ANNUAL FINANCIAL RESULTS...•Resourcing division –outstanding performance in a tough market ......

ANNUAL FINANCIAL RESULTS for the year ended 31 December 2018

FOR THE YEAR ENDED 31 DECEMBER 2018

ANNUAL FINANCIAL

RESULTS


Tough Economic Times - 2018

ANNUAL FINANCE RESULTS for the year ended 31 December 2018

GDP growth:

Last five years 1.2%

Last three years 0.9%

SA GDP 2018

grew 0.8% IMF World Economic Outlook: SA

expected to remain below

1.3% GDP growth

Average South African

poorer – income per

capita declines 5th year

in a rowUnemployment

Stats SA Q4 2018

27,1%

ANNUAL FINANCIAL RESULTS for the year ended 31 December 2018Source: STATSSA, IMF, City-Press


Strategic imperatives

Innovation > Business process> Product/market

development

Africa

Customer focus> Easy to do business with > Understanding needs

Academic excellence> Teaching & learning> Benchmarking our

performance> Learning analytics> International & Employer

recognition

Growth> Organic and Acquisitive> Channel> Product> Segment> Geographic

REG

ULA

TIO

NS

SOCIO-ECONOMIC ENVIRONMENT

REP

UTATIO

N

TRANSFORMATION

Human &capitalproductivity

Excellence through specialisation> Market focus> Benchmarking> Data driven

decisions

Operating Environment


103 000

938 000

149 000

966 000

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

Private Higher Education Public Higher Education

Higher Education Enrolment Growth

2011 2016

3%

45%

Source: Centre for Risk Analysis, Socio-Economic Survey of South Africa

Nu

mbe

r of

stu

de

nts


ANNUAL FINANCIAL RESULTS for the year ended 31 December 2018Source: Centre for Risk Analysis, Socio-Economic Survey of South Africa

480 000

11 800 000

590 000

12 300 000

0

2 000 000

4 000 000

6 000 000

8 000 000

10 000 000

12 000 000

14 000 000

Independent Schools Public Schools

Schools Enrolment Growth

2011 2016

23%

4%

Num

ber

of

stu

dents



971

26789

1966

23796

0

5 000

10 000

15 000

20 000

25 000

30 000

Independent Schools Public Schools

Nr. of Schools: Independent vs Public

2000 2017

102%

-11%

Source: Centre for Risk Analysis, Socio-Economic Survey of South Africa

Num

ber

of

stu

dents


Positive momentum continues

• Strong Group performance despite the challenging economic environment

• Positive growth in operating profit and revenue

• Schools division – good enrolments at entry levels, off-set by leavers due to

emigration and financial difficulties

• Despite strong headwinds the schools division has continued to grow scale

• Tertiary division – continued excellent performance

• Resourcing division – outstanding performance in a tough market

• Africa expansion strategy demonstrating good potential


Good resultsTrading performance summary

RevenueOperational

profit

Operating

margin

11% 14% 17.4%


Segmental trading performance

Schools Tertiary Resourcing

Revenue 15% 10% 4%

Operating profit 5% 23% 22%

Schools

The Rest of Africa

131%

(89)%


Enrolment numbers

24199 26713 27408 30827

29138

3346336136

39629

0

10000

20000

30000

40000

50000

60000

70000

80000

2016 2017 2018 2019

Schools Tertiary: Full Qualifications

70 456

53 337

60 17663 544

Num

ber

of

stu

dents


Group enrolments history

Group enrolments end February Feb-16 Feb-17 Feb-18%

IncreaseFeb-19

%

Increase

Schools 24 199 26 713 27 408 3% 30 827 12%

Tertiary: Full Qualification 29 138 33 463 36 136 8% 39 629 10%

Total 53 337 60 176 63 544 6% 70 456 11%


Financial Overview


1 851

2 594

3 224

3 938

4 389

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

14 15 16 17 18

R'm

Group Revenue


Operating profit

256

454

560

668

763

0

100

200

300

400

500

600

700

800

900

14 15 16 17 18

R'm


Group operating margin

13.85%

17.51%17.37%

16.96%

17.38%

10%

12%

14%

16%

18%

14 15 16 17 18


Normalised earnings per share

42.3

53.9

63.3

75.3

81.1

0

10

20

30

40

50

60

70

80

90

14 15 16 17 18

Ce

nts


286

558

738

806

946

93

223

291

394348

0

100

200

300

400

500

600

700

800

900

1 000

14 15 16 17 18

R'm

Cash generated by operations Cash from operations (after working capital)

