Wrap Text
Results For The Six Months Ended 30 June 2018
Stadio Holdings Ltd
(previously Embury Holdings (Pty) Ltd)
Incorporated in the Republic of South Africa
(Registration number: 2016/371398/06)
JSE Share Code: SDO
ISIN: ZAE000248662
(STADIO or the Group)
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018
FINANCIAL HIGHLIGHTS
FROM JUNE 2017 TO JUNE 2018
Student numbers increased from 1 112 to 27 777
Income increased from R35m to R301m
EBITDA increased from (R1m) to R60m
Core headline earnings increased from (R3m) to R32m
HEPS increased from (0.8) cents to 3.5 cents
CHEPS increased from (0.7) to 4.0 cents
OTHER STATISTICS
STUDENT NUMBERS PER FACULTY AND MODE OF DELIVERY
Student numbers
Year-on-year
30 Jun 2017 30 Jun 2018 growth rate Aug 2018*
Faculty
Business and Commerce 19 719 21 175 7% 22 424
Creative Industries 2 660 2 783 5% 2 787
Education and Training 1 112 1 716 54% 1 842
Law, Security and Political Sciences 1 682 2 103 25% 2 103
25 173 27 777 10% 29 156
Contact vs distance learning
Contact learning 4 237 4 904 16% 4 987
Distance learning 20 936 22 873 9% 24 169
25 173 27 777 10% 29 156
*Second semester enrolment still in progress
PROGRAMMES PER FACULTY AND MODE OF DELIVERY
Programmes
Current
registered Pipeline
programmes programmes Total
Faculty
Business and Commerce 33 11 44
Creative Industries 15 9 24
Education and Training 7 10 17
Law, Security and Political Sciences 4 9 13
Engineering and Manufacturing - 5 5
Agriculture and Nature Conservation - 3 3
59 47 106
Contact vs distance learning
Contact learning 26 31 57
Distance learning 33 16 49
59 47 106
COMMENTARY
OVERVIEW
STADIO is an investment holding company that focuses on the acquisition of, investment in and the growth and
development of higher education institutions to assist in meeting the demand for quality and relevant higher
education programmes in Southern Africa. It is the STADIO Group's vision to be a leading Multiversity, offering
qualifications aligned with the needs of societies, students and the world of work. As a Multiversity, STADIO currently
owns 5 registered higher education institutions that are aimed at providing programmes, both undergraduate
(including bachelors degrees, higher certificates and diplomas) and post graduate (including honours and masters
degrees), that provide graduates with a real chance of creating employment opportunities (entrepreneurship) or
finding employment.
In time STADIO will look to consolidate the programmes offered by its various higher education institutions that
will allow all stakeholders to benefit from the marketing, operational and regulatory advantages of doing so.
STADIO is still currently focused on growing its existing registered higher education institutions, is pursuing potential
further acquisitions of relevant higher education institutions, exploring further expansion opportunities of existing
institutions and overseeing the development of new faculties, programmes and campuses across all institutions.
REVIEW OF RESULTS
The board is pleased to report its interim results for the six months ended 30 June 2018.
The financial results for the six months ended 30 June 2018 included the consolidation of Lisof (Pty) Ltd including the
associated property companies Wadam (Pty) Ltd and Histodox (Pty) Ltd (collectively LISOF) effective 1 January
2018, and the consolidation of MBS Education Investments (Pty) Ltd (MBS Education), which owns 100% of
Milpark Education (Pty) Ltd (collectively Milpark) effective 19 March 2018.
On review of the student enrolments at the underlying institutions for the period ended 30 June 2018, the Group
grew contact learning students by 16% compared to the 2017 first semester intake and distance learning students
by 9% over the same period, reflecting an overall growth in Group student enrolments of 10% over the same period.
The growth in revenue, earnings before interest, taxation, depreciation and amortisation (EBITDA) and headline
earnings per share (HEPS) from the prior reporting period is attributable to the successful execution of STADIO's
organic and acquisitive growth plan. The Group grew student numbers organically at the existing Embury Institute
for Higher Education (Pty) Ltd (Embury) campus in Musgrave (Durban), through the opening of the 2 new Embury
campuses in Montana (Pretoria) and Waterfall (Midrand), and through the consolidation of the acquired institutions
namely South African School of Motion Picture Medium and Live Performance (Pty) Ltd (AFDA), Southern
Business School (Pty) Ltd (SBS), LISOF and Milpark.
