Annual Financial Results. For the year ended 31 December 2013

Transcription

1 Annual Financial Results For the year ended 31 December 2013

2 1 Strategic 2 Operations 3 Financial highlights 4 _ Financial analysis 5 Prospects 6 Questions

3 1 Strategic

4 SA Consumer spending vs disposable income Source: Stanlib

5 Source: Luxemburg Income Study

6 Attainment Quality Type High productivity jobs and incomes (17%) Mainly professional, managerial & skilled jobs Requires graduates, good quality matric or good vocational skills Historically mainly white Vocational training Affirmative action Labour Market 17% University /FET Type of institution (FET or University) Quality of institution Type of qualification (diploma, degree etc.) Field of study (Engineering, Arts etc.) Some motivated, lucky or talented students make the transition High quality secondary school High quality primary school High SES background +ECD - Big demand for good schools despite fees - Some scholarships/bursaries Minority (20%) Unequal society Majority (80%) Low productivity jobs & incomes Often manual or low skill jobs Limited or low quality education Minimum wage can exceed productivity Semi- Skilled (31%) Unskilled (19%) Low quality secondary school Low quality primary school Low SES background Unemployed (Broad - 33%) Source: Servaas van der Berg QLFS

7 Jobs, jobs, jobs December % Not economically active 29% 45% Unemployed Formal employment 14% Other employment Source: Stats SA

8 Jobs, jobs, jobs December % Not economically active 42.8% Unemployed 30.8% Formal employment 13.8% Other employment Source: Stats SA

9 Youth unemployment 2013 Age group % of EAP Official unemployment rate Expanded unemployment rate % 53% 67% % 30% 40% % 19% 27% % 12% 20% % 7% 14% Total 100% 26% 37% Source: South African Institute of Race Relations

10 Unemployment and jobs in SA more people have jobs, even though unemployment is up Million Employed Unemployed or discouraged Source: South African Institute of Race Relations

11 Formal employment Increase Increase in economically active population Average growth pa Government % Financial Services % Trade % Transport % Other Services % Productive & extractive % Total % 2.8% Source: South African Institute of Race Relations

12 Education and jobs in SA 100% 90% 80% 70% 60% 50% 40% 30% 20% Labour Force Participation Rate Employment Rate Unemployment Rate 10% 0% Sub Matric Matric Some Tertiary Completed Tertiary Source: CDE Insight 2013

13 State expenditure Principal budget allocations: Total of R1.25 trillion Economic Services & Infrastructure Education 20% Social Security Health Housing and community ameneties Public order & Safety Defence Other Source: Budget 2014

14 Basic overview of matric 2013 The good Matric pass rate increased to 78% Bachelor pass rate increased to 31% More students passing mathematics The bad Some questioning quality of matric pass Public starting to ask questions about why uni s are using NBTs Concerns over culling and whether this lead to increases in NWP and FST The ugly Grade 8 12 dropout is 2x as high (50%) in Q1 rel to Q5 (25%) A white child is 7 times more likely than a black child to obtain a Maths D+ and 38 times as likely to get an A- aggregate (using earlier matric data) Source: Nick Spaull RESEP

15 Source: South African Institute of Race Relations

16 80 (1931) 75 (1936) 70 (1941) 65 (1946) 60 (1951) 55 (1956) 50 (1961) 45 (1966) 40 (1971) 35 (1976) 30 (1981) 25 (1986) 20 (1991) Qualifications by age (birth cohort), % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Some tertiary Primary completed No schooling Some primary Degree Matric Some secondary schooling Source: Van der Bergh 2013

17 Focus on mathematics things are improving Number of students taking mathematics (as opposed to maths-lit) has declined since 2008, but proportion passing has risen Not necessarily a bad thing since many of those students shouldn t have been taking mathematics in the first place 60% 50% 56% 53% 49% 45% 44% 43% 40% 30% 20% 26% 24% 23% 21% 24% 25% Proportion taking maths Proportion passing maths 10% 0% Source: Taylor (2014)

