Good morning, everybody. Marcus Strömberg here, CEO of AcadeMedia, together with Katarina Wilson, our CFO. I will just start with a short introduction from this rainy Stockholm this morning. If you look into our presentation, you can see that at the first page, you meet some of our upper secondary students that have developed their own robot bores carrier. We have a lot of vocational program with IT profile, and it's really nice to see all these students. Then if we go to page number two, you can say that this quarter we continue our stable development. The demand of education of our different programs is still very high. We have a growth of more than 9%. Our organic revenue growth is 7.3%.
It's also very happy to say that we have now started to make bigger acquisitions again, and the Swedish Education Group is now a part of the group, and we have 2,500 students that contribute to the growth in this quarter. Operating profit has also increased. What is also to mention in this quarter is that we have continued our campus strategy, and we are very proud and happy to say that we have now announced the biggest campus in Stockholm. It's a big investment for us. It's one of the biggest school that we will see in Stockholm. Four of our different brands will be in this campus. Around 2,300 students will start in this school 2022. This campus strategy is very important for us. We see a great need of new school places, both in Stockholm, Gothenburg, Uppsala, Malmö.
To build this campus with different brands under the same roof is very good for both the students and our employees. We have also continued to develop our digitalization and EdTech strategy. We mentioned in this report that we are really already today the leading online trainer with more than 50,000 students in our different platforms. Of course, we have this situation with the pandemic. It's now five quarters that we have been working in this very hard situation for all our staff. The impact in Germany has been quite high. It has developed a number of new starts, but after the summer, we hope that will be more normal. In this quarter, we have also announced our employee survey, and still we have the situation with the pandemic. We have very positive results.
Both our leaders, our different staff, and also together with the parents, it has been quite good results. Then we go to page number three. We also give you a short picture of what we do when it comes to digitalization. We think that we are really now trying to develop AcadeMedia into the future. It's both an international view of things, and we also have this digitalization and EdTech. We work in different part of the digitalization and EdTech market. To start with, we work with marketplaces, so we help students, parents, to find the right educations. We just announced that we have made a small acquisition of a company that we call Studier.se, and they have around 50,000 different courses in their different programs. We think that this could be a good opportunity for us in the future.
We have also invested in a company called Hippocampus, and this is medical programs, and we have also started to move this into France. To work with an artificial intelligence medical program has been really interesting, and a lot of doctors and training campus that work in medical training program are interested in this. We have also developed educational services, and it's a way to support the teachers and the schools with different sort of services. For instance, we have where you can take your lessons at home online with service from a teacher. It's very interesting to see this development. In fact, also AcadeMedia also have some digitalization platforms that we have developed ourselves.
For what we have done the recent year, we have been developing this platform for many years, but now we have taken them out and given them a name, and that is also possibility to make new business and to take it into other areas. EdTech and digitalization is a really great new business opportunity for AcadeMedia. I hand over to you to go through the numbers, Katarina.
Thank you, Marcus. I'm Katarina Wilson, CFO of AcadeMedia. Moving on to page number four, highlights quarter three of our financial year. Student numbers grew by 8.1%, including the acquisition of Swedish Education Group that contributed, like Marcus said, with just over 2,500 students. Stockholms Internationella Montessoriskola, STIMS, and three new preschools in Germany in the quarter also contributed to the growth. Net sales increased by 9.3%, with organic growth in all segments. Swedish Education Group contributed 3.1 percentage points to the growth, and we classify this acquisition as acquired growth. Adjusted for the acquisition and a negative currency translation effect, mainly related to Norway of SEK 31 million, the organic growth was 7.3%. Adjusted EBIT increased to SEK 278 million compared to SEK 224 million last year, and the adjusted margin increased to 7.7%.
The increase also in this quarter was driven mainly by the adult education segment, but all segments showed a positive development. Moving on to page number five, showing an adjusted EBIT bridge illustrating that all segments are contributing to the growth. Adult education is the main driver of the increased profit. Again, like we have seen both in quarter one and two, the solid increase in number of students in the compulsory and upper secondary school segments, both through acquisitions, but also organic growth, is having a positive impact on the operating profit. We have also this quarter, due to the pandemic and the restrictions caused by the pandemic, had to cancel and postpone activities, reducing costs by about SEK 15 million in this quarter, mainly in the upper secondary school segment, but also somewhat in the compulsory school segment and group function.
