Advtech Limited · JSE:ADH
Advtech — H1 2016 Earnings Presentation
81 slides from Advtech's earnings presentation, August 2016
Slide 1: Interim Financial Results for the six months ended 30 June 2016
` INTERIM FINANCIAL RESULTS for the six months ended 30 June 2016 Accelerated growth – ACADEMIC EXCELLENCE INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 1
Slide 2: Agenda
Financials Strategy Acquisitions - Oxbridge and Capsicum Prospects and Targets Questions
Slide 3: Headline Earnings
HEADLINE EARNINGS ` R’m 200 189,6 150 104,4 100 81,2 66,5 71,5 50 0 2012 2013 2014 2015 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 3
Slide 4: Normalised Earnings
NORMALISED` EARNINGS R’m 200 165,4 150 109,2 100 82,5 67,5 72,2 50 0 2012 2013 2014 2015 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 4
Slide 5: Excellent Results: Performance at a glance
EXCELLENT RESULTS ` Performance at a glance Revenue Trading operating profit 28% 33% Normalised earnings Interim dividends per share per share 24% 13.5 cents INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 5
Slide 6: Excellent Results: Enrolment
EXCELLENT RESULTS ` Total enrolment School enrolment 2016: 54 200 2016: 25 062 13% 6% 2015: 48 053 2015: 23 721 Education sites Tertiary full-time enrolment 2016: 101 2016: 29 138 5 20% 2015: 96 2015: 24 332 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 6
Slide 7: Group Revenue
GROUP REVENUE ` R’m 1 800 1 200 600 0 2012 2013 2014 2015 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 7
Slide 8: Group Trading Operating Profit
GROUP TRADING ` OPERATING PROFIT R’m 350 300 250 200 150 100 50 0 2012 2013 2014 2015 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 8
Slide 9: Group Trading Operating Margin
GROUP TRADING ` OPERATING MARGIN 20% 15% 10% 5% 0% 2012 2013 2014 2015 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 9
Slide 10: Cash Flow Generation
CASH FLOW `GENERATION R’m 700 600 500 400 300 200 100 0 2012 2013 2014 2015 2016 Cash generated from operations Cash from operations (after working capital) INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 10
Slide 11: Schools Revenue
SCHOOLS REVENUE ` R’m 900 800 700 600 500 400 300 200 100 0 2012 2013 2014 2015 2016 ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015 11
Slide 12: Schools Operating Profit
SCHOOLS OPERATING ` PROFIT R’m 200 150 100 50 0 2012 2013 2014 2015 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 12
Slide 13: Schools Operating Margin
SCHOOLS OPERATING ` MARGIN 25% 20% 15% 10% 5% 0% 2012 2013 2014 2015 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 13
Slide 14: Tertiary Revenue
TERTIARY REVENUE ` R’m 700 600 500 400 300 200 100 0 2012 2013 2014 2015 2016 ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015 14
Slide 15: Tertiary Operating Profit
TERTIARY OPERATING ` PROFIT R’m 120 90 60 30 0 2012 2013 2014 2015 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 15
Slide 16: Tertiary Operating Margin
TERTIARY OPERATING ` MARGIN 20% 15% 10% 5% 0% 2012 2013 2014 2015 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 16
Slide 17: Resourcing Revenue
RESOURCING ` REVENUE R'm 250 200 150 100 50 0 2012 2013 2014 2015 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 17
Slide 18: Resourcing Operating Profit
RESOURCING ` OPERATING PROFIT R'm 15 10 5 0 2012 2013 2014 2015 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 18
Slide 19: Resourcing Operating Margin
RESOURCING ` OPERATING MARGIN 15% 10% 5% 0% 2012 2013 2014 2015 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 19
Slide 20: Revenue by division
REVENUE ` 14% 8% 39% 2015 53% 50% 2016 36% Schools Tertiary Resourcing INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 20
Slide 21: Operating Profit by division
OPERATING PROFIT ` 3% 6% 37% 31% 2015 2016 63% 60% Schools Tertiary Resourcing INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 21
Slide 22: Bad debt levels
` • Schools below 1% of revenue • Tertiary average 4% of revenue • Bad debt levels remain consistent Strong emphasis Well managed Mindful of consumer - collections INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 22
Slide 23: Agenda
Financials Strategy Acquisitions - Oxbridge and Capsicum Prospects and Targets Questions
Slide 24: Strategic Imperatives
` ECONOMY RISK MANAGEMENT Growth > Organic and Acquisitive REGULATIONS > Channel Africa > Product > Segment > Geographic Excellence through Specialisation REPUTATION & STAFF > Niche market focus > Benchmarking Academic Excellence > Database > Teaching & Learning development > Benchmarking our perfor
