ADVTECH LIMITED — Annual Report 2020

Apr 22, 2021

ROBUST · RESILIENT · SUSTAINABLE ANNUAL INTEGRATED REPORT 2020

ABOUT THIS REPORT	1
WHO WE ARE	3
GROUP OVERVIEW	4
Highlights	4
Chairman's letter	5
Our presence in Africa	6
Operating environment	7
Business model and value creation	9
Risk management	10
STRATEGIC REVIEW	17
CEO's review	17

Leadership structures	21
Our strategy	22
Progress against strategic objectives	25
Our response to COVID-19	26

USING OUR CAPITALS TO CREATE VALUE 28

Financial capital	28
Group commercial director's report	29
Ratios and statistics	32
Five year financial review	33
Value added statement	34
Intellectual capital: academic excellenceand academic governance at our core	35
Social and relationship capital	48
Human capital	59
Manufacture and infrastructure capital	63
Natural capital	66

Contents
		GOVERNANCE OVERVIEW	68
		Board of directors	68
		Corporate governance report	69
		Remuneration committee report	80
ABOUT THIS REPORT	1	Transformation, social and ethicscommittee report	93
WHO WE ARE	3	ANNUAL FINANCIAL
GROUP OVERVIEW	4	STATEMENTS	96
Highlights	4	SHAREHOLDERS'
Chairman's letter	5	INFORMATION	164
Our presence in Africa	6	Shareholders' analysis	164
Operating environment	7	Shareholders' diary	165
Business model and value creation	9
Risk management	10
STRATEGIC REVIEW	17
CEO's review	17
Leadership structures	21
Our strategy	22
Progress against strategic objectives	25
Our response to COVID-19	26
USING OUR CAPITALS TO
CREATE VALUE	28
Financial capital	28
Group commercial director's report	29
Ratios and statistics	32
Five year financial review	33

This report is an interactive PDF. It is best viewed in Adobe Acrobat for desktop, mobile or tablet.*

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OUR KEY STAKEHOLDERS

NAVIGATION TOOLS

Read more

Students and parents Recruitment candidates Employees/independent

• Regulatory bodies and

Media financiers

SDG

Group overview

Strategic review

Using our capitals to create value

Governance overview

Annual financial statements

OUR MATERIAL MATTERS

Academic excellence

• Challenging economic conditions

Regulatory changes and bureaucratic delays

Research and development

• Prudent investment and expansion
• An effective human resource strategy

About this report

Report scope and boundary

We are pleased to present our annual integrated report for the year ended 31 December 2020. This report is our primary engagement with stakeholders and particularly aims to provide relevant information to shareholders when making investment decisions. It also provides concise material and reliable information on the group's strategy, performance, governance and prospects, while explaining our sustainable value creation.

We appreciate that we operate in a dynamic operating environment where change is the only constant and our ability to adapt to change is critical to our success. Our integrated thinking approach assists in providing this agility, in that we continuously consider various factors in executing and shaping our strategy and informing our business model. These factors include stakeholders, risks, opportunities, material matters and our capital resources. Our report structure has been amended to include a dedicated section on how we consider these factors and use our six capitals, in a balanced manner, to create stakeholder value. We believe that this improved report structure better reflects our integrated thinking. Our sustainability information has also been included in this report.

Our reporting scope and boundary incorporates our group operations (school, tertiary and resourcing) in South Africa as well as operations in the rest of Africa.

Material matters

Our material matters (shown below) are those issues that could substantially impact our ability to execute our strategic priorities and create and sustain stakeholder value in the short (one to two academic years), medium (three to five academic years) and long term (more than five years). Over time these material matters are also likely to influence stakeholders' decisions. Depending on our internal and external operating environment, the importance of these matters can increase, decrease or remain consistent.

Our approach to determining the group's material matters involves an assessment of our internal and external operating environment as well as stakeholder concerns. Internally, we consider our risks and opportunities, which are matters discussed at board and leadership operational committee level.

Externally, we examine various factors that include the economy, the regulatory and fiscal environment and our social landscape, both locally and in the rest of Africa. We also assess the impact these matters have on our six capitals and strategic objectives over time. The board of directors reviews and approves our material matters annually.

The COVID-19 pandemic, likened to a black swan event, had a material impact on our business operations and operating model in 2020.

Our response to this pandemic and the impact on our stakeholders is discussed on pages 26 to 27.

Assurance

The board, with the support of the audit and risk committee, ensures the ongoing development and improvement of our combined assurance model to provide effective and efficient assurance services and functions. The use of a combined assurance model ensures an effective control environment, supports the integrity of information used for internal decision-making by management, the board and its committees and supports the integrity of the integrated report. It is designed with the goal to effectively cover all our significant risks and material matters through a combination of assurance service providers and functions, including the board and board committees, management (executive leadership and operational management), external assurance providers (external auditors) and internal assurance providers (internal auditors, risk and compliance functions).

Report navigation

To illustrate connectivity throughout this report, we make use of various icons as depicted on the contents page and page 3 and 24. We are committed to reducing our environmental footprint and have therefore not printed any hard copy integrated reports. Our stakeholders are encouraged to view this report in an interactive PDF format available on our website at: www.advtech.co.za under the investor information tab. The complete annual financial statements and all supplementary presentations are also available on our website.

Forward-looking statements

This report may contain forward-looking statements relating to the challenges and uncertainties the organisation is likely to encounter in pursuing its strategy, as well as the potential implications for its business model and future performance. We cannot guarantee that any forwardlooking statement will materialise and, accordingly, readers are cautioned not to place undue reliance on these forward-looking statements.

Board approval

The board acknowledges its responsibility for overseeing the integrity and completeness of this annual integrated report, which has been prepared in accordance with the IIRC Framework and King IV™ code. The board is satisfied that the content of this report accurately represents the group's performance for the year under review. As a collective, the board believes that we have appropriately and diligently considered these aspects, while reflecting the group's performance and strategy accurately.

This report, together with the group's annual financial statements for the year ended 31 December 2020, was approved by the board of directors on 20 April 2021 and signed on its behalf by:

Roy Douglas Group Chief executive officer

Chris Boulle Chairman

Shareholders' information

Annual financial statements

Shareholders'

Annual financial

Governance

Using our capitals

Group

Strategic

Highlights

5% Normalised per share earnings

Final dividend per share

Group overview

Robust . Resilient . Sustainable – ADvTECH's strategy prevails

20 April 2021

Chairman's letter Chris Boulle

Our country has faced one of the most challenging years. Our ADvTECH community demonstrated focus and resilience, amid extended lockdowns and abrupt changes to how and where learning could take place, ensuring that curricula continued without the loss of a single day of learning. Standards of teaching were maintained to effect the promised delivery of academic excellence and avoid a disastrous economic impact on the bulk of our businesses.

The year 2020 is among the most extraordinary years in recent history. The effects of COVID-19 and the resulting lockdowns were unprecedented and far-reaching, with unpredictable social and economic consequences. At ADvTECH, we have focused on the safety of all our stakeholders, maintaining compliance with government directives, ensuring that our businesses are run on a prudent basis as well as ensuring that the delivery of teaching during the academic year continued. The group's swift action in the face of this pandemic has enabled us to emerge from the crisis more resilient than ever.

Strong and compassionate leadership in a time of crisis is essential. I applaud the brave and unwavering manner in which the board and senior management rallied to strategically steer the group through this turbulent time and the commitment of all of our employees, who ensured that our group was spared what could have been a more material impact on our business. It is easy, with the benefit of hindsight, to state that our businesses were not amongst those which were greatly impacted by the lockdowns but this would not have been the case without the ability to put in place and implement the necessary corrective actions. Significantly, our leadership has remained innovative and

collaborative during this time, showing immense courage and tenacity. These noteworthy attributes bode well for ADvTECH's future. To thank employees for their dedication during this crisis, the group granted an additional annual leave day.

In the South African context, COVID-19 had the effect of highlighting many of the nation's concerns around the state of our society and the numerous deep-seated social and economic disparities which exist. South Africa's economy was already precariously positioned at the start of 2020. The effects of the pandemic and the implementation of the lockdowns drove the decline deeper, increased pressure on consumers and adversely impacted our operating environment, as was the case for almost all businesses. Both lives and livelihoods have been lost during what has become a prolonged lockdown to stem the spread of COVID-19. Great uncertainty still exists regarding, inter alia, the impact of different variants of the virus, the timing of the rollout of vaccinations, and the long-term impact of widespread behavioural changes on the part of communities.

In order to help the most vulnerable, kickstart the economy and service increasing levels of sovereign debt, the South African government will be required to make numerous structural reforms. Renewed concerns were raised when it was reported that COVID-19 relief tenders had been awarded without due process, leading to delays in the delivery of critical PPE equipment, and food aid not reaching intended recipients timeously. Hopefully the public backlash will strengthen our President's hand to enable the necessary changes to be made. 2020 also saw Government taking a tougher stance on corruption with the Zondo commission into state capture gaining momentum, and 402 individuals arrested and charged (including some high-profile arrests towards the end of 2020).

The death of George Floyd in the US at the hands of the police fuelled a new wave of Black Lives Matter protests across the world. This movement was keenly felt in South Africa, and also resulted in some claims of racism raised by students from various entities including ADvTECH brands. ADvTECH responded with a dedicated initiative focussed on respect, diversity and inclusion to emphasise our anti-racism position, as well as our inclusive approach to all (see page 44).

Despite the aforementioned challenges and the unprecedented trading environment, the group was able to deliver a solid financial performance as a result of the actions taken and continues to make good progress against its strategic objectives (see page 25).

The group's ability to continue providing an attractive customer value proposition, through its portfolio of clearly defined education brands and various modes of delivery (face-to-face, online, hybrid, blended and distance), remains an important differentiating factor for the business. Thanks to previous strategic decisions, the group was well positioned to withstand much of the impact of COVID-19 and the resultant lockdowns on its operations, and transition more than 75 000 students to online tuition without a single academic day lost – a remarkable achievement. We have also been able to transition back to face-to-face learning as and when allowed with the overwhelming majority of our stakeholders appearing to prefer this approach.

In addition to the group's purpose of growing a high-quality organisation through education, training and placement, we are also committed to

enriching people's lives and futures to make a difference in our society. Students mobilised to organise meals and other initiatives for those less fortunate as outlined on www.advtech.co.za. The group also invested R216 million in corporate social initiatives that supported 501 projects (see page 79). ADvTECH also continued to make good progress in supporting the United Nations' Sustainable Development Goals (SDGs) – with SDG4 (education) being the group's most notable contribution, as outlined on page 35.

Stakeholder engagement is an essential role of the board and as a collective we are committed to, and value transparent and honest dialogue. Having only received 57.6% shareholder support for our 2019 remuneration policy, extensive engagement took place during the year to resolve shareholder concerns. As a result of these engagements, a malus and clawback policy has been introduced, as well as amendments to address the concerns of the shareholders about our long-term incentives as detailed in the remuneration report on page 80. These new provisions will be presented to shareholders for approval at the group's Annual General Meeting (AGM) on 27 May 2021. The board is confident that with these amendments, the new policy now aligns with shareholder needs.

Having reviewed the manner in which the business coped thus far with the circumstances created by the pandemic together with the strong cash generation, a sound balance sheet and satisfactory enrolments for 2021 the board has decided to resume the payment of dividends. Please refer to the commercial director's report on page 29 for more detail.

Regarding changes to the board, Mr Stafford Masie resigned from the board, and Jane Hofmeyr (chairperson of the Transformation, social and ethics committee (Tsec)) and Jens Zimmermann will be retiring by rotation and not stand for re-election at the next AGM.

I would like to thank them for their invaluable contribution and wish them well in their future endeavours.

The board would like to welcome Clive Thomson and Monde Nkosi and look forward to their contributions. We also express our appreciation to the CEO and the executive leadership in executing the group's strategy.

I would like to also extend my and the board's condolences to all employees and stakeholders within the ADvTECH group, who have lost loved ones during the past year.

To my colleagues on the board, thank you for your invaluable input, wise counsel and support throughout this particularly challenging year. I appreciate the steadfast way the board collectively confronted and addressed the group's challenges head-on in these uncertain times. I am confident that our robust leadership and dedicated employees will be able to diligently tackle the challenges and uncertainty that may await us in 2021.

And finally, thank you to all our stakeholders for their continued support and engagement. Stay safe!

Sincerely

Group overview

Strategic review

Annual financial statements

Governance overview

Using our capitals to create value

Our presence in Africa

Like many businesses, we have had to grapple with the effects of COVID-19, the economic downturn and the disruption that this has caused to our operations. But despite these challenges, ADvTECH has adapted 'business unusual' with resilience and agility.

Our brands

The brands under the ADvTECH umbrella operate independently while being fully supported by the group. This enables each brand to focus on its offerings and value propositions, such as a unique ethos, products and student learning experience, tailored to the specific target audience, community and market. The range of brands and their niche positioning enables us to provide quality education to specific markets.

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

Operating environment

Owing to its substantial capital resource commitments in previous years (particularly financial, human, intellectual and manufacturing and infrastructure capital) ADvTECH stood firm in the face of the global pandemic and the group has emerged more resilient. A sharpened focus on operational effectiveness and efficiencies also continues to yield positive results both financially and operationally.

South Africa's initial hard lockdown in response to COVID-19 had a material impact on the already struggling economy. The country's unemployment rate rose to 32.5% in the fourth quarter, which is the highest since the index began in 2008. Combined with the closure of some businesses during lockdown, the job market stagnated and severely impacted our South African resourcing division. ADvTECH understands the financial pressures on our customers and therefore decided not to increase the 2021 school fees.

During lockdown, we provided R47 million worth of financial support, which assisted 5 386 families.

As the local economy struggles to rebound from the economic shock of the pandemic, South Africa's sovereign debt continues to rise. Against a backdrop of unproductive spending and rampant corruption, struggling state-owned enterprises, particularly Eskom, continue to hamper growth. South Africa has also faced several credit ratings downgrades, and disappointing GDP growth of -7.5%.

Our strategic decision to expand our footprint into the rest of Africa allows us to continue extending our high-quality offering in growth markets outside South Africa. The response to our offering remains positive as demonstrated by our enrolment figures. However, the lockdowns in the African countries in which we operate (Kenya, Botswana) have had an impact on tuition. The Kenyan Government closed all schools from March 2020, effectively cancelling the 2020 academic year. As our Makini schools offer the National Kenyan Curriculum, they were not allowed to offer tuition, even through our well developed e-learning platforms. For this reason, they were not allowed to invoice parents for curriculum-based tuition until October 2020, when three grades were allowed to return to class-based teaching.

Through a rescheduled timetable, students are expected to complete the 2020 academic year over a three-year period until 2022. The academic year for 2023 will again commence in January 2023. This decision could affect collections, which will continue to impact Makini's profitability. It is, however, important to note that Crawford International School in Nairobi, who follows the Cambridge International Curriculum was not as materially affected.

COVID-19 highlighted again the inequality of education in South Africa. The ability of more privileged students to continue with online education, with minimal disruption, was in stark contrast to those less privileged who often lacked access to the infrastructure, electricity, bandwidth and hardware required to continue learning.

Owing to significant investment in efficient and effective systems and internal processes that were already in place, the group's transition to online learning and remote working was seamless, without any compromising of academic excellence. Furthermore, financial and psychological support for students, parents and employees was enhanced to meet their needs. Through its prudent approach, ADvTECH's schools, tertiary and resourcing divisions continue to adapt to the effects of prolonged lockdowns and business closures.

During 2020, we were able to embed and refine our safety protocols in all our schools and as a result, we were able to open our schools as planned. Our existing contingency plans are intended to support students where it is not possible for them to physically return to class-based education due to COVID-19 implications. As always, given the fluidity of the situation, we will respond appropriately to any community or national changes and requirements as they happen.

Through ADvTECH's innovative and quality delivery we continue to lead the way in the education sector. ADvTECH's innovative blended learning business model (face-to-face and online) was a core reason that we could adapt swiftly to the online learning and working environment. This education model was favourably received by the students during the pandemic. The group also assisted students with 'boot camps' (virtual catch-up sessions) at various campuses to supplement online learning. We also provided data to approximately 8 000 students in order to enable more online learning. Further innovations in 2020 included the launch of ADvTECH's Evolve Online School (see page 19) that aims to tap into the growing homeschooling and online learning market, and MindSharp which opened in 2021, a dynamic digital learning platform in our tertiary division, offering certificates in various business skills (see page 19).

The Black Lives Matter movement sparked a global movement that engaged South Africans and saw students highlight racism in institutions of learning. This movement led to ADvTECH reinforcing our groupwide commitment to anti-racism and launching our own initiative around respect, diversity and inclusion (RDI) across all schools (see pages 44 and 45). In South Africa, the scourge of gender-based violence (GBV) continued as a prominent feature in our social landscape. The Government's GBV programme and national action plan encourages a stronger, collaborative and more focused response to violence against women and children. ADvTECH's RDI campaign also aims to create awareness around this unacceptable behaviour by instilling a culture of acceptance and inclusion, regardless of race or gender.

Economic factors impacting South Africa's operating environment

Unemployment levels

(2019: 29.1%)

Key legislation and institutions impacting our operating environment

Some of the legislation impacting the group's operating environment is tabled below. Due to COVID-19, additional legislation was promulgated, largely around disaster management and health and safety protocols.

SOUTH AFRICA

South African Schools Act

South African Qualifications Authority (SAQA)

Department of Basic Education (DBE)

Provincial Departments of Education (PDEs)

Department of Higher Education and Training (DHET)

Department of Labour (DOL)

Disaster Management Act: Regulations relating to COVID-19

Occupational Health and Safety Act

Accreditation with Umalusi, Higher Education Quality Council (HEQC) of the Council of Higher Education (CHE), British Accreditation Council (BAC)

Registration of teachers with the South African Council for Educators (SACE)

BOTSWANA

Botswana regulation bodies:

Minister of Basic Education MOBE Cambridge International Assessment Authority Minister of Health and Environment Ministry of Labour and Immigration Botswana Teaching Professionals Council Act

KENYA

Kenyan Ministry of Education Kiambu County Department of Education Cambridge International Assessment Authority Kenyan National Examinations Council Kenyan Ministry of Health Kiambu County Department of Health Teachers Service Council

statements

Governance overview

Looking ahead, nobody knows what the future holds regarding the global pandemic, as countries experience second and third waves and further hard lockdowns. We believe that our tailored approach to education and investments in state-of-the-art campuses, systems and up-to-date teaching and learning methodologies, together with professional academic staff, will continue to position us well to face any uncertainty with confidence. With our track record of innovation and academic excellence, we remain focused on weathering the economic headwinds and continue to look for opportunities to overcome adversity in this challenging and uncertain operating environment.

Strategic review

to create value

Group overview

Business model and value creation

Group overview

Strategic review

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Risk management

The board oversees risk management in accordance with our strategy and the audit and risk committee assists the board in monitoring and overseeing the group's risk universe.

Risk identification and management approach

Risk management is an integrated approach that involves board, leadership operating committees and operational management. The board evaluates and agrees on the group's risk appetite and risk tolerance in pursuit of its strategic objectives.

The board delegates the responsibility of implementing and executing effective risk management to the group's leadership, in line with the risk policy and exercises ongoing oversight of risk management. Additionally, the board receives periodic independent assurance on the effectiveness of risk management from its external assurance providers.

Combined risk assurance: The three lines of defence (management, internal and external assurance providers) provide combined assurance over ADvTECH's risk universe.

Risk governance

The board has ultimate accountability for the group's risks and is supported by the audit and risk committee. Due to the interrelated function between the audit committee and the risk committee, pertaining to the oversight of financial risks, these two committees were combined into one audit and risk committee in 2020. The combined assurance model provides comfort to the board that the group's risks are subject to robust combined assurance.

The oversight, management and assurance of risk management according to a combined assurance framework enables an effective internal control environment and supports the integrity of information used for internal decision-making, strategy development and business planning within the group.

The group continues to refine its approach to governing risk to ensure that it remains effective.

Risk governance framework

Shareholders' information

Annual financial statements

Significant risks

Our risk universe has been updated to align with the current environment. Based on our risk identification process, the top 10 risks tabled below were identified as the most significant. Where possible we have identified opportunities arising from these risks, which will be considered and pursued where feasible. COVID-19 had a significant impact on our educational offering from a teaching and learning perspective. Teachers had to move swiftly to prepare lessons for effective remote learning and also had to ensure facilities were aligned to COVID-19 safety protocols upon reopening. Students had to adapt to online learning and the loss of classroom time. To assist parents and students the group provided financial assistance on a case-by-case basis and did not increase fees for 2021.

review

Group overview

Pandemics: COVID-19 (2019: 7) 1

Unpacking our risk

Current and potential pandemics can impact our business operations and change the 'normal' business approach to operations. During COVID-19 ADvTECH was able to seamlessly transition to online operations

Mitigating actions

• • Rapid deployment of an online teaching capability
• • Established an incident response team
• • Risk assessment and incident tracking
• • Compliance with state directives including closure of campuses and schools
• • Communication and information campaigns • Improvement of employees' ability to work remotely

STRATEGIC OBJECTIVE IMPACTED MATERIAL MATTERS

• Excellence through specialisation
• Academic excellence
• Customer focus
• Growth
• Capital productivity
• Human capital productivity

face of disaster and lockdown constraints

Educational productivity

Opportunity

Level of control: High

Board committee: Board

Key stakeholders impacted:

• Students, parents, employees, independent contractors, suppliers, shareholders and community

• • Implementation of World Health Organisation (WHO) and National Institute for Communicable Diseases (NICD) protocols

• • Non-essential capex, operational costs, recruitment and dividend placed on hold

• • Financial impact analysis in place to support business decision making

• • Launched Evolve Online School as a comprehensive online schooling programme

• • Launched MindSharp as a tertiary offering

• Challenging economic conditions

• Academic excellence

Showcasing our readiness to offer online learning to maintain academic excellence in the

• Research and development
• Prudent investment and expansion

View our material matters which are also impacted by this risk

Economic climate/student enrolments (2019: 3) 2

Unpacking our risk

Continual deterioration of the economic climate preventing us from achieving strategic growth objectives

Level of control: High

Board committee: Board

Key stakeholders impacted: Investors and shareholders, employees/ independent contractors, recruitment

candidates and clients, students and parents

Mitigating actions

• • There is continual review of expenses and efficient use of capex and investments to maximise returns
• • Internal covenants for borrowings have been set at a more stringent level than they have been granted by the bank
• • Fees are being reviewed in line with effectiveness and efficiency models

STRATEGIC OBJECTIVE IMPACTED MATERIAL MATTERS

Growth Capital productivity

• • Investments into better performing economies in the rest of Africa are being prioritised

• • Non-essential capex, operational costs and new hires have been placed on hold

• • Salary and fee increases on hold

• Challenging economic conditions

• Prudent investment and expansion

• Research and development

View our material matters which are also impacted by this risk

Opportunity

• Rollout of our mid-fee brand
• Exploring investment opportunities in the rest of Africa
• Driving efficiencies to be able to deliver value to our customers

Group overview

Shareholders' information

Annual financial statements

• Using our capitals
• overview

Regulatory environment flux, uncertainty and bureaucratic process (2019: 1) 3 4

Unpacking our risk

Ideology impacting on education and our accreditation together with additional COVID-19 legislation implemented, necessitating additional controls

Level of control: High

Board committee: Audit and risk

Key stakeholders impacted:

Regulatory bodies and government, investors and shareholders, students and parents, employees/independent contractors, community and environment

Mitigating actions

• Continual review of current and new requirements to ensure compliance and focusing on building relationships with regulators

STRATEGIC OBJECTIVE IMPACTED MATERIAL MATTERS

• Educational productivity
• Academic excellence

• Focus on accreditation, both locally and internationally and maintaining accreditation audits

• Academic excellence • Challenging economic conditions
  • View our material matters which are also impacted by this risk

Opportunity

Identifying optimal processes and continuously streamlining efficiencies and proactive regulatory engagement

	Increasing competition
(2019: 2)

Unpacking our risk

Increased competition from private education providers and/or public colleges and schools. Challenges in the public landscape

Mitigating actions

• • Continuously improving operational excellence and customer focus
• • Exploring new markets (both segments and geographies)
• • Research and development of relevant technological and operational innovation
• • Robust and detailed evaluations precede any investments made

• Academic excellence

made where appropriate

Level of control: Medium Board committee: Audit and risk Key stakeholders impacted:

and community

Regulatory bodies and government, investors and shareholders, students and parents, employees/independent contractors

• The brand product and value proposition strategy are continuously reviewed • Student acquisition and retention initiatives are continuously reviewed • Competitive offerings are continually reviewed and acquisition propositions are

• Research and development
• Challenging economic conditions
• Regulatory changes and bureaucratic delays

View our material matters which are also impacted by this risk

Opportunity

New brand and product offerings e.g. Evolve Online School

Data privacy, leak of sensitive information and cyber security (2019: 5)

Unpacking our risk

5

Complex regulatory environments impacting on IT systems and data, including the Electronic and Communication Transaction Act and the Protection of Personal Information Act (POPIA); complexity of IT systems, infrastructure, and services; intentional user malfeasance; unintentional user error; hacking or infiltration by third parties

Mitigating actions

• • Resilient technology solutions in place
• • Business continuity including an IT disaster recovery plan is in place and all hard drives on laptops and information in transit are encrypted
• • IT security incident process in place

Growth

• Appointed a service provider to assist with POPIA implementation

Academic excellence

Customer focus

• STRATEGIC OBJECTIVE IMPACTED
• • Relevant policies in place (IT security policy, data privacy policy)
• • IT security framework in place and independently tested

Level of control: Medium Board committee: Audit and risk Key stakeholders impacted: Regulatory bodies and government, investors and shareholders, students and parents, employees/independent contractors and community

• Security awareness programmes in place

MATERIAL MATTERS

• Academic excellence • Research and development • Regulatory changes and bureaucratic delays

View our material matters which are also impacted by this risk

6 Return on investments (2019: 4)

Unpacking our risk

Risk of investments not performing to objectives/ expectations

Level of control: High

Board committee: Investment

Key stakeholders impacted: Investors and shareholders

Mitigating actions

• • Careful due diligence is undertaken in respect of the ongoing operations and new acquisitions through market research and financial modelling
• • Integration plans and teams are in place to optimise the integration of acquisitions into the business
• • Post investment analysis (consisting of corrective actions and lessons learnt) are undertaken by the investment committee
• • Optimising the capacity of all our sites

Opportunity

• Allocation of funds to projects that maximise return on funds at the lowest risk
• Ensure synergies are derived from acquisitions

Group overview

Strategic review

Opportunity

Robust systems to ensure a positive reputation in the market

Managing human rights and dignity (2019: new) 7 8 Transformation (2019: 6)

Unpacking our risk

Ensuring that students, parents, employees and all other stakeholders are not discriminated against, including discrimination on the grounds of race, gender or sexual orientation, among others. Additionally, that students are proactively protected against abuse and bullying, and also by acting immediately once informed of infringements by way of decisive action.

Level of control: Medium

Board committee: Board and Tsec

Key stakeholders impacted: Students and parents, employees/ independent contractors

• Various policies in place such as the sexual harassment policy and social media policy

RDI programme see page 44

View our material matters which are also impacted by this risk

• A respect, diversity and inclusion

programme in place

Mitigating actions

• • Regulatory and legal compliance frameworks have been identified and are communicated groupwide
• • Group fraud hotline/ethics hotline is in place and a business code of conduct has been implemented and is being consolidated

STRATEGIC OBJECTIVE IMPACTED MATERIAL MATTERS

Academic excellence

Opportunity

Our reputation in this regard can make our value proposition more compelling

Unpacking our risk

The risk of not being sufficiently transformed impacts on our ability to source and retain business

• Level of control: Medium
• Board committee: Tsec
• Key stakeholders impacted: Investors and shareholders, employees, recruitment candidates and clients,
• students and parents

Mitigating actions

• • Opportunities for employment equity candidates are reviewed continuously in line with the businesses to maximise the B-BBEE rating
• • Key focus areas are currently included and measured as part of KPIs at executive and management level
• • External consultants have been retained to provide expert advice on improving the B-BBEE rating

STRATEGIC OBJECTIVE IMPACTED MATERIAL MATTERS

Human capital productivity

• An effective human resource strategy

Growth

• • View our material matters which are also impacted by this risk

Opportunity

• Growth
• Employer of choice

Governance overview

Using our capitals to create value

Group overview

9 Certification fraud (2019: new)

Unpacking our risk

Reputational damage caused by a member of staff issuing a certificate fraudulently or erroneously or somebody obtaining a certificate fraudulently or erroneously

Level of control: Medium Board committee: Audit and risk

Key stakeholders impacted: Investors and shareholders, employees, students and parents

Mitigating actions

• • Accurate and secure records of graduates and high levels of co-operation with those requesting verification are being maintained
• • A zero-tolerance approach has been widely communicated and implemented for both students and staff
• • Communication about security features of certificates has been circulated
• • A new student system with improved automated verification system is being sourced and implemented

Opportunity

Positive reputation in the academic market to encourage

Unpacking our risk
Breakdown in internal control systems and	Level of control: Medium
procedures that result in significantinternal fraud	Board committee: Audit and risk
	Key stakeholders impacted:Employees, independent contractors,regulatory bodies and government, investorsand shareholders, students and parents
Mitigating actions
•Internal control processes, includingsegregation of duties, are in place groupwide•Internal audit and peer review processeshave been rolled out across the business andsignificant internal audit findings areregularly tracked and actioned bymanagement	•Qualified and competent financial personnelin key financial positions•A code of ethics and behavioural standards inplace for all employees•External audit review of internal controls andprocesses•Effective controls in automated systems
STRATEGIC OBJECTIVE IMPACTED	MATERIAL MATTERS
Capital productivity	•Growth

students to study through ADvTECH The audit and risk committee has monitored compliance with the risk appetite of the group and is satisfied that the group has, in all material respects, complied with the policy during the year under review.

The audit and risk committee further confirms that there were no undue, unexpected or unusual risks taken outside of the agreed risk tolerance levels. Looking ahead, we will continue to improve our risk management frameworks and processes to ensure increased accountability across all our operations to track the group's performance against our strategy.

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

CEO's review

Roy Douglas 20 April 2021

Executive overview

ADvTECH delivered a strong set of results in the 2020 financial year despite tumultuous conditions caused by the global pandemic and the knock-on effects on the economy.

It provided us with an opportunity to 'stress test' the business. ADvTECH came through with flying colours and showed the resilience of the business model and our ability to respond quickly and creatively to the challenges of 2020.

At the core of this accomplishment is the enormous capacity and capability of the group, particularly, the quality of our people, a testimony to the commitment, dedication and hard work from everybody associated with our organisation and reflected in the commendable financial and academic results we have delivered.

Demand for private education continues to grow and this demand, together with the soundness of our balance sheet and our strong cash generating capability, underpins our confidence in the business.

At the heart of our strategy is our commitment to academic excellence and sustaining our high-quality offering. Contributing to the standard of the education we offer were the investments in technology and processes in the past few years. These placed the organisation in a solid position to respond rapidly to the new set of circumstances that presented themselves in 2020.

The catalyst was our central academic team, supported by IT and other departments, who pulled out all the stops to migrate our educational offering onto an online platform in record time. Similarly, our teachers, lecturers and students collaborated and adapted impressively to complete the academic year in line with our expected standards of excellence.

We extend our gratitude to the entire business and all those who played such an important part to enable us to deliver such good results, under the circumstances, both academic and financial.

At the onset of the pandemic we set three priorities and these provided us with the clear focus on which we shaped our decisions, namely:

safety and well-being of our students, employees and stakeholders;

continuing the academic offering for all students and minimising the economic impact on all stakeholders; and

ensuring sustainability of our business through cash preservation and careful balance sheet management.

The safety and well-being of our people. Adherence to international best practice, careful planning and rapid implementation of world-class safety protocols across all 157 sites in the group, meant the COVID-19 infection rate in South African sites by year-end was contained to 0.4%, below the national average of 1.8%. This was a significant undertaking well executed, given the diverse locations.

We have always described ADvTECH as the epitome of a people's business. Our intellectual capital lies with our employees. In our South African education divisions we were able to keep everybody on full pay and paid increases and bonuses in April 2020 when they were due.

Unfortunately, our resourcing division was severely impacted because of the nature of the placement business in South Africa. We took action to preserve the business, but retrenchments and salary reductions were carried out as fairly and equitably as possible.

We provided additional physical, mental and financial support to all employees and particularly teachers. This included an employee wellness programme, pastoral care for our students and guidance for our parents, along with various policy updates and alignment.

Please read more about our social and relationship capital from page 48 to 58

Continuity in providing our quality academic offering. We did our utmost to ensure the smooth delivery of our academic

offering with the least disruption to our students' education. We transitioned 75 000 students from a face-to-face teaching to a full online platform within three weeks. The calendar was delayed, but not a single academic day was lost.

The advantage of the ADvTECH model is that we were able to draw on the expertise, knowledge, systems and processes already available in our tertiary business and, through our central academic team, to implement those rapidly throughout our schools business, including training and development.

Besides the swift transition, it was the scope of the programme we offered that set us apart from other organisations. We followed a holistic approach that went beyond the lesson plan and included psychological support, education support, support for parents, counselling and guidance.

Our people did an excellent job and the results are proven by our students' achievements.

Please read more about our central academic team and our students results on page 35 to 47

Sustainability of our business through cash preservation and careful balance sheet management.

In order protect the business to ensure ADvTECH would survive during the pandemic period, we limited spending to only what was essential, but continue to do whatever is necessary to support and sustain the business.

We have focused on preserving a healthy balance sheet, with net borrowings being well within our covenants. The cash preservation measures included not declaring dividends and curbing non-essential capital and operating costs. These interventions allowed the group to reduce net borrowings by R0.5 billion to R2.1 billion at 31 December 2020 (2019: R2.6 billion) and demonstrates the inherent cash generating ability of our business model. Cash generated by operating activities increased by 21% to R1.3 billion (2019: R1.1 billion).

ADvTECH's strong cash generating features contributed significantly to the commendable results.

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

CEO's report continued

We realised the economic impact would be significant, so we took whatever action we deemed necessary to protect the business and to minimise the effects on our employees and stakeholders by supporting them in a number of ways.

To mitigate the impact on parents and fee payers, reduce academic disruption and sustain the viability of the group, we introduced a case-by-case financial support programme and some R47 million was provided as assistance to 5 386 families.

Sound financial performance

Under the circumstances, ADvTECH delivered a sound financial performance. Group revenue grew by 8% to R5.5 billion (2019: R5.1 billion) for the year to 31 December 2020, despite the withdrawal of some students mainly at pre-primary phase, Makini being unable to recognise revenue for a large part of the year because of a government directive, our inability to provide boarding, aftercare and extramural activities, and the loss of revenue in resourcing South Africa.

Operating profit grew by 5% to R910 million (2019: R869 million) but was tempered by an increase in loss allowance and bad debts written off amounting to R264 million (2019: R136 million). The lower net financing costs in the year contributed to normalised earnings for the period increasing by 6% to R486 million (2019: R459 million) while normalised earnings per share increased by 5% to 89.8 cents (2019: 85.2 cents) per share.

We see good growth opportunities in South Africa and on the continent, but we can also be flexible in our capex allocation. Thus, we pulled back from the budgeted capex of R630 million to R300 million by focusing only on what was essential and on what would assist the business, to deliver on its academic promise.

Further detail on ADvTECH's financial performance is outlined in the financial capital section from pages 28 to 34

Segmental overview – revenue and operating profit.

* Resourcing division contributed R2.7 million in operating profit

Consolidation and standardisation

Having doubled our enrolment numbers through both organic growth and acquisitions in the past five years, ADvTECH has focused on a period of consolidating and standardising the different systems that we had and inherited during this period of sustained growth.

Several disparate and diverse activities were centralised under group shared services, including the consolidation of bank accounts and transactional finance to obviate site-specific financial administration.

On the academic front we combined the expertise and systems from our tertiary division and leveraged them across both education divisions to ensure the stability of our academic offering. We believe that this ability is a significant competitive advantage for us, both now and in the future.

Brand management at the schools helped to deliver on the objectives and to manage such a decentralised business at a time when leadership direction and change management was critical. We had the right skills where they were needed.

This was all in place prior to the pandemic and stood us in good stead to enable ADvTECH to deliver a flexible and rapid response in changed conditions.

Our strategy is clear and simple and allows us to focus on what we have singled out as the most important issues and where our priorities and focus need to be.

At the heart is our commitment to academic excellence – we believe that underpins everything we do. Continuing to deliver a top-quality product builds our reputation: this is vital to an education business.

Private education is expensive and to ensure that the value equation works for the consumer, we are giving increased focus to educational productivity and human capital productivity.

Governance

Using our capitals to create value

We are investing a significant amount of time in developing a truly customer-centric approach to ensure that especially in this tough market, we make it easy for people to do business with us. Our customers are investing their hard-earned money in our education offering and the key is to be responsive to their requirements, optimise how we interact with our parents and students and determine how we can provide the best possible service.

Read more about our strategic objectives on page 23

This includes focus on the value proposition so that brands are targeted at meaningful, viable consumer segments and that they fulfil their brand promise. We have repositioned some of our entities to meet those customer needs more specifically and ensure they are supported with effective and efficient systems and operations.

In the past five years we have improved market and value propositions as follows:

Consolidated transaction processing;

Invested in specific brand management teams, each with their own managing director, academic, financial, marketing and HR managers. Improved management skills and resources supported by the central academic team;

A new student information system; and

Introduced education productivity ratio targets and best-practice benchmarking and measure all our institutions against those to ensure they adhere to those targets.

In line with innovative product development we launched two new brands, Evolve Online School and MindSharp at the tertiary level.

The South African schools division experienced revenue growth of 5% to R2.1 billion (2019: R2.0 billion) with operating profit up 6% to R379 million (2019: R358 million) and operating margins improving from 17.7% to 17.9%. for the period under review.

Schools enrolments: end February

Enrolments	Feb 2017	Feb 2018	Feb 2019	Feb 2020	Feb 2021	% Increase
Schools: South Africa	24 763	25 443	25 448	26 393	27 334	4%
Schools: Rest of Africa	1 950	1 965	5 379	5 977	6 569	10%
Total	26 713	27 408	30 827	32 370	33 903	5%

We will continue to sharpen our brand value propositions and to have a balanced, targeted suite of offerings that cater to consumer market segments. Our portfolio of clearly defined school brands and segments has offerings to meet each of those requirements.

We experienced encouraging growth in all three school campuses we opened in January 2020: Pinnacle Linden (mid-fee); Pinnacle Waterfall (mid-fee); and Trinityhouse Glenvista (premium-fee). Maragon Ruimsig was repositioned as Crawford International. Two underperforming premium-fee school campuses, Trinityhouse North Riding and Trinityhouse Palm Lakes, were closed. Where possible, employees and the 200 students affected were absorbed into our nearby schools. The Abbotts College fee-reduction pilot programme in Centurion continued to work well and has been rolled out to other Abbotts Colleges in 2021.The Bridge High School was established in 2021 to extend our learning assisted brand offering from the preparatory school level, owing to demand.

An innovative product, Evolve Online School opened in January 2021 and already has 447 enrolments. An MITdeveloped programme, offers a world class home-schooling experience and gives parents an alternative to class based quality education. It is unique and provides more than a 'paper-behind-glass' learning experience. Students are placed within subjects according to their abilities, which tailors the learning experience to the specific needs of each student.

Schools division Schools rest of Africa

The pandemic affected our rest of Africa operations to a greater extent than our South African schools. The primary source of the impact was the regulated closure of Makini Schools. The decrease in revenue of 4% to R197 million (2019: R204 million) was due to Makini being unable to invoice fees for term two and most of term three, following a directive issued by the Kenyan government to defer the school year.

The Kenyan government abandoned the entire academic year (for the national Kenyan curriculum schools) and stopped all schools from having students on site until 2021. Consequently, we moved to online learning. Owing to Crawford International School offering the Cambridge International Curriculum, it successfully completed the academic year in July 2020. Crawford International School, which is now in its second year of operation, reported a significantly reduced operating loss as it progressed through the J-curve.

To mitigate the impact of the government directive, Makini schools responded by designing an alternative e-learning curriculum to support students, while also managing to keep costs as low as possible. It further launched, in parallel with the national Kenyan curriculum, the option of signing up for the Cambridge International Curriculum from September 2020. This yielded positive results and the programme currently has 256 enrolments.

Gaborone International School continued to perform well and proceeded with online tuition during Botswana's three separate periods of lock down.

We continue to build scale as seen by a 10% increase in enrolments in 2021 and anticipate a much-improved financial performance in 2021, underscoring the viability of our investments on the continent.

Shareholders' information

Annual financial statements

Governance overview

Strategic review

Group overview

Using our capitals to create value

Tertiary division/ "Private University"

The division sustained its performance with strong enrolments at the beginning of 2020, achieving a 13% growth in student numbers. Revenue increased by 9% to R2.3 billion (2019: R2.1 billion) and operating profit, despite having been impacted by a higher level of loss allowances, also increased by 9% to R538 million (2019: R496 million). The operating margin remained unchanged at 23%.

In South Africa, only two thirds of students could return to campus after lockdown. The balance continued online. The division negotiated reduced-fee data bundles for students and reassessed the delivery model across all our campuses, introducing more online and blended learning options. Our dedicated online platforms continued to grow with distance online education revenue increasing by R18 million, reaffirming our capacity to deliver regardless of mode of delivery.

Oxbridge Academy implemented greater student support to allow continued access to education. The traditional 'print-and-post' was supplemented by an electronic portal for students to download their study material. This was well received by students and has enabled the brand to broaden its reach, offering courses in Ghana, Zambia and Kenya.

The IIE is a formidable asset with its 16-year track record and offering 204 accredited courses. The Private Hotel School has been incorporated into the IIE and rebranded as the IIE School of Hospitality and Service Management.

Aside from face-to-face, we have capability in all other modes of delivery. We deliver at, any place, any time and in any methodology of the students' choosing, including distance learning and online access.

The tertiary first year enrolment cycle has been unavoidably affected by the delayed release of matric results and therefore the group is not able to provide comparative numbers at this stage. However, target for roll-over students has been achieved.

The tertiary first year enrolment cycle has been unavoidably affected by the delayed release of matric results and therefore the group is not able to provide comparative numbers at this stage. However, target for roll-over students has been achieved.

MindSharp is a dynamic digital learning platform and was launched to upskill individuals and corporate teams.

Resourcing division

The strategy to expand into the rest of Africa allowed the resourcing division to remain profitable. During the hard lockdown in April and May, hiring activity came to a complete standstill. We saw some recovery from June onwards but hiring sentiment remained low. In contrast, operations in the rest of Africa delivered growth, increasing revenue by 39% to R665 million (2019: R478 million) and operating profit by 42% to R21 million (2019: R15 million).

In South Africa, revenue decreased by 30% to R183 million (2019: R263 million). To mitigate the impact of the lower revenue and minimise the operating loss, strategies to reduce costs unfortunately required salary cuts, temporary layoffs and retrenchments within the division. The cuts were implemented across the board on a graduated basis to lessen the impact on the lower earning level employees. Rental discounts and deferments were also obtained from landlords, savings achieved on certain large supplier contracts and marketing activities were halted.

Prospects

Looking forward, the enormous capacity and capability we believed we had within the group was confirmed by the testing circumstances of 2020 and will provide the springboard for ADvTECH to progress from this new level in the coming year.

Our asset base is significant and we need to ensure those assets are generating high levels of return. If we do these things well, the growth opportunities are certainly there.

We expect the socio- and macro-economic environment to remain subdued in South Africa and a continued level of uncertainty owing to the impact of COVID-19. We continue to put new ideas in place to ensure that the business is solid and that ADvTECH is well positioned to be able to weather conditions in the foreseeable future.

It is critical that we continue to align and optimise our customer service levels and marketing activity for each brand and campus.

Given the financial pressures on consumers and a contraction in the economy, we did not increase school fees for 2021 and increased tertiary fees only marginally. Therefore it is vital that we continue to work on cost savings and productivity gains.

We remain confident that we will be able to manage an uncertain future given:

• The ongoing demand for quality education in South Africa and the rest of Africa;
• Our ability to implement flexible delivery models rapidly to maintain academic excellence;

Our continued focus on restructuring and rationalisation to drive operational efficiencies; and

Our ability to consistently deliver on our customer value proposition across all brands.

To ADvTECH employees and stakeholders, a very sincere word of thanks to everybody within our organisation during this past year for their commitment, flexibility to adapt in record time and their willingness to put in the extra effort.

Our commitment to excellence is fundamental to the growth of our business.

Roy Douglas Group CEO

20 April 2021

Strategic review

Group overview

The ADvTECH group's strategic imperatives require a leadership structure which will optimise decision-making and the implementation of strategic and operational initiatives. Each of the three divisions, schools, tertiary and resourcing as well as the centralised group support services, are governed by an operating committee and includes key decision makers and relevant stakeholders.

This ensures the use of their skills and knowledge to directly influence and contribute to the success and development of the brands and the growth of the division while group support services provides back office support and efficient transaction processing. Each operating committee benefits from executives with a broad range of experience and skills covering various disciplines (tabled alongside).

Our strategy

Academic excellence is at the very heart of our strategy and central to value creation. We pride ourselves in being South Africa's leading private education provider and a continental leader in quality education, training, skills development and placement. This is achieved through our three business divisions: schools, tertiary and resourcing, all of which are underpinned by our purpose and values.

The group successfully implemented its strategy to ensure sustainability of the business. Our ability to adapt to the global COVID-19 crisis with speed and agility is testament to the robust and resilient nature of the group's structures in place and significant investment in IT solutions. This is all underpinned by an academic body with substance and gravitas.

