Stadio Holdings Pty Ltd. · JSE:SDO
Stadio Holdings Pty — FY2023 Earnings Presentation
43 slides from Stadio Holdings Pty's earnings presentation, Mar 18, 2024
Slide 1: 2023 Annual Results Presentation
2023 Annual Results Presentation 18 March 2024 1
Slide 2: Overview
REFLECTING ON 2023 UNPACKING OUR RESULTS PRESENTATION OVERVIEW OUR GROWTH STRATEGY QUESTIONS & ANSWERS 22
Slide 3: Our purpose is to empower the nation by widening access to quality higher education
OUR PURPOSE IS TO EMPOWER THE NATION BY WIDENING ACCESS TO QUALITY HIGHER EDUCATION THROUGH OUR 3 DISTINCT PRIVATE HIGHER EDUCATION INSTITUTIONS 3
Slide 4: Reflecting on 2023
REFLECTING ON 2023 • Solid results in tough economic times • Good growth in students with a return to contact learning • Strong Heads of Campuses appointed • STADIO culture and values is starting to be embedded and general staff wellness is on the rise • Sport launched at STADIO Higher Education • L
Slide 5: Our people are critical to our success – thank you
TERESA PASSCHIER JOHAN HUMAN AFDA CEO CHIEF OPERATING OFFICER ANDREW HORSFALL DIVYA SINGH MILPARK CEO CHIEF ACADEMIC OFFICER 5 ISHAK KULA SAMARA TOTARAM CHIEF FINANCIAL OFFICER FORMER CF0 OUR TO OUR CRITICAL SUCCESS – PEOPLE ARE THANK YOU!
Slide 6: 2023 Financial Highlights
2023 FINANCIAL HIGHLIGHTS Semester 1 Semester 2 Revenue EBITDA Student Student up 16% margin Numbers Numbers to down to up 9% up 10% R1.4 bn 28% To 42 874 To 46 508 2022: 29% 2022: 39 167 2022: 42 463 2022: R1.2 bn Profit after EPS Core Core HEPS Tax up 26% Headline up 19% up 27% to Earnings to To R
Slide 7: 2023 Financial Highlights
2023 FINANCIAL HIGHLIGHTS Return on Equity Dividend per Return on share Equity up 12% up 18% to to 10.0 cps 11.7% 2022: 8.9 cps 2022: 9.9% 7
Slide 8: Unpacking our annual financial results
UNPACKING OUR ANNUAL FINANCIAL RESULTS 8
Slide 9: 2023 Summary Notes
2023 SUMMARY NOTES • Positioning the businesses to become first choice institutions • Consumer pressures and affordability impacting the business o Students taking longer to pay o Increasing overall loss allowance for the period • Capital projects include o New Krugersdorp campus was operational for
Slide 10: 2023 Summary Notes
2023 SUMMARY NOTES • Share issues and repurchases o Issued 3.2m STADIO Holdings (SDO) shares in April 2023 – settled obligation of Share Incentive Trust (SIT) o Repurchased and cancelled 3.2m (R14m) SDO shares by STADIO Holdings between July and December 2023 o Purchased 4.8m (R22m) SDO shares by SI
Slide 11: Total Student Numbers – Semester 1: June
TOTAL STUDENT NUMBERS SEMESTER 1: 30 JUNE 15% EXCLUDING TOTAL STUDENT NUMBERS CYCLICAL B2B 14% NEW STUDENT R % C AG NUMBER GROWTH 10 45000 42 874 40000 39 167 35 040 9% 35000 31 414 30000 28 280 26 334 25000 23 752 20000 15000 10000 5000 0 JUN 17 JUN 18 JUN 19 JUN 20 JUN 21 JUN 22 JUN 23 11
Slide 12: Total Student Numbers – Semester 2: December
TOTAL STUDENT NUMBERS SEMESTER 2: 31 DECEMBER 15% EXCLUDING TOTAL STUDENT NUMBERS CYCLICAL B2B 17% NEW STUDENT R C A G NUMBER GROWTH 9% 46 508 45000 42 463 40000 38 527 10% 35 271 35000 32 053 29 885 30000 27 584 25000 20000 15000 10000 5000 0 DEC 17 DEC 18 DEC 19 DEC 20 DEC 21 DEC 22 DEC 23 12