Slide 25: Strategic Imperatives
` ECONOMY RISK MANAGEMENT Growth > Organic and Acquisitive REGULATIONS > Channel Africa > Product > Segment > Geographic Excellence through Specialisation REPUTATION & STAFF > Niche market focus > Benchmarking Academic Excellence > Database > Teaching & Learning development > Benchmarking our perfor
Slide 26: Strategic Imperatives
` ECONOMY RISK MANAGEMENT Growth > Organic and Acquisitive REGULATIONS > Channel Africa > Product > Segment > Geographic Excellence through Specialisation REPUTATION & STAFF > Niche market focus > Benchmarking Academic Excellence > Database > Teaching & Learning development > Benchmarking our perfor
Slide 27: Strategic Imperatives
` ECONOMY RISK MANAGEMENT Growth > Organic and Acquisitive REGULATIONS > Channel Africa > Product > Segment > Geographic Excellence through Specialisation REPUTATION & STAFF > Niche market focus > Benchmarking Academic Excellence > Database > Teaching & Learning development > Benchmarking our perfor
Slide 28: Strategic Imperatives
STRATEGIC IMPERATIVES ` ECONOMY RISK MANAGEMENT Growth > Organic and Acquisitive REGULATIONS > Channel Africa > Product > Segment > Geographic Excellence through Specialisation REPUTATION & STAFF > Niche market focus > Benchmarking Academic Excellence > Database > Teaching & Learning development > B
Slide 29: Our Brands
OUR BRANDS ` SCHOOLS TERTIARY RESOURCING INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 29
Slide 30: Schools Division
SCHOOLS DIVISION 20% Revenue to R822 million 25% Operating Profit to R164 million
Slide 31: Schools Division: matric results
SCHOOLS DIVISION ` 1 728 3 137 2 average matrics total distinctions distinctions/candidate Government ADvTECH ADvTECH ADvTECH IEB NSC NSC IEB Group Matric pass rate 71% 99% 98% 99% 99% 3 11 32 51 56 matrics matrics matrics matrics matrics 10 distinctions 9 distinctions 8 distinctions 7 distinctions
Slide 32: Schools Division: Crawford Schools
SCHOOLS DIVISION ` CrawfordSchoolsTM Every child a masterpiece • Outstanding academic reputation • Contemporary education • Extensive subject choice • International benchmarking • Ivy league alumni 20 89% 84% existing ultimate schools built capacity utilised capacity utilised ANNUAL FINANCIAL RESULT
Slide 33: Schools Division: Crawford USA College Visits
SCHOOLS DIVISION ` CrawfordSchoolsTM USA College Visits Tuesday 13 September 2016 ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015 33
Slide 34: Schools Division: Trinityhouse
SCHOOLS DIVISION ` Trinityhouse An education beyond expectation • Christian ethos • Traditional values • Excellent growth • Focus on academics, sports & culture 13 78% 44% existing ultimate schools built capacity utilised capacity utilised ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015
Slide 35: Schools Division: Abbotts College
SCHOOLS DIVISION ` Abbotts College Your Future, Our Passion • Recognise individual needs • Specialised methodology • A unique solution for students who struggle in a traditional environment • Incredible results, not previously anticipated 6 75% 68% existing ultimate schools built capacity utilised c
Slide 36: Schools Division: Junior Colleges
SCHOOLS DIVISION ` Junior Colleges Building the world, one child at a time • Early childhood development • International curriculum • Safe, secure, stimulating environment 8 70% 67% existing ultimate schools built capacity utilised capacity utilised ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 DEC
Slide 37: Schools Division: Centurus Colleges
SCHOOLS DIVISION ` Centurus Colleges Preparing enlightened minds for life • Holistic educational experience • Strong academics, sport and culture • Development of weekly boarding concept 9 87% 70% existing ultimate schools built capacity utilised capacity utilised ANNUAL FINANCIAL RESULTS FOR THE YE
Slide 38: Schools Division: Maravest
SCHOOLS DIVISION ` Maravest Investing in the Education of our future (Maragon) Building the life of a child (Charterhouse) • Strong Christian focus • Traditional values • Varied curriculum • Focus on academics, sports & culture 14 81% 61% existing ultimate schools built capacity utilised capacity ut
Slide 39: Schools Division: ADvTECH Academies
SCHOOLS DIVISION ` ADvTECH Academies • Community based schools • Affordable education • Core academic offering 11 84% 59% existing ultimate schools built capacity utilised capacity utilised ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015 39
Slide 40: Tertiary Division
TERTIARY DIVISION 20% Revenue to R593 million 57% Operating Profit to R100 million
