Financials Academic excellence Schools division Tertiary division - - PowerPoint PPT Presentation

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%

Annual Financial Results for the year ended 31 December 2017

Segmental Trading Performance Revenue

Schools

15% 26% 40%

Operating Profit

3% 44% 59%

Tertiary Resourcing

Annual Financial Results for the year ended 31 December 2017

STUDENTS EDUCATIONAL SITES

2016 2017 2018

53 337 60 176 63 544 98 117 122

Group

Growth

Annual Financial Results for the year ended 31 December 2017

STUDENTS EDUCATIONAL SITES

2016 2017 2018

53 337 60 176 98 117 122

Including Oxbridge + University of Africa

Growth

Annual Financial Results for the year ended 31 December 2017

92 475 63 544

Bad debt

Annual Financial Results for the year ended 31 December 2017

Tough economic environment Pressure on consumers Well managed and under control

Schools <1% Tertiary <3%

Financial overview

The reported incident of fraud

Annual Financial Results for the year ended 31 December 2017

 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

Annual Financial Results for the year ended 31 December 2017 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

Annual Financial Results for the year ended 31 December 2017 1766 1932 2705 3353 4096 500 1000 1500 2000 2500 3000 3500 4000 4500 13 14 15 16 17

R’m

+23%

Group Trading operating profit

Annual Financial Results for the year ended 31 December 2017 222 256 448.0 560 671 100 200 300 400 500 600 700 800 13 14 15 16 17

R’m

+20%

Group Group trading operating margin

Annual Financial Results for the year ended 31 December 2017 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

Annual Financial Results for the year ended 31 December 2017 37.9 42.3 53.9 63.3 75.8 10 20 30 40 50 60 70 80 13 14 15 16 17

Cents

+20%

Group Cash flow generation

Annual Financial Results for the year ended 31 December 2017 363 286 558 738 811

200 93 223 291 400

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

Annual Financial Results for the year ended 31 December 2017 297 196 338 468 597 100 200 300 400 500 600 700 13 14 15 16 17

R’m

+28%

Group Capex and acquisitions

Annual Financial Results for the year ended 31 December 2017

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

Annual Financial Results for the year ended 31 December 2017

• 202
• 436
• 1157
• 1110
• 1617
• 1800
• 1600
• 1400
• 1200
• 1000
• 800
• 600
• 400
• 200

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+

11 647 000 2000 2016 256 000 2016 2000 953 000 2015 2012 97 000 2015 2012

Annual Financial Results for the year ended 31 December 2017

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

REGULA TION SOCIO-ECONOMIC ENVIRONMENT REPUT A TION TRANSFORMATION

Human & capital productivity Excellence through specialisation

> Niche market focus > Benchmarking > Database

development

Academic Excellence

Academic Excellence 2017 Matric results

Matriculants

1 754

Distinctions

2 866

Average distinctions Per candidate

1.6

Annual Financial Results for the year ended 31 December 2017

Academic Excellence Schools academic results comparison

Annual Financial Results for the year ended 31 December 2017 NSC 2017 ADvTECH NSC Schools 2017 Competitor NSC 2017 IEB 2017 Competitor 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

CURRICULUM

The 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 COMPETENCIES

Investigation | Creating | Communicating | Collaborating | Organising | Digital citizenship

DIGITAL LITERACY

Investigation | Creating | Communicating | Collaborating | Organising | Digital citizenship GLOBAL CITIZENSHIP Values | Attitudes | Behaviours | Embracing diversity | Taking action/Service

Academic Excellence GoLab programme at schools

Annual Financial Results for the year ended 31 December 2017

“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 excellence Continued focus on academic excellence as a differentiator Critical value proposition Regulation, accreditation & operations Market segmentation and differentiation

Academic Excellence Accredited courses by category

Annual Financial Results for the year ended 31 December 2017 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 COURSES

165

TOTAL

2 PHDs 10 MASTERS 11 HONOURS 47 DEGREES 36 DIPLOMAS 28 HIGHER CERTIFICATES 31 VOCATIONAL TRAINING

Academic Excellence Tertiary academic results

Annual Financial Results for the year ended 31 December 2017

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

Annual Financial Results for the year ended 31 December 2017

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 Finalists New Blood Pencil Winner Future Award IAB Bookmark Black Pixel Award Winner National Instagram Hack 3 Gold pack Finalists

International & Employer Recognition

Annual Financial Results for the year ended 31 December 2017

Academic system Integrated system utilised by schools and tertiary

Annual Financial Results for the year ended 31 December 2017

ADMIN SYSTEM

Differentiated Scalable Accessible Flexible Centralised

Academic System

Cloud-based

Student information system Why this why now?

Annual Financial Results for the year ended 31 December 2017

Easy to

• perate 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

Annual Financial Results for the year ended 31 December 2017 Cohort qualifications dashboard Setting module targets Target tracking Benchmarked by:

• Students
• Lecturers /

Teachers

• Campuses

Schools division

Annual Financial Results for the year ended 31 December 2017

Trading Revenue

Schools

819 915 1432 1644 1876 200 400 600 800 1000 1200 1400 1600 1800 2000 2013 2014 2015 2016 2017

R’m

+15%

Annual Financial Results for the year ended 31 December 2017

Trading profit – Normalised

Schools

157 162 292 321 330 50 100 150 200 250 300 350 2013 2014 2015 2016 2017

R’m

+3%

Annual Financial Results for the year ended 31 December 2017

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%

Annual Financial Results for the year ended 31 December 2017

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.

