Interim results presentation - 30 June 2005
unaudited resultsfor the six months ended 30 June 2005
Interim results presentation - 30 June 2005
INTRODUCTION
“Education is the most powerful weapon which you can use to change the world”.
Nelson Mandela
Interim results presentation - 30 June 2005
INTRODUCTION
“Those who educate children well are more to be honoured than parents, for these only gave life, those the art of living well”.
Aristotle
Interim results presentation - 30 June 2005
OVERVIEW
• The ADvTECH Group is a leader in Southern Africa in the area of Education, Skills Development and Human Resource Management
• The Group is focused on the development, deployment and management of human capital
• The business operates through two primary divisions, namely:
• Education
• Resourcing
Interim results presentation - 30 June 2005
ORGANISATIONAL STRUCTURE
ADvTECH Education
ADvTECH Resourcing
• Schools
• Tertiary
• Skills
• Recruitment
• Other
Interim results presentation - 30 June 2005
SCHOOLS TERTIARY SKILLS
Imfundo
Interim results presentation - 30 June 2005
RECRUITMENT OTHER
Interim results presentation - 30 June 2005
1 2 3
4 6
7 9
10
13 14
HF Brown (Chairman) *
FR Thompson (CEO) #
J Deeb (Tertiary/FD) #
CN Duff (Marketing) #
HR Levin *
DK Ferreira *
JNP Booyens (Properties) #
DL Honey (Resourcing) #
MI Sacks *
BD Buckham *
Prof J Jansen *
Prof DS Dowling (Bond) @
A Isaakidis (Schools) @
S Schwanzer (HR) @
1
101
6
11
5
2
3
7
4
8
9
12
12
1413
1313
11
8
5
BOARD OF DIRECTORS &
SENIOR MANAGEMENT
* Non – Executive Director # Executive Director @ Senior Management
Interim results presentation - 30 June 2005
23%
13%
10%7%7%
7%
5%4%
24%
Directors & StaffOld MutualSanlamWelihockyj interestsBD BuckhamNetcareFratersRMBOther
SHAREHOLDERANALYSIS
SHAREHOLDER SPREAD
Interim results presentation - 30 June 2005
MARKETDATA
Share Statistics (30/08/2005)
Share Price (cents) 180
Market Cap (R’m) 709
Shares in Issue (m) 394
0
0.5
1
1.5
2
2.5
AdvTech JSE All share Index JSE Cyclical Index
12 MONTHS
Jan ‘02 to August
‘05
0
1
2
3
4
5
6
7
8
AdvTech JSE All share Index JSE Cyclical Index
Interim results presentation - 30 June 2005
OPERATIONAL HIGHLIGHTS
o Operating margins improved
o Additional capacity resulting from investment in educational infrastructure
o Strengthened group management
o Academic expertise, governance and credibility further enhanced
Interim results presentation - 30 June 2005
EDUCATION
o The benefits of the recent capital expenditure began to filter through
o The division benefited from a solid improvement in enrolments across all campuses.
o Good gains were achieved, albeit from a low base, at Imfundo
o Independent Institute of Education contributed to the Group’s enhanced academic expertise, governance and credibility
Interim results presentation - 30 June 2005
RESOURCING
o Positive economic environment
o Strong performance in key areas, where ADvTECH enjoys market leadership positions
o Finance
o IT
o Engineering
o Increased efficiency and effectiveness of operations
Interim results presentation - 30 June 2005
JSE listed companies are required to adopt IFRS in the first financial year commencing on after 01 January 2005
• ADvTECH’s results for the year ending 31 December 2005 will the first set of annual financial statements that comply with IFRS
• The Group’s transition date for the adoption of IFRS is 01 January 2004
The main adjustments relate to accelerated depreciation (ISA16), operating leases (IAS17) and share based payments (IFRS 2)
IFRS
IT MUST BE NOTED THAT NONE OF THE ADJUSTMENTS ARE SUBSTANTIVE AND THEY HAVE NO CASH FLOW EFFECT
Interim results presentation - 30 June 2005
IFRS
IFRS Impact on accumulated loss as at 01 January ‘04
Accelerated depreciation
(R4,724)
(R3,048)
Operating lease adjustment
SA GAAP accumulated loss = R148,837
IFRS restated accumulated loss = R156,719
= (R7,882)
Share based payments
(R110)
All amounts in R’000
Interim results presentation - 30 June 2005
IFRS Impact on Income Statement for the year ended 31 December 2004
Accelerated depreciation
(R937)
(R809)
Operating lease adjustment
(R195)
Share based payments
SA GAAP net profit after tax = R39,250
= (R1,941)
IFRS restated net profit after tax = R37,309
12,0 (cents)
HEPS (BEFORE)
11,5 (cents)
HEPS (AFTER)
IFRS
All amounts in R’000
Interim results presentation - 30 June 2005
IFRS Impact on Income Statement for the 6 month period ended 30 June 2005
IFRS Accelerated depreciation
(R309)
(R70)
Share based payments
SA GAAP net profit after tax = R26,970
(R886)
Operating lease adjustment
IFRS restated net profit after tax = R25,704
= (R1,266)
7,0 (cents)
HEPS (AFTER)
7,3 (cents)
