Notice to Extraordinary General Meeting in Internationella Engelska Skolan i Sverige Holdings II AB (publ)

The shareholders in Internationella Engelska Skolan i Sverige Holdings II AB (publ) are hereby summoned to an Extraordinary General Meeting (“EGM”) to be held on Wednesday 13 June, 2018, at 2 p.m. at the premises of Advokatfirman Vinge, Norrlandsgatan 10, Stockholm.

Notification, etc.
Shareholders who wish to participate in the EGM must:

firstly be included in the shareholders’ register maintained by Euroclear Sweden AB as of Thursday 7 June 2018; and

secondly notify the company of their participation in the shareholders’ meeting no later than Thursday 7 June 2018. The notification shall be in writing to Nytorpsvägen 5B, 183 71 Täby or by email to egm@engelska.se. The notification shall state the name, personal/corporate identity number, shareholding, address and daytime telephone number and information about any assistants and, where applicable, representatives. When applicable, complete authorisation documents, such as powers of attorney for representatives, registration certificates or corresponding documents, shall be appended to the notification.

Nominee registered shares
Shareholders whose shares have been registered in the name of a bank or securities institute must temporarily re-register their shares in their own names with Euroclear Sweden AB in order to be entitled to participate in the EGM. Shareholders wishing such re-registration must inform their nominee of this well before Thursday 7 June 2018, when such re-registration must have been completed.

Proxy, etc.
Shareholders represented by proxy shall issue a dated and signed power of attorney for the proxy. If the power of attorney is issued on behalf of a legal entity, a certified copy of a registration certificate or a corresponding document for the legal entity shall be appended. The power of attorney is valid for a maximum of one year after the issuance or for the duration indicated in the power of attorney, whichever is longer, but not for more than five years after issuance. The registration certificate, where applicable, may not be older than one year. The power of attorney in original and, where applicable, the registration certificate should be submitted to the company by mail at the address set forth above well in advance of the EGM. The form to use for a power of attorney can be found on http://corporate.engelska.se/.

Shareholders’ right to request information
Shareholders are reminded of their right to request information in accordance with Chapter 7 Section 32 of the Swedish Companies Act (Sw. aktiebolagslagen).

Number of shares and votes
When this notice to attend the EGM was issued, there were a total of 40,050,000 shares, with one vote per share, in the company.

Proposed agenda

1. Opening of the meeting
2. Election of chairman of the meeting;
3. Preparation and approval of the voting list;
4. Approval of the agenda;
5. Election of one or two persons to attest the minutes of the meeting;
6. Determination of whether the meeting was duly convened;
7. Resolution to adopt a long-term incentive programme in the form of a share matching programme; including resolution regarding;
   a. Adoption of a share matching programme;  
   b. Amendment of the articles of association, authorisation for the Board of Directors to issue Class C shares, authorisation to repurchase issued Class C shares and to transfer own ordinary shares to participants of the programme; 
8. Resolution to adopt a long-term incentive programme in the form of a warrant programme including an issue of warrants, including resolution regarding; 
   a. Adoption of a warrant programme;      
   b. Issue of warrants;
9. Closing of the meeting.

The Board of Directors’ proposals

Resolution to adopt a long-term incentive programme in the form of a share matching programme (item 7)
The Board of Directors proposes that the EGM resolves to adopt a long-term incentive programme in the form of a share matching plan for certain principals and other management personnel within Internationella Engelska Skolan i Sverige Holdings II AB (“IES”) in accordance with item 7 (a) below. All resolutions in accordance with item 7 are conditional upon each other and are thus adopted as one single resolution. Further, the resolutions under item 7 are conditional upon the EGM’s resolution to adopt item 8.

Adoption of a share matching programme (item 7 (a))

Summary of the Programme
The Board of Directors proposes that the EGM resolves to adopt a long-term incentive programme in the form of a Share Matching Programme (the “Programme”). The Programme is proposed to include not more than 50 principals and other management personnel within IES (the “Participants”). The participants will be granted the opportunity to receive ordinary IES shares free of charge (“Matching Shares”) within the Programme in accordance with the terms and conditions set out below.

Personal investment
In order to participate in the Programme, the participant must have made a private investment in IES by acquiring IES shares acquired after 1 January 2018 (“Saving Shares”). The maximum number of Saving Shares that the participants can allocate to the Programme amounts to 1,600 Saving Shares in accordance with the below. For each Saving Share held under the Programme, the company will grant participants a right to one Matching Share, meaning the right to receive one Matching Share free of charge provided that certain conditions are fulfilled (“Share Right”).

