Stadio Holdings Pty Ltd. · JSE:SDO
Stadio Holdings Pty — FY2022 Earnings Presentation
49 slides from Stadio Holdings Pty's earnings presentation, Mar 15, 2023
Slide 1: 2022 Annual Results Presentation
2022 Annual Results Presentation 15 March 2023 1
Slide 2: Presentation Overview
PRESENTATION OVERVIEW SETTING 2022 ANNUAL OUR QUESTIONS THE FINANCIAL INVESTMENT AND SCENE RESULTS CASE 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: An interesting year for our students
AN INTERESTING YEAR FOR OUR STUDENTS • 2022 = first year that operations returned to normal since COVID-19 • Students and staff returned to campus • Normality returned to assessments and within classrooms • Students took time to readjust to venue-based exams, venue-based assessments and travel • Stu
Slide 5: Responsible management decisions
RESPONSIBLE MANAGEMENT DECISIONS • Management made difficult decision to disallow students from continuing studies in semester 2 where certain level of tuition fees remained outstanding • Continued to build on the strong foundations laid in previous years and support students where possible • A soli
Slide 6: Meet the team driving the results
MR ANDREW HORSFALL MILLPARK CEO MEET THE TEAM DRIVING THE RESULTS DR DIVYA SINGH MR JOHAN HUMAN MS SAMARA TOTARAM. CHIEF ACADEMIC OFFICER CHIEF OPERATING OFFICER CHIEF FINANCIAL OFFICER MS CHARISKA KNOETZE PROF PATRICK BEAN STADIO: EXECUTIVE HEAD SSTADIO: EXECUTIVE HEAD DISTANCE LEARNING CONTACT LEA
Slide 7: Solid financial results
SOLID FINANCIAL RESULTS Semester 1 Semester 2 Revenue EBITDA Student Numbers Student Numbers up 11% margin up up 11% up 8% to to to to R1.2 bn 29% 38 348 41 296 2021: 34 494 2021: 38 262 2021: R1.1 bn 2021: 28% Profit after Tax EPS Core Headline Core HEPS up 36% up 31% Earnings up 18% to to up 18% t
Slide 8: Starting to return cash to shareholders
88 STARTING TO RETURN CASH TO SHAREHOLDERS Dividend Return on per share Equity up 89% continues to to grow 8.9 cps 10% 2021: 4.7 cps 2021: 9% Work towards 85% free Moving in the right cashflow direction (currently ~44%) (0% in 2017) 8
Slide 9: 2022 Annual Financial Results Overview
2022 ANNUAL FINANCIAL RESULTS OVERVIEW MS SAMARA TOTARAM CHIEF FINANCIAL OFFICER
Slide 10: 2022 Results Notes
2022 RESULTS NOTES • STADIO Centurion Phase II completed– R 23m • Commenced with expansion of STADIO Distance Learning operational center in Krugersdorp – R 34m spent to date • Disposed of STADIO Montana – R 52 m in cash • CA Connect early settlement agreement settled in full • Final cash settled va
Slide 11: 2022 Results Notes
2022 RESULTS NOTES • Milpark onerous contract • R5.5m additional costs in 2022 related to Gauteng Lease • Change in tax rate from 28% to 27% • Negative impact on earnings due to net deferred tax asset position • Repurchase of shares by share incentive trust • 4m shares repurchased (R15m) • 3.8m reis
Slide 12: Total student numbers (like-for-like)
