Stadio Holdings Pty Ltd. · JSE:SDO
Stadio Holdings Pty — Investor Presentation (September 2017)
51 slides from Stadio Holdings Pty's investor presentation, September 2017
Slide 1: Listing presentation
Listing presentation September 2017
Slide 2: Agenda
AGENDA • Purpose • Rationale for the unbundling and listing • Industry background • Business rationale of STADIO • Overview of the STADIO group • Key strengths and competitive advantages • Financial information and prospects • Capital raising • Broad-based black economic empowerment strategy • Next
Slide 3: Purpose of communicating to the market
P U R P O S E O F C O M M U N I C AT I N G TO T H E M A R K E T Provide shareholders with relevant information relating to the STADIO Group and the terms pertaining to the unbundling and listing. Communicate the strategy and the objectives of the STADIO Group. Set out the salient details of the list
Slide 4: Rationale for unbundling
Rationale R AT I O N A L E F O R U N B U N D L I N G Separate and focussed management teams to develop operations and pursue growth opportunities in separate distinct markets (i.e. “schools” and higher education) that both offer attractive room for growth. Thus, the ultimate rationale for the unbund
Slide 5: With STADIO, we want them to continue the race
Rationale With the establishment of Curro, we created a learning track, on which learners could learn according to their own attitudes, aptitudes and talents: almost like an athlete running in their own lane … With STADIO, we want them to continue the race. 5
Slide 6: Vision: create a Multiversity
Rationale VISION The vision is to create a “Multiversity”, which will consist of various registered higher education institutions, with their own brands and each offering their own qualifications… aligned with the needs of companies and industries. 6
Slide 7: Industry background
I N D U S T RY BACKGROUND
Slide 8: Education is the civil rights struggle of our generation
Industry background BACKGROUND Education is the civil rights struggle of our generation requiring the biggest expansion of educational opportunity in modern history. UN Special Envoy for Global Education Gordon Brown, UN Education Commission 8
Slide 9: We believe
Industry background WE BELIEVE … In the development of necessary skills and intellectual capital that will promote economic growth and development. Access to education plays a vital role in promoting equality, democracy and ultimately social justice …
Slide 10: Global industry trends
Industry background G L O B A L I N D U S T RY T R E N D S GLOBALLY The number of students enrolled at higher education 213,7 million institutions more than doubled Source: UNESCO 2015 99,7 million between 2000 and 2015 … WHY ? Growing population Increasing number of school leavers qualifying to Inc
Slide 11: SA: Total higher education market
Industry background S A : TO TA L H I G H E R E D U C AT I O N M A R K E T In South Africa: 2015 26 PUBLIC 985 212 higher education institutions 87% 124 PRIVATE 1 132 422 147 210 higher education students 13% institutions enrolled Source: DHET 2017 STADIO believes student enrolments should be ~ 2 00
Slide 12: SA and global: private participation
Industry background S A A N D G L O B A L : P R I VAT E PA R T I C I PAT I O N 90% 84% 80% 71% 70% Percentage of students 60% at private higher 50% education institutions. 40% 31% 30% 20% 13% 10% 0% SA (2015) OECD (2013) Brazil (2012) Chile (2013) SA students 147 210 12
Slide 13: SA: Growth in student enrolments
Industry background SA: GROWTH IN STUDENT ENROLMENTS In South Africa 2000 2015 Increased demand for higher education with the number of students enrolled in higher 103% 1 132 422 education from 2000 to 2015. 557 000 First-time student enrolments increased by 75% at PUBLIC higher institutions – the b
Slide 14: Growth: increase in school leavers
Industry background G R O W T H : I N C R E A S E I N S C H O O L L E AV E R S Number of school leavers in South Africa qualifying for post-school education vs first year enrolments in public institutions. ~60% cannot be accommodated 500 000 450 000 +32% 442 672 at public higher education institutio
Slide 15: Growth: increase in participation rates
Industry background G R O W T H : I N C R E A S E I N PA R T I C I PAT I O N R AT E S The National Development Plan However, with the global Gross (NDP) has set a target to increase Tertiary Enrolment Rate (GTER) at higher education participation to: 34% in 2014, we estimate the number of participan
Slide 16: Main challenges in SA higher education
Industry background M A I N C H A L L E N G E S I N S A H I G H E R E D U C AT I O N Future growth of student limited infrastructure enrolments in South African public universities is constrained by: funding • The enrolment cap that is applied to public higher education institutions by the DHET. • T
Slide 17: Further challenges