Terms and conditions     
A Share Right may be exercised provided that the participant, with certain exceptions, as of the start of the Programme and up until and including the date of release of the interim report for the period 1 July – 31 March 2021 (the “Vesting Period”) has kept his or her own original Saving Shares and that the participant, with certain exceptions, maintains his or her employment within IES. The Programme shall start as soon as practicably possible after the EGM which resolves to adopt the Programme. 

The Share Rights
The Share Rights shall, in addition to what is set out above, be governed by the following terms and conditions:

• Share Rights are granted free of charge.
• Share Rights vests during the Vesting Period.
• Share Rights may not be transferred or pledged.
• The Share Rights will not be recalculated/compensated for any dividend distribution.
• Each Share Right entitles the participant to receive one Matching Share free of charge after the end of the Vesting Period if the participant, with certain exceptions, maintains his or her employment within IES and the invested Saving Shares until the time of the release of the interim report for the period 1 July – 31 March 2021.

Preparation and administration          
The Board of Directors, or a committee established by the Board of Directors for these purposes, shall be responsible for preparing the detailed terms and conditions of the Programme, in accordance with the terms and conditions above, including provisions on recalculation in the event of a bonus issue, split, rights issue and/or other similar events.

The Board of Directors shall have the right to make other adjustments if significant changes in IES or its environment would result in a situation where the adopted terms and conditions of the Programme no longer serve their purpose.

Allocation
The participants may allocate up to 1,600 Saving Shares to the Programme, in accordance with the above, entitling the holder to allotment of one (1) Share Right for each invested Saving Share.

Allotment of Matching Shares under the Programme and hedging arrangements
In order to implement the Programme in a cost-efficient and flexible manner, the Board of Directors proposes that the EGM, in accordance with item 7 (b) below, authorises the Board of Directors to resolve on a directed share issue of not more than 80,000 Class C shares to Svenska Handelsbanken AB (publ) and further to authorise the Board of Directors to subsequently resolve to repurchase the Class C shares from Svenska Handelsbanken AB (publ). The Class C shares will then be held by the company, whereafter the appropriate number of Class C shares will be converted into ordinary shares and subsequently be delivered to the participants under the Programme. The Board of Directors further proposes that the EGM resolves that not more than 80,000 ordinary shares may be transferred to the participants in accordance with the Programme.

Scope and costs of the Programme
The Programme will be accounted for in accordance with IFRS 2 which stipulates that the Share Rights should be recorded as personnel expenses during the Vesting Period. The costs for the Programme are estimated to amount to approximately SEK 5,997,060 excluding social security costs, calculated in accordance with IFRS 2 based on the following assumptions: (i) that all Share Rights are allotted, (ii) that the volume-weighted average price of the company’s share during the period of ten trading days falling immediately before the start of the Programme amounts to SEK 66.26 per share, (iii) an estimated annual turnover of personnel of 5 per cent, and (iv) a positive total shareholder return during the Vesting Period. The costs for social security charges are estimated to approximately SEK 1,799,118, based on the above assumptions, and also assuming an annual share price increase of ten (10) per cent during the term of the Programme and a social security tax rate of thirty (30) per cent. Together with the IFRS 2 cost it results in estimated costs of SEK 7,796,178. In addition to what is set forth above, the costs for the Programme have been based on that the Programme comprises not more than 50 participants and that each participant exercises the maximum investment.

Assuming an annual share price increase of 26 per cent, that all participants have maintained their employment by the end of the Vesting Period and that all invested Saving Shares are retained under the Programme, the maximum cost of the Programme will be SEK 10,601,826 in accordance with IFRS 2, and the maximum social security cost will amount to approximately SEK 3,180,548, meaning a total of approximately SEK 13,782,374.

Effect on key ratios and dilution
The costs are expected to have a limited effect on IES’ key ratios.

Upon maximum allotment of Matching Shares, and provided that the hedging arrangements in accordance with item 7 (b)(i)-(iv) below are adopted by the EGM, 80,000 shares will be allotted to participants under the Programme, meaning a dilution effect of approximately 0.20 per cent of the number of shares and votes in the company. Taking the shares which may be issued pursuant to the proposed incentive programmes under item 8 below under consideration, the total dilution amounts to 1.36 per cent. The dilution is expected to have a marginal effect on the company’s key ratios. 

The rationale for the proposal           
The rationale for the Programme is to create conditions for motivating and retaining competent employees in IES as well as to align the targets of the participants with those of the company, as well as to increase the motivation to reach and exceed the company’s financial targets. The Programme has been designed based on the view that it is desirable that principals and other management personnel in IES are shareholders in the company. Participation in the Programme requires that the participant has made a personal investment by acquiring Saving Shares.

