Slide 1: ACvieCcH
ACvieCcH GROUP
Slide 2: Agenda
Agenda Results Financials Academic excellence Schools division Tertiary division Resourcing division Africa Prospects Annual Financial Results for the year ended 31 December 2017
Slide 3: Good results: Trading Performance Summary
Good results Trading Performance Summary Trading Normalised Trading Operational Earnings Revenue Profit Per Share 23% 20% 20% Annual Financial Results for the year ended 31 December 2017
Slide 4: Segmental Trading Performance
Segmental Trading Performance Schools Tertiary Resourcing Revenue 15% 26% 40% Operating Profit 3% 44% 59% Annual Financial Results for the year ended 31 December 2017
Slide 5: Growth
Growth Group 2016 2017 2018 STUDENTS 63 544 60 176 53 337 122 EDUCATIONAL SITES 117 98 Annual Financial Results for the year ended 31 December 2017
Slide 6: Growth
Growth STUDENTS 2016 2017 2018 92 475 Including Oxbridge + University of Africa 63 544 60 176 53 337 122 EDUCATIONAL SITES 117 98 Annual Financial Results for the year ended 31 December 2017
Slide 7: Bad debt
Bad debt Tough economic environment Schools Tertiary Pressure on <1% <3% consumers Well managed and under control Annual Financial Results for the year ended 31 December 2017
Slide 8: Financial overview
Financial overview athe
Slide 9: The reported incident of fraud
The reported incident of fraud 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
Slide 10: Impact of fraud
Impact of fraud 12 Months to 12 Months to 6 Months to 6 Months to Total Amount 31 December 2015 31 December 2016 30 June 2017 31 December R’m R’m R’m R’m 2017 Name Rm’ Revenue overstated - (9.3) (5.1) (2.5) (16.9) Expenses Understated (Including the cash loss of (6.7) (15.1) (2.9) (6.5) (31.2) R5.0
Slide 11: Group Trading Revenue
Group Trading Revenue +23% 4500 4096 4000 3500 3353 3000 2705 2500 R’m 1932 2000 1766 1500 1000 500 0 13 14 15 16 17 Annual Financial Results for the year ended 31 December 2017
Slide 12: Group Trading operating profit
Group Trading operating profit +20% 800 700 671 600 560 500 448.0 R’m 400 300 256 222 200 100 0 13 14 15 16 17 Annual Financial Results for the year ended 31 December 2017
Slide 13: Group trading operating margin
Group Group trading operating margin 18% 17% 16% 16% 16% 14% 13% 13% 12% 10% • Growth Capex R’m • Capacity utilisation 8% 6% 4% 2% 0% 13 14 15 16 17 Annual Financial Results for the year ended 31 December 2017
Slide 14: Group NEPS
Group NEPS +20% 80 75.8 70 63.3 60 53.9 50 42.3 Cents 40 37.9 30 20 10 0 13 14 15 16 17 Annual Financial Results for the year ended 31 December 2017
Slide 15: Group Cash flow generation
Group Cash flow generation 900 Cash generated by operations 811 800 Cash from operations 738 +37% 700 600 558 500 R’m 400 400 363 286 291 300 223 200 200 93 100 0 13 14 15 16 17 Annual Financial Results for the year ended 31 December 2017
Slide 16: Free operating cash flow before capex
Group Free operating cash flow before capex +28% 700 597 600 500 468 400 338 R’m 297 300 196 200 100 0 13 14 15 16 17 Annual Financial Results for the year ended 31 December 2017
Slide 17: Capex and acquisitions
Group Capex and acquisitions 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 Sys
Slide 18: Net cash position
Group Net cash position 13 14 15 16 17 0 -200 -202 -400 -436 -600 -800 R’m -1000 -1200 -1110 -1157 -1400 -1600 -1617 -1800 Annual Financial Results for the year ended 31 December 2017
Slide 19: Tough Economic Times - 2017
Tough Economic Times - 2017 GDP growth last 5 years 1.5% GDP growth last 3 years 1% 135k formal jobs lost Q4 2017 IMF World Economic Outlook: SA expected to remain below 1% GDP growth SA business confidence 2018 highest Unemployment increase STATS SA Q4: 26,5% Since 1970s
Slide 20: Operating Environment
