• Operating income increased 12.1% to MSEK 813.5 (725.7), of which organic growth amounted to 9.9%
• The number of students in the Swedish schools at the end of the quarter was 26,814 (25,608)
• The number of registrations in the queue in Sweden at the end of the quarter was approx. 208,900 (188,000)
• EBIT amounted to MSEK 86.2 (50.3). Excl. the effects of the introduction of IFRS 16, EBIT amounted to MSEK 68.1 (50.3)
• The EBIT margin was 10.6% (6.9). Excl. IFRS 16, the EBIT margin was 8.4% (6.9)
• Profit for the quarter totalled MSEK 44.4 (40.4). Excl. IFRS 16, profit for the quarter amounted to MSEK 56.1 (40.4).
• Cash flow from operating activities for the quarter was MSEK 182.7 (97.1)
• Earnings per share before and after dilution amounted to SEK 1.11 (1.01)
• Anna Sörelius Nordenborg assumed the role of CEO on 25 November 2019

• Operating income increased 10.3% to MSEK 1,414.2 (1,281.6), of which organic growth amounted to 8.6%
• EBIT amounted to MSEK 140.8 (73.6). Excl. the effects of the introduction of IFRS 16, EBIT amounted to MSEK 104.6 (73.6)
• The EBIT margin was 10.0% (5.7). Excl. IFRS 16, the EBIT margin was 7.4% (5.7)
• Adjusted for the capital gain of MSEK 24.7 related to the divestment of the shareholding in Colegio IALE on 5 July 2019, EBIT amounted to MSEK 116.1 (73.8). Excl. IFRS 16, adj. EBIT amounted to MSEK 79.9 (73.8) and the adj. EBIT margin was 5.6% (5.8)
• Profit for the period totalled MSEK 61.5 (52.5). Excl. IFRS 16, profit for the period amounted to MSEK 85.4 (52.5)
• Cash flow from operating activities for the period was MSEK 314.8 (193.2)
• Earnings per share before and after dilution amounted to SEK 1.53 (1.31)

• On 10 January 2020, through its wholly owned Spanish subsidiary International Education Partnership S.L ("IEP"), IES acquired 100% of the shares in Colegio Joyfe, a private school in Madrid, Spain, with about 2,000 students
• On 3 February 2020, through its wholly owned Spanish subsidiary IEP, IES completed the acquisition of 100% of the school operations of Colegio Inglés Zaragoza, a private school in Zaragoza, Spain, with about 270 students
• Lars Jonsson was appointed the new CFO and a member of Group management of IES on 12 February 2020. He will assume his new position no later than 17 August 2020

CEO's comment

CONTINUED GROWTH IN SWEDEN AND SPAIN
We are continuing to grow at a rapid rate with more students and more schools in both Sweden and Spain. Over the past ten months, we have acquired four schools in Spain and started a new school in Skellefteå. Our quality is the key to our growth and for this reason it is gratifying that the results of the national tests in 2019 were once again far above the national average. Second-quarter operating income increased 12.1% year-on-year, of which 9.9% was attributable to organic growth, while EBIT rose to MSEK 68.1 (50.3), excluding the effects of IFRS 16. The higher EBIT was mainly due to a better balance between the increase in school voucher funding and the costs of teaching in Sweden. The ever-challenging financial situation of the municipalities is impacting the increase in school voucher funding in 2020, which is preliminarily expected to average just over 2% compared with 3% in 2019.

I have spent a great deal of time visiting our schools since I became CEO at the end of November. I have spoken with students, teachers, support staff and principals to form my own opinion of our position and what sets IES apart. In addition to a strong shared belief in our concept, which centres on having a calm and safe learning environment, I was struck during these meetings by the widespread commitment to our students throughout the organisation. This is impressive and confirms my view that IES is no ordinary school. We truly have something that should be found in all schools - the desire for all students to succeed regardless of their background. This culture will benefit even more students now as we continue to grow, with more schools in Sweden and Spain over the next few years.

Growth and higher earnings in Sweden
Our performance in the second quarter and first half-year was as expected in both Sweden and Spain. The Swedish operations had a better balance between the increase in voucher funding and the increase in teacher salaries in 2019 than in the past few years, which improved earnings for both the quarter and the first half-year. Revenues per student in Sweden for the first half-year rose 4.0%, personnel expenses per student rose 3.2% and total costs per student rose 3.1% compared with the year-earlier period.

The municipalities are experiencing a challenging financial situation, with high costs for an ageing population and growing numbers of children. This is reflected in the voucher funding decision for 2020, which is preliminarily expected to entail an average increase of just over 2% (3). We believe that we can offset this lower rate of increase for the year by further leveraging our size. In addition, the government grants to strengthen equality and skills has increased for 2020. For IES and our mixed group of students, this means funding of MSEK 64.1 (42.4) for 2020. This funding will be used in its entirety to offset costs in a corresponding amount.