EBIT adjusted for IFRS 16 amounted to SEK 284 million. Items affecting comparability of SEK 6 million was included in that number. IFRS 16 impacted EBIT with a further SEK 61 million positive, giving an EBIT of SEK 345 million. Moving on to page number six. Net sales rolling 12 months continues to increase and is getting close now to SEK 13 billion. Adjusted EBIT rolling 12 is at SEK 933 million and adjusted EBIT margin 7.2%. The adjusted EBIT margin has now improved for the eighth consecutive quarter, and we are meeting our financial profitability target for the second quarter running. Although I would like to remind you that the margin is somewhat inflated due to lower costs as a consequence of restrictions during the pandemic. Of course, the main driver of this improvement is the development in the adult education segment.
Moving on to page number nine, development in the quarter by segment, starting with the preschool segment. Despite the pandemic, we successfully opened three new units in Germany in the quarter, which gives a total of 270 units in this segment, whereof now 56 units in Germany. In all three countries, all preschools have remained open in the quarter. However, sometimes temporary closures had to be imposed during corona outbreaks. The number of children increased by 2.7%, driven mainly by Germany, but the growth is slower than planned due to the pandemic. Net sales increased by 1.3% compared to last year, and if we adjust for negative currency effects of SEK 31 million, sales grew by 4.5%. Adjusted EBIT and margin increased somewhat to SEK 75 million-SEK 71 million due to positive developments in Sweden and Norway.
In Norway, the school voucher increase was 4.4% compared to last year 2.7%, which means that the staff density norm is now better compensated. In Sweden, continued focus on efficient staff planning is contributing to the higher earnings. The average voucher increase in Sweden is 1.9%, which is higher than last year, 1.4%. In Germany, the situation is still difficult. Our new starts are delayed. We have so far this year started seven units in Germany, and two more are planned in this last quarter of this year, which gives a total of nine units. This is two units less than what we previously communicated and significantly less than our initial plan to open 15-20 units this financial year.
Another consequence of the pandemic in Germany is that we have to follow strict schooling-in rules, allowing only one child at a time, which means that it takes longer to fill our new preschools, which in turn gives us a lower capacity utilization. We believe that this situation will remain for a while and as long as the pandemic is ongoing. We are positive, and we have a plan for next year to open 15 new units next financial year. Also, next financial year, sales and EBIT in the preschool segment will be impacted by the termination of a contract that we have with the Oslo municipality to run two units with about 310 children in total. Moving on to the next page, compulsory school, page 10. All compulsory schools have remained open in the quarter.
Only a limited number of schools were forced to implement distance education for shorter periods following significant spread of the coronavirus. We continue to see good growth in this segment. The acquisition of Swedish Education Group and STIMS added four new units and just over 1,000 children and students. In total, the number of students increased by 6.7% and sales by 9.5%. Adjusted EBIT amounted to SEK 50 million compared to SEK 40 million last year, and the margin was 5.7%. Good volume growth contributed to the high earnings, and in addition, canceled and postponed activities due to the pandemic reduced costs somewhat, not that much. The average school voucher increase is 2.6%, which is higher than last year's 2.3%. Moving on to the upper secondary school, page 11. The upper secondary schools have now, for almost nine months, conducted distance education in part or in full.
The national recommendations on distance education ended on April the 1st. From this date it is now the decision of the principal organizer, huvudman in Swedish. The acquisition of Swedish Education Group added four new units to this segment and about 2,300 students. Student numbers grew in total by 12.3%, where Swedish Education Group contributed with 6.4 percentage points. Net sales increased by 13% as a result of the acquisition, as well as 18 new schools that we have opened over the last four years. The plan as it stands now is to open a further three schools in the autumn of 2021. Adjusted EBIT and margin was higher at SEK 116 million compared to SEK 98 million last year due to volume growth, including the acquisition, as well as lower costs of about SEK 10 million following canceled and postponed activities caused by the pandemic.
Items affecting comparability amounted to SEK 6 million. This was related to retroactive revenue from previous years of SEK 11 million and a restructuring expense of SEK 5 million. The average voucher increase is 1% in the upper secondary school segment, which is lower than last year's 2.3%. Moving on to the next page, adult education, page 12. The pandemic is still requiring education to take place as distance education and when in classrooms in smaller groups. Rising unemployment has continued to create high demand for adult education, with continued volume increase and high capacity utilization. Net sales increased by 19% in the quarter where the acquisition of Swedish Education Group under the brand name KYH in this segment contributed 5.2 percentage points. EBIT increased to SEK 64 million and the margin was 13.1%. All business areas contributed to the improvement.
