We facilitate lifelong learning
Lumi Gruppen is a leading education provider
Norway, offering high-quality educational services. 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, primarily to help former high school students achieve better exam results and/or complete their high school diploma to enter
higher education. ONH is a private university college established in 2007, acquired by Lumi Gruppen in 2019. ONH has one campus located in central Oslo, in addition to a strong online offering.
Sonans – market leader within private candidate exams
Oslo Nye Høyskole – National Student Survey 2022: #1 #1
in overall student satisfaction amongst multidisciplinary University Colleges, #5 of all University Colleges.
Oslo Nye Høyskole – National Student Survey 2022: 5/5
Bachelor programmes in International Studies and Political Science rated 5/5 on overall satisfaction.
Lumi Gruppen Students — Campus vs. Online (2023) 43% campus
8 015 students
57% online
Sonans Students — Campus vs. Online (2023) 52% campus
5 172 students
48% online
ONH Students — Campus vs. Online (2023)
2 843 students
74% online
20 NOK mill. Q2
Cost programmes on track with close to NOK 20 million in savings in the second quarter and a total of NOK 40 million for the first half of 2023. Additional NOK 10 million in annual savings expected from the second half of 2023.
Operating revenue
105
Launch of NTech vocational courses in the second quarter, targeting first enrolment for the school year 2023/2024.
EBIT excluding impairment
16 NOK mill. (134) (31)
Significantly improved credit quality bad debt expenses reduced by 2.3 percentage points compared to the second quarter 2022.
NOK mill.
Oslo Nye Høyskole
Stabilised cost development at ONH leading to a strong EBIT margin in the quarter.
We are an important part of the Norwegian educational system and provide opportunities for people who want to take higher education and participate in the workforce.
The positive development for Oslo Nye Høyskole (ONH) continued in the second quarter, with solid profitability due to a combination of top-line growth and cost initiatives. We are now at an inflexion point where ONH becomes our most significant operating segment.
On the other hand, the post-Covid driven market setback continued to affect our private candidate business in Sonans negatively in the second quarter. Lumi Gruppen has taken significant measures to adapt to the market situation for Sonans. The cost reduction programme in Sonans is well on track, with close to NOK 36 million in annual cost-saving measures realized in the first half of 2023. Additional savings of NOK 10 million are expected to be realized in the second half of 2023.
The market for our private candidate business in Sonans is expected to normalise over time which would rapidly translate into profit improvement. However, as of yet, there is no firm evidence that this normalisation will occur in the 2023/2024 school year, as the post-Covid effects are still affecting the private candidate market in Norway.
The first NTech vocational courses were launched in the first half of 2023, targeting the first enrolment for the school year 2023/2024.
Total operating revenue was NOK 104.7 million compared to NOK 134.4 million last year and represents a decline of 22 per cent. The decline was driven by the postCovid market setback for the private candidate business in Sonans. Oslo Nye Høyskole (ONH) continued its positive performance in the second quarter with 8 per cent growth, mainly driven by new study programmes offered online.
Operating expenses decreased by NOK 14.5 million or 16.3 per cent in the second quarter compared to the same period last year. The largest contributor was personnel expenses, which decreased by 21.6 per cent from NOK 50.8 million to NOK 39.8 million. The decrease in operating expenses is a result of the cost programmes implemented for both Sonans and ONH and strict cost focus throughout the organisation. In the second quarter, NOK 5.2 million in transaction costs were expensed related to the cash offer from Hanover Investors. Excluding these items, the actual reduction in operating expenses was NOK 19.8 million compared to the reported decrease of NOK 14.5 million.
Earnings before interest and tax (EBIT) and impairment of goodwill in the second quarter were NOK 16.1 million compared to NOK 30.7 million last year. The EBIT margin ended at 15.4 per cent compared to 22.8 per cent last year. The decrease in EBIT and lower margin in the quarter was a result of the decline in revenues. Reduced student volumes and lower revenue for Sonans have to a large extent been offset by the cost programme implemented together with the growth in volumes and revenue for Oslo Nye Høyskole. The negative deviation of NOK 29.6 million in revenue was therefore reduced to only NOK 14.5 million in lower EBIT and NOK 9.3 million when excluding the mentioned transaction costs of NOK 5.2 million.