By offering an allotment of Share Rights, the participants are rewarded for increased shareholder value. Further, the Programme rewards employees’ continued loyalty and thereby the long-term value growth in the company. With these considerations, the Board of Directors is of the opinion that the adoption of the Programme will have a positive effect on the future development of IES and thus be beneficial for both the company and its shareholders.

Preparations of the proposal and previous incentive programmes in IES
The company’s Board of Directors has prepared this Programme in consultation with external advisors. The Programme has been reviewed by the Board of Directors at board meetings in May 2018. There have been no previous long-term incentive programmes in IES.

Hedging arrangements in respect of the Programme

Proposal regarding amendment of the articles of association, authorisation for the Board of Directors to issue Class C shares, authorisation to repurchase issued Class C shares and to transfer own ordinary shares to participants of the Programme (items 7 (b)(i)-(iv))

Proposal regarding amendment of the articles of association (item 7 (b)(i))
The Board of Directors proposes that the EGM resolves to amend the articles of association with respect to the implementation of the Programme whereby paragraph 4 in the articles of association is supplemented in accordance with the following:

“Shares may be issued in two classes, ordinary shares and Class C shares. The ordinary shares shall carry one (1) vote and the Class C shares one tenth (1/10) of one vote each. Ordinary shares may be issued up to a maximum number of shares that represents the full share capital of the company. Class C shares may be issued up to a maximum number of shares that represents the full share capital of the company.

Class C shares do not entitle to dividends. Upon the company’s liquidation, Class C shares carry equivalent right to the company’s assets as other shares, however not to an amount exceeding up to the quota value of the share.

Should the company resolve on an issue of new ordinary and Class C shares, against other payment than contribution in kind, each holder of ordinary and Class C shares has preferential rights to subscribe for new shares of the same class in proportion to the number of old shares held by such holder (primary preferential rights). Shares not subscribed for with primary preferential rights shall be offered for subscription to all shareholders in the company (subsidiary preferential rights). If the number of shares so offered is less than the number subscribed for with subsidiary preferential rights, the shares shall be distributed among the subscribers in proportion to the number of already shares held, or, to the extent that this is not possible, by lot.

Should the company resolve on an issue of new shares solely of ordinary shares or Class C shares, against other payment than contribution in kind, all shareholders, irrespective of which class of shares held, are entitled to preferential rights to subscribe for new shares in proportion to the number of shares previously held.

The stipulations above regarding preferential rights shall apply mutatis mutandis for new issues of warrants and convertible debt, and shall not infringe on the possibility to resolve on an issue in which the preferential rights of shareholders are waived.

If the share capital is increased by a bonus issue, where new shares are issued, new shares shall be issued in relation to the number of shares of the same classes already held. In such cases, old shares of a specific class shall entitle to new shares of the same class. Following a requisite amendment in the articles of association, the aforementioned stipulation shall not infringe on the possibility to issue shares of a new class by a bonus issue.

Reduction of the share capital, however not below the minimum share capital, may as resolved by the company’s Board of Directors or general meeting, be made by redemption of Class C shares. When a resolution on reduction has been passed, an amount corresponding to the reduction amount shall be transferred to the company’s equity reserves, if the required funds are available. The redemption payment per Class C share shall correspond to the quota value of the share.

Following notice of the redemption resolution, holders of shares shall promptly receive payment for the share, or, if authorisation from the Swedish Companies Registration Office or a court is required, following notice that the final decision has been registered.

Class C shares held by the company, may upon decision by the Board of Directors be reclassified into ordinary shares. Immediately thereafter, the Board of Directors shall report the reclassification to the Swedish Companies Registration Office (Sw. Bolagsverket) for registration. The reclassification is effected when it has been registered and the reclassification been noted in the Swedish Central Securities Depository.”

Authorisation for the Board of Directors to issue Class C shares (item 7 (b)(ii))
The Board of Directors proposes that the EGM resolves to authorise the board, during the period until the Annual General Meeting 2018, on one or more occasions, to increase the company’s share capital by not more than SEK 2,000 through the issue of not more than 80,000 Class C shares, each with a quota value of SEK 0.025.

With deviation from the shareholders’ preferential rights, Svenska Handelsbanken AB (publ) shall be entitled to subscribe for the new Class C shares at a subscription price corresponding to the quota value of the shares. The purpose of the authorisation and the reason for the deviation from the shareholders’ preferential rights in connection with the issue of shares is to ensure delivery of shares to participants under the long-term incentive programme.