TOTAL STUDENT NUMBERS (LIKE-FOR-LIKE) SEMESTER 1: 30 JUNE SEMESTER 2: 31 DECEMBER 14% 15% 45,000 45,000 41 296 40,000 38 348 40,000 38 262 34 494 35 031 35,000 35,000 31 869 31 053 29 885 30,000 28 280 11% 30,000 27 584 8% 26 334 25,000 23 752 25,000 20,000 20,000 15,000 15,000 10,000 10,000 5,000 5
Slide 13: Student numbers - contact learning
STUDENT NUMBERS - CONTACT LEARNING SEMESTER 1: 30 JUNE SEMESTER 2: 31 DECEMBER 8,000 8,000 7,000 7,000 6 367 6 197 6 269 5 942 6 081 5 921 6,000 5 699 6,000 5 662 5 500 5 402 5,000 4 833 5,000 4 755 4,000 4,000 3,000 (4%) 3,000 (4%) 2,000 2,000 1,000 1,000 0 0 JUN 17 JUN 18 JUN 19 JUN 20 JUN 21 JUN
Slide 14: Student numbers - distance learning
STUDENT NUMBERS - DISTANCE LEARNING SEMESTER 1: 30 JUNE SEMESTER 2: 31 DECEMBER 39,000 17% 39,000 35 597 36,000 18% 36,000 32 686 32 320 33,000 33,000 30,000 28 573 30,000 28 664 27,000 27,000 25 672 24 784 24 385 10% 14% 22 751 24,000 22 199 24,000 20 932 21,000 18 997 21,000 18,000 18,000 15,000 1
Slide 15: Revenue
REVENUE (R millions) • 11% growth in revenue 1400 • S2 lower contribution due to timing of B2B business R1 214m 1200 • Mix change R1 098m • Bigger growth in DL 11% 1000 students at lower price point R933m • Contraction in CL revenue R815m contribution due to lower 800 student numbers R633m R617m • 1
Slide 16: EBITDA movement
EBITDA MOVEMENT (R millions) 19% 13% (2%) (2%) (2%) R60m R351m R309m (R7m) (R6m) (R5m) 16
Slide 17: Impact of COVID-19 & other savings/(costs)
IMPACT OF COVID-19 & OTHER SAVINGS/(COSTS) • 2021 still operating of normal and hybrid COVID-19 model • 2022 return to normal operations impacting costs • New centurion campus with additional costs • Milpark once – off onerous contract also impacting costs 17
Slide 18: EBITDA and adjusted EBITDA
EBITDA AND ADJUSTED EBITDA % Adjusted EBITDA margin 28% 29% • Adjusted EBITDA excludes (R millions) R309m R310m R351m R357m onerous contract costs of 300 27% R5.5m in December 2022 (December 2021: excludes fair R253m 250 24% value loss on CA Connect acquisition) 200 R196m • 15% growth in adjusted R1
Slide 19: Trade receivables and loss allowance
TRADE RECEIVABLES AND LOSS ALLOWANCE • Increase in debtors book impacted by economic environment and affordability • Also impacted by change in approach to collecting debtors • More students offered terms over which to pay • More students allowed to register with arrear balances (still Loss allowanc
Slide 20: Debtors analysis
DEBTORS ANALYSIS • Risk is concentrated on 2022 academic revenue • Largely provide in full for debtors outstanding from previous academic year (unless specifically assured of collection) • Historic bad debt write off rate +- 7% • Have overprovided in past 2 years i.e 8% loss rate (due to uncertainti
Slide 21: Impairment/de-recognition of assets
IMPAIRMENT/DE-RECOGNITION OF ASSETS • R2.8m impairment of Right of use asset (RoUA) • Following on from strategic shift in Milpark business to focus on digital enhanced distance learning only • Vacated the premises in 2022 • R3.7m de-recognition of curriculum intangibles: • Programmes evaluated annu
Slide 22: Profit/(loss) for period
