Advtech Limited · JSE:ADH
Advtech — FY2008 Earnings Presentation
54 slides from Advtech's earnings presentation, March 2009
Slide 1: Audited results for the year ended 31 December 2008
Audited results For the year ended 31 December 2008
Slide 2: Mark Shuttleworth quote
“A small group of passionate people is all it takes to change the world. In fact, if you look through the history of humanity, they are the only ones who have ever changed anything.” Mark Shuttleworth. Investing in human potential
Slide 3: Agenda
Agenda • Positioning • Quality • Operations • Financial • Conclusions Investing in human potential
Slide 4: Strategic positioning
Strategic positioning Chairman’s letter to shareholders … “our business is advantageously positioned in such vital sectors as education, training and personnel placement.” Investing in human potential
Slide 5: U.S. male unemployment rates
U.S. male unemployment rates Investing in human potential
Slide 6: U.S. male unemployment rates
U.S. male unemployment rates Investing in human potential
Slide 7: Operations
Operations “The path to finding employment lies in acquiring a tertiary qualification and not matric alone.” Econometrix January 2009 Investing in human potential
Slide 8: Skills shortage in SA
Skills shortage in SA Occupation Managers 41 147 Arts and Media Professionals 5 640 Management Professionals 32 292 Education Professionals 42 203 ICT Professionals 5 871 Engineering, ICT and Science Technicians 36 506 Source: Department of Labour critical skills list 2008 Investing in human potenti
Slide 9: Skills, poverty and jobs
Skills, poverty and jobs Investing in human potential
Slide 10: Strategic positioning
Strategic positioning Chief Executive’s report to stakeholders … “The enduring worth of the Group’s core operations and the annuity nature of much of the revenue continues to underpin the sustainability of the Group’s robust business model.” Investing in human potential
Slide 11: Balance sheet
Balance sheet R’m 2008 2007 Fixed and long term assets 665 479 Debtors 90 62 Less: non-interest bearing debt -290 -241 Net current assets -200 -179 Employment of funds 465 300 Shareholders funds 509 414 Interest bearing debt 0 4 Less: cash -44 -118 Funds employed 465 300 Investing in human potential
Slide 12: Annuity nature
Annuity nature • 50% of education revenue is returning students • Students can be with us up to 15 years • Growth in contract businesses • Imfundo • Resourcing Investing in human potential
Slide 13: Sustainability
Sustainability • Environmental • Sense of renewal • Academic experience - quality - enjoyment - value • Enrolments - returning students - word of mouth - tenure Investing in human potential
Slide 14: Sustainability (continued)
Sustainability (continued) • Barriers to entry • Regulatory and governance • Investment - human resources - infrastructure - problem areas - balance sheet Investing in human potential
Slide 15: Ploughing back
Ploughing back R’m % Total value created 927 100 Less: employees -514 55 Less: government taxes -173 19 Available to business 240 26 Investing in human potential
Slide 16: Ploughing back
Ploughing back R’m % Total value created 927 Less: employees -514 Less: government taxes -173 Available to business 240 100 Allocated to communities 37 15 Allocated to investors 71 30 Retained in the group 132 55 Investing in human potential
Slide 17: Employability
Employability • 90% of degree graduates were employed in less than three months after graduation • In certificate programmes, which are at the lower end of our qualifications, more than 65% of graduates find employment within the first three months after graduation Investing in human potential
Slide 18: Strategic positioning
Strategic positioning Chairman’s letter to shareholders … “While the fixed property portfolio is reported in the balance sheet at a cost of R531 million, management estimate the replacement cost of the present infrastructure at more than R2 billion” Investing in human potential
Slide 19: Investment
Investment Investing in human potential
Slide 20: Capacity
Capacity Investing in human potential
Slide 21: Quality
Quality American biologist Peter Agre once said: “Our single greatest defence against scientific ignorance is education.” Chairman’s letter to shareholders … “Our product and service delivery values are recognised to include an unequivocal commitment to superior teaching instruction and academic exc
Slide 22: Quality: IIE and governance
Quality IIE and governance • The introduction of a Higher Certificate in Photography • 35 accredited programmes in the IIE stable • Work Readiness Programme (WRP) Investing in human potential
Slide 23: Quality
Quality • The launch of IIE Forums which provide opportunities for reflection and debate on key educational issues with a focus on the role of private education • The launch of the Private Higher Education Network (PHEN) Investing in human potential
Slide 24: Quality
Quality • The Academic Advisory Council, comprising leading independent educational experts, which advises the Group in educational matters and policy Investing in human potential
Slide 25: Quality: IIE Senate