Authorisation for the Board of Directors to resolve to repurchase own Class C shares (item 7 (b)(iii))
The Board of Directors proposes that the EGM resolves to authorise the board, during the period until the Annual General Meeting 2018, on one or more occasions, to repurchase its own Class C shares. The repurchase may only be effected through a public offer directed to all holders of Class C shares and shall comprise all outstanding Class C shares. Repurchases shall be effected at a purchase price corresponding to the quota value of the share. Payment for the acquired Class C shares shall be made in cash. Since the balance date of the most recent annual report, the annual general meeting of the Company has resolved to distribute SEK 45,554,000 to the shareholders and thus there is SEK 376,121,610 left of the available amount under Chapter 17, Section 3, first paragraph, of the Swedish Companies Act.

The purpose of the proposed authorisation to repurchase is to ensure delivery of Matching Shares under the Programme.

Transfer of own ordinary shares (item 7 (b)(iv))
The Board of Directors proposes that the EGM resolves that the Class C shares the company acquires based on the authorisation to repurchase own Class C shares in accordance with item 7 (b)(iii) above, may, following the reclassification into ordinary shares, be transferred to participants in the Programme in accordance with the adopted terms and conditions.

The board further proposes that the EGM resolves that a maximum of 80,000 ordinary shares may be transferred to participants in accordance with the terms and conditions of the Programme. The number of shares that can be transferred is subject to recalculation in the event of a bonus issue, split, rights issue and/or other similar events during the Vesting Period.

The Board of Directors’ and the auditor’s statements under Chapter 19 Section 22 and 24 of the Swedish Companies Act will be available to the shareholders for inspection together with the proposal.

Resolution to adopt a long-term incentive programme in the form of a warrant programme including an issue of warrants (item 8)

Adoption of a warrant programme (item 8 (a))
The Board of Directors proposes that the EGM resolves to, in accordance with the below, issue not more than 468,000 warrants within the scope of a long-term incentive programme for members of the executive management as follows. All resolutions under item 8 are conditional upon each other and are thus adopted as one single resolution. Further, the resolutions under item 8 are conditional upon EGM’s resolution to adopt item 7.

In total, the incentive programme will encompass not more than 10 individuals. The incentive programme entails that members of the executive management, who have entered into a right of first refusal agreement with the company, are offered to acquire warrants at market value according to the Black & Scholes valuation formulae.

The issued warrants shall be subscribed for by English Summer School AB – a wholly owned subsidiary to IES – where after this company shall offer the warrants to employees within IES. The transfer of the warrants shall be made at a price corresponding to the market value of the warrants (the warrant premium), calculated according to the Black & Scholes valuation formulae. The valuation of the warrants shall be made by an independent appraiser or auditor firm. The company shall, in connection with the allocation of the warrants to the participants in the incentive programme, and with certain exceptions, reserve a pre-emption right regarding the warrants if the participant’s employment or assignment within IES is terminated or if the participant wishes to transfer its warrants prior to the warrants being exercisable.

The warrants have a vesting period of 3 years after which the holders is entitled to exercise the warrants to subscribe for shares during two weeks following the Q3-report and Q4-report 2021, respectively. The exercise price shall be determined as 115 per cent multiplied with the average volume weighted IES share price as quoted on Nasdaq Stockholm’s official price list during the period 10 trading days calculated as from and including 14 June 2018 and shall be rounded to the nearest SEK 0.10, whereby SEK 0.05 shall be rounded downwards. In accordance with customary conditions, the number of shares that each warrant entitles to will be recalculated should the company resolve on a share split, consolidation of shares, issue, etc. There can be no over-subscription.

Each warrant shall entitle the holder to subscribe for one (1) new share in IES in accordance with the exercise window set out above. The full terms and conditions for the warrants are available to the shareholders for inspection in accordance with the below.

Subscription of warrants shall take place from the time the price per warrant is established in accordance with the above, however no later than 31 July 2018. Payment shall be made in cash no later than 31 July 2018. However, the Board of Directors shall have the right to extend the subscription period and the payment period, respectively.

Allocation of warrants     
Not more than 10 members of the executive management in IES shall, provided that they and have entered into a pre-emption agreement with IES, be entitled to subscribe for warrants up to the maximum number of warrants as set out in the allocation below.

Board members shall not be eligible to participate in the incentive programme.

Effect on important key ratios and dilution
The costs are expected to have a limited effect on IES’ key ratios.

