Agenda · 2019. 7. 25. · IMF World Economic Outlook: SA expected to remain below Unemployment...

Agenda

Annual Financial Results for the year ended 31 December 2017

Results

Financials

Resourcing division

Africa

Tertiary division

Academic excellence

Schools division

Prospects

Good results

Trading

Revenue

Trading Performance Summary

Trading

Operational

Profit

Normalised

Earnings

Per Share

23% 20% 20%


Segmental Trading Performance

Revenue

Schools

15% 26% 40%

Operating

Profit3% 44% 59%

Tertiary Resourcing


STUDENTS

EDUCATIONAL SITES

2016 2017 2018

53 337

60 176

63 544

98

117

122

Group

Growth


STUDENTS

EDUCATIONAL SITES

2016 2017 2018

53 337

60 176

98

117

122

Including Oxbridge +

University of Africa

Growth


92 475

63 544

Bad debt


Tough economic

environment

Pressure on

consumers

Well managed

and under control

Schools

<1%

Tertiary

<3%

Financial overview

The reported incident of fraud


Total of R48.1 million, perpetrated over a three year period starting in 2015

Overstatement of revenue & understatement of costs

R35.5 million after tax impact

Theft of cash - R5.0 million of which R2.0 million has been secured

Criminal & civil charges being pursued

Impact of fraud


Name

12 Months to

31 December 2015

R’m

12 Months to

31 December 2016

R’m

6 Months to

30 June 2017

R’m

6 Months to

31 December

2017

Rm’

Total Amount

R’m

Revenue overstated - (9.3) (5.1) (2.5) (16.9)

Expenses Understated

(Including the cash loss of

R5.0 million)

(6.7) (15.1) (2.9) (6.5) (31.2)

Operating profit overstated (6.7) (24.4) (8.0) (9.0) (48.1)

Taxation Effect 1.9 6.6 2.0 2.1 12.6

Profit after Taxation Effect (4.8) (17.8) (6.0) (6.9) (35.5)

Group

Trading Revenue


17661932

2705

3353

4096

0

500

1000

1500

2000

2500

3000

3500

4000

4500

13 14 15 16 17

R’m

+23%

Group

Trading operating profit


222256

448.0

560

671

0

100

200

300

400

500

600

700

800

13 14 15 16 17

R’m

+20%

Group

Group trading operating margin


13% 13%

16%17%

16%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

13 14 15 16 17

R’m

• Growth Capex

• Capacity utilisation

Group

NEPS


37.942.3

53.9

63.3

75.8

0

10

20

30

40

50

60

70

80

13 14 15 16 17

Cen

ts

+20%

Group

Cash flow generation


363

286

558

738

811

200

93

223

291

400

0

100

200

300

400

500

600

700

800

900

13 14 15 16 17

R’m

Cash generated by operations

Cash from operations

+37%

Group

Free operating cash flow before capex


297

196

338

468

597

0

100

200

300

400

500

600

700

13 14 15 16 17

R’m

+28%

Group

Capex and acquisitions


CAPEX AND ACQUISITIONS R'm

Acquisitions 215.6

- Glenwood House

- Summit College

- The Private Hotel School

- University of Africa

- Greenwood Bay College

- Elkanah House

Capex Projects 718.0

5 Site Acquisitions 226.3

3 New Schools 114.4

Student Management and Finance Systems 29.2

Expansionary capex – existing sites 218.00

Furniture, Fittings, IT and Vehicles 130.1

Total Capex and Acquisitions 933.6

Group

Net cash position


-202

-436

-1157-1110

-1617-1800

-1600

-1400

-1200

-1000

-800

-600

-400

-200

0

13 14 15 16 17

R’m

Tough Economic Times - 2017

GDP growth last 3 years 1%

IMF World Economic Outlook:

SA expected to remain below

Unemployment

STATS SA Q4:

1% GDP growth

26,5%

SA business

confidence

2018 highest

increase

Since

1970s

GDP growth last 5 years 1.5%

135k formal jobs lost Q4 2017

Operating Environment

School market

Higher Education market size

Public

enrolments: +6%

Independent

enrolments: +130%

Total SA enrolments

Public higher

education: +3%

Private higher

education: +51%

Total estimated higher education enrolment SA

12 342 000

590 000

12 932 000

985 000

147 000

1 132 000

Source: CHE 2015, VitalStats 2015, SA Institute of Race Relations 2018 survey. CHE says 90 000+

11 647 0002000

2016

256 000

2016

2000

953 000

2015

2012

97 000

2015

2012


Strategic Imperatives

Innovation

> Business process

> Product/market

development

Africa

Customer focus

> Easy to do business

with us

> Understanding needs

Academic excellence

> Teaching & learning

> Benchmarking our

performance

> Learning analytics

> International &

Employer recognition

Growth

> Organic and Acquisitive

> Channel

> Product

> Segment

> Geographic

RE

GU

LAT

ION

SOCIO-ECONOMIC ENVIRONMENT

RE

PU

TAT

ION

TRANSFORMATION

Human &

capital

productivity

Excellence through

specialisation

> Niche market focus

> Benchmarking

> Database

development

Academic Excellence

Academic Excellence

2017 Matric results

Matriculants

1 754Distinctions

2 866 Average distinctions

Per candidate

1.6


Academic Excellence

Schools academic results comparison


NSC 2017

ADvTECH

NSC

Schools

2017

Competitor

NSC

2017

IEB 2017Competitor

IEB

2017

ADvTECH

IEB

Schools

2017

Number of

matrics

Matric pass

rate

Bachelor pass

rate

Average

distinctions

per candidate

75%

29%

824

42%

530

98%

58%

1

99%

89%

1 144

85%

1 224

100%

94%

2

ADvTECH

Group

2017

1 754

99%

84%

1.6

NSC IEB

Academic Excellence

Academic focus: 4 Strategic Areas

CURRICULUMThe Department of Basic Education (DBE). Curriculum Assessment Policy

Statements (CAPS). Independent Examinations Board (IEB). Cambridge

International (Cambridge). Early Years Foundation Stage (EYFS)

CORE SKILLS / GLOBAL COMPETENCIESInvestigation | Creating | Communicating | Collaborating | Organising |

Digital citizenship

DIGITAL LITERACYInvestigation | Creating | Communicating | Collaborating | Organising |

Digital citizenship

GLOBAL CITIZENSHIP

Values | Attitudes | Behaviours | Embracing diversity | Taking action/Service

Academic Excellence

GoLab programme at schools


“GO Lab empowers learners with 21st-

Century Skill Sets and hands-on

experience with modern technology to

better equip the youth for global and

future careers.” – GO Lab website

Helps to address the United Nations

“17 sustainable development goals.”

Critical Thinking Skills

Creative and Innovative Thinking Skills

Problem Solving Skills

Analytical Skills

Computational Thinking Skills

Design Thinking Skills

Collaboration & Teamwork

Curiosity & Questioning Skills

Communication Tools,

Techniques & Skills

Dedicated labs on campuses

Differentiators

Portfolio of brands

Unique value

proposition

and offerings

The IIE central

academic team

Centralised academic structures

Development of qualifications

Centralised systems

SA’s largest

“private university”