18 What proportion of matrics take and pass mathematics? Important statistic is the number passing which was declining from but has increased between % % % % 30% 20% Numbers wrote maths Number passed maths Maths pass rate % % Source: Taylor (2014)

19 School dropout Of 100 students that started school in % Do not reach matric 24% 49% Fail matric 2013 Pass matric 2013 Pass with university endorsement % students drop out before matric 99% do not get a non-matric qualification (Gustafsson, 2011: p11) What happens to them? 50% youth unemployment Source: Nick Spaull RESEP

20 How does SA fare internationally Source: Gustafsson (2011) The when and how of leaving school

21 Effective grade Insurmountable learning deficits: 0.3 SD South African Learning Trajectories by National Socioeconomic Quintiles Based on NSES (2007/8/9) for grades 3, 4 and 5, SACMEQ (2007) for grade 6 and TIMSS (2011) for grade 9) Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5 Q1-4 Trajectory Q5 Trajectory 0 Gr3 Gr4 Gr5 Gr6 Gr7 Gr8 Gr9 Gr10 Gr11 Gr12 (NSES 2007/8/9) (SACMEQ 2007) Projections Actual grade (and data source) (TIMSS 2011) Projections Source: Nick Spaull RESEP

22 Grade 3 maths curriculum: Can perform calculations using appropriate symbols to solve problems involving: division of at least 2-digit by 1-digit numbers 100% 90% 80% 70% 60% 50% 40% 30% 20% 59% 57% 57% 55% 13% 14% 14% 15% 13% 10% 12% 12% 35% 13% 14% 39% Still wrong in Gr5 Correct in Gr5 Correct in Gr4 Correct in Gr3 At the end of Grade 5 most (55%+) quintile 1-4 students cannot answer this simple Grade-3-level problem. 10% 0% 16% 19% 17% 17% Q1 Q2 Q3 Q4 Q5 Question 42 Source: Nick Spaull RESEP

23 The rise and rise of private education Attending % growth since % growth since 2000 Public school % % Private school % % All schools % % Source: South African Institute of Race Relations

24 Matric at ADvTECH Matric students at Abbotts College, CrawfordSchools and Trinityhouse 97% of our students qualifying for entrance into higher education institutions 84% of our students qualifying for entrance to bachelor studies at higher education institutions CrawfordSchools 100% pass rate for 20 th consecutive year 125 students achieved 6 or more distinctions Trinityhouse 100% pass rate 12 students achieved 6 or more distinctions Abbotts College 100% pass rate (statistically) 19 students achieved 6 or more distinctions Star Schools paper re-write candidates 77% pass rate (national average = 39%) 4 with overall A aggregate

25 Matric subject averages 2013 English 67% Mathematics 63% Physical Science 63% Information technology 73% Accounting 72%

26 How we compare in Matric Country ADvTECH Schools Crawford Wrote Passed % pass 78% 100% 100% B Pass % B Pass 31% 84% 98% Wrote maths Achieved 60% % Pass 15% 58% 67% % Pass of class 7% 40% 56% Source: Politicsweb James Myburgh

27 2 Operations

28 The Model of Value Relevant Good service Quality and Value Standout offering Dynamic improvement Great reputation GPTW Attract and Retain Best Staff Innovation Well resourced Strong Demand Technology Investment Career success Cash Flow Employer recognition Rewards to stakeholders Community engagement Sustained Income and Market Growth Partnerships Premium Price No subsidy no safety net

29 Group at a glance

30 Scope of operations Client base Schools students at 37 schools Tertiary full-time and part-time students at 23 campuses Some job candidates placed by 21 staffing branches The People staff 297 with Masters degrees 20 with PhD 215 alumni Annuity nature of revenue Some 50% of Group revenue is recurring student enrolment

