INTERIM Financial Results...continued coaching sessions and formed 32 new employer relationships...

INTERIM FINANCIAL RESULTSFOR THE SIX MONTHS ENDED 30 JUNE 2020

1

01 OVERVIEW 04 UNIVERSITY /

TERTIARY DIVISION

02 FINANCIAL

PERFORMANCE 05 RESOURCING

DIVISION

03 SCHOOLS DIVISION 06 PROSPECTS

CONTENTS

2 Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020

OBSERVATIONS FROM THE PANDEMIC

Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 20203

Speed, agility

and success

with which the

group

responded

Robust and

resilient

organisation

• Tertiary

• Schools

• Resourcing

Quality of our

people

THE MEASURE OF A BUSINESS IS

HOW IT RESPONDS TO A CHALLENGE OR CRISIS

RAPID RESPONSE TO COVID-19IMMEDIATE PRIORITIES WERE


Health, safety and well-

being of all stakeholders

and all that entails

(international best

practice, government

directives and protocols)

Critical to continue

to deliver quality

academic instruction

and minimize the

impact on students

Pay specific attention

to the needs of

students and parents

during this disruptive

time including pastoral

care

Sustainability of the group

• Cash preservation

• Capex reduction

VALUE OF OUR PEOPLESOCIAL IMPACT


Academic Excellence

At core of strategy

Intellectual Capital

Lies with our people and

teams

Financial Impact

Continue to pay employees

and contractors as far as

possible

Benefits

Evident in employee

motivation and

adaptability

Results

Evident in student

retention and joiners

Wellness

Programme

Manage anxiety and build

employee resilience

Schools

• Biggest challenge

• Standardised on Microsoft

platforms

• Consolidated Central

Academic Team

• Results: Rapid successful

transition

Tertiary

• Online capability in place

seamless transition

• Confident in ability to

continue and sustain quality

delivery

− LMS implemented since 2015

− Growing online offering

− Established digital campuses

− Successful blended learning

model

• Scale and scope of online

support

CONTINUED ACADEMIC DELIVERY


Overview

• Trained and supported

+5 500 teachers and lecturers

to transition from face-to-face

delivery to online platforms

• Ability to continue academic

offering seamlessly

• Not a single academic day

lost

OVERVIEW

Mental, emotional and physical well-

being of students

and educational psychology support

to parents with coping mechanisms

COVID-19 IMPACT – STUDENT SUPPORT ADDRESSING THE NEEDS OF OUR STUDENTS AND PARENTS

7

Supported 5 386 families with

financial assistance – R37 million

Supplied ~8 000 students with data

support

Tertiary boot camps – virtual catch

up sessions

Rosebank College Graduate

Empowerment Programme placed

233 graduates during lockdown,

continued coaching sessions and

formed 32 new

employer relationships

24/7 service desk support 1000+ calls / week

Virtual interaction: graduation

ceremonies; open days and campus

tours; cultural, sport and social

activities; pastoral care

Student support improved attendance:

