ADVTECH LIMITED - Interim results for the six months ended 30 June 2018

Release Date: 27/08/2018 08:12
Code(s): ADH
 
Wrap Text
Interim results for the six months ended 30 June 2018

ADvTECH Limited ("ADvTECH" or "the group")
(Incorporated in the Republic of South Africa)
Registration number: 1990/001119/06
JSE code: ADH ISIN number: ZAE 0000 31035

Trading revenue up 14%
Trading operating profit up 15%
Normalised earnings per share up 8%
Interim dividend per share 15.0 cents

Interim results for the six months ended 30 June 2018

Condensed consolidated statement of profit or loss
for the six months ended 30 June 2018
                                                                                    Percentage        Unaudited       Unaudited              Audited
                                                                                     increase/      6 months to     6 months to         12 months to
R'm                                                                          Note    (decrease)    30 June 2018    30 June 2017     31 December 2017

Revenue                                                                                    13%          2 264.8         2 000.1              4 086.9

Earnings before Interest, Taxation, Depreciation and Amortisation (EBITDA)                 14%            477.1           417.7                795.4

Operating profit before interest, impairment and fair value adjustment                     13%            388.9           344.0                640.1
Impairment of intangible asset                                                                             (1.8)              -                    -
Fair value adjustment on contingent consideration                               2                         (35.1)              -                    -

Operating profit before interest                                                            2%            352.0           344.0                640.1
Net finance costs paid                                                                                    (60.7)          (41.9)               (99.1)
  
 Interest received                                                                                          1.1             2.5                  3.9
 Finance costs                                                                                            (61.8)          (44.4)              (103.0)

Profit before taxation                                                                     (4%)           291.3           302.1                541.0
Taxation                                                                                                  (95.3)          (88.7)              (161.0)

Profit for the period                                                                      (8%)           196.0           213.4                380.0

Profit for the period attributable to:
Owners of the parent                                                                                      186.4           205.8                369.3
Non-controlling interests                                                                                   9.6             7.6                 10.7

                                                                                                          196.0           213.4                380.0
Earnings per share (cents)
Basic                                                                                     (10%)            34.8            38.5                 69.1
Diluted                                                                                    (9%)            34.8            38.4                 69.0

Number of shares in issue (million)                                                                       544.4           544.4                544.4
Number of shares in issue net of treasury shares (million)                                                535.6           534.1                535.6
Weighted average number of shares for purposes of basic earnings per share (million)                      535.6           534.0                534.2
Weighted average number of shares for purposes of diluted earnings per share (million)                    536.3           536.0                535.2

Net asset value per share including treasury shares (cents)                                11%            567.8           512.3                529.0
Net asset value per share net of treasury shares (cents)                                   11%            577.1           522.2                537.7
Free operating cash flow before capex per share (cents)                                     1%            123.3           122.5                111.7
Gross dividends per share (cents)                                                           0%             15.0            15.0                 34.0


Headline and normalised earnings
for the six months ended 30 June 2018
                                                                                    Percentage        Unaudited       Unaudited              Audited
                                                                                     increase/      6 months to     6 months to         12 months to
R'm                                                                                  (decrease)    30 June 2018    30 June 2017     31 December 2017

Determination of headline earnings
 Profit for the period attributable to owners of the parent                                               186.4           205.8                369.3
 Items excluded from headline earnings per share                                                            1.2             0.1                  0.5

   (Profit)/loss on sale of property, plant and equipment                                                  (0.2)            0.2                  0.7
   Impairment of intangible asset                                                                           1.8               -                    -
   Taxation effects of adjustments                                                                         (0.4)           (0.1)                (0.2)

Headline earnings                                                                          (9%)           187.6           205.9                369.8

Headline earnings per share (cents)
Basic                                                                                      (9%)            35.0            38.6                 69.2
Diluted                                                                                    (9%)            35.0            38.4                 69.1

Determination of normalised earnings
 Headline earnings                                                                                        187.6           205.9                369.8
 Items excluded from normalised earnings per share                                                         31.5            (3.2)                35.0

