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Agenda
Annual Financial Results for the year ended 31 December 2017
Results
Financials
Resourcing division
Africa
Tertiary division
Academic excellence
Schools division
Prospects
Good results
Trading
Revenue
Trading Performance Summary
Trading
Operational
Profit
Normalised
Earnings
Per Share
23% 20% 20%
Annual Financial Results for the year ended 31 December 2017
Segmental Trading Performance
Revenue
Schools
15% 26% 40%
Operating
Profit3% 44% 59%
Tertiary Resourcing
Annual Financial Results for the year ended 31 December 2017
STUDENTS
EDUCATIONAL SITES
2016 2017 2018
53 337
60 176
63 544
98
117
122
Group
Growth
Annual Financial Results for the year ended 31 December 2017
STUDENTS
EDUCATIONAL SITES
2016 2017 2018
53 337
60 176
98
117
122
Including Oxbridge +
University of Africa
Growth
Annual Financial Results for the year ended 31 December 2017
92 475
63 544
Bad debt
Annual Financial Results for the year ended 31 December 2017
Tough economic
environment
Pressure on
consumers
Well managed
and under control
Schools
<1%
Tertiary
<3%
Financial overview
The reported incident of fraud
Annual Financial Results for the year ended 31 December 2017
Total of R48.1 million, perpetrated over a three year period starting in 2015
Overstatement of revenue & understatement of costs
R35.5 million after tax impact
Theft of cash - R5.0 million of which R2.0 million has been secured
Criminal & civil charges being pursued
Impact of fraud
Annual Financial Results for the year ended 31 December 2017
Name
12 Months to
31 December 2015
R’m
12 Months to
31 December 2016
R’m
6 Months to
30 June 2017
R’m
6 Months to
31 December
2017
Rm’
Total Amount
R’m
Revenue overstated - (9.3) (5.1) (2.5) (16.9)
Expenses Understated
(Including the cash loss of
R5.0 million)
(6.7) (15.1) (2.9) (6.5) (31.2)
Operating profit overstated (6.7) (24.4) (8.0) (9.0) (48.1)
Taxation Effect 1.9 6.6 2.0 2.1 12.6
Profit after Taxation Effect (4.8) (17.8) (6.0) (6.9) (35.5)
Group
Trading Revenue
Annual Financial Results for the year ended 31 December 2017
17661932
2705
3353
4096
0
500
1000
1500
2000
2500
3000
3500
4000
4500
13 14 15 16 17
R’m
+23%
Group
Trading operating profit
Annual Financial Results for the year ended 31 December 2017
222256
448.0
560
671
0
100
200
300
400
500
600
700
800
13 14 15 16 17
R’m
+20%
Group
Group trading operating margin
Annual Financial Results for the year ended 31 December 2017
13% 13%
16%17%
16%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
13 14 15 16 17
R’m
• Growth Capex
• Capacity utilisation
Group
NEPS
Annual Financial Results for the year ended 31 December 2017
37.942.3
53.9
63.3
75.8
0
10
20
30
40
50
60
70
80
13 14 15 16 17
Cen
ts
+20%
Group
Cash flow generation
Annual Financial Results for the year ended 31 December 2017
363
286
558
738
811
200
93
223
291
400
0
100
200
300
400
500
600
700
800
900
13 14 15 16 17
R’m
Cash generated by operations
Cash from operations
+37%
Group
Free operating cash flow before capex
Annual Financial Results for the year ended 31 December 2017
297
196
338
468
597
0
100
200
300
400
500
600
700
13 14 15 16 17
R’m
+28%
Group
Capex and acquisitions
Annual Financial Results for the year ended 31 December 2017
CAPEX AND ACQUISITIONS R'm
Acquisitions 215.6
- Glenwood House
- Summit College
- The Private Hotel School
- University of Africa
