Adjusted EBITA*	344	319	8	642	679	-6	842	879
Operating margin, adjusted EBITA (%)*	11.8	11.7		7.6	8.2		7.5	7.9
Operating profit, EBIT	316	264	20	560	543	3	734	717
Operating margin, EBIT (%)*	10.9	9.7		6.6	6.5		6.5	6.5
Profit after tax	190	152	25	273	266	2	366	359
Earnings per share before dilution, SEK	2.01	1.61	25	2.90	2.82	3	3.87	3.80
Earnings per share after dilution, SEK	2.01	1.61	25	2.90	2.82	3	3.87	3.80
Cash conversion (%)*	52.1	70.8		81.7	91.1		95.8	103.2
Free cash flow*	186	274	-32	730	804	-9	1,197	1,271

* 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

Strong quarter with growing demand

A look back on the third quarter confirms that occupancy and demand in elderly care in Sweden is continuing to rise. We can also see how social challenges such as demographic shifts, a lack of care placements and mental illness are once again becoming evident.

In September, most of the general restrictions were eased across Scandinavian countries, bringing delight and relief. But in our operations, we are obviously continuing to follow the health guidance issued by the authorities in relation to, for example, PPE and hygiene procedures. I recently visited units in all three countries and would particularly like to commend our employees for the care and commitment they are showing our care receivers and their contribution to the creation of security and well-being.

Social challenges once again evident

How society will be affected in the long term by this difficult period we have experienced is anybody's guess, but we are now seeing some consequences with impact on Ambea's operational areas. Mental health problems have increased in the community, while the expansion of new nursing homes has not kept pace with the demographic shift. These challenges have existed for some time, but are once again becoming evident.

In a study from the University of Queensland in Australia, researchers have followed the psychological effects of the pandemic across the world. According to estimates from the study, the pandemic led to 53 million more cases of depression during 2020. According to the same report, the depression rate rose 24 per cent in Sweden and 17 per cent in Norway and Denmark. Women and children were reportedly the most affected. The 2020 annual report for the Swedish Children's Rights in Society organisation (BRIS) also reported a significant increase in calls from children and young people related to anxiety, depression, family conflicts, and physical and psychological violence. A similar situation was confirmed by the National Council for Children (Børns Vilkår) in Denmark. Society must take action to stop this trend. Ambea has a high level of expertise and experience in working with children, young people and adults when it comes to mental illness, substance abuse problems or other types of residential and treatment alternatives, and we are ready to help with this important task.

Continued unmet need for new nursing homes In 2019, the Swedish Ministry of Finance estimated that 560 new nursing homes would be needed in Sweden by 2026 due to the demographic shift of an increasingly ageing population. In September this year, Timbro released an updated report based on new population projections, which also accounts for the current rate of nursing home

In the years to come, Ambea will undoubtedly play a very important role in ensuring that society can provide enough care for everyone.

construction. According to the report, private actors are needed. Timbro predicts a shortage of 289 nursing homes in Sweden by 2026 and 418 residential facilities by 2030. Unless private actors like Ambea help society by building their own residential facilities, the situation could be even worse. The unmet need for nursing homes could already reach 400 within five years.

The fact that placements are currently available in elderly care has no effect on the major social challenge ahead. But there are solutions, and I am optimistic about the opportunities that exist for us to help our clients. While the political debate can sometimes be polarised, the fact remains that too few new nursing homes are being built. One concrete solution that would help to increase the number of new nursing homes in Sweden is a national introduction of the Act on System of Choice in the Public Sector (LOV). That would make it easier for both non-profit and private actors to help the community offer more care placements, provide more freedom of choice and help to meet the challenge. But the task is urgent and needs political priority.

Increased occupancy

In the third quarter, Ambea's net sales rose 7 per cent to SEK 2,912 million. This trend was attributable to increased occupancy in Vardaga, acquisitions and contracts won in Altiden. EBITA rose 18 per cent to SEK 344 million.

Nytida, our disability care operations, posted earnings in line with the preceding year. During the quarter, Nytida took over three contract management units in Västerås and opened five new residential LSS facilities under own management. We will continue to focus on sharing information and knowledge with our clients, loved ones and care receivers via events such as our popular webinars.

In Vardaga, the positive trend for demand and occupancy will continue – a situation that we expect to continue as society gets back to normal. During the quarter, we took over our first contract management unit in Gotland and occupancy in our new nursing homes under own management – Villa Näs in Åkersberg and Villa Stallgången in Eskilstuna – is running according to plan. Our intensified marketing campaigns will also continue to meet the higher demand.

In Altiden in Denmark, the integration of EKKOfonden is ongoing, and creating a leading position for Altiden in social care. In the third quarter, sales rose 57 per cent due to the acquisition and contracts won. In line with our strategy, we will continue to terminate contracts in home care, which will help to strengthen profitability. We have confidence in our growth potential in Denmark. Primarily through organic and acquired growth in social care, and through more residential facilities under own management in elderly care.