Quality IIE Senate • Ensures highest academic standards … • … that prepare students for careers • Majority are academics • Elected representatives of the lecturing and teaching body • Elected student representatives also serve on Senate • Sub committees Investing in human potential
Slide 26: Academic highlights: Schools
Academic highlights Schools ¾ Abbotts College, CrawfordSchools™ and Trinityhouse achieved 100% pass rate ¾ Our 1043 matric candidates obtained distinctions in almost a third of subjects written, 2332 in total Investing in human potential
Slide 27: Academic highlights: Schools
Academic highlights Schools ¾ Our schools continue to contribute significantly to the national output of key subjects with averages per candidate as follows: Mathematics – 75% Physical Science – 66% English – 70% Investing in human potential
Slide 28: Academic highlights: Tertiary
Academic highlights Tertiary ¾ National pass rate for students of Vega’s Honours degrees was 89% ¾ Final year students in the diploma in Accounting and Financial Computing at College Campus achieved a pass rate of 78% Investing in human potential
Slide 29: Academic highlights: Tertiary
Academic highlights Tertiary ¾Varsity College final year UNISA students achieved an overall pass rate of above 80%, including a 95% pass rate in English ¾ In the UNISA CTA examinations, five Varsity College students were placed in the top 20 overall Investing in human potential
Slide 30: Recruitment quality
Recruitment quality ¾ Major focus on training – 7 hours per month ¾ Repeat business from 65% of clients in one year ¾ 12% of client companies used us for the first time in 2008 Investing in human potential
Slide 31: Operations
Operations “… let’s say more or less 25% up across the board in terms of headlines, profits, revenues, dividends etc. Good numbers, resilient business.” Classic FM March 2009 Investing in human potential
Slide 32: ADvTECH Education
ADvTECH Education SCHOOLS TERTIARY SKILLS Investing in human potential
Slide 33: ADvTECH Resourcing
ADvTECH Resourcing RECRUITMENT Investing in human potential
Slide 34: Scale of operations
Scale of operations • Approx 46 500 students (2007: 45 000) • 52 education sites and campuses • 21 staffing branches • Approx 4 900 placements (2007: 4 300) • Number of employees 3 643 • 146 Masters degrees • 24 Doctorates • 266 Alumni Investing in human potential
Slide 35: Operations
Operations Investing in human potential
Slide 36: Operations
Operations Investing in human potential
Slide 37: Operations: Investments
Operations Investments • The acquisition of Trinityhouse School in Gauteng for R104m • The acquisitions of staffing companies IT Edge, Tech-Pro Personnel and The Working Earth • Total expenditure on acquisitions R143m Investing in human potential
Slide 38: The chairman said …
The chairman said … • The Group’s financial performance gives credence to our business model, our values and our operational framework. • Our Education division has again made important contributions to South Africa’s academic proportion and its transformational progress. • In the Resourcing divisio
Slide 39: Financial highlights
Financial highlights R’m 2008 2007 % growth Revenue 1 198 960 25% Operating profit 201 158 27% Headline earnings 155 119 30% HEPS (cps) 40.2 32.0 26% Diluted HEPS (cps) 40.0 31.0 29% Distribution (cps) 20.0 16.0 25% Investing in human potential
Slide 40: Balance sheet
Balance sheet R’m 2008 2007 %ch Non current assets 665 479 39% Debtors 90 62 45% Cash and equivalents 44 118 -63% Current assets -200 -178 Total assets 799 659 Shareholders funds 509 414 23% Interest bearing debt 0 4 Vendor claims 12 0 Fees in advance 84 65 29% Other payables 194 176 10% Funds emplo
Slide 41: Cash flow
Cash flow R’m 2008 2007 Cash generated by operating activities 251 194 Net cash inflow from operating 154 136 activities Net cash outflow into investing -235 -72 activities Free operating cash flow before capex 204 152 Cash conversion of earnings 132% 128% Investing in human potential
Slide 42: Financial analysis
FINANCIAL ANALYSIS Investing in human potential
Slide 43: Revenue trend
Revenue trend 5-year CAGR in revenue = 20% Investing in human potential
Slide 44: Group operating margin
Group operating margin Investing in human potential
Slide 45: Cash flow generation
Cash flow generation Investing in human potential
Slide 46: Net cash position
Net cash position Investing in human potential
Slide 47: HEPS
HEPS 5-year CAGR in HEPS = 35% Investing in human potential
Slide 48: Segmental analysis: Revenue
Segmental analysis Revenue Investing in human potential
Slide 49: Segmental analysis: Operating Profit
Segmental analysis Operating Profit Investing in human potential
Slide 50: Education trends
Education trends Investing in human potential
Slide 51: Resourcing trends
Resourcing trends Revenue R’m Investing in human potential
Slide 52: Prospects
Prospects • Expected that student enrolment and customer demand will be maintained • The Group has a sound balance sheet • Sufficient resources to optimally manage the business … • … and to consider acquisition and expansion opportunities • Confident of increased earnings in the year ahead Investing
Slide 53: 5 Year – Market Cap Index
5 Year – Market Cap Index Investing in human potential
Slide 54: Questions
Questions Investing in human potential