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AcadeMedia’s interim report July 2020 – March 2021

Third quarter (January – March 2021)

  • Net sales increased by 9.3 percent and amounted to SEK 3,591 million (3,284). Organic growth, including bolt-on acquisitions and adjusted for currency effects, was 7.3 percent.
  • Operating profit (EBIT) amounted to SEK 345 million (309).
  • Adjusted operating profit, adjusted for items affecting comparability and effects of IFRS 16, amounted to SEK 278 million (224). Items affecting comparability amounted to SEK 6 million (36).
  • Net profit for the period amounted to SEK 190 million (161).
  • Diluted earnings per share was SEK 1.80 (1.53). Adjusted for IFRS 16, diluted earnings per share was SEK 2.02 (1.83).
  • The average number of children and students in preschool, compulsory school, and upper secondary school during the third quarter was 89,691 (82,940), representing an increase of 8.1 percent. Adjusted for the acquisition of Swedish Education Group, the increase was 5.1 percent.
  • The pandemic continues to impact our operations, distance education has in part or in full continued at the upper secondary schools and compulsory schools. Activities have been cancelled or postponed.

First nine months (July 2020 – March 2021)

  • Net sales increased by 6.9 percent to SEK 9,668 million (9,044). Organic growth, including bolt-on acquisitions and adjusted for currency effects, amounted to 7.3 percent.
  • Operating profit (EBIT) amounted to SEK 840 million (639).
  • Operating profit, adjusted for items affecting comparability and effects of IFRS 16, amounted to SEK 653 million (449). Items affecting comparability amounted to SEK 7 million (36).
  • Net profit for the period amounted to SEK 414 million (252).
  • Diluted earnings per share was SEK 3.92 (2.39). Adjusted for IFRS 16, diluted earnings per share was SEK 4.62 (3.25).
  • The average number of children and students in preschool, compulsory school, and upper secondary school during the first nine months was 87,087 (82,245), representing an increase of 5.9 percent. Adjusted for the acquisition of Swedish Education Group, the increase was 4.9 percent.

The complete report will be made available at https://corporate.academedia.se/en/financials/reports-presentations/

Comments from CEO Marcus Strömberg

The third quarter of the financial year developed in line with previous periods, with continued high demand for adult education and good student growth in the school segments. Group turnover increased by 9.3 percent, of which acquisitions contributed 3.1 percentage points. Margins increased in all segments. During the quarter, we also continued to develop our digital strategy and a small EdTech acquisition was completed in early April.

The acquisition of Swedish Education Group (Segab) in January increased the number of students by approximately 2,500 and contributed to the increase in net sales. The organic growth in net sales was 7.3 percent. The increase in the margin for compulsory schools and upper secondary schools was mainly the result of more children and students, but also of good cost control and lower costs, as activities had to be cancelled or postponed because of the pandemic.

Campus strategy continues in the Upper Secondary School Segment

During the spring, it was decided that we will establish a new upper secondary school campus, Campus Södermalm, in Stockholm. In autumn 2022, four of our existing schools will move into the campus with room for more than 2,300 students, an increase of 1,400 places compared to today. The shortage of upper secondary school places is increasing, and from 2020 to 2027 Stockholm and its surrounding municipalities will need to create almost 15,000 additional upper secondary school places. We are pleased to be able to help ensure that a good education can be provided to the growing number of students. AcadeMedia already has smaller campuses in Uppsala, Solna and Nacka, which have proven to be very successful.

The campus strategy will provide students and staff with newly renovated premises with large common areas such as libraries, dining halls and sports facilities. Areas such as laboratories can be upgraded to a higher standard. We can make larger rental commitments and investments with reduced risk, as several schools, often with different focus, share the cost. As with opening new units, the investments we are now making in the Upper Secondary School Segment will negatively impact the segment’s margin over the initial two-year period.