online 98% vs 95% in face-to-face


COVID-19

4 187 3 871

13 190 13 098

9 016 8 992

26 393 25 961

3%

1%

2%

2%

-11%

-2%

-2%

-3%

Fe

b 2

0

Jun

20

Fe

b 2

0

Jun

20

Fe

b 2

0

Jun

20

Fe

b 2

0

Jun

20

Leavers

Joiners

Pre-Primary Primary High Total

IMPACT ON SA SCHOOL STUDENT NUMBERS


COVID-19

5 977 5 976

2%

-3%

Fe

b 2

0

Jun 2

0

Leavers

Joiners

Schools Africa

IMPACT ON SCHOOLS REST OF AFRICA

STUDENT NUMBERS


* Statistically higher attrition rate than normal

COVID-19

44 97546 620

9%

-5%

Feb

20

Ju

n 2

0

Leavers

Joiners

Tertiary

TERTIARY STUDENT NUMBERS


IMPACT ON STUDENT NUMBERS

32 370 31 937

44 975 46 620

77 345 78 557

2%

9%

6%

-3%

-5%

-4%

Feb

20

Ju

n 2

0

Feb

20

Ju

n 2

0

Feb

20

Ju

n 2

0

Leavers

Joiners

Schools GroupTertiary

GROUP IMPACT ON STUDENT NUMBERS


2%

Group

FINANCIALPERFORMANCE02

SOUND FINANCIAL PERFORMANCE


REVENUE

FREE

OPERATING

CASH FLOW

BEFORE CAPEX

NEPS

32%-2%13% 4%

OPERATING

PROFIT

CASH

GENERATED BY

OPERATING

ACTIVITIES

27%

CONTINUED GROWTH

1 572

1 929

2 175

2 499

2 829

H1 16 H1 17 H1 18 H1 19 H1 20

16%

293

344

404428

444

H1 16 H1 17 H1 18 H1 19 H1 20

11%

Group revenue(R’m)

Operating profit(R’m)


4%13%

CAGR

ESTIMATED DIVISIONAL IMPACT OF COVID-19


R’m Schools –

South

Africa

Schools –

Rest of

Africa

Tertiary Resourcing –

South Africa

Resourcing

– Rest of

Africa

Total

Lost revenue (26.3) (19.5) (16.8) (25.7) - (88.3)

Cost savings related to lost revenue 10.9 6.1 3.6 5.5 - 26.1

Net effect of lost revenue (15.4) (13.4) (13.2) (20.2) - (62.2)

COVID-19 related costs (7.9) (2.3) (4.2) (0.3) (0.7) (15.4)

Doubtful debtors expense* (15.1) (9.1) (47.2) (0.6) (0/5) (72.5)

Other cost savings 12.1 1.2 8.4 5.3 - 27.0

Estimated impact on operating profit (26.3) (23.6) (56.2) (15.8) (1.2) (123.1)

* 80% of the increase in bad debts written-off and the provision for doubtful debtors is considered to be COVID-19 related

4%

32%17%

13%

2 917

H1 20excludingCOVID-19

impact

293

344

404428

444

H1 16 H1 17 H1 18 H1 19 H1 20

1 572

1 929

2 175

2 499

2 829

H1 16 H1 17 H1 18 H1 19 H1 20

567


impact

EXCLUDING COVID-19 IMPACT

16

Revenue(R’m)


CONTINUE GROWTH


45%

-2%

57%

-2% 2%2020

41%

-1%

57%

1% 2%

2019

38%

4%42%

3%

13%2020

39%

4%41%

5%

11%

2019

Segmental revenuecontribution

June

Segmental operating profit contribution

June

SEGMENTAL OVERVIEW

17

Schools – South Africa Schools – Africa Tertiary Resourcing – South Africa Resourcing – Africa


CASH PRESERVATION

362424

555587 606610

785

890

999

1 268

H1 16 H1 17 H1 18 H1 19 H1 20

Cash generated from operations Cash from operations (after working capital)

20%

Cash flow generation

Cash preservation actions

HEALTHY LIQUIDITY MAINTAINED

18

• Curbing non-essential capex

− Capex expected to be

~R300m in FY2020

• Initiated cost savings in the

business without furloughing

our education employees


CAGR

610785

890999

1 268

-907 -919

-1 448

-1 805 -1 716

H1 16 H1 17 H1 18 H1 19 H1 20

R’m

Cashgenerated byoperationsNet borrowingsposition

CASH VS NET BORROWINGS POSITION

19

20%

Ratio =

Net Borrowing :

Cash

generation

1.5 1.2 1.6 1.8 1.4


BORROWINGS WELL WITHIN COVENANTS

Covenants

Net Borrowings: EBITDA

Banks: 3,5x

Internal: 3,0x

Actual: 2,1x

CAGR

0,0

14,4

24,8

43,9

78,9

15,7

0site

acquisition

3completion of campuses

of new schools

Student managementsystems

Additions to existingsites

Furniture,fittings, IT

and vehicles

Acquisitionof shares in Schole

R’m

Capex Projects

162.0

177.7

CAPEX AND ACQUISITIONS


SUSTAINABLE CAPEX REDUCTION

DEBTORS’ PROVISION

74

165

H1 2019 H1 2020

Trade andother receivables

Credit losses as % of revenue

BELOW TARGET COLLECTIONS

21

R’m%

increase

Unaudited

30 June

2020

30 June

2019

Trade receivables 26% 865 686

Loss allowance 39% (437) (314)

