ANNUAL FINANCIAL RESULTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 1
CONTENTS 01 05 FINANCIAL RESOURCING OVERVIEW DIVISION 02 06 CORPORATE COVID-19 RESPONSIBILITY 03 07 SCHOOLS INVESTMENT DIVISION 04 TERTIARY DIVISION
ECONOMY TOUGH ENVIRONMENT DUE TO POOR GROWTH, POWER OUTAGES AND COVID-19 GDP growth 0.2% in 2019 Historical Load IMF poor GDP Job losses Business forecasts shedding growth 0.8% high and confidence negative of 0.8% growing GDP growth economic COVID-19 lowest in 29.1% in 2020 impact last 5 years Emigration uncertainty 21 years Source: STATSSA, IMF, FNB, BER ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 3
GOOD RESULTS SNAPSHOT 20% 18% 8% 10% 16% 8% HEPS PROFIT FOR NEPS STUDENT REVENUE OPERATING THE YEAR ENROLMENTS PROFIT ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 4
OVERVIEW OPERATIONAL HIGHLIGHTS • Schools division records strong growth in rest of Africa and a significant increase in presence in mid-fee sector • Encouraging 5% organic growth in 2020 Schools division enrolments • Continued excellent performance in Tertiary division • Tertiary division enrolments increased by 13% for 2020 • Total student enrolment increased by 10% for 2020 • Good progress on our initiatives driving effectiveness, efficiencies and brand value proposition • Resourcing impacted by tough economic environment – solid performance under circumstances ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 5
COVID-19 IMMEDIATE RESPONSE • Safety and wellbeing of all our staff and students is our first priority • School & Tertiary closure from 18 March 2020 per government guidance • Follow and implement the World Health Organisation and NICD protocols and advice • Continuation of quality teaching and learning will remain paramount • Leveraging online learning tools and systems previously implemented to support our teaching and learning strategies • Comprehensive communication undertaken ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 6
COVID-19 PREPARATION • Established an Incident Support Team • All schools will go onto a modified four-term calendar • Leveraging technologies for online learning (e.g. MS Teams, IIE Learn) • Established educational delivery systems testing done and guidelines widely distributed • Ongoing process keeping stakeholders informed through online means ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 7
COVID-19 RESPONSES TO DATE ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 8
COVID-19 RESPONSES TO DATE ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 9
COVID-19 IMPACT & RISK • Board has delayed decision on the dividend declaration • Capex plans reconsidered • Expect some cost and revenue impact which will be determined by the tenure of closures ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 10
EDUCATION SECTOR MARKET TRENDS IN THE SCHOOLS SECTOR 5% 13% 26 789 12 230 194 11 647 172 23 289 2000 2018 92% 130% 1 865 589 348 971 256 283 Public Schools Private Schools Public Schools Private Schools Number of schools Number of scholars Source: Centre for Risk Analysis, Socio-Economic Survey of South Africa 2020 ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 11
SCHOOL LEAVER MARKET 500 000 450 000 442 672 400 000 32% 350 000 334 718 300 000 15% Qualifying school leavers 250 000 First year enrolments (Public) 200 000 193 282 150 000 168 388 100 000 50 000 0 2009 2010 2016 2017 ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 12
EDUCATION SECTOR MARKET TRENDS IN THE TERTIARY SECTOR 1 200 000 11% 1 000 000 1 036 984 938 000 800 000 2011 600 000 2017 80% 400 000 185 046 200 000 103 000 0 Public Universities Private Higher Education ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 13
ENROLMENT NUMBERS STRONG ENROLMENT GROWTH IN 2020 10% 10% 44 975 39 629 13% 36 136 33 463 Tertiary 29 138 32 370 5% 30 827 27 408 26 713 24 199 School 2016 2017 2018 2019 2020 Schools Tertiary: Full Qualifications ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 14
02 FINANCIAL OVERVIEW
CONSISTENT GROWTH 18% 18% 869 5 108 808 4 389 668 3 938 560 3 224 454 2 594 CAGR 15 16 17 18 19 15 16 17 18 19 Group revenue Operating profit (R’m) (R’m) ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 16