Shareholders' information

Annual financial statements

Governance overview

Strategic review

Group overview

Using our capitals to create value

Our strategic objectives

Our commitment to excellence is fundamental to the growth of our business. Students, parents, alumni, new and existing clients and all our other stakeholders rely on our ability to stay at the forefront of developments in education, training and placement. This commitment was evident during lockdown as we were able to act quickly to seamlessly transition our business to an online mode, with minimal disruption to our students, parents and customers.

Our strategic objectives depicted alongside (academic excellence growth; excellence through specialisation; customer focus; growth; educational productivity; human capital productivity and capital productivity) are the building blocks upon which we focus to achieve the group's strategy.

These strategic objectives are influenced by our internal (risks and opportunities and material matters), and external (regulation and socioeconomic environment) operating environment as well as our key stakeholders. These objectives are core to guiding our business and require ongoing innovation and data insights to maintain our respected reputation. They also ensure that we differentiate ourselves in the academic marketplace to attract and retain customers.

Progress against our strategic objectives is shown on page 25

Shareholders' information

Annual financial statements

Governance overview

Strategic review

Group overview

Using our capitals to create value

Material matters

Our material matters are those issues that could substantially impact the group's ability to execute our strategic objectives and create value for our stakeholders over time. The material matters tabled below have been identified and are discussed throughout the annual integrated report. Due to the severity of COVID-19, all our material matters were impacted by this global pandemic.

Challenging economic conditions

could adversely affect enrolment rates, and thus the rate at which we are able to execute our growth strategy.

Prudent investment and expansion

activities remains a short- and long-term focus. Our growth strategy includes expansion through organic growth, acquisitions and greenfield projects.

Our key stakeholders

Our key stakeholders are individuals, groups or organisations who contribute to and who benefitted from and who are, or could be, impacted by the group's activities, products or services. They hold us accountable for our activities.

The key stakeholder groups with which we interact regularly as well as their roles are depicted below and comprehensively discussed under our social and relationship capital section on page 48 to 58

Studentsand parents	Recruitmentcandidates and clients			Employees/independentcontractors
Investors, financiersand shareholders		Community		Regulatory bodiesand government
Alumni		Media

Research and development of

academically sound methods and processes is critical to ensuring every student and job candidate has the best chance at success. We invest significant resources into research and development.

Regulatory changes and bureaucratic

Academic excellence remains central to our value proposition and sets us apart from other academic institutions. It remains the fundamental reason why parents choose an ADvTECH school or tertiary institution for their child's

education.

An effective human resource strategy ensures business continuity and positive societal impact. With the correct development interventions, our employee complement will accurately represent the diverse communities we serve. Transformation and succession planning initiatives enable us to attract, develop and retain the best talent. We need to ensure that our employee complement is appropriately skilled and available to fill vacancies

caused by attrition or expansion.

delays could impact our ability to obtain licensing and accreditation approval, thereby affecting our expansion strategy.

Our capital enablers

Our capital resources are interlinked in value creation. We appreciate the need to balance the trade-offs between the deployment of our capitals to ensure the future sustainability of our business. Each capital resource is expanded on in this report in dedicated capital sections.

Human capital

Manufactured and infrastructure capital

Go to page 66

Integrating sustainable development goals

As part of our commitment to integrated sustainability management, we embrace the 17 UN Sustainable Development Goals (SDGs) by aligning our business and brands to them. To achieve maximum impact, we focus on the SDGs depicted below, with SDG4 Education being the goal where we have the most material impact.

How we action strategic objectives

HUMAN CAPITAL PRODUCTIVITY

Skills development

• Empowering employees with skills relevant to their current roles and future career aspirations

Employee value proposition

• Creating conditions to attract critical skills and retain high-performing employees

Progress in 2020

Skills development

• • R11 million (2019: R21 million) invested in employee training and development
• • 57 (2019: 184) employees participated in development programmes
• • Continued professional development for academic staff

Employee value proposition

• • Comprehensive employee wellness programme
• • Annual performance-based increases and bonuses awarded
• • Launched the respect, diversity and inclusion programme to reinforce our diverse culture

Progress in 2020

Schools

• • Excellent matric results 99.7% IEB pass rate
• • Not a single academic day lost during lockdown
• • Crawford South Africa relaunched as Crawford International • Makini Schools Kenya expanded offering, now includes
• Cambridge International Curricular option

Tertiary

• • 137 DHET accredited IIE courses (2019: 127)
• • 204 tertiary courses in total (2019: 197)
• • 82% (2019: 85%) average module pass rates (excluding supplementary exam results)
• • 38% (2019: 26%) average module distinction rate (excluding supplementary exam results)
• • IIE Vega launched the first PHD in Brand Leadership
• • 31 361 (2019: 25 172) total IIE graduates for the last five years
• • Incorporated the Private Hotel School under the IIE, and is now known as the IIE School of Hospitality and Service Management

Graduate placements

• • 18 021 students placed in employment since 2013
• • Varsity College, IIE MSA and Rosebank College career centres placed 1 174 students in jobs during 2020 (2019: 2 414)

objectives

best returns

Progress in 2020

these assets

& North-Riding)

How we action strategic

• Identifying the most appropriate investment opportunities and leveraging the associated benefits • Protecting and enhancing the respective assets for the

CAPITAL PRODUCTIVITY

• Redirected investment to existing facilities to improve the return on

• Closed two underperforming Trinityhouse campuses (Palm Lakes

• Capex plans reassessed given the uncertainty of COVID-19 – capex spend of R308 million (2019: R681 million)

Actively ensuring that our academic offerings have 'real world' application and that students are immediately

ACADEMIC EXCELLENCE

How we action strategic

• Remaining up to date with developments in pedagogy and supporting tools, including

• Implementing solutions that will drive improved academic

objectives

technology

performance • Continuously measuring performance through internal and external benchmarking • Using learning analytics to enable responsiveness and goal setting • Seeking international and employer recognition for our institutions, programmes and graduates Graduate placement

employable

How we action strategic objectives

CUSTOMER FOCUS

• Proactively seeking to understand and enhance customer learning experience requirements and striving to simplify their business interactions with us

Progress in 2020

• • Invested R216 million in bursaries (2019: R194 million)
• • R47 million financial assistance to 5 386 families
• • Streamlined online academic offering with additional IT support
• • Implemented over 30 IT projects with a particular focus on customer service
• • Integrated our student information system via all websites to improve the customer

• experience

segments to enter

How we action strategic objectives

• Optimise organisational processes and structures

Progress in 2020

Progress in 2020

• Group shared services (GSS) function continued to streamline business processes – finance, HR and payroll all centralised in 2020 (see page 65)

• • Greater operational efficiencies to drive improved administration and support
• service delivery • Ongoing investment in innovative
• technology

• Enhanced business intelligence capacity to provide informative data for analysis • Ongoing local and international benchmarking to maintain academic excellence

EXCELLENCE THROUGH SPECIALISATION

How we action strategic

• objectives • Market focus
• • Benchmarking –

salary surveys • Data driven insights

industry and

Shareholders' information

Annual financial statements

Governance overview

Strategic review

Group overview

Using our capitals to create value

Good progress Satisfactory progress Limited or no progress

Progress in 2020

South Africa

GROWTH

How we action strategic objectives • Expanding our existing brands organically and through strategic acquisitions

• • Maintained organic growth in schools mid-fee brands and tertiary division
• • Opening of Trinityhouse Glenvista, Pinnacle Waterfall and Pinnacle Linden
• • Opened The Bridge Lonehill High School
• • Identifying new market in 2021 • Launched two new brands, Evolve Online School and MindSharp, a
  • tertiary brand

Rest of Africa • 10% enrolment growth in the rest of Africa

• Diversifying revenue streams generated outside of South Africa

Group overview

Our response to COVID-19

Nobody could have predicted the effect this global pandemic would have on individuals and businesses. Governments globally responded by implementing lockdowns to slow down the rate of infection and flatten the curve. However, these lockdowns have also severely impacted economies as people's lives and livelihoods have been devastated.

At ADvTECH, our priority is the health, safety and wellbeing of all our students and employees. A COVID-19 steering committee was established to implement, oversee and monitor compliance with relevant protocols and legislation. The group promptly implemented the measures outlined below, to ensure we have been able to safeguard our students and employees. These measures align with the strict protocols issued in accordance with government directives such as the South Africa's Disaster Management Act, 2002, the World Health Organisation (WHO) and National Institute for Communicable Diseases (NICD). The committee also continually provided comprehensive communication to our stakeholders. Even in these uncertain times, the continuation of quality education remained paramount. We have leveraged online learning tools and systems previously implemented to support learning and teaching strategies, making the transition to online seamless. The positive feedback received from our students, parents and teachers has been encouraging. While not all our students and employees have avoided infection, the protocols in place enabled all sites to contain the number of positive COVID-19 cases to relatively low levels.

REPORTED 390 cases at year end with 0.4% student and staff infection rate.

RECORDED 100% recovery rate with no fatalities reported by year end.

Our response to the COVID-19 pandemic continues to be well-managed across all sites within the group. We continue to monitor the pandemic's ongoing effects and the group is prepared to adapt and respond efficiently and effectively.

Please read more in the social and relationship capital from page 48 to 58

Students and parents

ADvTECH successfully transitioned to online learning and remote operations to support continuous education and ensure business sustainability. The schools and tertiary divisions were able to respond quickly and effectively to ensure the continued delivery of quality education and academic excellence through technology and innovation. Remedial and ameliorative actions were instituted for students not able to participate optimally. Financial assistance with fees and connectivity on a case-by-case was provided. Extramural, aftercare and boarding fees were waived and we assisted students with data connectivity, where possible.

Further measures included:

• • Online learning orientation for students and parents.
• • Ongoing training and professional development by the central academic team.
• • Extra customer care initiatives including pastoral care, data and device support and wellness programmes.
• • Innovative academic offerings including Evolve Online School and MindSharp (tertiary).
• • Converting all sit-down assessments into online assessments.

COVID-19 IMPACT – student support

Addressing the needs of our students and parents

• Supplied ~8 000 students with data support

• Tertiary boot campus) virtual catch up sessions

• Virtual interaction: graduation ceremonies; open days and campus tours; cultural, sport and social activities; pastoral care

• 24/7 service desk supported 1000+ calls / week

• Graduate placement centres continued to place students throughout placing 1 174 students during 2020

• Mental, emotional and physical well-being of students and educational psychology support to parents with coping mechanisms

• Student support improved attendance: online 98% vs 95% in face-to-face

Employees

The pandemic and lockdown created uncertainty among employees as we adapted to lockdown conditions by working from home. Our commitment to our education division employees for their invaluable level of delivery remained firm and we implemented the annual salary increases and continued to pay out full salaries and bonuses due during the lockdown period. The group further took all necessary measures to, as far as possible, prevent job losses during this period.

• To better understand employee sentiment during the COVID-19 pandemic, we conducted two employee surveys that informed some of the measures implemented, including:
• • Enhancing our employee wellness programme to focus on stress, anxiety and mental health, that included wellness webinars with professional support from psychologists, as well as a partnership with the South African Depressions and Anxiety Group.
• • Regular senior management status meetings and leadership messages.
• • A dedicated COVID-19 email address to log suspected and confirmed cases.
• • Adherence to COVID-19 regulations and protocols (PPE, screening, social distancing, deep cleaning).
• • Repositioning key leadership and training programmes with a blended learning approach.
• • Implemented policies stipulated by legislation (antistigmatisation and leave), guidance, online content and training for teachers and lecturers as well as various support measures ('We got this' sessions and daily Q&As).
• • Relevant IT connectivity support for online teaching.

The resourcing division was significantly impacted by the economic downturn and resultant slowdown in recruitment activity owing to the COVID-19 pandemic and lockdowns. Despite these challenges, our staff experienced a smooth transition to working from home and maintained calls to clients. Measures implemented focused on training to prepare for a successful online interview and assisting clients with online interview scheduling to streamline the interview process.

Investors, financiers and shareholders

ADvTECH took tough decisions and managed operating costs and capital expenditure in such a way that it was possible to continue delivering academic excellence and providing an education experience that supports our commitment to quality academic tuition. Our strategy throughout has been to curtail operational costs without furloughing or reducing pay to the educators that enable us to offer the quality education that we do, whether through our superior online offering or on site. This decision benefitted the group by ensuring that our educators remained highly motivated and that delivery of high quality education continued uninterrupted, as is evidenced by the high rates of student retention.

As a result of the continued and uninterrupted delivery, the business was able to continue with tuition and charge accordingly, therefore making the business sustainable.

To keep our providers of capital continuously updated we issued SENS business updates on COVID-19's impact on our sustainability as well as informing them on measures implemented through our corporate and brand websites.

Regulatory bodies and government

ADvTECH was in constant communication with relevant education, health and safety regulatory bodies as the academic year progressed. We also implemented relevant policies and procedures to adhere to government protocols and regulations to ensure the safety and wellbeing of all stakeholders.

We regularly updated our alumni through newsletters, a Virtual Career Development Day and a variety of innovative engagements for graduates to gain career support and work readiness skills hosted by industry experts.

Regular interviews were arranged between management and the media to communicate ADvTECH's academic continuity and integrity. Social media proved invaluable during lockdown as we continued communicating our compliance to COVID-19 health and safety protocols as well as our value offering to parents and the public. We have received positive feedback from our customers on our proactive and consistent engagement during lockdown.

While lockdown impacted our CSI projects, we remain committed to continue supporting our communities, through our CSI projects. Please refer to our social and relationship capital on page 48 for more detail.

Financial capital

What is our financial capital

Our financial capital includes cash, investments, debt and equity resources. We use a combination of these financial resources in our business operations to ensure financial sustainability.

Why this capital is important

We use cash generated by our business activities as well as funding, both debt and equity, to finance business growth organically and through strategic investments to support the group's short, medium and long-term sustainability and growth plans. We provide our shareholders with a return on their investments through regular dividend payments.

How we create value using financial capital Material matters considered: Prudent investment and expansion Challenging economic conditions Strategic objectives supported Growth Schools division revenue up 4% (2019: 11%) to R2.3 billion (2019: R2.2 billion) Tertiary division rev enue up 9% 2020 2019 (2019: 25%) to R2.3 billion (2019: R2.1 billion) Resourcing division revenue up 15% (2019: 11%) to R848 million (2019: R741 million) Healthy liquidity maintained Value added of R4 418.0 million (2019: R4 160.4 million) Borrowings well within covenants Maintain a strong balance sheet. Sustainable cost and capital expenditure containment. Continued streamlining of processes to drive further effectiveness and efficiencies. Outlook SDGs supported Capital productivity

Strategic

review

Group overview

Using our capitals to create value

Group commercial director's report

Didier Oesch

Progress in 2020

A particularly pleasing aspect of the ADvTECH group results was the free operating cash flow before capex which increased by 39% to R799 million (2019: 574 million). This demonstrates the inherent cash generating capabilities of the group's business model.

This has allowed the group to scale up the business significantly over the years, through strategic investments while also positioning us well to withstand the effects of the COVID-19 pandemic. All our divisions continue to reap the rewards of these strategic investment decisions. During 2020, we enjoyed good enrolment growth and witnessed the benefits from our restructuring, rationalisation and cost saving initiatives. As in 2020, going forward our focus will remain on prioritising investments that maximise value from our existing assets and that deliver strong organic growth.

Sound financial performance

The group delivered a sound financial performance, demonstrating the outcomes of mitigating actions taken both before and as a result of the pandemic. In the first quarter of the financial year, we achieved good enrolment growth in the schools and tertiary divisions and benefited from the efficiencies previously implemented in the schools division. Our resourcing division also delivered a strong performance and the group was poised to deliver an outstanding result. However, the nine months from April to December 2020 were characterised by greater volatility following the implementation of lockdown restrictions causing disruption to some of our income streams and impacting on collections. This led us to heighten our focus on ensuring the sustainability of our business through cost controls, preserving cash and careful balance sheet management. The cash preservation measures included curbing non-essential capital and operating costs.

Revenue

Group revenue grew by 8% to R5.5 billion (2019: R5.1 billion).

Schools South Africa revenue increased by 5% to R2.1 billion (2019: R2.0 billion) following 4% enrolment growth. Their revenue growth was however tempered by the withdrawal of some students mainly at the pre-primary phase and the inability to provide boarding, aftercare and extramural activities for a substantial part of the year.

Our schools in the rest of Africa saw a 4% decline in revenue owing to Makini not being able to generate revenue for a large part of

the year as a result of a government directive. Both Crawford International and Gaborone International School achieved good enrolment growth and increased revenue.

The tertiary division continued its trend of good organic growth resulting in revenue increasing by 9% to R2.3 billion (2019: R2.1 billion) in spite of the extended disruption they faced due to the lockdown regulations which limited the number of students they could accommodate on the campus and negatively impacted the mid-year enrolment cycle.

Resourcing in South Africa was severely impacted by the hard lockdown in April and May with hiring activity coming to a standstill. There was some recovery from June onwards but hiring sentiment remained muted resulting in revenue for the year declining by 30% to R183 million.

The strategic decision to expand resourcing into the rest of Africa continues to bear fruit as the business was minimally impacted by COVID-19 and continued to build scale as their revenue increased by 39% to R665 million.

Operating profit before interest and non-trading items

Operating profit that grew by 5% to R910 million (2019: R869 million), was tempered by an increase in loss allowance and bad debts written off amounting to R264 million (2019: R136 million).

The drive for efficiencies in Schools South Africa stood the business in good stead as they were able to increase operating profit by 6% and improve the operating margin from 17.7% to 17.9%, despite an increase in bad debts.

Operating profit

(R'm)

Our schools in the rest of Africa reduced their operating loss marginally despite the significantly lower revenue from Makini as costs were managed as low as possible to mitigate the impact. Additionally, Crawford International School, which is now in its second year of operation, reported a significantly reduced operating loss as it progresses through the J-curve while Gaborone International School continues to perform well.

The tertiary division grew operating profit by 9% to R539 million (2019: R496 million) and maintained its operating margin at 23% despite a higher level of loss allowance and bad debts written off.

The combined resourcing division remained profitable owing to the resilient performance by the rest of Africa business that grew operating profit by 42% to R21 million (2019: R15 million). This was sufficient to more than offset the operating loss in the South African business that was minimised by strategies to reduce costs that unfortunately necessitated salary cuts, temporary layoffs and retrenchments.

Non-trading items

The net amount of non-trading items of R30.2 million is made up as follows:

Corporate action costs of R0.5 million relating to legal and consulting costs incurred in business combinations;

The impairment of property, plant and equipment amounting to R11.1 million due to the write down of the land and buildings at Trinityhouse Palm Lakes and Trinityhouse North-Riding, that were closed at 31 December 2020, to their expected realisation values;

Impairment of intangible assets with a carrying value of R24.9 million relating to the brand value of Maragon owing to the strategic re-positioning and re-branding of these schools;

Loss on disposal of a subsidiary amounting to R6.7 million relating to the sale of University of Africa in Zambia; and

A R13.0 million gain on settlement of contingent consideration relating to a negotiated reduction in the acquisition consideration for Makini Schools.

Profit for the year and normalised earnings per share

The lower average net borrowings, resulting from the cash preservation measures implemented, together with the lower interest rate, led to a decrease in financing costs. The taxation rate increased due to the current year including a greater amount of non-deductible non-trading items. Profit for the year decreased by 1% with normalised earnings per share, which excludes non-trading items, increasing by 5% to 89.8 cents (2019: 85.2 cents) per share.

Working capital and cash flow

The group has an inherently negative working capital model due to fees being payable in advance, while most costs are payable in arrears. Negative working capital amounted to R438 million at year end (2019: R374 million) with the increase compared to last year mainly due to lower net trade receivables and other debtors.

Group shared services was instrumental in ensuring that billings and collections for the schools division could continue effectively during the hard lockdown. At the half-year, collections while 8% above last year were 5% short of target. Due to the efforts of all involved in the collections process, the shortfall was reduced to less than 3% by year end. Notwithstanding this improvement, bad debts amounting to R189 million (2019: R101 million) had to be written off and the loss allowance was increased by R75 million to R376 million (R301 million). This represents 62% coverage of the debtors balance compared to 55% in the prior year.

Debtors' provision

		Unaudited
R'm	%increase	31 December2020	31 December2019
Trade receivables	11%	609	548
Loss allowance	25%	(376)	(301)
		234	247
Coverage of debtors'balance		62%	55%
Credit losses as %of revenue		5%	3%
	94%	264	136

Free operating cash flow before capex increased by 39% to R799 million, resulting in the cash conversion amounting to 171% of profit for the year. Cash generated by operating activities increased by 21% to R1.3 billion (2019: R1,1 billion). This enabled the funding of investments and capital expenditure of R308 million, payment of financing costs of R201 million and taxation of R213 million, repayment of lease liabilities of R98 million and the settlement of debt amounting to R484 million. Lorem ipsum

1.6 1.9 2.2 2.3 1.6 Ratio = Net borrowing:

Cash vs net borrowings position

Cash generated by operating activities

Net borrowings position

Cash generation

(R'm)

17%

Annual financial

Governance overview

Strategic review

Using our capitals to create value

30

Investments

Planned capital expenditure was reduced in order to preserve cash and was focussed on increasing capacity on sites to meet demand, equipment to enhance our delivery of online and hybrid tuition, and on business systems to enable the standardisation of processes across the group to allow for further efficiency improvements. Total capital expenditure was limited to R308 million with an additional R21 million spent to buy out the minority shareholder in The Private Hotel School and to increase our share in Schole Mauritius Limited and Africa HR Solutions Limited.

As a result of the focused capital expenditure, the capacity of the schools division only increased by 1% to be able to accommodate 41 500 students while the capacity utilisation has improved from 79% to 82%. Capacity on existing sites can be increased to accommodate a further 15 300 students. Plans are in place to roll out the development of this capacity over approximately eight to ten years.

While the group continues to seek both greenfield and acquisition opportunities to expand or complement its offering, no new school or tertiary openings are planned for 2022 as we look to increase capacity utilisation further. The capital expenditure programme will once again focus mainly on adding capacity to existing sites that will enhance the returns on these investments.

Return on funds employed (ROFE)

In the five-year period from the beginning of 2015 to the end of 2019, the group invested R4.4 billion in capital expenditure and acquisitions which has significantly increased the scale of the business. This, together with the inclusion of right-of-use assets, has resulted in the average net assets in a year increasing from R1.2 billion in 2014 to R6.5 billion in 2020, a compound annual growth rate of 33%. Over the same period, operating profit grew from R256 million in 2014 to R910 million (excluding the impact of COVID-19: R1 075 million) in 2020, a compound annual growth rate of 24% (excluding the impact of COVID-19: 27%). While this represents a significant increase, the lag in operating profit relative to the increase in net assets is due to the J-curve effect with projects taking several years before achieving their optimal returns. This has led to the ROFE decreasing during this period of significant investment. With these investments now moving out of the J-curve and towards their optimal returns, ROFE is expected to show meaningful improvement in the coming years. In fact, had it not been for the impact of the pandemic on our operating profit in 2020, it is estimated that ROFE would have improved to 16.4% compared to 14.3% in 2019.

Capital structure

The group has funding facilities in place totalling R2.85 billion, consisting of fixed-term

facilities allows the group to fund its long-term needs while maximising the benefits of its seasonal cash flows. These facilities are expected to provide sufficient funding for the rollout of the planned investment programme while still allowing for headroom against the covenants. The revolving credit facility was renewed during the year and is now available until December 2023. Secured term loan A amounting to R600 million is due for repayment in September 2021 and a decision will be made in the second quarter as to whether to pay down or refinance the loan.

Net borrowings decreased to R2.1 billion (2019: R2.6 billion) due to strong cash generation during the year and the lower capital expenditure incurred. The group remains well within its covenants at year-end, with net borrowings (including lease liabilities) equating to approximately 2.1 times (2019: 2.6 times) EBITDA, while gearing decreased to 68% (2019: 89%).

The group's inherently strong organic cash flow, which is expected to increase in line with earnings growth, together with the funding facilities in place, positions the group well to fund its future investment programme and enables it to consider significant additional growth opportunities that may become available.

Dividends consideration

In view of the heightened uncertainty owing to the onset of COVID-19, the board decided not to declare a final dividend for 2019 and an interim dividend for 2020. However, having reviewed the manner in which the business has coped thus far with the circumstances created by the pandemic together with the strong cash generation, sound balance sheet and satisfactory enrolments for 2021 the board has decided to resume the payment of dividends.

The group has declared a final dividend of 20.0 cents (2019: nil) per ordinary share in respect of the year ended 31 December 2020. As no interim dividend was declared the dividend for the full year is 20.0 cents (2019: 15.0 cents) per share.

Going forward and barring a significant disruption to the business, it is intended to revert back to the group's previous pattern and level of dividend pay-outs.

Appreciation

I would like to thank our shareholders and funders who have provided the means and support for us during these extraordinary times as we navigate our way through this global pandemic.

I would also like to thank the financial staff across all our divisions groupwide for their commitment to accurate and relevant financial reporting. The strength of the team and robustness of our systems allowed for the smooth operating of the financial function throughout the year, no matter how trying the circumstances were. Your diligence and commitment are critical to our ability to provide quality information that informs the decision-making of management, the board and our stakeholders.

Didier Oesch Group commercial director

20 April 2021

Ratios and statistics

for the year ended 31 December 2020

Earnings per share (cents) 16 17 18 19 20 70.9 68.772.0 87.1 85.1

Normalised earnings per share (cents)

Normalised earnings on average shareholder's funds

	2020R'm	2019R'm	Restated*2018R'm	Restated*2017R'm	Restated*2016R'm
Earnings and distribution
Earnings per share (cents)Headline earnings per share (cents)Normalised earnings per share (cents)Distributions to shareholders per share (cents)	85.191.289.820.0	87.186.085.215.0	72.071.479.030.0	68.768.875.334.0	70.971.163.332.5
Profitability
EBITDA on revenue (%)EBIT on revenue (%)Operating profit on average shareholders' funds (%)Normalised earnings on average shareholders' funds (%)Return on funds employed (%)#	22.816.024.113.313.9	23.017.327.014.014.3	24.717.525.814.215.8	20.916.223.214.616.4	23.018.924.713.516.4
Productivity
Revenue per average fixed assets (Rand)Revenue per employee (R'000)Revenue per square metre (Rand)	1.1700.38 893.2	1.1648.68 334.7	1.2581.48 160.5	1.2584.07 624.9	1.2545.07 151.9
Finance
Current assets to current liabilitiesOperating cash flow per share (cents)Capital expenditure – excluding acquisitions (R'millions)Capital expenditure – acquisitions (R'millions)Free operating cash flow before capex per share (cents)Net asset value per share (cents)Debtors days as at 31 DecemberNet gearing ratio (%)	0.3162.2308.421.0147.5700.917.967.9	0.382.9704.6320.0106.4623.223.388.9	0.477.9568.9114.9105.1571.521.878.5	0.372.4712.6215.6109.8519.726.775.0	0.453.5361.881.490.9489.624.441.6
Other
Total shares in issue (millions)Weighted average number of shares in issue (millions)Diluted weighted average number of shares in issue (millions)Employee headcount at year-endTotal capacity occupied ('000 m2)	551.8541.6541.67 853618.4	548.8539.0539.07 876612.9	546.6535.9536.17 549537.8	544.4534.2535.26 743516.4	544.4525.2525.75 916450.8

# The return of funds employed is calculated by dividing the normalised EBIT by the average funds employed for the year. The funds employed for each year is calculated by taking total assets for the year less cash balances and all non-interest bearing liabilities.

* The 2018 year is restated due to the adoption of IFRS 16. The 2016 and 2017 restatement relates to the adoption of IFRS 15.

Using our capitals to create value

Five year financial review

for the year ended 31 December 2020

Cash generated from operations (R'm)

	2020R'm	2019R'm	Restated*2018R'm	Restated*2017R'm	Restated*2016R'm
Summarised statements of comprehensive income
Revenue (including bursaries and discount allowed)Earnings before Interest, Taxation, Depreciation and Amortisation	5 499.2	5 108.0	4 389.0	3 937.7	3 224.3
(EBITDA)Depreciation and amortisation	1 255.9346.4	1 173.6304.5	1 083.8275.6	823.3155.3	740.6132.5
Operating profit before interest and non-trading itemsNon-trading income/(expenses)Net finance costs paid	909.5(30.2)(204.8)	869.113.5(221.8)	808.2(39.5)(192.0)	668.0(31.1)(99.1)	560.247.9(81.7)
Profit before taxationTaxation	674.5209.0	660.8192.5	576.7180.6	537.8160.1	526.4148.5
Total comprehensive income for the year	465.5	468.3	396.1	377.7	377.9
Headline earnings	494.1	463.7	382.9	367.5	373.5
Normalised earnings	486.3	459.2	423.4	402.5	332.3
Summarised statements of financial position
Shareholders' equityInterest bearing debtLease liabilitiesOther non-current liabilitiesDeferred taxation liabilityOther current liabilities	3 867.82 241.2565.050.1152.6764.0	3 420.32 725.3485.574.4170.9767.6	3 123.72 144.1537.872.9114.2733.1	2 829.31 727.0505.849.0101.4770.0	2 665.61 238.3––99.3631.9
	7 640.7	7 644.0	6 725.8	5 982.5	4 635.1
Non-current assets (including non-current assets held for sale)Bank balances and cashOther current assets	7 129.6181.7329.4	7 041.1170.5432.4	6 154.4228.9342.5	5 543.9109.9328.7	4 232.5128.2274.4
	7 640.7	7 644.0	6 725.8	5 982.5	4 635.1
Summarised cash flows
Cash generated from operationsNet cash inflow from operating activitiesNet cash outflow from investing activitiesNet cash (outflow)/inflow from financing activities	1 264.5895.1(273.8)(566.9)	1 192.1454.8(998.6)489.9	1 083.1425.6(657.5)512.4	805.7394.1(913.8)312.7	737.9291.3(441.0)78.2
Net increase/(decrease) in cash and cash equivalents	54.4	(53.9)	280.5	(207.0)	(71.5)

* The 2018 year is restated due to the adoption of IFRS 16. The 2016 and 2017 restatement relates to the adoption of IFRS 15.

Using our capitals to create value

Value added statement

for the year ended 31 December 2020

	2020R'm	2019R'm
Value added
Revenue (net of bursaries and discounts)Bursaries and discountsInterest receivedCost of providing services	5 499.2223.12.3(1 306.6)	5 108.0197.65.2(1 150.4)
	4 418.0	4 160.4
Value distribution
Employees
Net benefits paid to employeesSocial responsibility	2 492.1	2 323.4
Corporate social investment and bursariesGovernment	223.1693.9	197.6645.3
Government taxesNet VAT paidPAYE	210.870.2412.9	194.463.9387.0
Providers of capital	210.9	397.9
Finance costsDistributions to shareholders	207.13.8	227.0170.9
Reinvested in the group
Retained to sustain and grow the group	798.0	596.2
	4 418.0	4 160.4

Group overview

Strategic

Intellectual capital: academic excellence and academic governance at our core

What is our intellectual capital?

In an education business such as ours, intellectual capital is manifest in excellent academic outcomes, which are in turn a product of the work done by the teaching and learning professionals to deliver superior outcomes for students. This work includes the strategies, models and processes and their implementation, that define academic excellence in the group. Focus areas of the intellectual capital includes the development of, and investment in, technology, methodologies, data driven insights, curricula, programmes and qualifications. Standards are measured, inter alia, through benchmarking, relevance, accreditation, recognition locally and internationally from peers, employability, success at further study levels and growing market share. Deliberately employing intellectual capital to innovate in the above areas and develop both product and market through continual process improvement, supported by technology, provide the winning formula for excellence and success. Our 18 educational brands are our key differentiators. They remain strong and continue to attract students and clients based on their specific well-defined value propositions and offerings.

ADvTECH's academic excellence is reinforced by:

EXCEPTIONAL TEACHING AND

LEARNING strong combination of experienced and new, contributions are deliberately developed both through continuing professional development, programmes to align with the group academic strategy as well as extensive support for personal academic development through ongoing study.

DATA DRIVEN DECISION-MAKING

drawing on success, performance, retention, learning, and other data gathered internally and through structured benchmarking and organised through custom business intelligence tools aligned with our strategy.

RECOGNITION from local and international accreditors and regulators, employers, other institutions for further study and ongoing attention to reputation and relationship building.

positioned, having deliberately leveraged the learning from a massive educational technology shift in 2020 due to the lockdowns, to continue to leverage and exploit its systems, processes, and intellectual capital to embed leading practice academically.

An increased focus on formalised research, particularly in the tertiary division, on the quality and substance of our academic model will enable us to contribute more formally to knowledge management in the sector

broadly.

Financial capital Social and relationship capital

Other capitals impacted

Human capital

Group overview

Strategic review

As an education provider ADvTECH's intellectual capital, particularly as manifested through academic excellence, is what enables delivery of our strategy. Structural and operational support, at brand and site level as well as centrally in both the schooling and post schooling divisions, enables of the group. Cooperation between divisions research led improvement. All of this is supported by a sector leading, robust policy and academic governance framework incorporating rules, policies, practices and processes. The Central Academic Teams (CAT) are accountable for the delivery and capital area.

Group overview

By centering academic excellence in the strategy for both the schools and tertiary divisions ADvTECH has a differentiated market ability to measure and improve the quality of decisions that impact on our ability to grow our market share, despite the increase of new entrants into the education sector. By foregrounding the approach that academic excellence is good business potential tensions between business and education are minimised.

Brand differentiation and central academic leadership

ADvTECH, through its multi-brand strategy, is committed to brand differentiation so that each brand can meet the specific needs of its market. By placing this differentiation strategy in the context of a common commitment to academic excellence and resourcing it with a dedicated central academic team that now supports both divisions' synergies, efficiencies and scale opportunities can be leveraged. This team of specialists in schooling and post schooling education, supported by experts in each brand, leads and supports teaching and learning across the divisions. Common policies, standards and quality assurance systems enable quick and effective, data-driven, comparisons which enables focused support where needed.

The IIE's academic work for the tertiary sector is coordinated by our CAT, which has extensive higher education experience and a track record of supporting their qualifications and brands. The post schooling CAT now has in excess of 100 academic post schooling professionals, including academics, instructional designers, professional editors, content developers, programme managers, operations coordinators, business process analysts, business intelligence experts and research and curriculum development specialists. They support the almost 2000 professionals on the campuses and in the distance education units.

In the schooling division, increased attention to coordinated policy, which is principal driven is driving improved common standards without undermining differentiation. The school's CAT team coordinates brand collaboration in the consultation and development process of these standards and policies.

Governance and oversight

The CAT oversees the IIE's maintenance of the required standards for registration and accreditation at post school level and is, thus, responsible for assuring the academic quality on all campuses and for managing curriculum, assessments and all certifications. A formal governance structure, which includes a senate, teaching and learning committee and faculty boards, oversees the development and implementation of academic policies that enable the exceptional quality of the learning experiences on campus and online. The quality assurance system includes peer reviews of lecturers and tutors, programme reviews involving academics and people from industry, and a range of student success and graduate tracking projects.

The CAT-led response to COVID-19 ensured a seamless transition from face-to-face to online learning due to support provided to teachers, lecturers, parents and students, as discussed on page 48 to 58. Its effectiveness was underpinned by the collaborative and co-dependent relationship with brand and campus leadership.

Accreditation at post school level

The IIE higher education accreditation

The IIE offers higher education qualifications from higher certificate to PhD level. All qualifications are accredited by the Higher Education Quality Committee (HEQC) of the Council on Higher Education (CHE), registered on the National Qualifications Framework (NQF) by the South African Qualifications Authority (SAQA) and registered by the Department of Higher Education.

British Accreditation Council

For the past six years, the IIE has also been accredited by the internationally recognised quality assurance agency, the British Accreditation Council (BAC), and is the first South African private higher education provider to be recognised by this body. The BAC is an independent authority in the UK that also accredits private providers in other countries including Greece, Switzerland, Singapore, India, Mauritius and the United Arab Emirates. The continued BAC accreditation represents an objective confirmation of the world-class standards our institutions have attained and signals that students can have confidence in the value of their qualifications.

Trade and Occupational Qualification accreditations

Other post school qualifications, particularly those offered at Capsicum Culinary School or Oxbridge Academy, enjoy accreditation either directly from the QCTO (Quality Council of Trades and Occupations) or from one or more Services Sector Education and Training Authority (SETAs) and some continue to enjoy endorsement from international professional associations as appropriate for the offerings.

How we adjusted to the COVID-19 operating environment

ADvTECH has been preparing for future focused education (schools and tertiary) for some time. These unique and unprecedented circumstances, due to COVID-19, provided the perfect opportunity to entrench these global and digital literacy frameworks, skills and competencies in direct delivery for all students. As a result, not a single academic day was lost during 2020 and we maintained quality academic delivery.

Our ability to adjust during the pandemic led to previously developed technology being embedded in all programmes, resulting in technology being leveraged more effectively and our teaching and learning experience developing into an integrated tool. This will make it easier to collaborate and enhance the teaching and learning experience going forward. It also allows us ongoing resilience to respond rapidly to any future challenges that may arise by not being physically bound to campus or classroom sites. It enables us to share competencies across all brands while growing collaboration between students, teachers, lecturers and peers themselves.

Many lessons were learnt and continue to be learned, foremost among these being the validation that flexibility, adaptability and resilience are crucial ingredients in decision-making, particularly during challenging times.

In addition to continuing on their academic journey, we understood that most students also required social, emotional and logistical support, to navigate the circumstances. We rapidly implemented processes to address these demands.

Initiatives at our schools and tertiary divisions are listed in social and relationship capital from page 48 to 58

Group overview

Strategic review

to create value

The Independent Institute of Education (IIE)

The IIE is South Africa's leading 'private university'1 , with a 16-year track record of academic leadership following the initial integration of the separate institutions in 2005. It benchmarks against the highest local and international standards. While each ADvTECH brand has its own focus, the success of the IIE, and the rest of the tertiary division, can be attributed to its commitment to launching and building students' careers. While only those brands offering registered and accredited higher education qualifications as part of the formally registered IIE directly draw from IIE's standards and procedures, other post school brands are also developed and supported. The IIE's six brands have 137 accredited qualifications. The IIE achieves these successes because the model enables the IIE to draw on the skills of all its people to the benefit of all brands.

The IIE has the only Department of Higher Education and Training (DHET) accredited and peer reviewed academic journal managed by a private higher education institution. 'The Independent Journal of Teaching and Learning' is in its 15th year of publication, with two editions annually, and is available on open access platforms.

The IIE and ADvTECH's purpose

The IIE is accredited by the British Accredited Council (BAC)

Values

Respect • Development • Sustainability • Continual improvement • Responsiveness • Innovation

IIE Learn – leveraging learning management

The Blackboard based Learning Management System (LMS) supports the IIE's qualifications, modules, and student learning journey. Standardised module structures ensure teaching and learning strategy principles are attained. A dedicated team of instructional designers and content developers collaborate with heads of programmes to deliver content. Lecturers are trained to use LMS content to drive active learning and student engagement and are provided with relevant support to carry out their responsibilities.

Our progressive model and approach to traditional teaching and learning positioned us well to manage the COVID-19 crisis. We had been using IIE Learn (Blackboard) for more than five years when the pandemic occurred, and this platform was already an integral part of our teaching and learning model. This positioned the IIE to quickly move towards non-contact online facilitated learning only, maintaining academic integrity and quality teaching and learning for students.

1 In terms of the Higher Education Act, registered and accredited private higher education institutions are currently not legally allowed to call themselves universities. This even though the country has a unitary quality assurance system, which requires private institutions to fulfil the same criteria as public institutions. Despite this hurdle, IIE brands are increasingly becoming the first choice for prospective students, due to their growing reputation of producing high-quality graduates who are sought-after by industry. A December 2019 ruling by South Africa's Constitutional Court has significantly boosted ADvTECH's aim of being unambiguously recognised as a private university.

Intellectual capital continued

Intellectual capital continued

Throughput rates2

We intensified our focus on improving student success and throughput rates. Modular success must be accompanied by students remaining with the institution through to graduation. Student performance was constrained in 2020 with the stresses and impact of COVID-19 manifesting in students' ability to remain focused on studies. Support programmes mitigated the impact without any reduction in standards of assessments or required outcome levels.

Academic governance and curriculum at schools

School leaving examinations

In South Africa, all schools are now moving towards students completing the Independent Examinations Board (IEB) Grade 12 examinations with the final schools writing their first IEB examinations in 2023. At Greenwood Bay College and on the rest of the continent, localised Cambridge based curricula and structures are employed.

The International Baccalaureate (IB) is a global organisation with their head office located in The Hague, Netherlands. The IB programmes are divided into four core phases depending on school structures: Primary Years Programme (PYP) for 2 to 12-year-olds; Middle Years Programme (MYP) for 11 to 16-year-olds; Diploma Programme (DP) for 16 to 19-year-olds, as well as a careers certification offering. These IB programmes are currently active in over 5 200 schools across the globe, with over 70 000 professional educators engaging in discussions around teaching, learning, innovation and application, which continues to enhance and extend the exceptional IB educational offering.

International Baccalaureate

In 2019, ADvTECH's Crawford International South Africa was the first group globally to simultaneously complete the IB authorisation process, with seven of their preparatory schools becoming IB World Schools. Crawford International Ruimsig will be authorised as the eighth school in 2021. Crawford International preparatory schools are authorised to offer the IB PYP. The authorisation process is an intensive and mandated procedure required by all schools across the globe that aspire to be recognised as IB World Schools. The teaching and learning strategies of the IB are being drawn into the high school programmes in this brand, but the school leaving examinations remain with the IEB.

Cambridge system – rest of Africa schools

The inaugural class at Crawford International School Kenya delivered an exceptional performance in their first International General Certificate of Secondary Education (IGCSE) exams administered by the University of Cambridge. The IGCSE is externally set and marked, with certificated examinations from the University of Cambridge, whose curriculum is followed by Crawford International School, Kenya. Any student who takes an IGCSE subject will be gaining a qualification that is recognised globally.

Even with the public-school year being suspended in Kenya, learning continued online at Crawford International school during the country's lockdown. Three students got full-house As with one achieving seven A* (performance over 90 percent). On average, 4.2 As were achieved per student. 95 percent of all results fell within the A*-C bracket and 70 percent between A*-B bracket.

The Makini group of schools in Kenya was severely impacted by the scrapping of the academic year, and responded by designing a cost conscious, alternative supplementary development e-learning curriculum. In September 2020, Makini also launched the option of signing up for the Cambridge international curriculum, in parallel with the national Kenyan curriculum, with support from the Crawford International School team and the CAT.

Progress in 2020

Academic excellence within the schools division

The academic strategy of the ADvTECH schools' division is to ensure that each student progresses incrementally, to the best of their ability, in a learning environment that is flexible, inspiring, engaging and challenging.

This excellence-based strategy that has both a collective and individual commitment to the progress of each child, class, school, and brand. It keeps the focus on both the individual child as well as the learning environment.

We updated our strategy to ensure we embed the changes made and lessons learnt during COVID-19. The CAT is being restructured to enhance our support and strategic initiatives across the schools and ensure that we are better able to drive quality assurance, benchmarking and quality improvement alongside professional development. Each brand group has appointed an academic manager who will form part of the brand national office as well as part of the CAT. Given the growth and focus on excellence, the central team is being supplemented with brand academic managers. The central resources will focus on providing leadership in each of the crucial phases and on specific group strategies and initiatives.

As depicted on page 42, our current academic offering goes beyond the subject-based curriculum. We develop student skills to be aligned to global and digital literacy, skills and competencies, which are essential for our students who will enter the world of work in the era of the fourth industrial revolution and a unique programme focusing on respect, diversity and inclusion. Please read more on page 44. Furthermore, we develop our students to embrace global citizenship. This ensures that we fulfil our future focused education aspiration.

WORLD CLASS CURRICULA

INPUTS

DIGITAL LITERACY ACADEMIC LITERACY GLOBAL ORIENTATION

EMPLOYABILITY OF GRADUATES

SYSTEMS AND TECHNOLOGY

RESEARCH & DEVELOPMENT

WORLD OF WORK ORIENTATION

> Benchmarking

> Data-driven > Online-learning

> Blended teaching platform > Modern administrative systems > Learning and other analytics

> Adaptive > Sustainable > Inclusive > Equitable

> Drive to improve knowledge generation profile adding to knowledge economy > Industry-relevant qualifications

> Central Academic Team with experts

> International and employer recognition

3 4 5

• 82% IIE module pass rate

> 6 Faculties: Humanities & social sciences, Commerce, Law, ICT, Education Engineering and health sciences - > 45 000 registered students, 1800+ academic staff - 33 campuses across South Africa and the rest of Africa

1 2

50 National certificates and diplomas (N1-N6)

204Registered and accredited qualifications

3 Advanced diplomas 36 Diplomas 36 National Certificates

> BAC accredited > University level degrees > Professional qualifications:

1 PHD 6 Masters 36 Honours 36 Degrees

> Consistent quality

Tertiary division STUDENT CENTRED

EXCEPTIONAL TEACHING & LEARNING

MEANINGFUL STUDENT DEVELOPMENT

PROFESSIONALISM

> Work-integrated modules and work simulation

> Equity of provision (equity not uniformity)

> School to university bridging programmes

ACADEMIC EXCELLENCE

> Customer / student orientation – easy to register,

> Principal-based, policy and process-driven

enrol, etc

> Promotion of student success > Good governance

> Active learning

and experience

> High throughput rate > LMS strategy

> Academic training > Student interventions

> Whole student journey

OUTPUT

education

Capital in SA

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

42

Schools

CURRICULUM

To prepare our students for school-leaving examinations, ADvTECH exposes them to world-class curricula and ensures that our academic standards generate quality outcomes for our students' performance.

