EDU’s Share Buy-Back and CEO Exit Raise Questions on Future Direction
EDU Holdings has significantly raised its FY25 financial outlook following strong enrolments and cost efficiencies, while announcing a selective buy-back of 12.5% of its shares from major investors.
- FY25 revenue guidance nearly doubles FY24 results
- EBITDA expected to more than triple year-on-year
- Selective buy-back of 18 million shares at $0.55 each
- Mulpha CEO Greg Shaw resigns from EDU board
- Buy-back to be funded from cash reserves and requires shareholder approval
Strong Enrolments Drive Upward Revision
EDU Holdings Limited, a prominent player in Australia's private tertiary education sector, has delivered a striking upgrade to its FY25 financial guidance. The company now anticipates revenue between $80.4 million and $82.4 million, nearly doubling its FY24 revenue of $42.3 million. This surge is largely attributed to stronger-than-expected enrolments in the third trimester at its Ikon Institute, EDU’s higher education arm, alongside favourable timing in cost increases.
EBITDA is forecasted to leap to a range of $24.1 million to $25.6 million, a more than threefold increase from the $7.9 million recorded in FY24. Net profit after tax is expected to rise dramatically to between $13.6 million and $15.1 million, up from $2.6 million the previous year. CEO Adam Davis highlighted the success of four new higher education courses launched earlier in the year, which accounted for 17% of Ikon’s Trimester 3 enrolments, validating EDU’s strategic expansion of its course portfolio.
Selective Buy-Back Signals Confidence
In a move that underscores confidence in the company’s intrinsic value, EDU announced a selective buy-back initiative involving 18 million shares, representing 12.5% of its total shares on issue. The buy-back price is set at $0.55 per share, reflecting a discount to recent trading averages, and will be funded entirely from existing cash reserves. The shares will be repurchased from two long-term shareholders, Mulpha Education Investments and Investec Australia.
This buy-back is expected to be immediately accretive to earnings per share and is designed not to hinder EDU’s ongoing growth and capital management plans. The board views this as a prudent capital allocation strategy, especially given the current share price does not fully reflect the company’s value.
Leadership Changes and Shareholder Dynamics
The buy-back coincides with significant changes in EDU’s shareholder and board composition. Mulpha’s CEO Greg Shaw, who has been a substantial shareholder since 2022, will retire and resign from the EDU board, along with his alternate director Joshua Bolot. The board has expressed gratitude for their contributions and will soon initiate a search for a new director to fill the vacancy.
Investec, a cornerstone investor since EDU’s 2016 ASX relisting, is exiting the Australian market, and this transaction represents part of its final divestment from EDU. The buy-back agreements require shareholder approval, which will be sought in an upcoming meeting accompanied by detailed disclosures.
Looking Ahead
EDU’s upgraded guidance and strategic buy-back reflect a company gaining momentum and confidence in its market position. The successful execution of these initiatives, alongside the appointment of new board members, will be critical to sustaining investor confidence and supporting EDU’s growth trajectory in a competitive education sector.
Bottom Line?
EDU’s bold financial upgrade and share buy-back set the stage for a pivotal year, but shareholder approval and leadership renewal remain key watchpoints.
Questions in the middle?
- Will shareholder approval for the buy-back be secured without contest?
- Who will be appointed to replace Mulpha’s departing directors on the board?
- How will EDU sustain enrolment growth amid evolving education market dynamics?
