Stadio Holdings Pty Ltd. · JSE:SDO
Stadio Holdings Pty — FY2021 Earnings Presentation
52 slides from Stadio Holdings Pty's earnings presentation, Mar 14, 2022
Slide 1: 2021 Annual Results for the year ended 31 December 2021
2021 Annual Results for the year ended 31 December 2021 14 March 2022
Slide 2: Presentation Overview
22 PRESENTATION OVERVIEW STADIO Financial Our In Questions Group Results Investment Summary and Overview Case answers 7
Slide 3: Three distinct private higher education institutions
. . . THREE DISTINCT PRIVATE HIGHER EDUCATION INSTITUTIONS
Slide 4: A snapshot of the STADIO Group
4 A SNAPSHOT OF THE STADIO GROUP • Acquired further quality • Optimisation of current brands campuses and staff 2017 2018 2019 2020 2021 2026 • Opened 3 new campuses • First comprehensive • Purchased land in Centurion campus opens and Durbanville to build YEAR OF comprehensive campuses • 56 000 stud
Slide 5: Meet the team driving the great results
5 MEET THE TEAM DRIVING THE GREAT RESULTS
Slide 6: 2021 Financial Highlights – Dec 2020 to Dec 2021
6 2021 FINANCIAL HIGHLIGHTS – DEC 2020 TO DEC 2021 STUDENT NUMBERS +9% 35 031 (2020) to 38 262 (2021) Notes *Adjusted EBITDA is Earnings REVENUE +18% before interest, taxation, de R933m (2020) to R1.1bn (2021) preciation, and amortisation adjusted for the following once-off adjustments in ADJUSTED E
Slide 7: 4.7cps Maiden Dividend
Notes: • Return excess cash to shareholders whilst balancing 4.7cps future growth projects • Strong balance sheet with limited gearing MAIDEN DIVIDEND DECLARED
Slide 8: Financial Results
FINANCIAL RESULTS Ms Samara Totaram - CFO
Slide 9: 2021 Results Notes
9 2021 RESULTS NOTES • STADIO Centurion Phase I construction completed – R 235m • Open for new students in 2022 • Commenced with Phase II construction – to be completed in 2022 • STADIO Durbanville land acquisition – total cost R71m • R52m for transfer of land; R19m for development contributions • A
Slide 10: Total Student Numbers (Like-for-like)
10 TOTAL STUDENT NUMBERS (LIKE-FOR-LIKE) SEMESTER 1: 30 JUNE SEMESTER 2: 31 DECEMBER 17% 45000 45000 42000 18% 42000 9% 38 262 39000 39000 34 494 35 031 36000 11% 36000 33000 31 053 33000 31 869 29 885 30000 28 280 30000 27 584 26 334 27000 23 752 27000 24000 24000 21000 21000 18000 18000 15000 1500
Slide 11: Student Numbers - Contact Learning
11 STUDENT NUMBERS - CONTACT LEARNING SEMESTER 1: 30 JUNE SEMESTER 2: 31 DECEMBER 8000 8000 7000 7000 6 269 (6%) (6%) 6 367 (7%) 6 081 6 197 5 921 5 942 6000 6000 5 402 5 500 5000 4 755 5000 4 833 4000 4000 3000 3000 2000 2000 1000 1000 0 0 JUN 17 JUN 18 JUN 19 JUN 20 JUN 21 DEC 17 DEC 18 DEC 19 DEC
Slide 12: Student Numbers - Distance Learning
12 STUDENT NUMBERS - DISTANCE LEARNING SEMESTER 1: 30 JUNE SEMESTER 2: 31 DECEMBER 45000 45,000 42000 42,000 39000 25% 39,000 23% 36000 36,000 32 320 33000 33,000 15% 28 573 28 664 13% 30000 30,000 27000 24 784 27,000 25 672 24 385 24000 22 199 24,000 22 751 20 932 21000 18 997 21,000 18000 18,000 1
Slide 13: Revenue
13 REVENUE REVENUE (R millions) 1200 18% R1 098m REVENUE • 18% growth in Revenue 1000 R933m • 22% improvement in R815m Short Course income 800 • Increase in Other R633m Income driven by: 600 R548m • increase in academic R468m R409m income e.g. supps, 400 remarks, levies etc. • Insurance refunds 200