2020 progress update Status

DIGITAL LITERACY

The EdTech framework serves as a baseline for all our schools to ensure that students are provided with opportunities to develop key 21st century digital skills. These skills are based on the International Society of Technology in Education (ISTE) standards for students and focus on the development of the following skills:

• • Computational thinking
• • Collaboration
• • Critical thinking
• • Effective communication • Coding and productivity

Students also innovate, design and learn by being empowered to gauge and create their own learning journeys. This framework offers a clear progression across the grades and focuses on developing responsible global and digital citizens.

2020 progress update Status

reality

storage

Key concepts covered throughout

• Basic coding languages – block based, JavaScript and Python • Project management/ problem-based activities including Minecraft building • Office 365 and processing

• Global collaboration through digital platforms • Blogging

• Content creation – video, image, audio processing • Mobile app development • Virtual, augmented and mixed

• Networks and cloud-based

• Cyber safety and crimes

the framework include:

software

Develop an ADvTECH digital literacy/EdTech framework.

Completed On track

2020 focus area

• • Incorporating Minecraft as part of learning
• delivery. • EdTech framework developed for Gr 000 – 9 based on ISTE standards.

GLOBAL CITIZENSHIP FRAMEWORK

Our students live in a global world and we have extended our global citizenship and skills programme to include the transformative values of respect, diversity and inclusion (RDI). RDI is designed to equip our students with these essential skills as part of the formal curriculum and are embedded in teaching and learning and in all our curricula activities. The CAT provides professional academic workshops, webinars and collaborative sessions to enhance and enrich teacher development and to ensure that these global competencies are integrated into the school culture and mindset.

	2020 progress update	Status
Revised ourcurriculum to includeRDI as values.	Completed and sharedthe first eight cycles oflessons with allschools.
Tournament of Minds(TOM) – aninternationalcompetition thatengages students incritical thinking andproblem solvingcentred on the world'sproblems. ADvTECHworks in partnershipwith the tournament'sAustralian head officeto administer and leadthe competition inSouth Africa.	The TOM was carriedout online duringlockdown withanonline awardsceremony inOctober2020.

2020 focus area

Group overview

Strategic review

Using our capitals to create value

Shareholders' information

Annual financial statements

Governance overview

2020 focus area

ADvTECH's national school benchmark tests

An independent 2020 baseline test of more than 1 800 Grade 8 students showed that on average, a student from an ADvTECH primary school is better equipped to face high school compared to their peers from non-ADvTECH feeder schools. Students from ADvTECH primary schools also performed, on average, 6% higher in mathematics and 5% higher in language than their counterparts from other feeder schools. The baseline was conducted across 26 ADvTECH schools countrywide, including Crawford International, Pinnacle Colleges, Abbotts College and Trinityhouse.

This baseline diagnostic is an independent high school readiness assessment conducted digitally on the JUMPTRAK platform, with graded topic items which rank students, classes and schools.

This assessment has been added to the ongoing independent benchmarking exercise conducted by JumpCO3 at our schools at all grades up to Grade 8 and the IEB Grade 9 IBT assessment. The JUMPTRAK assessment was previously done from grades 1-8. However, we conducted surveys which provided evidence that these assessments should not take place in grades 1 and 2 because of the intensity of the assessments. Going forward, the JUMPTRAK assessments will only be conducted on students from grades 3-8. At the beginning of 2021 this will include grade 8 students as this is the beginning of a new phase going into high school. This will have more value in the Abbotts College schools as the brand has no primary school offering and students will be joining Abbotts for the first time in grade 8. The data generated can be used to understand any gaps or areas of consolidation that need attention. Teachers may administer

3 JumpCO, an independent national assessment body, conducts external assessments and analyses with a team of researchers and education experts.

the JUMPTRAK assessment should they feel that their student(s) need to do one, this can be from any grade from grades 3-8 at any time of the year. At the end of the year another JUMPTRAK assessment will be written across ADvTECH school for grades 3-8 students. The Australian Council of Educational Research (ACER) is a mathematics and english assessment written by all grade 9 students in ADvTECH schools. This process is administered by the Independent Examination Board (IEB) and all schools need to register for this assessment beforehand.

Respect, diversity and inclusion implementation

In 2020, international events and their local expression necessitated a revision of our formal approach to discrimination and exclusion. Management in both the schools and tertiary divisions committed to an anti-discrimination position moving away from policies and procedures that were more reactive, and focused on proactively creating non-discriminatory environments and practices. Focusing on respect, diversity and inclusion through a formal and unique RDI programme the group has embedded inclusive and progressive principles in all its institutions that are actively against discrimination, disrespect and exclusion. A coherent, activity-based strategy was developed, including eight activity streams over three phases, as depicted on the next page. This approach has resulted in deeper ownership in each entity and more tangible change.

Read more about the engagement session and allies in social and relationship capital from page 48 to 58

44

The journey to embed RESPECT, DIVERSITY and INCLUSION

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

Academic excellence within the tertiary (university) division

ADvTECH's tertiary division continues to grow its reputation as the leading provider of quality private higher education in South Africa. In keeping with our commitment to academic excellence, substantial investment ensured that ADvTECH was able to grow its footprint and that more students are now able to access our educational offerings, either at state-of-the-art campuses across South Africa, or through industry-leading distance education programmes.

Student focus

ADvTECH is a student-focused institution, with the aim of building student careers through curricula that are relevant to the modern world of work. We have developed strong industry, academic and professional body partnerships to ensure this relevance. We are committed to student success, including a focus on quality teaching and student support and development, which allows us to produce quality graduates who can make valuable contributions to the economy and society as citizens. In addition to our work-focused curricula, prospective students continue to be drawn to our brands as they provide smaller class sizes and personal attention.

Academic research and development Doctor of Philosophy in brand leadership

The IIE, through Vega, launched a Doctor of Philosophy offering in Brand Leadership qualification, a first in Africa. This will provide brand leadership professionals with the opportunity to assist in the development of the profession on the continent and globally, particularly in a developing digital economy. The unique focus on brand leadership addresses a particular social and economic imperative – the need for innovation by brands with shared stakeholder values and values-based leadership, to create developmental opportunities for communities, organisations and the environment. These future IIE PhD graduates will be leaders of this academic discipline. Through research, the aim is to achieve an immediate impact on professional and academic practice by including unique African perspectives and locally resourced knowledge.

Assessment as an example of COVID-19 responsiveness and its sustained impact

The nationwide lockdown provided an opportunity for the faculties to carefully consider our assessment practices and cater to the needs of students. As such, ADvTECH revised and converted all assessments that would have ordinarily been completed under examination conditions to take-home assessments. This developed a consensus in favour of a shift away from rote learning expectations, towards better engagement with content. The take-home assessments allow for a combination of application and synthesis on simpler concepts. This is something that we will be taking forward as a lesson learned.

We reduced the number of formative assessment points, namely where students received feedback, provided the reduction would not negatively impact on the academic integrity of affected modules. Where possible, cumulative assessments are used to test understanding of the entire curriculum, holistically, instead of formative assessments, which usually focus on specific curriculum parts.

Oxbridge Academy

During 2020, Oxbridge Academy's distance learning, as a delivery method, was reassessed and the accreditation was granted for the early childhood development (ECD) practitioner and Occupational health and safety (OHS) practitioner programmes. Oxbridge Academy was also recognised as a Huawei-accredited training centre and will start offering a range of computer courses. Oxbridge Academy was able to continue delivering services to its clients and prospective students during lockdown as well as address academic queries. Their operations and systems also enabled them to adopt a remote working strategy.

Oxbridge Academy updated their mobile app to include more features and improve user experience. They also refreshed their web-based student portal, and it now includes several resources to assist students throughout their educational journey.

Capsicum Culinary School

Capsicum Culinary Studio is a QCTO, the Culture, Art, Tourism, Hospitality and Sport Sector Education and Training Authority CATHSSETA, and a City & Guilds accredited provider offering various culinary certifications. It also has accreditations from the South African Chefs association. It is a training provider and offers blended learning through our partnership with Lobster Ink and the Culinary Institute of America (CIA). The ability to offer blended learning proved imperative during the lockdowns. Our students were able to continue their learning via video and digital platforms.

During 2020, our students continued learning through digital engagement platforms and partnerships with mobile networks. Students were able to engage in daily virtual lectures and digital content during the hard lockdown phase of 2020. They continued learning via a blended approach as we were able to return to campus until lockdown restrictions eased.

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

CASE

STUDY Pastoral care at Junior Colleges

Junior Colleges are committed to a holistic view of education, focusing on academic excellence as well as the children's psycho-social and physical development (emotional and social). Providing pastoral care throughout lockdown was fundamental in ensuring our students continued to develop holistically, felt connected to their teacher and that the foundation of learning continued. We focused on learner-teacher relationships throughout lockdown – teachers continued to provide encouragement and one-on-one sessions with the learners.

We also extended pastoral care to parents, by actively listening and showing underthey faced during lockdown. This supportive relationship ensured they remained positive and involved throughout lockdown and provided comfort that we were all in this together.

The Junior Colleges principals joined online classes weekly. One fond memory was our online Mothers' Day Tea initiative, where principals joined their teachers and engaged the parents, with an emphasis on "You've got this"! We sent out regular communication to parents, greeting them at the start of the week and at achieved. Thanking our parents and media platforms, for their continuous support and dedication to online learning was essential in assuring their involvement. had been

The Junior Colleges team, together with various multidisciplinary specialists, provided online webinars over other followers on Facebook. This parent toolkit series focused on various topics like parenting during a pandemic, building literacy and independence around the house, visual perception and early brain developments, and talking about talking.

The Junior Colleges team's dedication to pastoral care during lockdown strengthened relations between students and parents. It also highlighted our passion for education, even in these unusual circumstances.

Using our capitals to create value

Group overview

What is our social and relationship capital?

Our social and relationship capital incorporates our relationships with the communities in which we operate and that we serve as well as other stakeholders who benefit from or impact on our work. Transparency, responsiveness and dialogue characterises our management of stakeholder relationships including those with students, parents, communities, clients, our business partners, government, regulators, and investors. ADvTECH also aim to instil corporate citizenship by giving back to broader society through various outreach projects within our areas of operation as well as by instilling a culture of respect, diversity and inclusion in all aspects of our work internally and externally.

Other

supported

Customer focus

We recognise the impact of our business actions on our stakeholders and thus seek to ensure that in our creation of sustainable stakeholder value, we are including their inputs in our strategy development and implementation. As an our presence in communities has an immediate impact and we take a "shared destiny" approach to the communities in which we operate by participating in activities that support and sustain those communities. Our corporate social investment (CSI) programme also focuses largely on educational outcomes. Through local employment and procurement opportunities, where possible, we also support the economies in areas in which we operate. To the extent possible, in terms of our sustainability goals we align with support of the United Nations SDGs focusing on inclusive and equitable quality education and the promotion of lifelong learning opportunities for all. ,

to create value

Group overview

How we manage social and relationship capital to sustain our business

Stakeholder engagement

Our stakeholder engagement approach varies according to each stakeholder's role and interests. Active stakeholder interaction and constructive feedback is encouraged. Various sector appropriate engagement platforms are used. Concerns directly addressed to us are handled with a view to retaining relationships and building common understanding and mutual benefit. We monitor media and social media to identify concerns not directly communicated. Our stakeholder engagement policy guides our stakeholder communication to ensure consistent messaging across the group. All material stakeholder concerns are discussed at Tsec.

Corporate social investment

Our business is all about people development, education and imparting knowledge. Education promotes equality and enables social transformation, which is why community development through educational support is key to ADvTECH's CSI programmes. Our CSI approach is directed towards education interventions within disadvantaged local communities and promotes employee and student participation.

Examples of these initiatives are listed on page 79

Impact on society

Quality education maintains our stakeholders' confidence. We provide supportive learning environments that promote engagement and development, and we deploy education innovations and best practice to achieve academic excellence. Our aim is to develop balanced and confident students, who can identify and embrace personal growth opportunities and who understand their role in society. Whether we are able to work with a child from pre-school through to postgraduate study, or are only able to engage with a student for a few years, our focus is on generating alumni who can and will contribute positively to their communities and society.

At the outset, we communicated that our stakeholders' health, safety and wellbeing are paramount. Social media proved invaluable, particularly during lockdown, to continue communicating our COVID-19 compliant health and safety protocols as well as our value offering to parents and the public. In addition to continuing their academic journey, we understood that most students also required social, emotional and logistical support to navigate the circumstances. We rapidly implemented processes to address these demands. We have received positive feedback from our customers on our proactive and consistent engagement during lockdown.

HOW WE ADJUSTED TO THE COVID-19 OPERATING ENVIRONMENT

COVID-19 specific engagement, actions and decisions are comprehensively covered on page 26 to 27 of this report

49

Group

Material stakeholder concerns in 2020

There were several concerns that key stakeholders raised based on our current operating environment and which were related to COVID-19. These are discussed on this page along with our response.

Hot topics impacting our business

School and tertiary fees for 2021 due to COVID-19 impact on consumer finances

Consumer financial pressure was amplified due to COVID-19. This created financial stress around education affordability as people grappled with how the "new normal" would impact their livelihoods.

ADvTECH's response

• • Where possible, there will be no fee increases for 2021 to negate the economic pressures facing our consumers.
• • Financial assistance offered on a case-by-case basis for parents facing financial strain.

Rest of Africa: Court cases in Kenya

Crawford International School, Tatu City (CIS): In June 2020, parents petitioned the constitutional court of Nairobi for a fee reduction, stating dissatisfaction with the "reduced online service offering" provided by ADvTECH/Crawford International School during lockdown. The court ruled in ADvTECH's favour and dismissed the fee reduction petition. The court, however, ordered that ADvTECH/ Crawford International School establish a parents' association within 120 days. The new parents' association was established with the first meeting held on 5 November 2020.

ADvTECH's response

curriculum. • Initiated an e-learning enrichment programme at a

reduced fee.

fees.

offering.

• Continued offering the online Cambridge International

Makini Schools: Following the Kenyan government's decision to scrap the 2020 academic year, Makini schools revised their academic offering to include a supplementary enrichment programme at a reduced fee online and launched its new offering, the Cambridge International curriculum. Currently 256 students are enrolled for the Cambridge International

• Continued to collect tuition

• Monitoring legal action instituted by parents.

ADvTECH's response

• Offered payment plans on a case-by-case basis as opposed to a blanket discount for all parents. • A parents' association was

established in line with the court ruling and Education Act.

Anti-racism/black lives matter

The murder of George Floyd in the United States in May 2020 sparked an international response and several Black Lives Matter social media campaigns. Some of ADvTECH's schools were accused of racism by former students, while some students questioned how our schools have handled educator bias, particularly as it relates to discipline.

ADvTECH's response

• • A principle-based position on anti-racism was adopted by the senior management of the group and publicly communicated.
• • Reports that could be investigated were, and disciplinary action was taken where necessary.
• • A comprehensive respect, diversity and inclusion programme was rolled out that combined information sharing with unequivocal communication of expected conduct. (see page 44).
• • Internal and external communication campaigns were developed to reinforce ADvTECH's stand against racism.
• • A new code of conduct for schools that attended to the inclusive value set was released and supported with guidelines on behaviours required of a professional educator.
• • Anti-discriminatory reporting and escalation mechanisms were enhanced.
• • The 'FaceUp' app was piloted within the schools division allowing for anonymous reporting of incidents.
• • A new transformation plan was developed focusing on balancing a sense of belonging in addition to driving Employment Equity (EE) targets.
• • The group's disciplinary policy and grievance procedure was revised to provide guidance on how to discipline discriminatory behaviour, both informally and formally.

Group overview

Strategic review

to create value

Below, and on the following pages, we list our key stakeholders, their interests, how we engage with them and our internal view on our stakeholder engagement quality. Due to the materiality and magnitude of COVID-19's impact on our stakeholders, we addressed our COVID-19 engagement separately.

Stakeholders and why they are important to us

Investors, financiers and shareholders

Investors and the financial markets community have a shared interest in the group's success. These stakeholders contribute fiscal support to the business and enable us to grow in South Africa and the rest of Africa.

HOW WE ENGAGE
---------------

• • Regular financial results presentations
• • Annual integrated report and interim financial results publications
• • SENS announcements through the JSE
• • Media releases
• • Engagements and individual meetings with investors and analysts by the group chief executive officer and group commercial director
• • Regular engagement with financiers to discuss the group's debt obligations
• • Investor site visits
• • Annual general meeting
• • King IV™ compliance report, available at www.advtech.co.za

Positive Neutral Low Medium High

COVID-19 SPECIFIC ENGAGEMENT,ACTIONS AND DECISIONS	INTERESTS	VALUE ADD
•Issued SENS business updates onCOVID-19's impact and action toensureour sustainability•Board communicated its decision to theinvestor community to preserve cash andnot declare a final dividend for 2019 andinterim dividend for 2020 or to undertake ashare buyback	•Growthprospects•Profitable andsustainablebusiness•Remunerationpolicy•Policies•Strategy•Sustainability•Compliance withthe JSE Listings	•A sustainablegroup geared forlong-termgrowth•Providing amarket-relatedreturn oninvestment

• Requirements
• • Corporate
• governance

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

Students and parents

Current and potential parents and students are vital to our business as they create the demand needed for us to remain sustainable.

HOW WE ENGAGE

• • Parent functions, meetings
• and online parent portal • Face-to-face student, lecturer and teacher engagement
• • Cloud-based student information system
• • Continuous assessment and feedback on student progress
• • Tertiary student portal for students registered with the IIE
• • Electronic and mobile communication (websites, student mobile application, WhatsApp and D6 Communicator)
• • Newsletters and magazines • Student support teams and school counsellors
• • Call centres, service desks, academic support and student self-help tools
• • Social media
• • All schools advocate an open-door policy for students, parents and other stakeholders
• • An ethics hotline via student portals for tertiary students to report unethical behaviour
• • Student and parent customer satisfaction surveys

wellness programme, etc.•Fee reduction requests considered on a case-by-case basis•IT support available for technical issues•Student Information System (SIS) implemented and further developed	•Reputation
Schools•Ongoing interactions with relevant organisations regardingresumption of in classroom education and compliance with allapplicable COVID-19 regulations and protocols•Boarding and extramural fees waived•Orientation for students and parents regarding online learning•Detailed lesson guidelines provided to ensure quality assurance•Weekly meetings with academic director and managing directors•Ongoing training and professional development by the centralacademic team (CAT)•Surveyed parents and students to ascertain value of offering	work
Tertiary•Informal audits to assess students' computer hardware andconnectivity•Assisted students with data where possible•Adopted a new assessment strategy to accommodate varied accessand supplemented this with an academic safety net of additional

• opportunities where appropriate • Created internal messages to promote an attitude of "we can" to all challenges for staff
• • Social media and other campaigns directed at students to assist with their anxiety and promote pride and confidence such as #BeTheGreatestGeneration
• • Virtual campus tours

Positive Neutral Low Medium High

COVID-19 SPECIFIC ENGAGEMENT,ACTIONS AND DECISIONS	INTERESTS	VALUE ADD
General•Rolled out virtual teaching through MS Teams and IIE Learn•Regular student and parent communication regarding lockdownimpact and feedback on initiatives•Extra customer care initiatives – pastoral care, data and device support,wellness programme, etc.•Fee reduction requests considered on a case-by-case basis•IT support available for technical issues•Student Information System (SIS) implemented and further developedSchools•Ongoing interactions with relevant organisations regardingresumption of in classroom education and compliance with allapplicable COVID-19 regulations and protocols•Boarding and extramural fees waived•Orientation for students and parents regarding online learning•Detailed lesson guidelines provided to ensure quality assurance•Weekly meetings with academic director and managing directors•Ongoing training and professional development by the centralacademic team (CAT)•Surveyed parents and students to ascertain value of offering	•Quality offerings–academic, culturaland sport•Customer service•Policies•Qualified staff•Reputation•Safe, innovativelearning spaces•Preparation for thefuture world ofwork	•Provided onlineassistance•Improvedstudent andparentcommunicationand servicedelivery viauser-friendlydigitaltechnology•Enhancingproducts andcustomer service
Tertiary•Informal audits to assess students' computer hardware andconnectivity•Assisted students with data where possible•Adopted a new assessment strategy to accommodate varied accessand supplemented this with an academic safety net of additionalopportunities where appropriate•Created internal messages to promote an attitude of "we can" to allchallenges for staff•Social media and other campaigns directed at students to assistwith their anxiety and promote pride and confidence such as#BeTheGreatestGeneration•Virtual campus tours

STRATEGIC OBJECTIVES ENGAGEMENT QUALITY LEVEL OF INFLUENCE ON ADvTECH Excellence through specialisation Human capital productivity Academic excellence Customer focus

Alumni

It is important to foster our relationships with alumni as their success is based on the quality of education we provide. In turn, we use this as evidence of the impact of our teaching and learning methodologies.

HOW WE ENGAGE	COVID-19 SPECIFIC ENGAGEMENT,ACTIONS AND DECISIONS	INTERESTS	VALUE ADD
•Regular work placement surveys•Electronic communication such as websites, socialmedia platforms and newsletters•Graduate and alumni surveys and feature stories•Networking opportunities•Created coaching opportunities•Launched a YouTube channel on topics such as"managing your finances"	•Student and graduate services offeredvirtually•Two hundred and forty alumni attendedthe Virtual Career Development Week,gaining career support and work readinessskills hosted by industry expertsPlease refer to the case studyon page 26	•Career prospects•Networking•Further education•Developmentand continuedsuccess of theirinstitutions	•Supporting graduatesin finding employment•Enhancing ADvTECH'sreputation throughalumni

Recruitment candidates and clients

Recruitment candidates and corporate clients provide the mandate for us to operate in the recruitment market.

	HOW WE ENGAGE	COVID-19 SPECIFIC ENGAGEMENT,ACTIONS AND DECISIONS	INTERESTS	VALUE ADD
•••••	Regular face-to-face consultations and interviewsElectronic communication including websites,social media platforms and newslettersLinkedIn is a well-used platform in our resourcingbusinessSalary survey reports'Media releases' and 'social media' video clips toshare tips, information and facilitate therecruitment process for candidates and clients	•Provided training and tips to ourrecruitment candidates to prepare for asuccessful online interview•Assisted clients with online interviewscheduling to streamline interview process•Smooth transition to work from home andmaintaining calls to clients	•Customer service•Quality applicants•Vacancyplacementturnaround time•Remunerationbenchmarkingand surveys, e.g.PayScale	•Innovation forumsaimed at improving theonline user experience•Enhanced service levelsthrough innovativetechnologies•Quality placementsthat enhance clientproductivity

Customer focus Human capital productivity

Excellence through specialisation

ENGAGEMENT QUALITY

STRATEGIC OBJECTIVES

Growth

ENGAGEMENT QUALITY

Academic excellence

LEVEL OF INFLUENCE

STRATEGIC OBJECTIVES

Growth

ON ADvTECH

LEVEL OF INFLUENCE ON ADvTECH

Group overview

Strategic review

Using our capitals to create value

Shareholders' information

Annual financial statements

Governance overview

Media

The media keeps our stakeholders informed, which impacts our business operations, perceptions and brand awareness.

HOW WE ENGAGE	COVID-19 SPECIFIC ENGAGEMENT,ACTIONS AND DECISIONS	INTERESTS	VALUE ADD
•Regular results presentations•Annual and interim reporting•SENS announcements through the JSE•Media releases•Proactive public relations (PR) andeducational media releases addressingrelevant topics and the role of privateeducation in South Africa	•Regular interviews to allay fears andcommunicate ADvTECH's academiccontinuity and integrity	•Groupperformance•Growthprospects•Policies•Reputation•Quality	•Stakeholder crisis communicationsupport for COVID-19 and #BLM•Lobbying for legislation revisionsto allow private higher educationinstitutions to be called privateuniversities•Reinforcing ADvTECH's positionas an academic excellence sectorthought leader via PR campaigns•Building relationships with thecommunities in which weoperate through local media

Community

Our brands are integral to the communities in which they operate.

Positive Neutral Low Medium High

HOW WE ENGAGE	COVID-19 SPECIFIC ENGAGEMENT,ACTIONS AND DECISIONS	INTERESTS	VALUE ADD
•Initiating and partaking in various CSI projects andinitiatives•Some brands supporting disadvantaged schoolsin their communities through tutoring, academicand administrative support and various donations•Promoting sustainable development through allour CSI programmes and activities•Initiating or participating in various greeninginitiatives•Encouraging and supporting voluntary testingand education to minimise the stigma aroundthose living with HIV/Aids	•Lockdown limitations impacted someCSIprojects•Embraced virtual reading sessions tocontinue CSI projects	•Communitydevelopmentthrougheducationsupport•Bursaries•Reputation•Input intocommunities	•Providing financialsupport through bursaries•Involving students andemployees in CSI projectsand aligning withcommunity needs•Reduced carbon footprintthrough various energy,water and waste solutions

Group overview

Strategic review

Using our capitals to create value

Shareholders' information

Annual financial statements

Governance overview

Employees / independent contractors

Our business revolves around people. We pride ourselves on attracting and retaining top talent in the sectors in which we operate. Our employees are passionate and highly skilled. They have a commitment to quality and excellence and drive the execution of ADvTECH's strategy while living the company values.

HOW WE ENGAGE

COVID-19 SPECIFIC ENGAGEMENT,

response to COVID-19

• • Interactive communication across the group's brands via group internet
• • Workshops, presentations, online meetings, newsletters, video clips and project update meetings
• • Integrated leadership development programmes
• • Management toolkit for new managers
• • Change management initiatives
• • A teacher portal for the schools division
• • Regular health and wellness programmes and health and safety representatives
• • Cultural events to celebrate employee diversity
• • Employment equity and disability awareness communication campaigns and workshops
• • Employee awards and recognition
• • Employee satisfaction surveys at brand level
• • Respect, diversity and inclusion campaign
• • Employee pulse surveys

•Regular senior management status meetings and leadership
messages
•Dedicated COVID-19 email address to log suspected andconfirmed cases
•Provided relevant PPE equipment, sanitisers and face masks/shields

• Put in place an incident response team to manage ADvTECH's

• • Adhered to COVID-19 regulations and protocols (screening, social distancing, deep cleaning)
• • COVID-19 App created to record employee/independent contractor information, temperature readings and compliance declarations
• • Employees phased back to offices and where possible, working from home continues
• • Continued focus on employee wellness stress, anxiety and mental health
• • Schools CAT provided expectation policies, guidance, online content and training for teachers
• • "We got this" sessions for teachers and lecturers to share ideas
• • Daily Q&A sessions for teachers on online teaching and learning • Group IT assisted employees and students with connectivity
• options
• • Unavoidable employee retrenchments in resourcing division
• • Conducted two employee surveys with the aim of better understanding employee sentiment during the COVID-19 pandemic
• • Repositioned key leadership and training programmes with a blended learning approach

ACTIONS AND DECISIONS INTERESTS VALUE ADD • Skills development remuneration and • Develop and equip our employees to reach their potential and ensure succession plans in

and training • Competitive

which brings about career prospects and

benefits

projects

wellness • Diverse work environment • Sustainability • Recognition

• • Company growth, challenging work/ place • Enhance our market competitiveness through various training
• • Health, safety and opportunities • Equipped principals to be leaders in a customer-centric
  • environment
    • • Improved online staff engagement to enhance productivity
      • • Sensitising employees regarding respect, diversity and inclusion
      • • Support employees' mental health during pandemic

STRATEGIC OBJECTIVES Academic excellence Human capital productivity Customer focus

Excellence through specialisation

ENGAGEMENT QUALITY

LEVEL OF INFLUENCE ON ADvTECH

Shareholders' information Annual financial

statements

Using our capitals to create value

Governance overview

Group overview

Regulatory bodies and government

Regulatory and professional bodies, associations and government set and enforce regulatory standards and guidelines.

HOW WE ENGAGE	COVID-19 SPECIFICENGAGEMENT, ACTIONSAND DECISIONS	INTERESTS	VALUE ADD
•Implemented the South African Qualifications Framework,under the authority of the SAQA•Complied with the OHS Act and other relevant applicablelegislation•Compliance with relevant regulatory/statutory bodies•Annual academic publication – The Independent Journal ofTeaching and Learning•Registration with Provincial Department of Education (PDEs)and DHET•Register school relocations and name changes with PDEs•Representation and participation at the DBE workingcommittee on home education policy and related regulations•Engagement with the Department of Labour (DOL) insupport of our group transformation plan•Engagement with the Education, Training and Development(ETDP) SETA to provide internship opportunities and build theknowledge capital in the sector•Copyright compliance – requisite compliance with theMotion Picture Licensing Corporation (MPLC) and theSouth African Music Rights Organisation (SAMRO).•Memberships of various bodies:-Associate member of the Independent Schools Associationof Southern Africa (ISASA)-South African Private Higher Education (SAPHE) association-Federation of African Professional Staffing Organisations(APSO)-Institute for Personnel Service Consultants (IPSC)-Confederation of Associations in the Private EmploymentSector (CAPES)	•Health and safety requirements –interaction with regional entitiesregarding health and safetyrequirements forour schools	•License to operateas a businessentity•Regulatorycompliance•Policy adherence•Certification ofstudents	•Accreditation withUmalusi, HEQC, CHE•IIE accreditation withthe BAC•Registration of teacherswith the SACE•Maintaining goodrelations with regulatorsand ensuring regulatorycompliance

STRATEGIC OBJECTIVE

ENGAGEMENT QUALITY

Academic excellence

LEVEL OF INFLUENCE

ON ADvTECH

Communities Corporate social investment

• • Invested R216 million in bursaries (2019: R194 million).
• • Provided financial assistance to 5 386 families (R47 million) whose ability to pay full fees was impacted by COVID-19.
• • Varsity College and the IIE MSA launched the 200-merit-based scholarship programme, which aims to attract strong academic students who otherwise would not have had the opportunity to attend.
• • Select Varsity College campuses have adopted disadvantaged schools via their–'Adopt a School' CSI programme. Many of these schools lack the basics such as water, electricity, furniture, teaching aids, stationery, books, sanitary products and playgrounds.
• • The annual Vega Brand Challenge offers students exposure to actual clients and an opportunity to showcase their skills. Proceeds from the fees are donated to a bursary scheme aimed at assisting historically disadvantaged youth to attend a tertiary institution.
• • Our student teacher bursary programme provides an opportunity for young members of the community to develop through mentorship, guidance and on-the-job training. Our aim is to produce well-grounded, quality educators and ensure a pipeline of suitably trained teachers to ensure business and academic continuity.
• • The teacher bursary scheme currently has three participants (2019: 6) and aims to support the need for quality teachers in South Africa. In addition to completing their tertiary studies, selected bursary recipients are given the opportunity to practically apply their skills within ADvTECH's schools.

Case studies

The information on the following pages highlights some of ADvTECH's initiatives in the communities where we operate as well as the goals achieved. These initiatives also link to the UNs SDGs.

ADvTECH's goals

Raise awareness and motivate selfemployment and entrepreneurship as career options.

Provide inclusive and equitable quality education.

Assist in breaking the cycle of poverty by ensuring graduates are employed.

Partner with disadvantaged schools to improve their academic quality.

Promote lifelong learning opportunities for all.

Ensure that our graduates play an active role in building the economy of our communities.

Ensure sustainable cities and communities through community partnerships.

Produce highly skilled, employable graduate professionals.

Assist with basic needs and infrastructure improvement.

Encourage students to "pay it forward" by giving back to the communities to enrich and empower lives and livelihoods.

CASE STUDY

Graduate empowerment programme (GEP)

Higher education raises awareness and motivates self-employment and entrepreneurship as career options. This encourages innovative business start-ups, especially in the IT sector. We prepare students for their futures through the GEP that was introduced in January 2013.

Overview

While theoretical grounding is important, students also need practical training that prepares them for the world of work. Rosebank College aims to achieve this through the GEP. For more than 70 years, Rosebank College has delivered quality tertiary education to students across South Africa. Rosebank College's academic approach is career-oriented and technology-driven, with qualifications designed and frequently reviewed to meet changing market demands. This ensures that what students learn meets the latest skill requirements of their chosen vocation.

Each campus has a career centre and other career coaching sessions and mentorship covering various entrepreneurship attributes and communication skills in the workplace. Motivational speakers inspire and encourage the students, while Rosebank College partners with potential employers to help match roles and opportunities for the upcoming graduates. Prior to lockdown, new relationships were forged with large corporates and 563 graduates received coaching. Due to COVID-19's impact on the job market, some companies postponed the recruitment of graduates and intend recruiting in the future.

International and employer recognition

Outcomes

• • The GEP has enabled more than 18 021 graduates to find employment in the past eight years.
• • It supported graduates during lockdown and found jobs for 1 174 students.
• • Created a free online entrepreneur's course.

CASE STUDY The career centre team contacted 3 554 graduates to offer career support and ensure that alumni had access to the virtual career centre platform. The 2020 graduates, who had not yet secured employment, were equipped with necessary work readiness skills during a virtual career development week with industry experts, on topics such as CV and interview techniques, personal branding and job search strategies.

New avenues for connecting with final-year students and top employers included:

• • Final-year virtual career development sessions: thirty virtual career development sessions hosted across the various campuses to provide students with work readiness support and prepare them for the virtual graduation expo. Customised virtual career development sessions were established for each campus, and alumni were invited as panellists to share their industry experience with the final-year students.
• • Virtual grad expo: Varsity College partnered with SAGEA (South African Graduate Employers Association) to provide students with engagement opportunities in the virtual grad expo. They had the opportunity to speak to leading employers regarding bursaries, part-time employment and other graduate opportunities for 2021.
• • The career centre platform and app: This platform received substantial traffic and activity during lockdown. Live chat enables the career centre team to support students and alumni in real time with any career-related questions by promptly directing them to the resources on the career centre platform. The app has transformed how students connect and interact with the career centre platform, giving them easy access and on-the-go exposure to a wealth of interactive career tools, e-learning content and the latest job opportunities.
• • Employer engagement: Companies such as Mr Price, RCL Foods, Ogilvy, Derivco, Mondelez and imedia showcased their businesses and engaged with graduates.

Varsity College student support, career centre and alumni

Varsity College (VC) was able to respond effectively and efficiently to ensure graduate support and services could continue virtually.

Creating advertising campaigns for non-governmental organisations NGOs

Vega's work-readiness and work-integrated projects include the creation and management of advertising campaigns for NGOs.

Vega's final-year design programmes place a strong focus on social sustainability and self-directed learning. As a project in their final semester, digital design students had to select an SDG that they felt passionate about and then consider how COVID-19 impacted a local community in terms of the selected SDG. They then designed a digital campaign to address this impact. The focus of the digital design programme is on designing meaningful and strategic digital interactions and user experiences to address real-world challenges.

CASE STUDY

Outcomes

Human capital

What is our human capital?

Our employees are our human capital. Most of them are professionally qualified and contribute a wealth of intellectual capital to our academic expertise and integrity. We invest significant financial capital in building intellectual capital to attract and retain these high-calibre employees. They are passionate and committed to quality and excellence, which is key to creating and maintaining confidence in our value proposition.

Intellectual Other capitals impacted

capital

Financial capital Social and relationship

Strategic review

Group overview

Using our capitals to create value

Governance overview

Why this capital is important

We are a"people business" and ADvTECH's employees are our ambassadors who are instrumental in delivering an exceptional customer service. As a result of the global pandemic, 2020 has proven to be a testing time and our employees have shown commitment in adapting to the challenges created by lockdown. The crisis also allowed us to identify key talented individuals and potential leaders.

How we create value using human capital

Seamless

transition of all teachers and lecturers from face-to-face delivery to online platforms

Continued quality well-established central academic team – not a single academic day lost 0 days

working hours and working-fromhome model Invested in employee training and conferences to boost skills development 2020 2019 million million R11 R21

Material matters considered: Challenging economic conditions

SDGs supported

Enhanced employee wellness programme to manage physical,

wellbeing

Outlook

Continue to support employee wellbeing in the "new normal"working environment through ADvTECH's progressive wellness programme.

capital

Entrench our respect, diversity and inclusion "FaceUp" to students across the group. FaceUp is an independent reporting tool application that facilitates anonymous reporting of any discriminatory or bullying behaviour students/ employees may experience.

Roll-out the mentorship component of the Trailblazers programme.

Continue to build commercial competence and learning and development leadership programmes.

Collaborate with Oxbridge Academy to develop learning interventions designed to strengthen functional competence across all roles.

Our business success is directly attributable to our dedicated 7 853 employees (2019: 7 876). We have four main employee categories: permanent, independent contractors (e.g. lecturers and sports coaches), fixed-term and casual. We have various family leave benefits, for example maternity leave, parental leave, adoption and surrogate leave.

Employee development is essential to creating a culture of high performance and engagement. We engage employees' hearts and minds with creative, interactive and innovative programmes to help them succeed. ADvTECH's online support, digital teaching and skills ensure that our academic teams, teachers and lecturers will continue to provide quality academic excellence, as they did during lockdown.

Our skills development programmes include a management toolkit, coaching and mentoring programmes, a management development programme (MDP) and the Principal Development Programme (PDP).

Transformation is a strategic business imperative that enables us to deliver consistent value to all our stakeholders. Diversity means benefiting from the varied skills, experiences and cultures of all employees to create a rich working and learning environment.

The group's employment equity plan is closely monitored by several committees, namely the Tsec, the group's National Employment Equity Committee (NEEC) and the divisional/ brand Employment Equity committees.

Award category 2020

Long-service awards are presented on completion of five years' service intervals to acknowledge the important contribution of longer-serving employees. During 2020, employees reached the following milestones:

	academic excellence, as they did during lockdown.	Years'service	5	10	15	20	25		30 Total
	Our skills development programmes include a managementtoolkit, coaching and mentoring programmes, a	2020	351	183	85	49	7	1	676
INDEPENDENT	management development programme (MDP) and the	2019	389	195	72	59	4	2	721

Fair and competitive remuneration enables us to attract and retain top employees when it is key to our operational success and value-adding service to clients. We regularly benchmark our remuneration and we endeavour to offer value-added benefits to keep our packages competitive.

ADvTECH adheres to South Africa's rigorous labour relations legislation and all employees have the right to exercise freedom of association. Less than 0.1% of our employees have union representation. ADvTECH acknowledges its Kenyan Makini Schools' union that was created by employees in accordance with relevant in-country legal requirements.

Progress in 2020

Skills development

Investing in employee development remained a priority for the organisation during lockdown, helping to contribute to a sense of stability and focus. To this effect, 57 managers were upskilled in 2020 (2019: 184) and R11 million. (2019: R21 million) was invested in employee

towards learning "in the flow of business" where employees: Drive their own learning.

As an organisation, we are moving

• Own their individual development, with the support of their line manager.
• Continuously seek opportunities to learn in new and innovative ways.

training and conferences across the group.

Leadership development

We continually review and refine our employee leadership and development programmes (ADvTALENT) to ensure that our employees are offered the best service and that they, in turn, deliver top quality service to our customers. The flagship leadership development programmes (LDP, MDP and PDP) keep pace with changing business priorities, while continuing to drive a highperformance culture and growth mindset. A new development programme called Trailblazers was launched in May 2020 to address individual contributor talent.

The rigorous nomination processes introduced has resulted in exceptional commitment from the participants selected for the various leadership programmes, which proved to be particularly relevant during the lockdown.

Transformation

The group's employment equity policy drives annual targets, which are monitored by the group's Tsec and the occupational health and safety committees. Our new employment equity five-year plan was submitted to the Department of Labour in April 2020 and divisions are tracking their performance against the new interventions and targets. The NEEC also reviews all group policies to ensure they align with the new employment equity plan. In a drive towards a more robust transformation approach, each school brand will have its own Employment Equity committee. ADvTECH's employee breakdown by race and gender is shown below.

ADvTECH also employs 34 (2019: 21) people with disabilities, and we strive to provide the necessary resources and technologies they need to benefit from a productive working environment.

Performance management and remuneration

ADvTECH's performance management process is being repositioned as "performance success" to reinforce empowerment, growth and ownership principles. The process provides a standardised calendar, along with key standard templates, to support the performance management process in 2021 and beyond.

The blended model learning experience (e-learning and conversation guides) strengthens the growth culture mindset, that customer service and accountability are critical.

A highlight of 2020 was rethinking our remuneration policy. The business was committed to rewarding employees for their invaluable delivery and continued with salary increases during lockdown. Management acknowledged the significant extra effort that was required under the circumstances and therefore continued with the salary increase cycle. This decision boosted commitment, loyalty and productivity as the lockdown was extended. The new remuneration policy and malus and clawback policy were also approved to improve alignment with shareholders' needs, as outlined in the remuneration report on page 80.

Health and wellness

The health and wellbeing of our employees is a priority. Due to lockdown protocols, many employees continue to work remotely and this "new normal" was a source of anxiety for employees. A wellness programme was created to address this across divisions. The wellness programme incorporated mental, physical and financial elements and multiple mental and physical wellbeing webinars were hosted to assist employees with managing anxiety and stress and to build resilience during these unusual times. ADvTECH also partnered with the South African Depression and Anxiety Group (SADAG) to provide a confidential mental health support system. This allows employees and their families to contact a certified counsellor to manage any issue that may surface during this time. In addition, SADAG has shared several educational support webinars aimed at both teachers and students.

HIV/Aids

ADvTECH has always been well positioned to use its learning environment to educate students about HIV/Aids and promote responsible behaviour. We continue to encourage and support voluntary testing and education to minimise the stigma around HIV/Aids.

Human rights

Our employees are committed to the principles of the RDI programme that ADvTECH has introduced. This includes the right of children to receive education in an environment that is free of any form of discrimination, particularly in regard to religion, gender, race and sexual orientation. This encompasses any kind of bullying and other forms of discrimination. The group offers diversity and human rights training programmes to raise awareness among our employees and students.

Please refer to our new respect, diversity and inclusion programme (page 44 and 45)

Employee engagement

The initial internal pulse survey in April 2020 indicated that our employees were able to adapt to digital teaching with confidence because of the skills development training provided and support from the academic and IT teams. Results from a second pulse survey at the end of 2020 show that, overall employee sentiment increased as the year progressed, with employees reporting high levels of satisfaction around support provided for working from home and returning to site. This demonstrates employee confidence in ADvTECH's ability to manage the COVID-19 response and their high levels of trust in the leadership.

Please read more in our social and relationship capital from page 48 to 58

CASE STUDY

Dr Stellah N Lubinga

"The training and support I have received from ADvTECH since joining in 2014, has contributed immensely to who I am today as an academic and manager. From conference funding to the extensive management training through both the Management toolkit programme and MDP programme, I feel ready to face any challenges, and share my knowledge with other upcoming academics within the group and continent."

Dr Stellah N Lubinga, IIE Varsity College: Head of Academics

Dr Stellah N Lubinga joined the IIE in April 2014 as Head of Programme: Faculty of Commerce, tasked with the design and moderation of the Public Administration Degree. A year later, Dr Lubinga, who holds a Doctorate in Administration, was promoted to Senior Head of Programme: Faculty of Commerce. She was appointed as IIE Varsity College Sandton's Head of and grow in this new environment, and she co-authored a book entitled Organisational Analysis and Intergovernmental Relations: A South African Perspective.

Manufactured and infrastructure capital

What is our manufactured and infrastructure capital?

Our manufactured and infrastructure capital consists of campuses, buildings, infrastructure, technology, business processes and facilities. We invest significant financial capital in these assets to expand our brands to deliver on our brand-specific value propositions. We also use our manufactured and infrastructure capital resources to create environments, systems and processes conducive to learning, enabling our students to meet their full potential academically and become well-rounded individuals.

Continuing to invest in and maintain our assets to ensure optimal use of space and sustainability across our asset portfolio and ensure an appropriate return on investment.

Continuing to explore technical and digital innovations and cyber security to further enhance the experience of our customers, reduce costs, improve operations and add value to our academic offerings.

Microsoft Dynamics 365 is a cloud-based business applications platform and the implemented groupwide in 2021. Key automation, groupwide process standardisation, enhanced customer service and a streamlined supplier database.

Continuing to improve our GSS model by implementing new systems, enhancing integration and automation, centralising procurement and streamlining billings groupwide as well as leveraging data led insights to extract further efficiencies.

Why this capital

Our manufactured and infrastructure capital enables us to build a high-quality organisation for education, training and placements. ADvTECH's goal is to enable our students to reach their full potential academically and in the job market. We continue to invest in our assets for student growth and optimise how we use these assets to provide an appropriate return on investment and create stakeholder value.

is important? Outlook How we create value using manufactured and infrastructure capital

Shareholders' information Annual financial statements

Using our capitals to create value

Group overview

Strategic review

Governance overview

Strategic review

Using our capitals to create value

How we manage manufactured and infrastructure capital to sustain our business

ADvTECH is committed to designing, developing and maintaining world-class education facilities in locations that will enable us to achieve a sustainable return on investment. Our campuses are more than places to deliver education, as they are inherently designed to enrich the learning experience. All investments are preceded by feasibility studies and due diligence to ensure we maximise our return on investment.

Five years ago, ADvTECH started on a journey of significant investments in technology to streamline our processes, which has made us more effective and efficient and provided us with a key differentiator. These investments enabled continued service delivery and academic excellence during the national lockdown with minimal disruption during the switch over to an online and remote working environment. Our established infrastructure and systems, particularly in the digital environment, positioned the group to adapt swiftly to the challenges faced during lockdown.