In Stendi, our Norwegian operations, we have introduced capacity adjustments and efforts to strengthen profitability and increase occupancy are continuing as planned. Achieving long-term and sustained profitability requires a new approach now that society has reopened. As part of this process, we have decided to focus on social care where we are the market leader, have a high level of expertise and strong potential for growth as we move forward. Due to this decision, we are divesting elderly care in Norway. Elderly care accounts for 8 per cent of Stendi's sales and generates low profits. The divestment of elderly care will begin in the final quarter of the year and is expected to conclude in 2022.

Our contribution

In the years to come, Ambea will undoubtedly play a very important role in ensuring that society can provide enough care for everyone. Together with our clients, we will continue our efforts to ensure that all people have access to effective, personalised and high-quality care. As well as creating new care placements and developing the skills of employees, this also means improving the quality of care and encouraging innovation. We are optimistic about the future and want to contribute.

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.

We are working together to create 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.

First sod turned for Fribo Greve. In August, the first sod was turned for Altiden's upcoming nursing home in Greve – Altiden's second residential facility under own management. The facility will feature 75 apartments and be ready to welcome the first residents in early 2023. Miriam Toft (CEO of Altiden), Pernille Beckmann (Mayor of Greve) and Klaus Ahm (from the developer NREP) are holding the spade.

Sustainability and quality management in the third quarter

Proud sponsor and co-host of Glada Midnattsloppet

For fifth consecutive year, Nytida is co-hosting Glada Midnattsloppet, a running event for people with intellectual disabilities. In the wake of the pandemic, the event was held virtually and locally – a solution that proved successful for many people who don't want to, or cannot, participate in a normal event due to the pressures. A record number of participants, approximately 500 in total, ran, walked or rolled the two kilometres during the last two weeks of August.

Several of Nytida's units have arranged local events that have brought joy and inspired a fighting spirit in both care receivers and employees. One of these was Bräckevägen's day services in Falkenberg, where the young people blogged about their training sessions during the summer. Ambea and Nytida are proud of their contribution to the joy of movement, in a target group where exercise is often particularly important.

We are developing our industry – Lära celebrates 5 years!

Ambea has been training and developing the skills of both our own employees and the industry in general for a long time, and over the past five years, within the framework of Ambea's educational platform Lära. Lära was formed to gather all expertise in training, supervision and skills development that existed across various parts of the company. Staff turnover is high in care, and many employees may lack training or need

to complement their basic training. As an employer, we have a responsibility to ensure that employees have the knowledge they need to do a good job and treat our care receivers the right way. With approximately 10,000 trainees each year, of whom about half are our own employees, Lära is now one of the leading companies in Sweden in training and competence-raising initiatives in social work, care, school and treatment.

Lära was quick to offer online alternatives when the pandemic put a stop to classroom training, and will continue to offer free seminars and online training courses.

Reports and quality inspections during the quarter

SWEDEN

IVO inspections: The IVO performed 16 inspections, all within Nytida. Decisions have been issued for three of these, with no remarks from the IVO.

Lex Sarah: Two Lex Sarah cases were lodged, one by Nytida and one by Vardaga. A decision has not been issued for either of these cases.

Lex Maria: One Lex Maria case was lodged by Nytida. A decision on an earlier Lex Maria case in Vardaga has been received, and the IVO is closing the case without any need for further action. Individual complaints: Four individual complaints are under investigation by the IVO – one related to Vardaga and three to Nytida. No decisions have been issued for any of these cases. The IVO has issued decisions for two individual complaints lodged in earlier quarters, and closing them without any need for further action.

NORWAY

Regulatory inspections based on quality management: 23 units, all in children's operations, were inspected in the third quarter and none resulted in demands for action.

DENMARK

Regulatory inspections based on quality management: Nine regulatory inspections were carried out in Altiden during the quarter. Eight of these were performed in the newly acquired EKKO operations. Four of these inspections resulted in improvement measures and one of the units was required to take action which has now been completed with no remarks.