428 372

Coverage of debtors'

balance51% 46%

• Collections in the period 8% higher than H1 2019,

but 5% below our target

• Approximately R1bn collected in H2 fees


3%

6%

SCHOOLS DIVISION03• Agility in offering continued quality education

through adapting modes of delivery

• Continuing to build scale in the rest of Africa

• Benefits of restructuring and rationalisation

153159

172 175

198

H1 16 H1 17 H1 18 H1 19 H1 20

739814

945985

1 072

H1 16 H1 17 H1 18 H1 19 H1 20

1 098


impact

10%

225


impact

7%


23

Revenue(R’m)


SCHOOLS SA


CAGR

9% 13%

11% 28%

39%18%

39%

127


impact

29 31

47

92

108

H1 16 H1 17 H1 18 H1 19 H1 20

1213

8

-5

-9

H1 16 H1 17 H1 18 H1 19 H1 20

15


impact


24

Revenue(R’m)


SCHOOLS REST OF AFRICA


CAGR

GIS

GIS

GIS

& C

IS

GIS

& C

IS, M

akin

i

Ma

kin

iim

pa

ct


20,7%

19,6%

18,2%

17,8%

18,8%

H1 16 H1 17 H1 18 H1 19 H1 20

20,5%

H1 20 excludingCOVID-19 impact

SCHOOLS SA OPERATING MARGINEXCLUDING COVID-19 IMPACT

Operating margin

(%)

PORTFOLIO OF CLEARLY DEFINED BRANDSMEANINGFUL MARKET SEGMENTS

Modern,Progressive,

Academic focus

Traditional, holistic, Christian

based

Early childhood

development

Online/ home schooling

Mid-feeAcademic assisted and

support

PORTFOLIO OF CLEARLY DEFINED BRANDS

HISTORIC WORK DONE


Acquired:Summit College

Opened:FoundersHill PP&P

2016Acquired:

Glenwood

House

Elkanah

House

2017Acquired:

Makini schools

Opened:Crawford International School Kenya

The Bridge

Copperleaf High

Rebranded:

Summit → Pinnacle College Kyalami,

Kathstan → Pinnacle Rynfield

Founders Hill & Copperleaf → Pinnacle Colleges

2018Closed:

Trinityhouse Palm Lakes High

Abbotts Century City

Junior Colleges Tiny Town

2019Opened:

Trinityhouse

Glenvista

Pinnacle College Linden

Pinnacle College Waterfall

Reposition:

Maragon Ruimsig→

Crawford International

Merged:

JC Sandton & Crawford

Village → Crawford

International Bryanston

Closed:

Trinityhouse Palm Lakes

Trinityhouse North-Riding

2020Open:

Evolve

Reposition:

Pinnacle

College

Olympus

Pinnacle

College

Mooikloof

2020


Closed: Trinityhouse Palm Lakes High

Closed: Abbotts College Century City

Closed: Junior College Tiny Town

2018

2020

Opened: Pinnacle College Waterfall

2019

2017

&P

2016

2015

Opened: The Bridge

Opened: Copperleaf High

Rebranded: • Summit to Pinnacle College Kyalami

• Kathstan to Pinnacle College Rynfield

• Founders Hill to Pinnacle College Founders Hill

• Copperleaf to Pinnacle College Copperleaf

Acquired: Makini schools

Opened: Crawford International School Kenya

Open: Evolve

Opened: Trinityhouse Glenvista

Closed: • Trinityhouse Palm Lakes

• Trinityhouse North-Riding

Opened: Pinnacle College Linden

Rebranded:• Maragon Ruimsig as

Crawford International

• JC Sandton and Crawford Village as Crawford International Bryanston

PORTFOLIO OF CLEARLY DEFINED BRANDSCONTINUE TO ENHANCE BRAND VALUE PROPOSITION

Progressive/ modern

Online / home-

schooling

Early childhood

developmentMid-fee

Academic assisted and

support

Traditional/ holistic/

Christian based

• Trinityhouse

• MaragonAbbotts College Junior Colleges

• Crawford International

• Centurus Colleges

Acquired: Summit College

Opened: Founders Hill PP&P

Acquired: • Glenwood House

• Elkanah House

Acquired: Greenwood Bay College

Opened: • Founders Hill High

• Copperleaf College PP


ONLINE MARKET LANDSCAPE

Estimated size of the market segment

200 000

Long-term goal

10% of market segment

20 000 students

Target: Evolve

1.5% of market segment

3 000 students

At least 7 offerings currently in this space

• Trend-setting curriculum mapping system

developed at MIT

• Tailored learning experience

‒ Forward looking subjects

‒ Machine learning

• Strong focus on foundational, social and

emotional learning skills

‒ Home schooling market will change with WFH:

• Estimated 233 000 in 2017 in Home Schooling in SA

‒ More market players entering during COVID-19

‒ Each scholar is a potential online customer –

Affordability in SA the limiting factor

EVOLVE ONLINE SCHOOLTAPPING INTO THE HOME-SCHOOLING MARKET


* Evolve online school opening 2021 ** Figures are End Feb 2020


Trinityhouse

• Underperforming schools close end 2020:

− Trinityhouse North Riding

− Trinityhouse Palm Lakes

OUR CURRENT SCHOOL BRANDSENHANCING BRAND VALUE POSITION

31

Repositioning and merging

• Meaningful positioning that has a

sustainable market proposition.

• Continued improvement on

operational effectiveness and

efficiencies

• 2021 fee assessments:

0% increase

Maragon Brand - impaired

• Crawford International Maragon Ruimsig

now Crawford International Ruimsig –

successful rebranding

• Remaining Maragon schools to be

integrated with other better-defined

brands

SCHOOLS IN THE REST OF AFRICA

Crawford

International School

• Continue to offer and successfully

completed academic year

• E-learning success: 98% students

engaged

• Increase in enrolments due to quality

academic offering and superior online

delivery

• Cambridge international system

‒ Inaugural class IGSE exams: excellent results

‒ First IGCSE exams: excellent results,

average 4.2 A’s per student – 3x full house A’s

• Significant reduction in losses as we

move through the J-Curve

Makini

Schools

• Kenyan government - scrapping of

academic year severely impacted the

national Kenyan curriculum schools

• Designed alternative e-learning

curriculum to support students

• Parallel: Cambridge international

curriculum – effective September 2020

• Managing costs

• Employees impacted by salary

reductions

Kenya Botswana

WE REMAIN CONFIDENT IN THE REST OF AFRICA INVESTMENTS

32

Gaborone

International School

• Continue to perform well

• Swift and seamless online adoption

• Increase in enrolments due to quality

academic offering and superior online

delivery


UNIVERSITY/ TERTIARYDIVISION

04• The IIE SA’s leading “private university”

• Established flexible offering and delivery methods

• Resilient performance


IIE

Ed

uc

ati

on

Facultyof

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erc

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of

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ati

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&

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Facultyof

La

w

Facultyof

So

cia

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cie

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es

Facultyof

Hu

ma

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Facultyof

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Facultyof

• IIE is SA’s leading “private university”

