Humansoft K S C P : Transcript of the Analysts Conference

Company:	Humansoft Holding Company
Conference Title:	Humansoft Q2 2022 results conference call (Edited Transcript)
Date:	Thursday, 28 July 2022
Time:	2 pm (Kuwait time)

Hatem Alaa: Hello, everyone. This is Hatem Alaa from EFG Hermes and welcome to Humansoft's second quarter 2022 results conference call. I'm pleased to have on the call today from Humansoft Mr. Mayank Baxi, board member, and Mr. Anup Dhand, CFO. We'll start by some comments from management and then we'll open the floor for Q&A. Just as an initial reminder, to ask a question, you can either type your question in the Q&A chat box or you can click on the Raise Hand button and then unmute your mics. Gentlemen, please go ahead.

Mayank Baxi:Thank you. Hello, everybody. Welcome to the Humansoft Q2 2022 results conference call. I hope all of you and your loved ones are keeping safe, as still COVID is not over. Thank you, team at EFG, for facilitating this call. I am Mayank Baxi, board member of Humansoft, along with our CFO, Mr Anup Dhand, together we would like to briefly mention of the key highlights of the Q2 2022 and then run through the Q2 2022 financials. At the end we'll 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.

We consistently remain focused on strengthening the strategic pillars and some of the key highlights of which during Q2 2022 were:

QS World University Rankings for the year 2023 was released in June of 2022 and AUM has been ranked as the number-one university in Kuwait for the second year in a row and it's now among the top 750 globally. That's a very

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encouraging achievement.

AUM has launched the Smartverse Centre for AI and Innovation in cooperation with the University of California-Berkeley AMENA Centre for Entrepreneurship and Development.

Leading companies were recognised through the AUM Corporate Award of 2022. The launch of AUM Corporate Award stems from our belief in the importance of celebrating strategic partnership with the companies from private and public sectors.

The Next Generation Career Fair of 2022 was held for a full week in a hybrid environment with over 50 companies participating in the event.

Various events were organised on the campus for students, staff, and faculty during the second quarter, marking celebration of a successful year.

The admission process for the admission of new students both at AUM and ACM is currently in progress. As of now, the last day to apply for the scholarship students is 4th of August. We expect the announcement of local scholarships to come after 4th of August.

Now I would like to invite Mr. Anup Dhand, Humansoft CFO, to give a brief about Q2 2022 financial highlights.

Anup Dhand:Thank you, Mr Baxi, and good afternoon to all the attendees. I am Anup Dhand, CFO of Humansoft, and I would like to present the financial highlights for Q2 2022.

To begin with, we would like to inform that, due to changes in the academic calendar in 2020 and 2021, revenue and profitability of H1 2021 and H1 2022 are not comparable.

During H1 2021, revenue recognition was 50% of fall semester and 100% of spring semester. However, during H1 2022, revenue recognition was 25% for fall semester and 100% for spring semester.

In normal circumstances revenue recognised in H1 would have comprised of 20% of fall semester and 100% of spring semester.

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H1 2022 revenue of KD 44.2 million was lower by 18% in comparison with H1 2021 revenue of KD 54.2 million, mainly as a result of changes to the academic calendar in H1 2021 due to COVID-19.

For more details, you can also refer to the revenue recognition slide on page 19 in our investor presentation.

H1 2022 EBITDA of KD 29.5 million was lower by 27% in comparison with H1 2021 EBITDA of KD 40.4 million.

H1 2022 net profit of KD 27 million was lower by 27% compared with KD 36.9 million for H1 2021.

Net profit margin for H1 2022 was 61% and EBITDA margin for H1 2022 was 67%.

The earnings per share was 222 fils during H1 2022 as compared to 303 fils during H1 2021.

Humansoft had a net cash position of KD 68.6 million as of 30th June 2022.

Total equity was KD 110.1 million as of 30th June 2022 and the annualised return on average equity for H1 2022 amounted to 45%.

Total assets was KD 136.5 million as of 30th June 2022 and the annualised return on average assets for H1 2022 amounted to 37%.

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'll now open the floor for questions and answers. We request that you please introduce yourselves with your names and the institution you represent when you have any questions.

Thank you and over to you, Hatem.

Hatem Alaa:Thank you, gentlemen. To ask a question, you can either type your question in the Q&A chat box or you can click on the Raise Hand button on the right-hand side of your screens and unmute your lines. Again, you can

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either type your question in the Q&A chat box or you can click on the Raise Hand button. We'll take the first question from the line of Thomas Mathew from Kamco. Your line is open.

Thomas Mathew: Hi. Thanks for the call. I have three questions. The first one is on the second strategic pillar that you had announced during the annual earnings earlier this year. If you could provide an update on that, it would be very helpful. The second question is on the nursing major update, if you can probably give us some sort of an idea as to when that is probably going to start in terms of capex and in terms of fees and the number of credits that we can assume going forward for that major. The third question is about the number of students. I understand that last fall it was 13,753 students who were enrolled. By this fall, how many students are expected to pass out before your new enrolments? Those are my three questions. Thank you.

Mayank Baxi:Thanks, Thomas. As we mentioned during the annual call, there are short-term growth plans and a little longer-term growth plans. The plan that you refer, I think, refers to the little longer-term plan, so as of now, as we speak, there is no specific development where we can share more information regarding that, but certainly our focus is on both. As you have seen, on the short-term plans already a lot of developments have taken place which I recently highlighted and also regarding the nursing major, as mentioned earlier, we plan to start offering the major by fall of 2023.

As far as the capex is concerned, a consolidated capex plan of KD 6.5 million was also mentioned earlier. It remains the same. With regard to the number of credit, it will be similar to any other bachelor's programme because the nursing is offered in AUM. So specifically speaking total credits for nursing might just be somewhere around 120 to 125 credits. Exact number will come out once the curriculum is finalised, but it should be within that range.

As I also mentioned, regarding the new enrolments, the student enrolment is in progress. As we are in the process of still receiving applicants and the exact number of enrolments that will begin at fall will be only available at a later stage. If you are referring to the continuing students, then I think we should have close to 10,000 continuing students after the summer semester, but as of now, summer semester is also running, so the numbers could be a little

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