   Corporate action costs (reversed)/expensed                                                              (3.6)            2.9                 12.3
   Fair value adjustment on contingent consideration                                                       35.1               -                    -
   Adjustments relating to fraud*                                                                             -            (8.0)                31.1
   Taxation effects of adjustments                                                                            -             1.9                 (8.4)

Normalised earnings                                                                         8%            219.1           202.7                404.8

Normalised earnings per share (cents)
Basic                                                                                       8%             40.9            38.0                 75.8
Diluted                                                                                     8%             40.9            37.8                 75.6

* The previously reported fraud event was accounted for in the second half of 2017 and impacts the comparative results. Normalised earnings for the
  comparative results was adjusted by re-allocating the impact of this event to the accounting periods to which it relates. The normalised profit for the
  period ending 30 June 2017 was adjusted downwards to remove the effects of the event identified for that period. The normalised profit for the year
  ending 31 December 2017 has been adjusted upwards to remove the effect of the 2015 and 2016 charges recognised in the prior year to correct the
  effects of the event.


Condensed consolidated statement of other comprehensive income
for the six months ended 30 June 2018
                                                                                  Unaudited           Unaudited               Audited
                                                                                6 months to         6 months to          12 months to
R'm                                                                            30 June 2018        30 June 2017      31 December 2017

Profit for the period                                                                 196.0               213.4                 380.0
Other comprehensive income, net of income tax
Items that may be reclassified subsequently to profit or loss
 Gain on disposal to non-controlling interest                                          15.9                   -                     -
 Exchange differences on translating foreign operations                                34.7                (0.8)                 (6.4)

Total comprehensive income for the period                                             246.6               212.6                 373.6

Total comprehensive income for the period attributable to:
Owners of the parent                                                                  232.4               205.2                 363.6
Non-controlling interests                                                              14.2                 7.4                  10.0

                                                                                      246.6               212.6                 373.6


Condensed consolidated segmental report
for the six months ended 30 June 2018
                                                                               Percentage             Unaudited            Unaudited                Audited
                                                                                increase/           6 months to          6 months to           12 months to
R'm                                                                             (decrease)         30 June 2018         30 June 2017       31 December 2017

Revenue                                                                               13%               2 264.8              2 000.1                4 086.9

 Schools                                                                              18%               1 065.3                903.8                1 866.3
 Tertiary                                                                             12%                 882.7                789.1                1 580.2
 Resourcing                                                                            4%                 321.3                308.9                  644.3
 Intra group revenue                                                                                       (4.5)                (1.7)                  (3.9)

Operating profit before interest, impairment and fair value adjustment                13%                 388.9                344.0                  640.1

 Schools                                                                               0%                 171.6                172.1                  298.9
   - Trading operating profit                                                          5%                 171.6                164.1                  330.0
   - Adjustments relating to fraud                                                                            -                  8.0                  (31.1)

 Tertiary                                                                             24%                 195.1                156.9                  321.4
 Resourcing                                                                            4%                  18.6                 17.9                   32.1
 Corporate action costs reversed/(expensed)                                                                 3.6                 (2.9)                 (12.3)

Property, plant and equipment and proprietary technology systems                      23%               3 784.9              3 080.7                3 575.9

 Schools                                                                              22%               2 880.3              2 367.2                2 727.3
 Tertiary                                                                             27%                 897.6                705.8                  841.0
 Resourcing                                                                           (9%)                  7.0                  7.7                    7.6



Condensed consolidated statement of financial position
as at 30 June 2018
                                                                                        Unaudited            Unaudited                Audited
R'm                                                                                  30 June 2018         30 June 2017       31 December 2017

Assets
Non-current assets                                                                        5 487.4              4 508.4                5 101.5

 Property, plant and equipment                                                            3 705.3              3 038.5                3 511.8
 Proprietary technology systems                                                              79.6                 42.2                   64.1
 Goodwill                                                                                 1 438.0              1 209.9                1 305.3
 Intangible assets                                                                          217.6                205.8                  208.3
 Loan receivable#                                                                            34.9                    -                      -
 Investment                                                                                  12.0                 12.0                   12.0

