Good morning, and welcome to the Lumi Q2 quarterly presentation. The presentation will today be held in English, and we will be happy to answer any questions after the presentation today. Please, Erik, the stage is yours for the introduction of the presentation.
Thank you, Martin. Welcome everybody to this, this presentation. We look forward to presenting the results of the second quarter for 2023, and also perhaps a little bit more importantly, some trading update for this coming school year. As Martin said, we will answer any questions you might have by the end of the presentation. As you all know, we are a leading education provider, and we have now currently two operating segments, Sonans and ONH. We are pleased to announce that we are adding a third segment, NTech, Norwegian School of Technology, to the group now. Combined, we have more than 8,000 students enrolled in the quarter, and 57% of the students are attending online programs.
Sonans had 48% online students, whilst ONH had 74% online students in the quarter. I think first, just a brief summary of the quarter. I think it's fair to say that the market development for our two segments, Sonans and ONH, are a mixed bag. Now ONH is growing and gaining market share and have also stabilized the cost development, resulting in an improved EBIT margin in the quarter and the first half. Sonans experienced revenue decline in the quarter because of the intake for the last school year in the post-COVID market set back. Sonans has successfully implemented a cost program with a total saving of 36 million in the first half. An additional 10 million is expected in savings from the autumn. NTech is launched and targets students to attend its programs for upskill and reskill in the coming school year.
The first school year will be a pilot to build the brand, test the concept, develop more programs, and also increase the collaboration with the industry. Later in the presentation, we will give you an update on the autumn intake. We see that the private candidate market is still soft, and more cost measures is planned for Q3. The ONH intake is solid, with significant growth in applicants and contracts. Martin, before we go further, I will leave it to you to go through the financials in more details.
Thank you, Erik. We are moving on to the financials, and as we say in the heading here, the revenue in Q2 was as expected, and I think also then the revenues for the first half is also in line with what we presented in the outlook last time as well. The operating revenue was NOK 104.7 million in the quarter, a decline of 22%. For Sonans, the revenue was NOK 54.6 million, a decline of 38%, and as we have said earlier as well, this is due to kind of the post-COVID market setback. By that, we mean the market dynamics following the pandemic. That includes a stronger labor market and what we see, a flat growth in the applicants to higher education.
In the quarter, NOK 4.5 million was not recognized in the second quarter as a result of students with full year contracts demonstrating a low payment ability. A total of NOK 9 million has not been recognized for the first half of 2023. This has obviously reduced the bad debt expenses as well, but the net effect is negative for the quarter, as we will see on the EBIT comments as well. For ONH, the revenue ended at NOK 50 million for the quarter, a +8% growth, which has been driven by news to the programs, primarily online. As we can see on the graphs on the right-hand side, we see that the development is quite similar for Q1 and Q2 for Sonans and ONH.
We see that in total, Sonans has a decline of NOK 65 million in revenue throughout the first half of the year. ONH grew by NOK 10 million, and other revenues in the group was plus NOK 0.6 million, ending up in NOK 212.4 million for the quarter. For the EBIT margin, and as you can see, we are now presenting this excluding the impairment. We have announced a goodwill of NOK 270 million. We will not specifically comment on the goodwill. We have commented on that specifically in the report, but we can also have answer questions related to that after this presentation.
Excluding the impairment, the EBIT was NOK 16.1 million, compared to NOK 30.7 million in the quarter Q2 last year, and the margin was negatively affected by the revenue adjustment, as I said on the previous slide, of NOK 4.5 million in the quarter and a total of NOK 9 million for the first half of 2023. As I said, it's obviously a lower bad debt expenses as a result of this adjustment or, not recognizing the revenue, but there is a net negative effect for the business of this. Net savings was NOK 20 million for the group in Q2, when we then exclude the transaction cost related to the Hanover voluntary cash offer. As we presented in Q1 as well, we have now reported...
The numbers are reported, and we have not made any adjustments to the numbers. That means that the OpEx is including also non-recurring items in the quarter and the first half of 2023. Otherwise, bad debt expenses is slightly down last, last, low last year, and we also see a significant improvement from Q4 2022, where we had really high bad debt expense levels, and now we are back to normal levels. We have implemented credit control measures during this year and this, the end of last year, and we see a very positive impact on credit quality for the business. This will obviously reduce online sales, but when we look at the numbers, we believe there should be a net positive or at least net neutral effect on profit for the coming school year from these measures on credit....
On the right-hand side, again, we see the development in EBIT for the quarter and also then for the first half of 2022. As you can see, the, the majority of the decline in the EBIT is related to the Sonans' revenue, compensated partly then by the cost program in Sonans, so NOK 36 million. Higher revenue in ONH by NOK 10 million, savings in ONH OpEx of NOK 3 million, and then we have the last item, which is related to the transaction costs for the Hanover voluntary cash offer of close to NOK 6 million, ending up in NOK 22 million in EBIT for the quarter. Sorry. Okay, just for commenting also on the expenses for Sonans. We had net savings of NOK 16 million in Q2, and in total, the savings ended at NOK 36 million for the first half of 2023.
