INTERIM INTERIM FIN FINANCIAL ANCIAL RESUL RESULTS TS FOR THE SIX MONTHS ENDED 30 JUNE 2020 1
CONTENTS 01 04 UNIVERSITY / OVERVIEW TERTIARY DIVISION 02 05 FINANCIAL RESOURCING PERFORMANCE DIVISION 03 06 SCHOOLS DIVISION PROSPECTS Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 2
OBSERVATIONS FROM THE PANDEMIC Robust and Speed, agility resilient and success organisation Quality of our with which the • Tertiary people group • Schools responded • Resourcing THE MEASURE OF A BUSINESS IS HOW IT RESPONDS TO A CHALLENGE OR CRISIS Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 3
RAPID RESPONSE TO COVID-19 IMMEDIATE PRIORITIES WERE Health, safety and well- Critical to continue Pay specific attention Sustainability of the group • Cash preservation being of all stakeholders to deliver quality to the needs of • Capex reduction and all that entails academic instruction students and parents (international best and minimize the during this disruptive practice, government impact on students time including pastoral directives and protocols) care Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 4
VALUE OF OUR PEOPLE SOCIAL IMPACT Academic Excellence Financial Impact Wellness Benefits Programme At core of strategy Continue to pay employees Evident in employee and contractors as far as motivation and Manage anxiety and build Intellectual Capital possible adaptability employee resilience Lies with our people and Results teams Evident in student retention and joiners Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 5
CONTINUED ACADEMIC DELIVERY OVERVIEW Over Ov erview iew Tertiary Schoo Sc hools ls • Trained and supported • Online capability in place • Biggest challenge +5 500 teachers and lecturers seamless transition • Standardised on Microsoft to transition from face-to-face • Confident in ability to platforms delivery to online platforms continue and sustain quality • Consolidated Central • Ability to continue academic delivery Academic Team offering seamlessly − LMS implemented since 2015 • Results: Rapid successful − Growing online offering • Not a single academic day transition − Established digital campuses lost − Successful blended learning model • Scale and scope of online support Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 6
COVID-19 IMPACT – STUDENT SUPPORT ADDRESSING THE NEEDS OF OUR STUDENTS AND PARENTS Supported 5 386 families with 24/7 service desk support 1000+ financial assistance – R37 million calls / week Rosebank College Graduate Empowerment Programme placed Supplied ~ 8 000 students with data 233 graduates during lockdown, support continued coaching sessions and formed 32 new employer relationships Tertiary boot camps – virtual catch Mental, emotional and physical well- up sessions being of students and educational psychology support to parents with coping mechanisms Virtual interaction: graduation ceremonies; open days and campus Student support improved attendance: tours; cultural, sport and social online 98% vs 95% in face-to-face activities; pastoral care Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 7
IMPACT ON SA SCHOOL STUDENT NUMBERS COVID-19 Leavers 2% Joiners 26 393 -3% 25 961 1% -2% 13 190 13 098 2% -2% 9 016 8 992 3% -11% 4 187 3 871 Feb 20 Jun 20 Feb 20 Jun 20 Feb 20 Jun 20 Feb 20 Jun 20 Pre-Primary Primary High Total Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 8
IMPACT ON SCHOOLS REST OF AFRICA STUDENT NUMBERS COVID-19 Leavers 2% Joiners -3% 5 977 5 976 Feb 20 Jun 20 Schools Africa Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 9
TERTIARY STUDENT NUMBERS COVID-19 Leavers Joiners 9% -5% 46 620 44 975 Feb 20 Jun 20 Tertiary * Statistically higher attrition rate than normal Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 10
GROUP IMPACT ON STUDENT NUMBERS IMPACT ON STUDENT NUMBERS Leavers 6% Joiners -4% 78 557 77 345 9% Group -5% 46 620 44 975 2% 2% -3% 32 370 31 937 Feb 20 Jun 20 Feb 20 Jun 20 Feb 20 Jun 20 Schools Tertiary Group Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 11
02 FINANCIAL PERFORMANCE
SOUND FINANCIAL PERFORMANCE 4% -2% 32% 27% 13% FREE CASH OPERATING OPERATING GENERATED BY REVENUE NEPS PROFIT CASH FLOW OPERATING BEFORE CAPEX ACTIVITIES Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 13
CONTINUED GROWTH 11% 16% 13% 4% 2 829 444 428 404 2 499 344 2 175 1 929 293 1 572 CAGR H1 16 H1 17 H1 18 H1 19 H1 20 H1 16 H1 17 H1 18 H1 19 H1 20 Group revenue Operating profit ( R’m ) ( R’m ) Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 14
ESTIMATED DIVISIONAL IMPACT OF COVID-19 R’m Schools – Schools – Resourcing – Tertiary Resourcing Total – Rest of South Rest of South Africa Africa Africa Africa 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 Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 15
CONTINUE GROWTH EXCLUDING COVID-19 IMPACT 17% 32% 4% 567 13% 2 917 2 829 444 428 404 2 499 2 175 344 1 929 293 1 572 H1 16 H1 17 H1 18 H1 19 H1 20 H1 20 H1 16 H1 17 H1 18 H1 19 H1 20 H1 20 excluding excluding COVID-19 COVID-19 Revenue Operating profit impact impact ( R’m ) (R’m) Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 16
SEGMENTAL OVERVIEW Segmental revenue Segmental operating profit contribution contribution June June 2020 2020 -2% 2% 13% 1% 2% 11% 3% 5% 38% 39% 45% 2019 41% 2019 57% 57% 41% 4% -1% 42% 4% -2% Schools – South Africa Schools – Africa Resourcing – South Africa Resourcing – Africa Tertiary Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 17
CASH PRESERVATION HEALTHY LIQUIDITY MAINTAINED Cash preservation actions 20% 1 268 • Curbing non-essential capex 999 − Capex expected to be 890 ~R300m in FY2020 785 • Initiated cost savings in the 610 606 587 business without furloughing 555 our education employees 424 362 H1 16 H1 17 H1 18 H1 19 H1 20 CAGR Cash generated from operations Cash from operations (after working capital) Cash flow generation Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 18
CASH VS NET BORROWINGS POSITION BORROWINGS WELL WITHIN COVENANTS R’m 20% 1 268 Covenants 999 890 Net Borrowings: EBITDA 785 610 Banks: 3,5x Internal: 3,0x Actual: 2,1x -907 -919 Cash generated by -1 448 operations Net borrowings -1 716 -1 805 position CAGR H1 16 H1 17 H1 18 H1 19 H1 20 Ratio = Net Borrowing : 1.5 1.2 1.6 1.8 1.4 Cash generation Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 19
CAPEX AND ACQUISITIONS SUSTAINABLE CAPEX REDUCTION R’m 177.7 Capex Projects 162.0 78,9 43,9 24,8 15,7 14,4 0,0 0 3 Student management Additions to existing Furniture, Acquisition site completion of campuses systems sites fittings, IT of shares in Schole acquisition of new schools and vehicles Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 20
DEBTORS’ PROVISION BELOW TARGET COLLECTIONS Trade and Credit losses as % of other receivables revenue 6% Unaudited % 165 R’m 30 June 30 June increase 2020 2019 Trade receivables 26% 865 686 Loss allowance 39% (437) (314) 3% 428 372 74 Coverage of debtors' 51% 46% balance • Collections in the period 8% higher than H1 2019, but 5% below our target H1 2019 H1 2020 • Approximately R1bn collected in H2 fees Robust | Resilient | Sustainable INTERIM FINANCIAL RESULTS for the six months ended 30 June 2020 21
03 SCHOOLS DIVISION • 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
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