AGM 2020

May 5, 2020

PSEA holders, I'm Kevin Reinhold, President and CEO of Tano Group. First of all, I'd like to welcome you to this CEO, President for Carno Group's 1st annual general meeting as a listed company. I hope you all are healthy despite the current COVID-nineteen declared a tender pandemic. In these times, it's especially important that we take care of each other. That is why we, like many other companies, have taken proportional measures in connection with our ATM to enable you to follow the meeting by this webcast and by voting in advance. We hope to meet you all face to face at next year's AGM instead. The AGM will be recorded, so it'd be possible to view it afterwards on our website. In this presentation, I will make a summary of our 1st year on NASDAQ.com, including the significant events during the year, discuss the financial highlights of past year, say a few words about the report for the first quarter 2020 that we published earlier today. This will include a few comments on the COVID-nineteen pandemic and its consequences on panel and what we're doing to mitigate those the events during 2019, we had our focus on 3 different tasks. 1st, and in the beginning of the year, our focus was on our company public. Becoming a listed company is an exciting, a complex process that involves many parts in I would like, therefore, to thank all our financial advisors, lawyers, and of course, all our own employees who made a great effort in Segmentano to NASH stockholm. I also want to welcome all of you, our shareholders. Our second task was developing and implementing our new The platform was presented in the summer and at the end of the year, all former users of the 2 old platforms were on boarding on this joint platform. As a result of this successful onboarding, we were able to close the old platforms of Nostachi boutique and Carno Group Sweden. During the rollout of the new platform, we received a lot of valuable feedback from our users, We are therefore continuing to develop and deploy enhancements to the platform. This is part of our continuous improvement strategy. Where we use lessons learned from a project or process to further raise the customer value in our offering. The next step in this improvement strategy will be upgrading of our Danish offering using that technology experience from the work with the Juno platform. The 3rd task in 2019 was the integration of Monster JUTIQ, which we finalized at the end of the year. We have now merged the 2 legal entities into 1. We have moved the 2 offices into 1 and we have merged the 2 organization into one organization. Consequently, we can now benefit fully from all the potential the acquisitions is expected to bring us 2019 was a busy year with our heavy workload, and we are proud to have been able to continue updating our services and keep all customer relationships despite big efforts made on the IPO, integration of Northeastern Utic and the loans of Juno. Despite all these heavy extra tasks and really big projects, we did not relax on taking care of and driving on our core business. As an example, I can mention that we managed to keep the very high renewal rate on subscription. The rate came in at 97% last year. The 3% that did not renew their contracts were people that retired. This shows our important role in the legal system and that it's hard to get a higher renewal rate than we have. Another highlight was the publication is awareness and bring inspiration to legal professionals and law firms in both Denmark and Sweden. Or 3500 lawyers and legal professionals answered the survey, making it the largest survey of its kind in Scandinavia. The future lawyer service show that a clear majority of the respondents find it necessary for law firm to adapt to a new reality. This new reality is based on technical advance and innovations, globalization and increased demands on transparency. Further, lawyers expect a shift in attitudes between work and work life balance in the younger generations. In connection with our IPO, we announced the following medium term financial goals, a medium term in Canal Group is within 3 to 5 years. Our growth target is to have an annual organic growth rate of 3% to 5%. Our margin target is to increase our adjusted EBITA margin And our leverage target is to have a net debt ratio to adjusted EBITDA of no more than three times. During our first percent to SEK757 1,000,000. Of this increase, organic growth was 4 percentage points. IE just in the middle of the range of our targets. Adjusted EBITA margin improved by 0.2 percentage points and leverage ratio came in at 2.7 times, well in line with our targets of no more than free. The good leverage ratio was a result of equity injections in connection with the IPO. It was also the result of a strong cash generation since our operations generated adjusted cash flow of more than SEK250 1,000,000,000. These financial results have made it possible for the board to propose a dividend of 0.45 Swedish krone per share that you as the company's shareholder now have the opportunity today to approve. Carnos addressable market is expected to grow by a compound annual growth rate of 2.4 percent according to a market study we conducted in connection with our IPO. Our financial performance in 2019 indicates good penetration of our markets. In Denmark, our organic growth was 2.7% in 2019. Organic growth was according to expectation and mainly driven by online sales to existing customers. Our adjusted EBITA in Denmark improved by 5% to SEK 165,000,000 and adjusted EBITA margin was 39 0.3%. The adjusted EBITA improvement was due to higher sales, better product mix and good cost control. During 9, 2019, we have upgraded our offering to tax experts and released a tax new, new tax magazine in collaboration with Deanesaw auditors association to strengthen Carno's position within the growing tax area. We have also entered into a collaboration with the law firm Horton to promote E courses on the Danish market. In Sweden, net sales increased by 5.6% to CHF336 1,000,000, driven by strong performance in the online business partly offset by an except expected decline in the offline business. Adjusted EBITA margin increased by 9% to 1,000,000 and adjusted EBITA margin to 33.7 percent, driven by higher net sales and good cost control while higher depreciation and amortization had a negative impact. During 2019, we have delivered Good results in the immune spellings area where we have increased our presence. This is a growing area where we see opportunities to grow even more during coming years. We have also launched improvements to our tool outsize guidance, which helps our users with agreements and contract using templates. Also this year is off to a good start, especially considering that the corona pandemic began to reach out markets in Denmark and Sweden in the quarter. Our organic growth was 2.3%, which is a little less than in the preceding