Slide 1: Annual Financial Results
ANNUAL FINANCIAL RESULTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 1
Slide 2: Contents
CONTENTS 01 FINANCIAL OVERVIEW 05 RESOURCING DIVISION 02 COVID-19 06 CORPORATE RESPONSIBILITY 03 SCHOOLS DIVISION 07 INVESTMENT 04 TERTIARY DIVISION
Slide 3: Economy
ECONOMY TOUGH ENVIRONMENT DUE TO POOR GROWTH, POWER OUTAGES AND COVID-19 GDP growth 0.2% in 2019 IMF Load Historical forecasts shedding poor GDP Job losses Business 0.8% negative growth high and confidence GDP growth economic of 0.8% growing COVID-19 lowest in in 2020 impact last 5 years 29.1% Emigr
Slide 4: Good Results Snapshot
GOOD RESULTS SNAPSHOT 10% 16% 8% 18% 20% 8% STUDENT REVENUE OPERATING PROFIT FOR HEPS NEPS ENROLMENTS PROFIT THE YEAR ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 4
Slide 5: Overview: Operational Highlights
OVERVIEW OPERATIONAL HIGHLIGHTS • Schools division records strong growth in rest of Africa and a significant increase in presence in mid-fee sector • Encouraging 5% organic growth in 2020 Schools division enrolments • Continued excellent performance in Tertiary division • Tertiary division enrolment
Slide 6: COVID-19 Immediate Response
COVID-19 IMMEDIATE RESPONSE • Safety and wellbeing of all our staff and students is our first priority • School & Tertiary closure from 18 March 2020 per government guidance • Follow and implement the World Health Organisation and NICD protocols and advice • Continuation of quality teaching and lear
Slide 7: COVID-19 Preparation
COVID-19 PREPARATION • Established an Incident Support Team • All schools will go onto a modified four-term calendar • Leveraging technologies for online learning (e.g. MS Teams, IIE Learn) • Established educational delivery systems testing done and guidelines widely distributed • Ongoing process ke
Slide 8: COVID-19 Responses to Date
COVID-19 RESPONSES TO DATE ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 8
Slide 9: COVID-19 Responses to Date
COVID-19 RESPONSES TO DATE ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 9
Slide 10: COVID-19 Impact & Risk
COVID-19 IMPACT & RISK • Board has delayed decision on the dividend declaration • Capex plans reconsidered • Expect some cost and revenue impact which will be determined by the tenure of closures ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 10
Slide 11: Market Trends in the Schools Sector
EDUCATION SECTOR MARKET TRENDS IN THE SCHOOLS SECTOR 5% 13% 26 789 12 230 194 11 647 172 23 289 2000 2018 92% 130% 1 865 589 348 971 256 283 Public Schools Private Schools Public Schools Private Schools Number of schools Number of scholars Source: Centre for Risk Analysis, Socio-Economic Survey of S
Slide 12: School Leaver Market
SCHOOL LEAVER MARKET 500 000 450 000 442 672 400 000 32% 350 000 300 000 334 718 15% 250 000 Qualifying school leavers First year enrolments (Public) 200 000 193 282 150 000 168 388 100 000 50 000 0 2009 2010 2016 2017 ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 12
Slide 13: Market Trends in the Tertiary Sector
EDUCATION SECTOR MARKET TRENDS IN THE TERTIARY SECTOR 1 200 000 11% 1 000 000 1 036 984 938 000 800 000 600 000 2011 80% 2017 400 000 185 046 200 000 103 000 0 Public Universities Private Higher Education ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 13
Slide 14: Enrolment Numbers
ENROLMENT NUMBERS STRONG ENROLMENT GROWTH IN 2020 10% 10% 44 975 39 629 13% 33 463 36 136 29 138 Tertiary 30 827 32 370 5% 24 199 26 713 27 408 School 2016 2017 2018 2019 2020 Schools Tertiary: Full Qualifications ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 14
Slide 15: Financial Overview
02 FINANCIAL OVERVIEW
Slide 16: Consistent Growth
CONSISTENT GROWTH 18% 18% 869 5 108 808 4 389 3 938 668 3 224 560 2 594 454 CAGR 15 16 17 18 19 15 16 17 18 19 Group revenue Operating profit (R’m) (R’m) ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 16