Demand for higher vocational education remains high. We now also see that dropout rates are lower than normal. AcadeMedia's municipal adult education continues to grow. The contract portfolio covers many of the areas with increased demand. The labor market services business is also growing, and volumes are now at the same level as before the termination of the loss-making contract vocational and preparatory modules. The Swedish Public Employment Service has initiated the expansion of the new matching service, Rusta och Matcha, and we are now preparing to participate in the coming tender procedure. Moving on to page number 14, free cash flow and investment. Free cash flow, defined as cash flow before investing in expansion, was SEK 246 million compared to SEK 107 million last year. Changes in working capital had a somewhat negative effect on the cash flow in this quarter. This is a normal calendar effect.
Total CapEx to the right on this page is increasing, that's mainly due to the recent acquisition. Moving on to page 15. Our financial position improved even further. Net debt is significantly lower than last year at about SEK 1.6 billion, the cash position has improved, the leverage ratio is lower than last year at 1.2, which is well below our financial target of below three. Property-related lease liabilities increased also this mainly through the recent acquisition. Finally, moving on to the last page 16, the financial performance versus targets. To conclude, we are for the second quarter running, meeting all our financial targets, including our profitability target. With that, I would like to open up for questions.
Thank you. The first question comes from the line of Karl-Johan Bonnevier from DNB Markets. Please go ahead. Your line is open.
Yes, good morning. Thanks for the presentation. A question on the EdTech side to start with, as you started off with that. Is it possible to say how much revenue that are driven through this platform at this stage, or is it just a way of mitigating costs? How should we see the current structure of that business?
You can see it from two different views. If you take the revenue of this EdTech investment that we are doing, they are very small. It's nothing to talk about. If you talk the revenue online education, for instance, in our adult education, it has developed quite well. It depends on how you look at it. Hopefully the EdTech revenue the coming years will increase, of course. As I mentioned, it's very important if you look at the EdTech industry, there's much talking, but not so much revenue if you look at the different companies that exist in this market. If you look at AcadeMedia, we have really developed an online platform that we train our students on today. If you look at the adult education, if you're a student there, you can learn wherever you are, wherever you want.
If you are a student in our schools in upper secondary, you can now study wherever you are, but you have to follow the lessons. It's a very interesting development, and we have developed these sort of platforms in many years. You have to keep in mind that Hermods has existed 100 years.
If you look it from practical reach, you can say that basically all students you have in upper secondary and adult education programs in some way come in contact with your digital platforms.
When it comes to adult education, I would like to say most of them have some sort of contact with this sort of platform. Not all of them are in totally online training. If you look at the upper secondary, when it comes to the last year, all of the students have had some sort of online training.
Excellent. When I look at this Rusta och Matcha opportunity of a matching services under adult education, is that a big operational already now for you? This is a new service that you will add to the platform, so to say?
That's a very good question. We have developed, or the management team when it comes to adult education, has really made a turnaround. For the moment, the services from the employment agency is very small part of the adult education. Now we are working with vocation programs and the municipality training program, and it has been a great success for us. The coming two to five years, the employment services will open up a new market that is Rusta och Matcha. Here we are a very good player in this market, but there is no revenue for the moment. This is a market that we will enter the coming years.
When I look ahead to the next school year 2021/2022, I see that the demographic support seems to be helping you in all age groups going into the next year. Have you any idea about, say, how the demand will look for you going into the next year, looking at, say, preliminary listings with your different schools and so on?
If you look at AcadeMedia, that we have this recurring revenue and we have this foresight, of course we have this recruitment process is moving on as we are speaking, but we cannot announce it. We announce it after the summer. If we talk about the overall market, I would like to say that the demographic development is very positive. The need of new school places in the bigger cities is very high, and the municipalities, they don't create many new school places for the moment. If you also look at the penetration of the private player, I think that we see that the private operators take market shares also.
That is at least what I see when I look how the market develop. For the moment, we have 384,000 children and students in private schools in Sweden, and that is all-time high for the moment. I think we will see all-time high after the summer also. Not if you look at AcadeMedia, because I can't say anything about AcadeMedia, but if we look at the overall market.
