AcadeMedia’s interim report July – September 2018

AcadeMedia’s interim report July – September 2018 

First quarter (July – September 2018)

  • Net sales increased by 15.0 percent and amounted to SEK 2,343 million (2,037). Organic growth, including bolt-on acquisitions, was 2.8 percent.
  • Operating profit (EBIT) decreased by 27.5 percent to SEK 58 million (80). Adjusted for items affecting comparability, operating profit was SEK 52 million (82).
  • Net profit for the period was SEK 31 million (51).
  • Cash flow from operating activities amounted to SEK -219 million (142).
  • The average number of children and students in preschools, compulsory schools and upper secondary schools during the first quarter increased by 15.7 percent to 78,770 (68,098).
  • Earnings per share amounted to SEK 0.30 (0.54) before dilution and SEK 0.30 (0.54) after dilution.

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

Comments from CEO Marcus Strömberg

The financial year has begun with a good increase in the number of children, students and adult participants. The number of students increased by more than 15 percent, of which organic growth was 4.8 percent. Meanwhile, the labor market part of the adult education segment is weaker than expected and the cost-cutting measures have been unable to keep up with the market situation.

Record number of children and students
The start of the fall term is important for AcadeMedia. This is when we see how many parents and students have chosen AcadeMedia preschools and schools. It is rewarding to note the record-breaking number of students enrolled in AcadeMedia’s schools. The number of children and students in the three school segments increased by 15.7 percent for the first quarter of 2018/19 compared with the same period last year. This is partly the result of acquisitions. Excluding the two larger acquisitions, Vindora and KTS, organic growth in the number of students was 4.8 percent, which lays a good foundation for the coming year. It is especially positive that organic growth in the number of students in the Upper Secondary Schools segment is 4.5 percent, driven by new establishments as well as the addition of students in existing schools. The effort of the Upper Secondary Schools segment to increase brand awareness is now showing results. This year we admitted 13,500 first year students, which is an increase of 35 percent compared to last year.

First Espira preschool in Germany
Organic growth was high in the International Preschool segment, especially in Germany. AcadeMedia opened six new preschools in Germany since the beginning of the financial year. One important milestone is that the first Espira branded preschool opened in Karlsruhe, Germany. This truly marks the launch of the Nordic preschool model in Germany and it has been very well received both by parents and staff. In particular, the focus on nature and the outdoor activities is appreciated. All places are already signed up and the preschool is expected fill up during the year. It can also be noted that recruitment has been smooth despite the general shortage of preschool staff. During the rest of the 2018/19 financial year an additional five to six preschools are expected to open in Germany.  

Weak adult education market
The labor market in Sweden is exceptionally strong. In addition the Swedish Public Employment Agency has reduced the amount of resources allocated to the training of immigrants. The result is a decline in the market and a reduced need for adult education, which was also communicated this summer. This market situation mainly affects training aimed at the labor market and the Public Employment Agency. The municipal part of the adult education market has shown some growth compared with the same period last year. The higher vocational education and other parts of the adult education segment has also devloped well. The decline in demand is in paralell to the contract transition period that AcadeMedia is in where previous contracts with high margins are exchanged for new contracts with lower revenue per participant. Efforts to adjust capacity are underway and major cost-cutting measures have been implemented. These efforts are expected to continue during the second and third quarters. However, the cost-backs have not been sufficient to off-set the weaker than expected market conditions in labor market related trainings. All factors considered, it will take longer for the Adult Education segment to reach stable margin levels.

Financial performance
The first quarter is normally the weakest quarter of the year in all segments and especially in the school segments due to summer vacation. Growth in net sales continued to be strong due to increased volumes in the school segments. Operating profit in the school segments was essentially in line with the previous year. At the same time the operating result in the Adult Education segment was SEK 0, compared with SEK 43 million the previous year, as a result of the decline in the market and the renegotiated contracts in the segment. This affects the Group’s operating profit, which thus was lower than last year at SEK 58 million (80).

Development project
Schooling and education needs to improve to strengthen society. AcadeMedia’s goal is to lead the development of tomorrow’s education. This requires efforts to develop various aspects of our operations. AcadeMedia has several interesting development projects in areas such as digitization of our education programs and support structure, preparations to expand capacity of upper secondary schools in Stockholm, development of our brand profiles and concepts. These initiatives are important to ensure the continued successful and profitable growth of AcadeMedia.

Quality report
AcadeMedia is in the process of publishing its annual quality report. This document is now published for the seventh year and describes how AcadeMedia works with quality monitoring and improvement. Within AcadeMedia it is natural that quality can and should be measured to ensure that we create value for our children, students, participants and employees. The quality report can be found on the AcadeMedia website. In addition to analyzing the quality metrics for the year, the report also describes the development areas on which we are currently working. AcadeMedia goal is to always improve!

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 20 3008 9807
SE: +46 8 5664 2665
US: +1 8557 532 235

You can follow the presentation and the conference on the following page: https://tv.streamfabriken.com/academedia-q1-2018

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 15,300 employees at our 655 preschools, compulsory schools, upper secondary schools and adult education centres share a common focus on quality and development. Our 178,800 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 CET October 25, 2018.