Slide 13: Student Numbers – Contact Learning
STUDENT NUMBERS STUDENT NUMBERS – CONTACT LEARNING CONTACT LEARNING SEMESTER 1: 30 JUNE SEMESTER 2: 31 DECEMBER 1% CAGR R 8000 8000 1% CAG 7000 7000 6 081 6 269 6 367 5 921 5 807 6 197 6000 5 662 5 942 5 819 5 402 6000 5 500 5 699 5000 4 755 4 833 3% 5000 2% 4000 4000 3000 3000 2000 2000 1000 1000 0
Slide 14: Student Numbers – Distance Learning
STUDENT NUMBERS DISTANCE LEARNING EXCLUDING CYCLICAL B2B SEMESTER 1: 30 JUNE SEMESTER 2: 31 DECEMBER 21% 19% 45000 45000 R R 9% CAG 40 689 40000 12% CAG 40000 37 067 36 764 35000 33 505 35000 32 585 30000 29 119 30000 28 904 25 145 11% 25 856 10% 24 385 25000 22 199 25000 22 751 20 932 20000 18 997
Slide 15: Revenue
REVENUE REVENUE (R millions) 1600 • 16% growth in tuition fee income 1 414 o growth in distance 1400 1 214 learning students 1200 1 098 • 30% increase in registration fees: 1000 933 o growth in new students 815 16% 800 714 633 618 600 548 468 409 400 200 297 0 2018 2019 2020 2021 2022 2023 JUNE (INT
Slide 16: EBITDA and Adjusted EBITDA
EBITDA AND ADJUSTED EBITDA (R millions) % Adjusted EBITDA margin 450 27% • Adjusted EBITDA in current and 29% 391 388 prior years - excludes fair value loss 400 adjustment, onerous lease settlement 28% 351 357 350 and tax penalties 309 310 • EBITDA margins reduced to 28% 27% 300 impacted by: 253 o i
Slide 17: EBITDA Movement
EBITDA MOVEMENT EBITDA MOVEMENT (R millions) 21% 11% 450 2% (2%) (11%) 1% 400 71 391 351 5 350 (5) 4 300 (35) 250 200 150 100 50 0 DEC 22 PRESCRIBED DEBT LOSS LOSS ONEROUS ORGANIC DEC 23 ALLOWANCE PY SAVING ALLOWANCE (ADDITIONAL) CONTRACT SETTLEMENT GROWTH % change 17
Slide 18: Margin Analysis
MARGIN ANALYSIS • Employee costs margin slight improvement from prior year • Operating expense margin maintained at 23% but influenced by: o further investment into systems and processes impacting costs o increased marketing and software licensing costs o additional costs of doing business in South
Slide 19: Trade Receivables & Loss Allowance
TRADE RECEIVABLES & LOSS ALLOWANCE LOSS ALLOWANCE AS % OF REVENUE • Increase in debtors book impacted by economic Loss allowance margin (%) - pre recoveries Loss allowance margin (%) - post recoveries environment and affordability 9.3% 9.0% • Consumer pressures impacting collections 8.6% 8.4% 7.8% 7
Slide 20: Trade Receivables & Loss Allowance
TRADE RECEIVABLES & LOSS ALLOWANCE • Risk is concentrated on debtors relating to prior academic years • Accounts for 14% of the book • Provide for 95% of prior year book (increased from 94%) • Provide for 42% of current year book which is an 8.4% loss allowance margin on current revenue • Historic b
Slide 21: Profit/(Loss) for Period
PROFIT/ (LOSS) FOR PERIOD • Strong 27% growth in PAT (R millions) • Positively impacted by: 300 o organic growth in EBITDA 250 R236m for the period 27% 200 R186m o interest income earned vs prior year interest expense 150 R137m positive impact of change in 100 R84m R77m o tax rate 50 o prior year im
