Education group Advtech is keeping the promises it made to stave off a takeover attempt from competitor Curro two years ago, with the group’s decision to invest more aggressively in tertiary education paying off.
The group has also rolled out various Advtech degrees that are accredited with the British accreditation council and are attracting students.
The company’s share price was up about 2% in early trade on Monday following the release of a trading statement that indicated healthy earnings growth for the year to June.
Advtech said it expected the company’s basic earnings per share and headline earnings per share to be 4% to 7% higher than for the comparative period to June 2016.
"This statement is an extremely positive piece of news. It confirms that Advtech is on track to meet the past promises the group made when Curro tried to take it over," said Vunani Securities small-cap analyst Anthony Clark.
Chris Segar, an investment manager at Ivy Asset Management, said the trading statement was pleasing.
"Since Curro tried to take over Advtech, management at Advtech has gained impetus. We are pleased at the growth in normalised earnings per share.
"Also, the group’s tertiary education business’s operating margin is growing well in a difficult cycle," Segar said.
A roll-out of distance learning at some of its institutions was also a catalyst for growth.
Advtech said in the statement its normalised earnings per share for the half-year ended June 2017 would be 20% to 25% higher than for the comparative reporting period in 2016.
Earnings per share were expected to be 38.3c to 39.9c compared with 31.9c for the comparative period.
However, the settlement of a litigation matter disclosed in the company’s 2016 integrated annual report contributed to a once-off hike in the results for the comparative period. This and other corporate action costs that were excluded from earnings per share, would weaken the return.
Earnings per share were expected to be between 37.8c and 38.8c, compared with 36.3c for the comparative period and headline earnings per share were expected to be between 38.0c and 39.1c, compared with 36.5c for the comparative period.
Clark said Advtech’s full-year results needed to detail how the two businesses, schooling and tertiary education, were performing, compared with each other. Advtech’s share price closed 1.91% higher at R17.08 on Monday.
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