AcadeMedia’s interim report July 2019 – March 2020
Third quarter (January – March 2020)
- Net sales increased by 4.8 percent and amounted to SEK 3,284 million (3,135). Organic growth, including bolt-on acquisitions, was 5.3 percent.
- Operating profit (EBIT) amounted to SEK 309 million (231). Excluding the effects of IFRS 16, EBIT was SEK 259 million (231), which was an increase of 12.1 percent. Operating profit, adjusted for items affecting comparability and effects of IFRS 16, amounted to SEK 224 million (210).
- Items affecting comparability amounted to SEK 36 million (20).
- Net profit for the period amounted to SEK 161 million (172). Excluding IFRS 16, it was SEK 193 million (172).
- Cash flow from operating activities amounted to SEK 580 million (129). Excluding IFRS 16, it was SEK 139 million (129).
- The average number of children and students in preschool, compulsory school and upper secondary school during the third quarter was 82,940 (79,873), representing an increase of 3.8 percent. Growth was completely organic.
- Earnings per share was SEK 1.53 (1.63) before and after dilution. Adjusted for IFRS 16, earnings per share was SEK 1.83 (1.63) before and after dilution.
- The coronavirus outbreak had a sizable impact on operations but limited financial impact in the period.
First nine months (July 2019 – March 2020)
- Net sales increased by 5.7 percent to SEK 9,044 million (8,554). Organic growth including bolt-on acquisitions amounted to 6.0 percent.
- Operating profit (EBIT) amounted to SEK 639 million (416). Excluding the effects of IFRS 16, EBIT was SEK 484 million (416), which was an increase of 16,3 percent. Operating profit, adjusted for items affecting comparability and effects of IFRS 16, amounted to SEK 449 million (402).
- Items affecting comparability amounted to SEK 36 (15) million.
- Net profit for the period amounted to SEK 252 million (282). Excluding IFRS 16, it was SEK 343 million (282).
- Cash flow from operating activities amounted to SEK 1,558 million (258). Excluding IFRS 16, it was SEK 435 million (258).
- The average number of children and students in preschool, compulsory school and upper secondary school during the first quarter was 82,245 (79,326), representing an increase of 3.7 percent. Growth was completely organic.
- Earnings per share was SEK 2.40 (2.69) before and SEK 2.39 (2.68) after dilution. Adjusted for IFRS 16, earnings per share was SEK 3.25 (2.69) before and SEK 3.25 (2.68) after dilution.
Implementation of IFRS 16 has a significant effect on AcadeMedia’s financial statements. To simplify the comparison, the 2019/20 financial year is presented adjusted for IFRS 16. This is described as “Excluding IFRS 16”. Important key performance indicators and additional key performance indicators based on rolling 12 months are presented excluding IFRS 16. For example, adjusted operating profit (EBIT) is reported excluding IFRS 16. The segments within AcadeMedia have unchanged accounting principles and will continue to report rent as Other external expenses.
The complete report will be made available at https://corporate.academedia.se/en/financials/reports-presentations/
Comments from CEO Marcus Strömberg
The third quarter has been overwhelming. The coronavirus outbreak has had a considerable impact on the world, and of course also on AcadeMedia. Large parts of our organisation have shifted from in-classroom to distance education and our operations in Norway and Germany have been partially closed. Our employees have done an incredible job meeting the new demands and ensuring continuity for all our children, students, and adult education participants. We now conclude the third quarter with a feeling of humility.
The extraordinary situation currently taking place has brought AcadeMedia into a close cooperation with numerous parties in Sweden, including different authorities, ministry, companies and organisations. Our main joint goal is to decrease the spread of the virus while keeping society going to the largest possible extent. In March, many national and regional decisions were taken with the aim of limiting the spread of coronavirus. We have closely followed these developments and all government directives.
Despite the coronavirus’s effect on both society and our business, our quarterly financials experienced minimal impact. As a result, we have been able to focus on our core business, to provide care and education to our operations in preschool, compulsory school, upper secondary school, and adult education, despite our delivery of operations having changed in many ways.
Distance education in Upper Secondary School Segment and Adult Education Segment
On March 18th, and following the government’s recommendations, 36,000 upper secondary school students and 20,000 adult education participants at AcadeMedia transitioned to distance education. Both the Upper Secondary School Segment and Adult Education Segment managed the transition well. This was to a large extent a result of a long and dedicated effort on digitalisation within these segments. Many of our students and teachers were already accustomed to using digital tools. The transition was also made possible because of the enormous effort, and will to succeed, among students and staff.
