Annual Report Analyst presentation 2008 · Investing in human potential The chairman said … •...

Audited resultsFor the year ended 31 December 2008

Investing in human potential

“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

Agenda

• Positioning• Quality• Operations• Financial • Conclusions

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Strategic positioning

“our business is advantageously positioned in such vital sectors as education, training and personnel placement.”

Chairman’s letter to shareholders …

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U.S. male unemployment rates

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U.S. male unemployment rates

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Operations

“The path to finding employment lies in acquiring a tertiary qualification and not matric alone.”

Econometrix January 2009

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OccupationManagers 41 147Arts and Media Professionals 5 640Management Professionals 32 292Education Professionals 42 203ICT Professionals 5 871Engineering, ICT and Science Technicians 36 506

Source: Department of Labour critical skills list 2008

Skills shortage in SA

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Skills, poverty and jobs

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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.”

Strategic positioning

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Balance sheetR’m 2008 2007Fixed and long term assets 665 479Debtors 90 62Less: non-interest bearing debt -290 -241Net current assets -200 -179Employment of funds 465 300

Shareholders funds 509 414Interest bearing debt 0 4Less: cash -44 -118

Funds employed 465 300

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Annuity nature

• 50% of education revenue is returning students

• Students can be with us up to 15 years

• Growth in contract businesses• Imfundo• Resourcing

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Sustainability• Environmental• Sense of renewal• Academic experience

- quality- enjoyment- value

• Enrolments- returning students- word of mouth- tenure

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Sustainability (continued)

• Barriers to entry• Regulatory and governance• Investment

- human resources- infrastructure- problem areas- balance sheet

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Ploughing backR’m %

Total value created 927 100Less: employees -514 55Less: government taxes -173 19Available to business 240 26

Investing in human potential

Ploughing backR’m %

Total value created 927Less: employees -514Less: government taxes -173Available to business 240 100Allocated to communities 37 15Allocated to investors 71 30Retained in the group 132 55

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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

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

Investment

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Capacity

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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 excellence.”

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Quality

IIE and governance

• The introduction of a Higher Certificate in Photography

• 35 accredited programmes in the IIE stable

• Work Readiness Programme (WRP)

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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)

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• The Academic Advisory Council, comprising leading independent educational experts, which advises the Group in educational matters and policy

Quality

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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

Quality

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Academic highlights

Abbotts College, CrawfordSchools™ and Trinityhouse achieved 100% pass rate

Our 1043 matric candidates obtained distinctions in almost a third of subjects written, 2332 in total

Schools

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Academic highlights

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%

Schools

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Academic highlights

National pass rate for students of Vega’s Honours degrees was 89%

Final year students in the diploma in Accounting and Financial Computing at College Campus achieved a pass rate of 78%

Tertiary

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Academic highlights

Varsity College final year UNISA students achieved an overall pass rate of above 80%, including a 95% pass rate in English

In the UNISA CTA examinations, five Varsity College students were placed in the top 20 overall

Tertiary

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Major focus on training – 7 hours per month

Repeat business from 65% of clients in one year

12% of client companies used us for the first time in 2008

Recruitment quality

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“… let’s say more or less 25% up across the board in terms of headlines, profits, revenues, dividends etc. Good numbers, resilient business.”

Classic FMMarch 2009

Operations

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SCHOOLS TERTIARY SKILLS

ADvTECH Education

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RECRUITMENT

ADvTECH Resourcing

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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

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Operations

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Operations

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Operations

• 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

Investments

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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 division, the focus on key niche markets coupled with its professional application, service and commitment, served to once again generate outstanding results.

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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%

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R’m 2008 2007 %chNon current assets 665 479 39%Debtors 90 62 45%Cash and equivalents 44 118 -63%Current assets -200 -178Total assets 799 659

Shareholders funds 509 414 23%Interest bearing debt 0 4Vendor claims 12 0Fees in advance 84 65 29%Other payables 194 176 10%Funds employed 799 659

Balance sheet

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Cash flow

R’m 2008 2007

Cash generated by operating activities 251 194

Net cash inflow from operating activities 154 136

Net cash outflow into investing activities -235 -72

Free operating cash flow before capex 204 152

Cash conversion of earnings 132% 128%

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FINANCIAL ANALYSIS

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5-year CAGR in revenue = 20%

Revenue trend

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Group operating margin

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Cash flow generation

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Net cash position

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5-year CAGR in HEPS = 35%

HEPS

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Segmental analysisRevenue

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Segmental analysis Operating Profit

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Education trends

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Resourcing trends

Revenue R’m

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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

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5 Year – Market Cap Index

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Questions