South Africa getting a new university soon

Crawford-owner ADvTECH reported strong interim results on Monday and announced that it is in the process of acquiring recognition as a university and looking for a suitable building to be adopted to become a university campus.

ADvTECH released its results for the six months through June 2024 on Monday, which revealed strong results for the company.

The revenue of its education division grew by 12% due to good enrolment growth in both the schools and tertiary divisions. 

However, due to the challenging operating environment in South Africa and the end of some low-margin contracts in its rest of Africa operations, resourcing revenues declined by 3%. 

ADvTECH’s resourcing division consists of brands like CA Global, Communicate Recruitment and Network Recruitment.

These factors resulted in total revenue growing by 9% to R4.27 billion for the period.

Operating profit increased by 15% to R865 million, compared to R754 million the year prior, with the education division’s operating profit increasing by 16%. 

Resourcing’s operating profit increased by 3%, notwithstanding the decline in revenue. 

The group operating margin improved to 20.2%, bolstered by the operating margin in the education divisions growing to 23.5% due to operating leverage and the company’s drive for efficiency gains. 

ADvTECH said this more than offset the additional costs incurred to enhance its offering through the introduction of additional global benchmarking measures and artificial intelligence tools to support personalised learning and student information systems.

Net finance costs increased marginally to R93 million, compared to R85 million in 2023.

The company attributed this to increased finance costs on lease liabilities resulting from several new leases being entered into or renewed. Net interest paid to banks also declined because of the lower average net borrowings in the period.

The company’s taxation rate also decreased during the period to 27.6%, as a greater proportion of the group’s profits were earned in countries with lower taxation rates than South Africa.

Earnings per share increased by 16% to 97.6 cents per share, compared to 84.4 cents in 2023.

Loss allowances decreased to R494 million, down from R549 million the year prior. This represents 49% coverage of gross trade receivables due to the more favourable ageing of the company’s book and improved collections in the tertiary division, which accounts for 82% of ADvTECH’s total loss allowance. 

Credit losses for the group increased by 6% to R126 million in the six-month period, up from R119 million in 2023.

ADvTECH showed a strong cash-generating capacity, with cash generated by operating activities increasing by 12% to R1.96 billion. 

These funds were utilised to fund capital expenditure of R278 million, the payment of finance costs of R97 million, dividends of R335 million, taxation of R221 million, the repayment of the principal portion of lease liabilities of R44 million, the repurchase of shares of R36 million and the net settlement of debt amounting to R950 million.

Net borrowings, excluding lease liabilities, reduced to R189 million – a significant decrease from R422 million the year prior.

In its results, ADvTECH said its tertiary division continues to perform well and to grow on the back of a well-established, high-quality brand portfolio that offers a comprehensive range of programmes and qualifications. 

“Our ability to provide multi-channel modes of delivery is fundamental to enhancing our value proposition for every student,” it said.

“Expansion projects at our Rosebank College Cape Town, Pretoria and Braamfontein mega campuses are currently underway.” 

“A new purpose-built campus is under construction for Vega Pretoria adjacent to Varsity College, which will be more suitable than their existing rental premises.” 

In addition, the company said it has completed expansion projects at the Varsity College Pretoria and Cape Town campuses to increase capacity to meet continued strong demand.

ADvTECH said that following the previous Minister of Higher Education and Training publishing the draft regulations in September 2022 setting out the criteria to qualify as a university, amended criteria were published in April this year. 

“We submitted our comments in May, and we now await the publishing of the gazette, which is anticipated before the end of 2024,” the company said.

“Recognition as a university will ultimately benefit our students who will rightfully be afforded the same status as their peers who obtain similarly accredited qualifications through a Public University.” 

“In this regard, we will continue to engage with the Department of Higher Education and Training to bring this to fruition.”

ADvTECH added that it is in the process of acquiring a suitable building to be adopted to become a university campus. 

“Should it be approved by the Competition Commission, it will result in a R419 million capital investment over the next two years,” it said.

ADvTECH declared an interim dividend of 38 cents per share, up 27% from the prior year’s interim dividend.