Current assets                                                                              642.7                551.4                  457.3

 Trade and other receivables                                                                430.7                355.4                  307.1
 Other current assets                                                                        62.5                 56.3                   40.3
 Bank balances and cash                                                                     149.5                139.7                  109.9

Total assets                                                                              6 130.1              5 059.8                5 558.8

Equity and liabilities
Equity                                                                                    3 091.2              2 789.2                2 880.1

Non-current liabilities                                                                     821.1                770.8                  900.6

 Long-term bank loans                                                                       750.0                754.8                  751.5
 Deferred taxation liabilities                                                               12.2                 16.0                  100.1
 Acquisition liabilities                                                                     58.9                    -                   49.0

Current liabilities                                                                       2 217.8              1 499.8                1 778.1

 Current portion of long-term bank loans                                                      9.9                  9.6                   12.2
 Short-term bank loan                                                                       750.0                220.0                  750.0
 Trade and other payables                                                                   428.4                370.4                  384.5
 Taxation                                                                                    87.1                 81.8                    6.3
 Fees received in advance and deposits                                                      854.4                743.5                  411.8
 Bank overdraft                                                                              88.0                 74.5                  213.3

Total liabilities                                                                         3 038.9              2 270.6                2 678.7

Total equity and liabilities                                                              6 130.1              5 059.8                5 558.8

# This loan relates to a B-BBEE trust to facilitate their indirect investment in ADvTECH Resourcing (Pty) Ltd, is interest free and repayable
  within ten years.


Condensed consolidated statement of changes in equity
for the six months ended 30 June 2018
                                                                             Unaudited           Unaudited                Audited
                                                                           6 months to         6 months to           12 months to
R'm                                                                       30 June 2018        30 June 2017       31 December 2017

Balance at beginning of the period                                             2 880.1             2 677.3                2 677.3
 Total comprehensive income for the period                                       246.6               212.6                  373.6
 Dividends declared to shareholders                                             (104.3)             (104.2)                (186.7)
 Share-based payment expense                                                       2.2                 4.2                    6.3
 Share award expense under the management share incentive scheme (MSI)             4.0                   -                    2.0
 Shares awarded under the management share incentive scheme (MSI)                    -                   -                   (4.6)
 Share options exercised                                                           0.4                   -                   13.1
 Shares to be issued for business combination                                     35.1                   -                      -
 Non-controlling interest arising on disposal of subsidiary                       19.0                   -                      -
 Non-controlling interest arising on acquisition                                   8.1                (0.7)                  (0.9)

Balance at end of the period                                                   3 091.2             2 789.2                2 880.1



Supplementary information
for the six months ended 30 June 2018
                                                                             Unaudited           Unaudited                Audited
                                                                           6 months to         6 months to           12 months to
R'm                                                                       30 June 2018        30 June 2017       31 December 2017

Capital expenditure - current period                                             269.3               245.7                  718.0

Capital commitments                                                            1 632.9             1 533.2                1 911.0

 Authorised by directors and contracted for                                      226.1               332.9                  357.5
 Authorised by directors and not yet contracted for                            1 406.8             1 200.3                1 553.5

Anticipated timing of spend                                                    1 632.9             1 533.2                1 911.0

 0 - 2 years                                                                     748.1               718.9                  627.3
 3 - 5 years                                                                     523.7               338.7                  572.1
 more than 5 years                                                               361.1               475.6                  711.6

Operating lease commitments in cash - future years                               253.7               285.8                  296.2



Condensed consolidated statement of cash flows
for the six months ended 30 June 2018
                                                                                                    Unaudited            Unaudited             Audited
                                                                                Percentage        6 months to          6 months to        12 months to
R'm                                                                     Note      increase       30 June 2018         30 June 2017    31 December 2017

Cash generated from operations                                             3           14%              485.4                424.3               811.1
Movement in working capital                                                                             335.4                360.8                48.2

