AcadeMedia’s interim report July – December 2018

AcadeMedia’s interim report July – December 2018 

Second quarter (October – December 2018)

  • Net sales increased by 9.3 percent and amounted to SEK 3,076 million (2,813). Organic growth, including bolt-on acquisitions, was 4.5 percent.
  • Operating profit (EBIT) decreased by 22.9 percent to SEK 128 million (166). The decline was related to the Adult Education segment, but is partially offset by the strong development in the Upper Secondary School segment. Adjusted for items affecting comparability, operating profit was SEK 139 million (167).
  • Net profit for the period was SEK 79 million (116).
  • Cash flow from operating activities amounted to SEK 348 million (257).
  • The average number of children and students, excluding the Adult Education segment, increased by 8.8 percent to 79,335 (72,945).
  • Earnings per share amounted to SEK 0.75 (1.22) before dilution and SEK 0.75 (1.21) after dilution.

First six months (July – December 2018)

  • Net sales increased by 11.7 percent to SEK 5,418 million (4,850). Organic growth including bolt-on acquisitions amounted to 3.8 percent.
  • Operating profit (EBIT) increased by 24.4 percent to SEK 186 million (246). Adjusted for items affecting comparability, operating profit was SEK 191 million (249).
  • Net profit for the period amounted to SEK 111 million (168).
  • Cash flow from operating activities amounted to SEK 130 million (399).
  • The average number of children and students, excluding the Adult Education segment amounted to 79,052 (70,522), representing an increase of 12.1 percent.
  • Earnings per share was SEK 1.05 (1.76) before dilution and SEK 1.05 (1.76) after dilution

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

Comments from CEO Marcus Strömberg

AcadeMedia has had both success and headwind during the first half year. We have worked hard to adjust the organization in the Adult Education segment and despite solid revenue growth in the school segments and strong earnings in the Upper Secondary School segment the second quarter showed a decline in earnings due to Adult Education. A quick decline in the need for employment related education rendered low capacity utilization and losses in the contracts procured from the National Employment Agency. We are now taking further steps to adjust capacity to demand. Despite this I feel that we overall have strengthened our positions, which in the long term will provide good opportunities for profitable growth.

Upper Secondary Schools plan for growth

AcadeMedia is the leading independent provider of upper secondary schools and during the last couple of years we have honed our brands in order to better meet the student’s preferences. We have also started work to digitize upper secondary education and see a good likelihood that the new government will approve remote training in upper secondary school which will provide new opportunities. AcadeMedia now has an ideal position to benefit from strong market growth driven by Swedish demographics and the municipalities need to cater for an increasing number of students.

As a result of the new schools started in 2017 and 2018, improved capacity utilization in existing schools and the Vindora acquisition we have a large increase in the number of students and a strong revenue and earnings growth. For the fall of 2019 we plan to start another four upper secondary schools with a total of around 230 students in the first year.

One year with Vindora

The acquisition of Vindora one year ago added 36 new upper secondary schools and a smaller adult education business in one go. The acquisition gave us a leading position within practical and vocational training, an area which we believe has great potential. The acquisition has also met our expectations financially. However, we have not yet achieved our high quality standards. We are now actively working with improvements in the schools which need it. The Schools Inspectorate will be making planned audits of the Praktiska schools and we will work together with them to address possible issues identified. AcadeMedia aims to have high quality in everything we do and I am sure that we soon will improve our vocational schools and thereby enable many students to get a job by providing practical and job-related training. 

Market development Adult Education

AcadeMedia is the leading provider of adult education in Sweden with two strong comprehensive brands as well as businesses with niche positions. AcadeMedia operates in three market segments, employment related training tendered by the National Employment Agency, municipal adult education and higher vocational education. The municipal and vocational training are doing well, we have never had more students in these areas, and theSwedish National Agency for Higher Vocational Education is expanding. However, the National Employment Agency is cutting back its spending and this development was further underpinned by the national budget wich was passed by the Swedish Riksdag in December. The authority’s own projections now show a further decrease in spending on various forms of training for employment and immigrants. The very low volumes in the new contracts for Vocational Swedish (Yrkessvenska, ”YS”) and Vocational and Preparatory Modules (Yrkes- och Studieförberedande Moduler, ”YSM”) are now loss making. As we unfortunately expect that some of these new contracts will be loss-making throughout their term due to the low volumes an expense for future losses of SEK 15 MSEK has been taken in the quarter.

Political framework stabilizes

The September 2018 Swedish election rendered a parliamentary landscape more in our favor. However, it has taken time for a government to take form. What we now see is a coalition with a political program which cleary puts independent schools in a more positive position and ends the efforts to restrict profits or other aspects of our business. AcadeMedia has the aim to provide value to society by finding solutions to important societal needs. We shall provide the best possible value for every tax-crona spent in our business.

Half year summary

Financially the first half of 2018/19 has shown but success and headwind. Despite having worked hard at cutting costs in the adult education segment and a strong development in the upper secondary school segment the profit has declined compared to last year.

Our key challenges going forward are the adult education segment and the margin pressure from a non-transparent voucher payment system. However, strategically we have strengthened our possibilities to build a better future for Sweden, Norway and Germany and our children/students and shareholders. With the acquisition of Vindora we have a great potential to develop apprenticeship trainings and all school segments have a potential to gain market shares in a demographical strong market.

Marcus Strömberg
President and CEO
AcadeMedia AB (publ)

Presentation of the report
A web-cast telephone conference will be held at 09:30 CET today, where CEO Marcus Strömberg and CFO Eola Änggård Runsten 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:
UK: +44 33 3300 9032
SE: +46 8 5055 8351
US: +1 646 7224 902 

You can follow the presentation and the conference on the following page: https://tv.streamfabriken.com/academedia-q2-2019

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

For more information, please contact:

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

Eola Änggård Runsten, CFO
Telephone: +46 8 794 4240
E-mail: eola.runsten@academedia.se

About AcadeMedia
AcadeMedia creates opportunities for people to develop. The 17,300 employees at our 655 preschools, compulsory schools, upper secondary schools and adult education centres share a common focus on quality and development. Our 179,300 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 and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 08:00 CET January 31, 2019.