OPERATING MARGIN COMPARISON EXCLUDING IIE MSA, CIS, MAKINI AND RESOURCING 21,8% 21,4% 20,5% 19,7% 18,8% 18,4% 17,5% 17,4% 17,0% 17,0% 15 16 17 18 19 Operating margin (Group) Operating margin (excl IIE MSA, CIS, Makini & Resourcing) ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 17
HEPS & NEPS 14% 12% 86,0 85,2 79,0 75,3 71,4 71,1 68,8 63,3 53,9 51,0 CAGR 15 16 17 18 19 15 16 17 18 19 Headline earnings per share Normalised earnings per share (cents) (cents) ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 18
CASH FLOW GENERATION R’m 21% 1192 1083 806 738 558 455 426 394 291 223 15 16 17 18 19 Cash generated by operations Cash inflow from operating activities ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 19
BALANCE SHEET REMAINS SOUND • Disciplined approach to capital • Debtors allocation • well managed • increased emphasis on collections • Capital expenditure – slow down: • Borrowings well within covenants • following extensive expansion programme • Banks 3.5x • focus on maximising ROI • Internal 3.0x • lower CAPEX in 2020 ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 20
CASH VS NET BORROWINGS POSITION R’m 21% 1 192 Cash 1 083 806 generated by 738 558 operations -1 110 -1 157 Net borrowings -1 671 position -1 915 -2 554 CAGR 2015 2016 2017 2018 2019 Ratio = 2.1 1.5 2.0 1.8 2.1 Net Borrowing : Cash generation ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 21
CAPEX AND ACQUISITIONS R’m 1 000.7 Capex Projects 680.7 320,0 278,7 172,9 165,5 25,0 18,1 20,5 1 3 2 Student Additions to Furniture, Acquisition site new school new tertiary management existing sites fittings, IT of IIE MSA acquisition campuses sites systems and vehicles constructed ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 22
SCHOOL DIVISION EXCELLENT GROWTH CAPACITY ‘000 85% 86% 83% 81% 79% 41,2 38,2 33,0 32,4 31,2 30,8 28,6 27,4 26,7 24,2 16 17 18 19 20 % Existing building capacity utilised Students enrolled Existing building capacity ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 23
SEGMENTAL OVERVIEW Segmental operating profit Segmental revenue contribution contribution 2019 2019 3% 14% 5% 15% 41% 40% 43% 43% 2018 2018 51% 57% 39% 42% 0% 3% -2% 4% Schools - South Africa Schools – Africa Tertiary Resourcing ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 24
03 SCHOOLS DIVISION 25
SCHOOL DIVISION INITIATIVES Sharpening the focus on our brand positioning & improve customer value Improved operational Increased presence in the mid-fee effectiveness and sector, new campuses exceeding efficiencies target enrolment numbers Significant expansion All sales/marketing/customer past 5 years – facing staff received customer student numbers service, sales and lead generation increased 128% and lead conversion training ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 26
SCHOOL DIVISION INITIATIVES Organic enrolment growth of 5% for 2020, despite continued consumer financial pressure and high levels of emigration ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 27
SCHOOLS REVENUE R’m 13% 2 226 2 009 1 742 1 545 1 350 CAGR 15 16 17 18 19 ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 28
SA SCHOOLS 6% 11% 358 349 2 022 324 1 877 315 1 685 286 1 491 1 309 CAGR 15 16 17 18 19 15 16 17 18 19 SA schools revenue SA schools operating profit (R’m) (R’m) ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 29
AFRICA REVENUE AND EBIT R’m 204 89% Revenue: 131 Africa schools EBIT: Africa schools 57 12 4 CAGR -13 17 18 19 Africa schools revenue and EBIT (R’m) ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 30
REVENUE SA SCHOOLS AND REST OF AFRICA 2 022 1 877 1 685 1 491 1 309 South Africa Rest of Africa 204 131 54 57 41 15 16 17 18 19 ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 31
AFRICA SCHOOLS ENROLMENTS 5 977 5 379 1 965 1 950 17 18 19 20 ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 32
REST OF AFRICA Revenue up by 55% Crawford International School, Kenya will move out of the J-curve in 2020, a mere 15 months after opening its doors. Currently have 419 students Makini Schools up 12% enrolment growth ANNUAL FINANCIAL RESULTS for the year ended 31 December 2019 33
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