Slide 41: Contact Higher Education
CONTACT HIGHER ` EDUCATION VALUE PREMIUM NICHE INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 41
Slide 42: Higher Education
HIGHER EDUCATION ` Distance education Higher education Contact VALUE PREMIUM NICHE Training INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 42
Slide 43: Tertiary Division
TERTIARY DIVISION ` End Feb 2016 7 20 29 138 brands registered sites Full-time students INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 43
Slide 44: Tertiary Division
TERTIARY DIVISION ` INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 44
Slide 45: Tertiary Division: leading private higher education institute
TERTIARY DIVISION ` South Africa's leading private higher education institute Our registered academic authority: • Develop & submit qualifications for accreditation • Assess, monitor and develop academic and lecturing staff • Oversee assessment • Confer degrees INTERIM RESULTS FOR THE SIX MONTHS END
Slide 46: Tertiary Division: The IIE
TERTIARY DIVISION ` The IIE • Curricula relevant to the modern world of work • Innovative and supportive teaching methodologies • We focus on building student careers THE IIE IS THE ONLY • 4 faculties SOUTH AFRICAN EDUCATIONAL INSTITUTION • 60 + accredited qualifications ACCREDITED BY THE BRITISH AC
Slide 47: Tertiary Division: Growth
TERTIARY DIVISION ` Growth INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 47
Slide 48: Tertiary Division: Student success
TERTIARY DIVISION ` Student success 3 359 Students graduating 2 924 Graduates placed in 1 jobs through the Graduate Placement Programme st ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015 48
Slide 49: Tertiary Division: Rosebank College
TERTIARY DIVISION ` Rosebank College • Affordable • Quality, high demand qualifications • Employability • Digitally enabled • Blended learning • Enrolments: 418 students INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 49
Slide 50: Tertiary Division: Vega
TERTIARY DIVISION ` VEGA • Vega’s mantra – wisdomwithmagic • Qualifications in brand building, creative communication and media • High industry credibility and reputation INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 50
Slide 51: Tertiary Division: Varsity College
TERTIARY DIVISION ` Varsity College • Premium brand • Applying the best of teaching and learning methodologies • Student-centric approach • 4 Schools: • Humanities • Commerce • Social Sciences • Information Technology INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 51
Slide 52: Tertiary Division: Business School at Varsity College
TERTIARY DIVISION ` Business School at Varsity College • Short learning programmes • Part-time study • Adult learning – theory and practical application INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 52
Slide 53: Tertiary Division: Forbes Lever Baker
TERTIARY DIVISION ` Forbes Lever Baker • Premier tuition support provider for accounting qualifications • Superb pass rate • Top CTA level 2 student in 2015 95% pass rate for 2015 SAICA ITC board exam achieved by CTA students INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 53
Slide 54: Tertiary Division: The Design School of Southern Africa
TERTIARY DIVISION ` The Design School of Southern Africa • Education in design – graphic, fashion and interior • Vocational preparedness via academic excellence and industry experience • Inspirational, adaptable and innovative learning environment INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 201
Slide 55: Tertiary Division: Enrolment Growth
TERTIARY DIVISION ` Enrolment Growth: Full Qualifications 35 000 30 000 29 138 25 000 24 332 20 113 20 000 17 210 15 000 10 000 5 000 0 2013 2014 2015 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 55
Slide 56: Resourcing Division
RESOURCING DIVISION 116% Revenue to R224 million 30% Operating Profit to R9 million
Slide 57: Resourcing Division
RESOURCING ` DIVISION 2016 12 28 3 759 brands branches 2015 placements INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 57
Slide 58: Calibre and Quality of Our People
CALIBRE AND` QUALITY OF OUR PEOPLE Our intellectual capital and our skills are our greatest assets 44% of staff are professionally qualified 44 421 593 1 334 Doctorates Masters degrees Honours degrees Degrees INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 58
Slide 59: International Finance Corp
INTERNATIONAL ` FINANCE CORP World Bank Group R320m Invested in ADvTECH = R190m + R130m Share issue Acquired in market INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 59
