Al Mohafaza for Education's FY 2022/23 profit more than doubles to SAR 6.4M

Logo of Al Mohafaza Company for Education

Al Mohafaza Company for Education, expected to be listed on the Nomu-Parallel Market by the end of March, plans to use its share in the proceeds of its initial public offering (IPO), which reaches 81.25%, in building, managing and operating an educational complex in Riyadh.

**The value of total net proceeds may change depending on the final offering price by the financial advisor.

During 2024, the company expanded outside of Hadar Al-Batin and purchased a land plot in Al-Munsiyah district, Riyadh, spanning 12,000 square meters. The company intends to utilize the land for establishing boys/girls’ schools, at an estimated cost of about SAR 42.8 million, to be financed from the IPO proceeds. The remaining portion will be financed from the liquidity available to the company or through borrowing from banks and financing agencies, as the following table shows:

The company posted SAR 6.4 million in net profit (SAR 0.95 per share) in FY 2022/23, compared to SAR 2.8 million for the previous year.

The increase in net profit was mainly driven by revenue growth and improved profit margins, thanks to operational efficiency and a decline in the direct costs-to-sales ratio by 4.8%. This is in addition to a rise in other revenues by about 30% year-on-year (YoY) to SAR 2.6 million by the end of the year, backed by Human Resources Development Fund subsidies, which recorded SAR 1.3 million in 2023, compared to only SAR 800,000 in 2022.

Operating segments

On the operating segments side, both the tuition fees and students’ transportation segments saw YoY growth of 26% and 32%, reaching SAR 27.1 million and SAR 1.9 million, respectively, by the end of this year. This came in line with a rise in the actual student occupancy rate last year to 95.3%, compared to 85.9% a year ago, in light of the increase in student count from 1,443 to 1,601 students by the end of the year ended in July 2023.

The tuition fees segment accounted for the lion’s share of the company’s FY 2022/23 revenues at 93.6%, as shown in the following chart:

Financial position

The company's financial statements showed a 27% YoY increase in current assets in FY 2022/23 due to the hike in net cash to about SAR 20 million, bringing the company's total assets to SAR 83.4 million by the end of the year, compared to SAR 74.9 million in prior-year period.

The financial statements showed the collection of SAR 1.8 million in rental income in FY 2022/23, compared to SAR 2.1 million in the year before.

The following table shows the key items in the balance sheet in the previous two years:

The company's real estate investments declined slightly YoY as a result of accumulated real estate depreciation, bringing the book value of investment properties to SAR 21.9 million by the end of the year ended in July 2023.

Meanwhile, the valuation of investment properties by appraisers Manarat Al-Emaar and Khaled Al-Mutairi Office amounted to about SAR 26.1 million, an increase of SAR 4.2 million over the book value of the properties.

The following table shows the development of the book value of investment properties versus the appraisers’ valuation: