Stadio Holdings delivers resilient results amidst Covid turmoil
Stadio Holdings, the JSE listed investment holding company with investments in three private higher education institutions, Milpark Education, Stadio Higher Education and AFDA, has showed resilience and adaptability amidst the Covid-19 pandemic with a sturdy increase in core headline earnings and growth in student enrolments for the financial year to 31 December 2020.
Core headline earnings increased by 33% from R88 million to R117 million with core headline earnings per share growing by 31% from 10.8 cents to 14.2 cents. Revenue increased by 14% from R815 million to R933 million.
Core headline earnings reflects headline earnings adjusted for certain items that may distort the financial results from year-to-year, giving shareholders a more consistent reflection of the underlying financial performance of the group.
Earnings before interest, taxation, depreciation and amortisation (EBITDA) declined by 75% from R180 million to R46 million as a result of an accounting fair value loss adjustment relating to the acquisition of the CA Connect business. The consideration payable for the CA Connect acquisition is subject to the growth in EBITDA of the CA Connect business over a three-year period. Actual student enrolments for this business materially outperformed expected enrolments resulting in a higher-than-expected purchase consideration and thus a fair value adjustment to account for the increased purchase consideration due. Excluding the impact of the fair value adjustment, the adjusted EBITDA grew by 29% from R196 million to R 253 million.
During the year, the group also achieved a major strategic milestone by transferring the underlying businesses of Lisof (Pty) Ltd, Prestige Academy (Pty) Ltd and Southern Business School (Pty) Ltd into STADIO (Pty) Ltd (formerly Embury Institute for Higher Education (Pty) Ltd) and registering STADIO as a single private higher education institution. This business transfer resulted in a once-off non-cash accounting impairment of the aforementioned brands trademarks of R40 million which negatively affected the earnings of the group.
This business transfer will unlock opportunities to actively deliver on the marketing, operational and regulatory efficiencies that arise from operating as a single registered higher education institution.
Student numbers increased by a steady 10% from 31 869 to 35 031 during the period under review. Distance learning students grew by 12% to 28 664 students (2019: 25 672), and contact learning students grew by 3% to 6 367 students (2019: 6 197). STADIO graduates increased by 13% from 7 294 to 8 224 students.
Announcing the results, Stadio chief executive officer Chris Vorster, said the growth in student numbers is particularly pleasing given the extreme Covid-19 conditions during the year. “We were able to successfully complete the 2020 academic year on time with drop-out figures of 2.5% for contact learning and 6.1% for distance learning, the lowest since we started with operations in 2017.
“Stadio is considered a leader in distance learning, which gained further traction during the year. Our focus this year will be to further develop infrastructure and systems for student support, particularly for distance learning.
“Also, of great importance will be the enhancement of the employability of students and employment desirability. Progress in this regard is already evident from recent research by the group.
“In order for Stadio to be true to its vision of widening access to education, the focus is set firmly on affordability. In this regard we have taken the lead with one of the most affordable distance learning offerings in the market,” Vorster said.
The three principal objectives for the future are in short “WWS”, consisting firstly of widening access to higher education which goes hand in hand with affordability. Secondly, alignment with the world of work to assist in students to become employed and ensuring programmes are in line with industry requirements and thirdly, on student centredness, which includes various student success, student support and wellness initiatives.
Plans for the opening of the Stadio Centurion campus in Gauteng is on track for the first large intake of students in January 2022. The campus will accommodate about 5 000 students over time and will utilise various hybrid teaching models using both synchronous and asynchronous teaching methods.
“Our aim is firmly set on 56 000 students by 2026 and the blueprint for this is currently being developed,” Vorster said.
