ADvTECH’s shares surge after it flags expected rise in earnings
ADvTECH’S share price surged by more than 4 percent as the market welcomed the JSE-listed private education group flagging that its earnings were expected to rise as much as 35 percent for the six months to end June.
The group, which has been expanding its footprint both in South Africa and Africa, said earlier this year that the tough economic climate in South Africa was placing financial pressure on parents and emigration was also hurting its business.
Despite this, the group said in a trading statement yesterday that it expected its basic earnings per share (Eps) and headline earnings per share (Heps) to increase by between 25 percent and 35 percent during the period compared to last year.
“Earnings per share is expected to be between 42 cents a share and 45.4c, compared to 33.6c reported last year,” the group said.
However, last year’s Eps of 33.6c was restated from 34.8c as a result of the implementation of IFRS 16.
The group also said it expected its Heps to be between 42.3c and 45.6c, up from 33.8c reported last year.
ADvTECH’s Heps have also been restated from an earlier reported Heps of 35c as a result of the implementation of IFRS 16.
However, based on the previous published Eps of 34.8c and Heps of 35c, ADvTECH – which owns schools including Abbotts College, Crawford Schools, Vega, Rosebank College, Varsity College – expects an increase of between 21and 30 percent in Eps and Heps.
In the past, the group said it had consistently reported normalised earnings per share (Neps) as a way of omitting the effect of once-off transactions and corporate action costs from its results.
“In the current year, these include foreign exchange and bargain purchase gains on the acquisition of IIE MSA, insurance proceeds received in relation to the previously reported fraud event and other corporate actions costs,” the group said.
It also stated that omitting these aspects from consideration would result in Neps being between 5 and 9 percent higher than the comparative period, resulting in Neps of between 41.7c and 43.3c compared to 39.7c reported last year.
The Neps figure was also restated from 40.9c previously reported.
It acquired nine schools and five campuses, which included boarding facilities and approximately 4 100 students in both countries.
Share price of the group’s competitor, Curro Holdings, was also up by more than 4 percent yesterday afternoon. In its results presented last week, Curro reported a 7 percent increase in recurring headline earnings per share to 37.1c for the six months to end June. ADvTECH expects to release its results next week.
ADvTECH’s share closed at R11.48, while Curro closed at R21.70 on the JSE yesterday.