Progress in 2020

Campuses and buildings (properties)

Facilities management plays a major role in the upkeep of our properties, particularly through preventative maintenance. Key strategic imperatives, including the implementation of innovative systems, realising operational efficiencies and optimising consumption, are ongoing across multiple sites. Some initiatives listed below and outlined in the natural capital section (page 66), help us to track and manage our water and electricity consumption and costs more efficiently. Essential expansion projects were done to accommodate for growth or assets space optimisation where it was essential for 2021. All projects were executed on time, good quality and within budgets. Pinnacle College Linden, Pinnacle College Waterfall, Crawford Fourways, Pinnacle Foundershill and Pinnacle Rynfield.

Reducing costs and improving operational efficiencies

Outsourcing certain services was key to the 6% reduction in operational costs relating to facilities in 2020 and further outsourcing opportunities will be explored in 2021.

Efficient facilities management

Managing and optimising water and energy consumption in 2020 yielded positive results and the feasibility of installing solar panels will be investigated in 2021.

Education focus

The facilities management teams will be incorporated into properties management to streamline processes and manage employees' career paths to allow the brands to focus on education.

Environmental health and safety (EHS)

COVID-19 had a fundamental impact on our EHS functions within the group. Within the first six months of COVID-19, innovative methods of providing accurate information and professional guidance to all 142 educational sites groupwide, had to be implemented due to the restrictions on travel and face-to-face communications. Internal and external EHS compliance audits required for registration purposes had to be halted during lockdown, but have resumed under strict COVID-19 protocols, in the second half of the year.

Employee training as well as implementing COVID-19 protocols and procedures have been carefully planned, executed and monitored. Various departments groupwide collaborated in accessing and monitoring COVID-19 compliance.

Taking account of various lockdown regulations and compliance inspections at numerous sites by several government departments, ADvTECH ensured COVID-19 compliance.

Our facilities and EHS teams reviewed ADvTECH's health and safety compliance to meet the requirements of the Department of Education and the Department of Health and other regulatory bodies. A COVID-19 steering committee was established to oversee and monitor compliance with South Africa's Disaster Management Act requirements.

This COVID-19 steering committee proactively supported all brands in ensuring that proper processes and procedures were in place to protect our employees, parents and students, to minimise infection risk at all premises.

Precautionary measures COVID-19 risk assessment conducted.

Protocols and procedures compiled in line with relevant COVID-19 regulations to get workplace COVID-19 ready.

Created a COVID-19 app and repository portal on the intranet for information and training purposes.

Coordinated COVID-19 deep cleans at sites where positive COVID-19 cases have been reported.

Created awareness material regarding COVID-19 protocols (posters and training videos).

Conducted COVID-19 compliance inspections at all sites prior to reopening with assistance of properties' facilities and project teams.

Investigated and reported COVID-19 cases to relevant authorities.

Monitored legislative and directive changes and amended protocols and procedures accordingly.

Developed workplace plans and checks for inspection by authorities.

Systems, infrastructure and information technology

During lockdown, we scaled technology to match demand and implemented various solutions and student support tools to ensure a fluid transition for our stakeholders. While the demand for technologies continues to increase, the regulatory environment in the digital arena continues to evolve. The group has various policies and plans to ensure we comply with relevant regulations. In addition, with the surge of cyber security incidents, we have renewed our cyber insurance to mitigate this risk (see page 11 and 14).

Microsoft Office 365 (MS Teams, OneDrive and SharePoint Online and Microsoft PowerApp Platform)

This solution supported and enabled the education offering as well as business operations to respond to the challenges of 2020.

Student information system

STASY was successfully implemented across our schools in 2018 and will be rolled out in our tertiary division in 2021.

CASE

Group shared services

Our centralised GSS function has streamlined business processes, strategic decision making and our growth opportunities.

STUDY GSS provides a competitive advantage in a dynamic market. The value will be further demonstrated by leveraging a new enterprise-wide finance system. Further, additional process efficiencies will be delivered across all divisions, establishing a sustainable model to support ADvTECH's growth agenda.

The journey to transform ADvTECH's transactional finance and administration functions groupwide was primarily driven by the GSS initiative in 2020. During this challenging year, support functions such as finance, HR and payroll were delivered by GSS, which resulted in tangible benefits for the organisation. We continue to seek out and eliminate inefficiencies in other support functions with the primary purpose of reducing cost and enhancing the customer experience, both internally and externally. As additional functions are transitioned, a foundation to integrate future acquisitions is established.

The central processing and standardisation across schools division were critical at the onset of COVID-19, as this enabled remote working of these support functions, which underpinned business continuity throughout lockdown. Standardising processes and eliminating duplication led to a 17% productivity increase in the accounts payable team. Further, the 84% reduction in suppliers, through consolidation, has delivered a 31% reduction in invoices processed. The collection efforts in the schools division during COVID-19 limited the increase of outstanding fees. With a renewed focus on customer service and the implementation of a dedicated service desk, GSS has improved the resolution time of parent queries by 77%.

Formula for success

Proactively guiding the financial sustainability of the group, by leveraging enabling technology and best practices in order to support the strategic growth agenda, as serviced by a single finance shared services team.

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

Natural capital

What is our natural capital?

Central to our sustainability approach is consideration of how our activities may impact on future generations. We have also noted the growing concern around global climate change. The group continues to educate our students about these environmental issues and we lead by example through responsible corporate behaviour.

Why this capital

We rely on natural resources such as land, energy and water for our operations and are mindful that we need to preserve them by mitigating potentially negative environmental impacts through responsible usage. Our education oering includes awareness of our natural heritage to instil a deep respect for the environment in our students.

Strategic objectives supported

Material matters considered:

Customer focus

is important Outlook

All buildings and projects undergo environmental impact studies and comply with relevant environmental

legislation.

How we create value using natural capital

Academic excellence

Environmental projects supported through our corporate social investment.

SDGs supported

We design and build properties to minimise our environmental

impact.

Prudent investment and expansion

Academic excellence

Group overview

Using our capitals to create value

Governance overview

Shareholders'

Continue to explore feasible solutions to reduce our carbon footprint.

Continue to educate students about the importance of protecting the natural environment.

information

66

How we manage natural capital

While ADvTECH's environmental footprint impact is not significant, the group follows a sound environmental policy. We practice and teach environmental stewardship to our employees, students and communities to help preserve our country's natural assets for future generations.

Progress in 2020 Carbon footprint

ADvTECH is committed to reducing its environmental impact on an ongoing basis. While we do not currently measure our carbon emissions, the initiatives discussed below have assisted in offsetting our footprint. This aligns with the dual purpose of our teaching method, through education and leading by example.

Transforming infrastructure

Preserving the natural environment is integral to any maintenance or development work done at our existing or new schools. This applies to all our projects including new buildings, the conversion/renovations of existing buildings and, where possible, we repurpose acquired buildings. During the design process of greenfields buildings, classrooms and campuses, we ensure that buildings are environmentally friendly and designed to maximise natural light and air flow to reduce energy consumption required to heat or cool the facilities.

Energy

ADvTECH's goal is to reduce energy consumption across its schools and campuses by 6% over the next two years. The installation of smart metering devices allows ADvTECH to monitor electricity usage, which helps save on costs and detects excessive consumption. In addition, electricity meters on all sites measure actual usage to cross-check the accuracy of local council billings.

Water

ADvTECH's students and employees depend on municipal water for daily operations. The use of fresh water is limited to drinking or cleaning. Where possible the schools now have boreholes for irrigating sports fields and landscaped areas. In Centurion, where schools cannot use boreholes, rainwater tanks have been installed for gardens and sports fields. Reduction of water consumption is ongoing or planned for each site and consumption awareness training has been introduced. The installation of water meters is ongoing and will assist in accurately reporting usage and setting reduction targets.

Energy efficient initiatives implemented, or

• Smart electricity metering devices installed at various campuses to monitor actual consumption • LED lights, solar lights and light sensors installed

• Solar panels and wind-powered devices under

planned, groupwide include:

in lecture rooms and offices

• Timers on air-conditioning units

• Under-sink geysers

consideration

Water reduction measures implemented, or planned, groupwide include:

• Smart metering devices installed to monitor actual water usage to reduce peak demands, detect any leaks and monitor actual consumption versus what is charged.

• Bulk check meters installed where council meters are not available.

• Motion-sensor water taps installed with water restriction spouts for new or renovated bathrooms.

Recycling

Various recycling programmes are in place at most ADvTECH sites. This waste recycling project also includes training initiatives for the cleaners on site. An average of 91% waste was recycled up to March 2020. Between March 2020 and October 2020 there was a decline in recycled waste due to less waste being generated during the lockdown period.

Biodiversity

All potential new sites undergo an environmental impact study to determine if development is suitable for the natural environment. Mitigation strategies are applied to the designs and plans implemented where necessary to ensure that all new sites adhere to environmental standards. Providing school infrastructure requires large areas of land where development may impact the biodiversity of the area. ADvTECH strives to minimise this impact at development sites. We are not aware of any significant or potentially negative environmental impacts in our supply chain.

Sustainability and environmental education is a priority at ADvTECH in order to generate environmental awareness and hands-on experience.

CASE STUDY

Children from Centurus College were encouraged to fill two-litre bottles with litter and non-biodegradable waste to make eco-bricks. Initially these bricks were to be used for seating in and around the college playground.

Eco-bricks

Centurus was then informed by a Charterhouse parent – associated with the education-focused NPC Khensani's Collection – that the ecobricks could be used to build a classroom (attached to Faith Ministries Church), which was done.

Please refer to our website for more information.

STUDY

Volunteering in the Pilanesberg National Park

Pecanwood College incorporates environmental education from the Eco-School programme in its curriculum in order to make a difference and contribute to conservation.

Pecanwood also operates an eco-club throughout the year in its extramural programme. In 2020, staff members, students and past students volunteered on several weekends throughout the year to assist in the Pilanesberg National Park. They removed alien plants, used rocks to restore eroded roads, cut back dense vegetation to clear roads used by rangers/anti-poaching units, picked up litter and assisted with the Pilanesberg Cycle Tour.

ADvTECH's goals

CASE

Ensure ongoing environmental awareness

Provide practical and hands-on environmental education

Shareholders' information

Annual financial statements

Using our capitals to create value

Group overview

Board of directors

CHRISTOPHER BOULLE (49)

Chairman, Independent non-executive director BCom, LLB, LLM (WITS) APPOINTED 2013

leadership development I N COMMITTEE MEMBERSHIP

• Strategic value contribution: > Corporate governance > Corporate and trust law

• Commercial, finance and tax law > Mergers and acquisitions

  • Transformation and

Strategic value contribution: > Strategy development and execution > Marketing

• Strategic value contribution:

  • International commerce and management > Strategy, marketing,

    • business development and general management

JACQUELINE CHIMHANZI (DR) (47)

Independent non-executive director BSc (Hons), MBA, PhD (Cardiff)

COMMITTEE MEMBERSHIP A > African enterprises

• Credit risk

  • management

  • Business management

  • Strategy formulation

  • Risk management > Governance

• Education strategy, research, policy and development > Corporate governance MEMBERSHIP R T N

  • Human resource development

Chairperson

(30)

MONDE NKOSI

Non-executive director B.Bus.Sci. (UCT), MBA (Stanford), MA Education (Stanford) APPOINTED 2021

• Corporate strategy > Education policy and research

Strategic value contribution: > Financial management and commerce > Mergers and acquisitions > Corporate finance > Corporate governance

CLIVE THOMSON

DIDIER OESCH (55)

Executive director, group commercial director and chief financial officer BCompt (Hons) UNISA, CA(SA) APPOINTED 2005

COMMITTEE MEMBERSHIP I

Strategic value contribution:

Strategic value contribution: > Corporate finance and capital allocation > Mergers and acquisitions

• Business leadership and strategy > Corporate restructuring, acquisitions

• and disposals > Corporate finance and treasury

Strategic value contribution:

• Commerce and corporate management

• JSE Listed entities and corporate governance

• Investment management

• COMMITTEE MEMBERSHIP A R I

Independent non-executive director

SHIRLEY ZINN (PROFESSOR)

Independent non-executive director BA, HDipEd (UWC), BEd (Hons) (Unisa), MEd (UWC), EdM and EdD (Harvard)

MEMBERSHIP N I R T

JENS ZIMMERMANN

(59)

Independent non-executive director BA (Business), MBA (Harvard) APPOINTED 2018

APPOINTED 2012

COMMITTEE

KEITH WARBURTON

BCom, CTA (UCT), CA(SA) APPOINTED 2015

(62)

• Strategic value contribution:

• Global investment management education sector

• Corporate finance

• Strategic value contribution:

• HR management

  • Transformation and leadership development

• Education

COMMITTEE MEMBERSHIP I R

COMMITTEES

(71)

COMMITTEE

A Audit and risk committee I Investment committee N Nominations committee R Remuneration committee T Transformation, social and ethics committee

Using our capitals to create value

Group overview

Strategic review

Governance overview

• Mergers and acquisitions > Strategy and business development

• information

Shareholders'

68

• Mergers and acquisitions

(52)

A

(54)

KONEHALI GUGUSHE

APPOINTED 2020

COMMITTEE MEMBERSHIP A T

Independent non-executive director BCom Accounting (Rhodes University), CA(SA)

(45)

ROY DOUGLAS

(63)

Corporate governance report

Effective corporate governance is the cornerstone upon which the board and management of the ADvTECH group is based. The board embraces its responsibility for ensuring that the principles of sound corporate governance are observed and incorporated into the leadership and management of the group.

The directors, collectively and individually, acknowledge their fiduciary duties in terms of the Companies Act, King IV™ and the JSE Listings Requirements. A portfolio of evidence, setting out how the group has applied the principles of King IV™, is available on our website www.advtech.co.za

ADvTECH supports the principles of good corporate governance and adherence to the values of ethical leadership, corporate citizenship, stakeholder inclusivity, diversity and sustainable development.

Achieving governance outcomes

The board remains committed to the principles of King IV™ that ultimately lead to the governance outcomes as depicted below. This is achieved by effective and ethical leadership through continuously reassessing the group's internal controls, policies, terms of reference, procedures and processes, while considering the recommendations contained in King IV™ and making relevant changes when appropriate.

Group overview

Governance structure

ADvTECH has a unitary board structure that oversees the management and control structure, which directs the organisation in its entirety. The board retains full and effective control over the group and monitors executive management's implementation of plans and strategies.

The board has, through an approved delegation of authority, delegated the implementation and execution of the approved strategy to executive leadership through the group CEO. Executive leadership is responsible for the effective control of all group operational activities, acting as a decisionmaking body and a medium of communication and co-ordination between the various divisions, group companies and the board.

Governance framework

Leadership operating committees

The leadership operating committees (see page 21) are responsible for making recommendations to the board regarding the group's policies and strategies and for monitoring their implementation and execution in accordance with the board's directives. These committees oversee the identification, assessment, monitoring and reporting of group risks and make recommendations on risk mitigation to the board.

The leadership operating committees have access to the expertise of board members and attend board meetings, when appropriate, to ensure optimal alignment between the board and management in the group's strategy implementation.

Each of the group's three operating divisions (schools, tertiary and resourcing) have formal management structures that meet on a regular basis to ensure implementation and effectiveness of corporate governance and internal controls.

Board composition

The board comprises of eleven directors, with nine non-executive directors and two executive directors, being the group CEO and group CD (GCD). The majority of non-executive directors, including the chairman, are independent. There is a balance of power on the board and no single individual or group of individuals has unfettered powers to dominate the decision-making of the board.

Executive directors and prescribed officers have standard employment contracts, requiring no more than three months' notice of termination, except for the group CEO, which requires six months' notice.

Board skills/experience

The board comprises of an appropriate balance of knowledge, skills, experience, age, gender, race, diversity and independence to fulfil its role and responsibilities to stakeholders.

Corporate governance	5
Education and academia	4
Finance, commerce andinvestment management	8
Human resources	2
International businessand education exposure	4
Law	1
Marketing	2
Mergers and acquisitions	6
Strategy and businessdevelopment	5
Transformation anddiversity	2
Risk management	2

The directors, individually and collectively, have extensive experience and specialist skills across a range of sectors necessary to fulfil their role and responsibilities.

overview

Group

A non-executive director may not serve on the board for longer than

12 years.

Board chairman

In line with best practice, the chairman of the board, CH Boulle, is an independent non-executive director. The roles of chairman and CEO are separate, each with clearly defined responsibilities as set out in the board charter.

Lead independent director

The board has appointed independent non-executive director SA Zinn as its lead independent director, to lead in the absence of the chairman; chair discussions and decisionmaking by the board on matters where the chair has a conflict of interest; act as an intermediary between the chairman and other members of the board, where necessary; deal with shareholders' concerns where contact through normal channels has failed to resolve concerns or where such contact is inappropriate; and lead the performance appraisal of the chair.

The role and responsibilities of the lead independent director are included in the board charter, which is reviewed annually by the board.

Independence and performance

In terms of the principles of good corporate governance, an assessment of the independence of all non-executive directors was conducted. The board concluded that, in its view, the majority of non-executive directors are independent and there is no interest, position, association or relationship which, when judged from the perspective of a reasonable and informed third party, is likely to unduly influence or cause bias in their decision-making.

In addition, in terms of the board's policy, all non-executive directors who have served on the board for a period of nine years or longer or who are 70 years of age or over, are required to stand for re-election on an annual basis. The policy further stipulates that a non-executive director may not serve on the board for a period exceeding 12 years. Currently there are no non-executive directors who have served on the board for a period exceeding nine years. One director is over the age of 70 and will retire by rotation at the AGM.

Assessment of the board

The board of directors analyses and evaluates its effectiveness in line with King IV™. The analysis and evaluation of the effectiveness of the board of directors was conducted externally and independently during 2020 by the Institute of Directors (IoDSA).

Each board member completed a questionnaire and one-on-one interviews were held with an independent assessor. The evaluation did not reveal any significant areas of concern and concluded that the board and board committees effectively discharged their respective responsibilities. Areas which have been identified for improvement will be addressed during the current financial year.

An executive director's performance, in relation to key performance areas, as agreed at the beginning of each year, is assessed annually in accordance with the group's standard performance assessment processes.

Board appointment and removal

The board, assisted by the nominations committee, is responsible for recommending new director appointments or filling a vacancy. The nominations committee evaluates suitable candidates and submits nominations to the board. This process considers factors such as knowledge, skills, experiences, personality types, age, gender and race in order to achieve a broad and diverse board composition that will serve the best interests of the group.

The appointment of a new director is subject to approval by shareholders at the first AGM held following their appointment. An induction programme is established for new directors. On appointment to the board, new directors visit the group's businesses and meet with senior management to facilitate their understanding of the group structure and their fiduciary duties and responsibilities.

Directors are required to disclose their directorships to ensure they are not overcommitted in terms of their representation on other listed or unlisted boards and have sufficient time available to fulfil the responsibilities as a director on the ADvTECH board and committees.

Despite the provisions of any contract, the company may, by ordinary resolution, remove any director from office and appoint another person in his/her stead as contemplated in Section 71 of the Companies Act.

Board changes

The following directorship changes have occurred since the 2019 annual integrated report:

Directors	King IV™classification	Change	Effectivedate
JD Jansen	INED	Retirement	28 May 2020
SC Masie	INED	Resignation	5 August 2020
CB Thomson	INED	Appointment	12 March 2021
MM Nkosi	NED	Appointment	1 April 2021

The board and management wish to thank Prof JD Jansen and SC Masie for their dedication and considerable contributions on the ADvTECH board over the years.

The board would also like to welcome CB Thomson and MM Nkosi and looks forward to their contribution to the board.

Annual rotation and election

In terms of the memorandum of incorporation (MoI), one-third of all non-executive directors retire by rotation annually. Any director appointed by the board, either to fill a casual vacancy or as an addition to the board, is subject to approval by the shareholders at the first AGM held following their initial appointment.

Directors who have served the longest since their last re-election are selected for rotation at the end of each year. The board has also adopted the policy that all non-executive directors who have served on the board for nine years or longer and/or have reached the age of 70 or older must stand for re-election on an annual basis.

In accordance with the provisions of the company's MoI and King IV™, Prof SA Zinn will retire by rotation and will stand for re-election at the AGM. J Zimmermann will retire by rotation and has indicated that he will not stand for re-election. Owing to the policy adopted by the board, stating that board members over the age of 70 need to retire by rotation on an annual basis, Dr JM Hofmeyr will also retire by rotation. Dr JM Hofmeyr, although eligible, will not be standing for re-election.

Board of directors and committee membership and attendance

The board has delegated some of its responsibilities to its committees to assist in the execution of its duties. The board has established five committees to assist it in fulfilling its duties and responsibilities more effectively. The delegation of authority to the board committees does not absolve the board from its accountability. The board and its committees are furnished with full information ahead of each meeting, ensuring that all relevant issues are brought to the attention of directors for deliberation.

Board members are appointed to committees based on their areas of expertise and experience and consist of a minimum of three

non-executive members to satisfy the requirements for the committee composition in terms of King IV™. Non-executive directors should, where possible, not serve on more than three committees to ensure the effectiveness of the board composition. A chairman is appointed from the members of each committee.

Delegation to committees is given by means of a formal term of reference that is approved and reviewed annually by the board. The board and its committees are satisfied that the board and committees have fulfilled their responsibilities in accordance with their respective terms of reference for this reporting period.

The board met five times during the year. The table below sets out the attendance by the directors at these meetings:

Name of directors	King IV™classification	19 March2020	27 May2020	27 August2020	15 October2020	26 November2020
CH Boulle (chair)	INED	ü	ü	ü	ü	ü
JS Chimhanzi	INED	ü	ü	ü	ü	ü
KM Gugushe*	INED	N/A	ü	ü	ü	ü
JM Hofmeyr	INED	ü	ü	ü	ü	ü
JD Jansen**	INED	ü	ü	N/A	N/A	N/A
SC Masie***	INED	ü	ü	N/A	N/A	N/A
KDM Warburton	INED	ü	ü	ü	ü	ü
J Zimmermann	INED	ü	ü	ü	ü	ü
SA Zinn	INED	ü	ü	ü	ü	ü
RJ Douglas	ED	ü	ü	ü	ü	ü
JDR Oesch	ED	ü	ü	ü	ü	ü

* KM Gugushe was appointed to the board with effect from 17 April 2020.

** JD Jansen retired from the board with effect from 28 May 2020.

*** SC Masie resigned with effect from 5 August 2020.

Board committees

The following disclosure is made in respect of each committee:

• • its role and associated responsibilities and functions;
• • its composition;
• • areas of focus during the reporting period;
• • the number of meetings held; and
• • attendance at committee meetings is disclosed in this report, including that of external advisers or invitees who regularly attend meetings.

Audit and risk committee (ARCom)

ARCom is constituted as a statutory committee in terms section 94(7) of the Companies Act. As required by the Companies Act, shareholders elect the members of the ARCom at the AGM. All members of the committee are independent as defined by the Companies Act. Terms of reference, approved by the board and adopted by the committee, set out the committee's functions and responsibilities.

Owing to the size of the company, the board decided to combine the audit and risk committee into one committee. The newly formed committee comprises members of the audit committee, as approved by shareholders at the company's AGM held on 28 May 2020, with KDM Warburton as chair. The ARCom will now perform the functions of the risk committee and the agenda is divided into two separate sections to ensure that both audit and risk management responsibilities are attended to. The board is satisfied that the independence, experience and qualifications of each member enables them to fulfil the committee's mandate.

The board has recommended that the following non-executive directors be appointed to the ARCom at the AGM in May 2021, to hold office until the following AGM:

• • KDM Warburton (chairman);
• • JS Chimhanzi;
• • KM Gugushe; and
• • CB Thomson.

The appointment of Mr CB Thomson is subject to confirmation of his appointment as director by shareholders at the AGM.

Using our capitals to create value

Strategic review

Shareholders' information

Annual financial statements

Governance overview

The table below sets out the attendance by the directors at these meetings:
Name of directors	King IV™classification	18 March2020	26 May2020	10 July2020	12 August2020	26 August2020	16 November2020	25 November2020
		Auditcommittee	Riskcommittee			Audit and risk committee
KDM Warburton (chair)	INED	ü	(invitee)	ü	ü	ü	ü	ü
JS Chimhanzi*	INED	ü	ü	ü	ü	ü	ü	ü
CH Boulle	INED	(invitee)	(invitee)	(invitee)	(invitee)	(invitee)	(invitee)	(invitee)
KM Gugushe	INED	N/A	ü	ü	ü	ü	ü	ü
SC Masie**	INED	N/A	ü	N/A	N/A	N/A	N/A	N/A
RJ Douglas	ED	(invitee)	ü	(invitee)	(invitee)	(invitee)	(invitee)	(invitee)
JDR Oesch	ED	(invitee)	ü	(invitee)	(invitee)	(invitee)	(invitee)	(invitee)

* JC Chimhanzi chaired the risk committee meeting held on the 26 May 2020.

** SC Masie resigned as director of the board and member of the risk committee with effect from 5 August 2020.

These meetings are attended by the internal and external auditors, the group CEO and GCD, as well as other board members and invitees as considered appropriate by the chairman of the committee. The committee also ensures that, as a minimum, it meets with the external auditors at least once a year without management being present.

ARCom is further responsible for the recommendation of appointment of the external audit firm to the shareholders. Deloitte and Touche has served as auditors for a period of 19 years. In anticipation of the audit firm rotation requirements, the committee conducted an extensive review and assessment of proposed audit firms in line with the JSE Listings Requirements and company criteria, and based on the outcome of the assessment, will recommend the appointment of Ernst & Young as auditors for the 2021 financial year at the AGM in May 2021.

KEY RISK FOCUS FOR 2020

• • Refined the risk policy and the risk register as well as the identification of an appropriate risk appetite and risk tolerance threshold;

• • Monitored and oversaw the data privacy, the cyber risk and the group's risk register;

• • Monitored and assessed the material risks and ensured risk mitigation strategies were timeously actioned;

• • Monitored the regulatory environment;

• • Monitored the macro-economic environment;

• • Recommended further strengthening of the risk management process; and

• • Ensured the group remains operationally and financially resilient during and after the COVID-19 pandemic.

The committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference.

• • Monitored the integrity of the financial statements of the company, including its annual and half-yearly reports, preliminary results announcements and any other formal announcement relating to its financial performance;
• • Reviewed key judgements and significant matters raised by management and internal and external audit to ensure the accuracy and integrity of financial data disclosed;
• • Reviewed the dividend proposals to ensure the group has sufficient resources to make distributions;
• • Evaluated the adequacy and effectiveness of the internal control environment;
• • Evaluated the independence, effectiveness and performance of the internal audit function;
• • Reviewed and approved the annual internal audit plan, ensuring the inclusion of material risk areas, acceptable coverage of business processes and that all reporting requirements were met;
• • Recommended to shareholders the appointment of the auditors for the ensuing financial year;
• • Reviewed and approved the external auditors' 2020 annual plan, scope of work, audit fees and considered the key audit matters in the external audit report;
• • Reviewed the 2020 annual financial statements and annual integrated report;
• • Oversaw the preparation of the audit committee report for inclusion in the annual financial statements;
• • Assessed compliance with all other statutory requirements in terms of section 94(7) of the Companies Act of 2008, King IV™, JSE Listings Requirements and any other applicable regulatory requirements, and confirmed that no reportable irregularities were identified and reported by the external auditors in terms of the Auditing Profession Act, 26 of 2005;
• • Recommended an update and strengthening of the greater risk management environment;
• • Considered the effectiveness of the GCD and CFO, Mr JDR Oesch;
• • Reviewed the CEO and GCD sign-off on internal controls declaration;
• • Recommended the appointment of the new auditors for shareholder approval; and
• • Reviewed the impact of the COVID-19 pandemic on the group's annual financial statements.

Group overview

Strategic review

Using our capitals to create value

Shareholders' information

Annual financial statements

Governance overview

Remuneration committee (RemCom)

The board has delegated oversight of remuneration to the RemCom, in accordance with King IVTM, to ensure fair, transparent and responsible remuneration. All members of RemCom are independent non-executive directors.

The committee determines and approves the remuneration policy for all employees.

RemCom met three times during the year. The table below sets out the attendance by the directors at these meetings:

Name of directors	King IV™classification	18 March2020	16 September2020	24 November2020
SA Zinn (chair)	INED	ü	ü	ü
CH Boulle	INED	(invitee)	(invitee)	(invitee)
KDM Warburton	INED	ü	ü	ü
JM Hofmeyr	INED	ü	ü	ü
J Zimmermann	INED	ü	ü	ü
RJ Douglas	ED	(invitee)	(invitee)	(invitee)
JDR Oesch	ED	N/A	(invitee)	N/A

The chairman of the board, group CEO and group HR executive attend the meetings by invitation, but do not participate in any deliberations regarding their own remuneration. The GCD is occasionally invited to attend the meetings to report on areas within his expertise.

KEY FOCUS FOR 2020

• • Ensured the remuneration policy is aligned to and promotes the achievement of the group's strategic objectives and encourages individual performance;

• • Ensured that annual guaranteed pay, benefits and incentives are appropriately benchmarked to ensure the group is competitive in the employment market;

• • Reviewed and approved the performance evaluation of the group CEO, GCD and other executive directors against agreed deliverables;

• • Reviewed incentive schemes to ensure alignment to shareholder value creation and that the schemes are administered in terms of the rules;

• • Reviewed the remuneration of non-executive directors and recommend the fees for approval by the shareholders at the next AGM;

• implementation report is put to a non-binding advisory vote at the AGM of shareholders once every year and oversaw the preparation of the remuneration report, to be included in the annual integrated report;

• • Reviewed the succession plans for the board and its committees;

• • Reviewed and amended the NEPS and ROFE weightings for LTI and EBIT and ROFE for STI;

• • Approved outcomes for the 2017 LTI and the 2020 awards; and

• • Approved the STI outcomes for the 2019 financial year and set targets for 2021.

RemCom's report can be found on page 80 to 92

Transformation, social and ethics committee (Tsec)

Tsec is a statutory committee of the board appointed in terms of section 72(4) of the Companies Act. Tsec, in terms of this broader mandate, is responsible for the oversight of and reporting on the group's ethics, responsible corporate citizenship, sustainable development, stakeholder relations and transformation. Tsec takes into consideration the needs, interests and expectations of all material stakeholders, in the best interest of the company.

Tsec met three times during the year. The table below sets out the attendance by the directors at these meetings:

Name ofdirectors	King IV™classification	10February2020	26May2020	26August2020
JD Jansen (chair)*	INED	ü	ü	N/A
JM Hofmeyr (chair)**	INED	ü	ü	ü
KM Gugushe	INED	N/A	ü	ü
SA Zinn	INED	ü	ü	ü
RJ Douglas	ED	ü	ü	ü

* Prof JD Jansen retired as chair and member of Tsec with effect from 28 May 2020.

** Dr JM Hofmeyr was appointed as chair of Tsec with effect from 26 August 2020.

KEY FOCUS FOR 2020

• • Managed stakeholder relations in terms of sustainability, ethics and transformation;
• • Reinforced a culture suitable for offering quality education and learning;

A separate report from Tsec is included on page 93 to 95

• • Drove strategies to improve its B-BBEE accreditation; and
• • Ensured continued focus on employment equity.

75

Strategic review

Nominations Committee (NomCom)

NomCom consists of all the non-executive directors and is chaired by the chairman of the board. However, during the year under review, the board conducted an assessment of all its committees and had taken the decision to streamline the composition of the NomCom to comprise only three non-executive members.

• • CH Boulle (chair);
• • JM Hofmeyr; and
• • SA Zinn.

The role of the committee is to assist the board in ensuring that:

• • The board and its committees have the appropriate composition to effectively execute its duties;
• • Directors are appointed through a formal process; and
• • Induction and ongoing training and development of directors take place.

The NomCom met twice during the year. The table below sets out the
attendance by the directors at these meetings:

Name of directors	King IV™classification	19March2020	26November2020
CH Boulle (chair)	INED	ü	ü
SC Masie*	INED	ü	N/A
JD Jansen**	INED	ü	N/A
JS Chimhanzi***	INED	ü	ü
KM Gugushe***	INED	N/A	ü
KDM Warburton***	INED	ü	ü
J Zimmermann***	INED	ü	ü
JM Hofmeyr	INED	ü	ü
SA Zinn	INED	Apology	ü
RJ Douglas	ED	(invitee)	(invitee)
JDR Oesch	ED	N/A	(invitee)

* SC Masie resigned as member of the board and nominations committee with effect from 5 August 2020.

• ** Prof JD Jansen retired as member of the board and nominations committee with effect from 28 May 2020.
• *** JS Chimhanzi, KM Gugushe, KDM Warburton and J Zimmermann volunteered to step down as members of the nominations committee at the meeting held in November 2020.

The group CEO attends the meetings by invitation.

KEY FOCUS FOR 2020

• • Considered the composition of the board and its committees, made recommendations to the board in this regard as may be appropriate;
• • Considered the board performance assessment and action plans;
• • Considered board and executive succession plans;
• • Ensured effective induction of new directors; and
• • Considered new directors as identified in succession plans and appointed new directors.

The committee is satisfied that it has fulfilled its responsibilities in accordance with the committee's terms of reference.

Members of the investment committee comprise a mix of independent non-executive directors, the group CEO and the GCD. The majority of the members are independent nonexecutive directors.

The investment committee met once during the year. The table below sets out the attendance by the directors at these meetings:

Name of directors	King IV™classification	18 March2020
CH Boulle (chair)	INED	ü
SC Masie	INED	ü
KDM Warburton	INED	(invitee)
J Zimmermann	INED	ü
SA Zinn	INED	ü
RJ Douglas	ED	ü
JDR Oesch	ED	ü

At the nominations committee meeting held in November 2020, KDM Warburton was appointed as member of the investment committee, as opposed to being an invitee.

KEY FOCUS FOR 2020

• • Reviewed and considered the financial and other aspects of material investment or disinvestment activity;
• • Determined the most appropriate and advantageous method of funding material investments and the best capital structure of the company in pursuing its investment strategy;
• • Approved acquisitions, disposals and capital expenditure in line with the limits of authority delegated to it and in line with the strategy determined by the board;
• • Conducted post implementation reviews of acquisitions and major investments; and
• • Assisted in the acquisition strategy of the group.

Company secretary

The company secretary provides the directors of the company, both collectively and individually, with guidance as to their duties, responsibilities and powers and the impact of legislative and regulatory developments impacting the company. The company secretary is independent and has unrestricted access to the board. An arm's length relationship exists between the company secretary and the board. The company secretary is not a member of the board, but attends board meetings in the discharge of the company secretary's functions and maintains records of meetings.

Ms KN Piki resigned as group company secretary of ADvTECH effective 31 December 2020. Ms CB Crouse was appointed as group company secretary effective 1 January 2021. The board is satisfied that the company secretary has the necessary qualifications, skill and level of competence necessary to effectively discharge her responsibilities and is a fit and proper person.

Compliance governance

The board oversees compliance with its approved compliance framework and in accordance with good governance. ARCom is responsible for continual monitoring of the regulatory environment and appropriate responses to changes and developments that impact on the group and reporting on any significant changes to the board.

The legislation and regulations listed alongside, constitute relevant obligations on the group, amongst others.

Legislation and regulations

• • Companies Act 71 of 2008;
• • JSE Listings Requirements;
• • King IV Report of Corporate Governance™ in South Africa;
• • Employment Equity Act;
• • Broad-Based Economic Empowerment Act and related Codes of Good Practice;
• • The South African Schools Act;
• • The National Credit Act;
• • The Consumer Protection Act;
• • The Competition Act;

• Value-Added Tax Act; • Income Tax Act;

• Protection of Personal Information Act (POPI);

• • Higher Education Act;
• • National Qualifications Framework Act;
• • General and Further Education and Training Quality Assurance Act;
• • Umalusi Policy and Criteria, upon publication of the final version, under the General and Further Education and Training Quality Assurance Act; and
• • Other applicable local and foreign legislation and regulations.

There were no material or repeated regulatory penalties, sanctions or fines for contraventions of statutory obligations in the 2020 financial year.

Conflicts of interest declarations and related-party transactions

Members of the board disclose any conflict of interest they may have at board meetings and, as a matter of practice, are required to make disclosure of any potential conflicts of interest on an annual basis. A director or employee is prohibited from using his or her position, or confidential or price-sensitive information, to the benefit of himself or herself or any related party. During the year under review, no potential conflicts of interest were disclosed by directors.

The following related-party transactions were disclosed by directors and executive management during the year under review:

Directors

JS Chimhanzi has been awarded a Crawford International bursary for her child in terms of the group's bursary policy.

JDR Oesch has been awarded Crawford International bursaries for his children in terms of the group's bursary policy.

RJ Douglas has been awarded a Vega bursary for his child in terms of the group's bursary policy.

Prescribed officers

The board has identified MD Aitken, DL Honey and FJ Coughlan as prescribed officers in terms of the Companies Act. They are also members of the leadership operating committees.

DL Honey has been awarded the following bursaries for his children in terms of the group's bursary policy:

• • Crawford International; and
• • Vega.

His brother, E Honey, is a director of Adams & Adams Attorneys, which firm provides legal services in respect of intellectual property to the group.

FJ Coughlan has been awarded the following bursaries for her financial dependents in terms of the group's bursary policy:

• • Vega;
• • Abbotts College;
• • Crawford International; and
• • Pinnacle College.

Leadership committee

S van Zyl has been awarded the following bursaries for his children in terms of the group's bursary policy:

• • Crawford International; and
• • Vega.

V Mbhokota has been awarded the following bursaries for his children and financial dependents in terms of the group's bursary policy:

• • Crawford International; and
• • Centurus Southdowns College.

Group ICT steering committee

The group ICT steering committee reports to the board through ARCom and is responsible for the governance of technology and information, and sets the direction for how technology should be approached and addressed. The committee is chaired by the group CEO, with S van Zyl being the chief information officer and designated information officer. The committee meets formally at least four times a year to report on its duties in accordance with its terms of reference as approved by the board. The strategic intent of group IT is documented and communicated in the group IT strategy and is aligned with the enterprise strategy.

The board is satisfied that IT governance is properly managed and aligned with business needs and strategy, and that the disaster recovery programme will support the continuity of critical business processes.

Shareholders' information

Annual financial statements

Governance overview

Group overview

Strategic review

Using our capitals to create value

Ethics

The board sets the ethical tone and governs the group's ethics in a manner that supports an effective corporate culture within the group. Tsec oversees the group's adherence to these ethical standards and keeps the board apprised of any material ethical matters that may arise. Integrity is fundamental to how the group conducts its business and is expressed in its values as well as interaction with key stakeholders. The group has various processes, policies, codes and controls in place to embed the group's ethical culture. Group employees are required to act with the utmost integrity and objectivity and in compliance with both the letter and the spirit of the law and group policies.

United Nations Global Compact (UNGC)

ADvTECH embraces the 10 UNGC principles which cover human rights, the labour environment and anticorruption.

Organisation for Economic Co-operation and Development (OECD)

The group adheres to the guidelines for multinational enterprises regarding anti-corruption.

Sustainable Development Goals (SDGs)

Through our commitment to the United Nations SDGs, we embrace our role in providing quality education as a way of building an inclusive society that will uplift future generations.

Code of conduct

ADvTECH's code of conduct outlines what the group considers appropriate behaviour and is circulated to all employees.

Insider trading

The group has a board approved policy on insider trading which states that no director, executive, manager or any employee who is likely to come into possession of price-sensitive information may deal directly or indirectly in the company's shares during closed periods.

Dealing in the company's shares by directors and members of the leadership operating committees necessitates the prior clearance from the chairman and group CEO (as applicable). The company secretary retains a record of such dealings and approvals. Identified employees who are likely to have access to price-sensitive information require clearance from the group CEO before trading in the company's shares.

Strategic review

Using our capitals to create value

We strive for excellence and sustainability in meeting the needs of today, without compromising those values for future generations. In doing so, we are proud to make a meaningful difference to the people we serve through our core business activities and ongoing engagement with key stakeholders. Our main sustainability contribution is to educate students from preschool to tertiary level about the importance of long-term environmental, social and governance awareness and to lead by example in our everyday decisions. ADvTECH's sustainability approach incorporates various policies, standards and procedures relating to our economic, environmental and social performance. Our approach is built on a robust corporate governance framework and underpinned by our values, which results in various sustainability impacts as tabled below.

The group is committed to creating a culture of high performance as well as attracting and retaining high calibre employees to assist us in achieving our strategy and providing shareholder returns.

Herewith you will find the group remuneration report, which includes the remuneration policy and the implementation report. The provisions of King IV™, together with the JSE Listings Requirements, require that these two documents be submitted for non-binding advisory votes at the AGM of shareholders.

Dear shareholder

On behalf of the RemCom, I am pleased to present the group remuneration committee report for the financial year ended 31 December 2020. This report is written against the backdrop of key decisions that were made considering the effect of the pandemic on our employees, our suppliers, parents and the greater society. In this time of uncertainty, there has never been a better time to ensure a balance between what the company needs and the expectations of executives, as well as the expectations of shareholders and all stakeholders. As such, the committee spent considerable time reflecting and deliberating on its role in ensuring effective and fair remuneration.

In light of the pandemic RemCom also considered changes to short-term incentive scheme (STI) for the 2020 performance cycle. There was acknowledgement that the "standard" criteria previously agreed on that would not be applicable and that management actions were directed at the sustainability of the business. Performance was therefore amended towards outputs that included minimising student losses to protect revenue, balance sheet protection through cash preservation, and employee wellness, retention and engagement to drive morale and boost productivity. The remuneration report contains more detail in this regard.

At our prior AGM on 28 May 2020, 57.6% of our shareholders supported our remuneration policy and 81.6% of our shareholders supported the implementation report. During our engagements with shareholders, several suggestions were made by our shareholders and we have amended this year's remuneration policy to take those recommendations into account. The recommendations included the adoption of a malus and clawback policy, a minimum shareholder requirement policy and amendments to the weighting between normalised earnings per share (NEPS) and return on funds employed (ROFE) in our long-term incentive scheme (LTI) and between earnings before interest and taxes (EBIT) and ROFE in our STI. ADvTECH values shareholder feedback and we will continue to engage with shareholders regularly.

RemCom is satisfied that appropriate governance structures exist at and below board level, to recognise and retain top talent and fairly reward employees. The composition, number of meetings held and attendance at such meetings of RemCom are shown on page 75.

Going forward, RemCom will continue to review the principles of our remuneration against benchmark data and will report any changes in the next remuneration report. RemCom is satisfied that it has fulfilled its role and responsibilities in terms of its mandate and that the group's remuneration policy has achieved its objectives for the year under review.

The board, on recommendation of the RemCom, approved the remuneration report on 20 April 2021. Shareholders will be requested to cast a non-binding advisory vote on the remuneration policy and implementation report at the AGM to be held on Thursday, 27 May 2021.

On behalf of the remuneration committee

Professor SA Zinn Chair: remuneration committee 20 April 2021

Background statement

ADvTECH seeks to attract, retain, reward and develop high performing employees within the group to promote the achievement of its strategic objectives and to ensure the group's long-term sustainability. The group is committed to ensuring it remunerates fairly, responsibly and transparently to promote and advance diversity and transformation within the group.

Factors influencing remuneration

Fair and responsible pay

In determining what constitutes fair, responsible and transparent remuneration while balancing positive outcomes in the short-, medium- and long-term, RemCom considered various internal and external factors that influence remuneration. Some of the external factors include the prevailing economic climate, inflation and market benchmarks, while internal factors include the group's performance and affordability, responsibilities and internal benchmarks.

During the year, RemCom reviewed and approved the balanced scorecards for all executive directors, prescribed officers and key senior executives to ensure alignment with our strategic imperatives. A core component of the executive incentive scheme is to reward individual employee and team performance in meeting agreed key performance objectives and indicators. This performancebased remuneration philosophy is underpinned by a detailed and documented methodology approved by RemCom and sound governance and management principles.

Benchmarking

The guaranteed remuneration and other benefits of executive directors, prescribed officers and other key senior executives are benchmarked periodically against the market and are aligned with group performance to ensure that remuneration packages remain competitive and appropriate. Employee salary increases and share incentives for the 2020 financial year were considered and recommended for approval.

Non-executive director fees are benchmarked annually with the assistance of external consultants who are considered independent from the group.

Recent voting result on remuneration policy

Extensive shareholder engagement took place during the year under review to ascertain reasons for dissenting votes against the group's remuneration policy. Following this engagement, the group addressed relevant concerns, made amendments to the remuneration policy and long-term incentive awards and enhanced its remuneration disclosure. We remain committed to meeting shareholder expectations through effective and transparent shareholder engagement on our remuneration policy, implementation and disclosure.

Results of the non-binding advisory vote

KEY FOCUS AREAS IN 2020

During the year under review, RemCom focused on the following areas:

• • Approved the RemCom annual calendar for 2021
• • Reviewed the remuneration report and policy and implementation thereof
• • Approved the implementation of a group malus and clawback and minimum shareholder requirement policy
• • Obtained feedback and responded to shareholders' feedback on ADvTECH's remuneration policy and implementation report
• • Approved the alignment of the salary increase cycle to April for the education divisions. This transition is being managed over a two-year period
• • Reviewed the group's skills audit of senior level management across the group's three main divisions in line with succession plans
• • Reviewed and adjusted the executive STIs owing to the impact of COVID-19 for the year to align focus on the sustainability of the business
• • Approved cost to company remuneration packages for new employees who earn above R1.5 million
• • Reviewed fees payable to non-executive directors
• • Reviewed and recommended the remuneration report to the board for approval
• • Reviewed and amended the NEPS and ROFE weightings for LTI and EBIT and ROFE weightings for STI
• • Approved outcomes for the 2017 LTI and the 2020 awards
• • Approved the STI outcomes for the 2019 financial year and set targets for 2021

LOOKING AHEAD

Going forward, RemCom will focus on:

• • Reviewing the remuneration policy and practices to ensure alignment with King IV™
• • Obtaining feedback, addressing possible concerns and implementing recommendations from shareholders regarding the group's remuneration policy and implementation report
• • Reviewing and approving STI scheme targets
• • Ensuring that the search for skilled employees and rewarding of existing skills remains a priority
• • Reviewing and approving the LTI awards and targets
• • Approving the STI scheme outcomes for 2021

information

statements

Group overview

Strategic review

Using our capitals to create value

Governance overview

PART 1 Remuneration policy overview

Remuneration policy

The purpose of remuneration is to reward employees fairly and appropriately for their contribution and business success.