HEPS (BEFORE)
All amounts in R’000
Interim results presentation - 30 June 2005
FREE OPERATING CASH FLOW PER
SHARE
26%
31.1centsFINANCIAL
OVERVIEW
25%
OPERATING PROFIT
R36,7 m
REVENUE
20%
R332,6 m
NAV PER SHARE
14%
69.7cents
Interim results presentation - 30 June 2005
6.5 cents
FULLY DILUTED HEPS
48%
DILUTED HEPS
43%
6.7 cents
FINANCIALOVERVIEW 6.8
cents
30%
DILUTED EPS CONTINUING OPERATIONS
Interim results presentation - 30 June 2005
020406080
100120140
R'm
2002 2003 2004 2005
Net Cash from Operating Activities
FINANCIALHIGHLIGHTS
05
101520253035
cents
2002 2003 2004 2005
Free Operating Cashflow per Share
The above graphs refer to the respective 6 months period to June
Interim results presentation - 30 June 2005
SEGMENTALREVIEW -
EDUCATION
6 months % change 2005 2004
R’000
Revenue 20% 292,738 243,704
Operating profit 26% 47,006 37,272
Operating margin 16,1% 15,3%
88%
12%
EducationResourcing
REVENUE
Interim results presentation - 30 June 2005
SEGMENTALREVIEW -
RESOURCING
6 months % change 2005 2004
R’000
Revenue 20% 39,908 33,186
Operating profit 34% 5,328 3,987
Operating margin 13,4% 12,0%
88%
12%
EducationResourcing
REVENUE
Interim results presentation - 30 June 2005
June June December
R’000 2005 2004 2004
Unaudited Restated- Restated-
Unaudited Unaudited6 months 6 months 12 months
Capital expenditure – current period 39,634 14,210 43,510Capital commitments – remainder of year 41,895 20,657 -
Total 81,529 34,867 43,510
Capital commitments - Future years 2,200 27,143 82,416
CAPEX
“Our growth strategy continues to deliver, resulting in a new wave of investment in educational infrastructure, which creates a secure, quality platform for continued growth in the learner enrolment, academic achievement and a sustainable financial performance.”
Source: ADvTECH Press Release, 14 March 2005
Interim results presentation - 30 June 2005
REPORT CARD
PASSED
• Both Education and Resourcing divisions in a “promising growth phase”
Education revenue up 20%Resourcing revenue up 20%Invested R40 million in educational infrastructure in past 6 months
• Improved headline earnings and operating cash flows / HEPS to increase by 25% to 45%
HEPS up 43%Cash from operations up 79%
• Every effort being made to conclude litigation in the interest of shareholders
Legal proceedings still in progress
Interim results presentation - 30 June 2005
GROWTH STRATEGY
At Campuslevel
Org
anic
At Grouplevel
Stra
tegi
c
At Divisionallevel
Expa
nsio
nPlatform for Sustainable Growth
Strong Financial Track Record
Competent Management
Academic Capacity
Investment inInfrastructure
Academic Achievement
Interim results presentation - 30 June 2005
PROSPECTS
Current Economic Climate
• JSE All Share Index is at an all-time high
• Longest period of economic expansion on record
• Lowest inflation and interest rate environment in decades
• Record high consumer and business confidence levels
• Significant income taxation relief in recent Budgets
• Increased household disposable income
Interim results presentation - 30 June 2005
SOUTH AFRICAN MARKET
GROWING STRONGER
AS THE Reserve Bank reminded us yesterday, the economy has been in an upward phase of the business cycle for nearly six years, since September 1999, making this the longest period of economic expansion in the recorded economic history of SA.
Gross domestic product was running at an annualised 4,8% in the second quarter of this year, says Stats SA. The figure came in above market expectations and well ahead of the 3,5% for the first quarter. Most economists were already expecting full-year growth to come out at, or above, 4% (the treasury’s forecast is 4,3%). The better than expected second-quarter figures confirm this is on the cards. That would make this only the third time in two decades that the annual economic growth rate has exceeded 4%.
Source: Business Day, 25 August 2005
Consumer confidence at record levelsMail & Guardian Online, 11May 2005
Consumer confidence now 'very high'I-Net Bridge, 05 July 2005
Business confidence risesSapa, 06 July 2005
Interim results presentation - 30 June 2005
Source: Business Day , August 2005
Interim results presentation - 30 June 2005
Against this background, ADvTECH’s:
• Further investment in educational infrastructure and encouraging
developments in the skills and adult education division, Imfundo
• Increased student enrolments across all divisions
• Anticipated further growth in the Recruitment division
supports the board’s expectation that …
PROSPECTS
In the absence of any materially adverse factors improved full
year results and cash flow will be achieved once again
Interim results presentation - 30 June 2005
Q&A