AcadeMedia’s interim report July 2016 - March 2017

Third quarter (Jan 2017 – March 2017)

Nine months (July 2016 – March 2017)

Significant events after the end of the reporting period
On April 18 AcadeMedia equired the german preschool company Step Kids Education GmbH (Stepke). With this acquisition, AcadeMedia increases its German operations with ten preschools whereof three mobile preschools.  On April 3, it was announced that Sofia Larsen, Head of AcadeMedia's Pre- and Compulsory Schools, will leave AcadeMedia.

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

Comments from CEO Marcus Strömberg
AcadeMedia’s third quarter 2016/17 was boosted by the Adult Education segment, which continues to show solid volumes, at a substantially higher level than last year. Our growth has, as expected, slowed down compared to the second quarter of this year, as we no longer benefit from the acquisitions carried out during the second half of the financial year 2015/16. Overall, the quarter shows a stable operating profit

 Adult Education has another strong quarter
The Adult Education segment had another strong quarter. However, the corresponding quarter last year was also strong meaning growth numbers were not as high as in the preceding quarter (Q2). The Adult Education segment is active in a sector with great needs, especially in view of the large group of immigrants who need to be integrated into the Swedish society. This mainly involves Swedish language training, but also other skills in order for immigrants to become employable. We continue to believe in the long-term potential of the segment, although there is some uncertainty regarding tender processes being delayed by the Swedish Employment Agency, and that appeals sometimes lead to tenders having to be redone. For example, a major contract with the city of Stockholm, which was won by AcadeMedia will now have to be redone due to lacking formalites. In addition, several important contracts will also expire within the next twelve months, and must be replaced.

School segments affected by higher staff cost
As expected, the growth rates in the Pre- and Compulsory School segment and the International Pre-school segment have come down somewhat as we no longer benefit from the acquisitions carried out during the third quarter of last year. Revenue growth was solid in all three school segments but margins were affected by higher staff costs among other things, an effect which is noticeable for the sector as a whole. We can conclude that there is fierce competition for teachers and principals. We also note that municipalities are very aggressive in their wage offers in the market, and so far, these cost increases have not been reflected in the level of school voucher. According to the Swedish Education Act independent schools and preschools have the right to equal financial terms to municipal schools.

Customer and employee satisfaction
Our annual customer satisfaction survey was conducted during the third quarter. Compared with last year, the recommendation levels remain stable in our preschools and upper secondary schools, but are somewhat lower in the compulsory schools. The survey  provides important indications to where we should focus our efforts to achieve higher quality levels.In the third quarter, the annual employee satisfaction survey was also conducted in our Swedish operations. The response rate was 78 percent, which gives a reliable result and the survey shows continued improved satisfaction levels, as has been the case every year since 2013.The share of employees that feel proud of their workplace is 85 percent, and three out of four see good developmental opportunities at AcadeMedia. Moreover, 85 percent of our staff have a high level of confidence in their manager and 81 percent would recommend their employer to others. These findings are very encouraging as our employees are a prerequisite for further quality improvements. Hence, we must continue our quest to become the most attractive employer in the Swedish education sector.

New Upper Secondary Schools
The numbers of students per age group in the upper secondary school has decreased over a number of years. Now, however, demographics are at the lowest level and are starting to increase as of next year when the age groups are growing again. In addition, there is a strong urbanization trend and the number of immigrants in upper secondary schools is also very high. As mentioned last quarter, the Upper Secondary Schools segment has been marketing a number of potential new establishments. Interest in these units has been high and a decision has now been taken to proceed with up to seven new units for the fall of 2017/18. These units will only admit first year students and the total number of first year students in these schools is expected to be 300-350.

Profits in the welfare sector
The debate around the potential profit cap in the welfare sector continued during the quarter. The referral period for the government-commissioned report by Ilmar Reepalu expired at the end of February. It is notable that exceptionally many referrals were submitted and the overwhelming majority had major objections to the proposal and its lack of impact assessment. It seems clear that many have now understood the dire consequences of the suggested profit cap model, should it be implemented. The proposal would essentially ban corporations from operating in the welfare sector. Nevertheless, the political debate will continue and how the government will choose to proceed remains to be seen. In the meantime, AcadeMedia will continue to strive to deliver the best possible education to our children and students.

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.

You can follow the presentation and the conference on the following page:

https://tv.streamfabriken.com/academedia-q3-2017

Or call one of the following numbers at least ten minutes before the start of the call:

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

For more information, please contact:
Marcus Strömberg, CEO
Telephone: +46 8 794 4200
E-mail: marcus.stromberg@old.academedia.duvadev.se

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

Christian Hall, Investor Relations
Telephone: +46 763-111 242
E-mail: christian.hall@old.academedia.duvadev.se

About AcadeMedia
AcadeMedia creates opportunities for people to develop. The 12,500 employees at our 550 preschools, compulsory schools, upper secondary schools and adult education centres share a common focus on quality and development. Our 140,000 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.old.academedia.duvadev.se