ANNUAL FINANCIAL RESULTS 2012.pdfMatric results Physical Science 2011 Fail 0 - 29% Pass 30 - 40%...

ANNUAL FINANCIAL RESULTS

For the year ended

31 December

2012

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

STRATEGIC

OPERATIONS

FINANCIAL HIGHLIGHTS

FINANCIAL ANALYSIS

PROSPECTS

QUESTIONS

Agenda

STRATEGIC

Census 2011

Migration among our 52m people

Census 2011

Age structure

Census 2011

Access to internet

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

State expenditure

Principal budget allocations: Total of R1.15 trillion

Economic affairs

Education

Social security

Health

Housing and community

Law and order

Defence

Other

20%

Source: National Treasury

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

The rise of no fee education

Year No fees R1 – R100 R101 –

R500

R501 or

more

2002 1% 57% 22% 20%

2011 55% 7% 13% 23%

Source: South African Institute of Race Relations

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

The rise of no fee education

0 4 000 000 8 000 000

2007

2012

Source: South African Institute of Race Relations

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

• National Student Financial Aid Scheme

› Aims to grow tertiary student numbers, especially scarce skills

› Funds available

- 2012/2013 : R5.1 billion

- 2015/2016 : R6.3 billion

› Projected enrolments ‘000

- 2012/2013 : 910

- 2015/2016 : 990

› Projected assisted students ‘000

- 2012/2013 : 288

- 2014/2015 : 606

• Seta Funds proposal

› Seta funding to be reviewed, funds redirected to public FET colleges

and reimbursement to employers reduced

Increasing government support for

public tertiary students

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

Improvement?

2001 2012

Literacy 30% 52%

Numeracy 30% 41%

Grade 3 literacy and numeracy

Source: Department of Basic Education Technical Report 2012

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

Improvement?

Source: Department of Basic Education Technical Report 2012

In the year 2008 2009 2010 2011 2012

Matric candidates 534 552 538 496 511

Passed 334 335 365 348 378

Pass rate % 63 61 68 70 74

‘000

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

International comparisons

Country Quality of education

system

(rank out of 144)

Quality of maths and

science education

(rank out of 144)

Switzerland 1 5

Australia 15 24

India 34 30

Botswana 55 66

Nigeria 83 92

Ghana 62 93

Uganda 69 108

Mozambique 119 131

Egypt 139 139

South Africa 140 143

Source: South African Institute of Race Relations

“The World Economic Forum ranked South Africa last out of 62 countries,

in a survey about the quality of maths and science education”

Achiever Magazine

December 2012

Education in crisis

Source: The Times 19 December 2012

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

Matric results

Mathematics 2011

Fail 0 - 29%

Pass 30 - 40%

Pass 50 - 60%

Pass 70 - 100%

Source: South African Institute of Race Relations

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

Matric results

Physical Science 2011

Fail 0 - 29%

Pass 30 - 40%

Pass 50 - 60%

Pass 70 - 100%

Source: South African Institute of Race Relations

1 million eager school kids – Gr 10 in 2010

Source: South African Institute of Race Relations

51% attempted matric in 2012

38% passed

14% got university entrance

8% got > 40% for maths – just 80 000

And 7% got > 40% for science

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

Pressure for quality tertiary places 2012

‘000 of students

Applicants Places Chance of

getting in

UCT 25 4 16%

Wits 34 6 16%

Reporting universities 302 55 18%

Reporting universities of

technology

127

21

17%

Total 429 76 18%

Source: South African Institute of Race Relations

Labour unrest

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

Unemployment in SA

42%

13%

31%

14%

December 2008

Not economically active

Unemployed

Formal employment

Other employment

Source: Stats SA

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

Unemployment in SA

45%

14%

29%

12%

December 2012

Not economically active

Unemployed

Formal employment

Other employment

Source: Stats SA

OPERATIONS

“By their nature our activities in basic education, tertiary education and

staffing are of great value to the South African economy. This value flows

from not only the fresh annual cohort of students who complete their

education each year, but also the many thousands of alumni and graduates

who are active in the economy”

Leslie Maasdorp

Chairman

SCHOOLS

DIVISION

Group at a glance

TERTIARY

DIVISION

RESOURCING

DIVISION

SCHOOLS

DIVISION

TERTIARY

DIVISION

RESOURCING

DIVISION

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

• Client base

› Schools 13 000 students at 31 schools

› Tertiary 20 000 full-time and 13 000 part-time students at 23 campuses

› Some 3 800 job candidates placed by 21 staffing branches

• The People

› Just over 4 000 staff

› 273 with Masters degrees

› 26 with PhD

› 312 alumni

Scope of operations

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

• 48% of Group revenue is from returning students

• Equivalent to 55% of education revenue

• 58% of full-time student population is returning students

Annuity nature of revenue

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

Employee headcount

1 000

2 000

3 000

4 000

5 000

08 09 10 11 12

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

Investment

INVESTMENT PROGRAMME 2010 - 2012 R525 million

Infrastructural investments made

Tertiary properties

School properties

ICT equipment

Other infrastructuralequipment

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

• Four major infrastructure projects were completed in 2012:

› Phase 2 of Trinityhouse Little Falls opened in 2013

› Trinityhouse Palm Lakes KZN opened in 2013

› Acquisition of Abbotts College Pretoria East Campus

› Acquisition of Rosebank College building in Pretoria

• New sports facilities completed at Crawford Fourways and La Lucia

• 10 approved expansion projects to be rolled out in the next 8 to 10 years,

including 4 for Trinityhouse

• Capital commitments R1.1 billion

Infrastructure

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

Capacity

Capacity and year of development 236.200m²

25% created in last 5 years

Older capacity

Capacity created in 2008

Capacity created in 2009

Capacity created in 2010

Capacity created in 2011

Capacity created in 2012

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

Ploughing back

• Transformation forum "Developing Leaders for Tomorrow“

› 178 high performing employees

• Corporate Social Investment

› Over R59 million on bursaries benefitted 4 500 beneficiaries

› Total CSI spend 64 million

• Extensive outreach and other community engagement projects

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

Technology

• Crawford Preparatory Fourways is a leading exponent of iBooks and has

its own curriculum

• Electronic smart boards, videos and e-creativity are entrenched taught

using the new multimedia format

• First South African education group to participate in a Microsoft

Technology Adoption Programme

• First South African recruitment business to launch Premium Recruiter

package from LinkedIn

• IIE Connect enables lecturers across sites and brands to blog and chat

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

• College Campus

› Completed an online pilot with the American Public University Systems

(APUS)

• Varsity College

› UFS – LLB from 2013

› Partnership with The Open University, UK enables IIE graduates to go on

to a UK honours degree without leaving South Africa

• Vega

› Partnership with the Digital Marketing Institute (DMI), Ireland, for online

programmes

Academic development

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

• 1 301 Matric students at Abbotts College, CrawfordSchools™ and

Trinityhouse …

› CrawfordSchools™ 100% pass rate for 19th consecutive year

- 136 students achieved 6 or more distinctions

› Trinityhouse 100% pass rate

- 12 students achieved 6 or more distinctions

› Abbotts College 99% pass rate

- 19 students achieved 6 or more distinctions

Matric

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

• Subject averages

› Mathematics 63%

› English 66%

› Information technology 72%

› Physical Science 65%

› Accounting 72%

Matric

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

• Varsity College

› Offered BEd degree since 2004

› Includes specialist post-grad studies

› 2013 enrolment of 325 students

› Annual pass rate exceeds 90%

› Strong relationships and outreach programmes with schools

• Schools

Teacher bursary scheme was launched in 2007

› 172 recipients since 2008

First 9 graduates in 2012

Teacher training

FINANCIAL HIGHLIGHTS

STRATEGIC

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

Income statement and cash flow

Rm 2012 2011 % change

Revenue 1 687 1 606 5%

Operating profit 200 230 -13%

Headline earnings 139 162 -14%

HEPS (cps) 34.6 40.4 -14%

Diluted HEPS (cps) 34.6 40.4 -14%

Distribution (cps) 24.0 26.0 -8%

Free operating cash flow

before capex (cps)

