Stadio Holdings Pty Ltd. · JSE:SDO
Stadio Holdings Pty — H1 2021 Earnings Presentation
45 slides from Stadio Holdings Pty's earnings presentation, Aug 31, 2021
Slide 1: 2021 Interim Results for the six months ended 30 June 2021
2021 Interim Results for the six months ended 30 June 2021 31 August 2021
Slide 2: CEO's Overview
CEO’S OVERVIEW Mr Chris Vorster
Slide 3: Presentation Overview
33 PRESENTATION OVERVIEW 1 CEO’s overview 2 Financial results 3 Where to now? 4 Questions and answers 7
Slide 4: Three distinct private higher education institutions
. . . THREE DISTINCT PRIVATE HIGHER EDUCATION INSTITUTIONS
Slide 5: A snapshot of the STADIO Group
5 A SNAPSHOT OF THE STADIO GROUP 2017 2018 2019 2020 2021 2022 POSITIONING YEARS CONSOLIDATION GROWTH • Unbundled from Curro • Launch of STADIO • First mega-campus (4 brands into 1) opens • Acquired 6 quality brands • Invest in distance learning • Optimisation of current • Purchased land in Centurio
Slide 6: Why are we so motivated?
Z=, WHY ARE WE SO Z= MOTIVATED?
Slide 7: Higher education is an attractive market
77 1. HIGHER EDUCATION IS AN ATTRACTIVE MARKET Higher education student numbers up 130% since 2000 • 1.3 million from 0.6 million Demand set to grow • National Development Plan aims to have 1.6 million students enrolled by 2030 Public universities are full • Hampered by limitations on subsidies and
Slide 8: STADIO meets South African students' needs
88 2. STADIO MEETS SOUTH AFRICAN STUDENTS’ NEEDS STADIO offers: • A comprehensive higher education institution • Multi-faculties, -schools, -campuses and -modes (including distance, contact and blended learning) • Among South Africa’s ten biggest higher education institutions (ahead of Wits, Free St
Slide 9: Meet the team driving the great results
9 MEET THE TEAM DRIVING THE GREAT RESULTS Dr Divya Mr Johan Ms Samara Mr Julian Singh Human Totaram van der Chief Chief Chief Westhuizen Academic Operating Financial Milpark Officer Officer Officer CEO Mr Leonardo Mrs Chariska Prof Patrick Ms Teresa Snyman Knoetze Bean Passchier Executive Executive
Slide 10: 2021 Financial Highlights - June 2020 to June 2021
10 2021 FINANCIAL HIGHLIGHTS - JUNE 2020 TO JUNE 2021 * Notes 2020 included the following STUDENT once-off adjustments: REVENUE EBITDA* 1. CA Connect fair value NUMBERS +17% >100% adjustment +11% to to 2. Trademark impairment to related to the Business R548m R161m 34 494 Transfer HEPS* Core HE Core
Slide 11: Financial Results
FINANCIAL RESULTS 2021 Interim Results Presentation 31 August 2021 Ms Samara Totaram - CFO
Slide 12: 2021 Interim Results Notes
12 2021 INTERIM RESULTS NOTES • Concluded early settlement agreement with CA Connect shareholders − Final settlement value of R 201m • Completed construction of STADIO Centurion Phase I − R41m invested to June 2021 − Total acquisition and build of Phase I to June 2021 – R223m • Took transfer of STAD
Slide 13: Total student numbers (like-for-like)
13 TOTAL STUDENT NUMBERS (LIKE-FOR-LIKE) SEMESTER 1: 30 JUNE 10% CAGR • Driven by strong performance 36000 11% 34,494 in distance learning offerings 33000 31,053 • Contact learning enrolments 30000 28,280 lagging 26,334 27000 • Cyclical B2B still impacting 23,752 24000 overall growth 21000 • Excludi
Slide 14: Student numbers - contact learning
14 STUDENT NUMBERS - CONTACT LEARNING SEMESTER 1: 30 JUNE 8000 6% CAGR • Contact student enrolments 7000 lagging 6 269 • COVID-19 implications 6 081 6% 5,921 6000 5 402 • Lack of school visits 5000 4 755 • Uncertainty – students deferring studies 4000 • Regulatory delays in accreditations and site 3
Slide 15: Student numbers - distance learning
15 STUDENT NUMBERS – DISTANCE LEARNING SEMESTER 1: 30 JUNE 11% CAGR • Strong growth driven by 30000 professional programmes 15% 28,573 • Good growth in distance learning online (DLO*) offerings 25000 24,784 • Still impacted by cyclical B2B 22,199 20,932 business 20000 18,997 • Excluding cyclical B2B
