BUSINESS NEWS - Private education group ADvTECH’s schools division continues to weigh on earnings, partly due to fraud uncovered within the division and lower enrolments.
The group reported a 3% decline in diluted headline earnings per share to 69.1 cents in the year ended December 31 2017, down from 71 cents previously after taking a R35.5 million hit in profit after tax due to fraud committed by a financial manager in the schools division over a three year period from 2015.
Diluted normalised headline earnings per share, which exclude the impact of the fraud, rose 20% to 75.6 cents.
The fraud, which amounted to R48.1 million, resulted in an overstatement of revenue, an understatement of costs and the theft of cash.
The cash component amounted to R5 million, of which R2 million has been ring fenced and is likely to be secured as the group proceeds with criminal charges against the former employee, said chief executive Roy Douglas.
ADvTECH has corrected its financial results reported from 2015 onwards to reflect the impact of the fraudulent activities.
Fraud aside, the schools divison was also impacted by “muted” growth in student numbers.
Total enrolments rose by 3%, well below the 10% growth rate reported in 2016, to 27 408 learners.
The worrying first half trend of enrolments at its premium brands – which include the likes of Crawford Schools, Abbots College and Trinity House – being affected by financial pressures on families as well as emigration and “semigration” continued into the second half.
Douglas explained that enrolments at natural entry points, such as grades 0 and 1 in primary school and grade 8 in high school, were in line with expectations while replacing learners at non-natural entry proved difficult.
He added that group is prioritising investments into mid-fee schools in a bid to retain learners forced to leave premium brands due financial pressures and that it is also working to improve its presence in the Western Cape in order to capitalise on semingration.
