AcadeMedia’s interim report July 2021 – March 2022

Third quarter (January – March 2022)

• Net sales increased by 5.9 percent and amounted to SEK 3,802 million (3,591). Organic growth, including bolt-on acquisitions, was 4.7 percent.
• Operating profit (EBIT) amounted to SEK 313 million (346).
• Adjusted operating profit, adjusted for items affecting comparability and effects of IFRS 16, amounted to SEK 264 million (279). Items affecting comparability amounted to SEK -27 million (6) and related to a fire in a compulsory school in the first quarter and restructuring expenses in the Upper Secondary School Segment.
• Net profit for the period amounted to SEK 155 million (191).
• Diluted earnings per share was SEK 1.47 (1.80). Adjusted for IFRS 16, diluted earnings per share was SEK 1.67 (2.02).
• The average number of children and students in preschool, compulsory school, and upper secondary school during the third quarter was 93,092 (89,691), an increase of 3.8 percent.
• After the end of the reporting period, two preschools in the Netherlands were acquired.  

First nine months (July 2021 – March 2022)

• Net sales increased by 8.5 percent to SEK 10,488 million (9,668). Organic growth, including bolt-on acquisitions, was 5.7 percent.
• Operating profit (EBIT) amounted to SEK 887 million (843).
• Operating profit, adjusted for items affecting comparability and effects of IFRS 16, amounted to SEK 722 million (657). Items affecting comparability amounted to SEK -50 million (7) and include costs and insurance compensation received in relation to a fire in a compulsory school, VAT-expenses relating to the Adult Education Segment and restructuring expenses in the Upper Secondary School Segment.
• Net profit for the period amounted to SEK 441 million (418).
• Diluted earnings per share was SEK 4.17 (3.92). Adjusted for IFRS 16, diluted earnings per share was SEK 4.78 (4.62).
• The average number of children and students in preschool, compulsory school, and upper secondary school during the first nine months was 92,295 (87,087), representing an increase of 6.0 percent.

The complete report will be made available at

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

Comments from CEO Marcus Strömberg

AcadeMedia’s business continued to develop well in the third quarter. The annual student and staff survey continues to show good results, preliminary application figures for upper secondary schools are good, and the number of children and students has increased by 3.8 percent this quarter. We are particularly pleased to report that AcadeMedia made a platform acquisition in the Netherlands immediately after the end of the quarter. AcadeMedia thus operates in four countries.

As expected, the quarter’s results were affected by volume reduction in the Adult Education Segment and higher costs in Norway, partly due to the pandemic. At the same time, other parts of the business continued to show stable development and all together the adjusted EBIT was SEK 264 million.

A large and growing independent school sector

Today, some 400,000 children and students attend independent preschools, compulsory schools and upper-secondary schools. The possibility to choose a school for your child was introduced in 1992, and the proportion of families taking advantage of this has grown every year since. The independent school reform was and is a good reform, but has not significantly evolved over the last 30 years and needs to be modernised to suit today’s conditions.

An example of development that AcadeMedia would like to see is for school choice to become universal and compulsory for all. We want to combine this with a common quality reporting system in which relevant information can be compared. Such a system would enable all families to make informed choices.

In the spring, the Swedish Parliament will vote on several proposals put forward by the social democrat led government. These include changes to the financing system (school voucher funding) and the free school choice. The likelihood that the proposals will be voted through is slim, as a parliamentary majority already has said that they will say no. However, I hope that, after the elections in September if not before, the parties can meet union representatives and the industry and come up with a new agreement for independent schools. Such an agreement should benefit both the individual and society, and preserve the great freedom of choice we have managed to create.

AcadeMedia able to accommodate 2,500 children and young people from Ukraine

The number of Ukrainian children and young people applying to Swedish schools is low, but the commitment of our staff and students to Ukraine is great. Many schools have been collecting and donating money, mainly to UNHCR. Today, we offer Ukrainian-speaking preschool children books in their own language through Polyglutt, and our Linguista business, part of our adult education segment, is able to provide our schools with language support in Ukrainian through its digital service. We want to do our utmost to help, and if the number of Ukrainian refugees increases, AcadeMedia can accommodate around 2,500 children and students.

Stable operations even in the face of rising inflation

Despite the recent rise in inflation, with higher electricity and food prices, AcadeMedia has been relatively unaffected. We have only seen higher electricity prices in Norway; in Sweden we have to some extent hedged the electricity price and therefore are not seeing the same increase. Although our revenue is largely set by third parties, it is linked to underlying costs, so if inflation continues to rise, school voucher funding will be adjusted to reflect the new cost situation. In cases where municipalities experience changes in school costs during the current school year, our units are compensated retroactively. Also in Norway the school voucher includes a price index to take the current year’s inflation into consideration.

Preschool Segment expands into the Netherlands

We are very pleased to announce that we have now taken the next step in our international expansion and made a platform acquisition in the Netherlands. The acquisition includes two preschools with a total turnover of approximately EUR 2.7 million. The Dutch preschool market is relatively mature and has a funding system similar to the Swedish one, but the market is fragmented. The aim of this platform acquisition is to build up a group of preschools in the Netherlands over the next few years, mainly through acquisitions.

Adult Education Segment is changing

The strong labour market and lower immigration are now clearly reflected in the number of participants in our adult education programmes. The trend is particularly evident in our municipal operations, where we are actively working to adjust our capacity to more normal levels. Although volumes are now going down, it is worth remembering that this decline is from very high levels. We have a strong underlying operation that is now focusing on expansion into new markets. In the coming years, we will see an increased focus on skills development, including discussions about more people being entitled to financial support for further training, and if implemented, would increase demand for many of our courses.

The Game Assembly, the Adult Segment’s game creation programme, plans to launch an apprenticeship in the UK in autumn 2022. The aim is to work closely with game development studios and industry associations in the UK to eventually broaden the range of game programmes available. This means that AcadeMedia’s Adult Education is taking a small but strategically important step to grow internationally.

Positive results in this year’s student and employee surveys

Every year, AcadeMedia conducts two major surveys in which we ask employees, students and parents/ guardians what they think of their school various perspectives. The surveys are sent to around 135,000 people in total, and we are seeing good results again this year. I hope that all AcadeMedia employees are as proud as I am of this. We are each other’s working environment, and have created this together. If you want to read more about the results of our surveys, you can find them on page 12 and 13 of this interim report.

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 8 505 583 55
UK: +44 33 3300 9035
US: +1 631 9131 422 PIN: 74735929#

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

https://tv.streamfabriken.com/academedia-q3-2021-2022

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 5 May 2022.