The Group reported HEPS of 3.5 cents per share and reflected a core headline earnings per share (CHEPS) of
4.0 cents per share. CHEPS represents HEPS adjusted for certain items that, in the Board's view, may distort
the financial results from year to year, giving shareholders a more consistent reflection of the underlying financial
performance of the Group. These core adjustments include once-off acquisition related costs, amortisation costs
associated with client lists acquired (i.e. a non-cash charge arising as a result of the consolidation of the subsidiaries
acquired) and a deferred purchase consideration payable in respect of the CA Connect Professional Institution
CPT (Pty) Ltd (CA Connect) acquisition.
Shareholders are further advised that given the timing of expenses as well as the expenses to be incurred to meet
the operational requirements of the underlying institutions for the 2019 academic year, costs in the second half
of the current financial reporting period will be higher than reflected in the results presented to 30 June 2018.
As such shareholders are advised that the earnings in this report for the six months ended 30 June 2018 should not be
assumed to be a mirror representation of potential earnings for the subsequent six months ending 31 December 2018.
The Board remains of the view that the Group is well positioned to meet its prelisting statement targets for the
2018 financial year.
During the period the Group collectively invested R417 million for the acquisition of a 100% of LISOF (effective 1 January
2018), an 87.2% effective interest in Milpark (effective 19 March 2018) and the business of CA Connect (effective
12 April 2018), further details of which are contained in note 3 of the financial results.
The Group invested a further R36 million on the capital expansion of facilities as well as new programme development.
The current Group cash balance of R304 million will be utilised to fund working capital requirements, to facilitate new
developments and for potential further acquisitions which are in various stages of negotiation. STADIO currently has an
ungeared balance sheet and will review efficient funding structures going forward.
The Group reported R97 million of net cash flow from operating activities, R46 million of which relates to working capital
timing differences mainly generated from income received in advance.
FUTURE CAPITAL EXPANSION INITIATIVES
CAMPUS IN DURBANVILLE
The Group has entered into an agreement to acquire vacant land located in Durbanville, Western Cape as part of its
geographic expansion plan. STADIO intends to develop the aforementioned land with the aim of opening a consolidated
campus offering several faculties, including: Education and Training; Business and Commerce; Law, Security and Political
Sciences; and Creative Industries (including, fashion design, advertising, marketing and communication and the film
industry), as well as future faculties to be developed and acquired by STADIO. It is further envisaged that the new campus
will open in 2021 and accommodate approximately 5 000 contact learning students over time.
QUALIFICATIONS
The Group is in the process of developing and expanding its product offering. STADIO is currently actively exploring
the feasibility of developing further facilities,inter alia, Faculty of Engineering and Manufacturing and a Faculty of Health and Medical
Sciences. The establishment of the aforementioned faculties are currently in the research phase and still require further
engagement with various role-players, including the Council for Higher Education (CHE), the South African Qualifications
Authority (SAQA), the Department of Higher Education and Training (DHET) and other related professional councils.
The STADIO Group currently has 47 qualifications that are in the process of development and/or accreditation.
DIVIDEND
No Group dividend was declared for the period.
DIRECTORATE
On 9 March 2018 Douglas Ramaphosa was appointed as an independent non-executive director. He was further appointed as the
Chairperson of the Transformation, Social and Ethics Committee as well as a member of the Audit and Risk Committee.
PROSPECTS
The Board has considered the prospects of the Group and believes that the Group is well positioned to deliver on
its organic and acquisitive growth objectives as set out in its prelisting statement. The Group will continue to seek
out strategic acquisitions and will continue to develop and expand its product offering as part of its journey to create
a "Multiversity" of 100 000 students over time.
