SA private schools hit by the effects of emigration

Advtech, a listed private education provider, on Monday reported a 22% rise in revenue for the year ended December 2017, to R4.086 billion, led by growth in its tertiary division.

“Both the tertiary and resourcing divisions performed exceptionally well, as evidenced by significant increases in revenue and operating profit, whilst the schools division results were somewhat muted,” it said. However, its premium school brands were impacted by the effects of emigration and “semigration”.

Advtech operates 117 education sites (2016: 98) including 89 schools (2016: 78) and 28 tertiary campuses (2016: 20). Its schools include Abbotts College, Summit College, Advtech Academies, Centurus Colleges, Crawford Schools, Junior Colleges, Maravest Group and Trinityhouse.

In 2017, the group also added Oxbridge Training Institute and the The Private Hotel School to its portfolio.

The group reported an operating profit of R640 million, from R608 million, while diluted headline earnings per share increased 5% to 69.1 cents per share.

“Trading operating margins, however, narrowed marginally from 16.8% to 16.4% due to the decrease in school division’s margins as they brought new capacity into use that has not yet been filled, partially offset by an improvement in the tertiary division margins, Advtech said.

Capex doubled to R718 million, from R361.8 million in 2016, while capital commitments amounted to R1 911 million.

Advtech declared a dividend per share for the year of 34.0 cents.

Schools division

While for several years the schools division has been the top performer within the group, 2017 saw muted organic growth in student numbers. “Enrolments at some of our premium brands were particularly impacted due to financial pressures on some families and the effects of emigration and “semigration”.

“The division’s financial results were further weighed by the disappointing effects of the fraud. However, we remain confident that our strategy is appropriate and, together with the plans in place, the division is expecting improved performance,” Advtech said.

Revenue increased by 14% to R1.866 billion, representing 46% of group revenue, while operating profit declined by 13% to R299 million. Adjusted for the fraud the operating profit showed a 3% increase from R321 million to R330 million.

In December, the company said the fraud was perpetrated by a financial manager in the schools division head office and took place over a period of three years beginning in 2015.

Tertiary division

The tertiary division benefited from both organic growth and acquisitions. Revenue increased by 26% to R1.580 billion, contributing 39% of group revenue.

The operating margin increased from 18% to 20% on the back of operational leverage from strong volume growth, resulting in operating profit increasing by 44% to R321 million.

The tertiary division now offers 165 accredited tertiary courses, with a diverse range of offerings including vocational training, higher certificates, degrees, honours degrees, masters degrees and PhD programmes.

Advtech said that a new student information system is being introduced into the schools division which will greatly enhance its current student management and communication capability. Ultimately the system will be adopted by the tertiary division to create a standardised, unitary student-centred platform allowing for efficient processing, reporting and learning analytics.

“Overall the system will enable the management of student data from prospect to post graduation and all steps in between and in the process improve the quality of service to stakeholders.”

Read: Crawford Schools owner Advtech reports 22% rise in interim revenue

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SA private schools hit by the effects of emigration