Slide 16: Revenue
16 REVENUE REVENUE (R millions) 1000 R933m • 17% growth to June 2021 R815m • 4% improvement in short 800 course business • Sundry income still under R633m pressure 600 R548m R468m R409m 400 200 R297m 0 2018 2019 2020 2021 JUNE (INTERIM) DECEMBER (FULL YEAR)
Slide 17: EBITDA movement
17 EBITDA MOVEMENT EBITDA MOVEMENT (R millions) 24% 250% 15% 159% R11m R161m R7m R73m 52% R24m R46m
Slide 18: EBITDA and adjusted EBITDA
EBITDA AND ADJUSTED EBITDA (R millions) % Adjusted EBITDA margin 200 • Adjusted EBITDA excludes fair 29% value loss adjustment 180 R161m R161m • 34% growth in adjusted EBITDA 160 • Impacted by further COVID-19 140 26% savings as a result of protracted 26% R120m lockdowns 120 R103m R105m • Do not exp
Slide 19: Trade receivables and loss allowance
19 TRADE RECEIVABLES AND LOSS ALLOWANCE LOSS ALLOWANCE AS % OF REVENUE 8.5% 9% • Increase in debtors book impacted by late 8% 7% start to the academic year 6.0% 6% • +/-6 week lag in collections 5% 4% 3.3% 3.2% • Good cash collections post June 2021 3% • Better than expected collections on prior 2%
Slide 20: Cash collections as a % of revenue
20 CASH COLLECTIONS AS A % OF REVENUE CASH COLLECTIONS AS A % OF REVENUE • Significantly increased 180% 171% collections in July 2021 160% 151% • Further improved collections 139% 140% in August 2021 120% 114% • Still lagging prior year 105% 108% 99% 94% 100% 97% 100% 95% collections to July 2021 bu
Slide 21: CA Connect early settlement
21 CA CONNECT EARLY SETTLEMENT • Concluded early settlement agreement in June 2021 • In total transaction value amounted to R258m settled as follows: • Final settlement amount of R201m settled in two tranches • Immediately settled R68m − R48m in cash − R20m in STADIO Holdings shares – 6.7m shares is
Slide 22: EPS and HEPS
22 EPS AND HEPS EPS (cps) HEPS (cps) 9.6 cps 10 10 9.4 cps 5.1 cps 5 3.6 cps 5.1 cps 5 3.5 cps 0 -5 0 (1.5) cps -10 (8.7) cps -5 JUN 18 JUN 19 JUN 20 JUN 21 JUN 18 JUN 19 JUN 20 JUN 21 • Large increase in EPS and HEPS driven by: • Organic growth • Fair value adjustment in prior year – R74m (impacted
Slide 23: Core headline earnings
23 CORE HEADLINE EARNINGS CORE HEADLINE EARNINGS (R millions) CORE HEPS (cps) 37% CAGR 34% CAGR 100 10 41 % 9.7 cps 44 % R82m 80 8 6.9 cps 60 R57m 6 5.7 cps R46m 4.0 cps 40 R32m 4 20 2 0 0 DEC DEC DEC DEC-20 JUN JUN18 18 JUN JUN19 19 JUN JUN20 20 JUN 21 JUN 18 JUN 19 JUN 20 JUN 21 17 18 19
Slide 24: Core headline earnings movement
24 CORE HEADLINE EARNINGS MOVEMENT CORE HEADLINE EARNINGS MOVEMENT (R millions) 12% 44% 9% 4% R7m R82m 19% R5m R2m R11m R57m
Slide 25: Capital expenditure, debt and cash on hand
25 • Invested R135m on capital expenditure • Settled R68m of contingent consideration liability • R55m debt drawn down • R111m of cash on hand • Gearing ratio 15% (3% excluding IFRS 16 lease liability)
Slide 26: Cash flow generation
26 CASH FLOW GENERATION STADIO CASH FLOW FROM OPERATIONS (R millions) JUN 19 JUN 20 JUN21apyysqe pe Net cash flow from operations 108 124 168 168 (before working capital) Working capital changes 58 89 19 52 Net cash generated from operations 166 213 187 219 Coop ered a option wee woz | tek 86 Free c
Slide 27: Capital invested
27 CAPITAL INVESTED STADIO — HoLDINGs — CAPITAL INVESTED CR millions) Acquisitions DEC 17 DEC18 DEC 20 JUN 21 Infrastructure development & capital assests 73 272 26 169 Programme Development CUMULATIVE INVESTMENT nes
Slide 28: Cash utilisation
28 CASH UTILISATION CASH UTILISATION (R millions) *Excludes cash outflow related to CA Connect earn out **Includes cash outflow related to CA Connect earn out R174m (R41m) (R41m) R117m (R71m) R10m R111m (R23m) (R14m)
Slide 29: 2021 Capital expenditure: growth projects
29 2021 CAPITAL EXPENDITURE: GROWTH PROJECTS
Slide 30: Where to now?
