AcadeMedia’s interim report July – September 2020

First quarter (July – September 2020)

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

Comments from CEO Marcus Strömberg

The financial year started well with an increase of 5.1 percent in the number of children and students. Nine new units opened during the first quarter of 2020/21, four preschools, one integrated preschool, and four upper secondary schools. At the same time, sharply rising demand for our adult education services further boosted the upward trend. This contributed to good revenue growth and a solid start to the financial year.

The autumn start is always important in the world of education. Many expectant students embark on a new phase in their life when they change school levels, while others return to their school and the class they attended in the previous academic year. Last spring, our upper secondary students and adult participants studied remotely because of the Covid-19 pandemic, many were longing to get back to school and many were relieved when the Swedish government decided to re-open upper secondary schools and the adult education. Schools need to be full of students and energy – which they are now. Of course, the Covid-19 pandemic is still affecting the countries in which AcadeMedia operates, Norway, Sweden, and Germany. Our preschools, compulsory and upper secondary schools and adult education units comply with the official recommendations that are in place, although everyone strives to make activities as normal as possible.

Sharply higher demand in adult education

Towards the end of the previous financial year, we were pleased to see that many pieces had started to fall into place in our adult education segment, while demand in adult education increased.

Interest in higher vocational education was, as expected, strong. We had 45,000 applicants for our programme places and now have 7,691 students (6,638). This was an increase of 16 percent from the same time last year, and we are maintaining our market share of 15 percent. It is also satisfying to state that the capacity utilisation in our programmes is higher than before, having increased from 85 percent to just over 89 percent. Overall, this is the largest autumn start we have had in higher vocational education programmes, and our employees are working hard to provide everyone with the best start. Higher vocational education is a successful educational format based on the labour market’s workforce needs.

Our municipal adult education activities also started well. In the beginning of the quarter, we signed a new agreement with the City of Stockholm for a further four years. Higher unemployment is mainly affecting young people, those born abroad, and those with a short educational background. Studying at upper secondary school via municipal adult education can make a major difference to people in these categories, especially as matching in the labour market was insufficient even before the crisis.

We are now seeing the results of our hard work during the spring and summer in meeting the increased demand. The operating profit for the Adult Education segment rose sharply from SEK 22 million to SEK 57 million. However, this sharp volume increase has resulted in a cost lag, resulting in a temporary improvement in the profit margin. It remains our judgement that the EBIT margin in the Adult Education segment will over time maintain a level of 9-11 percent.

Continued focus on adult education programmes

The Swedish government’s budget bill for 2021 and plans for 2022-2023, presented further measures for job and retraining support with funding of in all SEK 11 billion. The measures are intended to mitigate the financial consequences of the pandemic. In addition to providing direct investment for building up capacity in higher vocational education, vocational education, and matching via the Public Employment Service, the measures will also enable jobseekers to participate in regular educational programmes without loss of unemployment benefit. This in turn will enable more people financially to participate in a programme during their unemployment, not only benefiting the individual but also society.

AcadeMedia has the broadest contract portfolio in the market and in-depth experience. We are well equipped to continue contributing to the initiatives in adult education being made to meet the major challenges that society is now dealing with, and may continue to face, if the level of unemployment persists.

Strong organic growth of 5.1 percent in child and student numbers

As we announced earlier in the autumn, we had a very strong start to the term, with a 5.1 percent increase in the number of children and students enrolled. In all, nine new units opened during the first quarter of 2020/21, four preschools, one integrated preschool, and four upper secondary schools.

In the Preschool Segment, the number of children increased by 3.2 percent, with two new preschools opening in Sweden and one in Norway. In Germany, the plan for new establishments was delayed by the Covid-19 pandemic and only one new preschool opened in the quarter. In the Compulsory School Segment, the number of students rose by 6.0 percent, with the two acquisitions in the preceding year and higher numbers in existing units contributing to the increase. One of our compulsory school units, Rudanskolan situated just outside of Stockholm – which features on the cover of this report – was finally able to move into its new, larger premises. The unit has also expanded with the opening of a preschool, Lilla Rudan. In the Upper Secondary segment, four new schools opened, and new students were also admitted to new establishments from previous years. Student enrolment in the Upper Secondary segment increased by a total of 5.6 percent.

Continued shortage of preschool places in Germany

According to a new study by the German Economic Institute (Institut der Deutschen Wirtschaft, IW), just over 132,000 preschool places have been created in Germany for children below the age of three years over the past five years. Nevertheless, there is still a demand for just over 340,000 preschool places. The reason why the gap has not shrunk is that more parents want to send their children to a preschool. The strongest demand is in North Rhine-Westphalia, which is also one of AcadeMedia’s focus areas, with a shortage of nearly 100,000 preschool places, according to the IW study.

Before the turn of the year, AcadeMedia will establish three new units in Germany, with the hope that we will open a further seven during the spring. However, the Covid-19 pandemic has impacted our programme of new establishments and it may also affect when these new units will open. The plan is that AcadeMedia will within a few years have more than 7,000 preschool places in Germany, an increase by approximately 3,000 places compared to today. Negotiations on further new establishments is a constantly ongoing process.

New profiles in Compulsory School Segment

Shortly after the end of the quarter, we announced that the Compulsory School Segment is clarifying the pedagogical offering and increasing the number of educational profiles. The new profiles are Montessori Mondial and Noblaskolan. AcadeMedia’s Compulsory School Segment previously consisted of three profiles Vittra, Pops Academy, and Pysslingen Skolor. As a result, 28 of the 73 Pysslingen units are to be renamed, 22 as Noblaskolan and six as Montessori Mondial.

The Noblaskolan concept is that students who are challenged will go further. Through a combination of experienced teachers, clear structures, security and support, students obtain the best conditions for a good education. Montessori Mondial provides a modern, results-oriented Montessori educational philosophy with special teachers and good learning environments.

By broadening our portfolio, from three to five, we are clarifying our educational offering and what the concept represents to guardians and their children, as well as to present and future employees. This change, which means that schools with the same educational concept will work more closely together, will also create a better organisational cohesiveness for our employees and a solid foundation for stronger collegial learning.

I look forward with great enthusiasm to the journey of development ahead!

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 5055 83 75
UK: +44 33 3300 9261
US: +1 833 5268 347

You can follow the presentation and the conference on the following page: https://tv.streamfabriken.com/academedia-q1-2020-2021

The presentation material will be available before the conference begins on AcadeMedia web via https://corporate.old.academedia.duvadev.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@old.academedia.duvadev.se

Katarina Wilson, CFO
Telephone: +46-8 794 42 91
E-mail: katarina.wilson@old.academedia.duvadev.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.old.academedia.duvadev.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 23 October 2020.