Cash generated by operating activities                                                  5%              820.8                785.1               859.3
Net finance costs paid                                                                                  (60.7)               (41.9)              (99.1)
Taxation paid                                                                                          (108.1)               (97.1)             (174.6)
Dividends paid                                                                                         (104.7)              (104.1)             (186.1)

Net cash inflow from operating activities                                                               547.3                542.0               399.5

Net cash outflow from investing activities                                                             (381.0)              (350.7)             (919.2)

 Additions to property, plant and equipment                                                            (247.2)              (243.7)             (688.8)
 Additions to proprietary technology systems                                                            (22.1)                (2.0)              (29.2)
 Business combinations cash flows                                                                      (113.1)              (109.3)             (215.6)
 Proceeds on disposal of property, plant and equipment                                                    1.4                  4.3                14.4

Net cash (outflow)/inflow from financing activities                                                      (3.3)              (229.7)              312.7

 Decrease in non-current bank loans                                                                      (1.5)               (25.7)               (6.5)
 (Decrease)/increase in current bank loans                                                               (2.3)              (204.0)              306.1
 Cash movement in shares held by the Share Incentive Trust                                                0.5                    -                13.1

Net increase/(decrease) in cash and cash equivalents                                                    163.0                (38.4)             (207.0)

Cash and cash equivalents at beginning of the period                                                   (103.4)               104.0               104.0
Net foreign exchange differences on cash and cash equivalents                                             1.9                 (0.4)               (0.4)

Cash and cash equivalents at end of the period                                                           61.5                 65.2              (103.4)


Free operating cash flow before capex per share
for the six months ended 30 June 2018

                                                                                                               Unaudited         Unaudited               Audited
                                                                                              Percentage     6 months to       6 months to          12 months to
R'm                                                                                             increase    30 June 2018      30 June 2017      31 December 2017

Profit for the period                                                                                              196.0             213.4                 380.0
Adjusted for non-cash IFRS and lease adjustments (after taxation)                                                    3.8               5.9                  12.9

Net operating profit after taxation - adjusted for non-cash IFRS and lease adjustments                             199.8             219.3                 392.9
Depreciation, amortisation and impairment                                                                           90.0              73.7                 155.3
Fair value adjustment on contingent consideration                                                                   35.1                 -                     -
Other non-cash flow items (after taxation)                                                                          (0.1)              0.1                   0.5

Operating cash flow after taxation                                                                   11%           324.8             293.1                 548.7
Movement in working capital                                                                                        335.4             360.8                  48.2

Free operating cash flow before capex                                                                 1%           660.2             653.9                 596.9

Weighted average number of shares for purposes of basic earnings per share (million)                               535.6             534.0                 534.2
Free operating cash flow before capex per share (cents)                                               1%           123.3             122.5                 111.7



Notes to the condensed consolidated interim financial statements
for the six months ended 30 June 2018

1. Statement of compliance

The condensed consolidated interim financial statements are prepared in accordance with International Financial Reporting Standard, IAS 34 Interim Financial Reporting,
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council
and the requirements of the Companies Act of South Africa. The accounting policies and methods of computation applied in the preparation of these consolidated interim
financial statements are in terms of International Financial Reporting Standards and are consistent with those applied in the previous annual consolidated financial
statements.

The preparation of the condensed consolidated interim financial results for the six months ended 30 June 2018 was supervised by Didier Oesch CA(SA), the group's
financial director.

These interim results have not been audited or reviewed.

Financial instruments

The fair values of the financial assets and financial liabilities approximates its carrying amount.

Post-balance sheet events

The directors are not aware of any matter or circumstance occuring between the date of the statement of financial position and the date of this report that materially
affects the results of the group for the period ended 30 June 2018 or the financial position at that date.

2. Fair value adjustment on contingent consideration

In terms of the sale of business agreement entered into between ADvTECH Limited and the previous owners of Maramedia Proprietary Limited ("the vendors"), the
purchase consideration was to be determined based on the earnings for the year ended 31 December 2015. Initially the fair value of the contingent consideration was
determined to be nil and was disclosed as a contingent liability.