Slide 17: Operating Margin Comparison
OPERATING MARGIN COMPARISON EXCLUDING IIE MSA, CIS, MAKINI AND RESOURCING 21,4% 21,8% 20,5% 19,7% 18,8% 18,4% 17,5% 17,4% 17,0% 17,0% 15 16 17 18 19 Operating margin (Group) Operating margin (excl IIE MSA, CIS, Makini & Resourcing) ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 17
Slide 18: HEPS & NEPS
HEPS & NEPS 14% 12% 86,0 85,2 79,0 71,1 71,4 75,3 68,8 63,3 51,0 53,9 CAGR 15 16 17 18 19 15 16 17 18 19 Headline earnings per share Normalised earnings per share (cents) (cents) ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 18
Slide 19: Cash Flow Generation
CASH FLOW GENERATION R’m 21% 1192 1083 806 738 558 426 455 394 291 223 15 16 17 18 19 Cash generated by operations Cash inflow from operating activities ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 19
Slide 20: Balance Sheet Remains Sound
BALANCE SHEET REMAINS SOUND • Disciplined approach to capital • Debtors allocation • well managed • increased emphasis on collections • Capital expenditure – slow down: • following extensive expansion • Borrowings well within covenants programme • Banks 3.5x • focus on maximising ROI • Internal 3.0x
Slide 21: Cash vs Net Borrowings Position
CASH VS NET BORROWINGS POSITION R’m 21% Cash 1 083 1 192 generated by 738 806 operations 558 Net -1 157 -1 110 borrowings -1 671 position -1 915 -2 554 CAGR 2015 2016 2017 2018 2019 Ratio = Net Borrowing : 2.1 1.5 2.0 1.8 2.1 Cash generation ANNUAL FINANCIAL RESULTS for the year ended 31 December 20
Slide 22: Capex and Acquisitions
CAPEX AND ACQUISITIONS R’m 1 000.7 Capex Projects 680.7 320,0 278,7 165,5 172,9 25,0 18,1 20,5 1 3 2 Student Additions to Furniture, Acquisition site new school new tertiary management existing sites fittings, IT of IIE MSA acquisition campuses sites systems and vehicles constructed ANNUAL FINANCIAL
Slide 23: School Division: Excellent Growth Capacity
SCHOOL DIVISION EXCELLENT GROWTH CAPACITY ‘000 85% 86% 83% 81% 79% 41,2 38,2 33,0 32,4 31,2 30,8 28,6 27,4 26,7 24,2 16 17 18 19 20 Students enrolled Existing building capacity % Existing building capacity utilised ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 23
Slide 24: Segmental Overview
SEGMENTAL OVERVIEW Segmental revenue Segmental operating profit contribution contribution 2019 14% 2019 3% 5% 15% 40% 41% 43% 43% 2018 2018 51% 39% 57% 42% 3% 0% 4% -2% Schools - South Africa Schools – Africa Tertiary Resourcing ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 24
Slide 25: Schools Division
03 SCHOOLS DIVISION 25
Slide 26: School Division Initiatives
SCHOOL DIVISION INITIATIVES Sharpening the focus on our brand positioning & improve customer value Improved operational Increased presence in the mid-fee effectiveness and sector, new campuses exceeding efficiencies target enrolment numbers Significant expansion All sales/marketing/customer past 5 y
Slide 27: School Division Initiatives
SCHOOL DIVISION INITIATIVES Organic enrolment growth of 5% for 2020, despite continued consumer financial pressure and high levels of emigration ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 27
Slide 28: Schools Revenue
SCHOOLS REVENUE R’m 13% 2 226 2 009 1 742 1 545 1 350 CAGR 15 16 17 18 19 ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 28
Slide 29: SA Schools
SA SCHOOLS 6% 11% 2 022 349 358 1 877 324 315 1 685 286 1 491 1 309 CAGR 15 16 17 18 19 15 16 17 18 19 SA schools revenue SA schools operating profit (R’m) (R’m) ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 29
Slide 30: Africa Revenue and EBIT
AFRICA REVENUE AND EBIT R’m 89% 204 131 Revenue: Africa schools EBIT: Africa 57 schools 12 4 CAGR -13 17 18 19 Africa schools revenue and EBIT (R’m) ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 30
Slide 31: Revenue: SA Schools and Rest of Africa
REVENUE SA SCHOOLS AND REST OF AFRICA 2 022 1 877 1 685 1 491 1 309 South Africa Rest of Africa 204 131 41 54 57 15 16 17 18 19 ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 31