- Greenwood Bay College
- Elkanah House
Capex Projects 718.0
5 Site Acquisitions 226.3
3 New Schools 114.4
Student Management and Finance Systems 29.2
Expansionary capex – existing sites 218.00
Furniture, Fittings, IT and Vehicles 130.1
Total Capex and Acquisitions 933.6
Group
Net cash position
Annual Financial Results for the year ended 31 December 2017
-202
-436
-1157-1110
-1617-1800
-1600
-1400
-1200
-1000
-800
-600
-400
-200
0
13 14 15 16 17
R’m
Tough Economic Times - 2017
GDP growth last 3 years 1%
IMF World Economic Outlook:
SA expected to remain below
Unemployment
STATS SA Q4:
1% GDP growth
26,5%
SA business
confidence
2018 highest
increase
Since
1970s
GDP growth last 5 years 1.5%
135k formal jobs lost Q4 2017
Operating Environment
School market
Higher Education market size
Public
enrolments: +6%
Independent
enrolments: +130%
Total SA enrolments
Public higher
education: +3%
Private higher
education: +51%
Total estimated higher education enrolment SA
12 342 000
590 000
12 932 000
985 000
147 000
1 132 000
Source: CHE 2015, VitalStats 2015, SA Institute of Race Relations 2018 survey. CHE says 90 000+
11 647 0002000
2016
256 000
2016
2000
953 000
2015
2012
97 000
2015
2012
Annual Financial Results for the year ended 31 December 2017
Strategic Imperatives
Innovation
> Business process
> Product/market
development
Africa
Customer focus
> Easy to do business
with us
> Understanding needs
Academic excellence
> Teaching & learning
> Benchmarking our
performance
> Learning analytics
> International &
Employer recognition
Growth
> Organic and Acquisitive
> Channel
> Product
> Segment
> Geographic
RE
GU
LAT
ION
SOCIO-ECONOMIC ENVIRONMENT
RE
PU
TAT
ION
TRANSFORMATION
Human &
capital
productivity
Excellence through
specialisation
> Niche market focus
> Benchmarking
> Database
development
Academic Excellence
Academic Excellence
2017 Matric results
Matriculants
1 754Distinctions
2 866 Average distinctions
Per candidate
1.6
Annual Financial Results for the year ended 31 December 2017
Academic Excellence
Schools academic results comparison
Annual Financial Results for the year ended 31 December 2017
NSC 2017
ADvTECH
NSC
Schools
2017
Competitor
NSC
2017
IEB 2017Competitor
IEB
2017
ADvTECH
IEB
Schools
2017
Number of
matrics
Matric pass
rate
Bachelor pass
rate
Average
distinctions
per candidate
75%
29%
824
42%
530
98%
58%
1
99%
89%
1 144
85%
1 224
100%
94%
2
ADvTECH
Group
2017
1 754
99%
84%
1.6
NSC IEB
Academic Excellence
Academic focus: 4 Strategic Areas
CURRICULUMThe Department of Basic Education (DBE). Curriculum Assessment Policy
Statements (CAPS). Independent Examinations Board (IEB). Cambridge
International (Cambridge). Early Years Foundation Stage (EYFS)
CORE SKILLS / GLOBAL COMPETENCIESInvestigation | Creating | Communicating | Collaborating | Organising |
Digital citizenship
DIGITAL LITERACYInvestigation | Creating | Communicating | Collaborating | Organising |
Digital citizenship
GLOBAL CITIZENSHIP
Values | Attitudes | Behaviours | Embracing diversity | Taking action/Service
Academic Excellence
GoLab programme at schools
Annual Financial Results for the year ended 31 December 2017
“GO Lab empowers learners with 21st-
Century Skill Sets and hands-on
experience with modern technology to
better equip the youth for global and
future careers.” – GO Lab website
Helps to address the United Nations
“17 sustainable development goals.”
