interim results 2008.pdffirst half 2008 +14% +16% first half 2007 as reported +15% +28% in the 2007...
TRANSCRIPT
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INTERIM RESULTS
June 2008
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Group overview
One of the most consistent features of life today is change.
Institutions of learning, business, government and countries world-wide respond to complex economic, social and environmental challenges.
ADvTECH focuses on incorporating new concepts and life-long learning approaches in classrooms and corporations.
This gives people the skills, confidence and opportunities they need to succeed in a fast-changing world.
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Group highlights
Strong financial performance.
Revenue up 19%.
Real growth in enrolments and placements.
Follow-up research on alumni.
Consistent long term growth.
Underpinned by balance sheet and cash flow.
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Financial highlights 1H20081H2007 % change
R475m R564m +19%Revenue
R72m R89m +24%Operating profit
14.4c 18.7c +30%HEPS
13.7c 18.3c +34%Diluted HEPS
46.5c 57.5c +24%Free operating cash flow per share
5.0c 7.0c +40%Distribution
R55m R72m +32%Profit for Period
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Financial overviewConsistency and efficiency
Group Revenue
0
100
200
300
400
500
600
2002 2003 2004 2005 2006 2007 2008
CAGR = 18%R'm
Group Operating Margin
4%
6%
8%
10%
12%
14%
16%
18%
2002 2003 2004 2005 2006 2007 2008
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Financial overviewCash generation
Net cash position
-100
0
100
200
300
2002 2003 2004 2005 2006 2007 2008
R'm
Cash flow generation
050
100150200250
2002 2003 2004 2005 2006 2007 2008
CAGR = 36%R' m
Cash generated by operations
Cash from operations (after working capital)
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Financial overviewProfitability
HEPS have improved 30%, underscoring a consistent trend.
HEPS
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4
6
8
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12
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2002 2003 2004 2005 2006 2007 2008
CAGR: 34%Cents
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1H20081H2007 % ChangeR688m R861m +25%NAV
R177m R240m +36%Net Cash on hand
R59m R94m +59%Debtors
A solid base to sustain future growth strategy.
Balance sheet insight
R9m R35m +289%Intangibles
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Resourcing’s share of revenue has increased to 17% (14%).
Segmental analysisRevenue
Revenue 2008Education Resourcing
Revenue 2007
Education Resourcing
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Segmental analysisOperating profit
Resourcing’s share has increased to 19% (16%).
Profit 2007
Education Resourcing
Profit 2008
Education Resourcing
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Education:Trinityhouse acquisition.Capex and property.Quality and Staff capacity.Programme development.
Resourcing:Focused expansion into niche offerings.Training.IT infrastructure.Acquisitions.
Segmental analysisADH investing for growth
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ADvTECH Education
Segmental analysis
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SCHOOLS TERTIARY SKILLS
ADvTECH Education
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Quality Peop
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Growt
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Susta
inabil
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Investment
EducationStrategy
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Strong underlying demand.
Real growth in student numbers.
Recognition of Education professionals.
Salaries.
Investment opportunities:CapexAcquisitive
EducationKey points
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Consistent performance during challenging times too
EducationRevenue
Revenue
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500
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CAGR:17%
R’ m
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EducationSustained profits
Margins again sustained
Education Operating Margin
15%
17%
19%
21%
2004 2005 2006 2007 2008
Education - Operating Profit
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20
40
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100
2004 2005 2006 2007 2008
CAGR: 17%R’m
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l Campus in Randpark Ridge.Grade 000 to Grade 12.1750 students.IEB Matric.Member of ISASA.Co-educational.Traditional, Christian ethos.Holistic education.Strong sports ethos.
Trinityhouse acquisition
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l Distinct and different niche.More traditional market and with the lower fees is more affordable.Popularity of the brand with marginally lower fees.Large waiting list.10 years old, proven model.Retained current management.The model is compact and require less land than, for example, the Crawford model. We plan to expand the brand.
Trinityhouse acquisitionRationale and strategy
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ADvTECH Resourcing
Segmental analysis
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RECRUITMENT
ADvTECH Resourcing
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Niche markets Focu
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model
Growth
Prof
itabil
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ResourcingStrategy
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Strong growth and improved operational efficiencies.
Positive outlook for full year.
ResourcingHighlights
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Resourcing division
Consistent revenue growth
Resourcing Revenue
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2004 2005 2006 2007 2008
R’m CAGR:24%
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Specialisation Shortage
Finance Managers 3 975
Finance Professionals 5 735
Total 9 710
Specialisation Shortage
ICT Managers 6 675
ICT Professionals 22 950
Total 29 625
Specialisation Shortage
Construction Managers 3 875
Engineering Managers 3 570
Production Managers 1 675
Engineering Professionals 12 073
Total 21 193
ResourcingA key driver
Source: Department of Labour, August 2008.
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Provides higher levels of efficiency and profitability
ResourcingFocused business model
Operating Margin
10%
15%
20%
25%
2004 2005 2006 2007 2008
Operating Profit
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R'm
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ADvTECH Group
Segmental analysis
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ADH positioned in areas of national and strategic importance.
Aspirational demand for education and jobs.
Key competencies (and differentiators) in career preparation.
Sustained verifiable record of success.
Ongoing investment justified and affordable.
ADH perfectly positioned.
GroupStrategy
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Resilient model spurred on by the enduring benefits that education provides.
New capacity:CapexAcquisition
IIE and new product innovation ongoing.
Infrastructure.
GroupSustainability
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Shortage of skilled resources driving ongoing growth.
Expanding niche focus.
Infrastructure.
GroupSustainability
Com
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l Affordability - cyclical pressure experienced.
Education remains an aspirational investment -demand remains strong.
Demand - short term discretionary spending under pressure.
Skill shortage - remains a challenge to SA.
Our economyChallenges
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Our economyResponse
Affordability - improved access to student financing.
Education remains a long term focus requiringincreased capacity, investment in new programmes in the broadest sense and quality improvements.
Skill shortage - maintain focus, supporting growth trend in recruiting, expand product offering.
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Relative share price performanceInvestor’s insight
5 Year - Market Cap Index
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2.00
4.00
6.00
8.00
10.00
12.00
14.00
2003/08/01 2004/08/01 2005/08/01 2006/08/01 2007/08/01 2008/08/01
5 Yr ADH Market Cap Index 5 Yr All Share Re-based Index 5 Yr Small Caps Re-based Index
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0.5%
ProspectsADvTECH Education
The Group remains committed to maintain a long term sustainable growth path.
The business model is proving resilient and will stand the test of time.
Investment in quality, infrastructure and capacity continues.
Registration numbers are indicative of 2nd half results.
Discretionary spend will experience pressure.
Cash conversion remains strong.
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0.5%
ProspectsADvTECH Resourcing
Continued shortage of skills will provide opportunities.
Cash conversion remains a focus of management.
Acquisitions will provide platform for further growth.
New product and growth market development continues.
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Thank you
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0.5%
Understanding the education growth story
Revenue Operatingprofit
First half 2008 +14% +16%First half 2007 as reported +15% +28%
In the 2007 report we highlighted that the growth over 2006 wasaugmented by closure costs of R5.5m at Crawford Durban whichhad been incurred in the prior year. Excluding these:
First half 2008 +14% +16%First half 2007 +15% +17%
Full year revenue growth for 2007 was 14%There is a pattern of sustained margin improvement.