The Group decided to make an impairment of the goodwill related to Sonans based upon the updated forecasted result of the 2023/2024 student intake and the new prognosis indicates an impairment of NOK 270 million. The Group still expects to see an improvement in the private candidate market in the coming years and market data indicates that Sonans has maintained a strong market share despite the post-Covid market setback. However, there is limited visibility on future student intake, and it is also likely that Sonans will have to go through a period of transformation to fully adapt to the new normal market situation. After the impairment, the value of goodwill allocated to Sonans is NOK 475 million.
Including the impairment of goodwill of NOK 270 million, the EBIT for the quarter ended at minus NOK 254.2 million (30.7).
Lumi Gruppen had a total liquidity reserve including the revolving credit facility of NOK 132.2 million (102.3) and net interest-bearing debt excl. IFRS 16 of NOK 237.8 million (398) at the end of the second quarter. On 24 April 2023, the Group launched a subsequent share offering which resulted in an additional NOK 25 million in proceeds. Together with the private placement in the first quarter, this has resulted in a total of NOK 200 million in proceeds of which NOK 130 million have been used to reduce the interest-bearing debt from NOK 430 million to NOK 300 million.
Lumi Gruppen agreed on a new leverage covenant (NIBD/NGAAP EBITDA) for the first and second quarter of 2023. The covenant for the first quarter was 4.0 and 5.0 for the second quarter. Actual leverage in the first quarter was 1.6 and it was 2.9 in the second quarter. In the new financing agreement with effect from the third quarter of 2023 and onward, the leverage covenant has been set at 3.5.
In the first half of 2023, the Group launched its marketing campaign for NTech. The first programme offered is “WebApp development and design” and the plan is to continue to develop and launch programmes annually within the technology areas relevant for NTech. NTech will also offer the programmes in different units allowing the sales of single courses, half-year programmes, etc. The student volumes in the vocational market have grown quite significantly over the last years and the Group believes that NTech is well positioned to take a significant share of
this market. NTech will offer programmes both on campus and online. The main investments for NTech prior to launch this year are personnel and marketing expenses. NTech will use existing premises and work closely together with Oslo Nye Høyskole to take care of student and general administration. This will lead to reduced up-front investment costs and hence lower the operational risk the first year in operation.
Oslo Nye Høyskole launched a new bachelor programme from the coming school year 2023/2024. The programme will target students planning a career within HR and organisational development. In coming years, the development of new study programmes will be of importance for Oslo Nye Høyskole to secure continued volume growth and to maintain and improve its competitive position. Thanks to the current investments, the launch and expansion of new programmes will be more straightforward and less complex, as many of them can be built upon the existing programme portfolio and subject areas.
Following the implementation of the cost programme last year, the Group has continued to work with cost optimisation to compensate for most of the volume loss and decline in revenue for Sonans. As previously announced, the decision to close three campuses in 2023 is expected to reduce the cost base by a further NOK 10 million in the coming school year 2023/2024. For the remaining campuses, work is also ongoing to identify possibilities to reduce campus size (i.e., reduced square meters) and/or identify the potential for subletting parts of the premises.
To improve classroom efficiency and utilisation, work is also ongoing to optimise the channel mix and the product portfolio offered per channel for Sonans. The result will be a larger share of students with combined contracts (campus, live and online) that will allow for more flexibility and reduced costs.
As a result of the growing online market for both private candidate and higher education in general, the Group will continue to prioritise the development of its digital education platforms to strengthen its competitive position. The platforms will also incorporate new technology such as artificial intelligence (AI).
The Group’s reporting structure comprises two operational segments: Sonans and Oslo Nye Høyskole (ONH).
Operating revenue decreased by 38.0 per cent to NOK 54.6 million (88). Most of the decline in revenue is related to lower student volumes for the campus offering. At the same time, online revenue dropped by 6.3 million in the second quarter. Of this, NOK 4.0 million is related to revenue not recognised because of students with full-year contracts demonstrating low payment ability and hence low likelihood for receiving a consideration from them. The Group announced in the fourth quarter of 2022 a change in its revenue recognition for full-year contracts. In the case where students demonstrate low payment ability in the first semester (i.e., 2H of 2022), revenue from their contracts will not be recognised in the second semester of the school year. The full-year contract revenue will however be recognised when payment is received. The effect of this change was NOK 9 million for the first half of 2023 in line with what has previously been communicated.
