Private education provider AdvTech is looking to ramp up its expansion to the rest of Africa as economic growth on the continent outpaces that of SA.
CEO Roy Douglas said while prospects on the continent look bright, the group which owns Pinnacle, Crawford and Trinityhouse private school brands, as well as a tertiary and a human resources business, will exercise caution and make considered investment decisions.
“The demand on the continent and the economic performance of most of the economies are better than that of SA. So we’re excited by the opportunities that Africa represents,” Douglas said.
“When one looks in Africa, there are some very obvious geographies, markets and countries that one would probably target before others. But what I can say is that we’re looking right across the continent.”
The company would probably prefer to buy an existing school, but it has built them from scratch as it did in Kenya where it built Crawford International School that opened in Nairobi in 2018.
Douglas was speaking as AdvTech released its half-year results to end-June, in which group revenue grew 16% to R3.9bn, it said “due to consistent enrolment growth in both the schools and tertiary divisions, as well as from increased business activity in the resourcing division”.
Its tertiary brands include Rosebank College and Vega.
Operating profit increased 23% to R754m thanks to what is known as operating leverage. Schools and tertiary campuses have high fixed building and maintenance costs, but once these are covered, extra pupils boost earnings substantially without radically increasing costs.
The number of new school learners grew 6% in SA and 10% in Africa, where it is seeing high demand.
Revenue in Africa, where its schools include a 3,000-learner school in Gaborone, Botswana, and two middle-class Makini schools in Kenya increased by 26% to R193m, while operating profit improved 73% to R48m.
The company increased its building capacity at Crawford International School in Kenya as it continued to experience strong demand.
ADvTech’s resourcing human resources business, which places staff in oil firms in Africa, is proving to be a growth engine, said Smalltalkdaily analyst Anthony Clark.
The African arm of the resources business increased revenue 33% to R713m and operating profit by 52% to R45m.
Douglas said he was pleased with 6% growth in new pupils in SA schools.
Rival Curro, that targets more middle-income families, reported 3% growth in new results, it said last week.
In the SA schools division, revenue increased 13% to R1.4bn and operating profit increased 20% to R282m.
Pinnacle Raslouw in Centurion opened in January 2023. The group said enrolments were well ahead of expectations.
Clark said there is good resilience in the private education sector, with a high demand for quality education.
“If you put your child in private education, it is highly unlikely to remove it unless there extenuating circumstance like emigration.”
AdvTech is joining businesses in SA in rolling out solar as the price of installing solar systems has dropped. It will be cheaper than running generators and able to supply sufficient power as schools are low users of electricity.
Douglas said: We have a lot of roof space where we can install solar panels. “If we can sell back into the grid, then that actually makes the investment.”
The group also increased its dividend slightly due to its performance and will pay out 30c a share.
In its tertiary division that includes Varsity College, revenue increased 13% to R1.5bn and operating profit grew 19% to R375m.
The operating margin increased to 25.0% from 23.8% due to cost containment measures, the group said.
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