Welcome to Desenio Q1 Report 2025. For the first part of the conference call, the participants will be in listen-only mode. During the Q&A session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to CEO Fredrik Palm and CFO Johan Roslund. Please go ahead.
Thank you, and welcome everybody to Desenio Group's Q1 results presentation conference call. With me today, I have our CFO, Johan Roslund. We will today present the outcome of the quarter, the completed restructuring of Desenio's bonds and capital structure, and finish with a Q&A session as usual. The development in the quarter continued weak across most of the markets, which had a negative impact also on our sales. In total, net sales decreased by 10% to SEK 206 million, compared to SEK 229 million the corresponding quarter last year. During the quarter, we continued to work to successfully increase our efficiency. Adjusted EBITDA amounted to SEK 21.5 million, which means that the adjusted EBITDA margin increased to 10.4% compared to 9.7% the corresponding quarter last year.
The high profitability is mainly explained by the fact that our adjusted gross margin improved to 84.8%, and that our adjusted admin expenses were SEK 6.9 million lower compared to last year. Our adjusted fulfillment cost ratio was in line with last year, while the marketing cost ratio was slightly higher. Adjusted operating cash flow improved to -SEK 17.7 million in Q1 this year compared to -SEK 19.1 million in Q1 last year. SEK 15.1 million is adjusted due to the refinancing of the Desenio Group-issued bonds. During the quarter, the restructuring of Desenio's bonds and capital structure was completed. The restructuring included a 75% write-down on the bonds and a debt-for-equity swap through a set of issue of shares, which led to a dilution effect of 95% for existing shareholders. 29.4% of the newly issued shares consist of new listed shares, while 70.6% consist of unlisted shares.
This means that around 33% of our shares are now listed. The unlisted shares can be converted into new listed shares under certain conditions, but no later than after four years. The previous bond was, in connection with this, replaced with two new bonds with terms of two and a half years and four years, respectively. Desenio's interest expenses are expected to be reduced by approximately SEK 69 million to SEK 34 million in 2025, compared to SEK 103 million gross in 2024. On April 23rd, an extraordinary general meeting of the Desenio Group decided to dismiss the previous board and elect four new board members: Martin Wise, Eric Flink, Andreas Otto, and Steven Taylor Matthews. All four are very experienced in, for Desenio, relevant areas, and we will work closer together to develop Desenio going forward.
To summarize the quarter, net sales decreased in a challenging market, but at the same time, we managed to increase the adjusted gross margin. The adjusted EBITDA margin increased as a result of higher efficiency, and the adjusted operating cash flow, excluding the extraordinary cost for the restructuring of the bond, increased compared to the previous year. On this slide, we analyze the difference in EBITDA margin in Q1 2025 compared to the corresponding quarter last year. As you can see, several costs include one of the elements related to the warehouse relocation and the refinancing of the bond. The adjusted product margin increased due to improved product mix, and the improved efficiency in fulfillment more or less neutralized the effect from lower net sales.
The marketing cost in relation to net sales was, as previously mentioned, slightly higher, while admin and other costs, excluding one-offs, were SEK 6.9 million lower. Now, let me comment more in detail on the development of the business in the markets. By looking at search trends in comparison to sales development in Germany and the U.K., we can see that our sales continue to trend higher than the market search volumes in Q1, even though sales development in the U.K. has not been as close to search volumes in Q1 for many years. This correlates to the previous slide. Here, we compare Desenio Group's share of voice compared to a few of our biggest competitors in Germany to the left and the U.K. to the right. We see slight positive development with Desenio taking market share in Germany, while we see slight negative development in the U.K.
Still, in both these important European markets, we have a strong 75% share of voice in search. In Sweden, we have even higher share of voice in search, close to 80%, which has been fairly stable over the past three years. Here, we see the share of voice development in the U.S. in relation to Postery, Fineartamerica, AllPosters, and Society6. As you can see, we have a steady increase still in share of voice in the US market, taking shares from our American competitors. This is Desenio Group's gross order intake since 2019. In Q1 this year, we saw the usual season pattern, but it was lower gross order intake than the previous year, but well above 2019. Here we see the development in our different segments compared to the same quarter last year. In the Nordics, net sales decreased by 2%.
