Internationella Engelska Skolan 2016/2017
Year-end Report - (1 July - 30 June 2016/2017)
Progress of operations in quarter 4 (April-June)
- Total operating income was up by 12.6% on the corresponding quarter of the previous year, mainly due to increased student numbers, and central government subsidies for läxhjälp (homework support) and lärarlönelyftet (subsidy to raise teacher salaries), and amounted to MSEK 543.1 (482.5)
- The number of students in the Swedish operation at the end of the quarter was 21,383 (19,771)
- There were around 144,000 registrations on waiting lists at the end of the quarter, an increase of some 32,000 registrations, (29%) compared to the corresponding point of the previous year
- Adjusted EBIT for the period increased by 7.8% on the corresponding quarter of the previous year, amounting to MSEK 53.7 (49.8). Accordingly, the adjusted operating margin was 9.9% (10.3)
- Profit for the quarter was MSEK 42.4 (31.5) and earnings per share were SEK 1.06 (0.79)
- Cash flow from operating activities amounted to MSEK 81.5 (124.1)
Financial year 2016/17 (July-June)
- Total operating income increased by 13.1% on the previous year, amounting to MSEK 2,043.3 (1,806.8)
- EBIT adjusted for items affecting comparability for the period increased by 11.6% on the previous year, to MSEK 198.7 (178.1). Accordingly, the adjusted operating margin was 9.7% (9.9)
- Profit for the year was MSEK 152.1 (127.0) and earnings per share were SEK 3.80 (3.17)
- Cash flow from operating activities amounted to MSEK 260.8 (180.8).
- Proposed dividend of SEK 1.14 (0.00) per share.
Significant events after the end of the reporting period
- IES opened four new schools in Helsingborg, Landskrona, Södertälje and Årsta in August 2017, which meant a total of some 24,000 students started the new academic year in the Swedish operation’s 34 schools.
- Ralph Riber left his position as CEO effective 7 August. IES’s CFO Fredrik Åkerman became Interim CEO effective the same date.
- The Swedish Schools Inspectorate has reported that for the present, IES will not be granted permits on five applications to start and operate F-9 preschool and compulsory school operations, and two applications for F-3. IES has prepared an action-plan and filed an application for review of the Inspectorate’s decision on the permits.
IES put in a strong finish to its financial year. In the fourth quarter, total operating income increased by 12.6% year-on-year to MSEK 543.1 and adjusted EBIT increased by 7.8% to MSEK 53.7, corresponding to an adjusted EBIT margin of 9.9%.
In its role as principal, IES received MSEK 21.0 of central government subsidies for läxhjälp in the calendar year 2017. Half of this amount was recognized as revenue in the fourth quarter 2016/17. Total revenue per student increased by 4.1% year-on-year including subsidies for läxhjälp and lärarlönelyftet, and by 2.9% excluding both these government subsidies.
Personnel costs per student are continuing to rise. Compared to the corresponding quarter of the previous year, they were up 9.3%, including expenses for lärarlönelyftet. The salary increases feed through to the earnings level, because as yet, there has been no compensation for the salary increases. Accordingly, school voucher funding decisions for the forthcoming financial year are crucial. We must ensure we are operating on the same terms as municipalities by monitoring the outcome of the school voucher process and municipal costs for compulsory school operations being consistent with actual conditions.
Our new schools in Årsta, Landskrona, Södertälje and Helsingborg, which opened in August, have all attained the class and student numbers we have planned for. In total across IES, we now have 86 more classes than in the previous year, equivalent to an increase of 12% on the academic year 2016/2017, and our student base has expanded to some 24,000.
Progress in Spain was also positive in the fourth quarter. We are continuing to lay the foundation for future expansion, and Elians has hired a local CFO to improve financial control and our capacity to execute our acquisition strategy through the coming years.
The Swedish Schools Inspectorate’s scheduled inspections of IES concluded as planned in June. All our 30 school units were inspected. The outcome of these inspections was positive and corroborated how we are satisfying the regulator’s standards and expectations of us. The Inspectorate had no observations to report on 27 of our schools, while only three attracted any form of comment.
After completing its scheduled inspections, the Inspectorate notified IES that for the present, it would not be granting permits on five applications filed to start up and operate F-9 preschool and compulsory school operations in Huddinge (Länna), with scheduled start in 2018, in the municipalities of Österåker, Östersund, Skellefteå and Ekerö, with earliest potential start in 2019 and F-3 in Halmstad and Huddinge (Flemingsberg), with earliest start in 2019.
The argument for the rejection is primarily the minor remarks that were found in the supervisory decision regarding the principal, when it comes to the use of psychologists in preventive student health and that two out of 29 principals in the compulsory schools have not had sufficient courses in pedagogy.
We have now prepared an action-plan for the usage of psychologists and the affected principals, as well as the Inspectorate’s other views. We subsequently filed a request to review the Inspectorate’s decision on these permits.
On 7 August, our principal owners and Board of Directors reported that they considered the timing for a change of CEO as favorable. Accordingly, Ralph Riber left his position as CEO, while I was appointed as Interim CEO until a permanent successor has been appointed.
In the yearly anonymous survey of IES school parents in the fourth quarter 2016/17, 94% of respondents stated that they would recommend their school to another parent (one of the two top options on a four-point scale). This is a strong rating, which is also part of the explanation for the substantial waiting lists for IES schools.
We’re looking forward to the 2017/18 academic year and are continuing to create a school operation with the highest possible quality with all our resources and commitment.
For more information, please contact:
Johan Hähnel, Investor Relations, tel. +46 (0)70 605 6334, Fredrik Åkerman, Interim CEO, tel. +46 (0)70 415 2365.
Teleconference in connection with publication of the quarterly report:
On Wednesday 23 August at 10:00 a.m. CET, Fredrik Åkerman, Interim CEO, will hold a conference call for the publication of the quarterly report. The call will be held in English.
To participate, please call the following number: +46 (0)8 505 96306 and enter the code: 16642913#. The presentation will be uploaded to IES’s website before the conference call, at: http://corporate.engelska.se/financial-information/reports-and-presentations.
Annual Report 2016/2017 – 25 October 2017
Interim Report Q1 2017/18 – 17 November 2017
Annual General Meeting 2016/17 – 17 November 2017
Interim Report Q2 2017/18 – 22 February 2018
Interim Report Q3 2017/18 – 25 May 2018
Internationella Engelska Skolan i Sverige Holdings II AB discloses the information provided herein pursuant to the EU’s Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the above contacts, on 23 August 2017 at 08:00 a.m. CET.