For the

year ended

31 December 2013

An

nu

al F

inan

cia

l R

esu

lts

__Financial highlights

1 Strategic

2 Operations

3

4 _ Financial analysis

5 Prospects

6 Questions

Strategic

1

SA Consumer spending vs disposable income

Source: Stanlib

Source: Luxemburg Income Study

Attain

ment

Qualit

y

Type

6

High SES background

+ECD High

quality primary school

High quality

secondaryschool

Low SES background

Low quality primary school

Low quality secondary

school

Unequal society

17%

Semi-Skilled (31%)

Unskilled

(19%)

Unemployed

(Broad - 33%)

Labour Market

High productivity jobs and incomes (17%)

• Mainly professional, managerial & skilled jobs

• Requires graduates, good quality matric or good vocational skills

• Historically mainly white

Low productivity jobs & incomes

• Often manual or low skill jobs

• Limited or low quality education

• Minimum wage can exceed productivity

University

/FET

• Type of institution

(FET or University)

• Quality of institution

• Type of

qualification

(diploma, degree

etc.)

• Field of study

(Engineering, Arts

etc.)

• Vocational training • Affirmative action

Majority

(80%)

Some motivated, lucky or talented students make the transition

Minority

(20%)

- Big demand for good schools despite fees

- Some scholarships/bursaries

Source: Servaas van der Berg – QLFS 2011

Jobs, jobs, jobs

45%

14%

29%

12%

December 2012

Not economically active

Unemployed

Formal employment

Other employment

Source: Stats SA

Jobs, jobs, jobs

42.8%

13.8%

30.8%

12.6%

December 2013

Not economically active

Unemployed

Formal employment

Other employment

Source: Stats SA

Youth unemployment 2013

Age group % of EAP Official

unemployment

rate

Expanded

unemployment

rate

15 – 24 14.5% 53% 67%

25 – 34 35.1% 30% 40%

35 – 44 27.3% 19% 27%

45 – 54 16.0% 12% 20%

55 – 64 7.1% 7% 14%

Total 100% 26% 37%

Source: South African Institute of Race Relations

Unemployment and jobs in SA

0

2000

4000

6000

8000

10000

12000

14000

16000

1995 2008 2013 1995 2008 2013

Million Employed

Unemployed or discouraged

Source: South African Institute of Race Relations

… more people have jobs, even though unemployment is up …

Formal employment

‘000 2001 2013 Increase Increase in

economically

active

population

Average

growth pa

Government 1 436 1 962 526 2.6%

Financial Services 988 1 677 689 4.5%

Trade 1 365 1 922 557 2.9%

Transport 493 626 133 2.0%

Other Services 336 752 416 4.3%

Productive &

extractive

2 366 2 755 389 1.3%

Total 6 984 9 694 2 710 1.7% 2.8%

Source: South African Institute of Race Relations

Education and jobs in SA

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

10 11 12 13 15 16 17

Labour ForceParticipationRate

EmploymentRate

UnemploymentRate

Sub Matric Matric Some Tertiary Completed Tertiary

Source: CDE

Insight 2013

State expenditure

Principal budget allocations: Total of R1.25 trillion

Economic Services &Infrastructure

Education

Social Security

Health

Housing and communityameneties

Public order & Safety

Defence

Other

20%

Source: Budget 2014

Basic overview of matric 2013

The good…

• Matric pass rate increased to 78%

• Bachelor pass rate increased to 31%

• More students passing mathematics

The bad…

• Some questioning quality of matric pass

• Public starting to ask questions about why uni’s are using NBTs

• Concerns over “culling” and whether this lead to increases in NWP and FST

The ugly…

• Grade 812 dropout is 2x as high (50%) in Q1 rel to Q5 (25%)

• A white child is 7 times more likely than a black child to obtain a Maths D+

and 38 times as likely to get an A- aggregate (using earlier matric data)

Source: Nick Spaull RESEP

Source: South African Institute of Race Relations

Qualifications by age (birth cohort), 2011

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20 (

1991)

25 (

1986)

30 (

1981)

35 (

1976)

40 (

1971)

45 (

1966)

50 (

1961)

55 (

1956)

60 (

1951)

65 (

1946)

70 (

1941)

75 (

1936)

80 (

1931)

No schooling

Some primary

Primary completed

Some secondary

schooling

Matric

Some tertiary Degree

Source: Van der Bergh 2013

Focus on mathematics – things are improving

Number of students taking mathematics (as opposed to maths-lit) has declined

since 2008, but proportion passing has risen

– Not necessarily a bad thing since many of those students shouldn’t have been

taking mathematics in the first place

56% 53%

49% 45% 44% 43%

26% 24% 23% 21%

24% 25%

0%

10%

20%

30%

40%

50%

60%

2008 2009 2010 2011 2012 2013

Proportion takingmaths

Proportion passingmaths

Source: Taylor (2014)

What proportion of matrics take and pass mathematics?