Total operating expenses excluding depreciation and impairment losses equalled NOK 39.3 million (55.7) in the second quarter. This represents a decrease of 29.4 per cent and NOK 16.4 million compared to last year. The decrease in operating expenses is a result of the cost programme implemented. Personnel expenses constituted 23 percentage points of the cost reduction, but underlying savings are higher as the sales and marketing department, previously employed by Lumi Services, was transferred to Sonans on 1 January 2023. As a result, other expenses (service fee from parent company) were reduced by NOK 2 million in the quarter and personnel expenses were increased by the same amount. Taking this into account, personnel expenses were reduced by NOK 5.8 million compared to last year. Last year’s accounts are not adjusted to reflect this change in structure and its effect on reported for operating expenses.
The development for bad debt continued to improve during the second quarter and is now closer in line with historical levels compared to 2H of 2022. Reported bad debt expense for the quarter is however somewhat higher due to an update of the ECL model as at 30 June 2023
resulting in a NOK 1.6 million higher accrual compared to the ECL percentages applied at the end of Q1 2023. The total provision for bad debt at the end of the second quarter was NOK 26.9 million for Sonans compared to NOK 19.5 million last year.
The Group has strengthened its order-to-cash process by implementing credit checks and tighter follow-up of students that are late with payments. Going forward, credit quality will continue to improve, resulting in a lower provision for bad debt.
Depreciation and amortisation expenses ended at NOK 10.7 million (12.3) in the second quarter. No impairment of right-of-use assets was made in the second quarter.
Earnings before interest and tax (EBIT) for Sonans in the second quarter were NOK 4.6 million (20). The decline in EBIT is a result of the market setback following the pandemic with lower sales volume not fully compen-sated by the cost programme implemented.
Sonans has completed its turnaround strategy, which has led to a stronger digital offering and reduced the number of campuses from 15 to 12, with a further reduction to 9 by the end of the second quarter of 2023. The campus operations will in the future be concentrated in the largest cities in Norway and the new education offering Live will provide students with the campus quality experience in the areas without a physical campus.
At the end of the second quarter, the number of fulltime employees (FTEs) was 91 (122).
Operating revenue increased by by 8.0 per cent to NOK 50.0 million (46.3) in the second quarter. Sales growth is to a large extent driven by the new programmes launched at ONH and online in particular. The growth in revenues is also a combination of a higher share of recurring revenues and volume growth.
Total operating expenses excluding depreciation and impairment losses equalled NOK 27.8 million (32) in the second quarter. The decrease in operating expenses compared to last year is mainly a result of lower bad debt expenses of NOK 0.9 million together with reduced personnel expenses by NOK 2.5 million and other expenses by 0.9 million.
Depreciation and amortisation expenses were NOK 3.0 million (2.4) in the second quarter.
Earnings before interest and tax (EBIT) for ONH in the second quarter were NOK 19.3 million (11.9). The EBIT margin was 13.0 percentage points higher compared to the same period last year as result of higher revenue and a stable development in operating expenses.
At the end of the second quarter, the number of FTEs was 120 (124), which is a reduction of 3.2 per cent.
Total operating revenue decreased by by 22.0 per cent to NOK 104.7 million (134.4). Revenue was adjusted by NOK 4.5 million in the quarter as result of full-year contracts in Sonans with low likelihood for receiving a consideration. Please see note 2 in the financial accounts for more information.
Total operating expenses excluding depreciation and impairment losses equalled NOK 74.3 million (88.9) in the second quarter. Net savings from the cost programmes were NOK 19.8 million in the quarter compared to last year. These savings are mainly related to a significant reduction in personnel expenses for Sonans, together with reduced marketing expenses, overhead and bad debt expenses. In the second quarter, NOK 5.2 million in transaction costs were expensed related to the cash offer from Hanover Investors. Therefore, the total reduction in operating expenses was only NOK 14.6 million in the quarter.
Depreciation, amortisation, and impairment expenses ended at NOK 284.6 million (14.8) in the second quarter. The amount includes the impairment of goodwill allocated to Sonans with NOK 270 million.