Slide 60: International Finance Corp
INTERNATIONAL ` FINANCE CORP World Bank Group • Support our expansion strategy in Africa • Their mandate – Invest and develop in Africa • Benefits: • Existing footprint in Africa • Established relationships with private and government • Local market knowledge • Credibility INTERIM RESULTS FOR THE SI
Slide 61: Agenda
Financials Strategy Acquisitions - Oxbridge and Capsicum Prospects and Targets Questions
Slide 62: South African Distance Education Market
SOUTH AFRICAN DISTANCE EDUCATION ` MARKET Distance Education growth 420 000 360 000 300 000 2009 2010 2011 2012 2013 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 62
Slide 63: Estimated Size of Distance Education in South Africa
ESTIMATED SIZE OF DISTANCE EDUCATION IN ` SOUTH AFRICA 938 201 total students in South Africa Higher Education • Africa and India – fastest growing Contact Distance markets for distance • E-learning trends – 15,2% growth in Africa Distance: 381 506 Contact: 556 695 INTERIM RESULTS FOR THE SIX MONTHS
Slide 64: Acquisitions: distance education
ACQUISITIONS ` distance 20 000 education students (approx.) • Call centre • • Student support Logistics 51% 50+ • Marketing acquired courses offered INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 64
Slide 65: Acquisitions: Oxbridge growth
ACQUISITIONS ` Oxbridge growth R’000 120 000 25 000 100 000 20 000 80 000 15 000 60 000 10 000 40 000 5 000 20 000 0 0 2014 2015 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 65
Slide 66: Hospitality and Tourism
HOSPITALITY` AND TOURISM • Employment in SA: Direct and indirect jobs in the sector are estimated to be 1.2m. • World Economic Forum estimates Sub-Saharan Africa will create 3.2m tourism jobs between 2012- 2022. • WEF expects African tourism employment to grow by 2.3% per annum. • WEF report: 8m peo
Slide 67: Acquisitions: Culinary arts education
ACQUISITIONS ` Culinary arts 600 Full-Time education 600 Part-Time Endorsements: Acquisition status: 6 campuses City and Guilds, 100% acquired World Association of Chef’s Societies by ADvTECH INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 67
Slide 68: Acquisitions: Capsicum historical performance
ACQUISITIONS ` Capsicum historical performance R’000 70 000 700 680 60 000 660 50 000 640 620 40 000 600 30 000 580 20 000 560 540 10 000 520 0 500 2014 2015 2016 Enrolments Revenue INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 68
Slide 69: Agenda
Financials Strategy Acquisitions - Oxbridge and Capsicum Prospects and Targets Questions
Slide 70: Schools Division Growth targets 2020
SCHOOLS DIVISION ` Growth targets 2020 R3bn R650m 40 000 revenue EBIT enrolments INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 70
Slide 71: Tertiary Division Growth targets 2020
TERTIARY DIVISION ` Growth targets 2020 R2.2bn R450m revenue EBIT INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 71
Slide 72: Africa revenue target 2020
AFRICA ` 30% Revenue 2020 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 72
Slide 73: NEPS stretch target 2018
NEPS ` 100 cps (NEPS) Stretch target 2018 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 73
Slide 74: Prospects
PROSPECTS` Total enrolments HEPS 60 000 55 51 55 000 54 200 50 50 000 48 053 45 45 000 41 40 39 40 000 35 35 35 000 33 654 30 000 30 2014 2015 2016 2012 2013 2014 2015 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 74
Slide 75: Dividend
DIVIDEND ` Interim dividends • Significant investments in pipeline per share • Recent fundraising activities 13.5 cents • Retaining cash to support capex pipeline and investments • Above inflation in dividend INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 75
Slide 76: Dividend History
` DIVIDEND HISTORY Cents 20 17 15 15 15 14 13,5 12,5 10,5 11 10 10 5 0 2012 2013 2014 2015 2016 Interim Final INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 76
Slide 77: ADvTECH = Good Investment
ADVTECH = GOOD ` INVESTMENT Return on Good Strong investment Growth performance ahead of cost of Opportunities capital Clear focus on Cash Academic Excellence Generation INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 77
Slide 78: ADvTECH Share Price
ADVTECH SHARE ` PRICE INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016 78
Slide 79: Agenda
Financials Strategy Acquisitions - Oxbridge and Capsicum Prospects and Targets Questions
Slide 80: Questions
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Slide 81: Thank you
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