30 30 WHERE TO NOW?
Slide 31: Student number growth path to 2026
80% DISTANCE LEARNING 20% CONTACT LEARNING 840 STUDENTS 12 976 STUDENTS 35 031 STUDENTS 56 000 STUDENTS 100 000+ STUDENTS ? JAN 3 OCT DEC PAT R500m 2017 2017 2020 2026* * As disclosed in the Pre-listing Statement
Slide 32: Our growth strategy
OUR 32 32 GROWTH STRATEGY
Slide 33: Growth opportunities
33 33 GROWTH OPPORTUNITIES DEMAND FOR HIGHER EDUCATION FAR EXCEEDS CAPACITY AT PUBLIC UNIVERSITIES DEMAND FOR HIGHER EDUCATION FAR EXCEEDS CAPACITY AT PUBLIC UNIVERSITIES
Slide 34: STADIO's blended learning strategy
34 34 STADIO’S BLENDED LEARNING STRATEGY CONTACT LEARNING DISTANCE LEARNING We will not build a mega-campus in every major city Move towards consolidation and optimisation of existing campuses Introducing 20% 80% blended learning of of channels students students
Slide 35: STADIO Centurion
STADIO CENTURION CENTURION 30 MAY 2021
Slide 36: STADIO Centurion May 2021
STADIO CENTURION 36 30 MAY 2021
Slide 37: STADIO Centurion May 2021
STADIO CENTURION 30 MAY 2021
Slide 38: Distance learning provides higher margins
38 38 DISTANCE LEARNING PROVIDES HIGHER MARGINS Distance learning at STADIO Group is well established ADVANTAGES: • Requires initial investment - minor upgrade costs and maintenance going forward • Offered at more affordable prices • Scalable • Higher margins • Flexible and accessible
Slide 39: COVID-19 Focus
COVID-19 FOCUS
Slide 40: COVID-19 critical focus areas
40 40 COVID-19 CRITICAL FOCUS AREAS The Health and Safety of our staff and students The continuation of the academic project - All teaching and learning moved online The protection of financial resources as well as stakeholders’ interests
Slide 41: STADIO well placed for COVID-19 impact
4141 STADIO WELL PLACED FOR COVID-19 IMPACT 80% of STADIO students study remotely Bad debt loss allowance doubled in 2020 from 4.3% to 8.6% - Managed through operational efficiencies and savings Continue seeking student funding opportunities – partnership with CAPITEC Student number impact • More di
Slide 42: In summary – laying foundation for growth
42 IN SUMMARY – LAYING FOUNDATION FOR GROWTH
Slide 43: Q&A
43 43 Q&A OUR PURPOSE: To empower the nation by widening access to higher education
Slide 44: Thank you
THANK YOU ENKOSI RE A LEBOGA DANKIE
Slide 45: STADIO Holdings
STADIO — HOLDINGS — STADIO Ne —_—_ — EDUCATION @ |EMBURY LISOF nesses §3