On behalf of the board,
RH Stumpf CR van der Merwe
Chairperson Chief Executive Officer
3 September 2018
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
6 months 6 months 12 months
R'000 R'000 R'000
Revenue 296 848 33 183 122 554
Other income 4 204 1 462 2 844
Income 301 052 34 645 125 398
Operating expenses (241 193) (35 500) (124 929)
Earnings before interest, taxation, depreciation and
amortisation (EBITDA) 59 859 (855) 469
Depreciation and amortisation (16 405) (3 568) (10 069)
Earnings/(loss) before interest and taxation (EBIT) 43 454 (4 423) (9 600)
Interest income 14 298 4 889 14 914
Finance cost (4 249) (4 374) (7 630)
Profit/(loss) before taxation 53 503 (3 908) (2 316)
Taxation (17 990) 627 (2 788)
Profit/(loss) for the year 35 513 (3 281) (5 104)
Profit attributable to:
Owners of the parent 28 759 (3 281) (7 037)
Non-controlling interests 6 754 - 1 933
Total comprehensive income/(loss) for the year 35 513 (3 281) (5 104)
Headline earnings/(loss) (note 4) 28 470 (3 281) (7 038)
Core headline earnings/(loss) (note 4) 31 915 (2 854) 3 238
Cents Cents Cents
Earnings/(loss) per share (EPS)
- Basic 3.6 (0.8) (1.2)
- Diluted 3.6 (0.8) (1.2)
Headline earnings/(loss) per share (HEPS)
- Basic 3.5 (0.8) (1.2)
- Diluted 3.5 (0.8) (1.2)
Core headline earnings/(loss) per share (CHEPS)
- Basic 4.0 (0.7) 0.6
- Diluted 3.9 (0.7) 0.6
Million Million Million
Number of shares in issue
- Basic 816 407 786
- Diluted 820 409 792
Weighted average number of shares in issue
- Basic 805 407 576
- Diluted 808 409 582
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
6 months 6 months 12 months
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 553 354 94 675 453 699
Goodwill 739 556 39 923 409 666
Intangible assets 183 787 42 051 113 522
Other investments 2 555 - 1 898
Deferred tax asset 63 084 4 880 14 695
Total non-current assets 1 542 336 181 529 993 480
Current assets
Inventories 4 347 2 245 7 370
Trade and other receivables 119 280 6 444 42 364
Loans and advances 2 384 42 2 500
Tax receivable 14 008 3 808 6 448
Cash and cash equivalents 303 838 122 537 646 090
Total current assets 443 857 135 076 704 772
Total assets 1 986 193 316 605 1 698 252
EQUITY
Share capital (note 5) 1 558 683 60 812 1 367 123
Retained earnings 46 000 20 164 17 241
Other reserves 3 037 - 953
Total equity attributable to equity holders of the Company 1 607 720 80 976 1 385 317
Non-controlling interest 40 961 - 29 354
Total equity 1 648 681 80 976 1 414 671
LIABILITIES
Non-current liabilities
Borrowings 3 801 - 3 570
Trade and other payables (note 6) 1 339 - 719
Deferred tax liability 32 174 7 441 20 116
Total non-current liabilities 37 314 7 441 24 405
Current liabilities
Borrowings 450 - 664
Loans from related parties 623 211 997 119 042
Trade and other payables (note 6) 267 405 16 191 136 010
Tax payable 31 720 - 3 460
Total current liabilities 300 198 228 188 259 176
Total liabilities 337 512 235 629 283 581
Total equity and liabilities 1 986 193 316 605 1 698 252
Net asset value per share (cents) 197 20 176
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2018
Unaudited Unaudited Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
6 months 6 months 12 months
R'000 R'000 R'000
Balance at the beginning of the period 1 414 671 84 257 84 257
Total comprehensive income/(loss) for the period 35 513 (3 281) (5 104)
Issue of ordinary shares 191 925 - 1 321 378
Share issue costs (365) - (15 066)
Recognition of share-based payments expense 2 085 - 953
Dividends paid to non-controlling shareholders (1 690) - -
Non-controlling interest 6 542 - 28 253
Balance at the end of the period 1 648 681 80 976 1 414 671
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2018
Unaudited Unaudited Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
6 months 6 months 12 months
R'000 R'000 R'000
Net cash flow from/(used in) operating activities 97 364 964 (47 737)
Cash generated from/(utilised by) operations (note 7) 109 330 449 (37 233)
Interest income 14 298 4 889 14 914
Finance cost (4 249) (4 374) (7 630)
Tax paid (22 015) - (17 788)
Net cash flow used in investing activities (280 972) (28 461) (391 903)
Purchase of property, plant and equipment (30 573) (23 370) (222 185)
Proceeds from sale of property, plant and equipment 303 662 233
Purchase of intangible assets and curriculum development costs (5 768) (5 753) (11 403)
Acquisition of subsidiaries (note 3) (244 934) - (158 548)
Net cash flow from financing activities (158 644) 2 763 938 459
(Share issue costs)/net proceeds from shares issued (365) - 824 934
Net proceeds from loans 624 - 119 042
Repayment of borrowings (157 213) 2 763 (32)
Dividends paid to non-controlling shareholders (1 690) - -
Additional investment in subsidiary with no change of control - - (5 485)
Net movement in cash and cash equivalents for the period (342 252) (24 734) 498 819
Cash and cash equivalents at the beginning of the period 646 090 147 271 147 271
Cash and cash equivalents at the end of the period 303 838 122 537 646 090
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL RESULTS
1. STATEMENT OF COMPLIANCE
The condensed consolidated interim financial information for the six months ended 30 June 2018 has been
prepared in accordance with the framework concepts and the measurement and recognition requirements
of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by
the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial
Reporting Standards Council, and to also, as a minimum, contain the information required by IAS 34: Interim
Financial Reporting, the Listings Requirements of the JSE and the requirements of the Companies Act of
South Africa, as amended. The report has been prepared using accounting policies that comply with IFRS
which are consistent in all material respects with those applied in the financial statements for the year ended
31 December 2017. The results have not been reviewed or audited by the Company's auditor. The condensed
consolidated interim results have been prepared internally under the supervision of the Chief Financial
Officer, S Totaram, CA(SA) CFA.