Earnings before interest and tax (EBIT) for the Group ended at minus NOK 254.2 million (30.7) in the second quarter. The decline in EBIT is a result of the revenue decline not being fully offset by the cost programmes implemented and the impairment of the goodwill allocated to Sonans with NOK 270 million. Excluding impairment, EBIT ended at NOK 16.1 million with a corresponding margin of 15.4 per cent (22.8).
Non-recurring items in the second quarter were NOK 5.2 million compared to NOK 7.8 million last year. Non-recurring items for the second quarter are mainly transaction costs related to the cash offer from Hanover Investors.
In the fourth quarter, the Group announced that the numbers presented in the quarterly report will be the reported numbers and not adjusted numbers. Nonrecurring items are therefore only shown on a separate line in the P&L and not included in EBITDA or EBIT number for the second quarter this year and last year and year-to-date this year and last year.
The Group’s assets totalled NOK 941 million at the end of the second quarter, a decrease of NOK 246 million from the same period last year. The Group’s equity amounted to NOK 472 million, a decrease of NOK 64 million compared to the same period last year. The equity ratio was 50 % (45 %).
The decline in total assets and equity is mainly a result of the goodwill impairment of NOK 270 million. Current and non-current liabilities to financial institutions were NOK 298 million at the end of the second quarter compared to NOK 428 million in the same period last year.
Net cash flow from the Group’s operations during the second quarter was minus NOK 80.5 million (-72). The difference between net cash flow from operations and profit before tax is mainly due to changes in working capital. For both Sonans and Oslo Nye Høyskole, most students pay tuition fees early in the semester (resulting in a very positive cash flow in the first and third quarters), and in the latter part of the semester the cash is used for ongoing operations.
The net cash outflow from investing activities amounted to NOK 2.6 million (4.9) in the second quarter. The majority of this relates to development of new study programmes for Sonans, ONH and NTech. The net cash outflow from investing activities also relates to the principal portion of lease liabilities in accordance with IFRS 16.
The net cash flow from financing activities was NOK 9 million (minus 55) in the second quarter. The positive cash flow from financing is a result of the successful subsequent offering following the private placement in March with proceeds of NOK 25 million.
During the second quarter, the Group had a decrease in cash and cash equivalents of NOK 74 million (minus 133). As of the balance sheet date, the Group had cash and cash equivalents of NOK 62 million, compared to NOK 32 million at the same time last year.
The leverage ratio at the end of the second quarter was 2.9. The calculation of leverage according to the original terms allowed a non-recurring item adjustment of 30 per cent of the NGAAP EBITDA excl. IFRS 16. The actual adjustment was 16 per cent. The leverage covenant according to the new financing agreement with Nordea is 3.5 for the next three years.
The Group’s share capital was NOK 23.2 million as of 30 June 2023, consisting of 55 241 433 ordinary shares, each with a par value of NOK 0.42. All the shares are fully paid and have equal rights.
The Group, following the successful private placement in March 2023, launched a subsequent offering on 24 April 2023. The offering was fully subscribed with 2 380 952 new shares issued, corresponding to gross proceeds of NOK 25 million.
Lumi Gruppen owned 193 814 treasury shares as at the balance sheet date. The number of shareholders as at 30 June 2023 was 373, of which the top 20 shareholders held 88.3 per cent of the shares.
On 11 August Hanover Investors increased its ownership in Lumi Gruppen AS to a total of 28,016,004 shares. Consequently, the Hanover Group now controls 50.7% of the total issued shares and votes in the Company.
The increased ownership of the Hanover Group in the Company represents a change of control event under the Company’s bank financing agreements. It has been agreed with the lender that the Company shall pay a fee to the lender of 1.40% of total commitments (amounting to approx. NOK 5,180,000) in exchange for a change of control waiver regarding the current facilities.
Further, the Company is obliged to agree on new financing terms in such agreements prior to 31 August 2023. The Company expects to announce any key changes to the bank financing agreements’ terms and
margins prior to this date. Should an agreement not be forthcoming, a non-compliance fee of 2.00% of total commitments (amounting to approx. NOK 7,800,000) will be due and the terms of the existing bank financing agreement will prevail.
