Africa-Press – South-Africa. JSE-listed private education provider ADvTECH, which owns brands like Crawford, Trinity House, Vega and Varsity College, has reported strong growth in profit – despite no increase in school fees.
For the year to December, JSE-listed private education provider ADvTECH saw 8% growth in revenue to R5.9 billion while its operating profit increased by 22% to R1.1 billion.
Its normalised earnings for the period increased by 35% to R656 million. A final dividend of 31 cents per share was declared, which brings the full-year dividend to 50 cents per share compared to 20c in the 2020 financial year.
ADvTECH owns 108 schools, with nine school brands, including Crawford International, Trinity House, Abbotts College and Pinnacle.
Enrolments by February 2022 were up 8% to 29 599 in South African schools and up 10% to 7 203 in schools in the rest of Africa, compared to February 2021.
While its fees were not increased, schools in South Africa increased revenue by 4% to R2.2 billion, while operating profit improved by 10% to R413 million.
Schools in the rest of Africa posted a 36% increase in revenue (to R268 million) and recorded an operating profit of R47 million – from a loss of R10 million in 2020.
CEO Roy Douglas says ADvTECH invested in expanding in the rest of Africa by offering good value.
“Often the market is nervous about cross border expansions, but we believe an education business like ours can operate effectively by bringing the right value and systems and have autonomous operations. Our margins in the rest of Africa are starting to match what we are obtaining in SA and we expect it could even exceed that. We are also looking at expanding to other geographies in Africa as well,” said Douglas.
Currently the group is mainly focused on Botswana and East Africa, mainly Kenya.
The group also has 32 tertiary education campuses in South Africa and elsewhere in Africa, with brands like Vega, the Independent Institute of Education and Varsity College.
Total group enrolments were up 6% by February 2022 to 84 341. Revenue in its tertiary business increased by 4% to R2.4 billion, while operating profit improved by 13% to R609 million.
Its resourcing division has eight brands, including Network Recruitment, Tech Pro and The Working Earth. Revenue for this division increased by 20% to R1 billion and an operating profit of R39 million – compared to R3 million in 2020 – was achieved.
Outlook
Douglas expects the growth trend will continue.
“ADvTECH is positioned to benefit from the growth in demand for education that is anticipated to continue both in South Africa and the rest of Africa. In addition, the inherent strong cash generation of our business model continues to strengthen our balance sheet and will enable us to invest in areas of opportunity with confidence,” he said.
However, he says the South African socioeconomic environment is constrained, with high unemployment and pressure on disposable incomes.
“It is, therefore, not about there not being a demand for what we offer, but affordability plays a part. That is why we drive our focus on efficiency and want our parents and students to see the quality and value of what we offer in the most effective way we can. That is why it is very important to point out that we achieved our current results without price increases and we are determined to keep process below inflation to ensure that we deliver value,” said Douglas.
“Indications are that there is still good growth potential for private education despite SA’s muted economic growth and consumer struggles with disposable income. People realise the importance and value of private education. And in the rest of Africa urbanisation, an emerging middle class and a young population wanting quality education count in our favour.”
By mid-morning on Monday ADvTECH’s share price was up 0.94% to R17.24 per share.
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