2. ACCOUNTING POLICIES
The accounting policies adopted in the preparation of the condensed consolidated interim financial information
are consistent with those of the annual financial statements for the year ended 31 December 2017 and
includes the adoption of new standards IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts
with Customers that were effective 1 January 2018. The new standards that have been adopted do not
have a material impact on the financial results. For a full list of standards and interpretations that have been
adopted by the Group, we refer you to the annual financial statements for the year ended 31 December 2017.
3. BUSINESS COMBINATIONS
During 2018 the Group invested R417 million in the acquisition of LISOF, Milpark and the business of
CA Connect.
LISOF
Effective 1 January 2018, the Group acquired 100% of LISOF for a total purchase consideration of R127 million.
LISOF is a registered private higher education institution (focusing on fashion design and retail education)
with six registered programmes ranging from higher certificates to honours degrees offered at two campuses
in Johannesburg and Pretoria.
MILPARK
Effective 19 March 2018, the Group acquired an effective 70% interest in Milpark for a purchase consideration
of R211 million. Brimstone Investment Corporation Ltd (Brimstone), the Group's BEE partner, acquired the
remaining 30% effective interest in Milpark for a purchase consideration of R89 million. The total purchase
consideration for Milpark amounted to R300 million.
On 20 March 2018, the Group and Brimstone concluded an asset-for-share agreement whereby the Group
acquired 17.2% of Brimstone's effective 30% interest in Milpark for a purchase consideration of R50.9 million.
This consideration was settled through the issue of 9.8 million ordinary STADIO shares (which are subject to a BEE
lock-in period of seven years), at an issue price of R5.20 per share (being STADIO's volume weighted average
share price, less a 20% discount at the date of settlement). Following the acquisition of the 17.2% interest
from Brimstone, the Group has an effective interest of 87.2% in Milpark. The Group's aggregate consideration
for its effective interest of 87.2% amounted to R261 million.
Milpark is a registered private higher education institution with a wide variety of programmes primarily in
business and commerce (ranging from higher certificates to an MBA), the majority of which is offered
through the distance learning mode of delivery.
CA CONNECT
Effective 12 April 2018, Milpark acquired the business of CA Connect for purchase consideration of
R32.3 million, with the deferred consideration being subject to the achievement of certain profit targets.
The Group's purchase consideration amounted to R28.2 million for an effective interest of 87.2%. The purchase
consideration was settled partly in shares and partly in cash on 12 April 2018. CA Connect specialises in education
services related to the Post Graduate Diploma in Accounting, a pathway for students who aspire to be a
Chartered Accountant.
