ADvTECH plans 30% revenue increase

To be generated by 2020

PRIVATE education group ADvTECH has set itself a challenge of increasing its revenue generated out of South Africa to 30 percent by the year 2020.

The company said it wanted to improve the revenue from the current 6 percent it generates from outside South Africa.

Chief executive Roy Douglas yesterday said the goal was realistic and within reach.

“We are going to work hard to achieve the revenue we have set ourselves to achieve,” Douglas said. “There are risks in moving to a new territory, but we believe the rest of Africa presents us with new opportunities to grow the business.”

The company operates mostly in South Africa, but last year it branched out, acquiring a stake in a private tertiary institution, the University of Africa, in Zambia.

Strategic The company also acquired a 51 percent stake of Oxbridge Academy, adding 21 000 registered distance learning students in the process.

In the schools division, ADvTECH acquired the Summit College.

A possible strategic acquisition of Glenwood House in George and Elkanah House in Cape Town is still on the cards, subject to due diligence and Competition Commission approval.

“We have concluded a number of strategic acquisitions, both in South Africa and other African countries. We increased our schools presence in the Western Cape and grew tertiary distance education, all of which positions us well for further growth,” Douglas said.

The group reported revenue growth of 24 percent to R3.35 billion for the year to end-December, up from R2.718bn recorded during the corresponding period last year, while earnings before interest, taxation, depreciation and amortisation jumped 33 percent to R740.6 million, up from R557.9m reported in 2015.

Headline earnings

share was 39 percent higher at 71.1 cents a share as compared to 51c a share.

The board declared a fullyear dividend of 32.5c a share, up from 29.5c a share compared to 2015.

Douglas said the results showed the group was on track to reach its growth targets.

Mergence Investment Managers equity analyst Nolwandle Mthombeni said ADvTECH needed to inject more capital into the rest of its African operations in order to increase revenue streams.

Mthombeni said as the company funded its acquisitions with cash from operations and debt, it may require additional funding to fund the expansion plans. She said, however, the company would not struggle to secure funding as it had a strong balance sheet.

“If it continues to see strong growth in enrolments in South Africa, it will be difficult to reach that target,” Mthombeni said. “As it currently stands, revenues of both the schools and tertiary divisions are growing in excess of 15 percent per annum and it will be a challenge to expand that fast in the rest of the continent.”

ADvTECH shares dropped 1 percent on the JSE yesterday to close at R19.80.