Humansoft K S C P : Transcript of the Analysts Conference

Company:	Humansoft Holding Company
Conference Title:	Humansoft Q3 2022 results conference call (Edited Transcript)
Date:	Wednesday, 2 November 2022
Time:	2 pm (Kuwait time)
Hatem Alaa	Hello, everyone. This is Hatem Alaa from EFG Hermes, and

welcome to Humansoft's Third Quarter 2022 Results Call. I'm pleased to have on the call today, from Humansoft, Anup Dhand, CFO, and Mayank Baxi, Board Member.

We'll start by a presentation from management and then we'll open the floor for Q&A. Just an initial reminder, to ask a question, you can click on the raise hand button on the right-hand side of your screen, or you can type in the Q&A chat box. Gentlemen, please go ahead.

Mayank Baxi Hello, everybody. Welcome to the Humansoft Q3 2022 Results Conference Call. Thank you, team at EFG, for facilitating this call. I am Mayank Baxi, Board Member at Humansoft Holding Company, and along with our CFO, Mr Anup Dhand, together, we would like to briefly mention some of the key highlights of Q3 2022 and then run the Q3 2022 financial highlights. At the end, we shall leave the floor open for questions and answers.

At the outset, I would like to mention that any forward-looking statements or views discussed during this call are subject to risks and uncertainties that may cause the actual results to differ. Humansoft does not assume any obligation to update such views or statements nor make any announcements regarding any revised circumstances.

With this, some of the key highlights of Q3 2022 are as follows:

AUM and ACM together have enrolled a total of 3,391 new students in fall of 2022, taking the total enrolled students at the beginning of fall 2022 semester to 13,684.

Kuwait's Arab Region University Rankings for 2023 were released, and AUM has been ranked the first university in Kuwait, and number 26 in the Arab region. AUM ranking in the Arab region has advanced from 34 in 2022 to 26 in 2023. This was achieved due to the continuous focus on improvements on all fronts by the team at AUM, and it reiterates our emphasis on maintaining high quality standards.

Stanford University has ranked five AUM faculty among the top 2% scientists in the world. We remain proud of our faculty and their achievements.

Academic year 2022 - 23 began with a series of activities and was also marked with a vibrant and welcoming environment for all the students to enjoy the campus life.

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AUM and ACM remain committed in promoting CSR through various initiatives, which were held inside the campus and across the local community to tackle and promote corporate social responsibility, such as the breast cancer awareness campaign organised recently.

Our financial performance at the end of Q3 2022 remained robust and we remain focused on improving efficiencies.

Now I would like to invite Mr Anup Dhand, our CFO, to give the brief about Q3 2022 financial highlights. Thank you.

Anup DhandThank you, Mr Baxi, and a good afternoon to all the attendees. I am Anup Dhand, CFO of Humansoft, and I would like to present the financial highlights of Q3 2022.

To begin with, we would like to inform that because of disruptions due to COVID-19 and the changes in the academic calendar in 2021, revenue and profitability of the nine-month period of 2021 and nine-month period of 2022 are not comparable.

During Q3 2021, revenue recognition was 100% of summer semester, however, during Q3 2022, revenue recognition is back to the same as in 2019 pre-COVID days, which is 100% of summer semester and 20% of fall semester.

Nine-month 2022 revenue of KD 62.6 million was lower by 7.6% in comparison with nine- month 2021 revenue of KD 67.7 million, mainly as a result of disruptions due to COVID-19 in 2021 and the changes to the academic calendar in nine-month 2021. For more details, you can also refer to the revenue recognition slide on page 19 in our investor presentation.

Nine-month 2022 EBITDA of KD 41.4 million was lower by 13.1% in comparison with nine- month 2021 EBITDA of KD 47.7 million.

Nine-month 2022 net profit of KD 37.9 million was lower by 11.3% compared with KD 42.7 million for nine-month 2021.

Net profit margin for nine-month 2022 was 61% and EBITDA margin for nine-month 2022 was 66%.

The earnings per share was 311 fils during nine-month 2022 as compared to 351 fils during nine-month 2021.

Humansoft had a net cash position of KD 73.5 million as at 30 September 2022.

Total equity was KD 121 million as at 30 September 22, and the annualised return on average equity for nine-month 2022 amounted to 40%.