Slide 14: EBITDA Movement
14 EBITDA MOVEMENT EBITDA MOVEMENT (R millions) R70m R309m R207m (R19m) R5m R46m *Prior year fair value loss adjustment of R207m
Slide 15: EBITDA Movement
15 EBITDA MOVEMENT EBITDA MOVEMENT (R millions) 28% R70m R309m R207m (R19m) R5m R46m *Prior year fair value loss adjustment of R207m
Slide 16: Impact of Covid-19 Savings/(Costs)
16 IMPACT OF COVID-19 SAVINGS/(COSTS) COVID-19 • 2020 curtailed spend due to COVID-19 • Significant savings in 2020 (including TERS benefit) • Continued savings in 2021 (but lower than 2020) • Expect 2022 to normalise
Slide 17: EBITDA and Adjusted EBITDA
17 EBITDA AND ADJUSTED EBITDA 28% (R millions) % Adjusted EBITDA margin R309m R310m ADJUSTED EBITDA 300 27% • Adj EBITDA excludes R253m fair value loss 250 adjustment 24% • 23% growth in adjusted R196m 200 R180m EBITDA 20% • Improvement in Adj 150 EBITDA margin to R129m R129m 28% 100 R46m 50 0 DEC 1
Slide 18: Trade Receivables and Loss Allowance
18 TRADE RECEIVABLES AND LOSS ALLOWANCE LOSS ALLOWANCE AS % OF REVENUE TRADE RECEIVABLES • Increase in debtors book Loss allowance margin (%) - pre recoveries Loss allowance margin (%) - post recoveries impacted by late start to 8.6% 8.4% 7.8% 7.5% the academic year • Lag in collections 4.3% 4.0% 3.
Slide 19: CA Connect Early Settlement
19 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 20: Impairment/De-recognition of Assets
20 IMPAIRMENT/DE-RECOGNITION OF ASSETS • Sale of STADIO Montana – R10m impairment • Selling price of R52m (book value = R62m) • Part of strategy to consolidate contact learning offerings • R17m impairment Right of use asset (RoUA) • Following on from strategic shift in Milpark business to focus on d
Slide 21: Profit/(Loss) for Period
21 PROFIT/(LOSS) FOR PERIOD IMPACTED BY: PROFIT/(LOSS) FOR PERIOD (R millions) • Good organic growth R137m in 2021 140 • 2021 impacted by 90 R84m R77m impairments (R22m) and fair value loss 40 adjustment (R1m) (10) • PY loss impacted by (R5m) fair value loss (60) adjustment: (R207m) in 2020 (110) •
Slide 22: EPS and HEPS
22 EPS AND HEPS EPS (cps) HEPS (cps) 14.9 cps 15 20 17.0cps 10 7.8 cps 8.5 cps 15 7.8 cps 8.5 cps 5 10 5 0 0 -5 -5 -10 -10 (8.5) cps -15 -15 (14.5) cps DEC 18 DEC 19 DEC 20 DEC 21 DEC 18 DEC 19 DEC 20 DEC 21 • Large increase in EPS and HEPS driven by: • Organic growth • 2021 impairments - R 22m impa
Slide 23: Core Headline Earnings
23 CORE HEADLINE EARNINGS CORE HEADLINE EARNINGS (R millions) CORE HEPS (cps) 160 R149m 27 % 20 140 17.6 cps 18 23 % R117m 120 16 14.2 cps 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 DEC 19 DEC DEC 20 DEC 20 DEC 21 DEC 21 DEC 18 DEC 19 DEC 20 DEC 21
Slide 24: Core Headline Earnings Movement
24 CORE HEADLINE EARNINGS MOVEMENT CORE HEADLINE EARNINGS MOVEMENT (R millions) 27% 41% R48m R149m (12%) 3% (5%) R117m (R14m) R4m (R6m)
Slide 25: Statement of Financial Position
25 STATEMENT OF FINANCIAL POSITION IMPACTED BY: • Invested R181m on capital expenditure • Impairments of R30m • Acquisitions of R10m • Settled R68m of consideration liability • Deemed equity settlement of R100m of CAC transaction • R15m debt drawn down • R66m of cash on hand • Gearing ratio 11% (1%
