annual report analyst presentation 2008 · investing in human potential the chairman said … •...
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Audited resultsFor the year ended 31 December 2008
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Investing in human potential
“A small group of passionate people is all it takes to change the world. In fact, if you look through the history of humanity, they are the only ones who have ever changed anything.”Mark Shuttleworth.
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Investing in human potential
Agenda
• Positioning• Quality• Operations• Financial • Conclusions
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Investing in human potential
Strategic positioning
“our business is advantageously positioned in such vital sectors as education, training and personnel placement.”
Chairman’s letter to shareholders …
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Investing in human potential
U.S. male unemployment rates
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Investing in human potential
U.S. male unemployment rates
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Investing in human potential
Operations
“The path to finding employment lies in acquiring a tertiary qualification and not matric alone.”
Econometrix January 2009
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Investing in human potential
OccupationManagers 41 147Arts and Media Professionals 5 640Management Professionals 32 292Education Professionals 42 203ICT Professionals 5 871Engineering, ICT and Science Technicians 36 506
Source: Department of Labour critical skills list 2008
Skills shortage in SA
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Investing in human potential
Skills, poverty and jobs
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Investing in human potential
Chief Executive’s report to stakeholders …
“The enduring worth of the Group’s core operations and the annuity nature of much of the revenue continues to underpin the sustainability of the Group’s robust business model.”
Strategic positioning
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Investing in human potential
Balance sheetR’m 2008 2007Fixed and long term assets 665 479Debtors 90 62Less: non-interest bearing debt -290 -241Net current assets -200 -179Employment of funds 465 300
Shareholders funds 509 414Interest bearing debt 0 4Less: cash -44 -118
Funds employed 465 300
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Investing in human potential
Annuity nature
• 50% of education revenue is returning students
• Students can be with us up to 15 years
• Growth in contract businesses• Imfundo• Resourcing
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Investing in human potential
Sustainability• Environmental• Sense of renewal• Academic experience
- quality- enjoyment- value
• Enrolments- returning students- word of mouth- tenure
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Investing in human potential
Sustainability (continued)
• Barriers to entry• Regulatory and governance• Investment
- human resources- infrastructure- problem areas- balance sheet
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Investing in human potential
Ploughing backR’m %
Total value created 927 100Less: employees -514 55Less: government taxes -173 19Available to business 240 26
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Investing in human potential
Ploughing backR’m %
Total value created 927Less: employees -514Less: government taxes -173Available to business 240 100Allocated to communities 37 15Allocated to investors 71 30Retained in the group 132 55
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Investing in human potential
Employability
• 90% of degree graduates were employed in less than three months after graduation
• In certificate programmes, which are at the lower end of our qualifications, more than 65% of graduates find employment within the first three months after graduation
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Investing in human potential
Strategic positioning
Chairman’s letter to shareholders …
“While the fixed property portfolio is reported in the balance sheet at a cost of R531 million, management estimate the replacement cost of the present infrastructure at more than R2 billion”
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Investing in human potential
Investment
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Investing in human potential
Capacity
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Investing in human potential
Quality
American biologist Peter Agre once said:“Our single greatest defence against
scientific ignorance is education.”Chairman’s letter to shareholders …“Our product and service delivery values are
recognised to include an unequivocal commitment to superior teaching instruction and academic excellence.”