68.4

66.0

4%

STRATEGIC

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

Segmental analysis

41% 46%

13%

2011

44% 44%

12%

2012

Schools Tertiary Resourcing

Revenue

STRATEGIC

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

Segmental analysis

53% 39%

8%

2011

73%

16% 11%

2012

Schools Tertiary Resourcing

Operating profit

STRATEGIC

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

Balance sheet highlights

Rm 2012 2011 % change

Tangible assets 980 813 21%

Debtors 111 106 5%

Fees in advance 169 139 22%

Shareholders equity 793 751 6%

Net borrowings 62 24

STRATEGIC

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

Ploughing back

R’m %

Total value created 1 206 100

Less: employees 713 59

Less: government taxes 220 18

Available to the business 273 23

STRATEGIC

FINANCIAL

ANALYSIS

PROSPECTS

QUESTIONS

OPERATIONS

Ploughing back

R’m %

Total value created 1 206

Less: employees 713

Less: government taxes 220

Available to the business 273 100

Allocated to communities 64 23

Allocated to investors 111 41

Retained in the group 99 36

FINANCIAL ANALYSIS

STRATEGIC

FINANCIAL

HIGHLIGHTS

PROSPECTS

QUESTIONS

OPERATIONS

Revenue trend

0 200 400 600 800

1 0001 2001 4001 6001 800

08 09 10 11 12

R'm

Group revenue

STRATEGIC

FINANCIAL

HIGHLIGHTS

PROSPECTS

QUESTIONS

OPERATIONS

Group operating margin

0%

5%

10%

15%

20%

08 09 10 11 12

STRATEGIC

FINANCIAL

HIGHLIGHTS

PROSPECTS

QUESTIONS

OPERATIONS

HEPS trend

0

10

20

30

40

50

08 09 10 11 12

Cen

ts

STRATEGIC

FINANCIAL

HIGHLIGHTS

PROSPECTS

QUESTIONS

OPERATIONS

Cash flow generation

50

100

150

200

250

300

08 09 10 11 12

R'm

Free operating cash flow before capex

STRATEGIC

FINANCIAL

HIGHLIGHTS

PROSPECTS

QUESTIONS

OPERATIONS

Schools

0

200

400

600

800

1 000

08 09 10 11 12

R'm

Revenue

STRATEGIC

FINANCIAL

HIGHLIGHTS

PROSPECTS

QUESTIONS

OPERATIONS

Schools

0

50

100

150

200

08 09 10 11 12

R'm

Operating profit

STRATEGIC

FINANCIAL

HIGHLIGHTS

PROSPECTS

QUESTIONS

OPERATIONS

Tertiary

0

200

400

600

800

1 000

08 09 10 11 12

R'm

Revenue

STRATEGIC

FINANCIAL

HIGHLIGHTS

PROSPECTS

QUESTIONS

OPERATIONS

Tertiary

0

50

100

150

200

08 09 10 11 12

R'm

Operating profit

STRATEGIC

FINANCIAL

HIGHLIGHTS

PROSPECTS

QUESTIONS

OPERATIONS

Resourcing

0

200

400

600

800

1 000

08 09 10 11 12

R'm

Revenue

STRATEGIC

FINANCIAL

HIGHLIGHTS

PROSPECTS

QUESTIONS

OPERATIONS

Resourcing

0

50

100

150

200

08 09 10 11 12

R'm

Operating profit

STRATEGIC

FINANCIAL

HIGHLIGHTS

PROSPECTS

QUESTIONS

OPERATIONS

Return on shareholders funds

Year 2008 2009 2010 2011 2012

Average shareholders funds

462 560 645 715 772

Headline earnings

156 160 149 162 139

Return on shareholders

funds

34% 29% 23% 23% 18%

Rm

STRATEGIC

FINANCIAL

HIGHLIGHTS

PROSPECTS

QUESTIONS

OPERATIONS

Rising investment

0

20

40

60

80

100

120

140

160

180

200

2007 2008 2009 2010 2011 2012

Average annual infrastructure investment

CAGR = 17%

STRATEGIC

FINANCIAL

HIGHLIGHTS

PROSPECTS

QUESTIONS

OPERATIONS

Return on funds employed 2012

Rm

Division Average funds

employed

EBIT Return on

funds

employed

Schools 433 148 34%

Tertiary 158 32 20%

Resourcing 16 20 129%

GROUP 607 200 33%

• Note: Depending on the assumption used for gearing, WACC is 9.5 -

12.5%

PROSPECTS

”The value of ADvTECH’s contribution to society is clearly indicated by the

growing demand for its services, the quality of its offering, the strength of its

business model and the annuity nature of the Group’s reserves”

JSE CEO Nicky Newton-King

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

QUESTIONS

OPERATIONS

Prospects

Source: Department of Health December 2012

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

QUESTIONS

OPERATIONS

Prospects

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

QUESTIONS

OPERATIONS

Prospects

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

QUESTIONS

OPERATIONS

Prospects

Source: Stanlib

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

QUESTIONS

OPERATIONS

Prospects

0

2

4

6

8

10

12

14

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

CPI

EPI

CPI and Education Price Index (EPI)

Year on year percentage change: 2001 to 2012

5.8

11.03

9.1

7.54

5.8

9.57

1.4

9.56

3.4

8.4

4.6

7.01

7.2

7.97

11.5

8.3

7.7

6.5

3.7

9.2

5.6

8.6

5.7

9.0

CPI

EPI

%

Source: Consumer Price Index January 2013

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

QUESTIONS

OPERATIONS

• Schools division

› High demand, waiting lists

› Roll out of investment plans

› Further investments being evaluated

› Financial and Human Resources well planned

› Binding constraint = planning regulation

• Tertiary division

› Steady progress with turnaround

› Will take time, as advised

› Strong emphasis on technology

• Resourcing division

› Employment market remaining difficult

› Responsive to general conditions and niche opportunities

› Focus on technology

Prospects

STRATEGIC

FINANCIAL

HIGHLIGHTS

FINANCIAL

ANALYSIS

QUESTIONS

OPERATIONS

5 Year – Market cap index

QUESTIONS