Slide 32: Africa Schools
AFRICA SCHOOLS ENROLMENTS 5 977 5 379 1 950 1 965 17 18 19 20 ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 32
Slide 33: Rest of Africa
REST OF AFRICA Revenue up by 55% Crawford International School, Kenya will move out of the J-curve in 2020, a mere 15 months after opening its doors. Currently have 419 students Makini Schools up 12% enrolment growth ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 33
Slide 34: New Schools - 2020
NEW SCHOOLS - 2020 TRINITYHOUSE PINNACLE COLLEGE PINNACLE COLLEGE GLENVISTA LINDEN WATERFALL Premium positioning Mid-fee positioning Mid-fee positioning Pre-Primary, Primary, High Pre-Primary, Primary, High Pre-Primary, Primary, High Currently grades 000 - 9 Currently grades 0 to 8 Currently grades
Slide 35: Repositioned Schools
REPOSITIONED SCHOOLS REPOSITIONED PINNACLE COLLEGE KYALAMI & RYNFIELD AS MID-FEE • Exceeded enrolment targets • Investment in facilities • Clear value proposition MERGED • Abbotts Century Gate with Abbotts Claremont effective 2020 REBRANDED MARAGON RUIMSIG TO CRAWFORD INTERNATIONAL RUIMSIG MARAGON •
Slide 36: Initiatives to Improve Operational Efficiencies
SCHOOL DIVISION INNITIATIVES TO IMPROVE OPERATIONAL EFFICIENCIES AND EFFECTIVENESS Group Shared Services: • GSS managed debtors book debt to revenue ratio improved from 5.6% in 2018 to 4.6% in 2019 • Accounts payable • Consolidating of vendors reduced payment volumes by 28% • Improved processes lead
Slide 37: Marketing and Student Enrolment Process
MARKETING AND STUDENT ENROLMENT PROCESS Sales Digital marketing Measures of training: successes: improvement: • All sales/marketing/customer • Increased emphasis on lead • STASY leads up 623% YoY facing staff received customer generation • Cost per lead down 69% service, sales and lead • Utilising a
Slide 38: Growing Mid-Fee Presence
SCHOOL DIVISION GROWING MID FEE PRESENCE GROWING MID-FEE SCHOOLS PREMIUM SCHOOLS REST OF AFRICA • Operational efficiencies • Greenfield developments • Botswana – GIS • Rationalisation • Repositioning • Kenya – Crawford • Integration • Acquisitions International & Makini • 67 Schools • 29 Schools • 1
Slide 39: Academic Excellence
SCHOOL DIVISION ACADEMIC EXCELLENCE • 1 582 matric candidates • 2 910 distinctions • 100% pass rate for IEB students • 96% IEB students achieved a bachelor pass • IEB students averaged 2.2 distinctions per student • As a group the bachelor pass rate increased from 81% to 89% in last 4 years ANNUAL F
Slide 40: Future Focused Education
FUTURE FOCUSED EDUCATION ACADEMIC EVERY STUDENT IS DEVELOPING INCREMENTALLY, IN AN ENGAGING, CURRICULUM EXCELLENCE INSPIRING AND CHALLENGING LEARNING ENVIRONMENT. DIGITAL IEB, DBE, ISASA, Future-focused Challenging Performance EYFS, Cambridge, teaching and and engaging analysis = LITERACY Internatio
Slide 41: Schools Future Capex
SCHOOLS FUTURE CAPEX • Reduced capex in the year ahead • No new schools planned for 2021 opening • Additional capacity on recently opened sites ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 41
Slide 42: Tertiary Division
04 TERTIARY DIVISION 42
Slide 43: Tertiary Division: Continued Excellent Performance
TERTIARY DIVISION CONTINUED EXCELLENT PERFORMANCE • Revenue increased 25% • Good enrolment growth 13% in 2020 • Growing reputation for providing a quality offering & work ready graduates • Our graduate and alumni successes which are recognised throughout industry • Clear brand positioning • Efficien
Slide 44: Tertiary Division Overview
TERTIARY DIVISION TERTIARY DIVISION OVERVIEW • IIE is SA’s leading “private university” • Central academic body; 15-year track record of Academic leadership • 33 Campuses • Division has 197 accredited courses from undergraduate programmes to Masters degrees • Multi-channel modes of delivery Contact:
Slide 45: Tertiary Revenue and Operating Profit
22% 2 145 38% 1 719 496 1 556 415 1 228 321 954 223 135 CAGR 15 16 17 18 19 15 16 17 18 19 Tertiary revenue Tertiary operating profit (R’m) (R’m) ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 45
Slide 46: Tertiary Operating Margin
25.3% 2,2% 24,1% 23,1% 20,7% 18,2% 14,1% IIE MSA restructure & integration 15 16 17 18 19 Tertiary operating margin ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 46
Slide 47: The IIE Trendsetters
THE IIE TRENDSETTERS RECOGNITION FOR OUR LLB QUALIFICATION • High Court rules in favour of IIE Varsity College law degree • Positive precedent to address the issue of ‘private university’ / private higher education institutions • Confirms to professional bodies in all fields, including law, engineer
Slide 48: IIE's Six Faculties
TERTIARY DIVISION IIE’S SIX FACULTIES IIE Faculty Faculty Faculty Faculty Faculty Faculty of of of of of of Social Sciences Communication Information & Technology Humanities Commerce Education Law
Slide 49: IIE Growth in Professional Qualifications
TERTIARY DIVISION IIE GROWTH IN PROFESSIONAL QUALIFICATIONS 2017 2020 GROWTH Law 1 634 3 187 95% Education 1 783 5 919 232% Accounting 166 733 342% Engineering 0 97 IT 4 655 6 801 46% Total 8 238 16 737 103% ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 49
Slide 50: BCom and BEd Prices Compared
TERTIARY DIVISION BCOM AND BEd PRICES COMPARED BCom BEd R63 580 – UCT Stellenbosch University R44 273 R81 380 Varsity College R73 338 Varsity College R42 688 UP R47 500 UJ R41 008 Stellenbosch University R47 248 WITS R34 175 WITS R45 885 Rosebank College R33 490 ANNUAL FINANCIAL RESULTS for the year
Slide 51: Growth in IIE Online Distance Students
TERTIARY DIVISION GROWTH IN IIE ONLINE DISTANCE STUDENTS 3457 56% 2219 50% 1479 111% 615% 701 58% 62 98 14 15 16 17 18 19 ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 51
Slide 52: Rosebank College New Campus
ROSEBANK COLLEGE NEW CAMPUS Port Elizabeth Campus ‒ Digitally enabled campus ‒ Opened in 2020 with 310 students ‒ Blended learning ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 52
Slide 53: Rosebank College New Campus
ROSEBANK COLLEGE NEW CAMPUS Cape Town Campus ‒ Mega campus ‒ Opened in 2020 with 471 students ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 53
Slide 54: Varsity College
VARSITY COLLEGE • The premium brand in the ADvTECH stable • Increasing capacity to accommodate student growth at Cape Town and Pretoria campuses • Module pass rate of 87% testament of their excellence in teaching and learning ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 54
Slide 55: Varsity College: Increase Capacity
VARSITY COLLEGE INCREASE CAPACITY TO MEET DEMAND Cape Town Campus - Move to new premises in 2021 ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 55
Slide 56: Varsity College: Increase Capacity
VARSITY COLLEGE INCREASE CAPACITY TO MEET DEMAND Pretoria Campus - Expanding existing site ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 56
Slide 57: Academic Excellence: International and Employer Recognition
ACADEMIC EXCELLENCE INTERNATIONAL AND EMPLOYER RECOGNITION 25 172 IIE graduates in the last 5 years 71% were employed within 6 months after graduation ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019
Slide 58: International and Employer Recognition
STRATEGIC IMPERATIVES INTERNATIONAL AND EMPLOYER RECOGNITION 2 Gold 2 Silver 1 Bronze 1 New Blood Award 4 Silver Black Pixel Award 2 students in the top 10 Top Talent Vega ranked # 1 Tertiary Brand by the Loeries 2019 annual official rankings in Africa and Middle East 2nd Place & Bronze Judges menti
Slide 59: International and Employer Recognition
STRATEGIC IMPERATIVES INTERNATIONAL AND EMPLOYER RECOGNITION Young Chef Best Food and 2020 to represent SA wine Pairing menu EMEA Business Awards at Global Winner Market Associate of the competition Best Cocktail Year Young Star Beverage student 2nd place Reaching for Young Stars Young Star Chef