Based on an arbitration award in favour of the vendors, which is currently under appeal, R35.1 million was recognised in the six months ended 30 June 2018 as the fair value
of the contingent consideration relating to the business combination. As this adjustment falls outside of the measurement period as defined by IFRS 3, it is therefore
recognised in the current period in the consolidated condensed statement of profit and loss. The fair value was determined using the market price of 2.2 million ADvTECH
Limited shares on 30 June 2018 which may be required to settle the contingent consideration.

                                                                                         Unaudited           Unaudited               Audited
                                                                                       6 months to         6 months to          12 months to
     R'm                                                                              30 June 2018        30 June 2017      31 December 2017

3.   Note to the condensed statement of cash flows
     Reconciliation of profit before taxation to cash generated from operations
     Profit before taxation                                                                  291.3               302.1                 541.0
     Adjust for non-cash IFRS and other adjustments (before taxation)                          8.5                 6.4                  15.0
                                                                                             299.8               308.5                 556.0
     Adjusted by:                                                                            185.6               115.8                 255.1

      Depreciation, amortisation and impairment                                               90.0                73.7                 155.3
      Fair value adjustment on contingent consideration                                       35.1                   -                     -
      Net finance costs paid                                                                  60.7                41.9                  99.1
      Other non-cash flow items                                                               (0.2)                0.2                   0.7

     Cash generated from operations                                                          485.4               424.3                 811.1

4.   Business combination(1)
4.1  Makini School Limited(2)
     A 71% interest in Makini School Limited (via Schole Mauritius Limited) was acquired on 1 May 2018 for a consideration of R130.8 million.
                                                                                                                                   Unaudited
                                                                                                                                 6 months to
     R'm                                                                                                                        30 June 2018

     Fair value assets and liabilities acquired
      Intangible assets                                                                                                                 15.6
      Goodwill                                                                                                                         112.0
      Property, plant and equipment                                                                                                     11.1
      Current assets(3)                                                                                                                 55.5
      Cash and cash equivalents                                                                                                         (2.9)
      Non-current liabilities                                                                                                           (4.4)
      Current liabilities                                                                                                              (48.0)
      Non-controlling interest(4)                                                                                                       (8.1)
                                                                                                                                       130.8

     Revenue of R14.6 million and profit after taxation of R0.8 million has been included in the condensed consolidated statement of profit
     or loss.

     Revenue of R41.8 million and profit after taxation of R1.7 million would have been included in the condensed consolidated statement
     of profit or loss if the acquisition was done at the beginning of the annual reporting period.

     This acquisition was made as an addition to our schools division in line with our expansion strategy and provides access to an African
     market.

     1 The consideration paid for this business combination includes an amount which has been recognised as goodwill in relation to the
       benefit of expected synergies and expansion opportunities.
     2 The accounting for this business combination is still within the measurement period.
     3 Included in current assets are trade receivables with a fair value of R35.1 million. This equals the gross amount of contractual amounts
       receivable. There were no contractual cash flows at acquisition date that are not expected to be collected.
     4 Measured at proportionate share of net asset value.


Commentary

Overview

The directors are pleased to announce satisfactory operating interim results for the period ending 30 June 2018, with the group continuing its trend of positive operational
performance. The tertiary division once again performed exceptionally well, while the schools division increased its scale significantly, mainly through acquisitions.

The reported results for the six months to 30 June 2018 were impacted by a non-trading fair value adjustment on contingent consideration relating to the Maramedia
acquisition. The purchase consideration for this acquisition was to be determined based on the earnings for the year ended 31 December 2015. Maramedia's audited
financial statements for the 2015 year indicated that the target profit required for the additional consideration to be payable was not achieved and therefore the fair value
of the contingent consideration was determined to be nil. However, as the vendor disputed the correctness of the audited financial statements the contingent
consideration was disclosed as a contingent liability. Based on a recent arbitration award in the vendor's favour, which is currently under appeal, and in terms of IFRS 3,
R35.1 million was recognised in these interim results as the fair value of the contingent consideration relating to the business combination. As this adjustment falls outside
of the measurement period as defined by IFRS 3 it is required to be recognised in the condensed consolidated statement of profit or loss. While this adjustment has a
material impact on the reported results, it should be excluded in order to evaluate the operating performance of the group.

