Stadio Holdings Pty Ltd. · JSE:SDO
Stadio Holdings Pty — H1 2024 Earnings Presentation
39 slides from Stadio Holdings Pty's earnings presentation, Aug 26, 2024
Slide 1: Interim Results Presentation for Six Months Ended 30 June 2024
INTERIM RESULTS PRESENTATION FOR SIX MONTHS ENDED 30 JUNE 2024 26 August 2024 1
Slide 2: Presentation Overview
PRESENTATION OVERVIEW 2024 UNPACKING OUR GROWTH QUESTIONS REFLECTIONS OUR INTERIM STORY & ANSWERS TO DATE FINANCIAL RESULTS 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: 2024 Reflections to Date
2024 REFLECTONS TO DATE • Solid results despite continuing tough economic times • Growth in students across distance learning and contact learning continues • Good progress made in debtors’ processes and collections • Exciting new programmes accredited – investing now for future growth • Continuous
Slide 5: 2024 Reflections to Date Continued
2024 REFLECTONS TO DATE CONTINUED • The need for higher education in South Africa continues to rise • Since 2008: - Matric degree passes (NSC & IEB) have increased annually by 11% - 1st Year degree intakes at public universities increased by 0.8% pa - Theoretical under supply has therefore grown by
Slide 6: Solid 2024 Interim Financial Results
SOLID 2024 INTERIM FINANCIAL RESULTS 47 024 R826m 29% R144m Higher Education Semester 1 takes Student Profit patience Numbers Revenue EBITDA after tax up up Margin up 16% flat 10% 14% JUN 2023: 42 874 JUN 2023: R714m JUN 2023: 29% JUN 2023: R127m GROWTH { 16.3cps 16.2cps R307m 12.6% Core Headline Ca
Slide 7: Unpacking Our Interim Financial Results
UNPACKING OUR INTERIM FINANCIAL RESULTS ISHAK KULA CHIEF FINANCIAL OFFICER 7
Slide 8: Summary 2024 So Far
SUMMARY 2024 SO FAR • We produced solid results despite a touch economic environment, with revenue growth of 16% to R826 million, underpinned by good overall student growth of 10% • The financial performance translated into good cash generation for the period, with a 20% increase in cash generated b
Slide 9: Summary 2024 So Far (Continued)
SUMMARY 2024 SO FAR (CONTINUED) • Transactions with Milpark Education non-controlling interest o Acquired an additional 0.7% effective interest for R5.8 million in January 2024 o During the period, paid for the R117.5 million equity interest acquired from Brimstone Corporation in December 2023 Milpa
Slide 10: Total Student Numbers
TOTAL STUDENT NUMBERS SEMESTER 1: 30 JUNE 17 EXCLUDING 10% % CYCLICAL B2B NEW 50000 47 024 14 CONTACT LEARNING 42 874 % STUDENT NUMBER 39 167 GROWTH 40000 35 040 GROWTH 31 414 30000 28 280 √ 26 334 20000 10% CAGR 10000 JUN 24 JUN 23 0 to JUN 18 JUN 19 JUN 20 JUN 21 JUN 22 JUN 23 JUN 24 JUN 24 JUN 18
Slide 11: Student Numbers Contact Learning
9% STUDENT NUMBERS CONTACT LEARNING 3% CAGR GROWTH JUN 24 • Contact learning growth impacted by: o Site extensions and growth in new qualifications coming through and contributing to growth, o Poor enrolments in prior years starting to work its way out of the system, but impacting 6- year CAGR JUN 2
Slide 12: Student Numbers Distance Learning
10% STUDENT NUMBERS 12% DISTANCE LEARNING GROWTH CAGR JUN 24 • Distance learning growth impacted by: o 17% growth excluding legacy business-to-business (B2B) Milpark Education business offerings o Legacy business-to-business (B2B) Milpark Education business offerings JUN 23 JUN 18 o Site extensions
Slide 13: Revenue
REVENUE • 16% growth in tuition fee income, 16% made up as follows - (R millions) o 18% revenue growth on contact learning to R262 million 900 826 o 16% revenue growth on distance 800 714 learning to R558 million 700 GROWTH 618 600 548 468 √ 500 409 400 297 300 19% CAGR JUN 24 200 100 JUN 23 0 to JU