At the upper secondary schools, students have been following their ordinary schedule in most cases, with the difference being that they enter their digital classrooms when lessons start. A lesson can begin with a video meeting where the teacher gives an overview of the lesson and students can ask questions. Other digital functions include chat features and the ability to record lessons so that students can repeat or review the content. Distance education imposes new and different demands on our students and their guardians. To help with this, AcadeMedia has created more than twenty films to support studying full time at home.
However, distance education does not suit everyone. Following a government decision at the beginning of April, schools are now permitted to offer education at school premises for those students who need it. We welcome this decision as it makes it easier to provide education for students with particular needs. Thanks to this change, we can now conduct certain exams and assessments, as well as vocational training on our premises. Students in need of special support can also receive tuition on site. Eventually, when we come to assess the experiences and insights gained from this period, I hope we will carry forward learnings that help enhance the Swedish education system significantly.
Pre- and compulsory schools in Sweden are open
Our Swedish compulsory schools and preschools have remained open, but they have and continue to have readiness to close in the case of any such decision from the government. Our compulsory schools in particular have been on stand-by not knowing whether a decision to close would be taken. The experiences of our upper secondary schools have been invaluable in preparations for potential closures of the compulsory schools.
Another challenge has been an increase in sick leave among students and employees. At schools where many students have been at home, the ordinary education was complemented with distance education. Many of our employees have experienced a considerable amount of extra work when education is taking place both in the classroom and simultaneously through distance learning. I am very proud of their efforts.
Preschools in Norway and Germany partially closed
Authorities in both Norway and Germany decided to close all preschools. The decision was effective as of mid-March and affected all children with the exception of children of key workers such as health care professionals and police. In Norway, approximately 80 percent of AcadeMedia’s 104 preschools have been open but only with a few children present. Similarly, in Germany almost all preschools have remained open with a greatly decreased number of children.
All in all, the financial impact of the closures has been limited. In Norway, parental fees have not been charged during the closure, but instead the Norwegian state has been funding the fees. In Germany, seven units are up to fifty percent financed by parental fees, which have not been charged during the closure. No personnel in Germany or Norway have been furloughed or made redundant.
Our planned new openings in Germany for the coming autumn will be executed as planned to the largest extent possible but could be delayed if needed. One of the new openings planned for the fourth quarter of this fiscal year has been delayed until the first quarter 2020/21.
In Norway, all closed preschools returned to normal operation between the 20th and 27th April. Preschools in Germany remain closed and no date has been set for when they will return to normal. However, it is expected that preschools in Germany gradually will open to more parental groups and after the summer will resume to full activities.
Adult education is more important than ever
In the wake of the coronavirus, notice of potential layoffs and bankruptcies in Sweden and the world is a reality. Unemployment is rising and is expected to reach 9 percent in Sweden but could become substantially higher if the crisis is prolonged. Large scale educational efforts will be needed, which is reflected in various Swedish government measures targeting services provided by the Swedish Public Employment Service, vocational adult education, higher vocational education, and “folkbildningen” education. AcadeMedia is well equipped to contribute when society must meet the need for education and retraining for those who have lost their jobs.
Increased number of satisfied students and employees
AcadeMedia’s annual client and employee survey was conducted during the quarter. The results continue to be encouraging. The students in compulsory and upper secondary school are increasingly satisfied with both their school as a whole and their education. Overall satisfaction level in pre-school has increased by a few percentage points among parents and carers. The employee survey also showed good results. For instance, 81 percent of our employees would recommend their workplace to others, an increase from the previous year.
We miss our children, students, and adult education participants
A school should be a place full of life, learning and enthusiasm. That is normal. Distance education works well however most students have a strong desire to see their classmates and teachers, and the teachers also want to meet their students. We have found this expressed in video greetings made by teachers and headteachers that have been shared on social media. I wish to share one of these recordings with you, from the upper secondary school Sjölins gymnasium in Gothenburg.
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 5199 9383
UK: +44 33 3300 9273
US: +1 833 8230 586
You can follow the presentation and the conference on the following page:
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
Katarina Wilson, CFO
Telephone: +46-8 794 42 91
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.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 CEST 5 May 2020.