AcadeMedia’s four segments have different seasonal variations. The three school segments show a recurring seasonal variation which typically means that the first half of the fiscal year, July to December, has weaker sales and earnings. This is mainly due to school holidays annual leave, and the annual salary review.
The second half of the year, January to June, is stronger as sales typically rise because of annual school voucher reviews and higher children and student numbers. At the same time, the Adult Education segment has a more erratic seasonal variation but, with a stable portfolio. Q4 and Q1 are typically weaker quarters while Q2 and Q3 are stronger, due to the distribution of training days over the course of the year. However, the seasonal variation in the Adult Education segment may show sharp deviations from this pattern in the event of major contractual changes or the implementation of community initiatives. The following is a summary of the key events driving seasonal variation for AcadeMedia during the year. The description of AcadeMedia’s seasonal variations is a summary based on experience and general patterns.
Covid-19 has had a major impact on our operations. However, while 2019/20 was an atypical year, the financial impact was limited. If the pandemic continues, this may impact seasonal variations.
Part of the first quarter of the Group’s financial year coincides with the school summer holidays. During this period, as no activities take place, the Group’s revenue is lower than in the other quarters. Staff costs are also lower since personnel are taking annual leave. This also applies to our Norwegian operations.
In the Adult Education segment, the number of working days or education days in the period may have some effect on revenue. These are governed by break periods and major public holidays such as Christmas, New Year and Easter.
The salaries of the Group’s employees are adjusted annually. The highest proportion of the Group's employees are teaching staff, whose salaries are adjusted as of 1 September each year. After that date, personnel expenses rise without a corresponding increase in school voucher funding. This means that margins are usually lower in the second quarter of the financial year.
School voucher funding is not adjusted until the end of the calendar year in both Norway and Germany. As a result, revenues increase during the third and fourth quarters without any actual change in the cost structure. Normally, the fourth quarter is the strongest in terms of revenues, partly due to voucher revision and partly because direct costs are lower. For example, the requirement for school meal provision goes down and the holiday period begins, while revenues do not decline at the same rate.
In the spring, some retroactive reimbursements from municipalities may also be received, depending on whether the municipality accounts show higher costs than budgeted in the school voucher calculations.
At preschool and compulsory school, new children are enrolled continuously throughout the year, particularly in May and June, with a corresponding increase in revenue. However, at upper secondary schools, the number of pupils decreases during the year due to students dropping out. Student attrition is also evident over the summer holidays.
Norway's rules on staff density accentuate the seasonal variation. Preschools in Norway show the same seasonal variation, but the pattern is accentuated by national rules on staff density. Younger children require higher staffing ratios than older children. The change, when younger children are considered older, takes place at the end of the calendar year. This leads to a higher level of staffing in the first half of the year than in the second half.
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