AcadeMedia’s Year-end report July 2018 – June 2019

Fourth quarter (April – June 2019)

Full year (July 2018 – June 2019)

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

Comments from CEO Marcus Strömberg

The fourth quarter of 2018/19 showed a substantial increase in operating profit as compared to last year. Pre- and Compulsory school showed solid improvement in fourth quarter earnings, bringing the full year adjusted EBIT-margin for the segment to 4.8 percent. Upper Secondary School had a strong year with higher margins, although the fourth quarter was weaker than last year. Adult Education performed much better this quarter compared to last year. To summarise the year as a whole, earnings and margins have improved in the Swedish Schooling segments, the Adult Education Segment is still in transition period, and International pre-school, especially Germany, is experiencing rapid growth. The board proposes a dividend of SEK 1.25 (0) per share. 

Pre- and compulsory school improve margins

The Pre- and Compulsory School Segment has shown a stable organic volume growth of three percent during the year generated mainly by adding students to existing compulsory schools. In 2019 the voucher increase for compulsory schools was also favourable (3.5 percent), while the voucher increase for preschools was only 2.0 percent. As mentioned in prior reports, we have also seen a stabilisation of staff turnover and wage inflation.

Organic volume growth, stable voucher increases, and improved staff turnover all contributed to improved margins for this segment and are key to maintaining stable and improved margins going forward.

The adjusted EBIT-margin for the fourth quarter was 8.3 percent (7.0) and 4.8 percent (4.6) for the full year. The improvement was mainly driven by a stronger margin in compulsory schools despite the slight deterioration of margin in Swedish pre-schools.

As announced previously, AcadeMedia will divest 12 preschools as of 1 July 2019 in order to focus on municipalities and units where potential for quality and profitability is better.

Record Year for Upper Secondary School Segment

2018/19 is yet another record year for the Upper Secondary School Segment although the fourth quarter included some additional expenses. Student numbers are now at almost 35,000 and AcadeMedia is a clear market leader among the independent secondary schools. The market share amount to approximately 36 percent among the independent education providers and almost 10 percent of the total market.

Praktiska Gymnasiet, a brand which came through the Vindora acquisition, is responsible for some of the growth, but it was mostly a result of opening new schools. Another four new schools will open this autumn.

Larger age groups are driving need for additional upper secondary schools. AcadeMedia has worked hard to secure attractive premises in order to support municipalities in expanding capacity. Future growth has been secured through the signing of several substantial lease contracts for new premises. 

Adult education not yet in the clear

In the Adult Education Segment, the fourth quarter was substantially better than last year, but earnings were down compared to the prior quarter. This is mainly due to a normal seasonal slowdown of activity for the summer.

Substantial cutbacks relating to the labour market training programs (Swedish Public Employment Service) have been carried out during the quarter and throughout the year. Reductions were mainly staff but have also impacted premises and other resources. These measures are expected to have a positive effect on margins for 2019/20.

While the business relating to municipalities and higher vocational training has continued to do well and outperform last year, the ongoing restructuring of the Swedish Public Employment Service still poses short term challenges. However, we are hopeful that this will provide opportunities for AcadeMedia within a few years. The politicians have now given Swedish Public Employment Service the assignment to develop a new system for matching of unemployed to jobs. The private providers will be given a greater role to educate and match the job seeker with available positions. The agency is planning for a new system to be trialled in 2020 and launched in 2021.The role of the agency will be to procure these services. As Sweden’s leading adult education provider, we see considerable potential for capturing part of this new business. 

International Preschool Segment

The International Preschool Segment, which includes preschools in Norway and Germany, is the fastest growing part of AcadeMedia. Turnover increased 11 percent in the quarter and almost 17 percent for the full year. Growth relates mainly to Germany. Adjusted EBIT improved in both countries.

The Norwegian preschool sector is currently undergoing changes relating to regulatory requirements of increased staffing which will be implemented the coming year. In addition, changes in actuarial assumptions will result in higher reported pension expenses in Norway next year. In total, this is expected to increase costs by around SEK 35 million in the fiscal year 2019/20.

New preschool segment set to capture growth

AcadeMedia’s market analysis shows that the European preschool market is set to grow. Several countries have a low level of young children attending preschool which hampers the earnings capacity of the nation as well as gender equality. The Nordic countries have operated pedagogical childcare for young children for more than 50 years and we have developed a special curriculum and pedagogical processes specially designed to develop and prepare young children for the next step in their education. As such AcadeMedia is well positioned to take part in and drive this development. AcadeMedia has decided to form a segment encompassing all preschools in Sweden, Norway and Germany in order to successfully capture this growth opportunity. As CEO, I will initially lead this segment, but the aim is to appoint a permanent head of the Preschool segment in 2020.

I am very excited about this development as I believe this will provide us with opportunities to participate in future restructuring and development of the European preschool sector.

Change Through Education

Last quarter, AcadeMedia’s management developed a revised strategic plan for the next four years. Titled “Change Through Education,” this plan and mission will be our strategic guide going forward. AcadeMedia will continue to nurture innovation and be a dynamic leader in the education industry. We have great confidence in our ability to bring positive change and development to both individuals and the societies we operate in.

Dividend proposed

Until now shareholders of AcadeMedia have injected equity capital for growth and investments. As a result of the financial development during the year and a stable outlook, the board of AcadeMedia has decided to propose a dividend of SEK 1.25 per share. 

Marcus Strömberg
President and CEO 
AcadeMedia AB (publ) 

Capital Markets seminar, 29 August 2019

In connection with the publishing of this report, AcadeMedia is hosting a capital markets seminar with focus on the rapidly growing European preschool market. The seminar will start at 10:45 am CEST and can be followed live on the following page, https://tv.streamfabriken.com/academedia-capital-market-seminar-2019

A recording of the webinar and the presentation material will be available on AcadeMedia web, https://corporate.old.academedia.duvadev.se/

Presentation of the Year-end 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:

SE: +46 8 566 427 06
UK: +44 33 3300 9267
US: +1 833 5268 381

You can follow the presentation and the conference on the following page:
https://tv.streamfabriken.com/academedia-q4-2018

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

About AcadeMedia
AcadeMedia creates opportunities for people to develop. The 16,900 employees at our 660 preschools, compulsory schools, upper secondary schools and adult education centres share a common focus on quality and development. Our 180,000 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 29 August, 2019.