Tertiary education business STADIO has released results for the year ended December 2021.

The core driver of revenue is student numbers, which increased by 9% to 35,031. Distance learning students are around 84% of the total. In the second semester, distance learning students grew 13% year-on-year and contact learning students decreased by 7%, so it’s not difficult to figure out that the mix of students is changing.

This trend will be accelerated by the Milpark business transitioning away from contact learning to distance learning only. With one of the Milpark students placing first in the SAICA ITC board examinations, the brand seems to be strengthening.

We will have to wait for a post-COVID world before we know the extent to which contact learning will recover.

In an effort to keep the revenue line ticking over, STADIO is growing its short course business and acquired Intelligent Africa in October 2021. This can be a lucrative way to tap into corporate budgets for learning and development.

Thanks to the mix effect of different qualifications and price increases on top of student number growth, revenue was up 18% for the year.

With the fair value adjustment for CA Connect in the prior year of R207 million excluded, EBITDA increased by 23% to R310 million.

This result was impacted by STADIO having entered into an early settlement agreement with the CA Connect shareholders, which led to a dilution in STADIO’s shareholding in Milpark from 87.2% to 68.5%. When all is said and done, that acquisition cost STADIO R258 million and made loads of money for the sellers thanks to a really strong performance in the CA Connect business.

There were also impairments related to changes in strategy around certain properties. STADIO recognised an impairment of R17 million on the leased Milpark campus in Gauteng and an impairment on the STADIO Montana property of R10 million based on a deal to sell the property for R52 million (the carrying value was R62 million). The base year also had substantial impairments (R51 million on intangible assets) so earnings per share isn’t a great tool for comparison of 2021 to 2020 (as is so often the case).

Without any adjustments, headline earnings per share (HEPS) swung from a loss of 8.5 cents the previous year to a profit of 17 cents per share. Core HEPS excludes the impact of non-recurring or non-cash items and increased by 24% to 17.6 cents per share.

To add to the good news, STADIO has declared its first ever dividend in the amount of 4.7 cents per share. This is encouraging considering that the group had substantial capital expenditure needs for projects like STADIO Centurion and STADIO Durbanville.

The balance sheet has R66 million in cash and STADIO has access to a revolving credit facility of R185 million of which only R15 million has been drawn down.

The share price closed 3.3% higher at R3.40. The dividend represents a yield of 1.4% on yesterday’s closing price.