Lumi’s business model has been transformed during the last year, with a more flexible and scalable business model with a lower share of fixed costs.
Based on the student intake for Sonans, more cost measures are being prepared for implementation from the third quarter.
For ONH, the trend is positive, with applicants trending clearly higher than last year, in line with indications given when the first quarter was presented.
The sales for the autumn intake as at week 32 are expected to end around 12 per cent above the autumn intake of the previous school year.
Based upon the autumn intake forecast as at week 32 and a forecast for the spring intake, revenue is expected to end in the range of NOK 225-235 million for ONH for the school year 2023/2024.
The private candidate business in Sonans is the most important swing factor for Lumi Gruppen’s financial development in the short to medium term. The cancellation of exams in high schools three years in a row has affected the private candidate market, and the market has not yet normalised.
The sales for the autumn intake as at week 32 are expected to end around 30 per cent below the autumn intake of the previous school year.
Based upon the autumn intake and forecast as at week 32 and a forecast for the spring intake, revenue is expected to end in the range of NOK 165-180 million for Sonans for the school year 2023/2024.
Profitability for Sonans is expected to be weak in the 2023-2024 school year. Lumi Gruppen will continue to adapt the cost structure to the current market situation.
The first NTech vocational courses were launched in the second quarter, targeting the first enrolment for the school year 2023/2024. NTech represents a new growth opportunity for Lumi Gruppen in a market segment growing rapidly in recent years. The Group will continue to develop programmes to increase the volume of students the coming years. NTech will offer courses both online and on campus. The financial impact of NTech is limited in the upcoming school year.
The market development for Lumi Gruppen is correlated and connected to several macroeconomic drivers including the activity in the public market for higher education, the cancellation of exams in high schools during Covid and the labour market.
There is a demand gap in public higher education in Norway, which means that a significant number of students do not have a place of admission. The number of applicants to higher education, which was announced by the Norwegian Universities and Colleges Administration Services (NUCAS) in late April, showed a small growth compared to last year, but was still significantly lower than in 2020 and 2021. The result of the intake was announced 20 July and the number of potential students without an admission place was in line with last year.
The labour market has been strong the past year, and this partly explains the development in applicants for higher education. A potential softer labour market could lead to higher demand for education going forward.
Lumi Gruppen is closely following the process regarding the recommendations published by the Admission Committee in December 2022. At this stage, these are suggestions that are likely to be modified through the political process before a potential implementation. Recent signals based on the public hearings indicate that the changes might be more moderate than originally
proposed. The political process means that implementation of any changes will take time, and the first school year with a new system implemented is expected in four to five years. While the outcome of the process may affect the current offering of Sonans, Lumi Gruppen believes this will also create new business opportunities. As long as access to attractive university programmes is limited, there will be a market for services that help students qualify. Lumi Gruppen is actively planning to adapt to any changes, based on various scenarios.
We confirm, to the best of our knowledge, that the condensed set of financial statements for the period 1 January to 30 June 2023 has been prepared in accordance with IAS 34 Interim Financial Reporting and gives a true and fair view of the Group’s assets, liabilities, financial position and profit or loss. We also confirm, to the best of our knowledge, that the interim management report includes a fair review of important events that have occurred during the financial year and their impact on the condensed set of financial statements, a description of the principal risks and uncertainties for the remaining six months of the financial year, and major related parties’ transactions.
This report 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.
Approved by the Board of Directors and Management
Helge Midttun Bente Sollid Storehaug Harald Arnet Anne Dahle Frode Eilertsen Chair Sylvie Milverton Erik Brandt Martin Prytz CEO CFO
Lumi Gruppen AS (the Company or Lumi Gruppen), is the parent company of the Lumi Gruppen (Lumi or the Group) and is a limited liability company incorporated and domiciled in Norway, with its head office in Nydalen, Oslo. The Company is listed on Euronext Growth stock exchange in Oslo, Norway and has the ticker “LUMI”.
Lumi Gruppen is a leading player in the education market in Norway. The Group consists of the parent company Lumi Gruppen AS and its subsidiaries Lumi Bidco AS, Lumi Services AS, Sonans Privatgymnas AS, Oslo Nye Høyskole AS, ONH Education AS and Norwegian School of Technology AS. The operating companies in the Group are Sonans Privatgymnas AS, Oslo Nye Høyskole AS and ONH Education AS. Lumi Services AS is a company that organises shared services like IT, marketing and finance on behalf of the operating companies.