Critical Thinking Skills
Creative and Innovative Thinking Skills
Problem Solving Skills
Analytical Skills
Computational Thinking Skills
Design Thinking Skills
Collaboration & Teamwork
Curiosity & Questioning Skills
Communication Tools,
Techniques & Skills
Dedicated labs on campuses
Differentiators
Portfolio of brands
Unique value
proposition
and offerings
The IIE central
academic team
Centralised academic structures
Development of qualifications
Centralised systems
SA’s largest
“private university”
Tertiary classes
<100 students
Public universities, 200+
students per class
Academic
excellenceContinued focus on
academic excellence
as a differentiator
Critical value
proposition
Regulation, accreditation & operations
Market
segmentation
and
differentiation
Academic Excellence
Accredited courses by category
Annual Financial Results for the year ended 31 December 2017
IIE
99
MASTERS
HONOURS
DEGREES
DIPLOMAS
HIGHER
CERTIFICATES
1
11
27
34
26
THE PRIVATE
HOTEL
SCHOOL
13
DIPLOMAS
HIGHER
CERTIFICATES
VOCATIONAL
TRAINING
COURSES
2
2
9
CAPSICUM
5
VOCATIONAL
TRAINING
COURSES
5
OXBRIDGE
17
VOCATIONAL
TRAINING
COURSES
17
THE
UNIVERSITY
OF AFRICA
31
PHDs
MASTERS
DEGREES
2
9
20
ACCREDITED TERTIARY COURSES165TOTAL
2 PHDs 10 MASTERS 11 HONOURS 47 DEGREES 36 DIPLOMAS
28 HIGHER CERTIFICATES 31 VOCATIONAL TRAINING
Academic Excellence
Tertiary academic results
Annual Financial Results for the year ended 31 December 2017
82%Average
module
pass rate
18%Average
module
distinction
rate
72%Average
throughput
pass rate
12%Average
dropout
rate
Academic Excellence
International and employer recognition
Annual Financial Results for the year ended 31 December 2017
2 363 of our graduates were placed in first time employment
through our Graduate Empowerment Programme
Strategic Imperatives – Graduate Placement
Loerie Awards
2 Gold
2 Silver
4 Bronze
4 FinalistsNew Blood
Pencil
Winner
Future
Award
IAB Bookmark
Black Pixel
Award
Winner
National
Hack
3 Gold
pack
Finalists
International & Employer Recognition
Annual Financial Results for the year ended 31 December 2017
Academic system
Integrated system utilised by schools and tertiary
Annual Financial Results for the year ended 31 December 2017
ADMIN
SYSTEMDifferentiated Scalable
Accessible
FlexibleCentralised
Academic
System
Cloud-based
Student information system
Why this why now?
Annual Financial Results for the year ended 31 December 2017
Easy to
operate across
geographies
and regulatory
environments
Seamless
integration
with other
systems
Replaces
legacy
systems
Improves
service to
the customer
One system
from
Kindergarten –
Postgrad
Enables
data-driven
decisions
Academic intelligence - KITSO
Annual Financial Results for the year ended 31 December 2017
Cohort qualifications dashboard
Setting
module
targets
Target
tracking
Benchmarked by:
• Students
• Lecturers /
Teachers
• Campuses
Schools division
Annual Financial Results for the year ended 31 December 2017
Trading Revenue
Schools
819915
1432
1644
1876
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2013 2014 2015 2016 2017
R’m
+15%
Annual Financial Results for the year ended 31 December 2017
Trading profit – Normalised
Schools
157 162
292
321330
0
50
100
150
200
250
300
350
2013 2014 2015 2016 2017
R’m
+3%
Annual Financial Results for the year ended 31 December 2017
Capacity Table
Schools
Schools capacity - end of February Feb-15 Feb-16 Feb-17 Feb-18
Students enrolled ('000) 22,9 24,2 26,7 27,4
Existing building capacity ('000) 26,9 28,6 31,2 33,0
% Existing building capacity utilised 85% 85% 86% 83%
Ultimate potential site capacity ('000) 34,3 37,0 41,5 45,2
% Ultimate potential site capacity utilised ('000) 67% 65% 64% 61%
Annual Financial Results for the year ended 31 December 2017
Trading operating margin
Schools
19%18%
20% 20%
18%
0%
5%
10%
15%
20%
25%
2013 2014 2015 2016 2017
R’m
Impact of:
• Added capacities not yet filled.