Cash flow generation


Free operating cash flow before capex

196

338

468

586563

50

100

150

200

250

300

350

400

450

500

550

600

650

14 15 16 17 18

R'm

• Reduced in 2018 due to

lower fees received in

advance

• Different payment terms

selected

• Good post year-end inflows

• Strong cash conversion at

139% of earnings


Net cash position

- 436

-1 157 -1 110

-1 617

-1 915

-2 500

-2 000

-1 500

-1 000

- 500

0

14 15 16 17 18

R'm

• Net Borrowings: EBITDA 2.0 times

• Covenant 3.5 times

• Borrowing capacity R3.3 bn

• Potential head room R1.4 bn


Percentage revenue contribution – segmental overview

46

39

15

Schools

Tertiary

Resourcing

2018


Percentage revenue contribution – segmental overview

45

39

16

46

39

15

Schools

Tertiary

Resourcing

20182017


Percentage operating profit contribution – segmental overview

43

52

5

Schools

Tertiary

Resourcing

2018


Percentage operating profit contribution – segmental overview

46

49

5

43

52

5

Schools

Tertiary

Resourcing

20182017


Bad debt As a percentage of revenue

Schools

1%

Tertiary

3%

• Tough economic environment

• Pressure on consumers

• Well managed and under control


SCHOOLSSCHOOLS


Schools Revenue

865

1 350

1 545

1 742

2 009

0

500

1 000

1 500

2 000

14 15 16 17 18

R'm


Schools operating profit

162

299

321327 331

100

150

200

250

300

350

400

14 15 16 17 18

R'm


Schools operating margin

18.7%

22.2% 22.4%

18.8%

16.5%

0%

5%

10%

15%

20%

25%

14 15 16 17 18


20

17

-2

01

826 751 -2 032

-979-1 880

-1 486

7 009

3 155 30 538

End 2017 End 2018MatricLeavers

Emigration Financial OtherLeavers

Joiners Acquisitions

23 920 -1 636

-829-1 230

-801

4 803

2 524 26 751

20

16

-2

01

7

ADvTECH Schools enrolment waterfall

Grey comparison to previous year




development

Africa




recognition


REG

ULA

TIO

N


REP

UTATIO

N

TRANSFORMATION



decisions

ANNUAL FINANCIAL RESULTS for the year ended 31 December 2018ANNUAL FINANCIAL RESULTS for the year ended 31 December 2018

Integration, consolidation, rationalisation

Accelerated growth and acquisitions

Necessary changes:

Acquired 49 schools past 4 years

Total 103 schools

Doubled in size

Organisational and

management restructure

Create a strong

portfolio of brands

On-board acquisitions

Academic standards Shared Services New systems to replace a

variety of legacy systems

Single unified systems

• Simplified

• Standardised

• Optimised

• Automated

• Time consuming and

complex

• Making progress

• Limited impact on

results


Strategic focus areas

1. Brand value proposition

2. Academic Development

3. Operational efficiencies:• Rationalisation and consolidation of transactional processing

• Effective and efficient school structures

Benefits:

• Providing value to our customers

• Data driven decision making to support student and teacher development

• Shared services and operational efficiencies


Strategic focus areas:Brand value proposition







Benefits:





Academic Development

FUTURE FOCUSED EDUCATION

IEB, DBE, ISASA,

EYFS, Cambridge,

International

Baccalaureate

Future-focused

teaching and

learning

Challenging

and engaging

curriculum

Performance

analysis =

personalised

learning

Computational thinking

and coding

Computer networks

and productivity

New age

technology

spacesfor collaborative problem-based learning

Understanding

sustainable global goals

and taking action

International

mindedness

Embracing diversity

Critical

Creative

Reflective

Inquiring

Interpreting

Presenting

Personal

integration

Communicating

with others

Collaboration

Leadership

Personal

behaviour

Organisational

skills

Self reflection

Growth mindset

EVERY STUDENT IS DEVELOPING

INCREMENTALLY, IN AN ENGAGING,

INSPIRING AND CHALLENGING

LEARNING ENVIRONMENT.