Slide 14: EBITDA and Adjusted EBITDA
EBITDA AND ADJUSTED EBITDA (R millions) (R millions) 29% 29% 29% Adjusted EBITDA margin 250 236 236 31% 210 210 200 29% 192 192 161 161 26% 150 • No significant difference between 26% 120 EBITDA and adjusted EBITDA for the 103 105 100 20% period • EBITDA margins remained robust at 60 60 46 29% and i
Slide 15: Margin Analysis
MARGIN ANALYSIS • Employee costs margin in line with prior year despite continued • Loss allowance margin slight increase from prior period but down on the investment for future growth prior full year 9%. • Operating expense margin maintained at 23% but influenced by strategic investments in: o Mark
Slide 16: Trade Receivable & Loss Allowance
TRADE RECEIVABLE & LOSS ALLOWANCE • New collection processes introduced starting to yield benefits. Operational changes introduced in Semester 2 will also prevent students from registering if account balances are not brought up to date • The loss allowance margin of 8.3% (June 2023: 7.7%) is slightl
Slide 17: Trade Receivable & Loss Allowance
TRADE RECEIVABLE & LOSS ALLOWANCE • Good collections on current period debtors resulted in debtors for the current period only growing by 5% when compared to the comparative period growth of 23% • Coverage on debtors relating to the prior year at 84%, supported by timing differences on settlement of
Slide 18: Profit/(Loss) for the Period
PROFIT/(LOSS) FOR THE PERIOD (R millions) (R millions) 14% • Strong 14% growth in Profit after tax 200 • Impacted by: o Organic growth in EBITDA for the 150 144 127 period 105 o Reduced depreciation and GROWTH 100 85 amortization for the period 52 o Continued investment for future 50 36 growth (incr
Slide 19: EPS & HEPS
20% 20% EPS & HEPS 29% GROWTH GROWTH CAGR JUN 24 HEPS JUN 23 JUN 23 to JUN to 23 JUN 24 To JUNJUN 24 24 JUN 18 20 20 16.3 16.2 15 13.6 15 13.5 11.2 11.1 9.6 9.4 10 10 5.1 5.1 5 3.6 5 3.5 0 0 (1.5) (5) (5) (10) (8.7) (10) JUN 18 JUN 19 JUN 20 JUN 21 JUN 22 JUN 23 JUN 24 JUN 18 JUN 19 JUN 20 JUN 21 JU
Slide 20: Core Headline Earnings
19% 19% CORE HEADLINE EARNINGS 26% GROWTH GROWTH CAGR JUN 24 Core HEPS JUN 23 JUN 23 to to JUN 24 JUN 24 JUN 18 160 20 140 137 16.2 120 116 15 13.6 100 96 11.3 82 80 9.7 10 60 57 6.9 46 5.7 40 32 5 4.0 20 0 0 JUN 18 JUN 19 JUN 20 JUN 21 JUN 22 JUN 23 JUN 24 JUN 18 JUN 19 JUN 20 JUN 21 JUN 22 JUN 23
Slide 21: Core Headline Earnings Movement
CORE HEADLINE EARNINGS MOVEMENT (R millions) (R millions) % change 24% (8%) (2%) 5% 19% • Core headline earnings growth of 19%, made up as follows: • Organic growth due to underlying institutional growth of 16% • Net impact of additional Milpark interest acquired Organic growth on prior year - 16% N
Slide 22: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION DEC 23 JUN 23 JUN 24 SUMMARISED STATEMENT OF FINANCIAL POSITION R millions R millions R millions Total assets 2 316 2 437 2 400 Property, plant and equipment 872 874 891 • Invested R49m on capital Right-of-use assets 65 76 67 expenditure including: Intangibles (incl G
Slide 23: Cash Flow from Operations
CASH FLOW FROM OPERATIONS (R millions) CASH FLOW FROM OPERATIONS (R millions) JUN 19 JUN 20 JUN 21 JUN 22 JUN 23 JUN 24 Net cash flow from operations (before working capital) 108 124 168 198 217 231 Working capital changes 58 89 51 52 38 76 Net cash generated from operations 166 213 219 250 255 307
Slide 24: Capital Invested