Industry background FURTHER CHALLENGES High drop out rates, low graduation rates • 55% of students never graduate from public higher and long time to education institutions. graduate. • Due to the enrolment cap, students who are academically Limited articulation cancelled or drop out have limited op
Slide 18: The role of private institutions
Industry background T H E R O L E O F P R I VAT E I N S T I T U T I O N S The private sector can assist with: Widening access to higher education by inviting students to enrol at private higher education institutions, taking PRESSURE OFF THE STATE. Reducing longer study periods that place a burden o
Slide 19: Business rationale of STADIO
BUSINESS R AT I O N A L E O F S TA D I O
Slide 20: Business rationale
Business rationale B U S I N E S S R AT I O N A L E • The current unemployment rate in South Africa remains critically high at 27.7%. • Education and training remains vitally important to reduce unemployment and promote economic growth. • Research further indicates that in South Africa, the graduate
Slide 21: A meaningful role by widening access
Business rationale A MEANINGFUL ROLE BY … 1 Widening access to higher education Investing capital to create capacity to accommodate the increasing demand for higher education. Enhancing the use of distance learning, which is both more affordable and will increase the breadth of access. Providing acc
Slide 22: A meaningful role by offering innovative curricula
Business rationale A MEANINGFUL ROLE BY … Offering innovative curricula and 2 programmes that: • Are relevant • Relate to the world of work and the needs of society • Will provide students with a real chance of finding or creating employment • Will ensure that STADIO graduates have a fundamental und
Slide 23: Focussing on graduate success and throughput
Business rationale A MEANINGFUL ROLE BY … 3 Focussing on graduate success and throughput • STADIO believes that, having registered a student, the higher education institution must take all reasonable and responsible steps to facilitate the success of the student, including the implementation of the
Slide 24: Sustainable financial support for students
Business rationale B U S I N E S S R AT I O N A L E Sustainable financial support for students • Several models are being investigated – Estimated at approximately STADIO will use academic merit and “needs” bursaries and scholarships. of revenue per annum. 1% - 3% • Engage with corporates to use the
Slide 25: A Multiversity
Business rationale A M U LT I V E R S I T Y As a “Multiversity”, STADIO will own various higher education institutions, which will retain their own brands, campuses and management teams, but will share a common ethos and benefit from the synergies, infrastructure and shared services arising from the
Slide 26: At listing date
Business rationale AT L I S T I N G D AT E STADIO will have: • 12 979 registered students • 3 registered higher education institutions • 3 brands (Embury, AFDA, SBS) • 5 faculties (Education, Commerce and Business, Law, Arts, IT) • 28 accredited programmes – ranging from higher certificates and dipl
Slide 27: Growth strategy
Business rationale G R O W T H S T R AT E G Y • To focus on the acquisition of reputable higher education institutions aligned with STADIO’s multiversity strategy and ethos. • To optimise utilisation at STADIO’s newly constructed facilities (Musgrave, Montana and Waterfall). • Promoting the growth o
Slide 28: Overview of the STADIO Group
O V E RV I E W O F T H E S TA D I O GROUP
Slide 29: Current business landscape
The STADIO Group CURRENT BUSINESS LANDSCAPE STADIO HOLDINGS LIMITED STADIO INVESTMENT HOLDINGS (PTY) LTD 100% 74% 100% • Johannesburg 3 • Musgrave (KZN) 2 • Krugersdorp 5 • Cape Town • Waterfall (Midrand) • Windhoek • Durban SITES • Montana (Pretoria) SITES SITES • Port Elizabeth • Gaborone 29
Slide 30: Current offering
The STADIO Group CURRENT OFFERING Empowering the nation by widening access to higher education for all qualifying school leavers and other adults … STADIO HOLDINGS LIMITED College of College of College of College of College of HEALTH College of the COMMERCIAL SCIENCE AND EDUCATION CREATIVE AND MEDIC
Slide 31: Key strengths and competitive advantages
KEY STRENGTHS AND COMPETITIVE A D VA N TA G E S
Slide 32: Strengths and competitive advantages
Strengths and advantages S T R E N G T H S A N D C O M P E T I T I V E A D VA N TA G E S A qualified and highly-skilled leadership team with expertise in education, academics, finance and business. Quality, well-established niche-market brands that are acknowledged leaders in their respective fields
Slide 33: Organogram – head office
Strengths and advantages ORGANOGRAM – HEAD OFFICE BOARD COMPOSITION Dr RH Stumpf Dr CR van der Merwe Ms S Totaram Mrs R Kisten # Chairperson# CEO* CFO* Mr A Mellet Dr D Singh Mr PN de Waal Mr KS Sithole# Alternate director for Chief academic officer* PSG Alpha CEO PN de Waal *Executive #Independent