Tertiary classes

<100 students

Public universities, 200+

students per class

Academic

excellenceContinued focus on

academic excellence

as a differentiator

Critical value

proposition

Regulation, accreditation & operations

Market

segmentation

and

differentiation

Academic Excellence

Accredited courses by category


IIE

99

MASTERS

HONOURS

DEGREES

DIPLOMAS

HIGHER

CERTIFICATES

1

11

27

34

26

THE PRIVATE

HOTEL

SCHOOL

13

DIPLOMAS

HIGHER

CERTIFICATES

VOCATIONAL

TRAINING

COURSES

2

2

9

CAPSICUM

5

VOCATIONAL

TRAINING

COURSES

5

OXBRIDGE

17

VOCATIONAL

TRAINING

COURSES

17

THE

UNIVERSITY

OF AFRICA

31

PHDs

MASTERS

DEGREES

2

9

20

ACCREDITED TERTIARY COURSES165TOTAL

2 PHDs 10 MASTERS 11 HONOURS 47 DEGREES 36 DIPLOMAS

28 HIGHER CERTIFICATES 31 VOCATIONAL TRAINING

Academic Excellence

Tertiary academic results


82%Average

module

pass rate

18%Average

module

distinction

rate

72%Average

throughput

pass rate

12%Average

dropout

rate

Academic Excellence

International and employer recognition


2 363 of our graduates were placed in first time employment

through our Graduate Empowerment Programme

Strategic Imperatives – Graduate Placement

Loerie Awards

2 Gold

2 Silver

4 Bronze

4 FinalistsNew Blood

Pencil

Winner

Future

Award

IAB Bookmark

Black Pixel

Award

Winner

National

Instagram

Hack

3 Gold

pack

Finalists

International & Employer Recognition


Academic system

Integrated system utilised by schools and tertiary


ADMIN

SYSTEMDifferentiated Scalable

Accessible

FlexibleCentralised

Academic

System

Cloud-based

Student information system

Why this why now?


Easy to

operate across

geographies

and regulatory

environments

Seamless

integration

with other

systems

Replaces

legacy

systems

Improves

service to

the customer

One system

from

Kindergarten –

Postgrad

Enables

data-driven

decisions

Academic intelligence - KITSO


Cohort qualifications dashboard

Setting

module

targets

Target

tracking

Benchmarked by:

• Students

• Lecturers /

Teachers

• Campuses

Schools division


Trading Revenue

Schools

819915

1432

1644

1876

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2013 2014 2015 2016 2017

R’m

+15%


Trading profit – Normalised

Schools

157 162

292

321330

0

50

100

150

200

250

300

350

2013 2014 2015 2016 2017

R’m

+3%


Capacity Table

Schools

Schools capacity - end of February Feb-15 Feb-16 Feb-17 Feb-18

Students enrolled ('000) 22,9 24,2 26,7 27,4

Existing building capacity ('000) 26,9 28,6 31,2 33,0

% Existing building capacity utilised 85% 85% 86% 83%

Ultimate potential site capacity ('000) 34,3 37,0 41,5 45,2

% Ultimate potential site capacity utilised ('000) 67% 65% 64% 61%


Trading operating margin

Schools

19%18%

20% 20%

18%

0%

5%

10%

15%

20%

25%

2013 2014 2015 2016 2017

R’m

Impact of:

• Added capacities not yet filled.


Focus Areas

Schools

Growth

Academic Excellence

Structure & Systems Efficiencies


Schools

Growth

Challenge

• Tough economic climate

• Emigration / semigration

• Increasing competition

• Limited pipeline

• Premium school bias

• Geographic imbalance

Response

• Customer & learner experience

• Value proposition

• Improved onboarding

• Stronger greenfield pipeline

• New school models

• Improved footprint

How + What

• School value offering review

• Lead & enrolment tracking

• Dedicated development team

• Onboarding programme optimisation

• Solid research based pipeline

• Launch of learning assist

• Western Cape footprint expansion


Student enrolment drivers

Schools

Financial pressureEmigration / Semigration

29% 43%

Jan Dec



Schools

Enrolments remain strong

Challenge is to minimise

leavers

• Market share – Value proposition remains competitive

• Academic excellence – Academic performance focus

• New Product Growth

• Financial – Mid fee

• Semigration – Increasing regional footprint



Schools

Schools sensitivity 2017 ActualAdditional volume growth

1% 2%

Revenue 1 866 1 890 1 908

Increase over 2017 14% 15% 16%

Trading Operating Profit 330 354 372

Increase over 2017 3% 7% 13%

Operating Margin 18% 19% 20%


Schools

Strong pipeline

2017 2018 2019 2020 2021

SCHOOLS

CAMPUSES

(end Feb)