Operating Environment School market Total SA enrolments 12 932 000 Public 2016 12 342 000 enrolments: +6% 2000 11 647 000 Independent 2016 590 000 enrolments: +130% 2000 256 000 Higher Education market size Total estimated higher education enrolment SA 1 132 000 Public higher 2015 985 000 education:
Slide 21: Strategic Imperatives
Strategic Imperatives SOCIO-ECONOMIC ENVIRONMENT Growth > Organic and Acquisitive > Channel Africa > Product > Segment > Geographic Excellence through specialisation > Niche market focus REGULATION REPUTATION > Benchmarking Academic excellence > Database > Teaching & learning development > Benchmark
Slide 22: Academic Excellence
Academic Excellence a ha
Slide 23: 2017 Matric results
Academic Excellence 2017 Matric results 1.6 1 754 2 866 Average distinctions Matriculants Distinctions Per candidate Annual Financial Results for the year ended 31 December 2017
Slide 24: Schools academic results comparison
Academic Excellence Schools academic results comparison NSC IEB ADvTECH ADvTECH Competitor Competitor ADvTECH NSC IEB NSC 2017 NSC IEB 2017 IEB Group Schools Schools 2017 2017 2017 2017 2017 Number of matrics 824 530 1 144 1 224 1 754 Matric pass rate 75% 98% 99% 100% 99% Bachelor pass rate 29% 42%
Slide 25: Academic focus: Strategic Areas
Academic Excellence Academic focus: 4 Strategic Areas CURRICULUM The 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 COMPETENCIES I
Slide 26: GoLab programme at schools
Academic Excellence GoLab programme at schools Critical Thinking Skills Creative and Innovative Thinking Skills Problem Solving Skills Analytical Skills Computational Thinking Skills Design Thinking Skills “GO Lab empowers learners with 21st- Century Skill Sets and hands-on Helps to address the Unit
Slide 27: Differentiators
Differentiators The IIE central Regulation, accreditation & operations academic team Portfolio of brands Centralised academic structures Market segmentation and Development of qualifications differentiation Unique value proposition and offerings Centralised systems Public universities, 200+ Tertiary
Slide 28: Accredited courses by category
Academic Excellence Accredited courses by category THE PRIVATE THE HOTEL UNIVERSITY IIE CAPSICUM SCHOOL OXBRIDGE OF AFRICA 99 5 13 17 31 1 MASTERS 5 VOCATIONAL 2 DIPLOMAS 17 VOCATIONAL 2 PHDs 11 HONOURS TRAINING 2 HIGHER TRAINING 9 MASTERS 27 DEGREES COURSES CERTIFICATES COURSES 20 DEGREES 34 DIPLOM
Slide 29: Tertiary academic results
Academic Excellence Tertiary academic results 18% 82% 72% 12% Average Average Average Average module module throughput dropout distinction pass rate pass rate rate rate Annual Financial Results for the year ended 31 December 2017
Slide 30: International and employer recognition
Academic Excellence International and employer recognition 2 363 of our graduates were placed in first time employment through our Graduate Empowerment Programme Annual Financial Results for the year ended 31 December 2017
Slide 31: Strategic Imperatives – Graduate Placement
Strategic Imperatives – Graduate Placement International & Employer Recognition Loerie Awards 2 Gold New Blood 2 Silver 4 Finalists Pencil 4 Bronze Winner Future IAB Bookmark Winner Black Pixel National 3 Gold Award Award Instagram pack Hack Finalists Annual Financial Results for the year ended 31 D
Slide 32: Academic system
Academic system Integrated system utilised by schools and tertiary Cloud-based ADMIN Differentiated Academic SYSTEM Scalable System Centralised Flexible Accessible Annual Financial Results for the year ended 31 December 2017
Slide 33: Student information system
Student information system Why this why now? One system Seamless Improves from integration service to Kindergarten – with other the customer Postgrad systems Easy to Replaces Enables operate across legacy data-driven geographies systems decisions and regulatory environments Annual Financial Results
