Academy of Learning’s new branches bode well for H2 2024 results; TASI transition on track: Chairman

Khalid Al-Ammar, Chairman of Academy of Learning Co.

---

Academy of Learning Co.’s (AOL) Chairman Khalid Al-Ammar expected the operation of new branches, especially the Riyadh branch, to have a positive impact on the H2 2024 financial performance FOR enhancing demand and boosting revenues.

 

In an interview with Argaam, Al-Ammar stated that the new Riyadh branch is poised to shift from pressuring earnings to being one of the drivers of the company’s strength.

 

For more exclusive interviews

 

The Riyadh branch incurred operating losses of SAR 12.9 million in H1 2024. When excluding such losses, AOL’s six-month net income would have amounted to SAR 21 million.

 

By the end of H1 2024, the company had 10 branches (nine in the Eastern Province and one in Riyadh). A total of nine branches were allocated for women and one for men.

 

In the coming days, AOL will open two new branches in Riyadh and Dammam. The latter is slated to be the largest female training center in the Eastern Province.

 

AOL, according to the chairman, is currently studying offers submitted by financial and legal advisors for its planned transition to the Main Market (TASI).

 

Here is the full interview with AOL’s Chairman Khalid Al-Ammar:

 

Q: AOL’s profits fell 46% year-on-year (YoY) to SAR 7.7 million by the end of H1 2024. What is your comment on these results?

 

A: The “expansion” and opening of new branches were the main reasons for the first-half profit fall, despite higher revenues.

 

AOL incurred operating losses of SAR 12.9 million from the Riyadh branch as it is still in the initial operating phase. The new branch is expected to enter the actual operating phase as of the second half of 2024. When excluding these one-off losses, the company’s six-month bottom line would have reached SAR 21 million, with a growth rate of 45% YoY.

 

In addition, marketing and sales expenses expanded to SAR 7.4 million in H1 2024, from SAR 4.1 million in H1 2023, with their positive impact projected to be reflected in the company’s results for the coming period.

 

Further, AOL has two branches under construction, which pose additional expenses.

 

All these expansions will start to show a positive impact as of H2 2024.

 

Q: Why did revenues jump 32.5% YoY in the first half, despite the 45.9% YoY drop in net income?

 

A: The expansion and opening of new branches, stepping up and diversifying marketing channels, and activating the current branches supported the company’s revenues to reach SAR 51.46 million by the end of the first six months of 2024.

 

The company’s branch network expanded to 10 in total for H1 2024, compared to seven branches for the same period of the previous year.

 

The newest Riyadh branch, which is the company’s largest branch in the Kingdom dedicated to women (with an accommodating capacity of 3,600 female students), began the initial operating phase in February 2024. It is expected to start the full actual operating phase as of mid-August when the new academic year starts.

 

AOL has been witnessing a rise in the number of students and higher occupancy across existing branches. Its total student count reached 7,837 students in H1 2024, compared to 5,956 in H1 2023.

 

The first-half revenue growth was not reflected in net income for the respective period given that the company incurred one-off operating losses from the new Riyadh branch which, if excluded, would have led to a 45% YoY leap in net earnings to SAR 21 million for the same period.

 

 

Q: How many branches were the company operating by H1-end and which contributed the most to the six-month top line?

 

A: The number of branches reached 10 by the end of the first half of 2024.

 

• Their geographical distribution was as follows: (nine branches in the Eastern Province and one in Riyadh).

 

• Their division by gender was as follows: (nine branches dedicated to women and one catering to men).

 

Work is currently underway on two new branches to be opened in the coming days. One will be in Dammam and is dedicated to women. It is slated to be the largest female training center in the Eastern Province. The second men-only branch is situated in Riyadh and will be the company’s second outlet in the Saudi capital following its debut in the city with its female academy.

 

The female academy in Al-Faisaliyah District, Dammam, generated the lion’s share of AOL's H1 2024 revenues.

 

Q: What impact does AOL expect as a result of the operation of new branches (especially the Riyadh branch) on H2 2024 financials?

 

A: The company expects a positive impact from the newest Riyadh branch, being its largest-ever female academy in Saudi Arabia. Given the increased adoption of diverse marketing techniques, higher demand and revenues, from the Riyadh branch in particular, is predicted during the second half of this year. This will result in transforming the branch from squeezing profits post-initial operation in H1 2024 to being one of the company’s key drivers of strength and profitability for the six-month period.

 

Q: How did the Riyadh branch’s current operating losses affect the company's overall financial performance for H1 2024?

 

A: Since the branch is still in the initial operating phase and is expected to enter the actual operating phase starting from H2 2024, the company's income statement recorded SAR 12.9 million operating losses for the Riyadh branch. Excluding this one-off impact, its H1 2024 net income could have amounted to SAR 21 million, rising 45% YoY. (This represents the company's natural annual growth rate over the last three years).

 

Q: What is the financial impact foreseen from the increase in the number of accredited study programs to 20 in total?

 

A: Raising the number of accredited study programs to 20 shall help diversify income sources and ramp up our market share. This is bound to enhance our ability to attract more students and achieve sustainable revenue growth. It would give the company a strong competitive edge given its offering of several diplomas in different fields. It also enables a higher student count as the company was able to boost its student capacity by opening new branches and entering new markets such as the Riyadh market and expanding into the training market dedicated to men.

 

We would also like to emphasize that the development of training programs was not only at the quantitative level, but also qualitatively, starting with the process of selecting new training programs based on precise and scientific mechanisms that serve the needs of the Saudi labor market. The process of developing training programs also includes ensuring that all the company's programs are interactive, which enhances their value and benefits the students.

 

Q: What is the expected financial impact of the new wholly-owned subsidiary, “National Learning Schools,” on AOL’s future performance?

 

A: The company's strategic plan and vision are focused on income diversification. It has already developed practical plans and procedures that it adopts to achieve this vision. Therefore, the Saudi education sector was deemed one of the leading sectors in the Kingdom, given the Saudi Vision 2030’s goals for educational development. Accordingly, the company saw that entering the private and international education sector will be a key investment opportunity for several reasons:

 

1. The government's move towards privatizing public education schools, as the company aspires to join the state’s privatization program for this sector.

 

2. Investing in the Saudi education sector is considered a safe haven.

 

3. AOL's investment in education also guarantees a long-term investment, as customers can be retained for up to 15 years.

 

4. The company is broadly experienced in the field of education and training, having achieved 20 years of success.

 

5. Aligns with AOL’s efforts to play a national role by investing in this public education sector in line with the Saudi Vision 2030.

 

All this and more incentivized the company's decision to establish the new wholly-owned subsidiary with a capital of SAR 10 million, in the efforts to tap the sector in an impactful and effective manner that guarantees a strong local market share, thus achieving its strategy for depth in revenues and income diversification.

 

Q: How many male and female students were enrolled in AOL's academies and schools by H1 2024-end?

 

A: By the end of H1 2024, the number of academy students soared 32% to 7,837 males and females, compared to 5,956 for the same period last year, with a growth rate of 32%. The count is expected to further increase at the beginning of the new academic year and the operation of the company's new branches.

 

As for schools, AOL is still preparing to launch its schools over the coming period.

 

Q: What are the latest updates on AOL’s TASI transition?

 

A: The board of directors unanimously decided on June 27 to move AOL from Nomu-Parallel Market to TASI. Currently, the company is studying bids submitted by a number of financial and legal advisors in order to contract with one of them under the proper and approved mechanisms. It will then start actual work on completing the transition file before filing the request with the Capital Market Authority (CMA) for consideration.