SCHOOLS

BY PHASE

(end Feb)

NEW MID-FEE

SCHOOLS BY

PHASE (included)

4747

4 3 8 6

49 53 59 60

89 94 104 114 122

NEW PREMIUM

FEE SCHOOLS

BY PHASE

(included)

3 7 2 2


New product development

Schools

Learning Assist: The Bridge

• Grade 0 - 7

• Gauteng, Northern

suburbs

• Opened 2018

• Opportunities

• West Rand


Expanding footprint: Western Cape

Schools

Elkanah

House

Student #

1 384

5 schools

Glenwood

House

Student #

831

3 Schools

Greenwood

Bay

Student #

349

3 SchoolsAbbotts

College

Student #

557

2 Schools

*Numbers at Feb 2018


New developments

Schools

Mooikloof

High School

(2018)


New developments

Schools

Wilgespruit

(2019)

Kyalami

(2019)

Glenvista

(2019)

Founders Hill

grew by

Schools

Copperleaf College

grew by

Mid-fee growth

is excellent

Impacted

negatively by:Fraud, emigration and

financial pressure

89%

94%


Schools

Academic

ExcellenceChallenge

• Entrench our position as

market leader

• Relevant curricula

development

• Leverage technology in

teaching & learning

Response

• Academic enhancement

through learning analytics

• Life skills

• Technology investment

How + What

• Advanced SIS

• Benchmarking

• Class/individual interventions

• GO Labs

• International partner for

digital literacy programme


Schools

Structural / System

EfficienciesChallenge

• Restructure for growth &

efficiencies

• Numerous outdated systems

with limited functionality and

lack of integration

How + What• New focused brand structure

with full support functions

• Finance SSC consolidating

transactional processing

• Single finance system

• Academia SIS

• Lead Alumni

• Portals

• HR recruitment system

• Automated payroll input

Response

• Complete review of brand

structures & support functions

• New accounting & student

information system


Finance structure & process changes

Schools

Historic landscape New landscape

Aging accounting systems on remote

servers

Time consuming consolidation &

reporting

Numerous COAs, ledgers and

bank accounts

Inefficient & outdated payment

mechanisms

Single finance system on central

server

Quick & accurate consolidation &

reporting

Single COA, significantly reduced

ledgers & bank accounts

Efficient & automated payment

systems

Decentralised skill challenges

Remote payments, billing & collections

Decentralised control environment

Centralised specialist skills & focus

Central payments, billing &

collections

Centralised key control environment

with better segregation

Tertiary division


Revenue

Tertiary

751827

982

1253

1580

0

200

400

600

800

1000

1200

1400

1600

1800

2013 2014 2015 2016 2017

R’m

+26%


Operating profit

Tertiary

48

84

135

223

321

0

50

100

150

200

250

300

350

2013 2014 2015 2016 2017

R’m

+44%


Operating margin

Tertiary

6.4%

10.2%

13.7%

17.8%

20.3%

0%

5%

10%

15%

20%

25%

2013 2014 2015 2016 2017

R’m


Tertiary

Segment Growth

Leading hospitality education provider

80% acquisition Founded January

20062 Campuses

Fully integrated

Stellenbosch

campus

Excellent

opportunity for

expansion

Tertiary


Largest chef school in SA with a national footprint

100% Acquisition Founded 20036 Campuses

Nationally

Integration with

PHS


Tertiary

Segment Growth

New hospitality campus in Rosebank

2018

Tertiary


Distance learning provider

Commerce and

management

Education Engineering and

Bio Science

Law and

Humanities

Degrees, Masters, PHD

Leadership in Africa’s

development

51% Acquisition

Lusaka, Zambia

35% growth

Tertiary


Wide range of skills development distance online learning courses

National Qualification Framework (NQF)

Short learning programme

Online courses

Flexible and accessible

vocational educationX% Growth

Superb distance

Support, procedures

and systems

Opportunity to

expand and

leverage distance

platform

27 000+ Students

Tertiary


Quality, affordable education that leads to employment

HumanitiesSchool of

education

IT Information &

communicationCommerce

Mega Campus Connected Campuses

7 Campuses

Polokwane

Bloemfontein (2018)