We expect a further or a further reduction of NOK 10 million is actually implemented and will yield impact directly from Q3 and the second half of 2023 from consolidating the Greater Oslo region and closing three campuses. From the intake numbers we see now, we see that the Oslo campus has a good performance, meaning that it seems that the consolidation so far has been successful. More cost measures is obviously, and Erik will comment on the intake, is being prepared for Sonans based on the expected result of the 2023, 2023-2024 intake. We are still a couple of weeks left of the intake, but as we present now, we are in a size of decline, which will require more measures for the business.
Cost levels at ONH is stabilizing and reduced compared to Q2 last year and the first half of last year as well, and this leads to a margin expansion, and we see that we are now back actually to the levels prior to the ramp-up we had in OpEx and expansion of study programs at ONH the last years. On the right-hand side, we just then try to, would like to present the numbers in for Sonans, the development, how it's been the last school year. As we see, the revenue has declined by 27%, from NOK 348 million to NOK 255 million, from the school year 2021, 2022 to the school year 2022, 2023.
As we present in the report and the presentation today, we expect a revenue in the size of NOK 270 million for this year. This is only an estimate still, because there are still at least three weeks left of the intake. That's before we can actually conclude on the actual sales number or the revenue for coming year. This also include an estimate for the spring intake, which takes place later on. As we can see then for Sonans, quarter by quarter, we're able now to reduce the expenses in the business.
On the right side, in the graph, we see that our indicative level now for the expenses for Sonans, excluding the positions and impairments, and the positions in IFRS 16 leasing, we are now at NOK 164 million in expenses for Sonans, and this is an indicative level now based on what we have made of savings throughout the last school year and the NOK 10 million already then implemented that will yield effect from Q3 this year. Also the number of 164 is then before any additional and new cost measures for Sonans. Lastly, on the cash side and the cash flow of the business, the net cash flow from operation was -NOK 80.5 million in the period, compared to NOK 71.9 million last year.
As we have commented in previous reports and presentations as well, the Q2 cash flow is negative also due to the fact that the students are paying their tuition fees in the first quarter of the year. The cash position was NOK 62 million at the end of the quarter, and in addition, we had a RCF available of NOK 70 million. New leverage covenants was agreed for Q1 and Q2 this year, and the reported covenant was 2.9. The agreed covenant going forward is 3.5. We signed a new financing agreement with Nordea in Q2 2023, following the private placements and the subsequent offering, and we did a repayment on the debt of NOK 130 million in the quarter.
At last, yesterday, Hanover also announced that they passed the 50% ownership in Lumi Gruppen on August 11, 2023, with the result that, the group has to pay a change of control waiver fee of NOK 5 million to Nordea. The group is now obliged to agree on new financing terms before August 31, 2023. I think by that, we conclude the financial presentation. We're happy to answer questions after Erik's section. We move on now to operations. Erik?
Thank you, Martin. I think this section will mainly focus on the open autumn intake. Just some brief update. I think the priority for Sonans has been to complete the cost program this school year, and as you can see from the figures, this has been successful. I think also, also very importantly, Sonans has delivered a school year with all-time high student satisfaction and high qualities. I think that's has been reassuring in a period of huge changes for, for the business. The key focus during this summer have been to secure a best possible intake. Unfortunately, you will see that the private candidate market is still soft, and the intake will end significantly lower than last year. It's also important to say that Sonans has kept its market market position.
As I previously also said, ONH is in a different sort of situation than Sonans, continue to grow and deliver improved margin, and ONH is strengthening its position as a leading online player in the higher education market. The intake is not completed yet. As of now, we have solid growth in new students for the coming school year. ONH has developed several new programs in the last couple of years. The investments are starting to pay off. We also see several growth opportunities ahead for ONH. For NTech, we now have a tech school platform with a 2-year program and 3 flexible shorter courses for upskill and reskill. The first school year will be a pilot to establish the brand and improve the product portfolio.
It takes time to establish a new school, we don't expect any significant more student volumes first school year, but the school year will lay a foundation for growth in the years ahead. Let's go to the Sonans' intake, a little bit more details about that. The private candidate market has declined in the last two to three years and continues to be soft for the school year, 2023-2024. We now expect the intake to end around 30% behind last year, with a total sale of around 150 million NOK, compared to 209 million NOK last year.
In addition, we expect around NOK 20 million in sale for the spring, just estimates so far, and then revenues for the school year is expected to earn around NOK 170 million, as Martin also showed you previously. It is important to say that the decline in Sonans's sale is a result of the decline in the private candidate market. When you look at the graph to the right, you see the number of private candidate exams in the school year, 2021 to 2023, also last school year. The number of exams declined by 45.5% in the period, and in the same peri-period, the Sonans sales declined by 35%. I think it's fair to say that Sonans's market position is still strong, and we have maintained its position with a lower decline than the overall market.
We expected the market to slightly improve in 2023, driven by the reintroduction of high school exams, a softer labor market, and increased number of applicants to higher education. When you look at the result now, the result was that several exams was canceled due to technical issues in the high schools. The labor market is still exceptionally strong, and the number of applicants to higher education ended at the same level as last year. We are confident that the market will start to recover since the underlying market fundamentals are still strong, but it will take longer time than expected. We also included just this graph on the next page, because despite the challenging year, Sonans student satisfaction was at all-time high in the last school year.