Slide 34: Financial information and prospects
FINANCIAL I N F O R M AT I O N AND PROSPECTS
Slide 35: STADIO at listing
Financial information and prospects S TA D I O AT L I S T I N G 2017 2017 Mode of Ave fees Accredited Pipeline Student # Capacity delivery (R’000) Faculties programmes programmes Sites Contact and Embury 1 073 6 100 39 1 8 17 3 distance AFDA 1 950 4 000 Contact 79 3 9 3 5 Southern Business 9 956 **
Slide 36: Pro forma (2016): key assumptions
Financial information and prospects PRO FORMA(2016): KEY ASSUMPTIONS • Pro forma financial information based on Summary of acquisitions included in pro forma financial 2016 results information • NO CAPITAL RAISING INCLUDED (i.e. Total from Rights Offer and B-BBEE transaction). Value Shares • Cash se
Slide 37: Pro forma financials (2016)
Financial information and prospects PRO FORMA FINANCIALS(2016) Pro forma – REVENUE Pro forma – EBITDA EBITDA margin 39% 33% 31% R111m R297m R43m R98m (R7m) R91m 32% R138m R44m 23% R48m R11m Embury AFDA SBS Total Embury AFDA SBS Total before Acquisition Total STADIO acquisition and and listing STADIO
Slide 38: Pro forma financials (2016)
Financial information and prospects PRO FORMA FINANCIALS (2016) Pro forma – HEADLINE EARNINGS HEPS (cps) R29m 11.3 (R11m) R55m (R7m) R29m 3.8 (R30m) R8m R18m Embury AFDA SBS Consolidated Total before Acquisition and Finance Total STADIO entries acquisition, listing listing costs costs pro forma and
Slide 39: Pro forma financials (2016)
Financial information and prospects PRO FORMA FINANCIALS (2016) Pro forma – NAV NAV (cps) 120.2 118.8 R413m R29m (R11m) (R7m) R55m (R7m) R579m R572m R29m (R30m) R31m R108m R27m R8m Embury AFDA SBS Consolidation Total before Acquisition and Total STADIO and restructure acquisition and listing costs p
Slide 40: Prospects
Financial information and prospects PROSPECTS GROWING STUDENT NUMBERS OVER CONTACT AND DISTANCE LEARNING MODES OF DELIVERY AIM (2026)* @ 100 000 – STADIO will only be ~5% of 12 979 35 000 56 000 100 000+ total higher students students students students education market PAT ~R500 million Vision (long
Slide 41: Financial forecast (2017–2019)
Financial information and FINANCIAL FORECAST (2017 – 2019) prospects KEY ASSUMPTIONS • Potential new acquisitions are not included in the • Embury will open 2 new campuses in Montana forecast. and Waterfall in 2018. These campuses are • AFDA acquired 1 September 2017 – R120m settled by initially los
Slide 42: Forecast financial information
Financial information and prospects F O R E C A S T F I N A N C I A L I N F O R M AT I O N STUDENT NUMBERS REVENUE 18 000 16 577 600 R536m 16 000 14 339 500 14 000 12 979 R417m 12 000 400 10 000 300 8 000 6 000 200 R142m 4 000 100 R48m 2 000 840 0 - 2016 2017 2018 2019 2016 2017 2018 2019 EBITDA 21%
Slide 43: Capital raising
C A P I TA L RAISING
Slide 44: Capital raising
Capital raising C A P I TA L R A I S I N G STADIO will, following the listing raise capital by way of a Rights Offer and a B-BBEE Transaction. Capital raising Value PSG Group has confirmed Rights Offer R640m that it will follow its rights and underwrite the Rights B-BBEE Transaction R200m Offer Tota
Slide 45: Capital raising
Capital raising C A P I TA L R A I S I N G The capital raised in terms of the Rights Offer and B-BBEE will be utilised as follows: Capital raising Value AFDA and SBS Acquisition R280m To be invested Potential acquisitions (in negotiations) R430m in 6-12 months Infrastructure Development, finance cos
Slide 46: Broad-based black economic empowerment strategy
BROAD-BASED BLACK ECONOMIC EMPOWERMENT S T R AT E G Y
Slide 47: B-BBEE transaction
B-BBEE Transaction B-BBEE TRANSACTION In support of social and economic transformation in South Africa, STADIO intends to implement the B-BBEE Transaction shortly after listing and concurrently with the Rights Offer. The B-BBEE Transaction will be by way of a private placement of shares to black peo
Slide 48: B-BBEE transaction
B-BBEE Transaction B-BBEE TRANSACTION • Pricing of B-BBEE Transaction – LOWER of 30 day VWAP post listing less 20% discount (subject to a minimum floor price of R2.50 per Placement Share); or R2.96 per share • Will require a BEE lock-in of 7 years 48
Slide 49: BEE transaction continued
B-BBEE Transaction BEE TRANSACTION CONTINUED • Individuals transaction Internal – reserved for STADIO Group black staff – minimum subscription of R20 000 External – black individuals – minimum subscription of R50 000 Will fill STADIO black staff first, then individuals from the bottom up on a pro-ra
Slide 50: Timeline
TIMELINE 15 September 3 October +-16 October +-27 October +- 30 October +- 23 2017 2017 2017 2017 2017 November 2017 Curro STADIO listed Rights Offer Rights Offer B-BBEE Offer B-BBEE Offer unbundling on JSE opens closes opens Closes announcement Rights Offer Pre-listing announced statement issued 50
Slide 51: Thank you
THANK YOU
STADIO Holdings — Investor Presentation (September 2017) on 6ix