When you look at the new openings that you are now doing for the next school year, are those in existing facilities, or are you taking on a lot of new property assets in that expansion?
We make some new starts after the summer, but I would like to say that the main driver is that we have increased the capacity at existing schools and that we have made new starts. What is very interesting is what will happen 2022, because then we open two big new campuses in Stockholm and we also create new campuses and develop new campuses in other cities. This August, we start a new campus in Örebro, and I think that is a very good strategy. We will see how it will develop. We started a campus in Uppsala, and I must say it's really the development when it comes to the brands that exist in this campus has been fantastic so far. I really believe in this strategy.
It's positive for the students, it's good for the employees, it's very good for the city because we create school places at a lower cost. That is the main driver that will help us into the future.
Excellent. Just two questions on Norway and Germany. Looking at the contract that the Oslo municipality is taking back now, it looks to be an extremely profitable contract. Was there something special with that contract?
When you look at it's this sort of contract that when you drive it as we do in Sweden, we have our own buildings, we have rental contracts and so on. In this contract, it was just running the schools because we didn't pay any rent in these schools, because it was part of how we did it with Oslo. You can say that it was profitable contracts.
Excellent. When I look at the rollout plan for Germany, as I understood it, for next fiscal year, you had a slightly more ambitious plan for rollouts. Is there anything happening in the marketplace? Earlier, I think you suggested that it would be a catch-up of units that you wouldn't be able to open this year during next year, but now that seems to be postponed.
It has been postponed. What we say now about the future is 15 new starts. To be honest and clear about Germany, the demand of new school places is higher than ever, but it has been very tough. It's difficult for us to understand in Sweden how tough it has been in Germany. The parents, they are waiting, because if you don't go to work, you don't need any school place, you don't want to pay the extra food and so on. I think we have to wait until after the summer. I'm convinced that the positive development and need of preschool places will be very high. How many new starts we can start, it's very difficult to answer, but our best view for the moment is 15.
If you look at the pipeline you used to have, say, where you were quite specific on where you were opening units and so on, you haven't lost any of those. It's more like they are in a wait-and-see mode, so to say, when you think it's logical to drive them.
Yes, that's correct. The construction workers haven't been able to work in Germany. It has been very tough for the people. What I think is positive is that we have started three new units this quarter. They are working very hard. The Stepke Group, they are the best preschool management team we have ever met. They will take all opportunities, but it has been a tough situation in Germany, and it will take some time.
Thank you. Thanks for the extra color.
Thank you. The next question comes from the line of Johan Sundén from Carnegie. Please go ahead. Your line is open.
Yeah, good morning. Thank you for taking my question. I think Karl-Johan once asked a lot of good questions before me, so many of my questions have already been answered. I think we can talk a bit on the Rusta och Matcha part. I think that is pretty interesting. Can you give some more light on the timeline, how the tender process will work, and the market potential?
It will be a SEK 1 billion market. It will be a big market. We don't really trust in the development because sometimes when it comes to employment services, it's one step forward, and then it's two steps backwards and one step aside. It is a big SEK 1 billion market that will be opened. It's not that sort of tender price process, it's more that you get a license to act on the market, and we really already had this sort of license. If you see on our history, we are really good in taking care of these sort of services because a lot of the people that will enter this market is people that will be very far from the labor market. I think it will be a good opportunity for us.
We will also enter this market with a more digital view. For a few years, we had to have physical places in different cities in Sweden. Now we will have smaller offices, we will use our existing buildings and have a more digital online approach when we enter this market. That is a way also to be more flexible because we know that the labor market program is more relative.
Just so I heard right, SEK 1 billion.
More than billion. They say SEK 5 billion. They mention that numbers. I would take it little bit careful, to be honest. They talk quite high numbers. If we just take 10% of that market, it will be a lot of money. We don't want to talk so very much about it because we have seen in the history that it change a lot. It is opportunity for AcadeMedia in the future. What is very important when you look at the adult education, that we have a fantastic development, both in municipality programs and vocational program, and the contract portfolio is, for the moment, perfect.
Great. Another question on the EdTech side from me as well. It's maybe a bit visionary, but how do you see it? What kind of efficiency improvement could that lead to for your own operations, maybe say in a three to five years' time? You're now in the middle of your margin target corridor, maybe a bit high margin in the adult business compared to normalized level. If you can speak freely of the potential there.