The condensed consolidated statement of profit or loss presented below reflects the trading results for the six months to 30 June 2018 by removing the effects of the fair
value adjustment on contingent consideration. In addition, the comparative trading results for the six months to 30 June 2017 and the 12 months to 31 December 2017
have been adjusted by removing the effects of the fraud previously reported.

Condensed consolidated statement of profit or loss from trading activities
for the six months ended 30 June 2018

                                                                                                                                                   Audited
                                                                                                       Unaudited          Unaudited           12 months to
                                                                                  Percentage         6 months to        6 months to            31 December
R'm                                                                                 increase        30 June 2018       30 June 2017#                  2017*

Trading revenue                                                                          14%             2 264.8            1 995.0                4 096.2

Earnings before Interest, Taxation, Depreciation and Amortisation (EBITDA)               14%               477.1              417.7                  826.5

Trading operating profit before interest                                                 15%               387.1              336.0                  671.2
Net finance costs paid                                                                                     (60.7)             (41.9)                 (99.1)

 Interest received                                                                                           1.1                2.5                    3.9
 Finance costs                                                                                             (61.8)             (44.4)                (103.0)

Trading profit before taxation                                                           11%               326.4              294.1                  572.1
Taxation                                                                                                   (95.3)             (86.8)                (169.5)

Trading profit for the period                                                            11%               231.1              207.3                  402.6

# Adjusted for revenue which was overstated by R5.1 million, expenses understated by R2.9 million and the taxation effect thereon of R2.0 million.
* Adjusted by removing the effects of the fraud relating to 2015 and 2016 that were accounted for in the 2017 financial results.

The strength and resilience of the group, through its diverse portfolio, has been demonstrated with trading revenue increasing by 14% to R2.3 billion (2017: R2.0 billion) and
trading operating profit by 15% to R387 million (2017: R336 million) resulting in the trading operating margin improving from 16.8% to 17.1%.

Higher average net borrowings, resulting from an acceleration in capital expenditure and the conclusion of acquisitions which increases both the scale and geographic
reach of the business, led to an increase in financing costs. Trading profit for the period increased by 11% to R231.1 million (2017: R207.3 million) while normalised earnings
per share increased to 40.9 cents (2017: 38.0 cents).

Cash generated by operating activities increased by 5% to R821 million (2017: R785 million) and enabled the investments and capex of R381 million and payment of
financing costs of R61 million, taxation of R108 million and dividends of R105 million. Trade and other receivables includes refunds due to the group following the
finalisation of adjustment accounts relating to acquisitions. The debtors' book continues to be well managed with a strong emphasis on collections while being mindful
and understanding of the consumer in this challenging economic climate.

Schools division revenue up by 18% and demand for mid-fee schools continues to grow

The schools divisional revenue increased by 18% to R1 065 million (2017: R903 million), representing 47% of group revenue, whilst trading operating profit grew by 5% to
R172 million (2017: R164 million).

This strong growth in revenue was achieved mainly as a result of acquisitions and good growth in the mid-fee sector. The challenging economic climate and unsettled
socio-political environment continues to impact on organic growth with increased levels of withdrawals owing to emigration and financial pressures. Trading profits were
impacted by costs incurred ahead of the opening in September 2018 of Crawford International School in Nairobi, Kenya, and costs relating to the new student information
system being introduced, which will benefit the division and the group in the future.

Good progress is being made in streamlining and consolidating internal processes and systems. The schools management structure has been reorganised and support
functions have been restructured and consolidated into the group shared services function, to drive efficiencies, effectiveness and improved controls. The new student
information system currently being rolled out across the entire schools division will greatly enhance our ability to track the academic progress of each student, while
providing valuable analytics to inform both academic and operational insights. All aspects of our brands and schools are also being evaluated to ensure that they are in line
with their customer value propositions.