Slide 34: Academic intelligence - KITSO
Academic intelligence - KITSO Setting module targets Target tracking Benchmarked by: • Students • Lecturers / Teachers • Campuses Cohort qualifications dashboard Annual Financial Results for the year ended 31 December 2017
Slide 35: Schools division
Schools division aerest
Slide 36: Schools Trading Revenue
Schools Trading Revenue +15% 2000 1876 1800 1644 1600 1432 1400 1200 R’m 1000 915 819 800 600 400 200 0 2013 2014 2015 2016 2017 Annual Financial Results for the year ended 31 December 2017
Slide 37: Schools Trading profit – Normalised
Schools Trading profit – Normalised +3% 350 330 321 300 292 250 200 R’m 157 162 150 100 50 0 2013 2014 2015 2016 2017 Annual Financial Results for the year ended 31 December 2017
Slide 38: Schools Capacity Table
Schools Capacity Table 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 %
Slide 39: Schools Trading operating margin
Schools Trading operating margin 25% 20% 20% 20% 19% 18% 18% Impact of: 15% • Added R’m capacities not 10% yet filled. 5% 0% 2013 2014 2015 2016 2017 Annual Financial Results for the year ended 31 December 2017
Slide 40: Schools Focus Areas
Schools Focus Areas Growth Academic Excellence Structure & Systems Efficiencies Annual Financial Results for the year ended 31 December 2017
Slide 41: Schools Growth
Schools Challenge Response Growth • Tough economic climate • Customer & learner experience • Emigration / semigration • Value proposition • Increasing competition • Improved onboarding • Limited pipeline • Stronger greenfield pipeline • Premium school bias • New school models • Geographic imbalance
Slide 42: Student enrolment drivers
Schools Student enrolment drivers Emigration / Semigration Financial pressure 29% 43% Jan Dec Annual Financial Results for the year ended 31 December 2017
Slide 43: Student enrolment drivers: Enrolments remain strong
Schools Student enrolment drivers 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 Financ
Slide 44: Student enrolment drivers: sensitivity
Schools Student enrolment drivers Additional volume growth Schools sensitivity 2017 Actual 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 Dece
Slide 45: Strong pipeline
Schools Strong pipeline 2017 2018 2019 2020 2021 SCHOOLS CAMPUSES (end Feb) 47 47 49 53 59 60 SCHOOLS BY PHASE (end Feb) 89 94 104 114 122 NEW MID-FEE SCHOOLS BY PHASE (included) 4 3 8 6 NEW PREMIUM FEE SCHOOLS BY PHASE 3 7 2 2 (included) Annual Financial Results for the year ended 31 December 2017
Slide 46: New product development: Learning Assist
Schools New product development Learning Assist: The Bridge • Grade 0 - 7 • Opportunities • Gauteng, Northern • West Rand suburbs • Opened 2018 Annual Financial Results for the year ended 31 December 2017
Slide 47: Expanding footprint: Western Cape
Schools Expanding footprint: Western Cape Elkanah House Student # 1 384 5 schools Greenwood Glenwood Bay House Student # Student # 349 831 3 Schools Abbotts 3 Schools College *Numbers at Feb 2018 Student # 557 Annual Financial Results for the year ended 31 December 2017 2 Schools
Slide 48: New developments: Mooikloof High School
Schools New developments Mooikloof High School (2018) Annual Financial Results for the year ended 31 December 2017
Slide 49: New developments
Schools New developments Wilgespruit (2019) Kyalami (2019) Glenvista (2019) Annual Financial Results for the year ended 31 December 2017
Slide 50: Schools
Schools Copperleaf College grew by 94% Mid-fee growth Founders Hill grew by is excellent 89% Impacted negatively by: Fraud, emigration and financial pressure
Slide 51: Schools Academic Excellence