The goals of our remuneration strategy are to:

• • Attract and retain high-quality talent and scarce skills that provide world-class education and recruitment expertise
• • Motivate and reward high performance to drive a culture of superior performance
• • Provide fair pay and incentives in line with our high standards of corporate governance
• • Minimise barriers to career development and mobility
• • Ensure compliance with all the applicable regulatory requirements

The group is characterised by both organic and acquisitive growth and all business entities are at varying stages of remuneration maturity. This policy creates a vision of an integrated policy that each entity will journey towards.

The group's remuneration philosophy entrenches a culture of high performance by aligning the elements of remuneration directly to the business objectives, values, purpose and strategy.

Key remuneration principles of our philosophy that shape and guide our remuneration policy and support value creation

ADvTECH is a knowledge-based business and its intellectual property is vested in people. As employment costs are our largest expense, the remuneration policy is critical to the success of the business.

Recognition of equal pay for work of equal value across the organisation.

Performance management provides the governance framework within which the remuneration policy is implemented.

Employees in sales may qualify for commission.

RemCom ensures that remuneration practices are based on principles of sound governance and is of the view that the remuneration policy has achieved its stated objectives for the year under review.

Key to this process is RemCom's independence in determining the remuneration and bonus policies for all employees, and in reviewing and approving of remuneration and bonuses payable to key senior executives.

Conditions of employment are reviewed against best practice and, where necessary, improvements to conditions of employment are implemented with due regard to the cost implications and the impact on staff. In an education environment, non-material aspects (such as study leave and study assistance) are welcomed by employees.

A review of the remuneration policy and its implementation is undertaken annually to ensure that it fulfils its purpose.

Remuneration structure

Remuneration is structured to attract and retain employees and provide incentives for exceptional performance. This is achieved through a combination of guaranteed remuneration, incentive rewards of a shortand long-term nature and conditions of service. Guidance is provided in the group's integrated remuneration policy, which seeks to combine and calibrate all forms of remuneration. Executive management is offered a remuneration structure similar to that of senior and management employees, with the same three elements.

ADvTECH's remuneration core elements

Executive remuneration structure

Our remuneration policy seeks to achieve a suitable balance between guaranteed and variable remuneration. Variable short-term incentives and LTI awards are each limited to a maximum of 100% of guaranteed remuneration in the case of the group CEO and 80% for the group CD. RemCom considers this to be an appropriate structure to reward achievement of both short- and long-term objectives.

Remunerationcomponent	ADvTECH's policy	Type of pay
GuaranteedremunerationIncludes salaryand employeebenefits on acost tocompany basis	•Reflects individual contribution and marketvalue relative to the role and to recogniseskill and experience.•Determined by the complexity of the role,market value and the ongoing review of theemployee's personal performance andcontribution to the group's overallperformance and values.•Reviewed annually with increases takingeffect in April.	Fixed payMonthlypayment afterdeductingcontributions toretirementfunding andmedical schemewhere applicable
Short-termincentivebonus scheme	Rewards management on achieving groupperformance and their respective KPAs. Theparticipant's potential eligibility percentageswill depend on the participant's job grade withthe threshold for executive directors as follows:•Group CEO (maximum of 100% ofguaranteed remuneration).•GCD (maximum of 80% of guaranteedremuneration).	Variable payPaid annually
Long-termincentivebonus scheme	Intended to attract and retain seniormanagement and reward sustainable valuecreation that aligns with stakeholders' interestsover the long-term. The awarding of sharesunder this scheme is based on meetingagreed performance targets.The maximum award in terms of themanagement share incentive (MSI) schemeisas follows:•Group CEO (maximum of 100% ofguaranteed remuneration).•GCD (maximum of 80% of guaranteedremuneration).	Variable payAwardedannually andvests after threeyears

PART 1 Remuneration policy overview

Shareholders' information

Annual financial statements

Governance overview

Group overview

Strategic review

Using our capitals to create value

Group overview

Group CEO and GCD

The group CEO's and GCD's total achievable remuneration packages reflected below are based on the maximum targets under the short- and long-term incentives schemes. RemCom considers this to be an appropriate mix to reward achievement of both short- and long-term objectives.

Short-term incentives

Objective To reward the achievement of short-term individual employee and group objectives.

Executive directors, prescribed officers, senior executives and managers participate in an annual STI plan. Eligibility

Balanced scorecard

RemCom has approved the following performance conditions and targets:

Financial KPAs:		Non-financial KPAs:
Earnings beforeinterest andtaxation (EBIT)Return on fundsemployed	40%30%	These KPAs are alignedto the group's strategic30%objectives andmitigation of key risksto ensure the group'slong-term sustainability

Each executive's personal KPAs are aligned to the above, based on their portfolio and the areas under their influence.

Impact of COVID-19 on STI Targets

Owing to the impact of COVID-19, RemCom has amended the "standard criteria" for the STI during the current remuneration cycle, to achieve greater focus on the sustainability of the business, with 30% of the STI being the maximum pay-out, based on the following criteria:

Minimising student losses to protect revenue

Balance sheet protection through cash preservation

Employee wellness, retention and engagement to drive morale and boost productivity

Committee discretion

RemCom approves the targets, the measurement of their achievement against these targets and the resultant bonuses to be paid. RemCom has discretion to award an ex-gratia bonus in exceptional circumstances. This includes where an individual has delivered exceptional results despite the group or divisional performance not being met, or where extraneous factors outside the control of executives are considered to have impacted on the overall performance, resulting in the targets not having been met.

No discretionary bonuses were granted during the year under review.

Long-term incentives: Management Share Incentive (MSI) scheme

The MSI scheme provides annual awards of forfeitable shares in the form of performance and retention shares to eligible participants.

The shares automatically vest in full after three years, on the achievement of the set targets and provided the individual is employed on the vesting date and that a minimum individual performance rating has been achieved over the three-year period.

The first award (a total of 1 781 289 shares) was made on 28 September 2017 and vested in 2020. The second award (a total of 2 266 166 shares) was made on the 27 September 2018 and vests in 2021. The third award (a total of 3 064 911 shares) was made on 18 September 2019 and will vest in 2022. The fourth award (a total of 4 705 127 shares) was made on 16 September 2020 and will vest in 2023.

Unvested shares carry dividend rights and voting rights. To be eligible to receive an award of forfeitable shares under the MSI, participants were required to relinquish their rights under the old scheme (share incentive scheme 2010) and all rights to vesting of the old scheme from 2021 onwards were forfeited.

RemCom considers the following regarding retention awards

The split in shares under the award favours performance-based targets over retention-based awards, with weightings being 75% performance and 25% retention for executives, and 60% performance and 40% retention for other participants.

The MSI scheme promotes

• • Good performance in relation to predetermined performance objectives
• • Retention of valuable skills and experience
• • Enhanced alignment of executives' awards with shareholder interests

Objective

• • Drive the longer-term strategic and sustainable performance of the group
• • Motivate participants to achieve the strategic objectives, thereby aligning shareholder and management interests
• • Reward management for their contribution to the delivery of the long-term strategic objectives
• • Attract future key talent in a competitive market with marketrelated variable earnings
• • Retain key talent to ensure sustainable performance of the group
• • Facilitate succession planning
• • Alignment with current market practice and King IV™

• Executive directors • Prescribed officers Eligibility • Senior executives • Managers

Balanced scorecard

RemCom has approved the following performance conditions and targets:

	Gateways
Achievement ofthe minimumaverage growthin normalisedearnings pershare (NEPS)target	Achievementof theminimumreturn on fundsemployedtarget	Achievementof a minimumindividualperformancerating

Committee discretion

RemCom has absolute discretion in the interpretation and application of the MSI rules to determine the following:

• • Individual participants based upon retention need
• • Level of awards based on market benchmarks
• • Allocation of awards between performance and retention share classification of termination (good or bad leaver) on a case-by-case basis
• • Performance measures, weightings and targets
• • Vesting period and basis of vesting

Group overview

Strategic review

Using our capitals to create value

Shareholders' information

Annual financial statements

Governance overview

	2018 and 2019 awards
Target 1	Compound annual growth rate of a minimum of the
75%	average CPI for the performance period with the
NEPS	maximum shares awarded at an average of CPI +7%
Target 2	Minimum target of weighted average cost of
25%	capital (WACC)** +2% with the maximum shares
ROFE*	awarded at WACC +6%
	2020 awards
Target 1	Compound annual growth rate of a minimum of the
60%	average CPI for the performance period with the
NEPS	maximum shares awarded at an average of CPI +7%
Target 240%ROFE*	Minimum target of WACC +2% with the maximumshares awarded at WACC +6%

Shares are awarded proportionately between the minimum and maximum targets.

• * The return on funds employed is calculated by dividing the normalised EBIT by the average funds employed for the year. The funds employed for each year are calculated by taking total assets for the year less cash balances and all non-interestbearing liabilities.
• ** The average WACC that is applicable during the relevant performance period.

Termination of employment or office

Non-executive directors are appointed in terms of a formal letter of acceptance and are not required to serve notice periods. In terms of the group's policy, all directors who have served on the board for nine years or longer or who are 70 years of age or over are required to stand for re-election on an annual basis. A non-executive director may not serve on the board for longer than 12 years.

Executive directors, prescribed officers and other key senior management are employed on standard employment agreements.

Employment contracts for executive management do not provide for termination payments arising from incapacity, dismissal, voluntary resignation, retirement, retrenchment or redundancy. In addition, no contracted balloon payments are due to executives upon termination.

Notice period

The following notice periods are in place:

Malus and clawback policy

During 2020, ADvTECH adopted a malus and clawback policy with the intention of aligning shareholder interests and the remuneration outcomes of employees. It allows the group to reduce or recoup the incentive remuneration in defined circumstances and is applicable to all ADvTECH employees who participate in the variable incentive remuneration programme.

Examples where the malus and clawback policy would be implemented include, but are not limited to:

• • where a material misstatement resulted in an adjustment in the audited consolidated accounts of the company or the audited accounts of any member of the group; and/or
• • where any information used to determine the quantum of an incentive remuneration amount was based on an error, or inaccurate or misleading information; and/or
• • where any action or conduct of a participant which, in the reasonable opinion of the board, amounts to serious misconduct; and/or
• • where any events or behaviour of a participant or the existence of events attributable to a participant, which led to the censure of the company or a member of the group by a regulatory authority, or have had a significant detrimental impact on the reputation of the company; and/or
• • the board or RemCom, in their discretion, deems it necessary to apply malus or clawback.

Minimum shareholder requirements policy

ADvTECH has adopted a minimum shareholder requirement (MSR) policy with the intention to align shareholder interests with executive objectives and to drive an increased level of executive accountability for the longer-term sustainability of the organisation.

The policy is based on the following principles:

• • Each executive's MSR target is determined using the individual guaranteed annual remuneration.
• • The target must be achieved within five years from approval of this policy (March 2021) or from the start date in the case of new appointees, unless otherwise determined by the RemCom considering market conditions and related factors.
• • The scheme is not intended to compel executives to incur debt to acquire ADvTECH shares, but rather that executives should retain shares acquired through the operation of share incentive schemes.

Group overview

Strategic review

Using our capitals to create value

Shareholders' information

Annual financial statements

Governance overview

• • Compliance to the MSR target will be measured annually and executives will have to declare the extent of their personal shareholdings in the company at each year-end.
• • RemCom will assess compliance with the MSR before making future discretionary LTI awards.

The MSR targets are set as follows:

In the event that the executive or senior manager fails to reach the MSR within the specified period the non-compliance will be flagged to RemCom who will be required to determine appropriate action and steps required for the executive to meet the MSR based on the circumstances for non-compliance.

Minimum shareholder requirements

Name ofdirectors	GuaranteedAnnualRemunerationR	Directshareholdingas at31December2020R	MSR shareprice as at31 Dec 2020(R9.50)R	MSRTargetR	Actualvalue ofshareholdingas at31 December2020
Executive
RJ Douglas	4 752 137	522 360	4 962 420	1.0	1.0
JDR Oesch	3 574 394	2 154 319	20 466 031	0.8	5.7
Prescribed
officers
MD Aitken	3 055 800	51 072	485 184	0.6	0.2
FJ Coughlan	3 117 059	137 582	1 307 029	0.6	0.4
DL Honey	3 218 690	7 478 545	71 046 178	0.6	22.1

Non-binding advisory vote on the remuneration policy

The shareholders of ADvTECH will be requested to cast a non-binding advisory vote on the remuneration policy at the AGM on Thursday, 27 May 2021.

Our remuneration policy sets out the principles used to ensure competitive remuneration while complying with all applicable laws and codes. This policy applies to the payments, accruals and awards made to executive directors, non-executive directors, senior executives and prescribed officers for the year ended 31 December 2021.

Guaranteed remuneration: Executive directors, prescribed officers and senior executives

During 2020, the increases to executives' guaranteed remuneration were linked to CPI and adjusted according to individual performance ratings.

Short-term incentives

PART 2 Implementation report

During the year under review, the NEPS target was not met and the ROFE target was partially met.

Based on the group's balanced scorecard, additional non-financial performance goals or KPAs were formulated in line with our strategic objectives. These individual KPAs are aligned to the executive's area of influence.

Strategic objectives	Target measures	Target
Growth	Achieved organically and through acquisitions
Academicexcellence	Achieved through remaining up to date withdevelopments in pedagogy and supporting tools,including technology and implementing thosethat will drive improved academic performance
Excellence throughspecialisation	Achieved by targeting high demand nichemarkets with special skills and continuouslyrefreshed candidate database
Product innovation	Drive relevant, innovative and sustainable productdevelopment. Provide value adding services toenable our brands to focus on their core functions
Human capitalproductivity	Created conditions to attract and retain criticalskills and high performance
Capitalproductivity	Achieved through identifying the most appropriateinvestment opportunities and leveraging theassociated benefits, while protecting andenhancing the respective assets for the best returns
Transformation	Aimed at achieving social and transformationjustice to reflect our nation's demographics
Reputation	Achieved through our customer value propositionand delivery of academic excellence
Customer focus	Proactively strove to understand the customerexperience to simplify and improve theirinteractions with all parts of the business
Regulations	Ongoing monitoring of the regulatoryenvironment to mitigate any risk associated withnon-compliance identified
TargetSignificantAchievedprogress	InsufficientProgressprogress

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

Outcome of executive bonuses

The parent and ultimate controlling party of the group is ADvTECH Limited.

Transactions between the company and its subsidiaries, which are related parties of the company, have been eliminated on consolidation and are not disclosed in this note.

Please refer to note 4 of the company annual financial statements for details of group entities.

STI Outcomes

Directors, prescribed officers and senior executive remuneration

Emoluments paid to executive directors and prescribed officers of the group (excluding gains on share options exercised) for the ended 31 December 2020, are set out below:

Name of directors	SalaryR	LongserviceawardR	BonusR	ExpenseallowanceR	ProvidentfundcontributionR	Total2020R
Executive
RJ Douglas	4 034 756	–	1 446 105	180 000	537 381	6 198 242
JDR Oesch	3 020 194	16 000	870 168	150 000	404 200	4 460 562
Total executive	7 054 950	16 000	2 316 273	330 000	941 581	10 658 804
Prescribed officers
MD Aitken	2 566 739	–	743 077	287 556	201 505	3 798 877
FJ Coughlan	2 555 967	16 000	569 764	227 556	333 536	3 702 823
DL Honey	2 650 128	–	441 949	186 840	381 722	3 660 639
Total prescribed officers	7 772 834	16 000	1 754 790	701 952	916 763	11 162 339

Emoluments paid to executive directors and prescribed officers of the group for the year ended 31 December 2019.

Name of directors	SalaryR	BonusR	ExpenseallowanceR	ProvidentfundcontributionR	Total2019R
Executive
RJ Douglas	3853 259	1472 408	180 000	514 240	6 019 907
JDR Oesch	2840 749	738 822	150 000	381 320	4 110 891
Total executive	6694 008	2211 230	330 000	895 560	10 130 798
Prescribed Officers
MD Aitken	2469 509	563 471	271 020	194 213	3 498 213
FJ Coughlan	2396 147	421 572	211 020	313 159	3 341 898
DL Honey	2813 161	790 352	221 916	370 918	4 196 347
Total prescribed officers	7678 817	1775 395	703 956	878 290	11 036 458

All targets have been achieved and therefore executive managers are eligible to

receive 30% of their maximum bonus award.

overview

Using our capitals to create value

Group overview

Long-term incentives

The directors and prescribed officers were awarded the following shares at 31 December 2020:

	Share awards asat 31 December2019	Share awardsawarded duringthe year		Share awards vestedduring the year	Share awardsforfeited duringthe year*	Share awards asat 31 December2020
				Benefit arising on
Name of directors	Number	Number	Number	vesting of awards(R)	Number	Number
Directors
RJ Douglas	246806		77082	703759	169724	–
	301758					301 758
	397162					397 162
		607097				607 097
JDR Oesch	140105		43757	399501	96348	–
	171300					171 300
	238985					238 985
		365310				365 310
Prescribed officers
MD Aitken	128624		40172	366770	88452	–
	155793					155 793
	205048					205 048
		311955				311 955
FJ Coughlan	89614		27987	255521	61627	–
	110079					110 079
	155747					155 747
		239196				239 196
DL Honey	140007		43726	399218	96281	–
	171180					171 180
	242198					242 198
		349265				349 265
	2 894 406	1 872 823	232 724	2 124 770	512 432	4 022 073

* This relates to awards forfeited due to performance targets not being met.

PART 2 Implementation report

MSI scheme

follows:

Outcomes against targets

		Target					Percentage
	Weighting	Threshold	Stretch	Actualachieved	of sharesvested
NEPS	75%	82.9	104.8	85.1	10.0%
ROFE (3 year average)	25%	15.4%	18.8%	15.5%	2.9%

* The performance shares include 83 400 NEPS and 8 936 ROFE.

The 2018, 2019 and 2020 awards vest in 2021, 2022 and 2023 respectively.

LTI

Outcomes – Executives and Prescribed Officers

	Shares		Shares
Name of executive	awarded	Retention	NEPS	ROFE	Total	Forfeited
Executive
RJ Douglas	246 806	61 702	13 892	1 488	77 082	169 724
JDR Oesch	140 105	35 026	7 886	845	43 757	96 348
Total executive	386 911	96 728	21 778	2 333	120 839	266 072
Prescribed officers
MD Aitken	128 624	32 156	7 240	776	40 172	88 452
FJ Coughlan	89 614	22 403	5 044	540	27 987	61 627
DL Honey	140 007	35 002	7 880	844	43 726	96 281
Total prescribed officers	358 245	89 561	20 164	2 160	111 885	246 360

PART 2 Implementation report

Share incentive scheme

The directors and prescribed officers held the following share options at 31 December 2020:

	Share options as at31 December 2019		Share options lapsedduring the year		Share options exercisedduring the year			Shareoptions as at31 December2020
Name of directors	Number	Exercise price(cents)	Number	Exercise price(cents)	Number	Market priceat exercise date(cents)	Benefit arisingon exerciseof options(R)	Number
Directors
RJ Douglas	83333	820	83333	820				–
	50000	1260						50 000
	55533	1696						55 533
JDR Oesch	50000	1260						50 000
	41100	1696						41 100
Prescribed officers
MD Aitken	11667	1696						11 667
FJ Coughlan	72000	1260						72 000
	30133	1696						30 133
DL Honey	80000	1260						80 000
	41100	1696						41 100
	514866		83333					431 533

PART 2 Implementation report

Details regarding directors' and prescribed officers' interests are disclosed in the corporate governance report on page 77

Details regarding directors' and prescribed officers' interests are disclosed in the directors' report on page 106

No new awards have been granted since the introduction of the MSI scheme in 2017 and once existing options have been exercised, this scheme will be terminated.

Non-executive directors' remuneration

ADvTECH seeks to appoint and retain high calibre non-executive directors to ensure meaningful deliberations of the board. RemCom recommends to the board the fees to be paid to non-executive directors during the year. Non-executive directors' remuneration is based on a combination of an annual retainer and attendance fees.

The fees payable to non-executive directors were approved by special resolution of the shareholders at the AGM held on 28 May 2020, as required by the Companies Act.

The voting outcomes on the non-executive directors' fees were as follows:

Nonexecutivedirectors' fees	Votes infavour	Votesagainst	Abstentions
2020	93.90%	6.10%	1.55%
2019	99.83%	0.17%	0.13%

Outcomes on the non-executive director fees were as follows:

Non-executive directors' fees for 2020

Non-executive directors' fees are based on attendance of board, committee and ad hoc committee meetings. An additional fee is payable to the chairman of the board and committees.

Non-executive directors' emoluments

Emoluments paid to non-executive directors of the group for the ended 31 December 2020, are set out below:

Name of directors	BoardR	AuditcommitteeR	RiskcommitteeR	RemunerationcommitteeR	Transformation,social and ethicscommitteeR	InvestmentcommitteeR	Total 2020R	Total 2019R
CH Boulle	586356	–	–	–	–	81327	667 683	714211
JS Chimhanzi	324439	123878	41844	–	–	–	490 161	464048
BM Gourley	48666	13273	16635	–	–	8848	87 422	695658
KM Gugushe	249818	98808	16714	–	49455	–	414 795	–
JM Hofmeyr	324439	–	–	54203	90229	–	468 871	464363
JD Jansen	131594	–	–	–	60438	–	192 032	442419
SC Masie	168285	–	25563	–	–	34411	228 259	392868
KDM Warburton	324439	226451	–	54203	–	–	605 093	573820
JS Zimmermann	389327	–	–	65044	–	51911	506 282	515721
SA Zinn	324439	–	–	75683	69007	43259	512 388	520254
Total non-executive	2871802	462410	100756	249133	269129	219756	4 172 986	4783362

An amount of R267 775 (2019: R292 002) relating to value-added tax was paid on director fees.

Group overview

Annual fees payable to non-executive directors

In light of COVID-19 and the uncertainty in the economic environment, the board, on recommendation by the committee, resolved to propose a 3.5% increase in non-executive directors' fees for 2021 which will be tabled at the next annual general meeting, to be held on Thursday, 27 May 2021 for shareholder approval.

Proposed annual fee: July 2021 to June 2022 (all fees are exclusive of VAT)

	2021		2020
Board/Committee	Proposedretainerfee	Proposed feeper meetingattended	Retainerfee	Permeetingattended
Directors	201 477	26 863	194 664	25 955
Audit Committee	–	–	53 090	11 798
Risk Committee	–	–	35 393	7 866
Audit and Risk Committee	54 948	12 211
Remuneration Committee	37 784	6 105	36 506	5 899
Transformation, social and ethics Committee	42 853	9 523	41 404	9 201
Investment Committee	36 632	8 141	35 393	7 866

Additional fee payable to chairman of board/committee:

	2021			2020
Board/Committee	Proposedretainerfee	Proposed feeper meetingattended	Retainerfee	Permeetingattended
Chairman of board	162 647	21 687	157 147	20 954
Audit Committee	–	–	43 959	9 769
Risk Committee	–	–	31 146	6 922
Audit and Risk Committee	45 498	10 111	–	–
Remuneration Committee	14 975	2 419	14 469	2 337
Transformation, social and ethics Committee	30 411	6 759	29 383	6 530
Investment Committee	32 236	7 164	31 146	6 922

A premium of 20% payable to non-resident non-executive directors was approved by shareholders and will be proposed again for 2021.

PART 2 Implementation report

Transformation, social and ethics committee report

Tsec is constituted as a statutory committee of ADvTECH Limited in terms of section 72(4) of the Companies Act 71 of 2008 (the Companies Act), as read with regulation 43 of the Companies Act Regulations, and a committee of the board in respect of all the other duties assigned to it by the board.

ADvTECH's board is responsible for promoting an ethical culture within the group and this is supported by Tsec. The duties and responsibilities of the committee members are set out in the charter and are approved by the board. Tsec assists the board in monitoring and reporting on the group's performance against its social, ethical, transformation, stakeholder relationships, anti-racism and other forms of discrimination and sustainability objectives and practices, to ensure that the organisation is a good corporate citizen. It also makes recommendations to the board in this regard. The committee has an independent role with accountability to the board and shareholders.

This report has been prepared in accordance with the requirements of the Companies Act, the group's MOI, the JSE Listings Requirements and King IV™ report on Corporate governance as well as other applicable laws. The report describes how Tsec has discharged its statutory duties, as well as additional duties assigned to it by the board during the year under review.

Committee members

Tsec consists of three independent non-executive directors and the group CEO. All committee members are suitably skilled and collectively have sufficient knowledge and skill to fulfil their duties. The committee is chaired by Dr JM Hofmeyr following the retirement of Professor JD Jansen by rotation at the AGM held on 28 May 2020. The board and committee welcomed the appointment of non-executive director, Ms KM Gugushe, on 17 April 2020.

The meetings of the committee are also attended by invitees, as required and necessary, to provide information and insights for the committee members on social and transformation matters within the group. These invitees include the CEO of the resourcing division, who is also a member of the resourcing transformation committee, and the group HR executive.

The Tsec's terms of reference require that the committee meet as many times per annum as may be required to sufficiently discharge its duties, subject to a minimum of two meetings per annum. During the year under review, the committee met three times. Full details of the attendance are included in the corporate governance report.

Dr JM Hofmeyr will report to the group's shareholders on matters within its mandate at the group's AGM to be held on 27 May 2021. Any specific questions for the committee must be sent to the company secretary prior to the AGM.

Role and responsibilities

Tsec operates in terms of a formal mandate that sets out its terms of reference, composition, roles, responsibilities and statutory duties. The mandate is reviewed on a regular basis and, where appropriate, amended. King IV™ expands on the role of the social and ethics committee as provided for in the Companies Act, 2008. In addition to its responsibilities of oversight of the implementation, and reporting on good corporate governance obligations, stakeholder relationships, communication and reporting, it also has an important role to play in assisting the group to redress the imbalances of the past, whether they are social, economic or environmental, in the interests of future sustainability.

Annual financial statements

In accordance with its statutory duties, Tsec monitors and reports on the following:

The group's compliance with applicable legislation, including the Companies Act, King IV™, the ten principles set out in the United Global Compact and the recommendations of the Organisation for Economic Co-operation and Development (OECD) regarding corruption, the Employment Equity act, the Skills Development Act and the Broad-Based Black Economic Empowerment Act;

The group's progress against annually approved targets for transformation in terms of the Employment Equity Act and Broad-Based Black Economic Empowerment (B-BBEE) Act;

Corporate social investment (CSI) undertaken by the group within the operating divisions and at a corporate level, including the promotion of equality, the prevention of unfair discrimination, the reduction of corruption, the contribution to development of communities in which its activities are predominantly conducted and a record of sponsorship, donations and charitable giving;

The group's compliance with health and safety regulations and the environmental aspects of the business, including compliance with public relations and consumer protection laws; and

The group's engagement with its stakeholders in accordance with its stakeholder policy, dispute resolution mechanisms and grievance policy.

KEY AREAS OF FOCUS

In particular, during 2020 Tsec reviewed and considered:

• • The impact of the COVID-19 pandemic on all stakeholders;

• • Reports on CSI projects undertaken by the group;

• • The group's efforts to encourage diversity and advance the objectives of equality groupwide;

• • The group's defined transformation objectives and targets;

• • Reports on labour and empowermentrelated matters;

• • The revised B-BBEE Codes of Good Practice, as well as its implications for the group;

• • The group's B-BBEE ratings;

• • Continued monitoring of the group's talent succession plans and training programmes;

• • The group's ethics hotline register, including results of internal investigations and actions taken; and

• • The board's diversity policy in line with King IV™ and the JSE listings requirements.

Transformation

Tsec is responsible for monitoring and reporting on transformation within the group to the board, to ensure groupwide transformation and its progress in increasing diversity and equality.

Significant progress was made in terms of transformation across the group over the past few years. Continued efforts to improve transformation, specifically within the schools division, are underway. The tertiary and resourcing divisions met regularly to discuss transformation targets in areas where these were not met and/or required improvement. In most areas their transformation targets were exceeded.

The group actively promotes employment equity in all its operations. ADvTECH prides itself on employing highly skilled, highly qualified and extremely innovative individuals and understands that in order to achieve this, it must promote equal opportunities to all. ADvTECH remains committed to achieving its five-year employment equity objectives to ensure employment is aligned to South Africa's national demographics. A talent review process is used to identify candidates from previously disadvantaged groups with potential to enable development and promotion.

An internship programme was implemented in 2019 in alignment with the Education, Training and Development Practices (ETDP) SETA to enhance skills development within the organisation. ADvTECH's management and leadership development programmes are focused on ensuring fair representation and participation by black talent.

During 2020, a number of disability awareness campaigns were undertaken to educate employees on the varied classification of disabilities to encourage confidential reporting. Several employees declared a disability, thereby enabling the organisation to provide the appropriate levels of support and empowerment.

Group overview

Strategic review

Using our capitals to create value

Governance overview

Social

ADvTECH continues to engage with its stakeholders to build positive and ongoing relationships with them, as well as manage negative situations. Stakeholder engagement and media coverage reports are reviewed at each meeting and regular engagement is embedded into the corporate communication culture. Investors and shareholders, students and parents, alumni, candidates and clients, employees, regulatory and professional bodies, the community and the media are all key stakeholders. Engagement with these key stakeholders is elaborated on page 51.

Tsec monitors the group's progress in CSI. In keeping with the organisation's core business of education, the group has implemented a bursary programme for learners. Bursaries totalling R216 million have been awarded during the year under review.

Please read more about our bursaries and CSI projects on page 79

Ethics

The board adheres to the principles of ethical leadership and creating an ethical culture. The directors, individually and collectively, continue to cultivate the highest levels of integrity, competence, responsibility, fairness, transparency and accountability in executing their functions. Compliance with ethical standards of behaviour is of primary importance to the group and is expressed in the group's values. These values are fundamental to how the group conducts its business and all activities. The values are reviewed regularly to ensure that they remain relevant.

Ethics are embedded in ADvTECH's code of conduct and a supplier code of conduct which applies to all employees, directors and stakeholders. In line with ADvTECH's zero tolerance policy towards fraud and corruption, all employees and stakeholders are encouraged to disclose any improper conduct or unethical behaviour through the fraud and ethics hotline that enables anonymous reporting. Each complaint received is reviewed by the group internal audit and referred to the appropriate party or parties for investigation. An ethics hotline report is submitted to the committee at each committee meeting for consideration. Ethics and awareness programmes are conducted each year to heighten the awareness of ethics within the organisation. Details of the ethics hotline number and/or email are available on the group's website and intranet.

Necessary steps are taken against those who have been found guilty of unethical behaviour. These steps may include disciplinary action that could result in dismissal, the laying of criminal charges and civil action instituted by the group against such an individual.

Policy review

All policies are reviewed by the committee to embed a high ethical standard and reinforce appropriate behaviour within the organisation.

Respect, diversity and inclusion campaign

ADvTECH implemented a significant programme that focuses on ensuring respectful, diverse and inclusive schools (RDI). This initiative was prompted by George Floyd's death that triggered an international response around Black Lives Matter. It was also the catalyst in South Africa for social media campaigns relating to experiences of racism in South African schools. The RDI programme aims to facilitate a culture based on deep respect for diversity, where everyone knows they belong and feels comfortable to participate and contribute. More detail on this RDI programme and the group's stakeholder response to the Black Lives Matter movement is outlined on page 50.

Emanating from the above, the group redefined our code of conduct across all schools to create a behavioural guideline for professional education providers. Webinars with employees and students have helped to raise awareness around issues of racism, bullying and sexual harassment within the ADvTECH schools and to drive communication of common values and principles.

In addition to our ethics hotline, ADvTECH implemented a smartphone application called FaceUp, an anonymous reporting app designed to empower individuals to report any discriminatory behaviour. This helps to identify specific problems and risks, and actively resolve them to create a safer, more trusting workplace. Please read more about the RDI programme on page 44 and our stakeholder engagement on page 49.

COVID-19 pandemic and business operations

The COVID-19 pandemic and ongoing lockdowns have had a significant impact on individuals and businesses globally. ADvTECH remains committed to providing a safe and healthy environment for all its stakeholders, as we steer our way through this crisis. The group also adheres to the strict protocols issued

in accordance with government directives, the Disaster Management Act, 2002 and its regulations. Tsec provided oversight around COVID-19's impact on ADvTECH and regularly kept the board apprised of developments within the group. Further details on COVID-19's impact on the group and our rapid response are outlined on page 26 and throughout our annual integrated report.

B-BBEE compliance and the promotion of B-BBEE in South Africa

The board recognises the critical role it must play in the development and empowerment of historically disadvantaged individuals in South Africa and its role towards transformation. Tsec is responsible for oversight of the group's transformation strategy. During the year under review, an independent external service provider was appointed to assist in improving the group's B-BBEE rating. The committee has also held meetings with B-BBEE Commission representatives to strengthen relations and obtain their advice.

The resourcing division's rating was negatively impacted owing to the COVID-19 pandemic and the slowdown in economic activity. Serious measures, including staff furlough, salary sacrifices, a hiring freeze and retrenchments, were implemented to ensure the division's sustainability. The division will continue to strive towards achieving its employment equity plan once the business stabilises.

Reporting

Tsec is satisfied that, in all material respects, it has achieved its objectives for the year under review and that no items have been reported which would indicate non-compliance with the mandate of Tsec or its statutory requirements in terms of the Companies Act.

On behalf of the Transformation, social and ethics committee

Dr JM Hofmeyr

Chair: Transformation, social and ethics committee 20 April 2021

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

Group overview

Strategic review

Using our capitals to create value

Governance overview

Annual financial statements

Shareholders' information

AUDITED ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2020

Contents

Directors' responsibility for financial reporting	97
Certificate by Group company secretary	97
Chief executive officer and Chief financial officer's responsibility statement	98
Independent auditors' report	99
Audit and risk committee (ARCom) report	102
Directors' report	105
Consolidated statement of profit and loss	108
Consolidated statement of financial position	109
Consolidated statement of changes in equity	110
Consolidated statement of cash flows	111
Consolidated segment report	112
Notes to the consolidated financial statements	114
Company statement of comprehensive income	154
Company statement of financial position	155
Company statement of changes in equity	156
Company statement of cash flows	157
Notes to the company financial statements	158

Strategic review

Directors' responsibility for financial reporting

The Companies Act, No 71 of 2008 of South Africa, as amended ("the Companies Act"), requires that a company must keep and maintain adequate accounting records. The directors are responsible for the content and integrity of the annual financial statements of ADvTECH Limited and its subsidiaries and related financial information included in this report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the company and the group as at the end of the financial year and the results of its operations and cash flows for the year then ended in conformity with International Financial Reporting Standards (IFRS), the Companies Act and the JSE Listings Requirements. The external auditors are engaged to express an independent opinion on the financial statements.

In preparing the annual financial statements, the group used appropriate accounting policies, supported by reasonable and prudent judgement and estimates, and prepared the annual financial statements in accordance with IFRS. The directors are of the opinion that the annual financial statements fairly present the financial position of the company and the group as at 31 December 2020, and the results of its operations and cash flows for the year then ended. The directors have considered the company's and the group's past results, expected future performance and reasonable changes thereto, and access to its funding, material and other resources, and in light of this review and the company's and the group's current financial position, are satisfied that the company and the group have access to adequate resources to continue in operational existence for the foreseeable future as a going concern.

The directors are responsible for the systems of internal control. These are designed to provide reasonable, but not absolute, assurance as to the reliability of the annual financial statements, to adequately safeguard, verify and maintain accountability of assets, and to prevent and detect material misstatement and loss.

Based on the results of a formal documented review of the group's system of internal control and risk management by the internal audit function during the year and the information and explanations given by management nothing has come to the attention of the directors which indicates that, in all material aspects, the group's system of internal control and risk management is not effective and that the internal financial controls do not form a sound basis for the preparation of reliable annual financial statements. The opinion of the directors is supported by the group's audit committee.

The consolidated and separate financial statements have been audited by the independent auditing firm, Deloitte & Touche, who were given unrestricted access to all financial records and related data, including minutes of all meetings of the shareholders, the board of directors and committees of the board. The directors believe that all representations made to the independent auditors during the audit were valid and appropriate. Their unmodified report appears on pages 99 to 101.

The preparation of the group's consolidated financial statements for the year ended 31 December 2020 was supervised by JDR Oesch CA(SA), the group's chief financial officer.

The annual financial statements of the company and the group set out on pages 102 to 163, which have been prepared on the going concern basis, were approved by the board of directors on 18 March 2021 and were signed on its behalf by

CH Boulle RJ Douglas Chairman Chief executive officer

JDR Oesch Group commercial director and chief financial officer

Certificate by Group company secretary

In accordance with the provisions of the Companies Act, I certify that, in respect of the year ended 31 December 2020, ADvTECH Limited has lodged with the Commissioner of the Companies and Intellectual Property Commission all returns and notices prescribed by the Companies Act and that all such returns and notices are true, correct and up to date.

CB Crouse Group company secretary 18 March 2021

Chief executive officer and Chief financial officer's responsibility statement

The directors, whose names are stated below, hereby confirm that:

• (a) the annual financial statements set out on pages 102 to 163, fairly present in all material respects the financial position, financial performance and cash flows of the issuer in terms of IFRS;
• (b) no facts have been omitted or untrue statements made that would make the annual financial statements false or misleading;
• (c) internal financial controls have been put in place to ensure that material information relating to the issuer and its consolidated subsidiaries have been provided to effectively prepare the financial statements of the issuer; and
• (d) the internal financial controls are adequate and effective and can be relied upon in compiling the annual financial statements, having fulfilled our role and function within the combined assurance model pursuant to principle 15 of King IV™. Where we are not satisfied, we have disclosed to the audit committee and the auditors the deficiencies in design and operational effectiveness of the internal financial controls and any fraud that involves directors, and have taken the necessary remedial action.

RJ Douglas JDR Oesch Chief executive officer Group commercial director and chief financial officer

Group overview

Strategic review

Using our capitals to create value

Governance overview

Annual financial statements

Independent auditor's report

to the shareholders of ADvTECH Limited

Report on the Audit of the Consolidated and Separate Financial Statements

Opinion

We have audited the consolidated and separate financial statements of ADvTECH Limited (the Group and Company) set out on pages 108 to 163, which comprise the consolidated and separate statements of financial position as at 31 December 2020, and the consolidated and separate statements of profit or loss and other comprehensive income, the consolidated and separate statements of changes in equity and the consolidated and separate statements of cash flows for the year then ended, and notes to the consolidated and separate financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of ADvTECH Limited and its subsidiaries as at 31 December, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the consolidated and separate financial statements section of our report. We are independent of the Group and Company in accordance with the Independent Regulatory Board for Auditors' Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics Standards Board for Accountants' (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. There are no key audit matters relating to the separate financial statements.

Key audit matter	How the matter was addressed in the audit
Valuation of loss allowance
The Group reflected R609.2 million worth of trade	Our audit procedures focused on the evaluation of the key judgements
receivables as at 31 December 2020 as disclosed in note 20	and estimates used in the directors' determination of the loss
to the consolidated financial statements against which a	allowance. The procedures on key judgements and estimates included:
loss allowance of R375.7 million has been recognised.	• Assessing the design and implementation testing of key controls;
The Group is required by the applicable accounting	• Comparison of historical projected cash inflows to actual inflows to
standards to determine and recognise an appropriate	assess the accuracy and reasonableness of the director's projections
allowance based on future expected credit losses. Due to	and the assumption that historical collections are a reasonable
the nature of the Group's education operations, trade	basis for determining future collections;
receivables are expected to be settled within the financial	• Consideration of the impact of the COVID-19 pandemic on the
and academic year they arise and therefore trade	historical cash collection profile;
receivables outstanding beyond this period would be at	• Analysis of the loss allowance at a brand level as a proportion of total
risk of non-recovery. Determining the value of provisioning	debtors and revenue to identify and investigate unusual fluctuations;
required against the trade receivables balance requires a	• Comparison of the ageing of receivables within the tertiary division
high degree of judgement and estimation by the directors.	over a period of time to identify unusual trends;
In determining the allowance for doubtful debts, the	• Assessment of returning pupils compared to those who have left
director's valuation incorporates a number of key	school within the schools division and the impact on the
judgements and estimates including the ageing of the	determination of the allowance for expected credit loss;
receivable, whether the student is still in attendance at an	• Analysing projected cash flows to determine if they are supportable
educational institution and the impact of COVID-19.	given future expected performance;
Accordingly, the determination of the allowance for	• Testing the mathematical accuracy of the valuation; and
expected credit losses is considered to be a key audit	• Evaluating the disclosure in the consolidated financial statements
matter.	We found the key judgements applied and the estimates used bythe directors to be appropriate based on historical performance,anticipated future outlook and current circumstances. Weconsidered the disclosure of the allowance for doubtful debts to beadequate.

Group overview

Strategic review

Using our capitals to create value

Governance overview

Annual financial statements

Independent auditor's report

to the shareholders of ADvTECH Limited (continued)

Key audit matter	How the matter was addressed in the audit
Valuation of goodwill
The goodwill recorded in the statement of financialposition at 31 December 2020 is R1 452.4 million and	We focused our testing of the impairment of goodwill on the keyassumptions made by the directors.
comprises 19.0% of the total assets of the Group.	Our audit procedures included:
These assets have been recognised in the consolidatedstatement of financial position because of the acquisitivenature of the Group.	• Engaging our internal specialists to assist with: –– Critically evaluating whether the model used by the directorsto calculate the value in use of the individual cash generating
As required by the applicable accounting standards, thedirectors conduct annual impairment tests to assess the	units complies with the requirements of IAS 36 Impairment ofAssets (IAS 36);
recoverability of the carrying value of goodwill. This isperformed using discounted cash flow models.	– Performing an independent recalculation of the weightedaverage cost of capital;
As disclosed in note 15, there are a number of keyjudgements made in determining the inputs into thesemodels which include:	• Analysing the future projected cash flows used in the models todetermine whether they are reasonable and supportable given thecurrent macroeconomic climate and expected future performance
• Applied growth rates;	of the cash generating units; and• Subjecting the key assumptions to sensitivity analyses.
• Terminal growth rates;• Pre-taxation discount rates; and• Post-taxation discount rates.	We found that the assumptions used by the directors werereasonable and supportable.
In line with the required accounting standards, the directorshave performed a discounted cash flow valuation inorder to determine the recoverable amount of the cashgenerating units.	We consider the disclosure of the goodwill to be relevant anduseful.
Due to the significance of this balance and the level ofjudgement involved, the valuation of goodwill isconsidered to be a key audit matter.

Other information

The directors are responsible for the other information. The other information comprises the information included in the document titled "ADvTECH Limited Annual Financial Statements for the year ended 31 December 2020", which includes the Directors' Report, the Audit Committee's Report and the Company Secretary's Certificate as required by the Companies Act of South Africa, which we obtained prior to the date of this report, and the Annual Report , which is expected to be made available to us after that date. The other information does not include the consolidated and separate financial statements and our auditor's report thereon.

Our opinion on the consolidated and separate financial statements does not cover the other information and we do not and will not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the consolidated and separate financial statements

The directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group's and the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and/or the Company or to cease operations, or have no realistic alternative but to do so.

Group overview

Strategic review

Using our capitals to create value

Governance overview

Annual financial statements

Independent auditor's report

to the shareholders of ADvTECH Limited (continued)

Auditor's responsibilities for the audit of the consolidated and separate financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• • Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's and the Company's internal control.
• • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
• • Conclude on the appropriateness of the directors' use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's and the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group and/or the Company to cease to continue as a going concern.
• • Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial

statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we report that Deloitte & Touche has been the auditor of ADvTECH Limited for 19 years.

Deloitte & Touche Registered Auditor

Per: Haroon Loonat

Partner

23 March 2021

Deloitte

5 Magwa Crescent, Waterfall City, Waterfall, South Africa

National Executive: *LL Bam Chief Executive Officer *TMM Jordan Deputy Chief Executive Officer Clients and Industries *MJ Jarvis Chief Operating Officer *AF Mackie Audit & Assurance *N Sing Risk Advisory DP Ndlovu Tax and Legal *MR Verster Consulting *JK Mazzocco People & Purpose MG Dicks Risk Independence & Legal *KL Hodson Financial Advisory *B Nyembe Responsible Business & Public Policy *R Redfearn Chair of the Board

A full list of partners and directors is available on request

*Partner and Registered Auditor

B-BEE rating: Level 1 contribution in terms of the DTI Generic Scorecard as per the amended Codes of Good Practice.

Associate of Deloitte Africa, a Member of Deloitte Touche Tohmatsu Limited.

Audit and risk committee (ARCom) report

ARCom is pleased to present this report, which was approved by the board and prepared in accordance with section 94(7) of the Companies Act, the Listing Requirements and King IVTM Code of Governance ("King Code").

In reviewing the committee's composition during the year, and owing to the size of the company, the board decided to combine the audit and risk committee, as detailed in the corporate governance report. The functions of the risk committee now falls within the ambit of this committee.

ARCom is satisfied that it has performed both the statutory requirements for an audit and risk committee as set out in the King Code, the Companies Act, the Listings Requirements, as well as the functions set out in the terms of reference, and that it has therefore complied with its legal, regulatory and other responsibilities.