Annual Financial Results for the year ended 31 December 2017
Focus Areas
Schools
Growth
Academic Excellence
Structure & Systems Efficiencies
Annual Financial Results for the year ended 31 December 2017
Schools
Growth
Challenge
• Tough economic climate
• Emigration / semigration
• Increasing competition
• Limited pipeline
• Premium school bias
• Geographic imbalance
Response
• Customer & learner experience
• Value proposition
• Improved onboarding
• Stronger greenfield pipeline
• New school models
• Improved footprint
How + What
• School value offering review
• Lead & enrolment tracking
• Dedicated development team
• Onboarding programme optimisation
• Solid research based pipeline
• Launch of learning assist
• Western Cape footprint expansion
Annual Financial Results for the year ended 31 December 2017
Student enrolment drivers
Schools
Financial pressureEmigration / Semigration
29% 43%
Jan Dec
Annual Financial Results for the year ended 31 December 2017
Student enrolment drivers
Schools
Enrolments remain strong
Challenge is to minimise
leavers
• Market share – Value proposition remains competitive
• Academic excellence – Academic performance focus
• New Product Growth
• Financial – Mid fee
• Semigration – Increasing regional footprint
Annual Financial Results for the year ended 31 December 2017
Student enrolment drivers
Schools
Schools sensitivity 2017 ActualAdditional volume growth
1% 2%
Revenue 1 866 1 890 1 908
Increase over 2017 14% 15% 16%
Trading Operating Profit 330 354 372
Increase over 2017 3% 7% 13%
Operating Margin 18% 19% 20%
Annual Financial Results for the year ended 31 December 2017
Schools
Strong pipeline
2017 2018 2019 2020 2021
SCHOOLS
CAMPUSES
(end Feb)
SCHOOLS
BY PHASE
(end Feb)
NEW MID-FEE
SCHOOLS BY
PHASE (included)
4747
4 3 8 6
49 53 59 60
89 94 104 114 122
NEW PREMIUM
FEE SCHOOLS
BY PHASE
(included)
3 7 2 2
Annual Financial Results for the year ended 31 December 2017
New product development
Schools
Learning Assist: The Bridge
• Grade 0 - 7
• Gauteng, Northern
suburbs
• Opened 2018
• Opportunities
• West Rand
Annual Financial Results for the year ended 31 December 2017
Expanding footprint: Western Cape
Schools
Elkanah
House
Student #
1 384
5 schools
Glenwood
House
Student #
831
3 Schools
Greenwood
Bay
Student #
349
3 SchoolsAbbotts
College
Student #
557
2 Schools
*Numbers at Feb 2018
Annual Financial Results for the year ended 31 December 2017
New developments
Schools
Mooikloof
High School
(2018)
Annual Financial Results for the year ended 31 December 2017
New developments
Schools
Wilgespruit
(2019)
Kyalami
(2019)
Glenvista
(2019)
Founders Hill
grew by
Schools
Copperleaf College
grew by
Mid-fee growth
is excellent
Impacted
negatively by:Fraud, emigration and
financial pressure
89%
94%
Annual Financial Results for the year ended 31 December 2017
Schools
Academic
ExcellenceChallenge
• Entrench our position as
market leader
• Relevant curricula
development
• Leverage technology in
teaching & learning
Response
• Academic enhancement
through learning analytics
• Life skills
• Technology investment
How + What
• Advanced SIS
• Benchmarking
• Class/individual interventions
• GO Labs
• International partner for
digital literacy programme
Annual Financial Results for the year ended 31 December 2017
Schools
Structural / System
EfficienciesChallenge
• Restructure for growth &
efficiencies
• Numerous outdated systems
with limited functionality and
lack of integration
How + What• New focused brand structure
with full support functions
• Finance SSC consolidating
transactional processing
• Single finance system
• Academia SIS
• Lead Alumni
• Portals
• HR recruitment system
• Automated payroll input
