obsession for skills-starved South Africa with many 201… · Capacity created in 2011. Education brands Strategic Operations Financial highlights Financial analysis Prospects Questions

Annual Financial Results for the year ended 31 December 2011

“Education has rightly become a bit of an

obsession for skills-starved South Africa with many

parents mortgaging their personal financial futures

to hopefully secure their childrens’.”

Finweek: January 2012

Agenda

Strategic

Operations

Financial highlights

Financial analysis

Prospects

Questions

Strategic

Issues

Strategic Operations Financial

highlights

Financial

analysis Prospects Questions


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Source: Government Green Paper

Green Paper

Honest assessment of a system beset by challenges

Lack of access, opportunities and equality

Changes needed to achieve quality, real learning and impact

Identifies the need and role for the private sector

Scale of the task

► 2 800k young people aged 18 – 24 not in employment or education

► Universities

• Presently 900k students – 16% participation rate

• By 2030 1 500k students – 23% participation rate

► Colleges

• Presently 330k students – 6% participation rate

• By 2030 4 000k students – 60% participation rate

Major challenges include human resources, physical capacity and funding

Government Green Paper on post-school Education and Training, Jan 2012

State expenditure


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Principal budget allocations: Total of R1.1 Trn

Debt service

Education

Social security

Housing and community

Health

Law and order

Infrastructure and technology

Defence

Other

20%

Source: National Treasury

46%

13%

29%

12%

December 2010

Not economically active

Unemployed

Formal employment

Other employment

Unemployment in SA

Source: Stats SA December 2010


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46%

13%

29%

12%

December 2011

Not economically active

Unemployed

Formal employment

Other employment

Unemployment in SA

Source: Stats SA December 2011


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State education


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Passing matric

► Home language 40%, 3 core subjects 30%, 2 other subjects 30%, 1 subject < 30%

► University endorsement: as above with 4 designated subjects 50%, language of

instruction 30%

► Universities also apply other criteria

Matric pass rate 70.2% (2010: 67.8%)

Mathematics pass rate 46.3% (2010: 47.4%)

Public universities report only having places available for 30% or less of

applicants

Minister of Higher Education, Blade Nzimande, recently reported a 60%

increase in enrolments in the college system

Source: DBE, Press Reports

Operations


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Academic highlights

1 190 Matric students at Abbotts College, CrawfordSchools ™ and

Trinityhouse …

► achieved a 100% pass rate

► all but 2 qualified for entrance into higher education institutions

► obtained distinctions in almost a third of subjects written

► achieved over 2 700 As in total

Five students from Trinityhouse achieved “Outstanding” status, being in the

top 60 IEB students

Crawford Sandton ranked the Top Independent School in Gauteng

One student from Crawford Sandton achieved the most distinctions in the

country with 12 As


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Schools

Academic highlights


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Schools

Our schools continue to contribute significantly to the national output in key

subjects with averages per candidate as follows:

Mathematics - 63%

Information Technology - 73%

Physical Science - 67%

English - 69%

Accounting - 73%

Note: A majority of candidates enter the ADvTECH schools system without

selection and about one third have less than two years of our teaching


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Academic highlights

Overall module pass rate for the Independent Institute of Education (IIE)

Diploma and Higher Certificates of 80%. These are offered at Rosebank

College, College Campus and Varsity College

FLB and Varsity College students achieved a 74% overall module pass rate

in UNISA exams

The Varsity College / Thuthuka / Deloitte bursary students studying towards

the UNISA BComp Degree achieved a module pass rate of 98% and a

distinction rate of 55%

Vega students achieved an overall pass rate (in final year) of 94%

DSSA students achieved an overall pass rate (in final year) of 88%

Higher Education


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The Independent Institute of Education

The IIE continued to expand its offering, launching a number of new

accredited degrees and diplomas

An association formed with the Open University of the United Kingdom will

enable students to obtain international qualifications

Rosebank College offered all newly enrolling students fully functional tablet

computers at no charge. These incorporate all teaching and learning

material and accelerate students into the digital world

The IIE continues to be well represented in regulatory structures and the

private higher education sector


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Infrastructure

Four major infrastructure projects were completed in 2011:

► Completion of the first phase of the Trinityhouse Little Falls campus, comprising

Grades 1 to 4 and associated facilities

► Completion of the new campus for Varsity College, Midrand

► Completion of the new campus for College Campus Auckland Park

► Rollout of the Group’s new IT system, SAM, was completed at a total project cost

of R70 million, within 10% of original estimate in 2009


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Scale of operations

Education Division

► Some 51 000 students across 57 campuses

► Increase in full-time students to 35 300

► Approximately 38 000 full-time equivalent enrolments (FTE)

