Today, Kip McGrath Education Centres (ASX: KME) released its full-year FY21 results after the market had closed.
Within the past six months, Kip McGrath’s shares have declined by around 30%.
Kip McGrath has been tutoring primary and secondary school children throughout the world to improve or extend their learning, particularly in English and Maths. It operates primarily across Australia, New Zealand, and the UK.
Digging into the numbers
Across FY21, Kip McGrath reported group revenue of $19.3 million, an increase of 12.6% on FY20. Franchise fee revenue remained resilient with only a 2% drop despite multiple lockdowns across the UK, Africa and parts of Australia.
The corporate centre and corporate direct initiative also showed signs of growth with FY21 revenue of $3.7 million, up from $1.4 million last year.
Kip McGrath’s EBITDA came in flat at $5.1 million, while profit after tax rose 10.2% to $1.7 million.
The board declared a fully franked final dividend of 1 cent per share, payable on 23 September.
These figures are mostly in line with the previously released unaudited results.
Key initiatives
Management thinks that online lessons resulting from COVID lockdowns aren’t a transitory event. Around 40% of its lessons are delivered online, but it notes there’s been a permanent and progressive shift in its business model.
In order to help facilitate this change, Kip McGrath has recently built out its management team to help prioritise blending learning, growing student numbers and further product development.
There are around 10 new corporate centres in the pipeline which is expected to double corporate revenue across FY22. These corporate centres allow the company to test and implement new systems.
Kip McGrath also continues to invest in its technology offering. Its next major development is the release of its upgraded learning software for its students, Kip Learn. This is currently being finalised and will be released to corporate centres for testing next month.
Summary
These results mostly confirmed the unaudited results. I wouldn’t expect the share price to move too much tomorrow.
While Kip McGrath’s shares have fallen out of favour with the market recently, this business still seems to be operating on some decent fundamentals. Management seems to have a clear idea of how they plan to grow the business.