CURRICULUM

GLOBAL

COMPETENCIES

DIGITAL

LITERACY

GLOBAL

CITIZENSHIPTHINKING RESEARCHING COMMUNICATING SOCIAL SKILLS SELF-MANAGEMENT

ANNUAL FINANCE RESULTS for the year ended 31 December 2018ANNUAL FINANCIAL RESULTS for the year ended 31 December 2018


Technological

collaborative

problem based

learning

Computational

thinking and coding

Computer networks

and productivity


Strategic focus onAcademic development


Strategic focus areas:Academic development

• Bachelor pass rate increased from 81% to 87% - last 4 years

• Higher education pass of 98% - last 4 years (degree, diploma, higher certificate)

• Performance of Maragon and Centurus distinction rates per matric

students - improved since acquired

• Crawford, Trinityhouse, Maragon and Centurus 100% pass rate


Schools academic results comparison

NSC IEB

NSC 2018

78.2%

34%

IEB 2018

98.9%

91%

Matric pass

rate

Bachelor pass

rate

Average

distinctions per

candidate

Competitor

NSC

2018

94.3%

52%

860

ADvTECH

NSC

Schools

2018

97.0%

68%

0.9

499

Competitor

IEB

2018

99.7%

88%

1 196

ADvTECH

IEB

Schools

2018

100%

95%

2.0

1 145

ADvTECH

Group

2018

99%

87%

1.7

1 644Number of

matrics

Strategic focus areas:Academic development







Benefits:





Strategic focus area:Operational efficiencies

Academic efficiencies• School cost structures

• Optimise teacher timetable:

• Teacher: Pupil ratios

• Staff: Pupil ratios

Organisational and management

restructure

Integrated Facilities Management

Group Shared Services• Payroll and HR Admin

• Transactional finance

• Debtors and creditors

• Payments

• Procurement

• Brand teams supported by Finance,

Marketing, HR and Principals

• Time consuming and complex

• Making progress

• Limited impact on results

Student Information system

• Enable data driven decisions


• Transactional processes

• Debtors and creditors

• Payroll + HR Admin

• Procurement

• Facilities management



Accountability and centralised service

delivery

Standardised service delivery

Improved responsiveness

Reduce invoices, payments and

contracts

Suppliers No. Contracts

Cleaning 8 50

Hygiene 12 71

Security 17 64

37 185

Single

unified

systems

Simplified

Standardised

Optimised

Automated

Example: Integrated facilities management



Strategic focus area:Operational effectiveness, efficient schools structure

Tough decisions

Trinityhouse School

Palm Lakes, KZN Abbotts College, Centurion

Success!

Increased enrolments


Pinnacle College, Rynfield

• Acquired 2015

• Originally defined as an “Inclusive” school

• Repositioning as mid fee

• Current student numbers: 291

• Planned capacity: 1 625



Pinnacle College, Kyalami

• Acquired 2016

• Confused market positioning

• Reposition as mid fee

• Adjusted fee structure

• Planned capex to realise full potential

• Current student numbers: 545

• Phase 1 : 1 800

• Phase 2 : 3 600





development

Africa




recognition


REG

ULA

TIO

N


REP

UTATIO

N

TRANSFORMATION



decisions




development

Africa

Customer focus> Easy to do business with> Understanding needs



recognition


REG

ULA

TIO

N


REP

UTATIO

N

TRANSFORMATION



decisions


African education market

6m households

will earn

$5 000 - $20 000

by 2025

“Private education proves to be one of the fastest growing sectors in

Africa”

Emerging markets education

investments increased more than

5 000% between 2001 and 2015

66m scholars in private

education by 2021

Population will double to 2.4bn

by 2050 1.2bn will

need education Sub-Saharan

Africa, largest

and fastest

growing

Median age

20

Urbanisation

will go from

35% (2010)

to 50% by

2030 Currently:

2/5 of population

age is

0–14 years

1/5 between

15–24 years

Source: Caerus Capital: The Business of Education in Africa


Crawford International School, Nairobi KenyaFirst greenfield development outside of South Africa

• Preparatory, Primary and College

• Boarding

• State of the art facilities

• Ultimate capacity of 1,685 students

• Africa Finalist for the World

Architecture Festival Global Awards:

Education facility design

• Enrolments exceed expectations


Expansion into the rest of AfricaAcquisition: Makini Schools – Nairobi & Kisumu, Kenya

• Founded in 1978

• 3 197 students

• K12 to Grade 12

• 7 Schools, 3 campuses

• Positive enrolments


Mid-Fee schools – excellent growth

Mooikloof High School


Schools – GrowthMid-fee sector

• Opening 2020

• Mid Fee School

• Preparatory, Primary and College (opening grade 000 –

grade 9)


Pinnacle College, Waterfall


Schools – GrowthMid-fee sector

• Opening 2020

• Mid Fee School

• Preparatory, Primary and College (opening grade 000

– grade 9)


