Internationella Engelska Skolan 2017/2018- Interim Report - (1 July - 31 March 2017/2018)

Progress of operations in the third quarter (January-March)

• Total operating income increased by 16.8% year on year, mainly due to a larger student base, and amounted to MSEK 632.3 (541.4) 
• The number of students in the Swedish operation at the end of the quarter was 23,971 (21,420)  
• There were around 179,000 registrations on waiting lists at the end of the quarter, an increase of some 18,000 (11%) on 31 December 2017, and an increase of some 35,000 (24%) on the corresponding point of the previous year   
• EBIT for the quarter decreased by 6.4% on the corresponding quarter of the previous year, amounting to MSEK 52.7 (56.3). The EBIT margin was 8.3% (10.4)  
• Profit for the quarter was MSEK 42.8 (44.1) and earnings per share were SEK 1.07 (1.10)
• Cash flow from operating activities amounted to MSEK 74.6 (-22.9)

Progress of operations in the period (July-March)

• Total operating income increased by 15.8% year on year, and amounted to MSEK 1,736.5 (1,500.2)
• EBIT adjusted for items affecting comparability for the period decreased by 14.6% year on year, to MSEK 127.4 (149.0). The adjusted EBIT margin was 7.3% (9.9)
• Profit for the period was MSEK 97.0 (109.7) and earnings per share were SEK 2.42 (2.74)
• Cash flow from operating activities amounted to MSEK 174.6 (179.4)

Significant events after the end of the reporting period 

• 50%-owned joint venture Elians acquired English School of Asturias in Spain
• The Board of Directors is convening an Extraordinary General Meeting (EGM), and is proposing adoption of a new incentive program for senior managers in the form of share warrants and a share matching program

CEO’s comment on progress in the third quarter

Internationella Engelska Skolan (IES) is the largest independent compulsory school operator in Sweden, managing 17 of the 20 largest free schools. Including the municipal principals, we manage 8 of the 25 largest compulsory schools. We can — and want to — be part of the solution to the challenges facing Sweden’s schooling system.

In my first weeks as CEO of IES, I’ve met principals, teachers, municipal politicians, school leaderships, students and parents. The picture that is emerging is consistent: the need for better Swedish schools is one of our greatest collective social challenges and we need to find ways to give our children a better future together. IES’s orderly study environment, high academic expectations, the opportunity to command English and our students’ excellent performance can make a positive contribution in this perspective.

At a time when many municipalities are facing burgeoning populations, with a high share born outside Sweden, these challenges accentuate. Within IES, 36% of our students have a foreign background, against the 24% average of municipal schools. In this context, the international environment IES offers serves as a complement, and can also reduce segregation and enhance a municipality’s attractions.

In the third quarter, we saw yet more evidence of how our efforts are appreciated. The number of waiting list registrations was up by 11% on year-end 2017, and by 24% on the corresponding point of the previous year. This means we had 18,000 new registrations in the quarter, and the number of waiting list registrations at the end of the quarter was some 179,000 for the coming years. In the fall, we will be opening two new schools, in Länna (Huddinge) and Sundbyberg, both in Stockholm, and are working hard to find ways to accelerate IES’s expansion alongside many of Sweden’s municipalities.

Total operating income in the third quarter increased by 16.8% year on year, mainly due to a larger student base, and amounted to MSEK 632. The EBIT margin was 8.3% compared to 10.4% in the corresponding period of the previous year. The narrower EBIT margin is partially due to higher start-up costs for the four new schools we opened in fall 2017, which should be compared to only one new school start-up in fall 2016. However, the main explanation is that total revenues per student for the third quarter were up by 3.5%, while personnel expenses per student increased by 8.1%. We believe progress is similar in municipal schools.

One precondition for us and other positive influences on Swedish schools to offer our skills is that school voucher funding has to reflect the actual costs within municipal schools. If municipalities are running deficits, then according to the legislated principle of equal terms, free schools should be compensated. I’m convinced that with greater transparency on how school voucher funding is determined, we will get there.

We are convinced that our skills in managing bilingual schools combined with strong core values and an effective business model are also attractive outside Sweden. When IES took its first step into the Spanish market in fall 2016, our ambition was to create a foundation for further expansion. Since then, we have improved quality systems, hired a skilled management and enhanced financial controls. Accordingly, our acquisition of English School of Asturias in May is a natural next step in IES’s expansion in Spain. Its operations are bilingual and largely based on the same principles as IES in Sweden, focusing on English, high education quality and an orderly classroom teaching environment.

We are continuing our work on developing skilled school leaderships and teachers and we bring teacher skills to Sweden through international hiring. Our passionate professionals work every day to create better schools. I’m delighted to be part of driving this progress, not only for IES, but also, for Sweden’s future.

Annette Brodin Rampe
CEO

 
For more information, please contact:
Johan Hähnel, Investor Relations, tel. +46 (0)70 605 6334, Annette Brodin Rampe, CEO, tel. +46 (0)73 852 4231.

Teleconference in connection with publication of the quarterly report:
On Friday 25 May at 10:00 a.m. CET, Annette Brodin Rampe, 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)8 566 42651 and enter the code: 55843997#. The presentation is available at IES’s website: http://corporate.engelska.se/financial-information/reports-and-presentations. 

Reporting schedule
Year-End Report 2017/18 – 29 August 2018
Interim Report Q1 2018/19 – 20 November 2018
Annual General Meeting 2017/18 – 20 November 2018

Internationella Engelska Skolan i Sverige Holdings II AB (publ) discloses the information provided herein pursuant to the EU’s Market Abuse Regulation. The information was submitted for publication, through the agency of the above contacts, on 25 May 2018 at 08:00 a.m. CET

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