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Investing in human potential
Quality
IIE and governance
• The introduction of a Higher Certificate in Photography
• 35 accredited programmes in the IIE stable
• Work Readiness Programme (WRP)
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Investing in human potential
Quality
• The launch of IIE Forums which provide opportunities for reflection and debate on key educational issues with a focus on the role of private education
• The launch of the Private Higher Education Network (PHEN)
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Investing in human potential
• The Academic Advisory Council, comprising leading independent educational experts, which advises the Group in educational matters and policy
Quality
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Investing in human potential
IIE Senate• Ensures highest academic standards …• … that prepare students for careers • Majority are academics• Elected representatives of the lecturing and
teaching body• Elected student representatives also serve on
Senate• Sub committees
Quality
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Investing in human potential
Academic highlights
Abbotts College, CrawfordSchools™ and Trinityhouse achieved 100% pass rate
Our 1043 matric candidates obtained distinctions in almost a third of subjects written, 2332 in total
Schools
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Investing in human potential
Academic highlights
Our schools continue to contribute significantly to the national output of key subjects with averages per candidate as follows:
Mathematics – 75%Physical Science – 66%English – 70%
Schools
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Investing in human potential
Academic highlights
National pass rate for students of Vega’s Honours degrees was 89%
Final year students in the diploma in Accounting and Financial Computing at College Campus achieved a pass rate of 78%
Tertiary
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Investing in human potential
Academic highlights
Varsity College final year UNISA students achieved an overall pass rate of above 80%, including a 95% pass rate in English
In the UNISA CTA examinations, five Varsity College students were placed in the top 20 overall
Tertiary
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Investing in human potential
Major focus on training – 7 hours per month
Repeat business from 65% of clients in one year
12% of client companies used us for the first time in 2008
Recruitment quality
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Investing in human potential
“… let’s say more or less 25% up across the board in terms of headlines, profits, revenues, dividends etc. Good numbers, resilient business.”
Classic FMMarch 2009
Operations
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Investing in human potential
SCHOOLS TERTIARY SKILLS
ADvTECH Education
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Investing in human potential
RECRUITMENT
ADvTECH Resourcing
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Investing in human potential
Scale of operations
• Approx 46 500 students (2007: 45 000)• 52 education sites and campuses• 21 staffing branches• Approx 4 900 placements (2007: 4 300)• Number of employees 3 643• 146 Masters degrees• 24 Doctorates • 266 Alumni
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Investing in human potential
Operations
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Investing in human potential
Operations
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Investing in human potential
Operations
• The acquisition of Trinityhouse School in Gauteng for R104m
• The acquisitions of staffing companies IT Edge, Tech-Pro Personnel and The Working Earth
• Total expenditure on acquisitions R143m
Investments
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Investing in human potential
The chairman said …• The Group’s financial performance gives
credence to our business model, our values and our operational framework.
• Our Education division has again made important contributions to South Africa’s academic proportion and its transformational progress.
• In the Resourcing division, the focus on key niche markets coupled with its professional application, service and commitment, served to once again generate outstanding results.
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Investing in human potential
Financial highlights
R’m 2008 2007 % growth
Revenue 1 198 960 25%
Operating profit 201 158 27%
Headline earnings 155 119 30%
HEPS (cps) 40.2 32.0 26%
Diluted HEPS (cps) 40.0 31.0 29%
Distribution (cps) 20.0 16.0 25%
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Investing in human potential
R’m 2008 2007 %chNon current assets 665 479 39%Debtors 90 62 45%Cash and equivalents 44 118 -63%Current assets -200 -178Total assets 799 659
Shareholders funds 509 414 23%Interest bearing debt 0 4Vendor claims 12 0Fees in advance 84 65 29%Other payables 194 176 10%Funds employed 799 659
Balance sheet
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Investing in human potential
Cash flow
R’m 2008 2007
Cash generated by operating activities 251 194
Net cash inflow from operating activities 154 136
Net cash outflow into investing activities -235 -72
Free operating cash flow before capex 204 152
Cash conversion of earnings 132% 128%
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Investing in human potential
FINANCIAL ANALYSIS
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Investing in human potential
5-year CAGR in revenue = 20%
Revenue trend
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Investing in human potential
Group operating margin
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Investing in human potential
Cash flow generation
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Investing in human potential
Net cash position
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Investing in human potential
5-year CAGR in HEPS = 35%
HEPS
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Investing in human potential
Segmental analysisRevenue
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Investing in human potential
Segmental analysis Operating Profit
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Investing in human potential
Education trends
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Investing in human potential
Resourcing trends
Revenue R’m
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Investing in human potential
Prospects• Expected that student enrolment and
customer demand will be maintained• The Group has a sound balance sheet• Sufficient resources to optimally manage
the business …• … and to consider acquisition and
expansion opportunities • Confident of increased earnings in the
year ahead
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Investing in human potential
5 Year – Market Cap Index
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Investing in human potential
Questions