Crawford schools owner AdvTech sees rise in earnings despite consumer woes and emigration

Listed private schooling group AdvTech said Wednesday (4 March), that it expects to see a rise in profit for the year ended December 2019, following insurance proceeds received in relation to a previously reported fraudulent event, and gains relating to its purchase of  of Monash, now called IIE MSA.

AdvTech said that basic earnings per share (EPS) and headline earnings per share (HEPS) for the period will be between 17% and 23% higher than the comparative reporting period in 2018.

EPS is expected to be between 84.0 and 88.3 cents per share as compared to 71.8 cents per share, while HEPS is expected to be between 83.3 and 87.6 cents per share as compared to 71.2 cents per share before.

AdvTech noted as far back as 2017, that fraud was perpetrated by a financial manager in its schools division head office and took place over a period of three years beginning in 2015.

As much as R5 million was stolen, “of which approximately R2 million should be recovered as the company has secured a court order freezing the service provider’s bank account, with whom the financial manager colluded,” AdvTech said that the time.

It said that the balance would be recoverable through the company’s insurers, which has now been finalised.

A delay in the effective purchase date of Monash, meant a foreign-exchange gain of R6.2 million.

The IIE MSA campus, located on Johannesburg’s West Rand, has a capacity for 6,500 students, which increases the tertiary student complement of AdvTech to more than 43,000 students.

2020 enrolment season

AdvTech said in a note in February, that it continues to see demand in, both the schools and tertiary sectors for the 2020 enrolment period despite difficult economic conditions.

“We have been working on several initiatives in the schools division and are pleased that our efforts to improve the strategic positioning and operational performance of the schools business is starting to show progress,” it said.

It said that in South Africa, all new schools (Trinityhouse Glenvista, Pinnacle Linden and Pinnacle Waterfall) and the repositioned offerings (Pinnacle Kyalami and Pinnacle Rynfield) have delivered good growth and have either achieved or exceed targeted enrolment numbers.

“Our core brands have also delivered encouraging organic growth despite the continued adverse effects of consumer financial hardship and emigration. In the rest of Africa, our student growth is encouraging and Crawford International School, Nairobi, is expected to move out of the J-curve in 2020, a mere 15 months after opening its doors,” it said.

AdvTech said that its tertiary division has delivered outstanding results for the past few years.

“There has been a positive market response to our two new Rosebank College campuses, a mega campus in Cape Town and a digitally-enabled campus in Port Elizabeth. Enrolments at our tertiary institutions are in line with expectations and, should this trend continue until the end of the enrolment season, it bodes well for the division,” it said.

The group expects to publish its financial results on 23 March.

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