The fair value of net assets acquired are:
LISOF MILPARK CA CONNECT TOTAL
R'000 R'000 R'000 R'000
Property, plant and equipment 69 524 12 185 - 81 709
Intangible assets 17 100 48 802 2 829 68 731
Deferred tax asset 1 626 13 857 - 15 483
Deferred tax liability (6 703) (2 671) (993) (10 367)
Trade and other receivables 2 828 44 848 3 547 51 223
Other financial assets - 510 - 510
Trade and other payables (6 295) (112 891) - (119 186)
Income tax payable (1 472) - - (1 472)
Income tax receivable 1 348 6 667 - 8 015
Borrowings (16 653) - - (16 653)
Loans and advances (21 518) - - (21 518)
Cash and cash equivalents 2 729 34 415 - 37 144
Total identifiable net assets acquired 42 514 45 722 5 383 93 619
Non-controlling interest - (5 853) (689) (6 542)
Goodwill 84 824 221 582 23 484 329 890
Consideration paid by the Group 127 338 261 451 28 178 416 967
Consideration paid by the Group
Cash (68 690) (206 996) (6 392) (282 078)
Equity (58 648) (50 863) (8 006) (117 517)
Deferred consideration - (3 592) (13 780) (17 372)
Total consideration (127 338) (261 451) (28 178) (416 967)
Net cash flow on acquisition
Cash consideration paid (68 690) (206 996) (6 392) (282 078)
Cash and cash equivalents acquired 2 729 34 415 - 37 144
(65 961) (172 581) (6 392) (244 934)
4. HEADLINE EARNINGS/(LOSS) PER SHARE
Unaudited Unaudited Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
6 months 6 months 12 months
R'000 R'000 R'000
Reconciliation of headline earnings/(loss):
Basic earnings/(loss) 28 759 (3 281) (7 037)
Adjustments attributable to parent:
Loss/(profit) on disposal of property, plant and
equipment 163 - (1)
Compensation from third parties for items of property,
plant and equipment that were impaired, lost or given up (564) - -
Tax on above 112 - -
Headline earnings/(loss) 28 470 (3 281) (7 038)
Reconciliation of core headline earnings/(loss):
Headline earnings/(loss) 28 470 (3 281) (7 038)
Adjustments attributable to parent:
Finance cost on deferred purchase consideration 868 - -
Acquisition costs 1 097 - 4 744
Listing costs, legal and other fees - - 4 154
Amortisation of client list 2 061 593 1 916
Tax on above (581) (166) (538)
Core headline earnings/(loss) 31 915 (2 854) 3 238
5. SHARE CAPITAL
The Company issued ordinary shares during the period as per the share capital reconciliation below:
Number
of ordinary
shares Share capital
(million) (R'000)
Balance as at 1 January 2018 786 1 367 123
Issue of shares in respect of acquisitions 30 191 560
Balance as at 30 June 2018 816 1 558 683
6. TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
6 months 6 months 12 months
R'000 R'000 R'000
Trade and other payables 78 468 10 685 25 304
Income received in advance 172 904 5 506 22 609
Deferred purchase consideration 17 372 - 88 816
268 744 16 191 136 729
7. CASH GENERATED FROM/(UTILISED BY) OPERATIONS
Unaudited Unaudited Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
6 months 6 months 12 months
R'000 R'000 R'000
Profit/(loss) before taxation 53 503 (3 908) (2 316)
Non-cash and other items disclosed separately 9 510 3 053 4 526
63 013 (855) 2 210
Movements in working capital 46 317 1 304 (39 443)
Decrease/(increase) in inventories 3 024 1 565 (3 561)
Increase in trade and other receivables (25 575) (6 148) (2 760)
Increase/(decrease) in trade and other payables 68 868 5 887 (33 122)
Cash generated from/(utilised by) operations 109 330 449 (37 233)
8. SEGMENTAL REPORTING
Due to all the services provided by the Group being related to higher education services within Southern
Africa, the Group only has one reportable segment. All historical information presented represents the
financial information of this single segment.
9. EVENTS AFTER THE REPORTING PERIOD
The directors are not aware of any material event which occurred after the reporting date and up to the
date of this report.
STATUTORY AND ADMINISTRATION
Directors: CR van der Merwe*, S Totaram*, D Singh*, PN de Waal**, DM Ramaphosa^, RH Stumpf^, R Kisten^,
KS Sithole^, A Mellet** (Alternate to PN de Waal)
* Executive director ** Non-executive director ^ Independent non-executive director
Company secretary: Stadio Corporate Services (Pty) Ltd
Registered office: Unit 13, San Domenico, 10 Church Street, Durbanville, 7550
Transfer secretaries: Computershare Investor Services (Pty) Ltd, Rosebank Towers, 15 Biermann Avenue, Rosebank,
Johannesburg, 2196. PO Box 61051, Marshalltown, 2107
Corporate adviser and sponsor: PSG Capital (Pty) Ltd
Website: www.stadio.co.za
Date: 03/09/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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