Membership and meetings

ARCom consists of four members, all of whom are independent non-executive directors and, as a whole, have the necessary financial literacy skills and experience to effectively execute their duties. The Chairman of the board is not a member of this committee but attends by invitation.

The board recommends that the following non-executive directors, who are current members of the committee, who are eligible and have made themselves available for re-election be re-elected by the shareholders at the annual general meeting (AGM) on 27 May 2021 to hold office until the following AGM:

• • KDM Warburton (chairman);
• • JS Chimhanzi;
• • KM Gugushe; and
• • CB Thomson.

Mr CB Thomson was appointed to the board and the committee with effect from 12 March 2021.

ARCom meets at least three times per year as required by its terms of reference. Meetings are attended by the internal and external auditors, the group chief executive officer (CEO) and group commercial director and chief financial officer (GCD), as well as other board members and invitees as considered appropriate by the committee's chairman. Details of the number of meetings held and attendance by members are included in the corporate governance report.

ARCom's terms of reference provide for confidential meetings between committee members and the internal and external auditors without executive management being present.

The internal and external auditors have unrestricted access to the committee.

Role and responsibilities

ARCom's duties and responsibilities are a combination of statutory and oversight duties to ensure the effectiveness of the internal and external assurance providers, risk management process, information technology (IT), compliance and finance functions.

It also assists the board in discharging its responsibilities to ensure that proper accounting records are maintained, oversees the financial reporting process and ensures compliance with accounting policies, group policies, legal requirements and internal controls.

External audit

ARCom performed the following functions in relation to the external audit of the group:

• • nominated and recommended to shareholders that Deloitte & Touche be appointed as independent external auditors for the company and its subsidiaries and the appointment of H Loonat as the independent designated auditor for the company for the financial year ended 31 December 2020 in compliance with the Companies Act and the Listings Requirements;
• • Deloitte & Touche have been the external auditors of the group for 19 years and H Loonat has been the designated auditor for the past five years. In terms of the audit firm rotation requirements, the committee had assessed a number of JSE approved audit firms against the qualifying criteria for ADvTECH and will recommend the appointment of Ernst & Young Incorporated (EY) as auditors for the 2021 financial year to shareholders, for approval at the next AGM;
• • received confirmation from the external auditors that they are independent of the group and is satisfied that the external auditors are independent of the group;
• • determined the fees to be paid to the auditors and set out the auditors' terms of engagement;
• • determined the nature and extent of any non-audit services that the auditors may provide to the group, or that the auditor must not provide to the group; and
• • pre-approved any proposed agreement with the auditors for the provision of non-audit services to the group.

Internal control

The board and leadership committees are ultimately responsible for overseeing the establishment of effective internal control systems to provide reasonable assurance that the group's financial and non-financial objectives are achieved.

Internal controls are implemented through the proper delegation of responsibility within a clearly defined approval framework, accounting procedures and adequate segregation of duties. The group's internal accounting controls and systems are designed to provide reasonable assurance as to the integrity of the group's financial statements and to safeguard, verify and maintain accountability for all its assets.

The internal audit department monitors the operation of the internal controls and systems and reports their findings and recommendations to management and the committee.

Corrective action is taken by management to address control deficiencies and improve systems where opportunities are identified.

The internal control and risk management process is ongoing and was considered effective at the date of approval of the annual financial statements.

Group overview

Strategic review

Using our capitals to create value

Governance overview

Annual financial statements

Audit and risk committee (ARCom) report

(continued)

Internal Financial Control Attestation

ADvTECH continues to maintain a strong risk management culture and has implemented adequate and effective internal financial controls (IFCs) to ensure the integrity and reliability of the financial statements. These IFCs safeguard, verify and maintain accountability of ADvTECH's assets, are based on established policies and procedures and are implemented by trained and skilled personnel whose duties are duly segregated. Adherence with the implemented internal controls is monitored continuously by the ARCom.

The CEO and CFO have reviewed the controls over financial reporting, and presented their findings to the Audit Committee. During the current financial year management identified three significant deficiencies in internal control over financial reporting of the 40 controls evaluated throughout the year which address significant and high risk areas.

The CEO and CFOs evaluation of controls included:

• • The identification and classification of risks including the determination of materiality.
• • Testing the design and determining the implementation of controls addressing significant and high risk areas.
• • Utilising internal audit to test the operating effectiveness of controls addressing high risk areas.
• • Obtaining control declarations from divisional managers on the operating effectiveness of all controls on an annual basis.

A formal remediation plan has been developed to address control deficiencies identified including the three significant deficiencies. Two of the significant deficiencies were remediated by year-end and the remaining deficiency will be remediated by the interim reporting period. Continuous improvements in controls is an ongoing process and improvements and enhancements will be implemented in stages throughout the coming year.

The committee considered the identified deficiencies as well as the appropriateness of management's response including remediation, reliance on compensating controls and additional review procedures. As a result, the committee noted the CEO and CFO final attestation and concluded that ADvTECH's internal financial controls can be relied upon as a reasonable basis for the preparation of the annual financial statements.

Annual integrated report 2020

Read more about the report in the 'About this report' on page 1.

ARCom will evaluate the annual integrated report for the year ended 31 December 2020 and will ensure it is satisfied that it complies in all material respects with the requirements of the Companies Act, the IIRC's International (IR) Framework, King Code, IFRS and the Listings Requirements.

Internal audit

The group's internal audit department has a specific mandate from the committee to independently appraise the adequacy and effectiveness of the group's internal controls, governance and risk management processes. The department, headed by the group internal audit manager, reports functionally to the chair of the committee and on an administrative basis to the GCD with direct access to the group CEO.

The internal audit coverage plan, which is subject to approval by the committee and updated annually, covers all major risk areas as identified and assessed by internal audit and the group's risk management process. This ensures that the audit coverage is focused on and identifies areas of high risk.

Internal audit provides an annual written assessment of the system of internal financial controls to the board and the committee. Nothing has come to the attention of the committee to indicate that any material breach of these controls has occurred during the year under review.

Accounting and auditing

The directors are responsible for ensuring that the group maintains adequate records and reports on the financial position of the group and the results of activities with accuracy and reliability. Financial reporting procedures are applied at all levels in the group to meet this responsibility. The external auditors are responsible for independently auditing and reporting on these financial statements in accordance requirements of the Companies Act and IFRS.

The external auditors, Deloitte & Touche, were given unrestricted access to all financial records and related data, including minutes of all meetings of shareholders, the board of directors, executive leadership committees and committees of the board.

The external and internal auditors have unrestricted access to the committee to ensure that their independence is in no way impaired. At least once annually (but generally prior to every meeting), the committee chairman meets independently with representatives of the internal and external auditors. Time is also set aside at least once a year, but generally at the end of every meeting, for the committee to meet independently of executive management with representatives of the internal and external auditors.

Finance function

The committee has considered and is satisfied with the continued appropriateness of the expertise and experience of chief financial officer (CFO), JDR Oesch CA(SA), and the finance function.

Reporting

The committee has discharged all its responsibilities and carried out all its functions as contained in its terms of reference and as required by the Companies Act. In particular, the committee:

• • reviewed the interim and year-end financial statements (and press announcements) and recommended them for adoption by the board;
• • approved the internal audit terms of reference and audit plans;
• • received and reviewed reports from internal auditors, which included commentary on the effectiveness of the internal control environment, systems and processes and, where appropriate, made recommendations to the board;
• • received and reviewed S22 letter from Deloitte & Touche, and were satisfied with reappointing them for the year ended 31 December 2020.
• • reviewed and considered the key audit matters as identified by the external auditors and was satisfied with the treatment of those matters in the financial statements;

Audit and risk committee (ARCom) report

(continued)

• • reviewed the independence of the external auditors, Deloitte & Touche;
• • recommend the appointment of EY as auditors for the 2021 financial year;
• • reviewed the external auditor's report;
• • determined the terms of engagement of the external auditors and the fees to be paid;
• • concluded that, with mandated partner rotation and policies and procedures in force, the risk of familiarity between the external auditor and management is mitigated;
• • determined the nature and extent of non-audit services that may be provided by the external auditors and pre-approved the contract terms for the provision of non-audit services by the external auditors;
• • reviewed the effectiveness of the group's assurance processes with particular focus on combined assurance arrangements including the external assurance audit, internal audit and the finance function; and
• • received and dealt appropriately with complaints, from within or outside the group, relating to the accounting practices and internal controls of the group, to the content or auditing of its financial statements, the internal financial controls or any related matter, potential violations of the law and questionable accounting or auditing matters.

Risk functions

ARCom oversees the following risk functions:

• • monitor and oversee the group's risk register, including the IT risk register and Rest of Africa risk register;
• • monitor and assess the material risks as well as ensure the risk mitigation strategies are timeously actioned;
• • oversee the development and annual review of policy and work plan for risk management for recommendation for approval by the board;
• • make recommendations to the board concerning the levels of tolerance and risk appetite, and monitoring of risks to ensure these are managed within the levels of tolerance and appetite as approved by the board;
• • monitor the regulatory environment as well as the macroeconomic environment;
• • evaluation of the effectiveness of the risk management process; and
• • ensure the group remains operationally and financially resilient during and after the COVID-19 pandemic.

On behalf of the audit and risk committee

KDM Warburton

Chairman: Audit and risk committee 17 March 2021

overview

Group overview

Strategic review

Using our capitals to create value

Directors' report

for the year ended 31 December 2020

Your directors have pleasure in presenting their report on the activities of the group and company for the year ended 31 December 2020.

Nature of business

The ADvTECH group is one of the largest diversified education, training and placement groups in South Africa. ADvTECH Limited (registration number 1990/001119/06) is listed in the Consumer Services sector subsector Education Services of the JSE Limited (JSE) (JSE code: ADH and ISIN number: ZAE 0000 31035).

The schools' division offers quality pre-primary, primary and secondary education via face to face and online learning and the tertiary division offers quality education on diploma, degree and postgraduate levels via face to face, online and distance learning. The resourcing division is a significant force in the placement industry, especially in the niche areas of IT, finance and engineering.

Financial results

The results for the year ended 31 December 2020 are set out herein.

Stated capital

The number of shares in issue during the year under review:

Number of shares in issue at 31 December 2019 548 766 976 Number of shares in issue at 31 December 2020 551 783 426

There were no repurchases of shares in the company by the group during the year. All shares are fully paid up and none are encumbered.

Declaration of final dividend no. 21

Having reviewed the manner in which the business coped thus far with the circumstances created by the pandemic together with the strong cash generation, sound balance sheet and satisfactory enrolments for 2021 the board has decided to resume the payment of dividends.

The board is pleased to announce the declaration of a final gross dividend of 20.0 cents (2019: no dividend) per ordinary share in respect of the year ended 31 December 2020. This brings the full year dividend to 20.0 cents (2019: 15.0 cents) per share.

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 16.0 cents per share, while it is 20.0 cents per share to those shareholders who are exempt from DT.

Events after the reporting period

The COVID-19 pandemic is ongoing and has resulted in the delay of the academic year. The commencement of face to face teaching at schools was delayed to 1 February 2021 as a result of COVID-19 government restrictions. The group's schools were able to continue teaching online up to that date and have since commenced with face to face teaching. The tertiary institutions have commenced tuition during March 2021 using a staggered approach. The group is able to transition between face to face and online learning seamlessly and is not expected to be adversely affected from any future lockdowns as a result of the pandemic.

The Minister of finance announced an intention to reduce the corporate tax rate to 27% as well as the review of various tax incentives and allowances. This is expected to be effective for financial years beginning after April 2022 and will affect the group from the 2023 financial year. This is considered a nonadjusting post balance sheet event and the group will monitor the legislative changes in this regard.

The directors are not aware of any other matter or circumstance between the date of the statement of financial position and the date of these financial statements that materially affects the results of the group and company for the year ended 31 December 2020 or the financial position at that date.

Response to COVID-19

Our response to the pandemic has been well-managed across all sites within ADvTECH and we are able to manage regulatory requirements and health protocols under different levels of lockdown. While the future remains uncertain, our business remains sustainable, well positioned and we are confident that we will navigate through this period, responding efficiently and effectively to any changes in the environment.

Our strict adherence to protocols has enabled all sites to operate and keep the number of positive COVID-19 cases to less than 0.2%. We had no workplace transmissions recorded to date. However, one of our employees unfortunately passed away during the December holidays.

A more detailed overview of our rapid response to COVID-19 can be found in the annual integrated report.

Compliance with the King code

ADvTECH Limited is listed on the Johannesburg Stock Exchange. The King IV Report on Corporate Governance™ for South Africa, 2016 ("the King code") is the primary corporate governance code in South Africa and is applicable to all types of entities.

The King code consists of a set of voluntary principles and leading practices with an 'apply and explain' disclosure regime. The Listings Requirements of the JSE requires listed companies to apply King IV paragraph 8.63(a)(i) which stipulates that issuers are required to disclose the implementation of the King code through the application of the King code disclosure and application regime.

The document that outlines how we have applied the principles and recommendations of the King code in this report, can be found on the website at www.advtech.co.za.

Group overview

Strategic review

Using our capitals to create value

Governance overview

Annual financial statements

Directors' report

for the year ended 31 December 2020 (continued)

Special resolutions adopted by the company

The company passed the following special resolutions at the AGM of shareholders held on 28 May 2020:

• • non-executive directors' fees for the period 1 July 2020 to 30 June 2021;
• • authority to make loans or give financial assistance to subsidiaries and related or inter-related companies; and
• • general authority to acquire the company's own shares.

Special resolutions adopted by subsidiary companies

Special resolutions in terms of section 45 of the Companies Act, 71 of 2008, were passed by certain subsidiaries of the company with general authority to provide financial assistance to related and inter-related companies. No other special resolutions were passed by subsidiaries.

Directorate

In accordance with the provisions of the company's Memorandum of Incorporation (MoI), one third of all nonexecutive directors will retire by rotation at the forthcoming AGM. SA Zinn being eligible, has offered herself for re-election. J Zimmermann will retire by rotation but has not offered himself for re-election. Owing to the policy adopted by the board, stating that board members over the age of 70 need to retire by rotation on an annual basis, JM Hofmeyr will also retire by rotation but has not offered herself for re-election.

Mr CB Thomson was appointed to the board with effect from 12 March 2021.

Interests of directors and prescribed officers

As at 31 December 2020, the directors' and prescribed officers' beneficial and non-beneficial, direct and indirect interests in the issued share capital of the company were 2% (2019: 2%) in aggregate.

	Beneficial						Non-beneficial
		Direct	Indirect		Direct		Indirect
	2020	2019	2020	2019	2020	2019	2020	2019
Directors
CH Boulle	3 549	3 549	–	–	–	–	–	–
JS Chimhanzi	–	–	–	–	–	–	–	–
RJ Douglas	522 360	445 278	–	–	–	–	–	–
J Hofmeyr	–	–	–	–	–	–	–	–
JDR Oesch	2 154 319	2 010 562	–	–	–	–	56 312	37 312
KDM Warburton	–	–	–	–	–	–	–	–
J Zimmermann	–	–	–	–	–	–	–	–
SA Zinn	–	–	–	–	–	–	–	–
Prescribed officers			–		–
MD Aitken	51 072	10 900	–	–	–	–	–	–
FJ Coughlan	137 582	139 595	–	–	–	–	4 000	4 000
DL Honey	7 478 545	7 652 444	–	–	–	–	441 159	441 159
Totals	10 347 427	10 262 328	–	–	–	–	501 471	482 471

The interests of directors and prescribed officers are as follows:

At the date of this financial report, none of the current directors or prescribed officers have acquired or disposed of any of the shares held by them as at 31 December 2020.

Group overview

Strategic review

Using our capitals to create value

Directors' report

for the year ended 31 December 2020 (continued)

Acquisitions and disposals

During the year under review, the group acquired additional shares in Schole Mauritius (14%), The Private Hotel School (20%) and Africa HR (5%). The group also disposed of the University of Africa group (UoA).

These acquisitions are in line with the published expansion programme. Further details on these acquisitions and disposals are detailed in note 37 of the annual financial statements.

Auditors

Deloitte & Touche, who have been the auditors of the group since 2002, continued in office as auditors of the company and its subsidiaries during the year under review. The 2020 audit is the fifth audit under the management of H Loonat, the lead independent external auditor.

In anticipation of the audit firm rotation requirements, the audit and risk committee has nominated Ernst & Young Incorporated for appointment as auditors of the group and, at the AGM, shareholders will be requested to appoint them as the independent external auditors of the company and its subsidiaries for the 2021 financial year, and to confirm C Trollope as the lead independent external auditor.

Company secretary

KN Piki was appointed company secretary on 24 March 2020. She subsequently resigned with effect from 31 December 2020. CB Crouse has been appointed as the company secretary with effect from 1 January 2021. The company secretary's address, as well as the address of the registered office of the company, is:

Business address: ADvTECH House, Inanda Greens Office Park,
54 Wierda Road West, Wierda Valley,
Sandton, 2196

Postal address: PO Box 2369, Randburg, 2125

Email address: groupsec@advtech.co.za

statements

Group overview

Strategic review

Using our capitals to create value

Governance overview

Consolidated statement of profit or loss

for the year ended 31 December 2020

		Audited2020	Audited2019
	Notes	R'm	R'm
RevenuePlacement cost of sales	4	5 499.2(645.4)	5 108.0(470.4)
Staff costsRent and occupancy costsIncrease in expected credit losses*Share of profit from joint arrangement*Other operating expenses*	5	(2 259.6)(273.4)(76.1)0.4(989.2)	(2 240.0)(241.4)(34.3)1.4(949.7)
Earnings before Interest, Taxation, Depreciation and Amortisation (EBITDA)Depreciation and amortisation	5	1 255.9(346.4)	1 173.6(304.5)
Operating profit before interest and non-trading itemsNon-trading items		909.5(30.2)	869.113.5
Corporate action costsImpairment of property, plant and equipmentImpairment of intangible assetsLoss on disposal of subsidiariesGain on settlement of contingent considerationForeign currency gain arising on corporate actionGain on bargain purchase of acquisitionInsurance proceeds (net of costs) on previously reported fraud event	121637	(0.5)(11.1)(24.9)(6.7)13.0–––	(3.9)––––6.26.15.1
Operating profit before interestNet finance costs	5	879.3(204.8)	882.6(221.8)
Interest earnedFinance costs incurredFinance costs on lease liabilities	6.16.26.3	2.3(146.5)(60.6)	5.2(167.4)(59.6)
Profit before taxationTaxation	7	674.5(209.0)	660.8(192.5)
Profit for the year		465.5	468.3
Profit for the year attributable to:Owners of the parentNon-controlling interests		461.14.4	469.4(1.1)
		465.5	468.3
Earnings per shareBasic (cents)	8	85.1	87.1
Diluted (cents)	8	85.1	87.1

* The increase in expected credit losses and the share of profit from joint arrangement are presented on the face of the statement of profit or loss. This is for disclosure comparability and enhancement purposes. Operating expenses was re-presented in the prior year as a result.

Consolidated statement of other comprehensive income

for the year ended 31 December 2020

	Audited2020R'm	Audited2019R'm
Profit for the yearOther comprehensive income, net of income taxationItems that may be reclassified subsequently to profit or lossExchange loss on translating foreign operations	465.5(15.1)	468.3(18.5)
Total comprehensive income for the year	450.4	449.8
Total comprehensive income for the year attributable to:Owners of the parentNon-controlling interests	445.84.6	451.1(1.3)
	450.4	449.8

Group overview

Strategic review

Using our capitals to create value

Governance overview

Annual financial statements

Consolidated statement of financial position

as at 31 December 2020

		Audited	Audited
		2020	2019
	Notes	R'm	R'm
ASSETS
Non-current assets
Property, plant and equipment	12	4 854.9	4 803.1
Proprietary technology systemsRight-of-use assets	1314	106.5442.9	80.9384.2
Goodwill	15	1 452.4	1 459.9
Intangible assets	16	162.2	197.1
Deferred taxation assets	17	53.9	40.5
Investment in joint arrangement	18	8.0	7.6
		7 080.8	6 973.3
Current assets
Inventories	19	17.4	22.5
Trade and other receivables	20	270.3	326.2
Taxation		7.0	39.0
Prepayments		34.7	44.7
Bank balances and cash	21	181.7	170.5
		511.1	602.9
Non-current assets held for sale	22	48.8	67.8
Total assets		7 640.7	7 644.0
EQUITY AND LIABILITIES
Capital and reserves
Stated capital	23	1 566.3	1 539.0
Shares held by the Share Incentive Trust	24	(12.0)	(15.3)
Net stated capital		1 554.3	1 523.7
Share incentive reserve		(8.7)	3.4
Foreign currency translation reserve		18.2	33.3
Retained earnings		2 274.9	1 840.0
Equity attributable to owners of the parent		3 838.7	3 400.4
Non-controlling interests		29.1	19.9
Total equity		3 867.8	3 420.3
Non-current liabilities
Long-term bank loans	26	1 200.0	1 800.0
Deferred taxation liabilities	17	152.6	170.9
Lease liabilities	31	427.3	369.2
Acquisition liabilities	29	50.1	74.4
		1 830.0	2 414.5
Current liabilities
Current portion of long-term bank loan	26	600.0	–
Short-term bank loans	27	441.2	880.1
Current portion of lease liabilitiesTrade and other payables	3128	137.7447.1	116.3436.5
Current portion of acquisition liabilities	29	3.8	–
Fees received in advance and deposits	30	310.8	328.8
Shareholders for capital distribution		0.8	0.8
Shareholders for dividend		1.5	1.5
Bank overdraft	21	–	45.2
		1 942.9	1 809.2
Total equity and liabilities		7 640.7	7 644.0

Group overview

Strategic review

Using our capitals to create value

Governance overview

Annual financial statements

Consolidated statement of changes in equity

for the year ended 31 December 2020

Balance at 31 December 2020		1 566.3	(8.7)	18.2	(12.0)	2 274.9	29.1	3 867.8
subsidiaries						(26.2)	5.2	(21.0)
subsidiariesAcquisition of additional shares in							3.4	3.4
incentive scheme (MSI)Non-controlling interest on disposal of	23	27.3	(27.3)					–
(MSI)Shares issued for the management share			(0.4)					(0.4)
share incentive scheme (MSI)Taxation effect of shares awarded underthe management share incentive scheme			(3.3)		3.3			–
Shares awarded under the management
Share award expense under themanagement share incentive scheme(MSI)	5/25		17.1					17.1
Dividends declared to shareholdersShare-based payment expense	115/24		1.8				(3.8)	(3.8)1.8
Profit for the yearOther comprehensive income for the year				(15.1)		461.1	4.4	465.5(15.1)
Total comprehensive income for the year				(15.1)		461.1	4.4	450.4
Balance at 31 December 2019		1 539.0	3.4	33.3	(15.3)	1 840.0	19.9	3 420.3
Non-controlling interests arising onacquisition of additional shares insubsidiary						(1.6)	1.6	–
Share issue costsShare options exercised	23	(0.1)	0.5		2.0			(0.1)2.5
Shares issued for the management shareincentive scheme (MSI)	23	25.1	(25.1)					–
Taxation effect of shares awarded underthe management share incentive scheme(MSI)			(1.0)					(1.0)
Shares awarded under the managementshare incentive scheme (MSI)			(4.1)		4.1			–
Dividends declared to shareholdersShare-based payment expenseShare award expense under themanagement share incentive scheme(MSI)	115/245/25		2.713.6			(163.1)	(7.8)	(170.9)2.713.6
Profit for the yearOther comprehensive income for the year				(18.5)		469.4	(1.1)	468.3(18.5)
Total comprehensive income for the year				(18.5)		469.4	(1.1)	449.8
Balance at 1 January 2019Adjustment to opening balance (IFRS 16)		1 514.0	16.8	51.8	(21.4)	1 583.5(48.2)	27.2	3 171.9(48.2)
Restated balance at 1 January 2019		1 514.0	16.8	51.8	(21.4)	1 535.3	27.2	3 123.7
	Notes	StatedcapitalR'm	ShareincentivereserveR'm	ForeigncurrencytranslationreserveR'm	held bythe ShareIncentiveTrustR'm	RetainedearningsR'm	NoncontrollinginterestsR'm	TotalequityR'm

Group overview

Consolidated statement of cash flows

for the year ended 31 December 2020

		Audited	Audited
	Notes	2020R'm	2019R'm
Cash flows from operating activitiesCash generated from operationsMovement in working capital	34.134.2	1 264.548.0	1 192.1(108.5)
Cash generated by operating activitiesNet finance costs		1 312.5(201.1)	1 083.6(234.3)
– interest received– finance costs paid– finance costs on lease liabilities– borrowing costs capitalised to assets		2.3(137.9)(60.6)(4.9)	5.2(157.9)(59.6)(22.0)
Taxation paidDividends paid	34.334.4	(212.5)(3.8)	(223.8)(170.7)
Net cash inflow from operating activities		895.1	454.8
Cash flows from investing activitiesAdditions to property, plant and equipment– to maintain operations– to expand operationsAdditions to proprietary technology systemsBusiness combinations cash flowsProceeds on disposal of property, plant and equipmentProceeds on disposal of subsidiaries	34.534.634.7	(95.0)(172.0)(36.5)–29.40.3	(142.2)(518.0)(20.5)(320.0)2.1–
Net cash outflow from investing activities		(273.8)	(998.6)
Cash flows from financing activitiesIncrease in non-current bank loansSettlement of current bank loansDrawdowns of current bank loansRepayment of lease liabilitiesCash received on exercise of share optionsAcquisition of additional shares in subsidiariesSettlement of contingent consideration		–(848.9)410.0(97.9)–(21.0)(9.1)	300.0(595.7)880.1(96.9)2.4––
Net cash (outflow)/inflow from financing activities		(566.9)	489.9
Net increase/(decrease) in cash and cash equivalentsCash and cash equivalents (net of bank overdraft) at beginning of the yearNet foreign exchange difference on cash and cash equivalents		54.4125.32.0	(53.9)180.5(1.3)
Cash and cash equivalents (net of bank overdraft) at end of the year	21	181.7	125.3

Strategic review

Group overview

Consolidated segmental report

for the year ended 31 December 2020

	Percentage	Audited	Audited
	increase/	2020	2019
	(decrease)	R'm	R'm
Revenue	8%	5 499.2	5 108.0
Schools	4%	2 311.2	2 226.4
– South Africa	5%	2 114.3	2 022.2
– Rest of Africa	(4%)	196.9	204.2
Tertiary	9%	2 343.6	2 145.3
Resourcing	15%	848.2	740.7
– South Africa– Rest of Africa	(30%)39%	183.0665.2	262.6478.1
Intra group revenue		(3.8)	(4.4)
Earnings before Interest, Taxation, Depreciation and Amortisation (EBITDA)	7%	1 255.9	1 173.6
Schools	11%	566.6	511.6
– South Africa– Rest of Africa	10%189%	558.58.1	508.82.8
Tertiary	9%	671.1	613.4
Resourcing	(63%)	18.2	48.6
– South Africa		(5.8)	31.3
– Rest of Africa	39%	24.0	17.3
Depreciation and amortisation	14%	346.4	304.5
Schools	19%	198.3	167.3
– South Africa	19%	179.9	151.3
– Rest of Africa	15%	18.4	16.0
Tertiary	12%	132.6	117.9
Resourcing		15.5	19.3
– South Africa	(25%)	12.9	17.1
– Rest of Africa	18%	2.6	2.2
Operating profit before interest and non-trading items	5%	909.5	869.1
Schools	7%	368.3	344.3
– South Africa	6%	378.6	357.5
– Rest of Africa		(10.3)	(13.2)
TertiaryResourcing	9%(91%)	538.52.7	495.529.3
– South Africa		(18.7)	14.2
– Rest of Africa	42%	21.4	15.1
Property, plant and equipment, proprietary technology systems, right-of-use assets
and non-current assets held for sale	2%	5 453.1	5 336.0
Schools	1%	3 798.4	3 771.6
– South Africa	1%	3 387.2	3 345.4
– Rest of Africa	(4%)	411.2	426.2
Tertiary	6%	1 633.8	1 545.9
Resourcing	13%	20.9	18.5
– South Africa	29%	17.7	13.7
– Rest of Africa	(33%)	3.2	4.8

Group overview

overview

Consolidated segmental report

for the year ended 31 December 2020 (continued)

	Percentage	Audited	Audited
	increase/	2020	2019
	(decrease)	R'm	R'm
Current assets		511.1	602.9
Schools	(24%)	287.7	376.8
– South Africa	(22%)	198.0	254.0
– Rest of Africa	(27%)	89.7	122.8
Tertiary	(18%)	119.6	145.5
Resourcing	29%	103.8	80.6
– South Africa	7%	38.5	36.1
– Rest of Africa	47%	65.3	44.5
Total liabilities		3 772.9	4 223.7
Schools	(12%)	2 721.6	3 096.2
– South Africa	(13%)	2 356.8	2 723.0
– Rest of Africa	(2%)	364.8	373.2
Tertiary	(6%)	991.3	1 055.6
Resourcing	(17%)	60.0	71.9
– South Africa	(33%)	37.3	55.7
– Rest of Africa	40%	22.7	16.2
Capital expenditure	(56%)	308.4	704.6
Schools	(59%)	194.2	473.2
– South Africa	(60%)	173.8	430.6
– Rest of Africa	(52%)	20.4	42.6
Tertiary	(51%)	111.1	226.8
Resourcing	(33%)	3.1	4.6
– South Africa	(15%)	2.3	2.7
– Rest of Africa	(58%)	0.8	1.9

The resourcing division has been split into two categories of disclosure in line with the categories utilised by the chief operation decision maker. The chief operating decision maker is the leadership committee (which comprises executive management and the key decision makers of each division) of the group and the above categories are reported to them on a monthly basis.

Group overview

Strategic review

Using our capitals to create value

Governance overview

Annual financial statements

Shareholders' information

Group overview

Strategic review

Using our capitals to create value

Notes to the consolidated financial statements

for the year ended 31 December 2020

1. General information

ADvTECH Limited is a limited company incorporated in South Africa.

The principal business activities are the provision of education, training and staff placement in South Africa and other African countries.

2. Adoption of revised standards

During the current year, the group adopted the following amendments to standards which are effective for annual reporting periods beginning on or after 1 January 2020:

• • IFRS 3: Business Combinations (Definition of business);
• • IFRS 7: Financial Instruments: Disclosures, IFRS 9: Financial Instruments and IAS 39: Financial Instruments Recognition and Measurement (Interest rate benchmark reform: The amendments to IFRS 9, IAS 39 and IFRS 7 amend requirements for hedge accounting to support the provision of useful financial information during the period of uncertainty caused by the phasing out of interest-rate benchmarks such as interbank offered rates (IBORs) on hedge accounting);
• • IFRS 16: Leases (early adoption): (COVID-19 related rent concessions: Amendment providing lessees with an exemption from assessing whether a COVID-19-related rent concession (a rent concession that reduces lease payments due on or before 30 June 2021) is a lease modification);
• • IAS 1: Presentation of Financial Statements (Definition of material: The amendments clarify and align the definition of 'material' and provide guidance to help improve consistency in the application of that concept whenever it is used in IFRS Standards.); and
• • IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors (Definition of material: The amendments clarify and align the definition of 'material' and provide guidance to help improve consistency in the application of that concept whenever it is used in IFRS Standards).

These amendments to standards, which became effective in the period ended 31 December 2020 were assessed for applicability to the group and management concluded that they were not applicable to the business of the group and consequently have had no material impact.

3. Significant accounting policies

The accounting policies below apply to the consolidated and separate financial statements (hereafter referred to as the financial statements).

3.1 Statement of compliance

The financial statements have been prepared in accordance with the requirements of the JSE Listings Requirements and with International Financial Reporting Standards (IFRSs) including interpretations of such standards issued by the IFRS Interpretations Committee, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council as well as the requirements of the Companies Act of South Africa.

3.2 Basis of preparation

The financial statements have been prepared on the historical cost basis.

The principal accounting policies adopted are set out below. Except as noted in note 2, these were consistently applied in the previous year.

3.3 Segmental reporting

The group's operating segments are determined by reference to the level of operating results regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated and for which discrete financial information is available. Operating segments which exhibit similar long-term financial performance and have similar economic characteristics are amalgamated.

The revenue earned by the schools and tertiary segments are derived from educational services and that of the resourcing segment from placement fees. The major sources of revenue are earned within South Africa. Revenue earned outside South Africa has been attributed to the Rest of Africa segments for both schools and resourcing.

Interest received, finance costs and taxation are assessed by the chief operating decision maker at a total group level and not considered separately at a segmental level.

Intra-group transactions are conducted at an arms-length basis.

3.4 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the company and entities (including special purpose entities) controlled by the company (its subsidiaries). Control is achieved when the company:

• • has power over the investee;
• • is exposed, or has rights, to variable returns from its involvement with the investee; and
• • has the ability to use its power to affect its returns.

Where an acquisition is achieved through a purchase of shares in a company, control is usually achieved when the shares are transferred into the name of the company. Where an acquisition is achieved through the purchase of assets, control is achieved either when all conditions precedent have been met or when the transfer of the land and buildings has been achieved.

Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statement of profit or loss and statement of other comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate.

for the year ended 31 December 2020 (continued)

3. Significant accounting policies (continued)

3.4 Basis of consolidation (continued)

Profit or loss and each component of the other comprehensive income are attributed to the owners of the company and to the non-controlling interests.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Changes in the group's ownership interests in subsidiaries that do not result in the group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the group's interests and the noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the company.

3.5 Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred to the group, liabilities incurred by the group to the former owners of the acquiree and the equity interests issued by the group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except for deferred taxation assets or liabilities that are recognised and measured in accordance with IAS 12 Income Taxes.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Measurement period adjustments are adjustments that arise from additional information obtained during the 'measurement period' (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date.

3.6 Goodwill

Goodwill arising on the acquisition of a subsidiary or a joint venture represents the excess of the cost of acquisition over the group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary or joint venture recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost as part of the investments and is subsequently measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cashgenerating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. Goodwill is assessed at each statement of financial position date for impairment.

3.7 Joint arrangement

A joint arrangement is a company over which the group exercises joint control. Joint control involves the contractually agreed sharing of control. Joint arrangements are classified as joint ventures when the parties that have joint control have rights to the net assets of the arrangements.

The equity method of accounting is applied in the consolidated financial statements, in relation to joint ventures. In applying the equity method, account is taken of the group's share of accumulated retained earnings and movements in reserves from the effective dates on which the companies became jointly controlling parties and up to the effective dates of disposal. In the event of a joint venture making a loss, the group recognises the losses to the extent of the group's exposure.

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

3. Significant accounting policies (continued)

3.8 Revenue recognition

The group recognises revenue from the following major sources:

• • Revenue from tuition fees;
• • Revenue from placement fees;
• • Interest income; and
• • Dividend income (as recognised in the company financial statements).

Revenue is measured based on the consideration specified in a contract with a customer. The group recognises revenue when it transfers control of a product or service to a customer.

3.8.1 Revenue from tuition fees

The group provides education services to students at schools as well as tertiary institutions. Such services include tuition, aftercare and boarding and are recognised on a straight-line basis over the period that the service is to be rendered. Payment for these services are received either upfront, quarterly or monthly. The upfront payments give rise to fees received in advance (contract liability) which is realised over the period in which the services are delivered.

The non-refundable enrolment fees are received to perform an administrative task. The promised service is the delivery of education. Therefore, the enrolment fees have been deferred to the period over which the education services are performed and included with fees received in advance.

The awarded bursaries and discounts are set off against the related revenue recognised. The recognised amounts of these bursaries and discounts are calculated based on the actual amounts approved and recognised on a straight-line basis over the period that the services are rendered.

For the sale of books and educational material, revenue is recognised when control of the goods has transferred. Payment of the transaction price is due immediately when the student purchases the goods.

3.8.2 Revenue from placement fees

The group provides recruitment services to a range of businesses. Revenue from placement fees is recognised as and when the services are rendered and candidates are successfully placed.

In certain transactions, where the group acts as an agent, revenue is recorded net of related costs.

3.8.3 Interest income and dividend income

Interest income is accrued on a time basis, by reference to the principal amount outstanding at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

Dividend income from investments are recognised when the shareholders' rights to receive payment have been established.

3.9 Leases

The group assesses whether a contract is or contains a lease, at inception of the contract. The group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the lessee uses its incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise:

• • Fixed lease payments; and
• • Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date.

The lease liability is presented as a separate line in the consolidated statement of financial position.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:

• • The lease term has changed as result of an extension, termination or purchase option in the lease;
• • The lease payments change due to changes in an index or rate, in which case the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used); or
• • A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

3. Significant accounting policies (continued)

3.9 Leases (continued)

Right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the group expects to exercise a purchase option, the related right-ofuse asset is depreciated over the useful life of the underlying asset. Depreciation is recorded from the commencement date of the lease.

Right-of-use assets are presented as a separate line in the consolidated statement of financial position.

Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs.

Rental concessions received as a result of the COVID-19 pandemic were recognised in the statement of comprehensive income in line with the practical expedient allowed in the amendment to IFRS 16.

3.10 Foreign currencies

The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in currency units, which is the functional currency of the company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the group and individual entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each statement of financial position date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the statement of financial position date.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are recognised in profit or loss for the period.

For the purposes of presenting these consolidated financial statements, the assets and liabilities of the group's foreign operations are translated into currency units using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (and attributed to non-controlling interests as appropriate).

Goodwill and fair value adjustments to identifiable assets acquired and liabilities assumed through acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognised in other comprehensive income.

3.11 Borrowing costs

Borrowing costs that are not capitalised to property, plant and equipment or proprietary technology systems are recognised in profit or loss in the period in which they are incurred.

3.12 Retirement benefit costs

The group operates pension and provident funds to which employees from certain defined divisions belong. Both funds are defined contribution plans.

These plans are governed by the Pension Fund Act of 1956.

Current contributions to the pension and provident funds are expensed when they become payable.

3.13 Share-based payments

The group issues equity-settled share-based payments to certain employees under the share option scheme. These equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed on the straight-line basis over the vesting period with a corresponding movement in the share reserve, based on the group's estimate of the shares that will eventually vest and adjust for the effect of nonmarket-based vesting conditions.

The fair value is measured using the Bermudan Binomial model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The group also issues equity-settled share-based payments to certain employees under the Management Share Incentive (MSI) scheme. These equity-settled sharebased payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed over the vesting period with a corresponding movement in the share reserve, based on the group's estimate of the shares that will eventually vest. The number of shares that will eventually vest fluctuates based on performance against pre-defined performance targets, which does not include market related vesting conditions.

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

3. Significant accounting policies (continued)

3.14 Taxation

Income taxation expense represents the sum of the taxation currently payable and deferred taxation.

Current taxation

The taxation currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group's liability for current taxation is calculated using taxation rates that have been enacted or substantively enacted by the statement of financial position date.

Deferred taxation

Deferred taxation is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding taxation base used in the computation of taxable profit. Deferred taxation liabilities are generally recognised for all taxable temporary differences and deferred taxation assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differences arise from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred taxation assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred taxation assets and liabilities are measured at the taxation rates that are expected to apply in the period in which the liability is settled or the asset realised, based on taxation rates (and taxation laws) that have been enacted or substantively enacted by the statement of financial position date. Deferred taxation is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred taxation is also dealt with in equity.

Deferred taxation assets and liabilities are offset when there is a legally enforceable right to set off current taxation assets against current taxation liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to settle its current taxation assets and liabilities on a net basis.

3.15 Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing net profit attributable to owners of the company by the weighted average number of ordinary shares in issue during the year, net of shares repurchased and the group's interest in its own ordinary shares.

Diluted earnings per share

For diluted earnings per share, the weighted average number of ordinary shares in issue, net of shares repurchased, is adjusted for the dilutive effect of potential ordinary shares. Potential ordinary shares are treated as dilutive when their conversion to ordinary shares would decrease basic earnings per share.

Headline earnings per share and normalised earnings per share

The presentation of headline earnings per share is mandated under the JSE Listings Requirements and is calculated in accordance with Circular 1/2019 – Headline Earnings, as issued by the South African Institute of Chartered Accountants.

Normalised earnings is a non-IFRS measure and excludes the impact of certain non-operational income and expense items (such as legal and other corporate actions costs, the gain on settlement of contingent consideration and the write-off of deferred taxation assets in certain subsidiaries) from reported headline earnings. It is included to provide an additional basis on which to measure the group's normalised earnings performance.

Non-trading items are a combination of the adjustments made for headline and normalised earnings.

Free operating cash flow before capex

Free operating cash flow before capex is calculated by subtracting non-cash items, repayment of lease liabilities net of tax, and movement in working capital from profit for the year. This is a non-IFRS measure.

Free operating cash flow before per share

Free operating cash flow before capex per share is calculated by dividing free operating cash flow before capex by the weighted average number of ordinary shares in issue during the year, net of shares repurchased and the group's interest in its own ordinary shares.

3.16 Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment. Additions to land and buildings are recognised based on the stage of completion of the construction project. Land and work in progress assets are not depreciated. Depreciation is calculated on the straight-line basis at rates that will reduce the cost of the assets to their estimated residual values over their expected useful lives. The depreciation is recognised in profit or loss.

The annual rates for this purpose are:

Buildings	1%
Computer equipment	25%
Computer software	33.3%
Furniture, fittings and equipment	10% – 20%
Motor vehicles	20%
Video equipment	33.3%
Leasehold improvements	Period of lease

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

3. Significant accounting policies (continued)

3.16 Property, plant and equipment (continued)

The useful life, residual value and depreciation methods of property, plant and equipment are reviewed on an annual basis and no adjustments were required to be made to these estimates.

Items of property, plant and equipment are derecognised on disposal when they have reached the end of their useful lives and no further economic benefits are expected to be obtained from them.

Borrowing costs incurred relating to the development of buildings and proprietary technology systems are capitalised and included in the cost of these assets until completion, less any identified impairment losses. The capitalisation rate used to determine the borrowing cost capitalised is the prevailing average borrowing rate. Depreciation of these assets, on the same basis as other buildings and proprietary technology systems, commences when the assets are ready for their intended use.

3.17 Intangible assets

Intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses. Amortisation is charged on the straight-line basis over the estimated useful lives and is recognised in profit or loss. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis and there were no adjustments required to be made in the current year.

Due to their nature, certain brand values have been identified as having an indefinite useful life on the basis that there is no foreseeable end to the period over which the asset will generate economic benefits. The key factor in assessing the useful life as indefinite is the reputation of a school which increases over time as it becomes entrenched in its community.

3.18 Impairment of tangible and intangible assets, excluding goodwill

At each statement of financial position date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss if any.

3.19 Inventories

Inventories are stated at the lower of cost and net realisable value. Inventory balances at year-end consist primarily of books. These are carried as inventory and expensed when provided to students.

3.20 Share purchases

The ADvTECH Limited Share Incentive Trust, The Independent Institute of Education Proprietary Limited and ADvTECH Resourcing Proprietary Limited hold shares in the company to be used for the settlement of their obligations under their share incentive schemes. Shares held are offset against stated capital.

3.21 Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss (FVTPL)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognised immediately in profit or loss.

3.21.1 Financial assets

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value depending on the classification of the financial assets.

3.21.1.1 Classification of financial assets

Financial assets are classified as subsequently measured at amortised cost as:

• • the financial asset is held by the group whose objective is to hold financial assets in order to collect contractual cash flows, and
• • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

By default, all other financial assets are subsequently measured at FVTPL.

3.21.1.2 Amortised cost and effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and allocating interest income over the relevant period.

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

3. Significant accounting policies (continued)

3.21 Financial instruments (continued)

3.21.1 Financial assets (continued)

3.21.1.2 Amortised cost and effective interest method (continued)

For financial instruments other than purchased or originated credit-impaired financial assets, the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition. For purchased or originated credit-impaired financial assets, a creditadjusted effective interest rate is calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of the debt instrument on initial recognition.

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. On the other hand, the gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost. For financial instruments other than purchased or originated credit-impaired financial assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired (see 3.21.1.7). For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset. If, in subsequent reporting periods, the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset.

Interest income is recognised in profit or loss and is included in the 'interest earned' line item.

3.21.1.3 Foreign exchange gains and losses

The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period. For financial assets measured at amortised cost, exchange differences are recognised in profit or loss and disclosed in note 5 in the line items 'foreign exchange gains' and 'foreign exchange losses'.

3.21.1.4 Impairment of financial assets

The amount of expected credit losses (ECL) is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The group recognises lifetime ECL for trade receivables using the simplified approach. The ECL on these financial assets is estimated using a provision calculation based on the group's historical credit loss experience as described in note 21.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of a financial instrument. In contrast, 12 months ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

Based on the above, the group has a credit risk grading framework against which financial assets are assessed for ECL. The current credit risk grading framework comprises the following categories:

Category	Description	Basis for recognising ECL
	Trade receivables: Education institutions
Performing	The counterparty has a low risk of default as the student is still in attendanceand regular payments are received.	Lifetime ECL – not creditimpaired
In default	• Amount is greater than 30 days past due and the student is no longer inattendance but payments are still being received; or• The student is still in attendance but regular payments are not received.	Lifetime ECL – creditimpaired
Write-off	The student is no longer in attendance and no payments are being received.	Amount is written off
Trade receivables: Resourcing
	Performing & overdue The counterparty has a low risk of default. Amounts could be greater than30 days but default is not expected.	Lifetime ECL – not creditimpaired
In default	Legal credit collection steps have been instituted and there is evidenceindicating the asset is credit-impaired.	Lifetime ECL – creditimpaired
Write-off	There is evidence indicating that the debtor is in severe financial difficultyand the group has no realistic prospect of recovery.	Amount is written off

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

3. Significant accounting policies (continued)

3.21 Financial instruments (continued)

3.21.1 Financial assets (continued)

3.21.1.4 Impairment of financial assets (continued)

Category	Description	Basis for recognising ECL
	Other financial assets and the company trade and other receivables
Performing	The counterparty has a low risk of default and does not have any past-dueamounts.	12 months ECL
Overdue	Amount is greater than 30 days past due and/or there has not been asignificant increase in credit risk since initial recognition.	Lifetime ECL – not creditimpaired
In default	Amount is greater than 90 days past due or there is evidence indicating theasset is credit impaired.	Lifetime ECL – creditimpaired
Write-off	There is evidence indicating that the debtor is in severe financial difficultyand the group has no realistic prospect of recovery.	Amount is written off

The group considers the credit risk on a financial asset to increase prior to the aging reaching 90 days and, hence, the 90 day presumption is not applicable.