The accounting policies applied by the Group in these consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 31 December 2022, unless otherwise stated.
The preparation of interim condensed financial statements involves the use of accounting estimates. Actual results may differ from these estimates. Management is required to exercise judgment in applying the Group’s accounting policies.
Management has used estimates and assumptions that have affected assets, liabilities, revenues, expenses and information on potential liabilities. Future events may lead to these estimates being changed. Estimates and their underlying assumptions are reviewed on a regular basis and are based on best estimates and historical experience. Changes in accounting estimates are recognised during the period when the changes take place. If the changes also apply to future periods, the effect is divided among the present and future periods. Management has, when preparing the interim financial statements, made certain significant assessments based on critical estimates and significant judgment when it comes to application of the accounting principles.
Lumi Gruppen earns revenue from educational services including one university college and several private candidate schools across Norway. Services are delivered both on campus and online, and delivered over time to the students. Educational service revenue is distributed according to the individual course sold. Courses for a single semester are distributed over 4 to 6 months while courses running over two semesters are distributed over 10 to 12 months.
From 1 January 2023, the Group changed its principles for revenue recognition for full-year contracts in case there is a low probability that the Group will collect the considerations. The revenue is not recognised until the
In Q2, NOK 4.5 million (first half NOK 9.1 million) related to full-year contracts was not recognised in Sonans due to low probability of collecting the amounts owed. In ONH all such revenue was recognised. The revenue not recognised is booked as a liability in the balance sheet and impaired in line with the ECL-model.
consideration is received. The probability is determined to be low when no consideration is collected in the first semester of the school year.
Invoicing for the educational services is done at the beginning of each school semester, in August/September and January. Invoices sent in August/September are for both the semester and for the entire school year fees. This creates the deferred revenue (unearned income) post in the balance sheet (a contract liability). This contract liability is always current, as the revenue will be earned within a maximum of 9 months after the date of the invoice. The liability will normally be largest in Q1, since payments received are for the semester, which is in both Q1 and Q2.
As described in the annual report for 2022, goodwill is assessed for impairment at an annual basis, and, as per IAS 36, more frequently if indicators of impairment are identified. Please refer to the 2022 annual report for a description of the accounting principles and identified cash generating units (CGUs) for goodwill in Lumi Gruppen. The autumn intake for CGU Sonans came in at a lower level than expected, and as a result of this an impairment test is performed for this CGU at 30 June 2023. No impairment indicators are identified for CGU Oslo Nye Høyskole, and no impairment test is performed for this CGU at 30 June 2023.
Measurement of the enterprise value for the CGUs is most sensitive for the following assumptions:
The discount rate is based on a weighted average cost of capital methodology (WACC). The nominal discount rate is based on the Group’s estimated capital cost measured as the weighted average of the costs for the Group’s equity and debt. The WACC considers the interest rate of the debt, the risk-free interest rate, the debt to total assets ratio, risk premium and an equity risk premium. Beta and debt ratio are based on an average of the applied industry group and a peer group.
Growth rates applied in the impairment testing for goodwill are based on management’s expectations on the market developments. Based on available information and management’s market expertise, the expectation is a slight increase in growth over the coming years with a flat and moderate growth when calculating the terminal value in the DCF model. Management expectations are based on historical trends and publicly available industry analyses. As is the case with expectations with an element of uncertainty, there can be a need for adjustments to the estimates in future periods.
The following key assumptions were used for the value-in-use calculations for CGU Sonans at 30 June 2023:
— WACC (after tax) 10.9% (11.3% at 31.12.2022)
— Terminal growth rate 2.75% (3.22% at 31.12.2022)
The estimated recoverable amount of the goodwill related to CGU Sonans is NOK 475 million. As this is below the carrying value of NOK 745 million, an impairment of NOK 270 million is recognised at 30 June 2023.
The Group leases are primarily office and school buildings and office equipment. Short-term and low-value leases are excluded from the financial lease accounting.
