STI Holdings’ attributable profit drops 10% on interest expenses

STI Education Systems Holdings, Inc. (STI Holdings) saw its attributable profit drop by 10% in its fiscal year ending March 2018, weighed down by interest expenses due to its bond issuance.

In a regulatory filing, the listed firm reported a net income attributable to equity holders of the parent of P496 million for the year ending March, lower than the P550.2 million it booked in the same period a year ago.

STI Holdings’ fiscal year from April to March follows that of the academic cycle in the Philippines, since it derives majority of its income from education services.

The owner of among the country’s largest networks of private schools attributed the decline to the increase in interest expenses.

“Interest expenses on loans increased by 177% or P140.2 million year-on-year mainly due to interest incurred on the STI Education Services Group, Inc.’s (STI ESG) bond issue charged to expense,” the company said.

STI ESG raised P3 billion last March 2017 from the issuance of fixed rate bonds, consisting of seven-year bonds due 2024 with a coupon rate of 5.8085% per annum, and 10-year bonds due 2027 at 6.3756% annually. The bonds are listed at the Philippine Dealing and Exchange Corp.

The funds raised from the bond issuance were used to finance the expansion of STI ESG’s campuses, refinance short-term loans, and for other general corporate requirements.

STI ESG can issue up to P2 billion worth of bonds until 2019, as per its three-year shelf registration program with the Securities and Exchange Commission worth up to P5 billion.

In terms of revenues, the company was able to breach the P3billion mark for the first time this year, inching up 5% to P3.08 billion, versus the P2.93 billion it generated in the same period last year.

The revenue growth was thanks to the continued increase in the number of enrollees in STI schools, both owned and franchised, alongside the performance of its subsidiary Information and Communications Technology, Inc. (iAcademy).

STI Holdings said a total of 105,031 students enrolled into its network of schools for school year 2017 to 2018, marking a 1.3% increase from the 103,727 enrollees last year. Senior high school students comprised 55% of the student population, while around 42% are college students under programs by the Commission on Higher Education.

The company continues to expand its school network with the construction of new sites for STI Lipa, STI Sta. Mesa, STI PasayEDSA, and a green field school in San Jose del Monte. The Lipa school is expected to be completed in November, in time for the second semester.

Shares in STI Holdings added a centavo or 0.89% to close at P1.13 apiece at the stock exchange on Tuesday.