Source: Taylor (2014)

0%

10%

20%

30%

40%

50%

60%

70%

0

50000

100000

150000

200000

250000

300000

350000

2008 2009 2010 2011 2012 2013

Numbers wrote maths

Number passed maths

Maths pass rate

Important statistic is the number passing which was declining from

2008 2011 but has increased between 2011 2013

49%

11%

24%

16%

Of 100 students that started school in 2002

Do not reach matric

Fail matric 2013

Pass matric 2013

Pass with universityendorsement 2013

• 550 000 students drop out before matric

• 99% do not get a non-matric qualification (Gustafsson, 2011: p11)

• What happens to them? 50% youth unemployment

Source: Nick Spaull RESEP

School dropout

How does SA fare internationally

Source: Gustafsson (2011) “The when and how of leaving school”

Insurmountable learning deficits: 0.3 SD

0

1

2

3

4

5

6

7

8

9

10

11

12

13

Gr3 Gr4 Gr5 Gr6 Gr7 Gr8 Gr9 Gr10 Gr11 Gr12

(NSES 2007/8/9) (SACMEQ2007)

Projections (TIMSS2011)

Projections

Effe

ctiv

e gr

ade

Actual grade (and data source)

South African Learning Trajectories by National Socioeconomic Quintiles Based on NSES (2007/8/9) for grades 3, 4 and 5, SACMEQ (2007) for grade 6 and TIMSS (2011) for grade 9)

Quintile 1

Quintile 2

Quintile 3

Quintile 4

Quintile 5

Q1-4 Trajectory

Q5 Trajectory

Source: Nick Spaull RESEP

Grade 3 maths curriculum: “Can perform calculations using appropriate symbols to solve problems involving: division of at least 2-digit by 1-digit numbers”

16% 19% 17% 17%

39% 13% 10% 12% 12%

14%

13% 14% 14% 15%

13%

59% 57% 57% 55%

35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 Q2 Q3 Q4 Q5

Question 42

Still wrong in Gr5

Correct in Gr5

Correct in Gr4

Correct in Gr3

At the end of Grade 5 most (55%+) quintile 1-4 students cannot answer this simple Grade-3-level problem.

Source: Nick Spaull RESEP

The rise and rise of private education

Attending

‘000

2000 2008 % growth

since 2000

2012 % growth

since 2000

Public

school

11 647 11 873 1.9% 11 924 2.4%

Private

school

256 366 42.9% 504

96.8%

All schools 11 903 12 239 2.8% 12 428 4.4%

Source: South African Institute of Race Relations

Matric at ADvTECH

• 1 344 Matric students at Abbotts College, CrawfordSchools™ and Trinityhouse

• 97% of our students qualifying for entrance into higher education institutions

• 84% of our students qualifying for entrance to bachelor studies at higher education institutions

– CrawfordSchools™ 100% pass rate for 20th consecutive year • 125 students achieved 6 or more distinctions

– Trinityhouse 100% pass rate • 12 students achieved 6 or more distinctions

– Abbotts College 100% pass rate (statistically) • 19 students achieved 6 or more distinctions

• Star Schools – 6 398 paper re-write candidates

– 77% pass rate (national average = 39%)

– 4 with overall “A” aggregate

Matric subject averages 2013

– English 67%

– Mathematics 63%

– Physical Science 63%

– Information technology 73%

– Accounting 72%

How we compare in Matric

Source: Politicsweb – James Myburgh

Country ADvTECH

Schools

Crawford

Wrote 562 112 1 344 641

Passed 439 779 1 337 641

% pass 78% 100% 100%

B Pass 172 006 1 128 627

% B Pass 31% 84% 98%

Wrote maths 245 663 940 534

Achieved 60% 38 323 543 356

% “Pass” 15% 58% 67%

% “Pass” of class 7% 40% 56%

Operations

2

Quality and Value

Strong Demand

Premium Price

Sustained Income and

Market Growth

Attract and Retain Best

Staff

Rewards to stakeholders

No subsidy no safety net

Great reputation

Well resourced

Relevant

Good service Standout offering

Career success

Dynamic improvement

The Model

of Value

Innovation

Technology Investment

Cash Flow

Community engagement

GPTW

Employer recognition

Partnerships

Group at a glance

Scope of operations

• Client base

– Schools 13 200 students at 37 schools

– Tertiary 20 200 full-time and 8 800 part-time students at 23

campuses

– Some 3 350 job candidates placed by 21 staffing branches

• The People

– 3 942 staff

– 297 with Masters degrees

– 20 with PhD

– 215 alumni

• Annuity nature of revenue

– Some 50% of Group revenue is recurring student enrolment

Employee headcount

1 000

2 000

3 000

4 000

5 000

09 10 11 12 13

Ploughing back

• Developing Staff

– Transformation forum: 149 high performing employees part of “Developing Leaders for Tomorrow” programme

– 55 on Management & Leadership Development Programmes

– 64 mentors trained during 2013. Total available 138

– 98 staff received mentoring

• Corporate Social Investment

– Over R72 million spent on bursaries benefitting 5 900 beneficiaries

– Total CSI expenditure R74 million

• Extensive outreach and other community engagement projects

– Crawford College Pretoria training teachers of Tshwane Secondary and assisting with Winter School

