Private schools thriving in South Africa as profits soar

ADvTech Group, the owner of private education brands like Crawford Schools, Pinnacle Colleges, Varsity College and many more, has seen a strong boost to profit in the first six months of the year.

In an interim trading update for the first half of 2023 (H1 2023), the group said that its South African brands, especially in the premium section, are seeing volume and operating growth.

“This is underpinned by the continued commitment to excellence in education coupled with a relentless focus on enhancing our value proposition, which has ensured that we continue to win market share in a tough operating environment,” the group said.

In the group’s South African schools, revenue jumped by 13% to R1,402 million (2022: R1,239 million), while operating profit increased by 20% to R282 million (2022: R235 million).

The group opened Pinnacle Raslouw in Centurion in January 2023 ahead of expectations, while the group is planning to also expand the Bridge Assisted Learning School into a second school in Morningside, Johannesburg in 2024.

Regarding load shedding, the group’s diesel costs to run generators amounted to R9 million; however, the group stressed that it has relatively low electricity costs.

The group has still rolled out five solar sites across its campuses, with plans to roll out to the majority of the group’s sites.

The group’s school brands in the rest of Africa also saw revenue increase grow by 26% to R193 million (2022: R153 million) and operating profit by 73% to R48 million (2022: R28 million), whilst the revenue at the group’s tertiary operations grew by 13% to R1,500 million (2022: R1 324 million) and operating profit increased by 19% to R375 million (2022: R315 million).

Across all of the group’s operations, revenue grew 16% to R3.9 billion (2022: R3.4 billion), whilst operating profit increased by 23% to R754 million (2022: R612 million).

The group was, thus, able to increase its dividend to 30.0 cents (2022: 23.0 cents) for the period.

Prospects

The group said that the current economic conditions in South Africa will continue to place consumers under pressure, but it still believes that it can benefit from continued growth in demand for education in South Africa and the rest of Africa – where the pressure is less pronounced.

It said that this and good enrolment growth in both the schools and tertiary divisions gives it confidence that it will continue its growth trajectory.

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