annual financial results 2012.pdfmatric results physical science 2011 fail 0 - 29% pass 30 - 40%...
TRANSCRIPT
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