Response
• Complete review of brand
structures & support functions
• New accounting & student
information system
Annual Financial Results for the year ended 31 December 2017
Finance structure & process changes
Schools
Historic landscape New landscape
Aging accounting systems on remote
servers
Time consuming consolidation &
reporting
Numerous COAs, ledgers and
bank accounts
Inefficient & outdated payment
mechanisms
Single finance system on central
server
Quick & accurate consolidation &
reporting
Single COA, significantly reduced
ledgers & bank accounts
Efficient & automated payment
systems
Decentralised skill challenges
Remote payments, billing & collections
Decentralised control environment
Centralised specialist skills & focus
Central payments, billing &
collections
Centralised key control environment
with better segregation
Tertiary division
Annual Financial Results for the year ended 31 December 2017
Revenue
Tertiary
751827
982
1253
1580
0
200
400
600
800
1000
1200
1400
1600
1800
2013 2014 2015 2016 2017
R’m
+26%
Annual Financial Results for the year ended 31 December 2017
Operating profit
Tertiary
48
84
135
223
321
0
50
100
150
200
250
300
350
2013 2014 2015 2016 2017
R’m
+44%
Annual Financial Results for the year ended 31 December 2017
Operating margin
Tertiary
6.4%
10.2%
13.7%
17.8%
20.3%
0%
5%
10%
15%
20%
25%
2013 2014 2015 2016 2017
R’m
Annual Financial Results for the year ended 31 December 2017
Tertiary
Segment Growth
Leading hospitality education provider
80% acquisition Founded January
20062 Campuses
Fully integrated
Stellenbosch
campus
Excellent
opportunity for
expansion
Tertiary
Annual Financial Results for the year ended 31 December 2017
Largest chef school in SA with a national footprint
100% Acquisition Founded 20036 Campuses
Nationally
Integration with
PHS
Annual Financial Results for the year ended 31 December 2017
Tertiary
Segment Growth
New hospitality campus in Rosebank
2018
Tertiary
Annual Financial Results for the year ended 31 December 2017
Distance learning provider
Commerce and
management
Education Engineering and
Bio Science
Law and
Humanities
Degrees, Masters, PHD
Leadership in Africa’s
development
51% Acquisition
Lusaka, Zambia
35% growth
Tertiary
Annual Financial Results for the year ended 31 December 2017
Wide range of skills development distance online learning courses
National Qualification Framework (NQF)
Short learning programme
Online courses
Flexible and accessible
vocational educationX% Growth
Superb distance
Support, procedures
and systems
Opportunity to
expand and
leverage distance
platform
27 000+ Students
Tertiary
Annual Financial Results for the year ended 31 December 2017
Quality, affordable education that leads to employment
HumanitiesSchool of
education
IT Information &
communicationCommerce
Mega Campus Connected Campuses
7 Campuses
Polokwane
Bloemfontein (2018)
Pietermaritzburg (2018)
Tertiary
Annual Financial Results for the year ended 31 December 2017
School of
ManagementSchool of Law
School of
Psychology and
Communication
School of Finance
& Accounting
Best of teaching & learning practice, combined with a comprehensive student experience
8 Campuses85% pass rate for the SAICA ITC
board exams
Tertiary
Annual Financial Results for the year ended 31 December 2017
High industry credibility
and reputation
Voted #1 by the
Loerie Awards
Brand
management &
communication
Digital marketing Creative design
The leading creative industry education experience
Loerie Awards
Design:
Gaming |
Fashion | Interior
Resourcing division
Annual Financial Results for the year ended 31 December 2017
Growth
Resourcing
SA markets
Grew market share
in a declining market