Teacher training

• Teacher Bursary Scheme:

› Teacher Bursary Scheme launched in 2007

› 236 bursary recipients since launch

› 54 bursary recipients in 2013

• Varsity College:

› Offered BEd degree since 2004

› Currently offer:

- BEd (ECD Foundation Phase)

- BEd (Inter & Secondary Phase)

- Unisa Pathway: BEd

- Post Graduate Diploma in Higher Education (*distance)

› 425 BEd enrolments in 2014 (2013: 325)

› BEd average module pass rate 2013: 90%

› Plan to extend teacher education offering

• In 2013, completed 9 projects which added 1 375 new

places by the start of 2014

• Current capital work in progress includes 10 projects which

will have capacity for a further 4 700 places once concluded

Infrastructure projects

Capacity

78%

2%

2%

5%

4%

9%

Capacity and year of development 2013 (%)

Older capacity

Capacity created in 2009

Capacity created in 2010

Capacity created in 2011

Capacity created in 2012

Capacity created in 2013

Investment

11%

68%

9%

12%

INVESTMENT PROGRAMME 2011 - 2013 (R859 million)

Infrastructural investments made

Tertiary properties

School properties

ICT equipment

Other infrastructuralequipment

Technology

Rm

Approximate capex in the last 5 years 220

Approximate opex in the last 5 years 265

Investment in Star Schools 15

Total technology spend 500

Financial

Highlights

3

Income statement and cash flow

Rm 2013 2012 % change

Revenue 1 766 1 687 5%

Operating profit 222 200 11%

Headline earnings 156 139 12%

HEPS (cps) 38.6 34.6 12%

Distribution (cps) 25.5 24.0 6%

Free operating cash flow

before capex (cps)

73.4

67.4

9%

Segmental analysis

44% 44%

12%

2012

46% 43%

11%

2013

Schools Tertiary Resourcing

Revenue

Segmental analysis

73%

16% 11%

2012

70%

22% 8%

2013

Schools Tertiary Resourcing

Operating profit

Balance sheet highlights

Rm 2013 2012 % change

Tangible assets 1 243 980 27%

Debtors 112 111 1%

Fees in advance 193 169 14%

Shareholders equity 853 793 8%

Net borrowings 202 62

Ploughing back

R’m %

Total value created 1 270 100

Less: employees 757 60

Less: government taxes 212 17

Available to the business 301 23

Ploughing back

R’m %

Total value created 1 270

Less: employees 757

Less: government taxes 212

Available to the business 301 100

Allocated to communities 74 25

Allocated to investors 103 34

Retained in the group 124 41

Financial

Analysis

4

Revenue trend

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

09 10 11 12 13

Rm

Group revenue

Group operating margin

0%

5%

10%

15%

20%

09 10 11 12 13

HEPS trend

0

10

20

30

40

50

09 10 11 12 13

Cen

ts

Cash flow generation

50

100

150

200

250

300

09 10 11 12 13

Rm

Free operating cash flow before capex

Schools

0

200

400

600

800

1 000

09 10 11 12 13

Rm

Revenue

Schools

0

50

100

150

200

09 10 11 12 13

R'm

Operating profit

Tertiary

0

200

400

600

800

1 000

09 10 11 12 13

Rm

Revenue

Tertiary

0

50

100

150

200

09 10 11 12 13

R'm

Operating profit

Resourcing

0

200

400

600

800

1 000

09 10 11 12 13

Rm

Revenue

Resourcing

0

50

100

150

200

09 10 11 12 13

Rm

Operating profit

Rising investment

0

50

100

150

200

250

300

2008 2009 2010 2011 2012 2013

Average annual infrastructure investment

Trend = 17%

Return on funds employed 2013

Rm

Division Average

funds

employed

EBIT Return on

funds

employed

2013

Return on

funds

employed

2012

Schools 723 157 22% 25%

Tertiary 230 48 21% 14%

Resourcing 2 17 736% 776%

GROUP 955 222 23% 25%

• Note: Depending on the assumption used for gearing, WACC is 10 - 13%

Prospects

5

SA GDP growth forecast

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

2010 2011 2012 2013 2014 2015 2016

Source: World Bank, GDP Growth Forecast

Prime lending rate 2009 - 2014

9% 8.5%

15%

Source: South African Reserve Bank

Rand/US$ exchange rate 2009 - 2014

Source: Thomson Reuters

Prospects

0

2

4

6

8

10

12

14

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CPI

EPI

CPI and Education Price Index (EPI)

Year on year percentage change: 2001 to 2013

%

Source: Stats SA

Investing for our future

As at March 2014 Rm

Existing investments

- Land, building and improvements

- Other assets

- Revaluation surplus

Total existing investments

1 262

348

737

2 348

- Capex commitment

- Not yet approved, part of projects

Total investment line up

1 176

1 490

2 666

Investment increase % 114%

Present “FTE” students

Approximate increase

33 900

23 000

Increase % 68%

12-Year market cap index

0

500

1000

1500

2000

2500

3000

3500

4000

12 yr ADH Mark Cap

JSE All Share Index

JSE Small Cap Index

Questions

6