With all of these initiatives in place, and in order to improve the return on investment, capital expenditure for the year ahead will be directed mainly towards increasing
capacity at existing sites before continuing with the roll out of new sites.

The acquisition of the Makini Schools group in Kenya, and securing of a management contract in Uganda, added nine schools, five campuses, boarding facilities and
approximately 4 100 students to the division's enrolments. This, together with the imminent opening of the Crawford International School in Nairobi, has resulted in
significant progress being made in our strategy of expanding our operations on the rest of the continent.

Tertiary division achieved excellent growth with operating profit up 24%

The tertiary division continued to show excellent growth with revenue increasing by 12% to R883 million (2017: R789 million), contributing 39% of group revenue. The
operating margin increased from 20% to 22% on the back of operational leverage from strong volume growth, resulting in operating profit increasing by 24% to R 195
million (2017: R157 million).

Three new campuses opened in 2018, including two new digitally enabled, blended learning sites of Rosebank College in Pietermaritzburg and Bloemfontein. Facilitating
expansion into the fast-growing hospitality sector, a new campus in Johannesburg combines Capsicum Culinary Studio and The Private Hotel School.

Resourcing division grows market share in a declining market

Notwithstanding the tough market conditions persisting, the resourcing division delivered a satisfactory result with both revenue and operating profit increasing by 4% to
R321 million (2017: R309 million) and R19 million (2017: R18 million) respectively.

Declaration of interim dividend no 18

The group's expansion plans to be implemented over the next few years require significant funding and therefore, the board believes it prudent to maintain the dividend.
An interim gross dividend of 15.0 cents (2017: 15.0 cents) per ordinary share has been announced in respect of the half year ended to 30 June 2018.

This is a dividend as defined in the Income Tax Act, 1962, and is payable from income reserves. The South African Dividend Taxation (DT) rate is 20%. The net amount per
share payable to shareholders who are not exempt from DT is 12.0 cents per share, while it is 15.0 cents per share to those shareholders who are exempt from DT. There are
544.4 million ordinary shares in issue. The total dividend amount payable is R82 million.

The salient dates and times applicable to the dividend referred to above are as follows:

                                                                                                              2018

Publication of declaration and finalisation information                                          Monday, 27 August
Last day to trade in order to participate in the dividend                                    Tuesday, 11 September
Trading commences ex-dividend                                                              Wednesday, 12 September
Record date                                                                                   Friday, 14 September
Payment date                                                                                  Monday, 17 September


Share certificates may not be dematerialised or rematerialised between Wednesday, 12 September 2018 and Friday, 14 September 2018, both dates inclusive.

Directorate

Jens Zimmermann was appointed as a non-executive director with effect from 24 April 2018.

Prospects

We continue to see opportunities for growth, both in South Africa and on the rest of the continent, and the group remains in a strong position to pursue its growth
strategy.

Our tertiary and resourcing divisions continue to perform well while significant change is being implemented in the schools division to drive operational efficiencies and
sharpen market focus, in order to deliver high levels of performance across the board.

On behalf of the board

Chris Boulle              Roy Douglas                       Didier Oesch
Chairman                  Chief executive officer           Group financial director

27 August 2018

Directors: CH Boulle* (Chairman), RJ Douglas (CEO), JDR Oesch (Financial), JS Chimhanzi*, BM Gourley*, JM Hofmeyr*, JD Jansen*, SC Masie*, KDM Warburton*,
J Zimmermann*, SA Zinn*
* Non-executive

Group company secretary: DM Dickson
Registered office: ADvTECH House, Inanda Greens, 54 Wierda Road West, Wierda Valley, Sandton 2196.
Transfer secretaries: Link Market Services South Africa (Pty) Ltd, Rennie House, 19 Ameshoff Street, Braamfontein 2017.
Sponsor and corporate advisors: Bridge Capital Advisors (Pty) Ltd, 50 Smits Road, Dunkeld, Randburg, 2196.

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