More students will recommend Sonans, more students are satisfied with the grades, the grade improvement is significantly higher than last year, with 1.3 in, in average improvement, which is exceptionally high compared to last year and also previous years. Sonans is not in this trouble due to quality programs, problems, which is reassuring. Then we can move on to ONH. ONH is in a strong position now, with the 12% growth in signed contracts for new students so far in the cycle. There is still 4 more weeks in the intake where we accept students, especially online students, since then the campus students start this week and next week.
We have completed more or less 80%-90% of the intake, and I will say that the prospects for the school year looks positives. When you look at applicants, they are up with 22%, by far outperforming the market, which only grew by around 1%. Signed contracts are up with 12% compared to last year. Just a reminder that last year, the intake was, was flat. We see exceptional growth in demand for online programs, where ONH has a solid offering and also a very strong position. This summer, we launched one new bachelor and several new one-year programs, all online, and the new programs are an important driver for the growth we see in student numbers for this school year.
As I also previously said, we see several growth opportunities going forward for ONH, where developing new programs is priority, number one. Then we can also look at just some brief comments on NTech. It is launched, and we now have four programs in the portfolio. We have the two-year program that was approved earlier this year, but we saw early that we also needed to develop shorter programs for upskill and reskill. We have spent the summer doing that, derived from the, from the two-year program. I think the first school year will be a pilot to build the brand, enhance the collaboration with the industry, and testing the product both online and physical. It is important to test the concept thoroughly.
After the feedback we have received so far in the campaign, the ambition this year is to start the three shorter programs for upskill and reskill to pilot the concept, and the programs will start during the school year in September, November, and January. The two-year program will start in 2024, both online and on campus. I think it takes time to establish a new brand, but the long-term prospects for NTech are still positive. I think that concludes the comments on the, on this part, and Martin can go through the outlook, and then obviously, we will be happy to answer any questions you might have afterwards. You're on mute, Martin.
Thanks, Erik. Sorry. Yes, just, just to conclude our presentation and, and a few comments then on the outlook of the business, I think first of all, we could say that the business model has been transformed during the last year. We believe we now have a more flexible and scalable business model with a lower share of fixed cost in the business. However, we see that we have to continue to work with the Sonans's business to adapt additionally to the market situation, even though we are positive on, on the future prospects of, of Sonans's. For ONH, the trend is, as we say, positive, with the applicants trending clearly higher than last year. That was also in line with the indication we gave in the, the first quarter presentation.
For Sonans, as we said, we are expecting now, the intake to end around 30% below the autumn intake last school year. As a result, not surprisingly, the profitability for Sonans will be weak for the coming school year, 2023, 2024. While we expect ONH profitability to improve, the coming school year. As Erik said, we have now launched NTech with the marketing campaign, and the 2-year program and the courses. As we write here, there will be limited kind of financial impact in the school year, the coming school year for NTech. We have also chosen to present the revenue estimates for this coming school year as well, as we say, and just to make sure everyone have the same information, is that we're now presenting the numbers per Week 32.
As Erik said, there are close to three weeks left of the intake for the autumn intake. These numbers also includes the spring intake, which takes place from first of September to first of February, the numbers that include an estimate based on the development so far in the intake for both Sonans and ONH. That means that we have presented a range in this case, and what we believe is, is a fair estimate for each of the businesses the coming year. Lastly then, and as I said previously in the presentation as well, we are now working also to look into Sonans, how we are able to adjust the business even more in line with the current market situation for Sonans. I think that's, that was, our presentation for today.
We are happy to answer questions, otherwise, you are also welcome to send questions directly to ir@lumigruppen.no. Otherwise, we can hold on for some few minutes more if there are any questions, and please use the chat, or you can just also raise your voice. Yes, we have one question on expectations on students for NTech for the coming school year. Would you like to comment, Erik?
Yeah, I think we will start. We plan to start three courses, one in September and one in November and one in January, and possibly another one in there. I guess, I mean, a fair estimate would be maybe 50 to 100 students in total during the, of course, participant during the school year. Okay.
Yes, there's a question on pricing for NTech comparable to ONH. I think we can say that NTech's pricing is in line with the, the industry in general...
Yeah
... on, on pricing. I think what we, what the prices are present now is currently in line with the type of courses we are offering. Basically, the pricing is in line with what the market levels for prices-
Yeah
... so to say.
Yeah. The prices for trade schools, like these tech schools, are a little bit higher than, for higher education. Also, a comment.
Yes.
Mm.
Okay, I think if there are not more any questions, we close the presentation. Just at last, we can then say that, as we did last year, we send a stock notice on the final result of the intake. We are now presented our estimates for Week 32, then around 1st of December, we will then can present the actual results of the intake for Lumi Gruppen, for Sonans and ONH, and then we have the final figure, so to say.
Mm.
Okay, thanks for joining today. We are happy to answer more questions. Just reach out to us, either by mail or phone. Have a nice day, everyone. Thanks.
Thank you. Bye.
Thank you.