Upon maximum allotment of warrants, and provided that the hedging arrangements in accordance with item 8 (b) below are adopted by the EGM, 468,000 shares will be allotted to participants under the incentive programme, meaning a dilution effect of approximately 1.16 per cent of the number of shares and votes in the company. Taking the shares which may be issued pursuant to the proposed incentive programmes under item 7 above under consideration, the total dilution amounts to 1.36 per cent.

Costs
The total cost for the company for the incentive programme is limited and is estimated not to exceed SEK 200,000 during the term of the incentive programme.

The warrants will be transferred at market value and, therefore, no social security contributions are to be paid by the group in relation to the issue of the warrants.

The rationale for the incentive programme
The rationale for the incentive programme is to create opportunities to motivate and retain competent employees in IES as well as to increase the motivation of meeting and exceeding the company’s financial targets. The incentive programme has been established as it is deemed desirable for members of the executive management within IES to be shareholders of the company. The Board of Directors considers that the adoption of the incentive programme as described above is in the favour of the company and the shareholders in the company.

Preparation of the proposal
The company’s Board of Directors has prepared this incentive programme in consultation with external advisors. The incentive programme has been reviewed by the Board of Directors at board meetings in May 2018. There have been no previous long-term incentive programmes in IES.

Proposal regarding issue of warrants (item 8 (b))               
The Board of Directors proposes that the company shall issue not more than 468,000 warrants for subscription of shares, whereby the company’s share capital may be increased by not more than SEK 11,700, at full subscription corresponding to approximately 1.16 per cent of the total share capital and the total number of votes in IES. 

The right to subscribe for warrants for subscription only accrues to English Summer School AB, with the right and obligation to dispose of the warrants as described above. Each warrant entitles the holder to subscribe for one share. The warrants shall be issued free of charge. There can be no over-allotment.

Miscellaneous
Resolution in accordance with item 7 and 8 above requires approval of at least nine tenths (9/10) of the shares represented and votes cast at the EGM.

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The terms and conditions of the warrants programme, the Board of Directors’ complete proposal under item 8 (b) and other documents in accordance with above will be available to the shareholders for inspection at the company’s office at Nytorpsvägen 5B, SE-183 71, Täby and on the company’s webpage http://corporate.engelska.se/, at the latest on 23 May 2018, and will be sent to shareholders who so request and state their postal address.

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Stockholm, May 2018
Internationella Engelska Skolan i Sverige Holdings II AB (publ)
The Board of Directors

For more information, please contact:

Johan Hähnel, IES’s IR Manager
Tel: +46 (0)70 605 6334
e-mail: johan.hahnel@engelska.se

This information is mandatory for Internationella Engelska Skolan i Sverige Holdings II AB (publ) to publish pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the above contact, at 8:00 a.m. CEST on 14 May 2018 

About Internationella Engelska Skolan

Internationella Engelska Skolan, IES, is one of the leading free school operators in Sweden with some 24,000 students in 34 schools at the beginning of the academic year 2017/18. IES operates schools for students from preschool until the third year of upper secondary school. Its main focus is grades 4-9, what is often called “middle school.” Within the compulsory school system in Sweden, IES is the leading independent operator, with nine of the ten largest free schools. IES’s results on the national tests in grade 9 are far above average in Sweden. 

Internationella Engelska Skolan was founded in 1993 and is in its 25th year of operation. Throughout this period, its schools have been defined by the three core convictions of its founder, Mrs. Barbara Bergström:

• A safe and orderly environment, where teachers can teach and students learn. 
• To command the English language—the key to the world.
• High academic expectations and targets.

Up to half of the teaching in IES schools is in English, by native English speaking teachers. Over 700 teachers with qualified foreign teaching degrees are currently teaching in IES schools. They are mainly recruited from Canada, USA, UK and South Africa.

IES’s student base is in high growth. Over the past ten years, total operating income has increased organically by an average of 19% per year. In the most recent financial year 2016/17, which concluded on 30 June 2017, total operating income was SEK 2,043.3 m, an increase of some 13% year on year. As of 31 December 2017, there were approximately 161,000 applications in the waiting list to secure a place for the current and forthcoming years.

Internationella Engelska Skolan has been listed on Nasdaq Stockholm Mid Cap, with the ticker ENG, since the end of September 2016. The largest (indirect) shareholders of IES are TA Associates of the US, which has close affiliations to leading universities and foundations in the US, and IES’s founder Barbara Bergström. Other major shareholders as of the end of March 2018 include investment company Öresund, Swedbank Robur fonder, the Third Swedish National Pension Fund, SEB fonder and AMF Försäkring & Fonder (owned jointly by LO, The Swedish Trade Union Confederation and the Confederation of Swedish Enterprise). 

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