What we hope for is that we will give the students more opportunity to move between physical learning and online learning. Today all schools are mainly focused on the physical learning, where you are on a present school. We have now shown that you can take online learning everywhere. The next step, I hope, will be that we could combine these two models because the meeting with the teachers to be at the schools, that is very important. Maybe in the future, this is from one of the municipality managers. He said that maybe in the future we can have schools with place for 400 students, but we run them with 600 students because some of them are online. I think that is what we will see in the future, that it's the possibility to have more students at the same schools.
I don't think that the schools will disappear. We need to have this physical meeting between teachers and students. That is what we hope. If you compare the adult education with the upper secondary training, you can say that the cost is a factor 1- 10. That is very easy to understand because if you run a course online, it's much more effective. Of course, you can't use that full potential. It's not possible to implement. That shows the potential. I will also say that the main driver for us is also the quality part of this, because we have to develop the quality. It will be a lack of teachers. This is also a way to develop the quality in the educational program and give the students better courses and better training programs.
As you mentioned, many of these platforms you have developed by yourself during the last few years. If you compare your platforms and to your competitors, both public and other private actors, how do that differ? Is this a new kind of competitive advantage for you? Because the voucher system, I think should be the same. It will be more about how much more efficient you can be than your competitors.
That's correct. I must say that we have looked at a lot of different platforms, and I must say that the platforms that we have developed when it comes to adult education, Omniway and Novo, they have really good quality. What is good with this platform is that they really have focused to help the students into the next step. They are really fantastic. If we look at this Cortexio platform that we also have developed in, we own, I think it's 25% or 30% of that company. That is a way to make the books to adapt to the students. The medical program, we have made books of that, and now we also have it for the nurseries, and we look for other programs. We have a lot of interesting platforms.
What is so interesting, I think that our team, they have developed services at a quite low cost, and I think they could compete in a good way with companies that had invested a lot of money in their platforms. Maybe this is the time where you can take this step into digitalization, maybe at a lower cost. If you take this instance for this service that we have developed called Släck om läxan, it's a sort of doktor.se, but as a teacher, I give home lessons to my students after schools. Maybe they've invested SEK 500,000. It's nothing. The service is working quite well. I think it will be a very interesting development for AcadeMedia the coming year. We have two different departments that work with this.
We have one department that we call AcadeMedia Digital, and we have one department that we call AcadeMedia Edtech, which has a more focus on investment to see opportunities in outside AcadeMedia. I hope that we will talk more about this in the future.
Just one final question from my side. I think it's likely most better to ask it to Katarina. It's related to this temporary cost savings. You now reported some SEK 50 million in temporary cost savings this quarter. When the upper secondary schools should return more to physical education during your Q4, how should we think about this? Should this remain at this level? Should they go back to a normal run rate level?
I would say that you should assume that we now go back to normal levels. That's what we're hoping. We're really hoping that we also can catch up with some of these activities. I don't think you should assume a lot further cost savings.
Good. Just one final question on the upper secondary side. You mentioned a few new openings coming up. You have the campus in Örebro and a few openings in Stockholm from 2022 as well. The margin profile, how should we think there? I get this year is very special, but if you take out the short-term cost savings, should we expect that the margin take a hit during the coming two years?
Yes
on that as well?
That's correct. I think you should see our campus, Södermalm, as a new start. It will be a margin impact from that. I think it's too early to actually say exactly how much. We're not talking about a lot, but you should take that into account.
You can also say that when we made new starts a few years ago, we were really up and running much faster. Now we invest a little bit more in year one because we want to make a solid new start. What we see is that the accelerated development is much faster after that first year if we invest a little bit more year one. That is what we have seen now in Uppsala, for instance, that if we invest in the buildings. You can see, in fact, we have a movie now that shows the campus Södermalm, and you can see that we really invest a lot. Because if we can create a school with 2,300 students, it will be fantastic for AcadeMedia the coming 50 years.
That is our focus when it comes to these new starts, to invest a little bit more in the beginning. To be clear, the main impact will be seen from 2022 and the coming two years from the Södermalm project.
Yes. Exactly correct.
Good. That was all from me. Thank you so much.
Thank you. Just a reminder that if you would like to ask a question, please press zero one. We have no further questions, so I will pass back for any closing comments.
We say thank you very much for your questions, and we wish you all a good day. Thank you very much.
Thank you.