In core Europe, it decreased by 12%. The rest of Europe and in the rest of the world, it decreased by 13%. In North America, which is included in the rest of the world, net sales decreased by 11% in local currency and -14% in SEK. Now it's time to hand over to you for the financial update.
Thank you, Fredrik. Q1 is typically the weakest quarter cash flow-wise, as both supplier as well as—I can change this—sorry. Yes, as both supplier as well as VAT payments are seasonally strong in Q4, and they are being paid in Q1. Adjusted for fees related to the bond refinancing, Desenio's operating cash flow in the quarter improved to SEK -17.7 million. Net working capital in relation to 12 months rolling sales is -4%, which means that we have a negative working capital position of SEK 33 million in Q1. We did not have any CapEx in the quarter if we exclude the effect of leasing. On the next slide, we have a bridge explaining how we go from adjusted EBITDA to operating cash flow in Q1. Starting from the left, we had SEK 21.5 million in adjusted EBITDA in Q1.
One-time items amounted to SEK 27.9 million, of which SEK 6.1 million was related to the warehouse consolidation, and the rest, SEK 21.9 million, was related to the refinancing of Desenio Group's bonds and mainly consists of lawyer fees and corporate finance advisory fees. We had non-cash items effects of SEK 31.8 million, including, for example, deferred tax and some effect from the restructuring and warehouse relocation. Cash flow from the decrease in inventory was positive by SEK 20.2 million. Cash flow from changes in assets and liabilities amounted to minus SEK 62.8 million in the quarter. Here we also have some effect from the bond restructuring and warehouse relocation, as well as from warehouse rent guarantee. In summary, operating cash flow was minus SEK 32.8 million in the quarter. This is how the group looks after the refinancing.
Desenio Group has a new subsidiary called Desenio Midco, where the operating companies and the SEK 150 million super senior bond is. This bond will be repaid after two and a half years. In Desenio Group AB, there is a reinstated senior bond of SEK 251 million maturing in four years. More interesting is to look at the implication of the financing cost with the new structure. Desenio paid around SEK 100 million in interest last year. With the new capital structure, the cash interest will be around SEK 34 million. Taking into account that the bonds were issued in March, the proforma cash interest 2025 will be SEK 43 million. Going forward, the additional cash flow can be used to reduce debt and provide more capital to support and develop the business. I now hand back to Fredrik again for a summary.
Thank you, Johan. To summarize the first quarter of 2025, we still operate in a rather weak market. However, the measures we have implemented and continued to work on are gradually leading to increased profitability. At the same time, we're still faced with the task of reversing the negative sales trend. During the quarter, the restructuring of Desenio's bonds and capital structure was completed. This means that we have gained a much healthier capital structure with a financial room for maneuver that we have not had in recent years. Given that we are now well-financed and have a clear strategy, there are good conditions to succeed in this and thereby take advantage of the scalability that we built and also further improve our efficiency. Thank you for listening, and we are now more than happy to answer any questions you may have. Over to you, operator.
To ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. There are no questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.
Thank you. We have one written question here. Why has sales decreased in Europe by 12%? What's causing that trend? If we dive down a bit in core Europe, the largest markets are Germany, the U.K., France. We have seen that there is a bit of difference in recovery in the markets. The largest market being Germany, we see clear recovery from Germany, while at the same time, the U.K. is still lagging and still struggling in terms of recovery. We can also see that the further north we come, which means the Nordics, recovery has come much longer. Our home market, where we also have the absolute highest share of the market being Sweden, is actually doing well. It is the strongest market in Europe at the moment. We have no other written questions. Again, thank you, everyone, for listening in.
Thank you very much, operator. If you have any more questions, please do not hesitate to reach out to us. Speak soon, and stay safe.