quarters but we estimate that the corona pandemic effects have reduced our growth by approximately 1 percentage point. And then we are not far from last year's organic growth of 4%. The COVID-nineteen pandemic has had an insignificant impact on our online business which accounted for approximately 70% Our offline sales has been affected to some extent. There has there, the decline has been mainly in books and training courses. However, we expect to partially recover this decline in offline later this year. We also managed to keep adjusted EBITA margin at the same high level as in the first quarter last year, despite Personal expenses increased in this quarter as the split between internal hours spent on maintenance and capitalized development is back to a normal split again. In 2019, cash flow was strong in the first quarter and cash flow increased by 4% in the first quarter of this year. So in summary, you could say, so far so good, we keep growing despite the COVID-nineteen pandemic. Let me therefore say a few words about the pandemic and what we have done to support our employees and the society. The COVID-nineteen pandemic affects us all. Many of us have a friend, a relative or colleague that has been infected. In Carna, we have taken precautionary measures, for instance, by having our employees work home during March April. Additionally, we are, of course, strictly adhering to the regulations and recommendations from their authorities where we operate. Our ambition has been and will continue to be that our employees shall stay healthy despite the pandemic. Their health and well-being our overriding concern currently. I should also mention that we have set up a special section on our platforms Denmark and Sweden where we have compiled all legal and regulatory information about the COVID-nineteen pandemic. Currently, these sections comprise more than 20 new laws and regulations, close to 40 law changes and Nomura's guidelines and advice related to the pandemic in Denmark and Sweden. This service has been very well received and have been many searches on our platform relate to the COVID-nineteen pandemic. We strongly believe that it is extremely important that all relevant persons have access to the information they need during these critical times. We have therefore decided to provide this information both to our existing customers and to all organization that needs the information, and we are doing the letter free of charge for a period. That's one way we assume our responsibility to help society in this serious situation. Our growth strategy comprised of the following 5 components. Adding more content and values through data driven features and tools. Expand the product offerings through innovations expand into adjacent and more verticals, geographical expansion and accelerate growth through acquisitions. The acquisitions we are aiming for should either be market entry acquisitions, vertical expansion acquisitions, or technology build on acquisitions. Or even better, a combination of these free. We are constantly adding more and better value to our platform, and this is our part of strategy to grow organically. This increase, of course, the benefit customers have on our platform and help us in renewal of contracts. During 2019, we also, among other things, introduced search algorithm based on artificial intelligence on Northeastern's platform in Sweden. This is an example of how we help users becoming more efficient. Our product outhouse guide and helps lawyers with agreements and contracts using templates. This is another example of how we help our users in taking better decisions faster. Over the next coming years, we intend to grow organically adding more content to the platform and developing new data driven features and tools. During 2019 and the beginning of this year, we have invested in 4 companies. The first acquisition which we made in 2019 was to take a minority position in procurement link. This is an example of a vertical expansion since the Danish legal tech Startup companies specialized in procurement law, a market segment that we currently don't address in an adequate way. Procurement in both has standalone potential and can bring more value to our digital platform. The next acquisition was in the beginning of this year when we invested in the Danish legal start take up legal tech startup company and took a 19% session and is developing new technologies, expected to be implemented in our digital platform over time to provide additional relevance and efficiency for our customers. Therefore, this investment is an example of our technology bolt on acquisition. The 3rd acquisition was in March this year when we formed a sixty-forty percent joint venture with LIX 20 fourseven called LIX Nordics. This is another vertical expansion acquisition since LIX 20 fourseven is a cloud based legal enterprise practice management solution that represent a new way for us delivering even more value to the customers. Further, this joint venture will operate in the whole Nordic region. Our 4th and latest acquisition is an example of a geographical expansion because it would be our way of entering the Norwegian markets. Towards the end of March, we concluded an agreement to invest in strawberry law. This company has now been renamed Carnor Group Norway. We and the strawberry team in Norway are well aligned with each other and we share the same view on how to create strong businesses, results by combining the strengths of both companies. In this combination of business, the legal research platform will be based on a platform collaboration between Kannogroup Norway and load data. This collaboration with load data is an important milestone for us as a LOTA is the most widely used legal information solution in the Norwegian market. The new company, Carnogroup Norway, is expected to launch its offering in the second half of twenty twenty one with a focus on annotations, countries and EU material. Looking forward, we intend to continue to leverage our position in our home markets while investing in geographic expansion. We want to grow in two dimensions. 1st, highly specific jurisdiction of products based on strong network of authors And secondly, general jurisdictional products for international purposes. The latter could, for instance, involve the growing environmental health and safety market, with strong cash generation from the core business, a strong cash position and good credit line we are financially prepared for additional investments and acquisitions. I want to conclude this presentation by thanking all employees for their dedication during 2019. Our employees, authors, and customers are key elements in our success and together, we are a strong team. I'm looking forward to together with all employees continuously further developing our company and realizing our plans. I also want to thank shareholders for your trust in Carnall Group And I hope to