CAPITAL INVESTED (R millions) CAPITAL INVESTED (R millions) DEC 19 DEC 20 DEC 21 DEC 22 DEC 23 JUN 24 Acquisitions 156 - 10 - 15 123* Infrastructure development and capital assets 168 98 181 87 44 39 Programme development 10 7 - 7 15 10 Total 334 105 191 94 74 172 Cumulative investment 1 777 1 882 2
Slide 25: Cash Utilisation
CASH UTILISATION (R millions) G G 25
Slide 26: 2024 Capital Expenditure: Capital Projects
2024 CAPITAL EXPENDITURE: CAPITAL PROJECTS 2024 CAPITAL EXPENDITURE (R millions) 2024 Curriculum and intangible development 36 Solar projects 13 Durbanville property 33 Milpark acquisitions 6 Existing campuses 38 Total Capital Projects 126 26
Slide 27: 7 Year Financial Overview
7 YEAR FINANCIAL OVERVIEW (R millions) JUN 18 JUN 19 JUN 20 JUN 21 JUN 22 JUN 23 JUN 24 Student numbers 26 334 28 280 31 414 35 040 39 167 42 874 47 024 Revenue (R millions) 297 409 468 548 617 714 826 EBITDA (R millions) 60 103 46 161 192 210 236 EBITDA (R millions)- normalised 60 105 120 161 192 2
Slide 28: Our Growth Story
OUR GROWTH STORY CHRIS VORSTER CHIEF EXECUTIVE OFFICER 28
Slide 29: Pause and reflect on what has been achieved in a short time
IT IS IMPORTANT TO PAUSE AND REFLECT ON WHAT HAS BEEN ACHIEVED IN A SHORT TIME 29
Slide 30: Then vs Now
THEN VS NOW 30
Slide 31: Then vs Now
THEN NOW SHARE PRICE • 75c low on 24 March 2020 • 599c in August 2024 (52 week high) • 31 414 (June 2020) CL student numbers negatively impacted by COVID (lagged • 50 473 with S2 registrations ongoing STUDENT NUMBERS effect impacts returning students & felt primarily in 2021 & 2022): Return to conta
Slide 32: We've Reached 50 000 Students in Time
32 32 WE’VE REACHED 50 000 STUDENTS IN TIME 2026** 100 000 STUDENTS 56 000 5% STUDENTS AUG 2024* DEC 2023 50 435 DEC 2017 46 508 STUDENTS STUDENTS ANNUAL GROWTH JAN 2017 12 976 REQUIRED STUDENTS 840 STUDENTS * Semester 2 registrations ongoing ** as per Prelisting Statement 32
Slide 33: Our Growth Strategy Is Working
OUR GROWTH EXPLORING OTHER GROWTH OPPORTUNITIES STRATEGY THROUGH EXCITING INTERNATIONAL AND LOCAL PARTNERSHIPS IS WORKING OPENING NEW EXPLORING TAKING COMPREHENSIVE OPENING NEW ACCREDITING PROGRAMMES CAMPUS & NEW GEOGRAPHIC REGIONS NEW TO NEW SITES OPTIMISING FACULTIES (not current focus) IN-DEMAND
Slide 34: Quality Remains Our Focus and Can Be Our Differentiator
Attracting top-academic individuals QUALITY Creating campuses that are conducive REMAINS OUR to higher education in a new world FOCUS AND Embracing technology to support CAN BE OUR the quality of our offering DIFFERENTIATOR Invite industry into our institutions and into the STADIO Community 34
Slide 35: Programme Breadth
PROGRAMME BREADTH • 96 qualifications accredited across multiple Schools • 52 programmes in development or awaiting accreditation • Currently expect to offer 11 new programmes across IT, Law, Risk and Management in 2025 • We are confident that the breadth of our offerings supports our comprehensive
Slide 36: Durbanville Campus
DURBANVILLE CAMPUS • Continued increase in contact learning student numbers makes us excited for Durbanville • As a reminder: - Will construct in phases (commencing September 2024) - Phase 1 will cost R220 million - funded 50% by cash resources, 50% long-term debt • STADIO Bellville campus is reachi
Slide 37: The Wheels of Higher Education Turn Slowly ...
THE WHEELS OF HIGHER EDUCATION TURN SLOWLY ... 37
Slide 38: ... But the Future Opportunities Created Are Significant
… BUT THE FUTURE . . . BUT THE OPPORTUNITIES OPPORTUNITES CREATED, AND CREATED, AND THE IMPACT THE POSITIVE IMPACT FELT, FELT IN THE ARE SIGNIFICANT!FUTURE, IS BIG! 38
Slide 39: Questions & Answers
QUESTIONS & ANSWERS STADIO 2 [w [Ww] s |