Schools Academic Challenge Response Excellence • Entrench our position as • Academic enhancement market leader through learning analytics • Relevant curricula • Life skills development • Technology investment • Leverage technology in teaching & learning How + What • Advanced SIS • Benchmarking • Cla
Slide 52: Structural / System Efficiencies
Schools Structural / System Challenge Response Efficiencies • Restructure for growth & • Complete review of brand structures & support functions efficiencies • New accounting & student • Numerous outdated systems information system with limited functionality and lack of integration How + What • New
Slide 53: Finance structure & process changes
Schools Finance structure & process changes Historic landscape New landscape Aging accounting systems on remote Single finance system on central servers server Time consuming consolidation & Quick & accurate consolidation & reporting reporting Numerous COAs, ledgers and Single COA, significantly red
Slide 54: Tertiary division
Tertiary division aga
Slide 55: Tertiary Revenue
Tertiary Revenue +26% 1800 1580 1600 1400 1253 1200 982 1000 R’m 827 800 751 600 400 200 0 2013 2014 2015 2016 2017 Annual Financial Results for the year ended 31 December 2017
Slide 56: Tertiary Operating profit
Tertiary Operating profit +44% 350 321 300 250 223 200 R’m 150 135 100 84 48 50 0 2013 2014 2015 2016 2017 Annual Financial Results for the year ended 31 December 2017
Slide 57: Tertiary Operating margin
Tertiary Operating margin 25% 20.3% 20% 17.8% 15% 13.7% R’m 10.2% 10% 6.4% 5% 0% 2013 2014 2015 2016 2017 Annual Financial Results for the year ended 31 December 2017
Slide 58: Tertiary Segment Growth
Tertiary Segment Growth Leading hospitality education provider Founded January Fully integrated Excellent 80% acquisition 2 Campuses opportunity for 2006 Stellenbosch campus expansion Annual Financial Results for the year ended 31 December 2017
Slide 59: Tertiary
Tertiary Largest chef school in SA with a national footprint 6 Campuses Integration with 100% Acquisition Founded 2003 Nationally PHS Annual Financial Results for the year ended 31 December 2017
Slide 60: Tertiary Segment Growth
Tertiary Segment Growth New hospitality campus in Rosebank 2018 Annual Financial Results for the year ended 31 December 2017
Slide 61: Tertiary: 35% growth
Tertiary Distance learning provider Degrees, Masters, PHD Lusaka, Zambia Leadership in Africa’s development 35% growth 51% Acquisition Commerce and Education Engineering and Law and management Bio Science Humanities Annual Financial Results for the year ended 31 December 2017
Slide 62: Tertiary
Tertiary Wide range of skills development distance online learning courses National Qualification Framework (NQF) Short learning programme Online courses 27 000+ Students Flexible and accessible vocational education X% Growth Opportunity to Superb distance expand and Support, procedures leverage dis
Slide 63: Tertiary
Tertiary Quality, affordable education that leads to employment Mega Campus Connected Campuses Polokwane Bloemfontein (2018) Pietermaritzburg (2018) 7 Campuses IT Information & School of Commerce Humanities communication education Annual Financial Results for the year ended 31 December 2017
Slide 64: Tertiary
Tertiary Best of teaching & learning practice, combined with a comprehensive student experience 85% pass rate for the SAICA ITC 8 Campuses board exams School of School of School of Finance School of Law Psychology and Management & Accounting Communication Annual Financial Results for the year ended
Slide 65: Tertiary
Tertiary The leading creative industry education experience Loerie Awards High industry credibility and reputation Voted #1 by the Loerie Awards Brand Design: management & Digital marketing Creative design communication Gaming | Fashion | Interior Annual Financial Results for the year ended 31 Decem
