Stadio Holdings Pty Ltd. · JSE:SDO
Stadio Holdings Pty — H1 2023 Earnings Presentation
36 slides from Stadio Holdings Pty's earnings presentation, Aug 30, 2023
Slide 1: 2023 Interim Results Presentation
2023 Interim Results Presentation 30 August 2023 1
Slide 2: Setting the Scene
SETTING 2023 INTERIM 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: We've come a long way in becoming a first-choice institution
WE’VE COME A LONG WAY IN BECOMING A FIRST-CHOICE INSTITUTION • Student numbers are growing with good growth expected for the second semester • STADIO Higher Education brand is gaining momentum • Milpark Education's graduates’ performance in SAICA ITC board exam is contributing to its brand awareness
Slide 5: Solid interim financial results
SOLID INTERIM FINANCIAL RESULTS Semester 1 Profit after Tax Student Numbers Revenue up 21% EPS up 9% up 16% to up 21% to to R127m to 41 865 R714m 13.6 cps JUN 2022: 38 348 JUN 2022: R618m JUN 2022: R105m JUN 2022: 11.2 cps Core Headline HEPS Core HEPS Return Earnings up 22% up 20% on Equity up 20% t
Slide 6: Interim 2023 Results Overview
2023 INTERIM RESULTS OVERVIEW
Slide 7: 2023 Summary Notes
2023 SUMMARY NOTES • Positioning the businesses to become first choice institutions • Focus on operations, processes and student experience • Consumer pressures and affordability impacting the business o Students taking longer to pay o Impacting overall loss allowance for the period • Capital projec
Slide 8: Total student numbers (like-for-like)
TOTAL STUDENT NUMBERS (LIKE-FOR-LIKE) 13% SEMESTER 1: 30 JUNE 14% 45000 41 865 42000 38 348 39000 9% 36000 34 494 33000 31 053 30000 28 280 26 334 27000 23 752 24000 21000 18000 15000 12000 9000 6000 3000 0 JUN 17 JUN 18 JUN 19 JUN 20 JUN 21 JUN 22 JUN 23 EXCLUDING CYCLICAL B2B NEW STUDENT NUMBER GR
Slide 9: Student numbers – contact learning
STUDENT NUMBERS – CONTACT LEARNING • 3% growth impacted by: SEMESTER 1: 30 JUNE o Covid 19 overhang – poor enrolments in prior years impacting rollover 8000 students, and 7000 o Milpark Education 6 081 6 269 5 921 5 662 5 807 transition away from 6000 3% 5 402 contact learning 5000 4 755 • Encouragi
Slide 10: Student numbers – distance learning
STUDENT NUMBERS – DISTANCE LEARNING SEMESTER 1: 30 JUNE • Biggest DL provider outside 16% of UNISA • Good growth in professional 45000 programmes continues 40000 36 058 • B2B still under pressure but 35000 32 686 10% 30000 28 573 showing improvements for S2 24 784 25000 20 932 22 199 • Milpark Educa
Slide 11: Revenue
REVENUE • 15% growth in tuition fee income (R millions) • 22% Increase in registration fees: o Growth in new students 1400 o Year module students paying 1 214 registration fees upfront 1200 1 098 • Increase in sale of learning materials 1000 933 due to students purchasing study 815 800 16% 714 mater
Slide 12: EBITDA and Adjusted EBITDA
EBITDA AND ADJUSTED EBITDA • Adj EBITDA in prior years 300 (R millions) % Adjusted EBITDA margin excludes fair value loss adjustment • EBITDA margins reduced to 29% 29% (in line with full year Dec 22 250 31% EBITDA) 29% 210 210 • Impacted by: 200 192 192 o increase in loss allowance 26% 161 161 expe
Slide 13: EBITDA Movement
EBITDA MOVEMENT EBITDA MOVEMENT (R millions) 10% 18% (1%) (2%) (5%) R210m R33m R192m (R1m) (R4m) (R10m) 13% % change 13
Slide 14: Margin Analysis
MARGIN ANALYSIS • Employee costs margin improving • Operating expense margin maintained at 23% but influenced by: o Additional costs of doing business in South Africa (loadshedding, municipal costs, security) o Further investment into systems and processes impacting costs • Loss allowance margin inc
Slide 15: Trade receivables and loss allowance
TRADE RECEIVABLES AND LOSS ALLOWANCE • Debtors book generally peaks in June LOSS ALLOWANCE AS % OF REVENUE Loss allowance margin (%) - pre recoveries • Consumer pressures impacting collections • 24% increase in gross debtors for the period Loss allowance margin (%) - post recoveries 8.5% 8.4% • DL m
Slide 16: Trade receivables and loss allowance
TRADE RECEIVABLES AND LOSS ALLOWANCE • Risk is concentrated on debtors related to prior academic years • Accounts for 32% of the book • Provide for 90% of prior year book • Provide for 21% of current year book using 8% loss allowance margin of current revenue as a measure • Historic bad debt write o
Slide 17: Profit/(Loss) for period
PROFIT/ (LOSS) FOR PERIOD (R millions) • Strong 21% growth in PAT • Positively impacted by: 140 R127m o Organic growth in EBITDA for R105m 21% period 90 R85m o Interest income earned vs prior R52m year interest expense 40 R36m o Positive impact of change in tax rate • Negatively impacted by: (10) o