Slide 22: EPS and HEPS
EPS AND EPS AND HEPSHEPS EPS (cps) HEPS (cps) 30 30 24.5 cps 24.5 cps 25 25 19.5 cps 20.0 cps 20 20 14.9 cps 26% 17 cps 15 23% 7.8 cps 8.5 cps 15 10 10 7.8 cps 8.5 cps 5 0 5 -5 0 -10 -5 -15 -10 (14.5) cps (8.5) cps -20 -15 DEC 18 DEC 19 DEC 20 DEC 21 DEC 22 DEC 23 DEC 18 DEC 19 DEC 20 DEC 21 DEC 22
Slide 23: Core Headline Earnings
CORE HEADLINE EARNINGS CORE HEADLINE EARNINGS (R millions) CORE HEPS (cps) 250 30 209 200 24,6 25 G R 176 A G R %C CA 20,7 24 24% 149 20 150 17,6 19% 19% 117 15 14,2 100 88 10,8 70 10 8.6 50 5 0 0 DEC 18 DEC 19 DEC 20 DEC 21 DEC 22 DEC 23 DEC 18 DEC 19 DEC 20 DEC 21 DEC 22 DEC 23 23
Slide 24: Core Headline Earnings Movement
CORE HEADLINE EARNINGS MOVEMENT 19% (R millions) 44 209 200 7 4 176 (4) 8 4% 2% 150 (2%) (26) 5% 25% (15%) 100 50 0 DEC 22 TAX RATE PRESCRIBED DEBT PY LOSS ALLOW ADDITIONAL LOSS INTEREST UNDERLYING DEC 23 CHANGE (PY&CY) UTILISATION ALLOW GROWTH 24
Slide 25: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION • Invested R59m on capital expenditure including: o solar projects (R5m) o software development (R8m) o curriculum development (R15m) o building projects (R4m) o recurring capex (R27m) • R130m of cash on hand • Gearing ratio 6% (0% excluding IFRS 16 lease liability) •
Slide 26: Cash Flow from Operations
CASH FLOW CASH FLOW FROM OPERATIONS FROM OPERATIONS ** EBITDA adjusted for fair value adjustment and onerous contract ** Adjusted for CA Connect in 2022 for R33 million (2021: R48 million) settlement in cash 26
Slide 27: Capital Invested
CAPITAL INVESTED CAPITAL INVESTED (RM) DEC 16 DEC 17 DEC 18 DECI9 | DEC20 DEC 21 DEC 22 | DEC23 Acquisitions “ 594 440 156 - 10 - 15 Infrastructure development and capital assets 73 272 26 168 98 181 87 44 Programme development 12 1 15 10 7 : 7 15 Total 85 877 481 334 105 191 94 4 Cumulative investm
Slide 28: Cash Utilisation
CASH UTILISATION (R millions) 450,0 256.0 400,0 (10.0) (14.5) (7.9) 350,0 (8.5) 3.2 (28.4) 300,0 (36.0) 130.0 250,0 (62.2) 200,0 148.2 150,0 (93.0) (15.0) 100,0 50,0 ,0 CASH FROM CURRICULUM BUILDING ISSUE OF LEASE ACQUISITIONS/NCI OPERATING DEVELOPMENT PROJECTS SHARES LIABILITIES ACTIVITIES JAN 23 T
Slide 29: 2024 Capital Expenditure: Capital Projects
2024 CAPITAL EXPENDITURE: CAPITAL PROJECTS 29
Slide 30: Dividend Declaration
DIVIDEND DECLARATION • Business generates strong cash flows • Aim to return 85%+ of free cash flow over time (having regard for growth capital projects) • Considers future investment in Durbanville, systems, processes and new qualifications • Final annual dividend of 10.0 cps declared (up from 8.9 c
Slide 31: 7 Year Financial Overview
7 YEAR FINANCIAL OVERVIEW DECEMBER | 2017 | 2018 | 2019 2020 | 2021 | 2022 Student numbers 12 976 29 885 32 053 35 271 38 527 42 463 46508 Revenue (Rm) 122 633 815 933 1098 1214 1414 EBITDA (Rm) 0.5 129 180 46 309 351 391 EBITDA (Rm) - normalised 0.5 129 196 253 310 357 388 Headline (loss)/earnings
Slide 32: Our Growth Strategy
CHRIS VORSTER CHIEF EXECUTIVE OFFICER OUR GROWTH STRATEGY STADIO