3.21.1.5 Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forwardlooking information that is available without undue cost or effort. Forward looking information considered includes the future prospects of the industries in which the group's debtors operate as well as consideration of various external sources of actual and forecast economic information that relate to the group's core operations, namely the education and recruitment industries.

3.21.1.6 Definition of default

The group considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that receivables that meet the following criteria are generally not recoverable:

• information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the group, in full.

Irrespective of the above analysis, the group considers that default has occurred when the credit risk grading framework "In default" category is satisfied, unless the group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

3.21.1.7 Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

• a) significant financial difficulty of the issuer or the borrower;
• b) a breach of contract, such as a default or past due event;
• c) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
• d) the disappearance of an active market for that financial asset because of financial difficulties.

3.21.1.8 Write-off policy

The group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery. For educational trade receivables factors that indicate that there is no realistic prospect of recovering the debt include payment patterns, eg. irregular payments, as well as whether the student is still attending classes. For resourcing trade receivables factors that indicate that there is no realistic prospect of recovery include, when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings. Another indicator is when the credit risk grading framework "write off" category is satisfied. Financial assets written off may still be subject to enforcement activities under the group's recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.

Governance overview

Using our capitals to create value

Group overview

Strategic review

statements

Governance overview

Using our capitals to create value

Group overview

Strategic review

Notes to the consolidated financial statements

for the year ended 31 December 2020 (continued)

3. Significant accounting policies (continued)

3.21 Financial instruments (continued)

3.21.1 Financial assets (continued)

3.21.1.9 Measurement and recognition of ECL

The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forwardlooking information as described above. As for the exposure at default, for financial assets, this is represented by the assets' gross carrying amount at the reporting date.

For financial assets, the ECL is estimated as the difference between all contractual cash flows that are due to the group in accordance with the contract and all the cash flows that the group expects to receive, discounted at the original effective interest rate.

Where lifetime ECL is measured on a collective basis to cater for cases where evidence of significant increases in credit risk at the individual instrument level may not yet be available, the financial instruments are grouped on the following basis:

• • nature of financial instruments (i.e. the group's trade and other receivables and amounts due from customers are each assessed as a separate group. Loans to related parties are assessed for ECL on an individual basis);
• • past-due status;
• • nature, size and industry of debtors; and
• • external credit ratings where available.

The grouping is regularly reviewed by management to ensure the constituents of each group continue to share similar credit risk characteristics.

If the group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the group measures the loss allowance at an amount equal to 12 months ECL at the current reporting date.

The group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

3.21.1.10 Derecognition of financial assets

The group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the group retains substantially all the risks and rewards of ownership of a transferred financial asset, the group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

3.21.2 Financial liabilities and equity instruments 3.21.2.1 Classification as debt or equity

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

3.21.2.2 Equity instruments

An equity instrument in the group consists of stated capital and share based payment instruments. Equity instruments issued by the group are recognised at the proceeds received, net of direct issue costs.

No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the company's own equity instruments.

3.21.2.3 Financial liabilities

All financial liabilities currently held in the group and company are subsequently measured at amortised cost using the effective interest method.

3.21.2.3a Financial liabilities subsequently measured at amortised cost

Financial liabilities that are not contingent consideration of an acquirer in a business combination, are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.

3.21.2.3b Foreign exchange gains and losses

For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments. These foreign exchange gains and losses are recognised in profit or loss and disclosed in note 5 in the line items 'foreign exchange gains' and 'foreign exchange losses'.

3.21.2.3c Derecognition of financial liabilities

The group derecognises financial liabilities when, and only when, the group's obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

for the year ended 31 December 2020 (continued)

3. Significant accounting policies (continued)

3.22 Critical accounting judgements and key sources of estimation uncertainty

Impairment of assets

An assessment of impairment at a cash-generating unit level for tangible and intangible assets, as well as individual assessments of goodwill and financial assets (including related provisions), is performed at the end of each reporting period.

The critical estimates used in individual impairment assessments of assets are the factors relating to the technical, economic and business circumstances which affect the inputs applied in determining the recoverable amount of the respective assets. Refer to notes 15, 16 and 20.

Expected credit loss allowance

An assessment of impairment of trade receivables is performed at the end of each reporting period based on various factors as disclosed in note 20. Management judgement is required on estimating such information.

Purchase price allocation relating to business combinations

The group exercises judgement in determining the purchase price allocation which is a combination of

determining the fair value of the tangible and intangible assets and resulting goodwill relating to the business combinations. For tangible assets, an independent valuation is obtained from a certified valuer. The free cash flow method is used to value intangible assets and the key assumptions involved were growth rates, discount rates and attrition rates.

Useful lives and residual values of property, plant and equipment and intangible assets

Management judgement and assumptions are necessary in estimating the methods of depreciation/amortisation, useful lives and residual values of property, plant and equipment and intangible assets. The group reassesses the estimated useful lives and residual values of components of property, plant and equipment and intangible assets on an ongoing basis and makes appropriate changes as and when necessary. Indefinite useful lives are allocated to intangible assets if there is no foreseeable limit to the period over which the group expects to consume the future economic benefits embodied in the intangible asset.

3.23 Standards not yet effective

At the date of the authorisation of these financial statements, the following standards were in issue but not yet effective:

IFRS 3	Business Combinations: Reference to the Conceptual Framework. The amendmentupdates a reference in IFRS 3 to the Conceptual Framework for Financial Reportingwithout changing the accounting requirements for business combinations.	Annual period beginningon or after 1 January 2022
IFRS 7IFRS 9IAS 39	Interest Rate Benchmark Reform Phase 2: The amendments to IFRS 9, IAS 39, IFRS 7,IFRS 4 and IFRS 16 amend requirements relating to changes in the basis fordetermining contractual cash flows of financial assets, financial liabilities and leaseliabilities, hedge accounting and disclosures.	Annual period beginningon or after 1 January 2021
IFRS 9	Financial Instruments: Annual Improvements to IFRS Standards 2018 – 2020: Theamendment clarifies which fees an entity includes when it applies the '10 per cent'test in assessing whether to derecognise a financial liability.	Annual period beginningon or after 1 January 2022
IAS 1	Presentation of Financial Statements: Classification of liabilities as current or noncurrent: narrow-scope amendments to IAS 1 to clarify how to classify debt and otherliabilities as current or non-current.	Annual period beginningon or after 1 January 2023
IAS 16	Property, Plant and Equipment: Proceeds before intended use: The amendmentsprohibit an entity from deducting from the cost of an item of property, plant andequipment any proceeds from selling items produced while bringing that asset tothe location and condition necessary for it to be capable of operating in the mannerintended by management. Instead, an entity recognises the proceeds from sellingsuch items, and the cost of producing those items in profit or loss.	Annual period beginningon or after 1 January 2022
IAS 37	Provisions, Contingent Liabilities and Contingent Assets: Onerous contracts. Theamendments specify which costs should be included in an entity's assessmentwhether a contract will be loss-making.	Annual period beginningon or after 1 January 2022

The group intends to adopt the above standards at the start of the financial period following the effective date.

None of the standards that have been published, but not yet effective, are expected to have a significant impact on the amounts recorded in the financial statements.

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

2020R'mRevenueThe group derives its revenue from the transfer of services over time in the following majorincome streams. This is consistent with the revenue information that is disclosed for eachreportable segment under IFRS 8 (see consolidated segmental report):4 654.8Education services2 406.8Tuition – Schools2 360.9Tuition – Tertiary(223.1)Bursaries and discounts4 544.6Net tuition fees18.8Boarding fees57.8Enrolment and application fees30.1Extramural activities and aftercare3.5Education material and uniforms848.2Placement fees(3.8)Intra group revenue5 499.2Timing of revenue recognitionOver timeNet tuition fees, boarding fees, enrolment and application fees and extramural activities andaftercare4 651.3At a point in timeEducational material and uniforms, placement fees and intra group revenue847.9	Audited	Audited
		2019
		R'm
		4 371.7
		2 266.2
		2 148.5
		(197.6)
		4 217.1
		33.3
		57.1
		57.8
		6.4
		740.7
		(4.4)
		5 108.0
		4 365.3
		742.7
Total5 499.2		5 108.0

Group overview

Strategic review

overview

for the year ended 31 December 2020 (continued)

		Audited2020	Audited2019
	Notes	R'm	R'm
Operating profit before interestOperating profit before interest is stated after taking the following into account:
Auditors' remuneration		16.1	14.1
– Current year audit fee– Prior year under provision– Other services		15.10.70.3	13.20.20.7
Amortisation		24.4	26.7
– Proprietary technology systems– Intangible assets	1316	14.010.4	14.012.7
Depreciation – property, plant and equipment	12	193.1	174.3
– Land and buildings– Computer equipment– Computer software– Furniture, fittings and equipment– Motor vehicles– Video equipment– Leasehold improvements		24.171.34.350.48.23.631.2	14.869.84.142.47.61.833.8
Depreciation – right-of-use assets	14	128.9	103.5
Total depreciation and amortisation		346.4	304.5
Foreign exchange gainsForeign exchange losses		(5.1)1.6	(6.4)3.9
Lease charges		65.0	65.9
– Expense related to short term leases– Savings as a result of rent concessions received– Expense relating to variable lease payments not included in the measurementof lease liabilities– Expense related to low value assets		42.0(1.7)21.23.5	41.0–20.84.1
Professional feesNet loss on disposal of property, plant and equipment		30.4–	43.30.5
(Profit)/loss on disposal of property, plant and equipmentLoss on disposal of property, plant and equipment reclassified to loss ondisposal of subsidiaries		(1.4)1.4	0.5–
Loss on disposal of subsidiariesGain on settlement of contingent consideration	37	6.7(13.0)	––
Directors' emoluments		15.2	15.2
– For services as directors– VAT on non-executive director fees– For managerial and other services	353535	4.20.310.7	4.80.310.1
Pension and provident fund contributionsShare-based payment expenseManagement share incentive scheme expense (MSI)Staff costs	2425	150.41.817.12 075.1	134.42.713.62 074.1
Total staff costs		2 259.6	2 240.0
Number of staff (at year-end)Number of staff covered by retirement plans (at year-end)		7 8534 939	7 8764 960

overview

for the year ended 31 December 2020 (continued)

			Audited2020	Audited2019
		Notes	R'm	R'm
6.6.1	Net finance costsInterest earnedCall accounts		1.7	2.7
	Current accountsSouth African Revenue Service and other revenue authorities		0.20.4	2.5–
			2.3	5.2
6.2	Finance costs incurredBank loansBank loans facility fees		(135.4)(2.6)	(158.0)(2.5)
	Bank overdrafts		(1.1)	(1.9)
	South African Revenue Service and other revenue authoritiesOther		(2.1)(5.3)	(0.4)(4.6)
			(146.5)	(167.4)
6.3	Finance costs on lease liabilities
	Finance costs on lease liabilities	31	(60.6)	(59.6)
	Net finance costs		(204.8)	(221.8)
7.7.1	TaxationTaxation expense comprises
	Current taxation– current year		240.3	210.1
	– prior year over provision		(0.5)	(9.5)
	Deferred taxation – current year– assessed losses written off	1717	(41.0)4.8	(23.2)–
	– prior year under provision	17	5.4	15.1
	Total taxation expense		209.0	192.5
	Estimated taxation losses for the group carried forward at year-end wereR296.4 million (2019: R274.0 million). A rand equivalent amount ofR234.2 million relates to Crawford International School in Kenya which hasaccelerated allowances relating to the construction of buildings allowing a taxwrite-off over two years.
	Deferred taxation assets relating to taxation losses to the value of R6.5 million(2019: R4.1 million) have not been raised in the group.
7.2	Reconciliation of taxation
	Profit before taxationTaxation at 28%		674.5188.9	660.8185.0
	Foreign taxation effect		(6.4)	(9.3)
	Taxation at effective normal tax rate of 27% (2019: 27%)Permanent differences		182.516.8	175.711.2
	Disallowable expenditure – depreciation on buildings and amortisation ofleasehold improvements		12.0	10.0
	Disallowable expenditure – loss on disposal of subsidiaries		1.9	–
	Disallowable expenditure – legal, consulting and otherDisallowable expenditure – foreign entities		3.62.0	2.80.1
	Exempt income		(2.7)	(1.7)
	Current taxation – prior year over provision		(0.5)	(9.5)
	Deferred taxation – assessed losses written offDeferred taxation – prior year under provision		4.85.4	–15.1
	Taxation expense recognised in profit		209.0	192.5
	Effective taxation rate		31.0%	29.1%
	The majority of the exempt income relates to the gain on settlement of contingent consideration (2019: gain on bargain

purchase on the acquisition of IIE MSA).

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

				Audited2020R'm	Audited2019R'm
	Earnings per shareThe calculation of the weighted average number of shares for basic and diluted earnings pershare, headline earnings per share and normalised earnings per share attributable to equityholders is based on the following data:
	Number of sharesWeighted average number of shares ('m)Less: Weighted average number of shares held by the Share Incentive Trust and under the		549.0	546.6
	MSI ('m)Weighted average number of shares for purposes of basic earnings per share ('m)			(7.4)541.6	(7.6)539.0
	Dilutive effect of share options ('m)			–	–
	Weighted average number of shares for purposes of diluted earnings per share ('m)			541.6	539.0
	There are 1 757 621 (2019:476 712) share options that are potentially dilutive but did not havean effect in the current year as the exercise price exceeded the market price.
	EarningsEarnings for the purpose of basic and diluted earnings per share			461.1	469.4
	Earnings per shareBasic (cents)			85.1	87.1
	Diluted (cents)			85.1	87.1
		Audited 2020R'm		Audited 2019R'm
		Gross	Net	Gross	Net
	Headline earnings per shareEarningsEarnings for the purpose of basic and diluted earnings per shareItems excluded from headline earnings per share	41.3	461.133.0	(5.6)	469.4(5.7)
	(Profit)/loss on disposal of property, plant and equipment	(1.4)	(1.0)	0.5	0.4
	Loss on disposal of subsidiariesImpairment of property, plant and equipmentImpairment of intangible assetsGain on bargain purchase of acquisition	6.711.124.9–	6.79.417.9–	–––(6.1)	–––(6.1)
	Earnings for the purpose of basic and diluted headline earningsper share		494.1		463.7
	Headline earnings per share
	Basic (cents)Diluted (cents)		91.291.2		86.086.0
10.	Normalised earnings per shareEarningsEarnings for the purpose of basic and diluted headline
	earnings per shareItems excluded from normalised earnings per share	(12.5)	494.1(7.8)	(7.4)	463.7(4.5)
	Corporate action costsGain on settlement of contingent considerationWrite-off of deferred taxation assets	0.5(13.0)–	0.4(13.0)4.8	3.9––	3.9––
	Foreign currency gain arising on corporate actionInsurance proceeds (net of costs) on previously reported fraudevent	––	––	(6.2)(5.1)	(4.5)(3.9)
	Earnings for the purpose of basic and diluted normalisedearnings per share		486.3		459.2
	Normalised earnings per share
	Basic (cents)		89.8		85.2

to create value

Group overview

Strategic review

Shareholders' information Annual financial

statements

for the year ended 31 December 2020 (continued)

		Audited2020R'm	Audited2019R'm
11.	DividendsFinal dividend No 19 paid on 15 April 2019: 15.0 cents per shareInterim dividend No 20 paid on 30 September 2019: 15.0 cents per shareDividend attributable to shares held by the treasury sharesDividends declared by subsidiaries to non-controlling interests	–––3.8	82.082.0(0.9)7.8
	Total dividends	3.8	170.9
	On 18 March 2021 the directors declared a dividend No 21 of 20.0 cents per share payable on19 April 2021 to shareholders registered on the record date, being 16 April 2021.
	Analysis of dividends per share declared:InterimFinal	–20.0	15.0–
		20.0	15.0

			Cost
				Foreign
				currency	31 Dec
	1 Jan 2020	Additions	Disposals	effect	2020
2020	R'm	R'm	R'm	R'm	R'm
12.Property, plant and equipment
Land and buildings	4 299.6	115.5	(30.9)	(4.7)	4 379.5
Computer equipment	394.6	54.4	(37.0)	(0.3)	411.7
Computer software	19.5	1.7	(3.5)	–	17.7
Furniture, fittings and equipment	322.2	39.6	(32.5)	(0.4)	328.9
Motor vehicles	62.4	3.6	(2.2)	(0.1)	63.7
Video equipment	11.2	6.4	(4.9)	(0.1)	12.6
Leasehold improvements	544.6	47.6	(36.1)	(0.6)	555.5
	5 654.1	268.8	(147.1)	(6.2)	5 769.6

	Accumulated depreciation and impairment
					Foreign
					currency	31 Dec
	1 Jan 2020	Depreciation	Impairment	Disposals	effect	2020
	R'm	R'm	R'm	R'm	R'm	R'm
Land and buildings	129.2	24.1	11.1	(6.5)	(3.6)	154.3
Computer equipment	257.2	71.3	–	(36.5)	(0.1)	291.9
Computer software	11.4	4.3	–	(2.6)	–	13.1
Furniture, fittings and equipment	181.6	50.4	–	(32.1)	(0.1)	199.8
Motor vehicles	43.5	8.2	–	(2.1)	–	49.6
Video equipment	7.0	3.6	–	(2.6)	–	8.0
Leasehold improvements	153.3	31.2	–	(35.3)	–	149.2
	783.2	193.1	11.1	(117.7)	(3.8)	865.9

Group overview

Group overview

Notes to the consolidated financial statements

for the year ended 31 December 2020 (continued)

		Net book value
	31 Dec	31 Dec
	2020	2019
	R'm	R'm
12.Property, plant and equipment (continued)
Land and buildings	4 225.2	4 170.4
Computer equipment	119.8	137.4
Computer software	4.6	8.1
Furniture, fittings and equipment	129.1	140.6
Motor vehicles	14.1	18.9
Video equipment	4.6	4.2
Leasehold improvements	406.3	391.3
	4 903.7	4 870.9
Reclassified as non-current assets held for sale	(48.8)	(67.8)
Cost	(51.9)	(71.8)
Accumulated depreciation	3.1	4.0
	4 854.9	4 803.1

Included in land and buildings is an amount of R12.7 million (2019: R56.3 million) which relates to buildings that are still in progress.

Included in leasehold improvements is an amount of R5.2 million (2019: R8.0 million) which relates to improvements that are still in progress.

The amount of borrowing costs capitalised to current year additions amounted to R1.8 million (2019: R20.9 million) at an average capitalisation rate of 6.7% (2019: 9.0%).

Although property, plant and equipment are held under the cost model, the group obtained an independent valuation of its fixed property during 2019. The valuation was conducted by the Quadrant Property Group, a group of independent sworn valuators. Their valuation based on present land use amounted to R5 407.1 million, a premium of R1 236.7 million or 30% over book value as at December 2019. The previous valuation conducted during 2016 valued the group's fixed property at R3 384.1 million. The fair value is determined using the present value of future cash flows and is level 3 on the fair value hierarchy. There were no material changes to information and assumptions used by the valuators.

Valuations are done on a triennial basis with the next valuation due in 2022.

Land and buildings having a net book value of R2 593.3 million (2019: R2 431.3 million) have been pledged as security for the banking facilities (refer to note 26, 27 and 36).

Trinityhouse Palm Lakes and Trinityhouse North-Riding were closed as at 31 December 2020 and as a result, land and buildings were impaired by R11.1 million in anticipation of its disposal in future.

				Cost
			Acquisitions
			through		Foreign
			business		currency		31 Dec
	1 Jan 2019	Additions	combinations	Disposals	effect	Reallocation	2019
2019	R'm	R'm	R'm	R'm	R'm	R'm	R'm
Land and buildings	3 518.7	407.8	406.0	(25.0)	(8.4)	0.5	4 299.6
Computer equipment	378.6	68.8	5.6	(55.6)	(0.3)	(2.5)	394.6
Computer software	16.4	3.5	0.6	(1.0)	–	–	19.5
Furniture, fittings and
equipment	324.9	45.7	18.1	(69.2)	(0.7)	3.4	322.2
Motor vehicles	58.5	5.0	0.1	(1.0)	(0.2)	–	62.4
Video equipment	7.5	3.8	–	(0.1)	–	–	11.2
Leasehold
improvements	443.7	148.4	–	(46.1)	–	(1.4)	544.6
	4 748.3	683.0	430.4	(198.0)	(9.6)	–	5 654.1

for the year ended 31 December 2020 (continued)

	Accumulated depreciation and impairment
				Foreigncurrency		31 Dec
	1 Jan 2019	Depreciation	Disposals	effect	Reallocation	2019
	R'm	R'm	R'm	R'm	R'm	R'm
Property, plant and equipment(continued)
Land and buildings	139.1	14.8	(24.0)	(0.7)	–	129.2
Computer equipment	243.6	69.8	(54.5)	–	(1.7)	257.2
Computer software	8.3	4.1	(1.0)	–	–	11.4
Furniture, fittings and equipment	206.0	42.4	(69.1)	(0.1)	2.4	181.6
Motor vehicles	37.0	7.6	(1.0)	(0.1)	–	43.5
Video equipment	5.3	1.8	(0.1)	–	–	7.0
Leasehold improvements	165.9	33.8	(45.7)	–	(0.7)	153.3
	805.2	174.3	(195.4)	(0.9)	–	783.2
					Net book value
					31 Dec	31 Dec
					2019R'm	2018R'm
Land and buildings					4 170.4	3 379.6
Computer equipment					137.4	135.0
Computer software					8.1	8.1
Furniture, fittings and equipment					140.6	118.9
Motor vehicles					18.9	21.5
Video equipment					4.2	2.2
Leasehold improvements					391.3	277.8
					4 870.9	3 943.1
Reclassified as non-current assets held for sale					(67.8)	–
Cost					(71.8)	–
Accumulated depreciation					4.0	–

Group overview

for the year ended 31 December 2020 (continued)

		Audited	Audited
	Note	2020R'm	2019R'm
13.Proprietary technology systems
CostBalance at beginning of the yearAdditions		163.439.6	141.821.6
Balance at end of the year		203.0	163.4
Accumulated amortisationBalance at beginning of the yearAmortisation expense	5	82.514.0	68.514.0
Balance at end of the year		96.5	82.5
Carrying amountAt beginning of the year		80.9	73.3
At end of the year		106.5	80.9

The student academic management system for schools and tertiary forms the bulk of the amount above. Useful lives of between six and ten years are used in the calculation of amortisation on a straight-line basis.

Included in proprietary technology systems is an amount of R75.6 million (2019: R39.9 million) which relates to systems that are still under development.

The amount of borrowing costs capitalised to current year additions amounted to R3.1 million (2019: R1.1 million) at an average capitalisation rate of 6.7% (2019: 9.0%).

				Cost
			Foreign
			currency			31 Dec
		1 Jan 2020	effect	Additions	Terminations	2020
	2020	R'm	R'm	R'm	R'm	R'm
14.	Right-of-use assets
	Land and buildings	647.0	(2.8)	188.6	(98.4)	734.4
	Computer equipment	0.6	–	–	–	0.6
	Motor vehicles	–	–	1.4	–	1.4
		647.6	(2.8)	190.0	(98.4)	736.4

	Accumulated depreciation
		Foreign
		currency			31 Dec
	1 Jan 2020	effect	Depreciation	Terminations	2020
	R'm	R'm	R'm	R'm	R'm
Land and buildings	263.1	(0.4)	128.1	(98.4)	292.4
Computer equipment	0.3	–	0.2	–	0.5
Motor vehicles	–	–	0.6	–	0.6
	263.4	(0.4)	128.9	(98.4)	293.5

		Net book value
	31 Dec	31 Dec
	2020	2019
	R'm	R'm
Land and buildings	442.0	383.9
Computer equipment	0.1	0.3
Motor Vehicles	0.8	–
	442.9	384.2

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

14. Right-of-use assets (continued)

The group leases several land and buildings from which it conducts it operations. The leases range from 1 year to 36 years depending on the type of operation. Additions in the current year mainly consist of renewed leases on land and buildings.

Approximately 25% (2019: 13%) of the leases for land and buildings expired in the current financial year. Where appropriate, the expired contracts were replaced by new leases for identical underlying assets. The maturity analysis of lease liabilities is presented in note 31.

Some of the property leases in which the group is the lessee contain variable lease payment terms that are linked to revenue generated from tuition fees and is used to reduce the fixed costs of those businesses. The amount of variable lease payments are disclosed in note 5.

Overall the variable payments constitute up to 13% (2019: 13%) of the group's entire lease payments. The group expects this ratio to remain constant in future years. The variable payments depend on sales and consequently on the overall economic development over the next few years.

There are certain leases within the group which have extension clauses. Where it is reasonably certain that these will be exercised, the extension term has been included in the determination of the right-of-use assets.

The total cash outflow for right-of-use assets amounted to R158.5 million (2019: R156.5 million).

As at 1 January 2021, the group entered into various leases, which had not commenced by the year-end and as a result, lease liabilities and right-of-use assets have not been recognised for these leases.

	Cost
2019	1 Jan 2019R'm	AdditionsR'm	TerminationsR'm	31 Dec2019R'm
Land and buildingsComputer equipment	744.10.6	45.1–	(142.2)–	647.00.6
	744.7	45.1	(142.2)	647.6
			Accumulated depreciation
	1 Jan 2019R'm	DepreciationR'm	TerminationsR'm	31 Dec2019R'm
Land and buildingsComputer equipment	302.00.1	103.30.2	(142.2)–	263.10.3
	302.1	103.5	(142.2)	263.4

		Net book value
	31 Dec	31 Dec
	2019	2018
	R'm	R'm
Land and buildings	383.9	442.1
Computer equipment	0.3	0.5
	384.2	442.6

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

		Audited2020R'm	Audited2019R'm
15.	Goodwill
	Cost
	Balance at beginning of the year	1 459.9	1 465.6
	Disposal of subsidiaries	(4.3)	–
	Foreign currency effect	(3.2)	(5.7)
	Balance at end of the year	1 452.4	1 459.9

The group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.

When testing goodwill for impairment, the recoverable amounts of the cash-generating units (CGUs) are determined using valuein-use calculations taking into account estimated discount rates and growth rates. Goodwill is allocated to each CGU depending on the nature of the underlying business and the cash flows which support the recognition of the goodwill.

Cash flow projections for financial forecasts are based on expected revenue, operating margins, working capital requirements and capital expenditure. These are more prudent than the three year budgets which have been approved by the directors. The effects of the COVID-19 pandemic on the forecasts such as possible lower revenue, additional costs and reduced capital expenditure have been factored into the projections. The future cash flows (which includes the effect of the COVID-19 pandemic) are determined by taking the actual cash flow for the current year inflated by an expected growth rate for the CGU being considered. The future cash flows are supported by the underlying student numbers which are in line with expectations. Growth rates applied are determined based on past experience and industry trends relating to the CGU. Growth rates can fluctuate from year to year based on the assumptions used to determine these rates.

The discount rates present the current market assessment of the risks for each CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow projections. The discount rate calculations are derived from the weighted average cost of capital and takes into account both the cost of debt and the cost of equity. The cost of equity was arrived at by using the capital asset pricing model (CAPM) which, where necessary, takes into account an equity risk premium. The CAPM uses market betas of comparable entities in arriving at the cost of equity. The cost of debt is based on the interest-bearing borrowings the group is obliged to service.

The key assumptions used are as follows:

2020Cash-generating unit	GoodwillR'm	IndefinitelifeintangibleassetsR'm	Period ofprojectedcash flowsYears	Appliedgrowth rate%	Terminalgrowth rate%	Pretaxationdiscountrate%	Posttaxationdiscountrate%
Schools – South AfricaSchools – Rest of Africa*TertiaryResourcing – South AfricaResourcing – Rest of Africa	1 095.0157.8167.77.724.2	84.616.6–––	55555	7.014.06.06.06.0	4.75.04.74.74.7	14.9514.4117.5918.4018.52	12.2012.8013.5016.5017.60
	1 452.4	101.2

*Higher growth rates are used in the Schools – Rest of Africa CGU as these are new schools that will grow faster in the early years.

2019	Goodwill	Indefinitelifeintangibleassets	Period ofprojectedcash flows	Appliedgrowthrate	Terminalgrowthrate	Discountrate
Cash-generating unit	R'm	R'm	Years	%	%	%
Schools	1 256.4	126.2	5	7.0	5.0	12.61
Tertiary	171.5	–	5	7.0	5.0	12.61
Resourcing	32.0	–	5	7.0	5.0	13.11
	1 459.9	126.2

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

15. Goodwill (continued)

Goodwill acquired is allocated to the group's CGUs, or groups of CGUs, that are expected to benefit from the synergies of the combination. The CGUs represent the lowest level within the group at which goodwill is monitored for internal management purposes. During the current year the schools and resourcing division CGUs were split into South Africa and Rest of Africa in order to align to the operating segments due to the change in the manner of reporting to the chief operating decision maker. These CGUs are used for the purpose of performing the goodwill impairment calculations.

The estimated recoverable amounts of the CGUs exceeded their carrying value. Due to the headroom available, a 10% variation to management's cash flow estimates would not impact the result of the recoverable amount exceeding the carrying value. Management have used a reasonable possible variation of 10% in the determination of the sensitivity of the key inputs. On the discount rates, a 5% variation would not result in the recoverable amount falling below the carrying amount. These variations have been deemed reasonable based on management's analysis of the inputs and as such this provides a relevant and sufficient guidance on the sensitivity of goodwill.

Except for the impairment of specific indefinite life intangibles as disclosed in note 16, the directors were satisfied that there were no other impairment adjustments required to goodwill and intangible assets.

		Customerbases	Brandvalues	Totalaudited
	Note	R'm	R'm	R'm
Intangible assetsCost
Balance at 1 January 2019Foreign currency effect		159.8(0.5)	151.4(0.7)	311.2(1.2)
Balance at 1 January 2020Foreign currency effect		159.30.4	150.7–	310.00.4
At 31 December 2020		159.7	150.7	310.4
Accumulated amortisation and impairmentBalance at 1 January 2019Amortisation expense	5	82.911.5	17.31.2	100.212.7
Balance at 1 January 2020ImpairmentAmortisation expense	5	94.4–9.0	18.524.91.4	112.924.910.4
At 31 December 2020		103.4	44.8	148.2
Carrying amountAs at 31 December 2019		64.9	132.2	197.1
As at 31 December 2020		56.3	105.9	162.2

The following useful lives are used in the calculation of amortisation on a straight-line basis:

	Total useful life	Remaining useful life
Customer bases	5 to 15 years	1 to 12 years
Brand values	5 to 10 years, indefinite life	2 to 6 years, indefinite life

The key factor in the assessing the useful life as indefinite is the reputation of a school which increases over time as it become entrenched in its community. The value of a school brand would increase as the school builds its reputation. The brand value of various schools acquired having a carrying amount of R101.2 million (2019: R126.2 million) have a life span in excess of 20 years and therefore an indefinite period of amortisation was selected. Refer to note 15 for details of the assumptions applied in assessing the indefinite useful life intangible assets for impairment.

Intangible assets with a carrying value of R24.9 million relating to the brand value of Maragon (in the schools division) were impaired. The recoverable amount which is based on the value in use was considered to be Rnil and the assets were fully impaired. The reason for the impairment was the strategic re-positioning and re-branding of these schools which is currently in progress.

for the year ended 31 December 2020 (continued)

	Audited	Audited
	2020	2019
	R'm	R'm
Deferred taxation
Opening deferred taxation	(130.4)	(101.6)
	41.0	23.2
Current year temporary differences	37.8	20.8
Foreign currency effect	(0.6)	0.1
Movement in deferred taxation assets relating to taxation losses	3.8	2.3
Assessed losses written off	(4.8)	–
Business combinations	0.9	(36.9)
Prior year under provision	(5.4)	(15.1)
Balance at end of the year	(98.7)	(130.4)
The deferred tax balance is disclosed as follows:
Deferred taxation assets	53.9	40.5
Deferred taxation liabilities	(152.6)	(170.9)
	(98.7)	(130.4)
Deferred taxation assets of R75.2 million (2019: R77.2 million) relating to taxation losses wereraised in businesses where it is probable (based on current performance and approved
forecasts) that sufficient taxable profits will be available in future to utilise the taxation losses.
Deferred taxation assets relating to temporary differences (other than taxation losses) arising inprofitable businesses are recognised as it is probable that sufficient taxable profits will be
available in future to realise these assets.
The balance comprises:Deferred and prepaid expenditure	(3.6)	(5.7)
Allowance for future expenditure (S24C)	(69.2)	(73.9)
Fees received in advance	71.4	74.7
Commercial building allowance	(91.8)	(75.0)
Allowance for doubtful debts	62.9	49.9
Leave pay accrual	8.1	7.9
Other	1.6	–
Property, plant and equipment allowances	(69.7)	(82.6)
Estimated taxation losses carried forward	75.2	77.2
Net lease liabilities	33.7	28.7
Bonus provision	13.8
Management share incentive scheme awards (MSI)	7.2
Intangible assets	(40.3)
Fair value of land and buildings on acquisitions	(98.0)
	(98.7)
Deferred and prepaid expenditure	2.1
Allowance for future expenditure (S24C)	12.9
Fees received in advance	(3.3)
Commercial building allowanceAllowance for doubtful debts	(16.8)13.0
Leave pay accrual	0.2
Deferred taxation accounted for in the statement of profit or loss:Other	1.6
Property, plant and equipment allowances	12.9
Movement in taxation losses	(0.9)
Net lease liabilities	5.0
Bonus provision	1.8
Management share incentive scheme awards (MSI)	2.0	12.05.2(50.2)(98.6)(130.4)(1.5)(4.8)(7.9)(13.9)1.11.7–(56.3)97.8(3.6)2.83.8
Intangible assetsFair value of land and buildings on acquisitions	9.90.6	3.70.3

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

		Audited2020R'm	Audited2019R'm
18.	Investment in joint arrangementInvestment held at 1 JanuaryShare of profit from joint arrangement	7.60.4	6.21.4
	Investment 50% held at 31 December	8.0	7.6
	The group holds a 50% interest in Star Schools Proprietary Limited (incorporated in SouthAfrica), a company involved in matric re-writes and the supply of educational study guides,which is classified as a joint arrangement. The investment in the joint arrangement isaccounted for using the equity accounting method.
	Summarised aggregated financial information
	Revenue	37.9	42.2
	Profit for the year	0.9	2.8
	Current assetsNon-current assets	9.22.7	6.92.1
	Current liabilities	(5.7)	(4.1)
	Non-current liabilities	–	(0.2)
	Net asset value of Star Schools	6.2	4.7
19.	InventoriesBooks	12.8	18.8
	Educational material and promotional items	4.6	3.7
		17.4	22.5
20.	Trade and other receivablesAmounts receivable for tuition feesAmounts receivable for placement fees	580.728.3	502.245.1
	Amounts receivable from the sale of goods and services	0.2	0.4
	Trade receivablesLoss allowance	609.2(375.7)	547.7(301.2)
		233.5	246.5
	Deposits	14.9	21.8
	Staff debtors	1.3	1.2
	VAT refundable	0.6	20.5
	Other receivables*	20.0	36.2
		270.3	326.2
	* The majority of other receivables is made up of rentals receivable and withholding tax credits.Profit or loss impact
	Credit losses#	263.6	135.8
	#

Includes the profit or loss impact of bad debts written off and the movement in the loss allowance.

The average credit period is 40 days (2019: 39 days). No interest is charged on outstanding trade receivables.

The group measures the loss allowance for trade receivables at an amount equal to lifetime expected credit losses (ECL). This assessment takes into consideration the aging of the debtor as well as whether the student is still in the educational institution or has left in order to determine the risk. The COVID-19 pandemic resulted in the delay of payment with more debtors being included in the older and riskier debtor categories and resulted in an increased ECL. The ECL on trade receivables are estimated using a provision calculation by reference to past default experience of the debtor category.

The group measures the loss allowance of other debtors at an amount equal to lifetime ECL. Other debtors are usually short term in nature and are written off when considered irrecoverable. The loss allowance applicable to other debtors is not considered significant.

Governance overview

Using our capitals

Group

Strategic

for the year ended 31 December 2020 (continued)

20. Trade and other receivables (continued)

The group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. In the education institutions, debtors are considered in default when the account is more than 30 days overdue. However, these are written off only when the student is no longer in attendance and payments are not being received. In the resourcing division, debtors are written off when there is severe financial difficulty such as bankruptcy. Trade receivables that have been written off remain subject to enforcement activities.

The following table details the risk profile of trade receivables based on the group's provision calculation. As the group's historical credit loss experience does show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is further distinguished between the group's different customer bases.

Schools

	Performing	In default	Total	Performing	In default	Total
		2020			2019
Gross carrying amountLifetime ECL	44.9(1.3)	94.5(81.1)	139.4(82.4)	25.2–	72.4(36.4)	97.6(36.4)
	43.6	13.4	57.0	25.2	36.0	61.2

Approximately 21% of in default debtors relates to debtors from a previous financial year.

Tertiary

	Performing	In default	Total	Performing	In default	Total
		2020			2019
Gross carrying amount	76.8	364.5	441.3	59.8	344.8	404.6
Lifetime ECL	(2.3)	(289.9)	(292.2)	–	(263.4)	(263.4)
	74.5	74.6	149.1	59.8	81.4	141.2

Approximately 51% of in default debtors relates to debtors from a previous financial year.

Resourcing

	Performing& overdue	In default	Total	Performing& overdue*	In default	Total
		2020			2019
Gross carrying amountLifetime ECL	27.4(0.3)	1.1(0.8)	28.5(1.1)	44.1–	1.4(1.4)	45.5(1.4)
	27.1	0.3	27.4	44.1	–	44.1

* The previous categories of performing and overdue were combined as there was no significant difference in credit risk between the two.

The following table shows the movement in lifetime ECL that has been recognised for trade and other receivables in accordance with the simplified approach set out in IFRS 9.

	Collectively assessedLifetime ECL – creditimpaired
	2020	2019
Balance at beginning of the year	301.2	237.9
Remeasurement of loss allowance	275.4	152.3
Amounts written off	(194.2)	(109.4)
Business combinations	–	28.2
Amounts recovered	(6.7)	(7.8)
Balance at end of the year	375.7	301.2

for the year ended 31 December 2020 (continued)

20. Trade and other receivables (continued)

The table below explains how significant changes in the gross carrying amount of the trade receivables contributed to changes in the loss allowance:

		Increase/(decrease) in lifetime ECL
		Not creditimpaired	Creditimpaired	Not creditimpaired	Creditimpaired
		2020		2019
	Increase/(decrease) in schools trade receivablesIncrease in tertiary trade receivables(Decrease)/increase in resourcing trade receivablesSettlement in part by certain tertiary brand's trade receivables	19.717.0(16.7)	22.119.7(0.3)	(4.6)28.311.7	10.553.0(0.7)
	that were more than 365 days past dueIncrease in trade receivables due to business combinations	––	(34.6)–	–45.1	(63.9)28.2
				Audited2020	Audited2019
			Note	R'm	R'm
21.	Cash and cash equivalentsBank balances and cashBank overdraft			181.7–	170.5(45.2)
	Net cash and cash equivalents		181.7	125.3
	Bank balances and cash comprise cash held by the group and short-term bankdeposits with an original maturity of three months or less. The carrying value ofthese assets approximates their fair value.
	The carrying amounts of the group's bank balances are denominated in the localcurrencies of the underlying operations
22.	Non-current assets held for saleLand and buildings		12	48.8	67.8

During the prior year, the group implemented plans to consolidate certain schools and tertiary sites. As a result of this, some land and buildings became vacant and were deemed surplus to requirements. Management committed to a plan to dispose of these assets and these were actively marketed to be sold at market value. The sale is expected to be realised within the next 12 months.

These assets are recorded at carrying value as the selling price is expected to exceed the book value of the assets.

Governance overview

for the year ended 31 December 2020 (continued)

23. Stated capital

Authorised

1 000 000 000 shares of no par value (2019: 1 000 000 000 shares)

		Audited		Audited
	Number	Stated	Number	Stated
	of shares	capital	of shares	capital
	2020	2020	2019	2019
	'm	R'm	'm	R'm
Issued
Balance at 1 January	548.8	1 539.0	546.6	1 514.0
Shares issued for the management share incentive scheme	3.0	27.3	2.2	25.1
Share issue costs	–	–	–	(0.1)
Balance at 31 December	551.8	1 566.3	548.8	1 539.0

The unissued shares are under the control of the directors subject to the provisions of the Companies Act, the requirements of the JSE Limited and in certain circumstances shareholders approval.

24. ADvTECH share incentive scheme

Certain employees and executive directors were eligible to participate in the scheme. The option offer value is the closing price at which shares are traded on the JSE Limited on the trading day immediately preceding the offer date. Share options accepted by participants are exercisable at intervals of two, four and six years after the offer date. On exercise of the options, the participant pays the Share Incentive Trust an amount equal to the offer price multiplied by the number of options exercised. Except for exceptional circumstances, if a participant leaves the employ of the group prior to exercising the options, the options lapse. No new options will be granted under this scheme as it has been replaced by the MSI as disclosed in note 25.

			Weighted
		Exercise	average
		price of	estimated
		outstanding	contractual	Fair value
	Expiry date	options	life	at grant date
Date options granted	year ending	(cents)	(years)	(cents)
2 October 2014	31 Dec 2020	820	4.2	235
19 November 2015	31 Dec 2021	1 260	3.8	423
20 October 2016	31 Dec 2022	1 696	3.5	597

		Weighted		Weighted
		average		average
	Number	exercise	Number	exercise
	of share	price	of share	price
	options	(cents)	options	(cents)
Reconciliation of options	2020		2019
Options outstanding on 1 January	2 687 514	1 364	3 413 779	1 274
Less – Exercised	(5 000)	820	(342 333)	697
– Lapsed	(526 634)	934	(383 932)	1 156

As at 31 December 2020 there were 73 (2019: 78) participants (including executive directors) in the ADvTECH share incentive scheme.

to create value

Group overview

for the year ended 31 December 2020 (continued)

24. ADvTECH share incentive scheme (continued)

	Number of shares		Shares held byshare incentive trustR'm
Reconciliation of shares owned	2020	2019	2020	2019
Shares owned by the trust as at 1 JanuaryLess – Shares transferred to MSI (Refer to note 25)– Options exercised during the year	2 732 693(576 134)(5 000)	3 813 057(738 031)(342 333)	15.3(3.3)–	21.4(4.1)(2.0)
Shares owned by the trust at 31 December	2 151 559	2 732 693	12.0	15.3

The groups of persons to whom the shares will be allocated by the trust have been identified.

The loan receivable from the trust is unsecured, interest free and has no fixed terms of repayment. The loan is eliminated on a group basis but is reflected in the company annual financial statements.

The fair values relating to the share option expense were calculated using the Bermudan Binomial model. The group recognised a total expense of R1.8 million (2019: R2.7 million) related to share-based payment transactions during the year.

25. ADvTECH management Share Incentive Scheme (MSI)

Certain employees and executive directors are eligible to participate in the scheme. Share awards accepted by participants vest three years after the offer date subject to certain performance and retention criteria being met. Participants that were in the ADvTECH share incentive scheme had to forfeit any share options that would have vested in 2020 and after to be able to take up the share awards in the new MSI. The MSI was treated as a modification of the previous share incentive scheme as the participants of this scheme were also participants of the previous scheme. In addition, the forfeiture of the options is part of the transactions relating to awards under the MSI and would not have been required if the MSI scheme was not implemented. Participants will receive dividends and have voting rights in the three years before these shares vest. The MSI scheme is equity-settled.

Date awards granted	Vestingdate yearending	Fair valueof awardsgranted(cents)
28 September 2017	31 Dec 2020	1 715
27 September 2018	31 Dec 2021	1 485
18 September 2019	31 Dec 2022	1 167
16 September 2020	31 Dec 2023	904

		Weighted		Weighted
	Number	average	Number	average
	of share	price	of share	price
	awards	(cents)	awards	(cents)
Reconciliation of awards		2020		2019
Awards outstanding on 1 January	6 803 798	1 395	3 911 710	1 604
Add – Awards granted during the year	4 705 127	904	3 064 911	1 167
Less – Vested	(571 676)	1 715	–	–
– Forfeited	(1 006 590)	1 715	–	–
– Forfeited due to employees leaving the group	(105 953)	1 354	(172 823)	1 575
Awards outstanding at 31 December	9 824 706	1 109	6 803 798	1 395

As at 31 December 2020 there were 35 (2019: 36) participants (including executive directors) in the MSI.

Group overview

for the year ended 31 December 2020 (continued)

25. ADvTECH management Share Incentive Scheme (MSI) (continued)

	Number of shares
Reconciliation of shares owned	2020	2019
Shares owned by the group as at 1 JanuaryAdd – Shares bought from the Share Incentive trust (Refer to note 24)– Shares issued into the MSILess – Share awards vested during the year	6 803 802576 1343 016 450(571 676)	3 911 714738 0312 154 057–
Shares owned by the group at 31 December	9 824 710	6 803 802

The group recognised total expenses of R17.1 million (2019: R13.6 million) related to the MSI during the year.