PROFIT/ (LOSS) FOR PERIOD (R millions) • Good organic growth in 2022 200 R186m • Impacted by additional costs • Return to normal 150 R137m operations post COVID-19 100 R77m R84m • Onerous contract • New STADIO 50 Centurion campus • 2022 impacted by 0 impairments (R6.5m) (2021: impairments of R30m) (
Slide 23: EPS and HEPS
EPS AND HEPS EPS (Cents) HEPS (Cents) 19.5cps 20 14.9 cps 25 15 20.0cps 20 17.0cps 10 7.8 cps 8.5 cps 15 5 10 7.8 cps 8.5 cps (14.5) cps 0 5 (8.5) cps 0 -5 -5 -10 -10 -15 -15 DEC 18 DEC 19 DEC 20 DEC 21 DEC 22 DEC 18 DEC 19 DEC 20 DEC 21 DEC 22 IMPACTED BY: • Large increase in EPS and HEPS driven by
Slide 24: Core headline earnings
CORE HEADLINE EARNINGS CORE HEADLINE EARNINGS (R millions) CORE HEPS (cps) 180 R176m 20.7cps 160 R149m 20 17.6 cps 18 140 18 % 16 18 % R117m 14.2 cps 120 14 100 R88m 12 10.8 cps 80 R70m 10 8.6 cps 60 8 6 40 4 20 2 0 0 DEC 18 DEC 19 DEC 20 DEC 21 DEC 22 DEC 18 DEC 19 DEC 20 DEC 21 DEC 22 24
Slide 25: Core headline earnings movement
CORE HEADLINE EARNINGS MOVEMENT (R millions) 30% 18% R44m R176m (3%) (1%) (4%) (4%) R149m (R4m) (R2m) (R5m) (R6m) 25
Slide 26: Statement of financial position
STATEMENT OF FINANCIAL POSITION • Invested R93m on capital expenditure • Impairments of R6.5m • Settled R33m of contingent consideration liability • Disposed of STADIO Montana for R52m • Repaid all outstanding debt (R15m) • Refinanced debt facility – reduced to R100m (option to increase by further R
Slide 27: Cash flow generation
CASH FLOW GENERATION *EBITDA adjusted for fair value adjustment and onerous contract * *Adjusted for CAC settlement in cash R33m (2021 : R48m) 27
Slide 28: Cash utilisation
CASH UTILISATION (R millions) *Excludes cash outflow related to CA Connect settlement **Includes cash outflow related to CA Connect settlement R263m (R33m) (R23m) (R34m) R52m (R32m) (R36m) (R15m) (R59m) (R8m) R7m R148m R66m 28
Slide 29: Capital invested
CAPITAL INVESTED CAPITAL INVESTED (RM) DEC 16 | DEC 17 | DEC 18 | DEC 19 | DEC 20| DEC 21| DEC 22 Acquisitions - 594 440 156 - 10 - Infrastructure development and capital assets 73 272 26 168 98 181 87 Programme development 12 "1 15 10 7 - 7 Total 85 877 481 334 105 191 93 Cumulative investment 85 9
Slide 30: 2023 Capital expenditure: growth projects
2023 CAPITAL EXPENDITURE: GROWTH PROJECTS 30
Slide 31: Dividend declaration
DIVIDEND DECLARATION • Maiden dividend of 4.7 cps declared in 2022 • Aim to return 85%+ of free cash flow over time (having regard for growth capital projects) • Future investment in systems, processes and new qualifications • Business generates strong cash flows • Second annual final dividend decla
Slide 32: 7 year financial overview
7 YEAR FINANCIAL OVERVIEW DECEMBER 2018 Student numbers 840 12 976 29 885 31869 35 031 38 262 41296 Revenue (Rm) 46 122 633 815 933 1098 1214 EBITDA (Rm) "1 05 129 180 46 309 351 EBITDA adjusted (Rm) "1 0.5 129 196 253 310 357 Headline earnings (loss) (Rm) 7 (7) 63 70 (70) 144 170 Core headline earn
Slide 33: Our investment case
OUR INVESTMENT CASE MR.CHRIS VORSTER CHIEF EXECUTIVE OFFICER STADIO 33 HOLDINGS.