Africa
Superb growth
Endorses our
strategy
to diversify and
explore
alternative markets
Africa revenue
Dollar based
Annual Financial Results for the year ended 31 December 2017
Revenue
Resourcing
200 194
297
461
644
0
100
200
300
400
500
600
700
2013 2014 2015 2016 2017
R’m
+40%
Annual Financial Results for the year ended 31 December 2017
Operating profit
Resourcing
18 18
29
20
32
0
5
10
15
20
25
30
35
2013 2014 2015 2016 2017
R’m
+59%
Annual Financial Results for the year ended 31 December 2017
Operating margin
Resourcing
9.1%9.4%
9.8%
4.4%5.0%
0%
2%
4%
6%
8%
10%
12%
2013 2014 2015 2016 2017
R’m
Africa
African Education Market
66mn scholars in private
Education by
Private sector
investment need
Emerging markets
education investments
increased more than
“Private higher education proves to be one of the
Sub-Saharan Africa, largest & fastest growing
6mn
2021
$16 – $18bnover the next 5yrs
between 2001 and 2015
5 000%
fastest growing sectors in Africa”
Median age 20
households will earn
$5 000 – $20 000 by 2025
Operating Environment
Currently 2/5 of population
age is 0-14 years 1/5
between 15-24 years
Urbanisation will
go from 36% (2010) to
50% by 2030
Population will double to 2.4bn by 2050
1.2bn will need education
Annual Financial Results for the year ended 31 December 2017
Geographic growth
Expansion into the rest of Africa
30% revenue
2020
11% of revenue
generated outside
SA’s borders
Annual Financial Results for the year ended 31 December 2017
Kenya
Expansion into the rest of Africa
Population:
-48.5million
Economic:
⁻5.8% GDP growth 2016 ⁻6.1% GDP growth forecast 2019⁻$3156 GDP per capita 2016 (PPP Current international $)
Market:
⁻28% Population growth last 10 years⁻41% of population between ages 0-14⁻19% of population between ages 15-24⁻10.1mn scholars
Annual Financial Results for the year ended 31 December 2017
Nairobi, Kenya
Expansion into the rest of Africa
Congestion: classic city issues
Annual Financial Results for the year ended 31 December 2017
Nairobi, Kenya
Expansion into the rest of Africa
Satellite City – Tatu City
Annual Financial Results for the year ended 31 December 2017
Expansion into the rest of Africa
Tatu City
Nairobi, Kenya
Copperleaf
Academy
(2017)
Annual Financial Results for the year ended 31 December 2017
Expansion into the rest of Africa
Crawford International School
Annual Financial Results for the year ended 31 December 2017
Africa development partner
Expansion into the rest of Africa
Largest urban developer in Africa
12 000 hectares under development in Africa
Kenya GhanaDemocratic
Republic of
Congo (DRC)
Zambia Nigeria
Annual Financial Results for the year ended 31 December 2017
Dividend
• Strong cash generation
• Increased capex pipeline
• Balance between preserving cash for
development projects and
shareholder returns
• Likely to continue increasing dividend
cover
0%
10.5 11.0 12.5 13.5 15.0
15.0 15.0 17.0
19.0 19.0
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
2013 2014 2015 2016 2017
Dividends per Share
Interim Dividend Total Dividends
11%
Prospects
Prospects
Strong performance
Good growth
opportunities
ROI ahead of cost
of capital
Cash
generation
Clear focus
on academic
excellence
Annual Financial Results for the year ended 31 December 2017
Annual Financial Results for the year ended 31 December 2017
Prospects
Improved sentiment
New President: Cyril Ramaphosa
New Minister of Higher Education:
Naledi Pandor
Cabinet
reshuffle
Hope to avoid ratings downgrade
The Bureau for Economic Research: business
confidence up by highest margin since the mid-1970s
IMF World Economic Outlook 2018: Sub-Saharan-Africa
GDP growth forecast 2018: 3.3% and 2019: 3.5%
Questions?