Slide 60: Tertiary Capex
TERTIARY CAPEX 2020 / 2021: • Varsity College Cape Town moving to new leased Capex required premises R300mn • Varsity College Pretoria expansion • Rosebank Pretoria expansion 2017 2018 2019 2020 1 4 1 2 Campuses opened / • University of Africa • Private Hotel School • Private Hotel School • Rosebank
Slide 61: Resourcing Division
RESOURCING DIVISION GROUP
Slide 62: Resourcing Division
RESOURCING DIVISION • SA market – very tough • Solid performance under circumstances • Africa strategy to develop other markets and geographies now represents approximately half of operating profit • If rest of Africa investment not done Resourcing division profits would be 38% lower ANNUAL FINANCIA
Slide 63: Impact of Africa Investments
RESOURCING DIVISION IMPACT OF AFRICA INVESTMENTS Africa countries South Africa market - decline • Mauritius-based business • Highest levels of unemployment in 15 years • Invested in additional services offerings – future growth • Declining business confidence • Country payroll services • Medical aid
Slide 64: Resourcing Remains Highly Cash-Generative
RESOURCING DIVISION REMAINS HIGHLY CASH-GENERATIVE 800 45 700 40 600 35 30 500 25 400 20 300 15 200 10 100 5 Mauritius South Africa 0 0 2018 2019 2018 2019 Revenue EBIT ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 64
Slide 65: Corporate Responsibility
06 CORPORATE RESPONSIBILITY
Slide 66: Our ESG Focus Areas
OUR ESG FOCUS AREAS OUR BUSINESS IS ABOUT PEOPLE DEVELOPMENT & EDUCATION Governance Social Environmental impact impact impact • Corporate governance focus • Academic excellence: 100% • Low energy and water efficient grounded on principles of IEB Matric pass rate campuses King IV & Companies Act • 25
Slide 67: Investment
07 INVESTMENT 67
Slide 68: Strategic Imperatives
STRATEGIC IMPERATIVES SOCIO-ECONOMIC ENVIRONMENT Innovation Excellence through Growth Rest of Africa specialisation • Organic and acquisitive Growth in the rest of Africa • Market focus • Channel • Benchmarking: industry • Product & salary • Segment • Data driven insights • Geographic Risk mitigatio
Slide 69: Africa Investment Case
AFRICA INVESTMENT CASE 20% of population 66mn 6mn households Urbanisation Population will are between scholars in will earn between will be double to 15 – 24 years private education $5K - $20K 50% 2.4bn 2020 2021 2025 2030 2050 40% 1.2bn will of population need under 14 years education Source: Caeru
Slide 70: A Continent Leader in Private Education
A CONTINENT LEADER IN PRIVATE EDUCATION • Academic excellence • Tertiary offering: • 6 faculties • 197 accredited qualifications • Portfolio of schools to meet a variety of demands • Opportunity for internationalisation for our brands • World class teaching and learning practices • Sound investment
Slide 71: Investment Thesis
INVESTMENT THESIS • Proven track record of profit growth • Strong cash generation • Large asset base underpin • Diverse revenue streams • Strong balance sheet • Growing demand for high quality education in South Africa and the rest of Africa • Tertiary division remains well positioned to continue to
Slide 72: Dividend and Share Buyback Consideration
INVESTMENT DIVIDEND AND SHARE BUYBACK CONSIDERATION • Defer the dividend declaration in view of the highly uncertain economic outlook owing to the impact of COVID-19 • Confident on navigating the business through the unpredictability of COVID-19 • Board will reconvene in May 2020, when impact of pan
Slide 73: Prospects
PROSPECTS WELL POSITIONED TO DELIVER A SOLID PERFORMANCE IN THE YEAR AHEAD • Went through a phase of significant growth, we are now focusing on delivering returns on the investment • Strong organic enrolment growth in 2020 • The restructuring and rationalisation of the Schools division – starting to
Slide 74: Thank You
THANK YOU 74