Ambea's key figures for social sustainability

	TARGET	OUTCOME Q3 2021	COMMENTS
Care Receiver Survey Positive response rate to the question about overall satisfaction with our care and service. Scale of 0–100.	>85.0%	–	In the third quarter, Vardaga conducted surveys of both customers and family members in all units, but the results have not been compiled and will be presented in the fourth quarter.
Team Barometer Index (TBI) The Group's employee satisfaction survey in the form of regular pulse surveys conducted during the year. Scale of 0–100.	>75	72	The Team Barometer Index is in line with the preceding quarter (-1) and full-year 2020. All divisions identify structured objective and focus areas at both central and local levels, alongside of active and continuous improve ments in each individual unit.
QHR Index Function of eight selected quality and HR metrics that indicate the status of the operations in a relevant way. Scale of 0–10.	>7.50	7.28	A lower outcome for Q3 compared with Q2 (7.37). Alti den in particular reports a lower result since several new units are included in the calculation, which are obviously rated lower in the index, but Nytida has also dropped slightly. Continued focus on units with a low QHR Index score, with frequent monitoring of action plans and support from the relevant support functions.
Leadership Index (LI) The Group's employee satisfaction survey related to leadership. Scale of 0–100.	>80	–	No survey in Q3.
Improvement Index A unit's management of reported non-confor mances and documented systematic quality management. Scale of 0–10.	>7.50	7.84	Higher outcome in Q3 compared with Q2 (7.79).
eNPS The Group's survey of employee loyalty. Scale of -100 – +100.	>+20	+18	The eNPS score is a measure of the likelihood that our employees would recommend us as an employer. No new survey was conducted in Q3.
Self-assessment A unit's control of conformance with about 200 requirements in the quality management system. Scale of 0–2.	>1.85	–	No survey in Q3. Conducted in November.

All divisions identified objectives and focus areas at both central and local levels, alongside of active and continuous improvements in each individual unit.

We prioritise five of the UN Sustainable Development Goals

Good Health and Well-being

Ambea offers high-quality social care for our care receivers and security for their loved ones.

Quality Education

We use Lära, our internal and external educational platform, to train the employees of today and tomorrow.

Affordable and Clean Energy

By ensuring that Ambea's Own Management operations always use renewable energy, we are helping to increase overall market demand for fossil-free energy.

Decent work and economic growth

Ambea's operations begin with caring for our employees – when they are happy and healthy, they can do more for our care receivers.

Responsible Consumption and Production

Ambea creates modern residential facilities with lower CO₂ emissions. By keeping our stocks down, we only consume as much as we need.

READ MORE about our global goals in the Annual Report.

Lower CO₂ emissions from Ambea's units

Ambea shall reduce the GHG emissions we can control by 50 per cent by the end of 2025, and by 30 per cent as early as 2020–2021. All compared with the base year of 2019. This target was set by Ambea's Board in 2020.

Emission-reduction initiatives

Based on our 2019 emissions, we identified the following topics as material for reducing Ambea's CO₂ emissions: energy, travel and transport, food and waste management.

READ MORE about our environmental performance on our website: www.ambea.com/target-50-percent-reduce -of-our-climate-footprint-to-2025/emission-reduction -initiatives

AMBEA AB (PUBL) CORP. REG. NO. 556468-4354 | INTERIM REPORT Q3 2021 6

Group

Third quarter

Net sales

Net sales rose 7 per cent to SEK 2,912 million (2,732). Acquired growth was 4 per cent and organic growth was 3 per cent year-on-year.

Net sales in Own Management amounted to SEK 2,207 million (2,021). The year-onyear increase in sales was due to acquisitions completed and start-up units.

Net sales in Contract Management amounted to SEK 642 million (653). The year-onyear decline in sales was attributable to terminated home care contracts i in Altiden.

Net sales in staffing rose 8 per cent to SEK 64 million (59).

Earnings

EBIT rose 20 per cent to SEK 316 million (264), representing a margin of 10.9 per cent (9.7).

EBITA rose 18 per cent to SEK 344 million (291). The EBITA margin was 11.8 per cent (10.7). In the preceding year, EBITA was negatively impacted by items affecting comparability of SEK 27 million in Stendi related to restructuring.

Adjusted EBITA for the quarter rose 8 per cent to SEK 344 million (319).The year-onyear increase was positively impacted by a higher rate of occupancy in Vardaga, but offset by higher costs in Stendi.

Net financial items

Net financial expense for the quarter was SEK -76 million (-69). Of this amount, SEK -59 million (-47) pertained to interest on a lease liability, SEK -16 million (-22) to interest and financial expenses/income, and SEK -1 million (0) to exchange rate fluctuations.

Income tax

Tax expense for the period was SEK 50 million (43), corresponding to an effective tax rate of 21 per cent (22).

Profit for the period

Profit for the period totalled SEK 190 million (152), corresponding to earnings per share of SEK 2.01 (1.61) before dilution and SEK 2.01 (1.61) after dilution.

Net sales by segment July-September 2021

Group

January-September

Net sales

Net sales amounted to SEK 8,490 million (8,319). Acquired growth was 2 per cent and organic growth amounted to 0 per cent year-on-year.

Net sales in Own Management amounted to SEK 6,425 million (6,173), up 4 per cent year-on-year, attributable to acquisitions and start-up units.

Net sales in Contract Management amounted to SEK 1,872 million (1,967). The yearon-year decline in sales was negatively impacted by terminated elderly care contracts in Altiden, Vardaga and Stendi.

Net sales in staffing rose 8 per cent to SEK 193 million (179).