Slide 66: Resourcing division
Resourcing division ADveCH
Slide 67: Resourcing Growth
Resourcing Growth SA markets Endorses our Africa Africa revenue strategy Superb growth to diversify and Grew market share Dollar based in a declining market explore alternative markets Annual Financial Results for the year ended 31 December 2017
Slide 68: Resourcing Revenue
Resourcing Revenue +40% 700 644 600 500 461 400 R’m 297 300 200 194 200 100 0 2013 2014 2015 2016 2017 Annual Financial Results for the year ended 31 December 2017
Slide 69: Resourcing Operating profit
Resourcing Operating profit +59% 35 32 30 29 25 20 20 18 18 R’m 15 10 5 0 2013 2014 2015 2016 2017 Annual Financial Results for the year ended 31 December 2017
Slide 70: Resourcing Operating margin
Resourcing Operating margin 12% 9.8% 10% 9.4% 9.1% 8% R’m 6% 5.0% 4.4% 4% 2% 0% 2013 2014 2015 2016 2017 Annual Financial Results for the year ended 31 December 2017
Slide 71: Africa
Africa
Slide 72: Operating Environment: African Education Market
Operating Environment African Education Market Currently 2/5 of population Population will double to 2.4bn by 2050 age is 0-14 years 1/5 1.2bn will need education between 15-24 years 66mn scholars in private “Private higher education proves to be one of the Education by 2021 fastest growing sectors
Slide 73: Expansion into the rest of Africa
Expansion into the rest of Africa Geographic growth 30% revenue 2020 11% of revenue generated outside SA’s borders Annual Financial Results for the year ended 31 December 2017
Slide 74: Expansion into the rest of Africa: Kenya
Expansion into the rest of Africa Kenya 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 1
Slide 75: Nairobi, Kenya: Congestion: classic city issues
Expansion into the rest of Africa Nairobi, Kenya Congestion: classic city issues Annual Financial Results for the year ended 31 December 2017
Slide 76: Satellite City – Tatu City
Expansion into the rest of Africa Nairobi, Kenya Satellite City – Tatu City Annual Financial Results for the year ended 31 December 2017
Slide 77: Copperleaf Academy Tatu City
Expansion into the rest of Africa Copperleaf Academy (2017) Tatu City Nairobi, Kenya Annual Financial Results for the year ended 31 December 2017
Slide 78: Crawford International School
Expansion into the rest of Africa Crawford International School Annual Financial Results for the year ended 31 December 2017
Slide 79: Africa development partner
Expansion into the rest of Africa Africa development partner Largest urban developer in Africa 12 000 hectares under development in Africa Democratic Kenya Ghana Republic of Zambia Nigeria Congo (DRC) Annual Financial Results for the year ended 31 December 2017
Slide 80: Dividends per Share
Dividend Dividends per Share 40.0 35.0 • Strong cash generation 30.0 • Increased capex pipeline 25.0 17.0 19.0 19.0 0% • Balance between preserving cash for 20.0 15.0 15.0 15.0 development projects and 10.0 11% shareholder returns 5.0 10.5 11.0 12.5 13.5 15.0 • Likely to continue increasing dividend
Slide 81: Prospects
Prospects STE
Slide 82: Prospects
Prospects Strong performance Clear focus on academic excellence Good growth opportunities Cash ROI ahead of cost generation of capital Annual Financial Results for the year ended 31 December 2017
Slide 83: Prospects: Improved sentiment
Prospects New President: New Minister of Cyril Ramaphosa Higher Education: Naledi Pandor Improved sentiment Cabinet reshuffle Hope to avoid The Bureau for Economic IMF World Economic Outlook Research: business 2018: Sub-Saharan-Africa ratings downgrade confidence up by highest GDP growth forecast 20
Slide 84: Questions?
Questions?
Slide 85: GROUP
GROUP