Slide 34: Our strategy is underpinned by our WWW
OUR STRATEGY IS UNDERPINNED BY OUR WWS WIDENING WORLD ACCESS OF WORK STUDENT CENTREDNESS >> Operational Excellence >> Product Leadership >> Customer Intimacy Our strategy is working and efficiencies are starting to show STADIO
Slide 35: What we've done
WHAT WE'VE DONE SHIFTING GEARS • In 2020, we launched our ‘new’ comprehensive institution - STADIO Higher Education • Over the last 2 years we've: Invested in infrastructure Aligned and improved processes and policies Improved our academic quality and academic staff Improved our distance learning of
Slide 36: Our growth strategy
OUR GROWTH STRATEGY TAKING OPENING NEW EXPLORING ACCREDITING PROGRAMMES OPENING COMPREHENSIVE NEW NEW NEW TO NEW SITES CAMPUS & FACULTIES GEOGRAPHIC IN-DEMAND OF DELIVERY OPTIMISING PROGRAMMES & SCHOOLS REGIONS & TO NEW EXISTING MODES CAMPUSES 36
Slide 37: Our strategy is working
OUR STRATEGY IS WORKING THE GROWTH PHASE STADIO Centurion campus opens - first comprehensive campus (equivalent to university campuses) New Milpark strategy implemented– online distance learning specialist (leader in accounting offering) Continued accreditation and development of new in-demand progr
Slide 38: New programme growth
NEW PROGRAMME GROWTH • Offering 6 NEW qualifications in 2023 across various modes of learning delivery: School of Law School of Education 86 School of Architecture Certificated programmes School of Commerce School of Accounting • In 2023, there are 12 qualifications that are already accredited by CH
Slide 39: Our growth strategy illustrated
OUR GROWTH STRATEGY ILLUSTRATED • Growth strategy includes: 1. Development of new, in-demand programmes 2. Taking programmes to new campuses - we have seen how this increases student numbers on the relevant campus • An illustrative example based on one of our campuses: Growth had we Growth with cont
Slide 40: Why new student numbers are important
40 WHY NEW STUDENT NUMBERS ARE IMPORTANT 50 50 • New student numbers, in general, have a 3-year impact • A good intake results in positive impact on returning numbers in the following years • New student growth in 2022 and 2023 is positive = good pipeline for next few years 40
Slide 41: We're growing to meet demand
WE'RE GROWING TO MEET DEMAND • 11 campuses, 3 support centres • All our campuses will double up as distance learning support centres and assessment centres • We’re expanding to support our comprehensiveness: - New STADIO Centurion campus opens (5000 capacity) - STADIO Bellville expanding - rented ex
Slide 42: Will not build a comprehensive campus in every city
WILL NOT BUILD A COMPREHENSIVE CAMPUS IN EVERY CITY • Aim = 3 comprehensive campuses (offering a full student experience) : STADIO Centurion STADIO Musgrave (to take new Schools to this site) STADIO Durbanville (to come) and • Continue optimising current campuses • We offer a real student experience
Slide 43: Krugersdorp Logistics Centre
KRUGERSDORP LOGISITICS CENTRE 43
Slide 44: We're on track to achieve our targets
WE'RE ON TRACK TO ACHIEVE OUR TARGETS 8% ANNUAL GROWTH REQUIRED OCT 2017 2026 840 12 976 41 296 56 000 100 000+ STUDENTS STUDENTS STUDENTS STUDENTS * STUDENTS JAN DEC 2017 2022 * As disclosed in the Pre-listing Statement TARGET: 80% DISTANCE LEARNING & 20% CONTACT LEARNING 44
Slide 45: The market continues to grow and needs private higher education
THE MARKET CONTINUES TO GROW AND NEEDS PRIVATE HIGHER EDUCATION OUR UNIVERSITIES HAVE CAPACITY CONSTRAINTS Do not access higher education 49% 440 702 Grade 12s qualified for university in Accepted 2021 61% into 1st year at publics NSC passes have increased by 32% since 2021 with minimal increased ca
Slide 46: We are well placed to support more students
WE ARE WELL PLACED TO SUPPORT MORE STUDENTS THE FUTURE IS EXCITING We offer quality programmes with quality academic staff and student support Our programmes are affordable, accessible, and relevant Milpark is becoming the leader in accounting and financial offerings AFDA remains the number one film
Slide 47: We're a new vision in higher education
WE’REA NEW VISION IN HIGHER EDUCATION a6: Orica! a ia aA oy Gh ha HOLDINGS.
Slide 48: In conclusion
IN CONCLUSION — HoLDINGs —
Slide 49: Questions & Answers
QUESTIONS & ANSWERS