Pietermaritzburg (2018)

Tertiary


School of

ManagementSchool of Law

School of

Psychology and

Communication

School of Finance

& Accounting

Best of teaching & learning practice, combined with a comprehensive student experience

8 Campuses85% pass rate for the SAICA ITC

board exams

Tertiary


High industry credibility

and reputation

Voted #1 by the

Loerie Awards

Brand

management &

communication

Digital marketing Creative design

The leading creative industry education experience

Loerie Awards

Design:

Gaming |

Fashion | Interior

Resourcing division


Growth

Resourcing

SA markets

Grew market share

in a declining market

Africa

Superb growth

Endorses our

strategy

to diversify and

explore

alternative markets

Africa revenue

Dollar based


Revenue

Resourcing

200 194

297

461

644

0

100

200

300

400

500

600

700

2013 2014 2015 2016 2017

R’m

+40%


Operating profit

Resourcing

18 18

29

20

32

0

5

10

15

20

25

30

35

2013 2014 2015 2016 2017

R’m

+59%


Operating margin

Resourcing

9.1%9.4%

9.8%

4.4%5.0%

0%

2%

4%

6%

8%

10%

12%

2013 2014 2015 2016 2017

R’m

Africa

African Education Market

66mn scholars in private

Education by

Private sector

investment need

Emerging markets

education investments

increased more than

“Private higher education proves to be one of the

Sub-Saharan Africa, largest & fastest growing

6mn

2021

$16 – $18bnover the next 5yrs

between 2001 and 2015

5 000%

fastest growing sectors in Africa”

Median age 20

households will earn

$5 000 – $20 000 by 2025

Operating Environment

Currently 2/5 of population

age is 0-14 years 1/5

between 15-24 years

Urbanisation will

go from 36% (2010) to

50% by 2030

Population will double to 2.4bn by 2050

1.2bn will need education


Geographic growth

Expansion into the rest of Africa

30% revenue

2020

11% of revenue

generated outside

SA’s borders


Kenya


Population:

-48.5million

Economic:

⁻5.8% GDP growth 2016 ⁻6.1% GDP growth forecast 2019⁻$3156 GDP per capita 2016 (PPP Current international $)

Market:

⁻28% Population growth last 10 years⁻41% of population between ages 0-14⁻19% of population between ages 15-24⁻10.1mn scholars


Nairobi, Kenya


Congestion: classic city issues


Nairobi, Kenya


Satellite City – Tatu City



Tatu City

Nairobi, Kenya

Copperleaf

Academy

(2017)



Crawford International School


Africa development partner


Largest urban developer in Africa

12 000 hectares under development in Africa

Kenya GhanaDemocratic

Republic of

Congo (DRC)

Zambia Nigeria


Dividend

• Strong cash generation

• Increased capex pipeline

• Balance between preserving cash for

development projects and

shareholder returns

• Likely to continue increasing dividend

cover

0%

10.5 11.0 12.5 13.5 15.0

15.0 15.0 17.0

19.0 19.0

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2013 2014 2015 2016 2017

Dividends per Share

Interim Dividend Total Dividends

11%

Prospects

Prospects

Strong performance

Good growth

opportunities

ROI ahead of cost

of capital

Cash

generation

Clear focus

on academic

excellence



Prospects

Improved sentiment

New President: Cyril Ramaphosa

New Minister of Higher Education:

Naledi Pandor

Cabinet

reshuffle

Hope to avoid ratings downgrade

The Bureau for Economic Research: business

confidence up by highest margin since the mid-1970s

IMF World Economic Outlook 2018: Sub-Saharan-Africa

GDP growth forecast 2018: 3.3% and 2019: 3.5%

Questions?

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Agenda · 2019. 7. 25. · IMF World Economic Outlook: SA expected to remain below Unemployment...

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