Operating income for the entire Group for the first half-year increased by 10.3% to MSEK 1,414.2, of which organic growth amounted to 8.6%. EBIT totalled 10.0% (5.7), and excluding IFRS 16 and the capital gain from the sale of the Spanish school in the first quarter, the EBIT margin was 5.6% (5.8).

The rate of growth in Sweden remains high. We have announced our plans to open seven new schools over the next three years and regularly receive inquiries from municipalities about even more. We will open two new schools, one in Upplands Väsby and one in Östersund, in the autumn. The queues are long and we have already started the admissions process.

Higher rate of growth in Spain
We have operated schools in Spain since 2016, when IES became a co-owner of a group of schools. We streamlined our ownerships structure over the past year, which has enabled a higher rate of growth. Over the past ten months, we have acquired no fewer than four schools and sold our share of the last jointly owned school. Following our two most recent acquisitions (Colegio Zaragoza and Colegio Joyfe) at the start of 2020, IES owns seven schools with a total of 4,800 students, making us the sixth largest non-religious school operator in Spain in terms of number of students. We have also built up a local organisation with a head office in Madrid that has been further strengthened in the past few months. We now have the platform needed to continue to drive growth in the next few years.

Spain is a large and growing market for high-quality bilingual teaching, where parents are actively looking for schools that can improve their children's prospects in a labour market dominated by high unemployment among young people. We have decided to focus on fee-based bilingual schools that provide education according to the UK curriculum or the Spanish curriculum and that target Spanish middle-class families. There are about 300 schools with more than 200,000 students in this segment, the majority of which are owned by private individuals. They choose us as the new owner of their schools in order to become part of a successful Swedish school group.

The Spanish private school market is currently being consolidated and we intend to remain actively involved in this consolidation. We evaluate each new school on an individual basis and one essential criterion is that IES can add value as an owner. This mainly takes place through quality enhancements, better use of capacity and synergies, for example, in purchasing. A great deal of experience can also be exchanged between Spain and Sweden that will benefit both parts of the operations.

With its 2,000 students, our most recent acquisition in January 2020, Colegio Joyfe in Madrid, is the largest school we have acquired to date. It is a successful school with a good reputation that we are looking forward to continuing to develop together with the students and staff.

In terms of earnings, Spain performed according to plan in the second quarter following a seasonally weak first quarter.

Good results in national tests
Our main measure of the academic quality of Swedish compulsory schools is their results in the national tests, and the results of the tests held in the spring 2019 term were published by the Swedish National Agency for Education in November. IES once again stood out, with a significantly higher share of grade 9 students achieving top marks (A-C) in the core subjects of Swedish, mathematics and English compared with the national average. The national tests are a good quality measure since the same tests are taken by all students in Sweden and are graded according to centralised marking schemes. A great deal of hard work was put into achieving these figures and we are very proud of the performance of our students!

IES's starting point has always been that all students can succeed regardless of their background. We have 37 schools in Sweden, situated in both traditional middle-class areas and in socially vulnerable areas. 38% of our students have a foreign background compared with the national average of 24%. By having high expectations of all students, we achieve good results for both students who come from homes where parents have academic qualifications and those that do not.

One cornerstone in improving and maintaining a high level of quality is comprehensive, systematic quality processes. We have developed and applied these processes over time in order to continuously improve our operations.

However, I am convinced that no quality system in the world can replace the dedication to our students and the professional pride that are so clearly evident throughout our operations. This is exactly what schools should be like and it makes me proud!

Anna Sörelius Nordenborg
CEO

FOR MORE INFORMATION, PLEASE CONTACT:
Emma Rheborg, Head of Communications, tel. +46 (0)768-511 540
Anna Sörelius Nordenborg, VD, tel. +46 (0)70-990 38 21
Fredrik Åkerman, CFO, tel. +46 (0)70-415 23 65

TELECONFERENCE IN CONNECTION WITH PUBLICATION OF THE QUARTERLY REPORT:
CEO  Anna Sörelius Nordenborg  and CFO Fredrik Åkerman will be holding a teleconference today, Thursday 20 February, at 10:00 a.m. in connection with publication of the quarterly report. The teleconference will be held in English. To participate in the teleconference, call the following number: +46 (0)8-566 426 51 and then press 75160419#. The presentation material is available on IES's website: http://corporate.engelska.se

FINANCIAL CALENDAR Date
Q3 interim report 2019/20 15 May 2020
Year-end report 2019/20 26 August 2020
Q1 interim report 2020/21 20 November 2020

This is a translation of the Swedish original. In case of any inconsistency between the Swedish and the English version, the Swedish version shall prevail.

This information is such information that Internationella Engelska Skolan i Sverige Holdings II AB (publ) is obligated to publish in accordance with the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact people set out above, on 20 February 2020 at 8:00 a.m. CET.