• Central academic body: 15-year

track record of Academic leadership

• 33 Campuses

• Division has 197 accredited courses from

undergraduate programmes to Masters degrees

• Most of our qualifications registered and accredited

for face-to-face and distance

• Multi-channel modes of delivery: full-time

or part-time, distance (online) and blended learning

• Almost 45 000 full qualification students

• Benchmark against highest local and international

standards

* Stats as at end Feb 2020

TERTIARY DIVISIONTERTIARY DIVISION OVERVIEW

26%20%

RESILIENT PERFORMANCE

14% 3%

16% 26%

1 204


impact

308


impact

581

778

868

1 038

1 187

H1 16 H1 17 H1 18 H1 19 H1 20

100

157

204

245 252

H1 16 H1 17 H1 18 H1 19 H1 20

35

Revenue(R’m)


UNIVERSITY / TERTIARY


CAGR

25,6%

27,5%

H1 20(excl. COVID-19 & MSA)

17,3%

20,2%

23,5% 23,6%

21,2%

24,7%

22,8%

H1 16 H1 17 H1 18 H1 19 H1 20

UNIVERSITY / TERTIARY


IMPACTED BY IIE MSA INTEGRATION

Operating margin

(%)

Excl IIE MSA

-8%

11%

62 98

701

1 479

2 219

3 457

3 983

4 254

2014 2015 2016 2017 2018 2019 2020 30 June 2020

* End Feb YoY

GROWTH IN IIE ONLINE DISTANCE STUDENTS


56%50%111%615%58%

since March

7%

HIGHER EDUCATION FULL-TIME QUALIFICATIONS

15%

15 898 15 937

16 880

Feb 19 Feb 20 30 June 2020

* End Feb YoY

OXBRIDGE ACADEMY ENROLMENTSVOCATIONAL AND OTHER STUDY PROGRAMMES


6%

Rolling enrolment cycle – any time of year

RESOURCINGDIVISION05• Remains profitable despite tough SA market

• Good performance in the rest of Africa

• Dual focus on permanent and contract placements

20%

26%

20


impact

9

18

20

13

3

H1 16 H1 17 H1 18 H1 19 H1 20

224

309 321

387

464

H1 16 H1 17 H1 18 H1 19 H1 20

490


impact

MITIGATING ACTIONS TO MINIMISE LOSS

40

Revenue(R’m)


RESOURCING


RESOURCING DIVISION

• Hiring activity came to a standstill

Mitigating actions:

• Reduce costs

• Adjusted our consultant vs support staff ratio

• Salary cuts, temporary layoffs and retrenchments

• Cuts were implemented across the board on a

graduated basis to lesson impact on lower

earning level employees

• Negotiated rental discounts and deferments and

large supplier contracts

• Geographic expansion strategy prevails

• Good opportunities

• Active business development to expand African

profit base

• Dual focus on permanent and contractor

placements contributed to sustainability locally

and the rest of Africa

South Africa market – severely impacted

Rest of Africa

REMAINS PROFITABLE DUE TO A GOOD PERFORMANCE IN THE REST OF AFRICA


PROSPECTS06

42


Re-assess the delivery model

and introduce more online and blended

learning options

Rosebank College well-positioned to grow online

offering – the rest of Africa

2021 uncertainties:

• Public school calendar delayed

• Lead generation access to matriculantsand scholars

IMPACT GOING FORWARD

Innovative digital marketing and

advertising – virtual open days

& virtual tours

Continue to improveacademic delivery

models and student support

Oxbridge electronic portal enabled

broadening the reach into Zambia, Kenya and Ghana

Vega short courses

pivot online only

OUTLOOKUNCERTAINTY REMAINS


The pandemic has provided strong evidence of the robustness of our business

Remain cautious - economy will remain weak

Healthy brands servicing meaningful

market segments

Agile capable business with outstanding

value proposition

Underpinned by an academic body with

substance and gravitas

Continued streamlining of processes to drive

further effectiveness and efficiencies

Sound strategy that developed relevant

organisational structures with opportunity to

extract further value

Capability to provide quality education through

any mode of delivery

Strong balance sheet, sustainable cost and

capital expenditure containment

THANK YOU

45

Questions

46

• Schools offering:

‒ 109 schools, 55 campuses

• Tertiary offering:

− 7 faculties

− 197 accredited qualifications

• Portfolio of schools to meet a variety of markets

− Opportunity for internationalisation for our brands

• World class teaching and learning practices

• Sound investment in enabling technologies

• Central academic team: centralised high efficiency enables cost-effective product development &

centralised quality control

• Multiple modes of delivery:

− Face to face; Online; Hybrid: Blended; Distance

LEADER IN PRIVATE EDUCATION


IT INVESTMENT PAYS OFF

Preparedness:

• Invested in IT’s vision of a digital future

since 2014

• When COVID-19 struck, we were ready

• Ensured virtual learning, remote working,

business continuity & sustainability

Agility:

• Able to scale technologies to match

increased demand

• Staff and students adopted technology to

work remotely

Solutions:

• Virtual learning using Microsoft Teams

• Connectivity: issued sim cards and reverse

billing

• Implementation of JIRA helpdesk software

improved customer focus and service delivery

• Decentralised internal and outsourced IT support

Student support tools:

• Effectively handled 3200 requests in last 3

months

• Scaled STASY and Blackboard

• MS Teams activity increased by 3151% in last

180 days

• 9522 MS Teams created


Educational productivity

Optimise organisational

processes and structures

Rest of Africa

Growth in the rest of Africa

Customer focus

• Easy to interface with

• Understand and respond

to needs

• Deliver end-to-end

service to our customers

Academic excellence

• Teaching & learning

• Benchmarking performance

• Learning analytics

• International & employer

recognition

Growth

• Organic and acquisitive

• Channel

• Product

• Segment

• Geographic

RE

GU

LAT

ION

S

SOCIO-ECONOMIC ENVIRONMENT

RE

PU

TAT

ION

TRANSFORMATION

Human capital productivity

• Talent management

• Productivity benchmark

• High performance culture

Capital productivity

• Return on investment

• Optimise cost structures

Innovation

Data insights

Ris

k m

itig

ati

on Te

ch

no

log

y

Excellence through

specialisation

• Market focus

• Benchmarking: industry

& salary

• Data driven insights

STRATEGY PREVAILS REAPING THE REWARDS OF PAST STRATEGIC DECISIONS


Central academic team

ACADEMIC EXCELLENCE


Forefront of

international best

practice and

developments in

pedagogy

Evolving best practice in teaching

and learning - improve

progressive, streamlined and

effective – content and activities to

better support the student

development journey

Invested significantly

in ensuring future

focused education

and curricular

Teachers, lecturers and academic

teams share information and

resources. Several research

projects underway.

Focus on individual student

development through databased

learnings – no student left behind

CORE TO ADvTECH STRATEGY

AGILE DELIVERY


Where the teaching takes place

How students are taught

Where ADvTECH uses this approach

In person

Contact / Face2face

Students on site attend class with educator

They are taught face to face in a room with the educator and peers.

Schools and tertiary

Blended

Classroom supplemented by online

Combination of face to face and online material presented on platforms like Blackboard (Learn) and MS Teams. The online is supportive and complementary and supplementary to the face to face.

Schools and tertiary

Hybrid

Classroom or online simultaneously –Student chooses

Combination of online material with traditional teaching strategies (Face to Face) happening in a class with some students while being broadcast to students not in the class.

Schools and tertiary since start of pandemic

Distance Only

Distance

No physical class attendance

Students are either engaged through technology or sent their learning material. Assessments are submitted.

Tertiary only until 2021 when first school begins.

Online

Interactive online only engagement – no static PDF

Online engagement between the educator and peers using technology. Sometimes includes synchronous (same time) lecturing but often asynchronous (student can engage when suits them).

Tertiary only until 2021 when first school begins

Pack &Post / Online

Materials delivered to student via post or online portal

Pre-prepared study material. Supplemented with digitally mediated support and engagement.

Oxbridge

EDUCATION THROUGH OUR STUDENT’S PREFERRED MODE OF DELIVERY

INTERIM Financial Results...continued coaching sessions and formed 32 new employer relationships...

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Transcript of INTERIM Financial Results...continued coaching sessions and formed 32 new employer relationships...