Slide 18: EPS and HEPS
EPS AND HEPS EPS (cps) HEPS (cps) 15 13.5 cps 15 13.6 cps 11.1 cps 11.2 cps 9.4 cps 9.6 cps 10 10 21% 22% 5.1 cps 5.1 cps 5 3.5 cps 5 3.6 cps 0 0 (1.5) cps -5 -5 -10 -10 (8.7) cps -15 -15 JUN 18 JUN 19 JUN 20 JUN 21 JUN 22 JUN 23 JUN 18 JUN 19 JUN 20 JUN 21 JUN 22 JUN 23 • Growth in EPS and HEPS fol
Slide 19: Core Headline Earnings
CORE HEADLINE EARNINGS CORE HEADLINE EARNINGS (R millions) CORE HEPS (cps) 160 20 140 18 120 116 16 14 13.6 100 96 82 20% 12 11.3 80 20% 10 9.7 60 57 8 6.9 46 6 5.7 40 32 4.0 4 20 2 0 0 JUN 18 JUN 19 JUN 20 JUN 21 JUN 22 JUN 23 JUN 18 JUN 19 JUN 20 JUN 21 JUN 22 JUN 23 19
Slide 20: Core Headline Earnings Movement
CORE HEADLINE EARNINGS MOVEMENT (R millions) 24% 20% 7% (1%) (3%) (7%) R24m R116m R7m (R1m) (R3m) (R7m) R96m 17% 20
Slide 21: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION • Invested R31m on capital expenditure including o Solar projects (R3m YTD) o Software development (R5m) o Curriculum development (R4m) o Building projects (R4m) o Recurring capex (R15m) • R175m of cash on hand • Gearing ratio 8% (0% excluding IFRS 16 lease liability)
Slide 22: Cash flow from operations
CASH FLOW FROM OPERATIONS ** EBITDA adjusted for fair value adjustment ** Adjusted for CA Connect R33 million settlement in cash 22
Slide 23: Capital Invested
CAPITALINVESTED CAPITAL INVESTED (RM) 17 DEC 18 DEC 19 DEC 21 DEC 22 JUN 23 Acquisitions . 594 440 156 = 10 . = Infrastructure development and capital assets 73 272 26 168 98 181 87 2) Programme development 12 1 15 10 7 : 7 4 Total 85 877 481 334 105 191 94 31 Cumulative investment 85 962 1443 1777
Slide 24: Cash Utilisation
CASH UTILISATION (R millions) R181m (R4m) (R5m) (R7m) (R15m) R3m (R15m) (R18m) (R93m) R175m R148m 24
Slide 25: 2023 Capital Expenditure: Capital Projects
2023 CAPITAL EXPENDITURE: CAPITAL PROJECTS 25
Slide 26: Our Investment Case
OUR INVESTMENT CASE
Slide 27: Solid Strategy
SOLID STRATEGY • We have the right strategy and are gaining momentum • Our strategy and our decisions are underpinned by our WWS • Our focus has been on building infrastructure and improving our systems and processes to accommodate student growth o efficiencies will come (overall, targeting an EBITD
Slide 28: Illustrating our growth in offerings
ILLUSTRATING OUR GROWTH IN OFFERINGS • Clear programme development strategy • Good pipeline of in-demand qualifications to come • Continuous stream of quality submissions to counter any delays • Good breadth of programme offerings with 91 qualifications and 47 pipeline programmes (up from 87 qualifi
Slide 29: Offering a holistic student experience
29 OFFERING A HOLISTIC STUDENT EXPERIENCE • Our learning management system is world class and helps both distance learning and contact learning students • Our campuses are conducive to offering quality learning • Sport introduced at STADIO Higher Education with the netball team participating in its
Slide 30: A few highlights
30 A FEW HIGHLIGHTS • STADIO Higher Education was the sponsor of the official U18 and U13 Craven weeks • STADIO Higher Education’s first 2 Doctorates graduates (in minimum time) • Milpark Education’s PGDA had an 82% pass rate for first time writers of the SAICA ITC Board exam, and is the biggest con
Slide 31: Why the STADIO Group? A new vision in higher education
WHY THE STADIO GROUP? FIRST CHOICE INSTITUTION STUDENTS BECOME SHAREHOLDERS A NEW VISION IN MINIMAL DEBT REQUIRMENTS HIGHER EDUCATION FOR GROWTH INVESTED IN INFRASTRUCTURE SYSTEMS AND PROCESSES - READY TO ACCOMODATE STUDENT GROWTH COMPREHENSIVENESS AND QUALITY OF PROGRAMMES (RELEVANT, FLEXIBLE & ALI
Slide 32: 2023 Semester 2 student numbers looking great
2023 SEMESTER 2 STUDENT NUMBERS LOOKING GREAT DISTANCE LEARNING CONTACT LEARNING 14% 45,000 40,411 10000 3% 37,500 35 597 32 320 8000 28,664 6,197 6,367 30,000 25,672 5,500 5,942 5,699 5,843 22,751 24,385 6000 4,833 22,500 4000 15,000 7,500 2000 0 0 Dec-17 Dec-19 Dec- 20 Dec-20 Dec-21 Dec-22 Aug-23*
Slide 33: We're on track to achieve our targets
WE'RE ON TRACK TO ACHIEVE OUR TARGETS OCT 2017 2026 840 12 976 41 865 56 000 100 000+ STUDENTS STUDENTS STUDENTS STUDENTS * STUDENTS JAN JUN 2017 2023 * As disclosed in the Pre-listing Statement TARGET: 80% DISTANCE LEARNING & 20% CONTACT LEARNING 33
Slide 34: In Conclusion
IN CONCLUSION Our Institutions are becoming the FIRST-CHOICE We have a I am excited about clear strategy the future and and good believe we can momentum build off the solid interim results 34
Slide 35: We're a new vision in higher education
WE’REA NEW VISION IN HIGHER EDUCATION a6: Orica! a ia aA oy Ghia ha HOLDINGS.
Slide 36: Questions & Answers
QUESTIONS & ANSWERS