Advtech, a listed private education provider, on Monday reported a 22% rise in revenue for the six months ended June 2017, to R2 billion, with operating profit up by 28% to R344 million.
Headline earnings per share climbed 6% to 38.6 cents per share and the group declared a dividend of 15 cents per share, up from 13.5 cents in 2016.
Advtech’s schools division consists of 90 (2016: 78) schools, across 47 campuses under the following brands: Abbotts College, Advtech Academies, Centurus Colleges,
Crawford Schools, Junior Colleges, Maravest Group and Trinityhouse.
The divisional revenue increased by 10% to R904 million, representing 45% of group revenue, while operating profit grew by 5% to R172 million, Advtech said.
“The difficult economic climate and unsettled socio-political environment had a more significant effect on enrolment numbers than had been anticipated. We have seen a consistent rise in the number of families emigrating and this trend had a particularly negative effect on enrolled numbers as we lose students in grades where it is difficult to replace,” it said.
“In addition, we have seen an increase in withdrawals and exclusions as a result of financial pressures. Therefore, while actual new enrolments have been in line with expectations, net student numbers have been adversely affected by these two negative influences,” Advtech said.
It said that the impact of these factors, combined with the initial j-curve costs of our investments in greenfield and school expansions, suppressed profits.
Advtech said that although it does not foresee short-term relief from the socio-economic uncertainty, it is likely to see a return to higher levels of increase in profitability as growth projects and restructuring efforts deliver results.
The company bases its confidence is based on the following:
- More students will be enrolled in additional classes at key entry points to offset the losses experienced in later grades.
- Management and operational structures have been reorganised to drive greater focus on market activities and improved business efficiency.
- The implementation of shared services and rationalisation of transactional processing will lower the cost base of the business.
- The demand for Advtech Academies schools has been ahead of expectation, with new projects in the pipeline.
Revenue for the tertiary division climbed 33% to R789 million, contributing 39% to group revenue.
The operating margin increased from 17% to 20% on the back of operational leverage from strong volume growth, resulting in operating profit increasing by 56% to R157 million.
“The division’s brands have strong value propositions and are well positioned to effectively deliver value to their respective target markets. This, together with good operational structures and efficiencies in place has created a platform for robust growth within the division,” Advtech said.
“With our focus on expansion into new and growing market segments, The Private Hotel School has been acquired and will join Capsicum Culinary Studio to build our presence in the hotel and hospitality education sector.”
Advtech said it continues to explore new geographies, delivery channels and product formats in order to identify further growth opportunities.
In 2018, Rosebank College will move to a ‘mega campus’ in Durban and open two digitally enabled campuses in Bloemfontein and Pietermaritzburg.
The tertiary division consists of The Independent Institute of Education (IIE) which operates Varsity College, Rosebank College and Vega (including DSSA), Oxbridge Academy, Capsicum Culinary Studio, University of Africa (in Zambia) and the recently acquired The Private Hotel School in Stellenbosch.
The division has a national urban footprint of 27 sites in South Africa and one in Zambia, totaling 28 sites.
Advtech said its resourcing division achieved a 38% rise in revenue to R309 million, while operating profit increased by 111% to R18 million.
The division comprises permanent and temporary staffing solutions as well as recruitment advertising, e-Recruitment, payroll solutions and advertising response handling.
Its portfolio of brands include Brent Personnel, Cassel & Company, CA Global, Africa HR Solutions, CA Financial Appointments, Communicate Recruitment, Insource.ICT/IT Edge, Network Recruitment, Tech-Pro Personnel and The Working Earth.