Pinnacle College, Linden


Create a strong portfolio of brandsMid-fee success

Opening in 2020Success Re-positioning


Schools – GrowthPremium sector

• Opening 2020

• Preparatory, Primary and College

(opening grade 000 – grade 9)


Trinityhouse, Glenvista




development

Africa




recognition


REG

ULA

TIO

N


REP

UTATIO

N

TRANSFORMATION



decisions


Innovation - New product developmentThe Bridge Assisted Learning School

• Grade 0 – 7

• Northern Suburbs, Gauteng

• Opened 2018

• Enrolments ahead of targets


Schools – GrowthStrong pipeline – Mid-fee focus

Schools

By phase (end Feb)

Pipeline

103 103 112 117 122

Total 103

9 5 5 3

2019 2020 2021 2022 2023

112 117 122 125


Schools – GrowthSchools capacity

Schools capacity - end of February Feb-16 Feb-17 Feb-18 Feb-19

Students enrolled ('000) 24.2 26.7 27.4 30.8

Existing building capacity ('000) 28.6 31.2 33.0 38.2

% Existing building capacity utilised 85% 86% 83% 81%


TERTIARYTERTIARY


Tertiary revenue

799

954

1228

1556

1719

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

14 15 16 17 18

R'm


Tertiary operating profit

84

135

223

321

395

0

50

100

150

200

250

300

350

400

14 15 16 17 18

R'm


Tertiary operating margin

10.5%

14.1%

18.2%

20.7%

23.0%

0%

3%

6%

9%

12%

15%

18%

21%

24%

27%

14 15 16 17 18


Tertiary Division

• The IIE – SA’s largest and most accredited ‘private university’• The IIE and Central Academic Team have 3 000+ academic staff• 6 Established faculties • 201 Accredited tertiary courses• Comprehensive integrated Student Information System • International partnerships and endorsements

• BAC – British Accreditation Council• City and Guilds Institute UK• Swiss Education Group• World Association of Chefs• AHA – American Hospitality Academy • Fontys Academy for Creative Industries (Holland)• Offenbach University of Art and Design (Germany)• Sup de Pub School of Communication (France)




development

Africa




recognition


REG

ULA

TIO

N


REP

UTATIO

N

TRANSFORMATION



decisions


THE INDEPENDENT INSTITUTE OF EDUCATION

South Africa’s largest and most accredited

“private university”/private higher

education system


THE IIE FACULTIES

FACULTY OF COMMERCE

FACULTY OF INFORMATION

& COMMUNICATION TECHNOLOGY

FACULTY OF SOCIAL SCIENCES

FACULTY OF LAW


FACULTY OF EDUCATION

FACULTY OF HUMANITIES


Academic excellenceAccredited tertiary courses by category

42 programmes in the accreditation pipeline

201

101

IIE

1 MASTERS

11 HONOURS

28 DEGREES

34 DIPLOMAS

27 HIGHER

CERTIFICATES

3

Capsicum

3 NATIONAL

CERTIFICATES

AND DIPLOMAS

5

The Private

Hotel School

1 DEGREE

1 ADVANCED

DIPLOMA

1 DIPLOMA

1 HIGHER

CERTIFICATE

1 NATIONAL

CERTIFICATE AND

DIPLOMA (N1-6)

92

Oxbridge

12 DIPLOMAS

80 NATIONAL

CERTIFICATES

AND DIPLOMAS

total

29

DEGREES

11

HONOURS

1

MASTERSACCREDITED

TERTIARY

COURSES

84

NATIONAL CERTIFICATES AND DIPLOMAS

(N1 –N6)

1 2947

DIPLOMASADVANCED

DIPLOMA

28

HIGHER

CERTIFICATES


The IIE – Professional qualifications

IIE’s

Professional

Qualifications

2017 2019 Growth

Law 1 634 2 686 64%

Education 1 783 3 964 122%

Accounting 166 607 266%

Total 3 583 7 257 103%


29 Campuses

82%

Average module pass rate

+3 000

Academic

Staff

40 000 Registered Students for full time qualifications

Tertiary division by numbersFebruary 2019


The IIE – TrendsettersLLB High Court ruling success

• High Court rules in favour of IIE Varsity College law degree

• Positive precedent to address the issue of ‘private university’ /

private higher education institutions

• Confirms to professional bodies in all fields, including law,

engineering, accountancy, teaching, nursing and psychology that

the same rules apply across the board, and that students and

graduates from public and private universities and institutions

must be treated equally


The IIE – teaching and learning excellence

Data-driven decision-making informed by global best practice and

local relevance

Investment in technology from business solutions and student

learning experience

Superior student support before, during and after studies

Continuous professional development of lecturers and industry

collaboration

Unparalleled market insight and response: student needs &

regulatory environment


The IIE – Teaching and learning excellence

• The Independent Journal of Teaching and Learning

• The only private higher education provider publishing

an accredited research journal

• Train and develop our own lecturers, set standards

and teaching practices


Data driven decision makingAcademic intelligence

Cohort qualifications dashboard

Setting module

targets

Performance tracking

Analysed by:

• Students

• Lecturers

• Campuses


Reputation match

• Academic Excellence

• Module pass rate

• Student employability

Add 32 qualifications to portfolio

• MBA

• Engineering

• Public health, etc.

West Rand campus – capacity 6 500 students

4 Student residences

ANNUAL FINANCE RESULTS for the year ended 31 December 2018

Monash SA (MSA)Expected to be effective April 2019



Growth

Pretoria

Johannesburg

Durban


Growth

Pretoria

Johannesburg

Durban 2018


Growth

Pretoria

Johannesburg

Durban 2018

Cape Town 2020


Growth

Polokwane 2016

Pretoria

Johannesburg

Durban 2018

Cape Town 2020


Growth

Polokwane 2016

Pretoria

Johannesburg

Durban 2018

Pietermaritzburg 2018

Bloemfontein 2018

Cape Town 2020


Growth

Polokwane 2016


Bloemfontein 2018

Port Elizabeth 2020

Pretoria

Johannesburg

Durban 2018

Cape Town 2020


Growth

Polokwane 2016

Pietermaritzburg

Bloemfontein

Port Elizabeth 2020

Mbombela 2021

Pretoria

Johannesburg

Durban 2018


Bloemfontein 2018

Cape Town 2020


New hospitality campus in Rosebank

2018

2 CAMPUSES6 CAMPUSES

ANNUAL FINANCE RESULTS for the year ended 31 December 2018ANNUAL FINANCIAL RESULTS for the year ended 31 December 2018

Tertiary segment growth


Academic Excellence


International and employer recognition

43 760 The IIE graduates

71% were employed within

6 months after graduation


4 Silver

4 Bronze

2 New Blood

Awards

1 student in

the top 10

5 Semi-

finalists

1 Student

admitted to

international

society

2nd Place1 Gold

1 Gold Muse

Strategic ImperativesInternational and employers recognition



WinnerMost Scintillating

KWV Brandy

Cocktail

Top 3

Young Star of the Year Chef

Most Promising Chef –Best Starter

Purple Ribbon – Best Main Course

Young Star – Beverage Student of the Year

Reaching for Young Stars

Inter-school

Challenge

InfoChef 2018

2nd and

3rd Place

Prawn Festival @

Gold Circle

SACA inter-school

event

2nd PlaceWinner




Varsity College have 4 of

the top 20 students

ITC Certified Board exams

82% Pass rate




RESOURCING


Resourcing revenue

194

297

461

644670

0

100

200

300

400

500

600

700

800

14 15 16 17 18

R'm


Resourcing operating profit

18

29

20

32

39

0

10

20

30

40

50

14 15 16 17 18

R'm


Resourcing operating margin

9.4%9.8%

4.4%

5.0%

5.8%

0%

2%

4%

6%

8%

10%

12%

14 15 16 17 18

Different business model


Outstanding Performance

SA markets Grew market share in a

declining market

Superb growth

Endorses our

strategy to diversify and

explore alternative markets

Africa revenue Dollar based

• Placements increased by

23%

• Highly cash generative

• SA markets: grown our

market share in a declining

market



Prospects

• Strong position to explore numerous opportunities in and

outside South Africa

• Tertiary and Resourcing divisions are well positioned and

perform strongly

• Schools division

• Continue integration, consolidation and rationalisation

phase

• Drive operational efficiencies

• Sharpen market focus


Dividend –Prudent and responsible


Dividends per

share for the year

30.0 cents

Final Gross Dividend

15.0 cents

• Significant investment opportunities

• Balance between preserving cash for development projects and

shareholder returns

• Capital allocations amount R1.9bn

• Prudent and responsible management of cash resources


QUESTIONS


THANK YOU

ANNUAL FINANCIAL RESULTS...•Resourcing division –outstanding performance in a tough market ......

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Transcript of ANNUAL FINANCIAL RESULTS...•Resourcing division –outstanding performance in a tough market ......