ADvTECH is doing good business in South Africa – although it could be better, admits CEO Roy Douglas, as the company eyes growth in the rest of Africa. 

The private education, training and recruitment group on Monday delivered its interim results for the six months ending 30 June 2023, revealing healthy growth in enrolments and an increase in profit of almost a quarter.

Its operations in South Africa are doing well, but could do better if the economy was in a better place and if its tertiary colleges – which offer accredited undergraduate and postgraduate degrees – were finally allowed to call themselves “universities”.

South Africa’s private education providers are not allowed to describe themselves as universities due to key criteria that need to be amended by the higher education minister.

Strong growth

ADvTECH’s businesses include 26 brands with 152 education, training and recruitment sites in South Africa, Kenya and Botswana.

Total enrolment grew by 5.1%. 

ADvTECH’s schools division (which leads Crawford, Trinityhouse, Pinnacle, Abbotts and other schools), its tertiary unit (which operates Vega, Capsicum, Varsity College and others) and its specialist resourcing division helped drive group revenue by 16% to R3.9-billion (an increase from R3.4-billion in 2022).

Headline earnings per share, a profit measure based on operational and capital investment activities, jumped by 25% to 84.3c.

Operating profit was up 23% to R754-million, with the group operating margin improving just over a percent to 19.2%.

The group said its capital expenditure focused on increasing capacity at existing sites to meet demand, the development of a new school and a new tertiary site, acquiring equipment and enhancing business systems.

Enrolments have risen sharply in recent years. Group-wide, ADvTECH currently boasts almost 89,000 pupils and students. 

In a statement, ADvTECH noted that while the board still sees significant investment opportunities, “the consistent growth trend and continuing strong cash generation, together with a sound balance sheet and reduced borrowings, has given the board the confidence to increase the dividend at a marginally higher rate than the growth in earnings”.

As such, the board has declared an interim dividend of 30 cents per ordinary share.

Schools in South Africa saw a 6% increase in enrolments, with revenue up by 13% to R1.4-billion and operating profit up 20% to R282-million.

Pinnacle Raslouw in Centurion opened in January 2023 with enrolments “well ahead” of expectations, it said. This has necessitated bringing forward the development’s second phase.

In the rest of Africa – where the group sees significant future potential – enrolments were up 10%, although it’s off a low base as that still comprises a small part of the division. 

“We have around 62,000 [pupils] in South Africa, and in the rest of Africa, we have 8,000, so it’s about a quarter of our total schools’ division numbers, but it’s growing.”

Growth in South Africa was pleasing, he said, as the local economy has significantly underperformed and consumers are under massive pressure, but they look at Africa as offering the most growth opportunities. 

“We think growth is going to be more muted (in South Africa) than that which we can achieve in the rest of Africa. But with a nicely balanced portfolio of South African businesses that are performing well and are well-positioned in the market, we think it bodes well going forward.” 

ADvTECH’s school brands in the rest of Africa saw strong enrolment growth, with a 26% increase in revenue to R193-million and a 73% hike in operating profit to R48-million.

Gaborone International School in Botswana was performing “exceptionally well”, with strong enrolment growth and academic results. 

In Kenya, Crawford International School also saw strong demand.

In the tertiary sector, enrolments were looking good, with revenue up 13% and operating profit up 19%. 

Revenue increased by 13% to R1.5-billion and operating profit by 19% to R375-million. Operating margins increased to 25%, due to cost containment measures.

The resourcing division saw substantial growth in volume, with revenue up 33% to R713-million, but the SA unit declined slightly (by 4%) due to the disposal of the group’s 51% majority share of the Contract Accountants group in the second half of 2022. 

What’s in a name? 

ADvTECH, which also owns SA’s largest registered private higher education provider, the Independent Institute of Education, has offered degrees through its various tertiary colleges for more than a decade. 

Douglas has previously said their private degrees are accredited and registered in the same way against the same criteria by the same regulatory authorities (the SA Qualifications Authority and the Council of Higher Education) as public degrees, yet they have been prohibited from referring to their institutions as universities. 

After years-long delays in publishing the criteria and attempting to engage with the minister, ADvTECH sought a court order to compel him to do so. 

Last year, ADvTECH won its court case, forcing Minister Blade Nzimande to draft regulations in terms of the Higher Education Act by mid-August that would enable them to meet the criteria to be called a university. 

The draft regulations were published for comment in 2022 but are not yet finalised. That’s because they were “broad, bland and not very specific at all”, Douglas told Daily Maverick.

Since then, his group and South African Private Higher Education have made submissions to the department and are working with them to get the regulations formulated. 

Progress has been slow. 

“The very reason we took the minister to court was because we’ve been trying to get those criteria [published] for a number of years. We believe that our students are seriously disadvantaged because our degree qualifications are the exact equivalent of that which you can get in the public sector, but our students can’t say they went to university, which is a serious disadvantage. 

“It’s grossly unfair and an infringement of their rights, so we want to get that resolved as soon as possible. We think it will remove a massive perceptive barrier.”

The higher education ministry was contacted for comment via e-mail and WhatsApp, but failed to acknowledge messages or respond by our publication deadline. DM