31 Employee headcount

32 Ploughing back Developing Staff Transformation forum: 149 high performing employees part of Developing Leaders for Tomorrow programme 55 on Management & Leadership Development Programmes 64 mentors trained during Total available staff received mentoring Corporate Social Investment Over R72 million spent on bursaries benefitting beneficiaries Total CSI expenditure R74 million Extensive outreach and other community engagement projects Crawford College Pretoria training teachers of Tshwane Secondary and assisting with Winter School

33 Teacher training Teacher Bursary Scheme: Teacher Bursary Scheme launched in bursary recipients since launch 54 bursary recipients in 2013 Varsity College: Offered BEd degree since 2004 Currently offer: - BEd (ECD Foundation Phase) - BEd (Inter & Secondary Phase) - Unisa Pathway: BEd - Post Graduate Diploma in Higher Education (*distance) 425 BEd enrolments in 2014 (2013: 325) BEd average module pass rate 2013: 90% Plan to extend teacher education offering

34 Infrastructure projects In 2013, completed 9 projects which added new places by the start of 2014 Current capital work in progress includes 10 projects which will have capacity for a further places once concluded

35 Capacity Capacity and year of development 2013 (%) 4% 9% 5% 2% 2% Older capacity Capacity created in 2009 Capacity created in 2010 Capacity created in 2011 Capacity created in 2012 Capacity created in %

36 Investment INVESTMENT PROGRAMME (R859 million) Infrastructural investments made 12% 11% 9% Tertiary properties School properties ICT equipment Other infrastructural equipment 68%

37 Technology Rm Approximate capex in the last 5 years 220 Approximate opex in the last 5 years 265 Investment in Star Schools 15 Total technology spend 500

38 3 Financial Highlights

39 Income statement and cash flow Rm % change Revenue % Operating profit % Headline earnings % HEPS (cps) % Distribution (cps) % Free operating cash flow before capex (cps) %

40 Segmental analysis Revenue % 12% 44% 43% 11% 46% Schools Tertiary Resourcing

41 Segmental analysis Operating profit % 11% 73% 22% 8% 70% Schools Tertiary Resourcing

42 Balance sheet highlights Rm % change Tangible assets % Debtors % Fees in advance % Shareholders equity % Net borrowings

43 Ploughing back R m % Total value created Less: employees Less: government taxes Available to the business

44 Ploughing back R m % Total value created Less: employees 757 Less: government taxes 212 Available to the business Allocated to communities Allocated to investors Retained in the group

45 4 Financial Analysis

46 Rm Revenue trend Group revenue

47 Group operating margin 20% 15% 10% 5% 0%

48 Cents HEPS trend

49 Rm Cash flow generation Free operating cash flow before capex

50 Rm Schools Revenue

51 R'm Schools Operating profit

52 Rm Tertiary Revenue

53 R'm Tertiary Operating profit

54 Rm Resourcing Revenue

55 Rm Resourcing Operating profit

56 Rising investment 300 Average annual infrastructure investment Trend = 17%

57 Return on funds employed 2013 Rm Division Average funds employed EBIT Return on funds employed 2013 Return on funds employed 2012 Schools % 25% Tertiary % 14% Resourcing % 776% GROUP % 25% Note: Depending on the assumption used for gearing, WACC is 10-13%

58 5 Prospects

59 SA GDP growth forecast 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Source: World Bank, GDP Growth Forecast

60 Prime lending rate % 8.5% 9% Source: South African Reserve Bank

61 Rand/US$ exchange rate Source: Thomson Reuters

62 Prospects % CPI and Education Price Index (EPI) Year on year percentage change: 2001 to 2013 CPI EPI Source: Stats SA

63 Investing for our future As at March 2014 Existing investments - Land, building and improvements - Other assets - Revaluation surplus Total existing investments - Capex commitment - Not yet approved, part of projects Rm Total investment line up Investment increase % 114% Present FTE students Approximate increase Increase % 68%

64 12-Year market cap index yr ADH Mark Cap JSE All Share Index JSE Small Cap Index

65 6 Questions