Slide 26: Cash Flow Generation
26 CASH FLOW GENERATION *EBITDA adjusted for fair value adjustment ** Adjusted for CAC Connect R48m settlement in cash
Slide 27: Capital Invested
27 CAPITAL INVESTED CAPITAL INVESTED CR millions) Acquisitions Infrastructure development & capital assets Programme development Cumulative investment DEC 2016 85 DEC 2017 962 FULL YEAR DEC 2018 1443 DEC 2019 1777 DEC 2020 1882 DEC 2021 2073 nes
Slide 28: Cash Utilisation
28 CASH UTILISATION CASH UTILISATION (R millions) *Excludes cash outflow related to CA Connect settlement **Includes cash outflow related to CA Connect settlement R239m (R42m) (R73m) (R71m) R117m (R37m) (R29m) R66m (R30m) (R8m)
Slide 29: 2022 Capital Expenditure: Growth Projects
29 2022 CAPITAL EXPENDITURE: GROWTH PROJECTS
Slide 30: Dividend Declaration
30 DIVIDEND DECLARATION • Significant investment in growth capex since listing • Acquisitions • Greenfield developments • Systems and curriculum development • Future investment in systems, processes and new qualifications • Business generates strong cash flows • Look to return excess cash to shareho
Slide 31: Our Investment Case
jez, OUR Sr’) INVESTMENT =|! CASE
Slide 32: Historic Growth in Higher Education Enrolments
32 32 HISTORIC GROWTH IN HIGHER EDUCATION ENROLMENTS 41% 1 283 890 Notes: 1,400,000 Private CAGR growth (10yrs) 1,200,000 909 637 191% 11% 1,000,000 Public CAGR 800,000 growth (10yrs) PRIVATE 28% 3% 600,000 PUBLIC 400,000 Total CAGR 200,000 growth (10yrs) 41% 4% 0 2009 2010 2011 2012 2013 2014 2015
Slide 33: 49% of eligible matriculants not accommodated by public universities
33 33 49% OF ELIGIBLE MATRICULANTS NOT ACCOMMODATED BY PUBLIC UNIVERSITIES 500,000 455 825 Notes: 450,000 439 779 442 672 403 874 409 906 • DHET sets the maximum number 401 435 400 761 400,000 377 829 364 147 of students admitted to public HEIs 350,000 348 117 annually (enrolment cap) 334 716 296,93
Slide 34: STADIO Group Context
34 34 STADIO GROUP CONTEXT
Slide 35: One of the top 10 largest higher education providers in South Africa
The STADIO Group is one of the TOP 10 largest higher education providers in South Africa with over 38 000 students in South Africa & throughout Africa STADIO, Milpark Education and AFDA are registered with the Department of Higher Education and Training as separate private higher education instituti
Slide 36: We have a far-reaching footprint
ONGWEDIVA (NAMIBIA) Distance Learning Campus WE HAVE A FAR- REACHING WINDHOEK (NAMIBIA) Distance Learning Campus HATFIELD (PTA) CENTURION (PTA) FOOTPRINT KRUGERSDORP (JHB) WATERFALL (MIDRAND) Distance Learning Campus RANDBURG (JHB) AUCKLAND PARK (JHB) DURBAN NORTH (DBN) MUSGRAVE (DBN) AFDA Milpark E
Slide 37: A vast range of offerings in our schools
WITH A VAST RANGE OF OFFERINGS IN OUR SCHOOLS OF SCHOOL OF SCHOOLS OF SCHOOL OF SCHOOLS OF BUSINESS BUSINESS, EDUCATION FILM, MEDIA INFORMATION LAW & POLICING SCHOOL COMMERCE & DESIGN & TECHNOLOGY MANAGEMENT FASHION STADIO HIGHER STADIO HIGHER STADIO HIGHER STADIO HIGHER STADIO HIGHER MILPARK EDUCAT
Slide 38: Good growth over first 6 years
38 GOOD GROWTH OVER FIRST 6 YEARS FINANCIAL OVERVIEW
Slide 39: Why are we excited?
