ADvTECH Announces Plans for New University amid Strong Interim Financial Results

ADvTECH, the owner of Crawford schools and a prominent player in South Africa's private education sector, has reported strong financial results and is seeking to enter the higher education market as a university. With robust revenue growth in the education division and impressive overall performance, the group is showing a confident stride amid economic challenges.

For the six months leading up to June 2024, ADvTECH has seen a 12% increase in revenue within its education division, attributed to enrollment growth in both schools and tertiary education. Nevertheless, the ADvTECH report detailed a 3% decline in its resourcing revenues, with an overall revenue increase of 9%, reaching R4.27 billion.

Operating profit surged by 15% to R865 million, benefiting from a 16% rise in the education division's operating profit. The resourcing division, despite a dip in revenues, also marked a 3% operating profit growth. The group's operating margin has thus improved to 20.2%, underpinned by gains in efficiency and the introduction of artificial intelligence tools to enhance personalized learning experiences.

There was a marginal rise in net finance costs, attributed mainly to increased lease liabilities. But a decrease in net borrowings led to a reduction in net interest paid to banks. ADvTECH also reported a lowered tax rate due to a larger proportion of profits originating from countries with lower tax rates, contributing to a 16% leap in earnings per share to 97.6 cents.

Improved collections, especially in the tertiary division, allowed for a decrease in loss allowances. Despite an increase in credit losses, the company has exhibited strong cash generation, with a notable 12% jump in cash generated by operating activities to R1.96 billion. These finances have been strategically allocated to various investments, including capital expenditure, dividends, and debt settlements, thereby significantly reducing net borrowings.

As ADvTECH's tertiary division continues to excel with ongoing campus expansions in Cape Town, Pretoria, and Braamfontein, the company is making strides towards acquiring university status, following the criteria released by the Minister of Higher Education and Training. This move will enhance the credibility and status of their students' qualifications, on par with those from public universities.

The process involves significant capital investments, amounting to R419 million over two years, pending approval by the Competition Commission. Moreover, the declaration of a 38 cents per share interim dividend, up 27% from the previous year, echoes ADvTECH's robust financial health and future growth prospects.