Higher abnormal costs drag Stadio to full-year loss
Company writes down value of some of its trademarks after three of its businesses are consolidated under its brand name
Stadio, the private higher education group that was hived off SA’s biggest group in the sector Curro several years ago, has swung into a loss after accounting for the adjusted price tag in its acquisition of a private education venture offering lessons to aspirant chartered accountants, CA Connect.
CA Connect, which Stadio acquired in April 2018, offers the postgraduate diploma in accounting programme.
The fair value adjustment of R207m in the purchase of CA Connect relates to higher-than-expected student enrolments, and where the performance of the business was part of the sales agreement.
Stadio said the acquisition price was subject to the performance of earnings before interest, tax, depreciation and amortisation (ebitda) of the CA Connect business over a three-year period, which ends in June 2022.
“The enrolments on the (postgraduate diploma in accounting) and PGDA bridging programmes have continued to exceed expectations over the last two years. The better-than-expected student enrolments in 2020 resulted in an increased ebitda expectation over the (three-year) period and thus increased the contingent consideration liability in respect of this acquisition,” the group said.
As a result, the net loss was R138m in the year to December, from a profit a R84m a year before, the company said in a statement on Monday. The company also wrote down the value of some of its trademarks after three of its businesses were consolidated under its brand name.
Headline loss per share came in at 8.5c, swinging from headline earnings per share (heps) of 8.5c a year before. However, core HEPS, the group’s preferred measure of underlying earnings and which strips out abnormal items, rose 31% to 14.2c.
Student enrolments rose 10% to 35,031 in December 2020. In the same period, distance learning students rose 12% to 28,664 and contact learning students 3% to 6,367.
“Notwithstanding the challenges presented by the Covid-19 pandemic and the uncertainties created by the second wave of infections, the group is confident and remains committed to achieving its strategic objectives and seeking further growth opportunities,” the company said in a statement.
The market reacted positively, pushing up the share price 3.35% to R2.47 on Monday.
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