Slide 33: On track to reach 56 000 students before 2026
ON TRACK TO REACH 56 000 STUDENTS BEFORE 2026 6% annual growth required OCT 2017 2026 840 12 976 46 508 56 000 100 000+ STUDENTS STUDENTS STUDENTS STUDENTS * STUDENTS JAN DEC 2017 2023 TARGET: 80% DISTANCE LEARNING 20% CONTACT LEARNING * In accordance with the Prelisting Statement 33
Slide 34: Our Growth Strategy
OUR GROWTH STRATEGY ALSO EXPLORE OTHER GROWTH OPPORTUNITIES THROUGH EXCITING INTERNATIONAL AND LOCAL PARTNERSHIPS TAKING OPENING NEW EXPLORING ACCREDITING PROGRAMMES OPENING COMPREHENSIVE NEW NEW NEW TO NEW SITES CAMPUS & FACULTIES GEOGRAPHIC IN-DEMAND OF DELIVERY OPTIMISING & SCHOOLS REGIONS PROGRA
Slide 35: Higher education requires patience
XXXXXEDUCATION REQUIRES PATIENCE HIGHER • To date, we’ve invested in: > our processes and systems > new technologies that drive academic and operational excellence > new comprehensive campus and logistics centre • Operational efficiencies and scalability of above is not immediately evident • Investm
Slide 36: Programme Growth
PROGAMME GROWTH XXXXX • 87 qualifications and various programmes in development or awaiting accreditation • Analysis of current offerings to ensure viability of all programmes offered • Only new in-demand programmes introduced • 2023 introduced exciting programmes in Law, Education, Humanities, Acco
Slide 37: Patience is rewarded
XXXXX PATIENCE IS REWARDED To update images • Example of one of our new distance learning programmes introduced in 2023: > New students up 73% year to date > Total students up 225% year to date Easily scalable with minimal additional investment needed • Our contact learning growth strategy is workin
Slide 38: It's time to build Durbanville
ITS TIME TO BUILD DURBANVILLE XXXXX 38
Slide 39: The time is right
THE TIME IS RIGHT XXXXX To update images • Contact learning strategy is working • Previously, risks were too high – now have proof of concept in Centurion and believe the time is right • Bellville campus is reaching capacity and cannot accommodate the strategy of comprehensiveness in the long-term •
Slide 40: What does this mean?
WHAT DOES THIS MEAN? • To build in phases • Will start construction in 2024, subject to final municipal approvals • Phase 1 will cost R220 million • To be funded 50% by cash resources and 50% long-term debt • Will continue with current dividend payouts • Bellville campus expected to relocate to the
Slide 41: In summary the pieces are coming together for growth acceleration
IN SUMMARY THE PIECES ARE COMING TOGETHER FOR GROWTH ACCELERATION PROGRAMME MIX COMPREHENSIVENESS Exciting in-demand We do not want a campus in every city programmes across multiple and Durbanville campus will allow us to Schools and multiple modes at achieve 20 000 students for our our 3 institutio
Slide 42: ...and we are excited about the future
. . . AND WE ARE EXCITED ABOUT THE FUTURE 100 000 STUDENTS IS VERY ACHIEVABLE 2024 IS FULL OF OPPORTUNITIES WE ARE A NEW VISION IN HIGHER EDUCATION! 42
Slide 43: Questions and Answers
QUESTIONS AND ANSWERS 4 © Mo, STADIO