Listed private schooling group AdvTech has published its interim results for the six months ended June 2019, reporting muted growth in South Africa, largely due to emigrating learners and consumer financial pressures.
Including its growing international operations, the group reported a revenue increase of 15% to R2.5 billion, from the restated R2.18 billion in the prior corresponding period.
Operating profit before interest and non-trading items increased by 6% to R428 million, from the restated R404 million in the prior corresponding period, while headline earnings per share increased by 28% to 43.4 cents per share, from the restated 33.8 cents per share in the prior corresponding period.
Normalised earnings increased by 8% to R229 million, from the restated R213 million in the prior corresponding period, the group said, with a interim dividend of 15 cents per share declared for the period.
According to AdvTech, its schools divisional saw revenue increase by 9% to R1.076 billion (2018: R991 million).
Strong growth was achieved in schools in the rest of Africa as Crawford International School in Kenya came onstream and the Makini Schools, which experienced several years of student numbers declining prior to being acquired, achieved positive growth.
South Africa had a more muted performance, which was impacted by the “high levels of withdrawals owing to emigration and financial pressures, particularly in the premium schools”, the group said.
Local revenue was also impacted by the closure of Trinityhouse Palm Lakes high school, together with the rebranding and re-positioning of Pinnacle College Kyalami and Pinnacle College Rynfield into the mid-fee sector.
“We are confident the re-positioning of these schools will benefit the group going forward and lead indicators are encouraging for 2020 enrolments,” it said.
Operating profit for South African schools increased by 2% to R175 million (2018: R172 million).
In July, AdvTech said it will grow its offering in the ‘mid-fee schools’ sector, where annual fees range between R35,000 and R85,000.
The group said that the offerings in the sector would appeal to middle-market families who, due to the economy, may not be able to send their children to ‘premium’ private schools anymore, or may have never been able to.
“The challenging South African socio-economic climate continues to affect growth (at SA schools), owing to high levels of withdrawals. Our focus is to ensure that our brands offer value to our customers and we continue to invest in enhancing our academic offering, improving our focus on customers and driving operational efficiencies,” it said.
In tertiary education, the group’s universities division continued to show strong growth with both revenue and operating profit increasing by 20% to R1.038 billion (2018: R868 million) and R245 million (2018: R204 million) respectively.
The operating margin was maintained at 24%, it reported.
The strong organic growth was supplemented by the acquisition of Independent Institute of Education (IIE) MSA. With the addition of 32 IIE MSA qualifications, the IIE and ADvTECH’s tertiary qualification suite now stands at 220 accredited courses, with a diverse range of offerings from vocational skills training to masters degrees.
“This, together with a student complement of over 40,000, entrenches the IIE’s leadership position as SA’s largest ‘private university’ or private higher education institute,” the group said.
AdvTech’s teriary education offering will expand with the opening of Rosebank College campuses in Cape Town and Port Elizabeth in 2020. Capacity is also being increased at several of its Varsity College campuses to meet growing demand, it said.