WHY ARE WE EXCITED? CURRENT CURRENT ORGANIC ORGANIC HIGH NEW PRODUCT WELL PRICED COMPREHENSIVE LIFELONG LEARNING GROWTHGROWTH IN-DEMAND ON EXISITING DISTANCE LEARNING PARTNER PROGRAMMES SITES OFFERING COMING • Range of • Short courses Good management and execution affordable Wide range of programmes
Slide 40: STADIO Khulisa student share scheme
Notes: • Launched October 2021 • Award shares to postgraduate students on graduation (no dilution to shareholders) • KHULISA means growth of a person, a community, and a country • Create active loyal alumni • Lifelong learning partner • Contribute to students' future wealth creation
Slide 41: Why are we so excited?
WHY ARE WE SO EXCITED?
Slide 42: STADIO Centurion
STADIO CENTURION 8 MARCH 2022
Slide 43: Our blended learning strategy
43 43 OUR BLENDED LEARNING STRATEGY Notes: We will not build a comprehensive campus in 80% 20% every major city of students of students Introducing blended learning channels – increases current capacity Move towards consolidation and optimisation of existing campuses (e.g. Montana sale) DISTANCE LEA
Slide 44: We want to be the alternative to UNISA
Notes: • Distance learning is well established in the We want to STADIO Group • Currently 32 320 distance learning be the students • Distance learning is - comprehensive offering alternative to - scalable - affordable - flexible - accessible UNISA - offers higher margins • Never compromising on qual
Slide 45: Student growth to 56 000 by 2026
12 976 38 262 100 000+ STUDENTS STUDENTS STUDENTS JAN OCT DEC DEC IN THE 2017 2021 2026* 2017 2020 FUTURE 840 35 031 56 000 STUDENTS STUDENTS STUDENTS * 80% DISTANCE LEARNING 20% CONTACT LEARNING * As disclosed in the Pre-listing Statement
Slide 46: 8% growth required to reach 56 000 students
Notes: 8% GROWTH REQUIRED • Student numbers have grown 9% annually for the last 4 years (4 year CAGR) 38 262 56 000 students students 2021 2026
Slide 47: In Summary
47 47 IN SUMMARY
Slide 48: STADIO Group institutions meets South African students' needs
48 48 STADIO GROUP INSTITUTIONS MEETS SOUTH AFRICAN STUDENTS’ NEEDS • Very well positioned for growth going forward • 3 distinct brands: − STADIO Higher Education - comprehensive higher education institution, comparable to the public universities − AFDA - number one film school in South Africa − Mil
Slide 49: How big can we get?
49 HOW BIG CAN WE GET? EXPANSION OF DISTANCE LEARNING BLENDED NEW LEARNING PROGRAMMES, TEACHING STREAMS MODEL ??? AND MODES TO BE BIGGEST HOW BIG GROWTH DISTANCE CAN WE PROGRAMME LEARNING 4.9% 27% S NOT YET PROVIDER GET GDP CORE ACTIVATED OUTSIDE OF GROWTH* HEADLINE UNISA EARNINGS GROWTH SOLID FOUND
Slide 50: Q&A
50 50 Q&A OUR PURPOSE: TO EMPOWER THE NATION BY WIDENING ACCESS TO HIGHER EDUCATION
Slide 51: Thank you
THANK YOU ENKOSI RE A LEBOGA DANKIE
Slide 52: STADIO Holdings
STADIO — HOLDINGS — STADIO Ne —_—_ — EDUCATION @ |EMBURY LISOF nesses §3