► Revenue per FTE R37k

Resourcing Division

► Placed approximately 3 977 people in new positions, mainly, in IT, Finance and

Engineering

► Leading market position in IT, Finance and Engineering

The People

► 3 984 staff members

► Includes 258 Masters and 32 Doctoral degrees

► 264 alumni

Employee headcount trend


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0

1 000

2 000

3 000

4 000

5 000

02 07 08 09 10 11

Annuity nature of revenue

Over 50% of Group revenue is from returning students

Equivalent to 53% of education revenue

57% of full-time student population is returning students. This is down

from 60% in 2010 because of growth in first year enrolments


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Ploughing back

Corporate citizenship is a key component of our business strategy aimed at

promoting sustainable development in our society

► In 2011, an overall amount of R70 million (2010: R57 million) was invested on

citizenship activities

► Included in this amount is R60 million (2010: R53 million) that was spent on

bursaries and impacted the lives of 2 892 (2010: 2 453) beneficiaries

Extensive outreach and other community engagement projects


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Investment


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8%

55%

26%

11%

INVESTMENT PROGRAMME 2009 - 2011 (R424 million)

Infrastructural investments made

Tertiary properties

School properties

ICT equipment

Other infrastructuralequipment

Capacity and year of development


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Total Capacity 225 300m² Year on year increase = 13 200m²

32% created in last 5 years

Older capacity

Capacity created in 2007





Education brands


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SCHOOLS HIGHER

EDUCATION SKILLS

Resourcing brands


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RECRUITMENT

Financial highlights


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Income statement

Rm 2011 2010 % growth

Revenue 1 606 1 470 9%

Operating profit 230 203 13%

Headline earnings 162 149 9%

HEPS (cps) 40.4 37.2 9%

Diluted HEPS (cps) 40.4 37.1 9%

Distribution (cps) tba 21.5 tba


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Ploughing back


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R’m %

Total value created 1 186 100

Less: employees 668 56

Less: government taxes 226 19

Available to the business 292 25

Ploughing back


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R’m %

Total value created 1 186

Less: employees 668

Less: government taxes 226

Available to the business 292 100

Allocated to communities 70 24

Allocated to investors 92 32

Retained in the group 130 44

Financial analysis


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Revenue trend


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0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

07 08 09 10 11

R'm

Group revenue

5-year CAGR in revenue = 14%

8%

10%

12%

14%

16%

18%

07 08 09 10 11

Group operating margin


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Cash flow generation


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0

50

100

150

200

250

300

07 08 09 10 11

R'm

Free operating cash flow before capex

CAGR = 12%

0

10

20

30

40

07 08 09 10 11

Cen

ts

HEPS trend


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5-year CAGR in HEPS = 12%

Segmental analysis


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86%

14%

2010

87%

13%

2011

Education Resourcing

Revenue

Segmental analysis


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Operating profit

87%

13%

2010

91%

9%

2011

Education Resourcing

0

200

400

600

800

1 000

1 200

1 400

1 600

07 08 09 10 11

R'm

Revenue

Education trends


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Education trends


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0

50

100

150

200

250

300

07 08 09 10 11

R'm

Operating profit

Resourcing trends


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0

50

100

150

200

250

07 08 09 10 11

R'm

Revenue

Resourcing trends


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0

10

20

30

40

50

07 08 09 10 11

R'm

Operating profit

Prospects


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Financial


Prospects


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Source: TradingEconomics.com

SA GDP growth


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Source: Stanlib

Retail sales trend


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SA headline CPI


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Source: Stanlib

Price indices

0

2

4

6

8

10

12

14

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

CPI

EPI


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CPI and Education Price Index (EPI)

Year on year percentage change: 2001 to 2011

Perc

enta

ge

5.8

11.03

9.1

7.54

5.8

9.57

1.4

9.56

3.4

8.4

4.6

7.01

7.2

7.97

11.5

8.3

7.7

6.5

3.7

9.2

5.6

8.6

CPI

EPI

ADvTECH investment trend

0

20

40

60

80

100

120

140

160

2006 2007 2008 2009 2010 2011

Average annual infrastructure investment


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CAGR = 20%

R’m

5 Year – Market cap index


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Questions


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Documents

obsession for skills-starved South Africa with many 201… · Capacity created in 2011. Education brands Strategic Operations Financial highlights Financial analysis Prospects Questions