AcadeMedia’s interim report, July – September 2022

First quarter (July 2022 – September 2022)

• Net sales increased by 6.6 percent and amounted to SEK 3,104 million (2,911). Organic growth, including bolt-on acquisitions, was 4.5 percent.
• Operating profit (EBIT) amounted to SEK 239 million (233).
• Adjusted operating profit, adjusted for items affecting comparability and effects of IFRS 16, amounted to SEK 151 million (194). Items affecting comparability amounted to SEK 6 million (-30).
• Net profit for the period amounted to SEK 94 million (100).
• Earnings per share was SEK 0.73 (0.94) after dilution. Adjusted for IFRS 16, earnings per share was SEK 0.93 (1.15) after dilution.
• The average number of children and students in preschool, compulsory school, and upper secondary school during the first quarter was 95,834 (91,431), representing an increase of 4.8 percent.
• As previously communicated, AcadeMedia has initiated negotiations to acquire a compulsory school and adult education business in Germany.  

The complete report will be made available at

https://academedia.se/en/investors/reports-and-presentations/

Comments from CEO Marcus Strömberg

For AcadeMedia, the new financial year of 2022/23 started off with strong demand in the school segments and adult vocational training business. Particularly encouraging is the increasing growth and demand in preschool, where the number of children increased by 8.1 percent.

Pursuing our international strategy, we strengthened our presence in the Netherlands this quarter, with the acquisition of five additional preschool units. Moreover, negotiations are in progress regarding a further acquisition in Germany that would broaden the business and open up new opportunities for profitable growth.

Although the underlying business is performing well, results for the quarter were negatively impacted by higher food and electricity costs. Going forward, we will continue to be affected by the major cost increases in society. Lower unemployment has during the summer and early autumn reduced demand in our municipal adult education business, which is why further cost adjustments have been initiated.

Inflation-proof over time

Higher electricity and food prices continue to drive inflation, which in September was around 10 percent in Sweden and Germany and 7 percent in Norway on an annual basis. These extraordinary cost increases had a negative impact on results for the quarter and are estimated to continue to affect results going forward.

The statutory school voucher funding model, is intended to maintain equal conditions, ensuring that AcadeMedia remains inflation-proof over time. We currently assess, however, that it may take until January 2024 for the school voucher to reflect the large cost increases we are now seeing. That is why we are taking a series of measures to address the sharply rising costs in our various markets.

In Germany, we will defer three new establishments until the next financial year. The planned 15 new establishments in 2022/23 will be reduced to 12 and in 2023/24 will increase to around 20 new units. The demand for preschool places in Germany remains high. In Adult Education Segment, cost reduction programmes have been implemented. Further cost savings are planned in the second quarter to realign our operations. The cost programmes will take full effect from January 2023 and, combined with the changes in school voucher funding, our ambition is to return to normal profitability levels by 2024.

New upper secondary campuses in Stockholm have made a strong start

Our two newly opened campuses in Stockholm have started well, with high enrolment and good student numbers. Together, our five campuses in the Stockholm area now have more than 5,000 students. The campuses have contributed to 10 percent growth in our academic upper secondary programmes and demand for academic programmes is expected to remain high in the metropolitan regions.

We see good opportunities for continued strong organic growth in autumn 2024 as our campuses fill up with new student intakes. Thanks to our investments in increased capacity and the fact that the demographic trend in upper secondary schools remains robust, in Stockholm alone we can increase student numbers by a further 1,000.

Higher Vocational Education is developing well, Municipal Adult Education adjusts to lower demand

The buoyant labour market has reduced demand for municipal adult education by more than 25 percent during the summer and autumn compared with a year earlier. AcadeMedia's Adult Education segment is adjusting staffing levels to reflect the lower volumes, however the segment's profit will be affected during the autumn and winter.

The Swedish National Institute of Economic Research is predicting that the Swedish economy will go into recession next year. This is expected to lead to a reduction in demand for labour and a rise in unemployment. On this basis, we anticipate that participant volumes will increase in 2023. We have a strong portfolio of contracts running until 2024.

The volumes in AcadeMedias’s higher vocational education business increased by 7 percent compared to the previous year. Demand is stable and is expected to remain firm going forward. AcadeMedia is the market leader in higher vocational education and we will continue to strengthen our position.

Long-term regulatory framework for the education sector in Sweden

Shortly after the end of the reporting period, Sweden’s incoming government presented the “Tidö Agreement”, laying out the policies to be implemented over the next mandate period. The agreement covers a number of proposals relating to education. AcadeMedia welcomes many of these proposals. Over the years, we ourselves have proposed several of the measures addressed in the agreement. Through the Tidö Agreement, there are now very good opportunities to develop long-term rules, and it also creates the conditions for independent schools to remain an important part of developments in the sector.

The strength of the agreement lies in the fact that it addresses both systemic issues and those that directly affect teaching, in the classroom. Through the agreement, we move from a situation with relatively large perceived political uncertainty for the independent school sector to a long-term regulatory framework that has the potential to both improve learning outcomes and create equivalence in Swedish schools. This will benefit the students, those working in schools and Sweden as a whole.

Pursuing our international strategy

AcadeMedia is negotiating with a German education company, FAWZ, which operates schools and adult education in Brandenburg, Germany. AcadeMedia's model is also scalable internationally and an acquisition would expand AcadeMedia's presence in Germany and pave the way for new opportunities for profitable growth.

Demand in all our markets is expected to remain strong in 2023 and our overall assessment is that our past investments and solid position will enable us to cope well with the new economic situation in the years to come. This new business environment also creates attractive acquisition opportunities. Even in these challenging times, AcadeMedia is strong and well position to seize opportunities.

Marcus Strömberg
President and CEO 
AcadeMedia AB (publ) 

Presentation of the report

A web-cast telephone conference will be held at 09:30 CEST today, where CEO Marcus Strömberg and CFO Katarina Wilson will present the report.

To participate in the conference call, and thereby be able to ask questions, call one of the following numbers ten minutes before the start of the call:

SE: +46-8-5051-6386
UK: +44-20-319-84884
US: +1-412-317-6300
Pin code: 1761127#

You can follow the presentation and the conference on the following page:

https://ir.financialhearings.com/academedia-q1-2022

The presentation material will be available before the conference begins on AcadeMedia web via:
https://academedia.se/en/investors/reports-and-presentations/

It will also be possible to access the recorded version of the webcast after it is finished on this page.

For more information, please contact:
Marcus Strömberg, CEO
Telephone: +46 8 794 4200
E-mail: marcus.stromberg@academedia.se

Katarina Wilson, CFO
Telephone: +46-8 794 42 91
E-mail: katarina.wilson@academedia.se

About AcadeMedia
AcadeMedia creates opportunities for people to develop. The 18,100 employees at our 680 preschools, compulsory schools, upper secondary schools and adult education centres share a common focus on quality and development. Our 188,000 children and students are provided with a high-quality education, giving them the best conditions to attain both learning objectives and their full potential as individuals. AcadeMedia is Northern Europe ́s largest education company, with locations/facilities/presence in Sweden, Norway and Germany. Our size gives us the capacity to be a robust, long term partner to the communities we serve. More information about AcadeMedia is available on www.academedia.se.

This information is information that AcadeMedia AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 08:00 CEST 25 October 2022.