Total assets were KD 163.7 million as at 30 September 22 and the annualised return on average assets for nine-month 2022 amounted to 31%.

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Humansoft's fortress balance sheet, high return on average assets and high return on average equity provides protection, resilience and enables Humansoft to withstand stress events like COVID-19.

With this, we now open the floor for questions and answers. We request that you please introduce yourself with your name and the institution you represent when you have any questions. Thank you. Over to you, Hatem.

Hatem AlaaThank you, Anup. To ask a question, you can either click on the raise hand button and unmute your lines or you can type in the Q&A chat box. Again, you can either click on the raise hand button or type in the Q&A chat box. We'll take the first question from the line of Thomas Mathew. Your line is open.

Thomas Mathew Hi. Thanks for the call, and congrats on the higher number of enrolments as against last year. I just wanted to understand a broader picture of how the enrolments reached the number of over 3,300. If you could give us a backdrop of how many high school graduates were there and how many scholarships were there for all the

private universities in Kuwait and what the market share was for AUM and ACM, that would be helpful. I have a couple of more questions. I'll just wait for the response and then I'll probably ask those. Thank you.

Mayank Baxi Thank you, Thomas. See, as you must be aware, the Kuwait PUC announces the scholarships after the initial enrolments of the students and registrations at the various universities. And this year also, the same process was followed. Now, how it happens is that in the initial stage, when the list is first publicised, the information and the data is not the final one. It keeps updating until the start of the semester.

And that is because, during the period from the first publication of the enrolment of students in various universities until the start of the fall semester, there can be various changes that can happen in terms of the students wanting to change their majors or students wanting to go to other universities or some of the schools' results, particularly the American and British school results, may come subsequently. And all those factors result into the situation where the final numbers are not available at that point of time.

And then in between, the changes occur, which is also not getting fully available in the public domain. So whatever data or whatever information that we gather at the end of the enrolment or registration period or at the beginning of the fall semester may be gathered through various newspaper sources, etc., because there is no authentic one source.

And so, I would just like to make that clear, that when I am referring to the total high school graduates and the broad allocations, that might be subject to the corrections, if any, because the final numbers may not be available in public domain.

Thomas Mathew

Sure.

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Mayank Baxi Yes. Overall, if you look at the Kuwait demography and the schools operating here, particularly the Arab government schools and public schools and the foreign schools, this year, a total of about 45,000 students would have graduated. And I am talking from the public and private schools, Arabic schools affiliated to the government and also the foreign schools.

Now, out of these graduates, more or less the allocations that we gather from various publications, newspapers, etc. is that Kuwait University would have taken something around 9,000 students. The public announcements for foreign scholarships at that point was roughly around 4,000 students. Local scholarships were announced, around 6,400 students. And the remaining, PAAET would have taken this year about 16,000 students. So that adds up to around 35,000 students.

And the remaining 10,000 would consist of various things. There could be drop-outs, there could be some of the expats going abroad and leaving the country for higher studies, and some of Kuwaiti high school graduates also getting into, say, Police Academy or National Guards, etc. So that is the broad allocation of the high school graduates.

Thomas Mathew Sure. Just so that I understand this correctly, so you're saying that 6,400 students were the private scholarships. And AUM and ACM combined have 3,300 enrolments as against, let's say, last year, which I believe was about around 5,800 scholarships. And I think AUM and ACM was about 3,183 students that…

Mayank Baxi Let me correct this. Again, 6,400 was the number that was available in the public domain when the PUC first announced the list of the local scholarships. Now, if you have seen, at that point of time, the AUM/ACM number was not 3,300, It was around 2,700. the additions happened afterwards.

So similarly, other universities numbers may have also got changed due to withdrawal or readjustments there. The total number at the end was 6,400-odd, may not be the actual final number because that is not available in the public domain. Now, when you compare with last year, last year, I think in all, the total local scholarships had been around 7,000.

Thomas Mathew Sure. Very clear. Thank you so much. Another question was on the number of students that have graduated from ACM

Mayank Baxi	Yes, one more thing, Thomas.
Thomas Mathew	Yes.
Mayank Baxi	Also, the number changes subsequently, because at the initial point of

time, self-paid students are not part of the announcement. So, when the AUM/ACM number increases to, say, 3391 this time, it is also consisting of the self-paid students that come in later.

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