Right-of-use assets are leased assets recognised in the statement of financial position in accordance with IFRS 16 and are primarily buildings and office equipment. Right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. The right-of-use assets are reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying amount of the asset exceeds its recoverable amount.
The Group has entered into a significant lease agreement with commencement date in the third quarter of 2023. This agreement will be recognised as an IFRS 16 lease obligation at the commencement date, and right-of-use asset is estimated to approx. NOK 120 million when recognised.
recognised in the balance sheet
recognised in the statement of profit or loss
Parent company (Lumi Gruppen AS)
Current and non-current liabilities to financial institutions are financial liabilities, primarily bank loans, and are recognised initially at fair value and subsequently at amortised cost using the effective interest rate method to measure interest expense on the loans.
In connection with the private placement that took place in March 2023, the Group received a commitment from the bank for a new three-year financing agreement. The financing agreement was signed in Q2, and the structure and terms are as follows:
— NOK 300-330 million senior facility agreement and a revolving credit facility of NOK 70 million
— Interest rate NIBOR + applicable margin dependent on leverage level
— Leverage (NIBD/EBITDA) covenant 3.5
— Allowable adjustment of EBITDA of up to 10%
— Semi-annual instalments of NOK 7.5 million
Balances and transactions between the Company and its subsidiaries, which are related parties to the Company, have been eliminated on a consolidated basis. There are no
significant related party transactions for Lumi Gruppen as of 30 June 2023.
There are no contingent liabilities as of 30 June 2023.
The Group reports its financial results in accordance with IFRS accounting principles as issued by the IASB and as endorsed by the EU. 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 use 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 assessing compliance with financial covenants. Alternative Performance Measures reflect adjustments based on the following items:
Adjusted EBITDA before impact of IFRS 16
Adjusted EBITDA before impact of IFRS 16 is a measure of EBITDA adjusted for (i) lease expenses applying IAS 17 Leases, (ii) revenue and cost from sold or acquired business, and (iii) certain extraordinary items affecting comparability, referred to as Non-Recurring items in this report. The Group has presented this APM because it considers it to be an important supplemental measure to understand the leverage ratio of the Group.
Adjusted EBITDA margin
Adjusted EBITDA divided by total revenue.
EBIT
EBIT is a measure of earnings before deducting net financial items and taxes. The Group has presented this APM because it considers it to be an important supplemental measure to understand the overall picture of profit generation in the Group’s operating activities.
Adjusted EBIT is a measure of EBIT adjusted for (i) revenue and cost from sold or acquired business, and (ii) certain extraordinary items affecting comparability referred to as Non-Recurring items in this report, and (iii) for the subsidiaries of Lumi Gruppen AS, also including IFRS adjustments as these companies report on NGAAP. The Group has presented these APMs because it considers them to be important supplemental measures to understand the underlying profit generation in the Group’s operating activities.
Adjusted EBIT margin
Adjusted EBIT divided by total revenue.
Current and non-current borrowings for the period (excluding property lease liabilities recognised under IFRS 16) less cash and cash equivalents for the period. Net debt is a non-IFRS financial measure, which the Group considers to be an APM, and this measure should not be viewed as a substitute for any IFRS financial measure. The Group has presented this APM as it is a useful indicator of the Group’s indebtedness, financial flexibility and capital structure because it indicates the level of borrowings after taking into account cash and cash equivalents within the Group’s business that could be utilised to pay down the outstanding borrowings. Net Debt is also used as part of the assessment for financial covenant compliance.
Net debt divided by last twelve months Adjusted EBITDA before impact of IFRS 16.
Capital expenditure (capex) is a measure of total investment in the period both in the operations and in development of new business. Capital expenditures consist of both maintenance capex and development capex and the source of capex is the Statement of cash flows.
LUMI SERVICES AS
SONANS PRIVATGYMNAS AS
OSLO NYE HØYSKOLE AS NORWEGIAN SCHOOL OF TECHNOLOGY AS
ONH EDUCATION AS
Both local presence with campuses and online offering
Bergen
Tromsø
Stavanger
Trondheim
Lillestrøm Oslo Ski Sandvika
Drammen
Oslo Campus — Oslo Nye Høyskole
Fredrikstad Tønsberg
Kristiansand