	Audited	Audited
	2020	2019
	R'm	R'm
Secured term loans	1 800.0	1 800.0
Disclosed as:
Current liabilities	600.0	–
Non-current liabilities	1 200.0	1 800.0
	1 800.0	1 800.0
	Long-term bank loans

The directors consider that the carrying amount of long-term bank loans approximates their fair value.

Secured term loans

The secured term loans are made up of three secured term facilities, namely secured term loan A, B and C.

Secured term loan A is a three year facility amounting to R600.0 million which came into effect on 28 September 2018 and attracts interest at JIBAR + 1.65%.

Secured term loan B is a four year facility amounting to R600.0 million which came into effect on 28 September 2018 and attracts interest at JIBAR + 1.775%.

Secured term loan C is a five year facility amounting to R600.0 million which came into effect on 28 September 2018 and attracts interest at JIBAR + 1.90%.

These facilities and the revolving credit facility in note 27 are secured by mortgage bonds over properties having a net book value of R2 593.3 million (2019: R2 431.3 million). Refer to note 12.

Refer to note 36 for details of securities on the term loans.

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

		Audited	Audited
		2020	2019
		R'm	R'm
27.	Short-term bank loans
	Group revolving credit facility	410.0	850.0
	Kenyan subsidiary revolving credit facility	31.2	30.1
		441.2	880.1

The group revolving credit facility and the secured term loans (as per note 26) are secured by mortgage bonds over properties having a net book value of R2 593.3 million (2019: R2 431.3 million). Refer to notes 12, 26 and 36.

The directors consider that the carrying amount of the short-term bank loans approximates their fair value.

Group revolving credit facility

Effective from 2 December 2020, this represents a R950.0 million revolving credit facility available to the group for a three year period.

The facility utilised attracts interest at the following rates:

• • total drawdowns are less than one third of the facility available: JIBAR + 2.0%
• • total drawdowns are greater than one third but less than two thirds of the facility available: JIBAR + 2.1%
• • total drawdowns are greater than two thirds of the facility available: JIBAR + 2.2%

The group has the option to make draw-downs for periods of one, three and six months (or for a shorter period agreed with the lender) and may elect to roll these for further periods.

Prior to 2 December 2020, this represented a R950.0 million revolving credit facility that was available to the group commencing on 28 September 2018 and terminating on 2 December 2020.

The replaced facility attracted interest at the following rates:

• • total net borrowings to EBITDA ratio less than 1.5: JIBAR + 1.625%
• • total net borrowings to EBITDA ratio less than 2.5 and greater than or equal to 1.5: JIBAR + 1.775%
• • total net borrowings to EBITDA ratio greater than or equal to 2.5: JIBAR + 1.925%

The group had the option to make draw-downs for periods of one, three and six months and could have elected to roll these for further periods.

Kenyan subsidiary revolving credit facility

This represents a KES 303.0 million revolving credit facility that is available to Makini Schools Limited (a partially owned subsidiary) for a period of three years. The facility bears interest at the Kenya Central Bank Rate plus 3.25%.

Refer to note 36 for details of securities.

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

	Audited2020R'm	Audited2019R'm
28.Trade and other payablesTrade payables and accrualsLeave pay accrual	418.029.1	408.028.5
	447.1	436.5
Trade payables and accruals principally comprise amounts outstanding for trade purchases andongoing costs.
The directors consider that the carrying amount of trade payables, including the leave payaccrual, approximates their fair value. The average credit period on purchases is two months. Nointerest is charged on trade payables for the first 60 days from date of invoice. The group hasfinancial risk management policies in place to ensure that payables are paid within the credittime frame.
29.Acquisition liabilitiesAcquisition liabilities	53.9	74.4
Disclosed as:Current liabilitiesNon-current liabilities	3.850.1	–74.4
	53.9	74.4
A portion of the acquisition consideration of Pinnacle College Kyalami (previously SummitColleges) is settled through the provision of bursaries to students. The programme commencedon 1 January 2016 and runs for a period of 25 years. The carrying value represents the presentvalue using a 9% discount rate. The seller has allocated R3.8 million less than they arecontractually entitled to and there is an expectation that this could be settled within the next12 months.
30.Fees received in advance and depositsFees received in advance (i)Deposits (ii)	272.338.5	286.342.5
Total	310.8	328.8
There were no significant changes in the contract liability balance during the reporting period.There was no revenue recognised in the current reporting period that related to performanceobligations that were satisfied in a prior year.Revenue recognised that was included in the contract liability balance at the beginning ofthe period:Fees received in advance	286.3	304.1
(i) The fees received in advance, representing a contract liability, is recognised over time as the education services are delivered. It represents performance obligations

that are unsatisfied (or partially unsatisfied) as at the end of the reporting period. Management expects that 100% of the fees received in advance allocated to the unsatisfied contracts as of 31 December 2020 and 31 December 2019 will be recognised as revenue during the next reporting period.

(ii) The deposits are refundable and therefore has no impact on revenue recognised. Accordingly this is not a contract liability but rather a financial instrument, refer to note 33.

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

			Audited	Audited
			2020	2019
		Note	R'm	R'm
31.	Lease liabilitiesLease liabilities		565.0	485.5
	Disclosed as:
	Current liabilities		137.7	116.3
	Non-current liabilities		427.3	369.2
			565.0	485.5
	Balance as at 1 January		485.5	537.8
	Foreign currency effect		(3.0)	–
	Additions		180.4	44.6
	Finance costs on lease liabilitiesRepayment of lease liabilities	6.3	60.6(158.5)	59.6(156.5)
	Balance as at 31 December		565.0	485.5
	Maturity analysis – lease payments
	Year 1		137.7	116.3
	Year 2		125.8	94.7
	Year 3		101.3	82.9
	Year 4Year 5		87.671.5	51.630.1
	Onwards		567.0	583.6
	The group applied an incremental borrowing rate on new leases rangingbetween 5.2% (2019: 8.5%) and 7.5% (2019: 12.0%) to determine the leaseliabilities depending on the length of the lease, the jurisdiction and the marketinterest rates.
	The group does not face a significant liquidity risk with regard to its leaseliabilities. Lease liabilities are monitored at a group level.
32.	Commitments
	32.1 Capital commitments
	Capital expenditure approved by the directors:Contracted but not provided for		293.0	363.8
	Not contracted		576.2	763.0
			869.2	1 126.8
	Capital commitments will be financed through existing facilities and cash generatedby operations.Anticipated timing of spend:
	0 – 1 years		282.4	276.5
	1 – 2 years		139.7	91.0
	3 – 5 years		152.4	428.7
	more than 5 years		294.7	330.6
			869.2	1 126.8
	32.2 Equipment lease commitments in cashDue within one year		1.6	4.0
	Due within two to five years		1.5	3.3
			3.1	7.3

The leases relate to equipment with various lease terms. The commitments include specified escalations in lease payments.

Using our capitals to create value

Group overview

Strategic review

for the year ended 31 December 2020 (continued)

		Audited	Audited
		2020	2019
		R'm	R'm
33.	Financial instrumentsCategories of financial instruments
	Financial assets
	Amortised costTrade and other receivablesBank balances and cash	270.3181.7	326.2170.5
	Financial liabilities
	Amortised costLong-term bank loansShort-term bank loansTrade and other payablesDepositsShareholders for dividendsBank overdraft	1 800.0441.2418.038.51.5–	1 800.0880.1408.042.51.545.2

Financial risk management objectives and policies

The group's principal financial instruments comprise bank loans, bank and cash equivalents and various items such as trade receivables and payables that arise directly from operations. All financial instruments are carried at amortised cost. The main purpose of these instruments is to finance the group's operations.

The support office function co-ordinates access to funds. The financial management function of the group monitors and manages the credit risk, liquidity risk and market risk (including interest rate risk, currency risk and other price risk).

Monthly reporting to the chief operating decision maker enables risk monitoring and enable risk exposure mitigation.

Capital risk management

The group manages its capital to ensure that subsidiaries/divisions will be able to continue as going concerns while maximising the return to stakeholders through optimisation of the debt and equity balance. The group's overall strategy remains unchanged.

The capital structure of the group consists of bank and cash equivalents, equity, comprising stated capital, reserves, retained earnings, secured term loan and short-term bank loans.

Capital projects are timed to coincide with additional capacity required to ensure facilities are utilised on completion.

Liquidity risk

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established appropriate liquidity risk management procedures for the management of the group's short-, medium- and long-term funding and liquidity management requirements. The group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by daily monitoring forecast and actual cash flows, and by assessing the maturity profiles of financial assets and liabilities. Surplus funds are placed on short-term deposits.

Bank overdraft, term loans and revolving credit facilities available at 31 December 2020 amounted to R2 905.6 million (2019: R2 906.9 million) of which R2 241.2 million (2019: R2 725.3 million) has been utilised at year-end. The group did not breach any of its covenants during the year ended 31 December 2020.

All financial assets are expected to be realised within 1 year.

Group overview

Strategic review

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Strategic review

Notes to the consolidated financial statements

for the year ended 31 December 2020 (continued)

33. Financial instruments (continued)

The table below analyses the groups financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity set at the earliest date on which the group may be required to pay. The amounts disclosed in the table are the contractual undiscounted cash flows.

	Capital outflow as at31 December 2020		31 December 2019	Capital outflow as at
	Less than	Between	Less than	Between
	1 year	1 & 5 years	1 year	1 & 5 years
	R'm	R'm	R'm	R'm
Secured term loans	600.0	1 200.0	–	1 800.0
Revolving credit facility	441.2	–	880.1	–
Trade and other payables	418.0	–	407.9	–
Deposits	38.5	–	42.5	–
Bank overdraft	–	–	45.2	–
Total	1 497.7	1 200.0	1 375.7	1 800.0

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the group. The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

The group's credit risk is primarily attributable to its trade receivables. The amounts presented in the statement of financial position are shown net of expected loss allowances. The group has no concentration of credit risk, with exposure spread over a large number of counterparties and customers.

Credit risk controls are in place in the form of upfront deposits before enrolment. Other monitoring procedures are also in place to ensure that follow-up action is taken to recover overdue debts or ultimately the suspension of delivery of services.

In order to minimise credit risk, the group has tasked its financial management to categorise exposures according to their degree of risk of default. The credit rating information is obtained from the group's own trading records which is based on historical trends while being cognisant of the current economic environment. The group's exposure is continuously monitored.

At the end of the reporting period the group reviews the recoverable amount of trade debtors to ensure that adequate loss allowance is made for irrecoverable amounts. In this regard, the directors of the company consider that the group's credit risk is significantly mitigated.

The group has applied the simplified approach in IFRS 9 to measure the loss allowance at lifetime ECL. The group determines the ECL on these items by using a provision calculation, estimated based on historical credit loss experience with focus on the categories of the credit risk framework of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. Note 20 includes further details on the loss allowance for trade and other receivables.

Bank balances and cash falls under a performing internal credit rating resulting in the consideration of 12 months ECL. As bank balances and cash are held with reputable international banking institutions no loss allowance has been included against these balances.

Market risk

The group's activities expose it primarily to the financial risks of changes in interest rates and foreign currency exchange rates. Market risk exposures are separately measured as detailed in the respective notes below. There has been no change to the group's exposure to market risks or the manner in which these risks are managed and measured.

Interest risk

The group is exposed to interest risk on the banking facilities and bank balances as these attract interest at floating interest rates. The group analyses its interest rate exposure and calculates the impact on profit or loss of an interest rate shift. Should it be appropriate swaps or other hedging instruments will be considered.

A sensitivity analysis has been prepared based on the exposure to interest rates at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 1% increase or decrease is used as a reasonably possible change in interest rates. If interest rates varied by 1% higher or lower and all other variables were held constant the group's profits before taxation would have increased or decreased by R19.3 million (2019: R17.6 million).

The group's sensitivity to interest rates have decreased during the current year mainly due to the decrease in the short-term bank loans in place as detailed in notes 26 and 27.

for the year ended 31 December 2020 (continued)

33. Financial instruments (continued)

The group's exposure to interest rates on financial assets and financial liabilities are detailed in the table below:

		Interest outflow as at		Interest outflow as at
		31 December 2020		31 December 2019
		Less than	Between	Less than	Between
	Interest rate	1 year	1 & 5 years	1 year	1 & 5 years
		R'm	R'm	R'm	R'm
Secured term loans	Variable	97.5	196.5	154.2	309.9
Revolving credit facility	Variable	6.6	–	3.0	–
Total		104.1	196.5	157.2	309.9

Foreign currency risk management

The group undertakes certain transactions denominated in foreign currencies. Hence, exposure to exchange rate fluctuations arises.

Material foreign exchange exposures are hedged with a corresponding foreign exchange contract (FEC). There were no unsettled FECs as at year-end.

The carrying amounts of the group's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows.

	Liabilities		Assets
	2020	2019	2020	2019
United States Dollar	0.7	0.7	5.2	5.4
Great British Pound	–	0.6	–	–
Australian Dollar	–	0.3	–	–
Mauritian Rupee	0.1	–	0.2	–
Euro	4.1	–	7.1	–

The group's foreign currency exposure risk has not changed significantly year on year. The payables and receivables consist of invoices denominated in a foreign currency and are expected to be settled in a relatively short period of time. Fluctuations in the exchange rate are unlikely to have a material impact on the group's results.

Fair value measurements

The directors consider that the carrying amount of the financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values.

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

		Notes	Audited2020R'm	Audited2019R'm
34.	Notes to the statement of cash flows34.1 Cash generated from operations
	Profit before taxation		674.5	660.8
	Adjusted for non-cash IFRS and other adjustments (before taxation)		10.5	10.6
	Adjustments:		685.0579.5	671.4520.7
	Depreciation, amortisation and impairment		382.4	304.5
	Net finance costs	6	204.8	221.8
	Gain on settlement of contingent consideration	5	(13.0)	–
	Gain on bargain purchase of acquisitionLoss on disposal of subsidiaries	5/37	–6.7	(6.1)–
	(Profit)/loss on disposal of property, plant and equipment	5	(1.4)	0.5
			1 264.5	1 192.1
	34.2 Movement in working capital
	Decrease/(increase) in inventories		4.8	(2.7)
	Decrease/(increase) in trade and other receivables and prepayments		64.3	(14.9)
	(Decrease)/increase in trade and other payables and provisions		(3.5)	46.5
	Decrease in fees received in advance and deposits		(17.6)	(137.4)
	Decrease/(increase) in working capital		48.0	(108.5)
	34.3 Taxation paid
	Balance at beginning of the year		39.0	16.6
	Disposal of subsidiariesBusiness combinations		(1.7)–	–(1.3)
	Current charge (including foreign currency effect)		(242.7)	(200.6)
	Taxation on equity item		(0.4)	(1.0)
	Foreign taxation credits		0.3	1.5
	Balance at end of the year		(7.0)	(39.0)
	Cash amount paid		(212.5)	(223.8)
	34.4 Dividends paid
	Balance at beginning of the year		(1.5)	(1.3)
	Declared during the yearBalance at end of the year	11	(3.8)1.5	(170.9)1.5
	Cash amount paid		(3.8)	(170.7)
	34.5 Additions to property, plant and equipment to maintain operationsLand and buildings		(22.1)	(22.2)
	Computer equipment		(36.8)	(41.3)
	Computer software		(1.7)	(2.9)
	Furniture, fittings and equipment		(19.1)	(29.3)
	Motor vehiclesVideo equipment		(2.7)(5.1)	(3.7)(1.5)
	Leasehold improvements		(7.5)	(41.3)
			(95.0)	(142.2)

Group overview Strategic

review

Governance overview Using our capitals to create value

Annual financial statements

for the year ended 31 December 2020 (continued)

		Audited	Audited
		2020	2019
		R'm	R'm
34.	Notes to the statement of cash flows (continued)
	34.6 Additions to property, plant and equipment to expand operations
	Land and buildings	(93.0)	(366.6)
	Computer equipment	(17.6)	(27.5)
	Computer software	–	(0.6)
	Furniture, fittings and equipmentMotor vehicles	(20.5)(0.9)	(16.4)(1.3)
	Video equipment	(1.3)	(2.3)
	Leasehold improvements	(38.7)	(103.3)
		(172.0)	(518.0)
	34.7 Business combinations cash flows
	Additions to property, plant and equipment	–	(430.4)
	Additions to current assetsAdditions to non-current liabilities	––	(168.3)36.9
	Additions to current liabilities	–	119.7
	Gain on bargain purchase	–	6.1
	Cash and cash equivalents acquired	–	116.0
		–	(320.0)
	34.8 Free operating cash flow before capex per share
	Profit for the year	465.5	468.3
	Adjusted for non-cash IFRS and other adjustments (after taxation)	10.5	7.5
	Net operating profit after taxation – adjusted for non-cash IFRS and other adjustments	476.0	475.8
	Depreciation, amortisation and impairment	382.4	304.5
	Repayment of lease liabilities	(97.9)	(96.9)
	Taxation adjustment on IFRS 16 leases	(8.7)	(1.6)
	Other non-cash flow items (after taxation)	(1.0)	0.4
	Operating cash flow after taxation	750.8	682.2
	Movement in working capital	48.0	(108.5)
	Free operating cash flow before capex	798.8	573.7
	Free operating cash flow before capex per share (cents)	147.5	106.4

for the year ended 31 December 2020 (continued)

35. Related party transactions

The parent and ultimate controlling party of the group is ADvTECH Limited.

Transactions between the company and its subsidiaries, which are related parties of the company, have been eliminated on consolidation and are not disclosed in this note.

Please refer to note 4 of the company annual financial statements for details of group entities.

Directors, prescribed officers and senior executive remuneration

Emoluments paid to executive directors and prescribed officers of the group (excluding gains on share options exercised) for the ended 31 December 2020, are set out below:

	SalaryR	LongserviceawardR	BonusR	ExpenseallowancesR	ProvidentfundcontributionsR	Total2020R	Total2019R
Executive
RJ Douglas	4 034 756	–	1 446 105	180 000	537 381	6 198 242	6 019 907
JDR Oesch	3 020 194	16 000	870 168	150 000	404 200	4 460 562	4 110 891
Total executive directors	7 054 950	16 000	2 316 273	330 000	941 581	10 658 804	10 130 798
Prescribed officers
MD Aitken	2 566 739	–	743 077	287 556	201 505	3 798 877	3 498 213
FJ Coughlan	2 555 967	16 000	569 764	227 556	333 536	3 702 823	3 341 898
DL Honey	2 650 128	–	441 949	186 840	381 722	3 660 639	4 196 347
Total prescribed officers	7 772 834	16 000	1 754 790	701 952	916 763	11 162 339	11 036 458

Emoluments paid to non-executive directors of the group for the ended 31 December 2020, are set out below:

	BoardR	AuditcommitteeR	RiskcommitteeR	RemunerationcommitteeR	Transformation,socialand ethicscommitteeR	InvestmentcommitteeR	Total2020R	Total2019R
CH Boulle	586 356	–	–	–	–	81 327	667 683	714 211
JS Chimhanzi	324 439	123 878	41 844	–	–	–	490 161	464 048
BM Gourley	48 666	13 273	16 635	–	–	8 848	87 422	695 658
KM Gugushe	249 818	98 808	16 714	–	49 455	–	414 795	–
JM Hofmeyr	324 439	–	–	54 203	90 229	–	468 871	464 363
JD Jansen	131 594	–	–	–	60 438	–	192 032	442 419
SC Masie	168 285	–	25 563	–	–	34 411	228 259	392 868
KDM Warburton	324 439	226 451	–	54 203	–	–	605 093	573 820
JS Zimmermann	389 327	–	–	65 044	–	51 911	506 282	515 721
SA Zinn	324 439	–	–	75 683	69 007	43 259	512 388	520 254
Total non
executive	2 871 802	462 410	100 756	249 133	269 129	219 756	4 172 986	4 783 362

An amount of R267 775 (2019: R292 002) relating to value-added tax was paid on director fees.

for the year ended 31 December 2020 (continued)

35. Related party transactions (continued)

MSI scheme

The directors and prescribed officers were awarded the following shares at 31 December 2020:

	Share awardsas at31 December2019	Share awardsawardedduringthe year		Share awardsforfeitedShare awards vestedduring theduring the yearyear*		Share awardsas at31 December2020
	Number	Number	Number	Benefitarisingon vestingof awards (R)	Number	Number
DirectorsRJ Douglas	246 806301 758397 162	607 097	77 082	703 759	169 724	–301 758397 162607 097
JDR Oesch	140 105171 300238 985	365 310	43 757	399 501	96 348	–171 300238 985365 310
Prescribed officersMD Aitken	128 624155 793205 048	311 955	40 172	366 770	88 452	–155 793205 048311 955
FJ Coughlan	89 614110 079155 747	239 196	27 987	255 521	61 627	–110 079155 747239 196
DL Honey	140 007171 180242 198	349 265	43 726	399 218	96 281	–171 180242 198349 265
	2 894 406	1 872 823	232 724	2 124 769	512 432	4 022 073

*This relates to awards forfeited due to performance targets not being met.

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

35. Related party transactions (continued)

Share option scheme

The directors and prescribed officers held the following share options at 31 December 2020:

	Share options as at31 December 2019		Share options lapsedduring the year		Share options exercisedduring the year		Share optionsas at31 December2020
	Number	Exerciseprice(cents)	Number	Exerciseprice(cents)	Number	Marketprice atexercisedate(cents)	Benefitarising onexercise ofoptions(R)	Number
DirectorsRJ Douglas	83 33350 00055 533	8201 2601 696	83 333	820				–50 00055 533
JDR Oesch	50 00041 100	1 2601 696						50 00041 100
Prescribed officersMD AitkenFJ Coughlan	11 66772 00030 133	1 6961 2601 696						11 66772 00030 133
DL Honey	80 00041 100514 866	1 2601 696	83 333		–		–	80 00041 100431 533

Details regarding directors' and prescribed officers' interests are disclosed in the directors' report on pages 105 to 107.

36. Securities on term loans and short term bank loans

In terms of the group's banking arrangement, ADvTECH Limited, ADvTECH Resource Holdings (Pty) Ltd, ADvTECH Resourcing (Pty) Ltd, The Independent Institute of Education (Pty) Ltd, Innospan Investments (Pty) Ltd and Nanospan Investments (Pty) Ltd have issued to its bankers unlimited cross guarantees including cessions of loan accounts on behalf of each other's overdraft, secured term loans and revolving credit facilities. These facilities are also secured by mortgage bonds over properties having a net book value of R2 593.3 million (2019: R2 431.3 million). As at 31 December 2020 the total amount of facilities utilised amounted to R2 210.0 million (2019: R2 650.0 million) and overdrafts utilised amounted to Rnil (2019: R45.2 million) as per notes 21, 26 and 27.

37. Business combinations/disposals

37.1 Schole Mauritius Limited

A further 13.66% of Schole Mauritius Limited was acquired on 1 April 2020 for a cash consideration of R15.7 million. The total holding is 90.18% of the share capital.

37.2 University of Africa

The shareholding in Ubiquity Open Academy Holdings Proprietary Limited and its subsidiaries, which includes the University of Africa in Zambia, was disposed of as at 1 May 2020 for a consideration of R0.3 million.

	Audited
	2020
	R'm
Non-current assets disposed
Non-current assets	(3.6)
Goodwill	(4.3)
Current assets disposed
Current assets	(3.2)
Cash and cash equivalents	0.5
Current liabilities disposed
Current liabilities	0.8
Non-controlling interest	3.4
Loss on disposal	6.7
	0.3

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

37. Business combinations/disposals (continued)

37.3 The Private Hotel School Proprietary Limited

A further 20% of The Private Hotel School Proprietary Limited was acquired on 1 November 2020 for a cash consideration of R2.0 million. The total holding is 100% of the share capital.

37.4 Africa HR Solutions Limited

A further 5% of Africa HR Solutions Limited was acquired on 1 November 2020 for a cash consideration of R3.3 million. The total holding is 56% of the share capital.

38. Going concern

The annual financial statements of the group and company are prepared on a going concern basis.

Fees received in advance contributes a significant part of the negative working capital (excluding short term funding) where the obligation relates to providing services rather than the outflow of cash. Although current liabilities exceed current assets, there is sufficient receivables and cash to settle trade and other payables. The group also generates significant cash flow at the beginning of each year and is able to settle its liabilities in the ordinary course of business.

The directors have reviewed and approved the group and company budget and cash flow forecasts prepared by management. These forecasts have taken into account the potential lower revenue, additional costs (including increased provision for doubtful debts and bad debts) and lower capital expenditure as compared to previously approved budgets. The directors have compared these forecasts against the cash reserves and borrowing facilities available to the group. It is concluded that the group will remain comfortably within its existing bank facility limits and covenants for at least the next 12 months from the date of approval of these annual financial statements with significant headroom available. Management prepared a detailed profit or loss, cash flow and balance sheet forecast. This forecast has been reviewed and approved by the board of directors.

Nothing has come to the attention of the directors to indicate that the group and company will not remain a going concern for the foreseeable future.

39. Events after the reporting period

The COVID-19 pandemic is ongoing and has resulted in the delay of the academic year. The commencement of face to face teaching at schools was delayed to 1 February 2021 as a result of COVID-19 government restrictions. The group's schools were able to continue teaching online up to that date and have since commenced with face to face teaching. The tertiary institutions have commenced tuition during March 2021 using a staggered approach. The group is able to transition between face to face and online learning seamlessly and is not expected to be adversely affected from any future lockdowns as a result of the pandemic.

The Minister of finance announced an intention to reduce the corporate tax rate to 27% as well as the review of various tax incentives and allowances. This is expected to be effective for financial years beginning after April 2022 and will affect the group from the 2023 financial year. This is considered a non-adjusting post balance sheet event and the group will monitor the legislative changes in this regard.

The directors are not aware of any other matter or circumstance between the date of the statement of financial position and the date of these financial statements that materially affects the results of the group and company for the year ended 31 December 2020 or the financial position at that date.

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

Company statement of comprehensive income

for the year ended 31 December 2020

		Audited2020	Audited2019
	Notes	R'm	R'm
RevenueStaff costsOther operating income	12	–(5.5)5.6	150.0(6.1)6.1
Profit before taxationTaxation	23	0.1–	150.0(0.3)
Profit for the year#		0.1	149.7

The company did not earn other comprehensive income during the year.

Group overview

overview

Company statement of financial position

as at 31 December 2020

		Audited	Audited
		2020	2019
	Notes	R'm	R'm
ASSETS
Non-current assets
Investments in subsidiaries at cost	4	658.4	658.4
Loan to Share Incentive Trust*		12.0	15.3
		670.4	673.7
Current assets
Loans to subsidiaries	4	877.8	844.3
Trade and other receivables	5	36.6	39.2
Prepayments		0.6	0.1
Taxation		0.1	–
		915.1	883.6
Total assets		1 585.5	1 557.3
EQUITY AND LIABILITIES
Capital and reserves
Stated capital	6	1 566.3	1 539.1
Share incentive reserve		37.6	36.1
Accumulated loss		(22.8)	(22.9)
Total equity		1 581.1	1 552.3
Current liabilities
Trade and other payables	7	2.1	1.8
Taxation		–	0.9
Shareholders for capital distribution		0.8	0.8
Shareholders for dividend		1.5	1.5
		4.4	5.0
Total equity and liabilities		1 585.5	1 557.3

* Refer to note 24 of the consolidated annual financial statements.

Using our capitals to create value

Group overview

Strategic review

Company statement of changes in equity

for the year ended 31 December 2020

		Share
	Stated	incentive	Accumulated	Total
	capital	reserve	loss	equity
Note	R'm	R'm	R'm	R'm
				1 536.6
				149.7
				(163.1)
				25.1
				0.5
				4.5
		(1.0)		(1.0)
				1 552.3
				0.1
				27.3
				(0.1)
				1.9
		(0.4)		(0.4)
	1 566.3	37.6	(22.8)	1 581.1
	666	1 514.025.11 539.127.3(0.1)	32.10.54.536.11.9	(9.5)149.7(163.1)(22.9)0.1

*Refer to note 11 of the consolidated annual financial statements.

**Refer to notes 24 and 25 of the consolidated annual financial statements for details on the share incentive schemes. to create value

Group overview

Strategic review

statements

156

Company statement of cash flows

for the year ended 31 December 2020

		Audited	Audited
		2020	2019
	Notes	R'm	R'm
Cash flows from operating activities
Cash generated from operations	10.1	0.1	–
Movement in working capital	10.2	7.6	5.4
Cash generated by operating activities		7.7	5.4
Taxation paid	10.3	(1.4)	(2.1)
Dividends paid	10.4	–	(162.9)
Net cash inflow/(outflow) from operating activities		6.3	(159.6)
Cash flows from financing activities
Effects of share options exercised on the share option reserve		–	0.5
Movement in the loan to Share Incentive Trust		–	1.9
(Increase)/decrease in loans to subsidiaries*		(6.3)	157.2
Net cash (outflow)/inflow from financing activities		(6.3)	159.6
Net increase in cash and cash equivalents		–	–
Cash and cash equivalents at beginning of the year		–	–
Cash and cash equivalents at end of the year		–	–

* Included in the (increase)/decrease in loans to subsidiaries is an amount of R27.2 million related to the issue of shares to related parties for the MSI. Included in the prior year is a non-cash movement relating to dividends received of R150.0 million received from The Independent Institute of Education Proprietary Limited.

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020

The accounting policies applied are consistent with the group accounting policies detailed on pages 114 to 123.

		Audited	Audited
		2020R'm	2019R'm
1.	RevenueThe company derives its revenue from dividends from subsidiaries and is recognised at a pointin time when the rights to receive payment have been established.
	Dividend received from subsidiary	–	150.0
2.	Profit before taxationProfit before taxation is stated after taking the following into account:Auditors' remuneration – current year audit fee	1.7	1.3
	Directors' emoluments – for services as directorsDirectors' emoluments – VAT on non-executive director feesStaff costs	4.20.31.0	4.80.31.0
	Total staff costs	5.5	6.1
3.3.1	TaxationTaxation expense comprisesTotal taxation expense	–	0.3
3.2	Reconciliation of taxationProfit before taxation	0.1	150.0
	Taxation at 28%Permanent differences	––	42.0(41.7)
	Disallowable expenditure – legal and consulting feesNon–taxable income – dividend received	––	0.3(42.0)
	Taxation expense recognised in profit	–	0.3

Shareholders' information

Annual financial statements

Governance overview

Using our capitals to create value

Group overview

for the year ended 31 December 2020 (continued)

				Proportion held	Interest of holding company
				directly or
	Issued share capital			indirectly	Shares		Loans receivable
	31 Dec	31 Dec	31 Dec	31 Dec	31 Dec	31 Dec	31 Dec	31 Dec	Princi
	2020	2019	2020	2019	2020	2019	2020	2019	pal
	R	R	R	R	R	R	R	R	activity
Investments in and loans to subsidiaries
and joint arrangements
Direct:
The Independent Institute of Education (Pty) Ltd* 597 404 309		2	100	100	598.6	101.2	842.8	809.3
Maramedia (Pty) Ltd	100	100	100	100	–	–	–	–
ADvTECH Resource Holdings (Pty) Ltd	3 150 023	3 150 023	100	100	59.8	59.8	0.9	0.9
Indirect:
ADvTECH Kenya Ltd (c)	119 560 239	119 560 239	100	100
ADvTECH Mauritius Ltd (a)	142 714	142 714	100	100
ADvTECH Resourcing (Pty) Ltd	100	100	100	100			7.1	7.1
ADvTECH Resourcing Investments (Pty) Ltd	68 508 341	68 508 341	100	100
Africa HR Solutions Ltd (a)	100	100	56	51
Bryan Hattingh Independent Services (Pty) Ltd	1	1	100	100
CA Financial Appointments (Pty) Ltd	1 000	1 000	51	51
CA Global Finance (Pty) Ltd	1 000	1 000	52	52
CA Global Headhunters (Pty) Ltd	120	120	52	52
CA Mining (Pty) Ltd	100	100	52	52
CA Oil and Gas (Pty) Ltd	120	120	52	52
Capsicum Culinary Studio (Pty) Ltd	1 000	1 000	100	100
Charterhouse Private Schools (Pty) Ltd	100	100	100	100
Future Indefinite Investments 82 (Pty) Ltd	100	100	100	100
Innospan Investments (Pty) Ltd	1 000	1 000	100	100
Kapele Appointments (Pty) Ltd	100	100	70	70
Knyber (Botswana) (Pty) Ltd (b)	370 413	370 413	100	100
Latiano 754 (Pty) Ltd	47 435 741	47 435 741	100	100
Maragon Private Schools Avianto (Pty) Ltd	100	100	100	100
Maragon Private Schools Gold (Pty) Ltd	100	100	100	100
Maragon Private Schools Platinum (Pty) Ltd	100	100	100	100
Maragon Private Schools Ruimsig (Pty) Ltd	100	100	100	100
Maragon Private Schools Titanium (Pty) Ltd	100	100	100	100
Maragon Private Schools Tshwane (Pty) Ltd	120	120	100	100
Maravest (Pty) Ltd*	1 000	1 000	100	100		497.4	27.0	27.0
Nanospan Investments (Pty) Ltd	1 000	1 000	100	100
Nascifon (Pty) Ltd*	100	100	100	100
Oxbridge Academy (Pty) Ltd	100	100	51	51
Resen Holdings (Pty) Ltd (b)	89 873 101	89 873 101	100	100
Resource Development International (Pty) Ltd	200	200	100	100
Schole Mauritius Limited (a)	125 199 067	125 085 946	90	77
Shetland Investments (Pty) Ltd	100	100	100	100
Star Schools (Pty) Ltd (joint arrangement)	100	100	50	50
Strategic Connection (Pty) Ltd	100	100	100	100
The Makini School Limited (c)	4 970 800	4 970 800	90	77
The Private Hotel School (Pty) Ltd	100	100	100	80
VirtuallyHR (Pty) Ltd	120	120	51	51

1 Independent provider of education.

2 Investment/property holding company.

3 Recruitment, placement and temporary staffing company.

4 Dormant company.

* the company disposed of its investment in Maravest Proprietary Limited and Nascifon Proprietary Limited to the Independent Institute of Education Proprietary Limited at book value. The consideration received was in the form of shares in the Independent Institute of Education Proprietary Limited.

Results of subsidiaries so far as they concern members of the company: aggregate profit after taxation R465.5 million (2019: R468.3 million). All companies are incorporated in the Republic of South Africa except as indicated: (a) Mauritius (b) Botswana (c) Kenya.

Refer to the consolidated annual financial statements for information relating to acquisitions of subsidiaries.

The loans are interest free and there are no fixed terms of repayment. The inter-company loans do not carry a significant credit risk as the underlying entities are profitable, are forecasted to remain profitable in future based on budgets and cash flow forecasts and are expected to generate sufficient cash to meet their obligations.

The directors consider that the carrying amounts of the loans receivable approximate their fair value.

Group overview

Using our capitals to create value

for the year ended 31 December 2020 (continued)

		Audited	Audited
		2020	2019
		R'm	R'm
5.	Trade and other receivables
	Other receivables	36.6	39.2

Other receivables consist of inter-company receivables. The inter-company receivables are unsecured, interest free and have no fixed terms of repayment.

The inter-company receivables are recognised as "performing" under the internal credit rating and therefore the loss allowance is based on 12 month expected credit losses. As the underlying entities are profitable and generating sufficient cash to meet their obligations, which is expected to continue for the following 12 months, no loss allowance has been included.

The directors consider that the carrying amount of other receivables approximates their fair value.

6. Stated capital

Authorised 1 000 000 000 shares of no par value (2019: 1 000 000 000 shares of no par value)

	Numberof shares2020'm	AuditedStatedcapital2020R'm	Numberof shares2019'm	AuditedStatedcapital2019R'm
IssuedBalance at 1 JanuaryShares issuedShare issue costs	548.83.0–	1 539.127.3(0.1)	546.62.2–	1 514.025.1–
Balance at 31 December	551.8	1 566.3	548.8	1 539.1

The unissued shares are under the control of the directors subject to the provisions of the Companies Act and the requirements of the JSE Limited and in certain circumstances shareholders' approval.

		Audited	Audited
		2020	2019
		R'm	R'm
7.	Trade and other payables
	Trade payables and accruals	2.1	1.8

Trade payables and accruals principally comprise amounts outstanding for ongoing costs.

The directors consider that the carrying amount of trade payables approximates its fair value. The average credit period on purchases is two months. The company has financial risk management policies in place to ensure that payables are paid within the credit time frame.

review

Group overview

for the year ended 31 December 2020 (continued)

		Audited2020R'm	Audited2019R'm
8.8.1	Financial instrumentsCategories of financial instrumentsFinancial assetsAmortised costLoan to Share Incentive TrustLoans to subsidiariesTrade and other receivables	12.0877.836.6	15.3844.339.2
	Financial liabilitiesAmortised costTrade and other payablesShareholders for dividend and capital distribution	2.12.3	1.82.3

Financial risk management objectives and policies

The company's principal financial instruments comprise various items such as other receivables, trade payables and related party loans that arise directly from operations. These items have been classified as financial instruments carried at amortised cost. The main purpose of these instruments is to finance the company's operations.

The support office function co-ordinates access to funds. The financial management function of the group monitors and manages the credit risk, liquidity risk and market risk (including interest rate risk, currency risk and other price risk). Refer to note 33 in the consolidated annual financial statements for the policies and procedures in place to manage these risks.

Capital risk management

The company manages its capital to ensure that subsidiaries/divisions will be able to continue as going concerns while maximising the return to stakeholders through optimisation of the debt and equity balance. The company's overall strategy remains unchanged.

The capital structure of the company consists of equity, comprising stated capital and reserves.

Liquidity risk

Maturity groupings are based on the remaining period at the reporting date to the contractual maturity set at the earliest date on which the company may be required to pay. The financial liability amounts disclosed are the contractual undiscounted cash flows. Both the trade and other payables as well as the shareholders for dividend and capital distribution, are due within less than 1 year. The loan to the Share Incentive Trust is expected to realise between within 2 years whereas the loans to subsidiaries and other receivables are receivable in less than 1 year.

Credit risk

The company's credit risk is primarily attributable to its receivables from subsidiaries, inter-companies and the Share Incentive Trust. The credit risk on these are assessed on low and would only be considered in default should the circumstances in the underlying entities change adversely. The loss allowance on these is not considered significant as the underlying entities are profitable, are forecasted to remain profitable in future based on budgets and cash flow forecasts and are expected to generate sufficient cash to meet their obligations. The loan receivable from The Independent Institute of Education Proprietary Limited exceeds 5% of total financial assets, refer to note 4 for details of this loan.

Group overview

Strategic

Governance overview

for the year ended 31 December 2020 (continued)

8. Financial instruments (continued)

The tables below detail the credit quality of the company's financial assets and other items, as well as the company's maximum exposure to credit risk according to the credit risk rating framework:

			12 month or
			lifetime
			expected	Gross		Net
		Internal	credit losses	carrying	Loss	carrying
Financial instrument	Note	credit rating	(ECL)	amount	allowance	amount
31 December 2020
Loan to Share Incentive Trust	24 (Consolidated		Performing 12 month ECL	12.0	–	12.0
	annual financial
	statements)
Loans to subsidiaries	4		Performing 12 month ECL	877.8	–	877.8
Trade and other receivables	5		Performing 12 month ECL	36.6	–	36.6
31 December 2019
Loan to Share Incentive Trust	24 (Consolidated		Performing 12 month ECL	15.3	–	15.3
	annual financial
	statements)
Loans to subsidiaries	4		Performing 12 month ECL	844.3	–	844.3
Trade and other receivables	5		Performing 12 month ECL	39.2	–	39.2

Fair value measurements

The directors consider that the carrying amount of the financial assets and financial liabilities recognised in the financial statements approximate their fair values.

9. Contingent liabilities

In terms of the group's banking arrangement, ADvTECH Limited, ADvTECH Resource Holdings (Pty) Ltd, ADvTECH Resourcing (Pty) Ltd, The Independent Institute of Education (Pty) Ltd, Innospan Investments (Pty) Ltd and Nanospan Investments (Pty) Ltd have issued to its bankers unlimited cross guarantees including cessions of loan accounts on behalf of each other's overdraft, secured term loans and revolving credit facilities. These facilities are also secured by mortgage bonds over properties having a net book value of R2 593.3 million (2019: R2 431.3 million). As at 31 December 2020 the total amount of facilities utilised amounted to R2 210.0 million as per notes 26 and 27 of the consolidated annual financial statements.

Group overview

for the year ended 31 December 2020 (continued)

			Audited	Audited
			2020	2019
	Note		R'm	R'm
10.	Notes to the statement of cash flows
10.1	Cash utilised in operationsProfit before taxation		0.1	150.0
	Adjust for non-cash items – Dividend received		–	(150.0)
			0.1	–
10.2	Movement in working capitalDecrease in trade and other receivables and prepaymentsIncrease/(decrease) in trade and other payables		7.30.3	5.7(0.3)
	Decrease in working capital		7.6	5.4
10.3	Taxation paidBalance at beginning of the yearCurrent chargeTaxation on equity itemBalance at end of the year	3	(0.9)–(0.4)(0.1)	(1.7)(0.3)(1.0)0.9
	Cash amount paid		(1.4)	(2.1)
10.4	Dividends paidBalance at beginning of the yearDeclared during the yearBalance at end of the year		(1.5)–1.5	(1.3)(163.1)1.5
	Cash amount paid		–	(162.9)

11. Related party transactions

ADvTECH Limited performed certain administrative services for The Independent Institute of Education (Pty) Ltd and for ADvTECH Resourcing (Pty) Ltd for which management fees of R8.0 million (2019: R8.8 million) and R2.0 million (2019: R2.2 million) respectively were charged and paid, being an appropriate allocation of costs incurred by the relevant administrative departments.

Refer to note 35 of the consolidated annual financial statements for information regarding the directors' remuneration.

12. Events after the reporting period

Refer to note 39 of the consolidated annual financial statements for information relating to events after the reporting period.

Group overview

Group overview

Strategic review

Governance overview

Annual financial statements

Shareholders' information

Using our capitals to create value

Shareholders' analysis

as at 31 December 2020

Range of shareholding	Number ofshareholders	% of totalshareholders	Number ofshares	% of totalissuedshare capital
1 to 10 000	7 122	87.6%	7 592 799	1.4%
10 001 to 100 000	640	7.9%	20 647 597	3.7%
100 001 to 1 000 000	277	3.4%	100 004 777	18.1%
more than 1 000 000	92	1.1%	423 538 253	76.8%
	8 131	100.0%	551 783 426	100.0%

Major shareholders (5% and more of the shares in issue)

	Shares held
	Number	%
Government Employee Pension Fund	75 064 307	13.6%
Coronation Fund Managers	66 376 832	12.0%
Allan Gray	50 410 292	9.1%
CitiGroup (Custodian)	46 471 275	8.4%

To the best knowledge of the directors and after reasonable enquiry, as at 31 December 2020, the spread of shareholders was as follows:

Shareholder spread
Non-public	11	0.1%	23 363 139	4.3%
Directors (including prescribed officers and subsidiary directors)	8	0.1%	11 382 549	2.1%
ADvTECH Share Incentive Schemes (including unvested shares)	3	0.0%	11 980 590	2.2%
Public	8 120	99.9%	528 420 287	95.7%
Totals	8 131	100.00%	551 783 426	100.0%

Share information

	2020	2019	2018	2017	2016
Closing price at period end (cents)	950	1 080	1 485	1 750	1 717
JSE market price high (cents)	1 115	1 543	1 782	2 075	1 810
JSE market price low (cents)	576	1 000	1 341	1 451	1 292
Total number of transactions on JSE	57 008	71 443	63 311	103 675	82 893
Total number of shares traded	147 436 015	137 759 968	136 787 992	237 816 712	252 534 798
Total value of shares traded (R)	1 251 731 767	1 701 647 937		2 143 467 835 4 250 477 901 3 796 373 545
Average price per share (cents)	849	1 235	1 567	1 773	1 525
Shares in issue*	551 783 426	548 766 976	546 612 919	544 368 530	544 368 530
Percentage volume traded to shares in issue	27%	25%	25%	44%	46%
PE ratio	11.6	12.4	20.0	25.3	24.2

*Shares in issue per JSE as at 31 December 2020.

Shareholders' diary

2021

Dividend
Declaration of dividend	Thursday, 18 March
Announcement of annual results for 2020	Tuesday, 23 March
Last day to trade in order to participate in the dividend	Tuesday, 13 April
Trading commences ex-dividend	Wednesday, 14 April
Record date	Friday, 16 April
Share certificates may not be dematerialised and rematerialised between	Wednesday, 14 April and
	Friday, 16 April, both days inclusive
Dividend payment date	Monday, 19 April
Annual general meeting (AGM)
Record date to receive notices	Friday, 16 April
Posting date and no change statement on SENS	Thursday, 22 April
Last date to trade to be eligible to participate and vote at the AGM	Tuesday, 18 May
Record date to be recorded as a shareholder	Friday, 21 May
Proxy forms to be received by 10h00	Tuesday, 25 May
AGM to be held at 10h00	Thursday, 27 May
Results of AGM published on SENS	Thursday, 27 May
Interim results
Interim results for the six months ended 30 June 2021	Tuesday, 31 August

Governance overview

Using our capitals to create value

Group overview

Tel +27 11 676 8000 ADvTECH House, Inanda Greens, 54 Wierda Road West, Wierda Valley, Sandton, 2196 www.advtech.co.za