EdTech – a new business opportunity

For many years, AcadeMedia has actively worked to increase the digitalisation of our operation, as we consider digitalisation to be an opportunity to improve the quality of education and to make administrative processes more efficient. Many of these processes are closely associated with teaching and are often an important tool in enabling teachers to dedicate more of their time to teaching. We have always seen digitalisation as a way to invest in our own business and we have developed everything from learning platforms (Omniway, Novo) to digital services, (snackamedsyv.se, snackaomlaxan.se, and bytagymnasium.se). Approximately 50,000 adult participants are currently studying using our in-house learning platforms.

Until now, digitalisation was seen mainly as an internal focus area where we streamlined work and improved quality using smart solutions, however we are now seeing digital education services as a business opportunity. Our aim is for a number of these products and services to begin a growth journey, but in terms of AcadeMedia as a whole, this is in its infancy.

The acquisition of studier.se in April 2021 is the latest example of expansion in EdTech. It is a marketplace for education and courses with around 50,000 unique users per month and fits well with our existing portfolio of digital training services. EdTech is a big area, and we turn our focus to this market with great excitement.

The pandemic is impacting our German preschools

Our German preschools have been under pressure for the last year, as a result of varying degrees of lockdowns due to the pandemic. The financial development has been affected and several factors combined make the situation difficult. Some parents have been cautious to start a new preschool place, while others who have a place but have not been able to attend, are unwilling to pay the full parental fee. It has also taken longer to fill new preschools and on-board children to existing preschools due to the enforcement of strict schooling in rules allowing only one child at a time. In addition, our new establishments have been delayed and it has been more difficult to recruit staff, as many people are cautious about changing jobs. All in all, this has resulted in lower capacity utilisation, at 89.5 percent (90.5), and slightly reduced parental fees.

As long as society remains partially closed, this situation will continue. However, the underlying need for new preschool places remains high and we hope that the vaccines will reduce the spread of infection and give  parents, children and our employees a better situation. Once that happens, we expect a gradual return to normal schooling in routines and fee levels. The plan is to open about 15 new preschools during the next financial year.

Adult education important for the development of the skills of Sweden’s workforce

Swedish higher vocational education colleges have undergone a major expansion, doubling their number of places since 2014. The planned level of 50,000 annual places has now been reached, and it is expected that this level will maintain in 2022. No further expansion is planned, which means that the allocation in January 2022 will be lower than the previous year’s allocations. Considering Sweden’s current situation, with historically high levels of unemployment, it would be unfortunate if the Swedish authority for higher vocational education were not allocated additional resources to continue the expansion. Higher vocational education has proven to work very well, as students get jobs and businesses get skills that boost their competitiveness.

A reform of the Swedish Public Employment Agency is currently ongoing and will be completed in 2022. According to the Swedish Public Employment Agency’s forecasts, the market for matching services will grow significantly in the coming years. The expansion of the new matching service “Rusta och matcha” is happening gradually. We are already one of the leading suppliers of this service and with our experience we are well placed to scale relevant operations up.

Satisfied students and staff despite the pandemic

AcadeMedia’s two annual surveys were conducted in January. One of them is for staff and the other is for students, guardians, and participants in our adult education programmes. We expected the Covid-19 pandemic to affect the surveys, but it was difficult to know in advance in what way. The year has been stressful for both individuals and the organisation, while at the same time we have witnessed great efforts from all groups to manage the situation in the best possible way.

These efforts were clearly and gratifyingly rewarded when the results of the survey came in and we saw improved results in both surveys. It is pleasing, and it is with pride, that we present the results in more detail on page 12 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 8 566 426 92
UK: +44 33 3300 9272
US: +1 833 2498 404

You can follow the presentation and the conference on the following page:
https://tv.streamfabriken.com/academedia-q3-2021

The presentation material will be available before the conference begins on AcadeMedia web via https://corporate.academedia.se/en/financials/reports-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 17,600 employees at our 661 preschools, compulsory schools, upper secondary schools and adult education centres share a common focus on quality and development. Our 182,000 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 6 May 2021.