Internationella Engelska Skolan: Acquisition of 50% of Grupo Educativo Elians Complete

Regulatory News:

Internationella Engelska Skola (STO:ENG)

On 5 July 2016, Internationella Engelska Skolan i Sverige Holdings II AB (publ), IES, signed a conditional purchase agreement to acquire 50% of the shares of three Spanish School providers, which collectively form Grupo Educativo Elians. Extraordinary General Meetings (EGMs) of the three school companies held on 5 July 2016 elected three Board members from IES to the Board of Directors of Grupo Educativo Elians, and work on producing shared growth and development plans commenced. IES also issued a working capital loan of a total of EUR 2.1 m against collateral of 50% of the shares of the three school companies.

The necessary regulatory approval has now been secured. Accordingly, it has been possible to finalize the acquisition for a purchase consideration of EUR 5 m. The payment was executed without external loan finance.

The companies within the Grupo Educativo Elians group had sales of EUR 12.4 m in the financial year September 2015 - August 2016. There were 364 employees at the end of the financial year, and at the beginning of the 2016 - 2017 academic year, there were 1,600 students. Schooling is provided in Valencia, Castellón and La Nucia (Alicante) from pre-school to upper secondary school for students aged 1-18.

Total estimated transaction costs are SEK 4 m, of which SEK 2.3 m was charged to the fourth quarter 2015/2016. The holding in Grupo Educativo Elians will be recognized as an associated company.

An attractive market for IES’s education concept

Spain has a well-developed private education system and is one of the more attractive European markets for IES’s concept outside Sweden. IES intends to provide bilingual education in Spanish and English, consistent with the Spanish and UK national curriculums, as is permitted in Spain.

In Spain, IES can bring competence to provide students with the capacity to command English as a second language, benefit from its established methodology for hiring English-speaking teachers, provide a developed framework to enhance the quality of schooling and provide knowledge of effective financial management that supports operational expansion.

Ongoing expansion in Spain will be through organic growth of the acquired entities, and supplementary acquisitions where IES can offer its education concept. Expansion is expected to enhance IES’s attractiveness as an employer, because operations in more countries create attractive career opportunities for IES’s teachers, principals and other staff.

IES has no brand presence in Spain. Accordingly, operations will be conducted under the recognized and local brands that the acquired operations are managed under, and constitute a sister organization to IES.

This information is such that Internationella Engelska Skolan i Sverige Holdings II AB (publ) is obliged to publish pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the above contact, at 8:00 a.m. CET on 10 November 2016.

About IES

Internationella Engelska Skolan, IES, is one of the leading free school operators in Sweden with some 21,400 students in 30 schools in the academic year 2016/17. IES provides schooling from year 1 of grade schooling up to and including the third year of senior high school. Its main focus is on grades 4 - 9, known internationally as middle school. Within the compulsory school system in Sweden, IES is the leading independent provider with nine of the ten largest independent schools. IES school’s results in the grade nine national tests are consistently well above average compared to schools in Sweden each year.

Internationella Engelska Skolan was founded in 1993 and is currently in its 24th financial year. During all these years, the schools have featured the three central pillars of what we offer students, as set out by the organization’s founder Barbara Bergström:

• To command the English language – the key to the world. Up to half of our teaching is in English, performed by certified native English-speaking teachers.
• A safe and orderly environment, where teachers can teach and students learn.
• High academic expectations.

Up to half of education is conducted in English, by teachers whose native language is English. Over 600 teachers qualified in foreign countries—mainly Canada, the US, the UK and South Africa—teach in IES schools.

The student body has expanded strongly. Revenue received has traced yearly organic growth averaging 19% in the past 10 years. In the most recent financial year 2015-2016 that concluded on 30 June 2016, revenue received was SEK 1,807 m, an increase of some 17% on the previous year. As of 30 September 2016, there were approximately 122,000 applications in the waiting list to secure a place for the forthcoming year.

Internationella Engelska Skolan has been listed on Nasdaq Stockholm Mid Cap with the ticker ENG since the end of September 2016. The largest shareholders of IES are TA Associates of the US, which has close affiliations to leading universities and foundations in the US, and IES’s founder Barbara Bergström. Other major shareholders include Swedbank Robur Funds, investment company Öresund, Norron Asset Management, the Third Swedish National Pension Fund, AMF Pension (owned jointly by LO, The Swedish Trade Union Confederation and the Confederation of Swedish Enterprise), and the Second Swedish National Pension Fund.

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