Annual Financial Results for the year ended 31 December 2017

Focus Areas

Schools

Growth Academic Excellence Structure & Systems Efficiencies

Annual Financial Results for the year ended 31 December 2017

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

Annual Financial Results for the year ended 31 December 2017

Student enrolment drivers

Schools

Financial pressure Emigration / Semigration

29% 43% Jan Dec

Annual Financial Results for the year ended 31 December 2017

Student enrolment drivers

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

Annual Financial Results for the year ended 31 December 2017

Student enrolment drivers

Schools

Schools sensitivity 2017 Actual Additional 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%

Annual Financial Results for the year ended 31 December 2017

Schools Strong pipeline

2017 2018 2019 2020 2021

SCHOOLS CAMPUSES (end Feb) SCHOOLS BY PHASE (end Feb) NEW MID-FEE SCHOOLS BY PHASE (included)

47 47

4 3 8 6

49 53 59 60 89 94 104 114 122

NEW PREMIUM FEE SCHOOLS BY PHASE (included)

3 7 2 2

Annual Financial Results for the year ended 31 December 2017

New product development

Schools Learning Assist: The Bridge

• Grade 0 - 7
• Gauteng, Northern

suburbs

• Opened 2018
• Opportunities
• West Rand

Annual Financial Results for the year ended 31 December 2017

Expanding footprint: Western Cape

Schools

Elkanah House Student # 1 384 5 schools Glenwood House Student # 831 3 Schools Greenwood Bay Student # 349 3 Schools Abbotts College Student # 557 2 Schools

*Numbers at Feb 2018

Annual Financial Results for the year ended 31 December 2017

New developments

Schools Mooikloof High School (2018)

Annual Financial Results for the year ended 31 December 2017

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%

Annual Financial Results for the year ended 31 December 2017

Schools

Academic Excellence

Challenge

• 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

Annual Financial Results for the year ended 31 December 2017

Schools

Structural / System Efficiencies

Challenge

• 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

Annual Financial Results for the year ended 31 December 2017

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

Annual Financial Results for the year ended 31 December 2017

Revenue

Tertiary

751 827 982 1253 1580 200 400 600 800 1000 1200 1400 1600 1800 2013 2014 2015 2016 2017

R’m

+26%

Annual Financial Results for the year ended 31 December 2017

Operating profit

Tertiary

48 84 135 223 321 50 100 150 200 250 300 350 2013 2014 2015 2016 2017

R’m

+44%

Annual Financial Results for the year ended 31 December 2017

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

Annual Financial Results for the year ended 31 December 2017

Tertiary Segment Growth

Leading hospitality education provider

80% acquisition Founded January 2006 2 Campuses Fully integrated Stellenbosch campus Excellent

• pportunity for

expansion

Tertiary

Annual Financial Results for the year ended 31 December 2017

Largest chef school in SA with a national footprint

100% Acquisition Founded 2003 6 Campuses Nationally Integration with PHS

Annual Financial Results for the year ended 31 December 2017

Tertiary Segment Growth

New hospitality campus in Rosebank 2018

Tertiary

Annual Financial Results for the year ended 31 December 2017

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

Annual Financial Results for the year ended 31 December 2017

Wide range of skills development distance online learning courses

National Qualification Framework (NQF) Short learning programme Online courses Flexible and accessible vocational education X% Growth

Superb distance Support, procedures and systems Opportunity to expand and leverage distance platform

27 000+ Students

Tertiary

Annual Financial Results for the year ended 31 December 2017

Quality, affordable education that leads to employment

Humanities School of education IT Information & communication Commerce

Mega Campus Connected Campuses

7 Campuses Polokwane Bloemfontein (2018) Pietermaritzburg (2018)

Tertiary

Annual Financial Results for the year ended 31 December 2017

School of Management School of Law School of Psychology and Communication School of Finance & Accounting

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

8 Campuses 85% pass rate for the SAICA ITC board exams

Tertiary

Annual Financial Results for the year ended 31 December 2017 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

Annual Financial Results for the year ended 31 December 2017

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

Annual Financial Results for the year ended 31 December 2017

Revenue

Resourcing

200 194 297 461 644 100 200 300 400 500 600 700 2013 2014 2015 2016 2017

R’m

+40%

Annual Financial Results for the year ended 31 December 2017

Operating profit

Resourcing

18 18 29 20 32 5 10 15 20 25 30 35 2013 2014 2015 2016 2017

R’m

+59%

Annual Financial Results for the year ended 31 December 2017

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 – $18bn

• ver 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

Annual Financial Results for the year ended 31 December 2017

Geographic growth

Expansion into the rest of Africa

30%

revenue 2020

11%

• f revenue

generated outside SA’s borders

Annual Financial Results for the year ended 31 December 2017

Kenya

Expansion into the rest of Africa

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

Annual Financial Results for the year ended 31 December 2017

Nairobi, Kenya

Expansion into the rest of Africa Congestion: classic city issues

Annual Financial Results for the year ended 31 December 2017

Nairobi, Kenya

Expansion into the rest of Africa Satellite City – Tatu City

Annual Financial Results for the year ended 31 December 2017

Expansion into the rest of Africa Tatu City Nairobi, Kenya Copperleaf Academy (2017)

Annual Financial Results for the year ended 31 December 2017

Expansion into the rest of Africa Crawford International School

Annual Financial Results for the year ended 31 December 2017

Africa development partner

Expansion into the rest of Africa Largest urban developer in Africa 12 000 hectares under development in Africa

Kenya Ghana Democratic Republic of Congo (DRC) Zambia Nigeria

Annual Financial Results for the year ended 31 December 2017

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

• pportunities

ROI ahead of cost

• f capital

Cash generation Clear focus

• n academic

excellence

Annual Financial Results for the year ended 31 December 2017

Annual Financial Results for the year ended 31 December 2017

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?