ADvTECH Limited (ADH.JO) Earnings Call Transcript & Summary

Okay. I think we'll kick off. Good morning, and welcome to everyone. Just a couple of pieces of housekeeping before we get into the numbers. All of the collateral from today will be posted on our website immediately after this presentation. We'll then reload or load, I should say, the webcast recording tomorrow, and a transcript will be posted early next week. [Operator Instructions] And if anyone wants more information after the event, then please contact [indiscernible] on the address on the screen. Please also join us for snacks and drinks after the presentation. We also have some small gift packs for you and what we are hoping to build into a tradition, hand-prepared for you by chefs from our Capsicum Culinary School. So before I get into the presentation, I just wanted to introduce our new COO, John Sikiotis. John is with us this morning. He joined us on the 1st of August and brings a wealth of leadership experience to the company. Our Property, IT and African schools divisions will report to him, but his primary focus will be on business development across the group. And John's appointment significantly strengthens our senior executive team, and I am delighted to have him on board. And then getting into the results. Just for context, this is a reminder of the major brands in our portfolio across 3 divisions. I'd just point out the addition of Flipper and the new logos for Abbotts and the Bridge and also the new look for Rosebank International. The new Rosebank iconography was developed for our new university in Ghana, but we will also be adapting it over time for use in SA. And then the high-level financials for the half year. So we'll get into these in more detail as we move through the slides, but revenue up 10%, operating profit up 14% to just under ZAR 1 billion, operating margin up to 21%, HEPS up 15% and normalized earnings per share up 16% and an 18% increase in the dividend to ZAR 0.45. This is a snapshot of the current shape of the business in terms of revenue and operating profit. As you can see from the chart, 84% of our revenue and 95% of our profit now come from the education business. And within education, we're also pivoting over time towards our tertiary division, which now contributes 51% of operating profit versus 44% from schools in total. And then running through performance at divisional level. Schools South Africa revenue was up 11% for the period with operating profit up 12% and then driven by a combination of organic growth and the Flipper acquisition, Schools Rest of Africa grew revenue by 31% and operating profit by 34%. Tertiary revenue and operating profit were up 13% and 14%, respectively. And for reasons I'll come back to later, we had a marginal decline in resourcing revenue and operating profit down 5% and 2%, respectively. And then recapping our 2025 enrollments. For the total group, enrollments this year are running up by a very healthy 13% and that breaks down into increases of 11% in Schools and 14% in tertiary. And looking at the compound annual growth rates, you'll note that we increased enrollments this year well ahead of the 5-year trends in both divisions. And then looking at the further breakdown of the 11% schools growth. In South Africa, enrollments are up by 4% and in the Rest of Africa, we're up by 40%. And then looking at the compound annual growth rates, we're also seeing consistently strong growth over a 5-year period. And then breaking down the 14% tertiary enrollment growth. Our contact student numbers were up 11% year-on-year, whilst in distance, we were up 40%. You'll recall from our Strategy Day that growth in distance is a strategic imperative. And you'll also note the acceleration here ahead of our 5-year compound annual growth rates in total and on both splits. And although we are pleased to report such strong numbers, as I guided at our full year results presentation, the outperformance of Rosebank and distance at lower fee points is having a mix impact on revenue of just under 5%. Just for reference, Rosebank and distance fees are about 1/3 of what we charge for Contact in Varsity College and Vega. And then moving on to more detail on our financial performance. This slide gives the 5-year context for the 10% revenue and 14% operating profit increases that I shared earlier. And looking at the CAGRs, I'd just point out the consistency of our delivery with revenue and operating profit compounding over 5 years at 13% and 18%, respectively. And then looking at the group level operating margin, we've moved up to 21% from 20.2% for the same period last year, driven by operating leverage, efficiencies and a favorable mix shift towards our higher-margin education businesses. And then just looking at the bottom left block, I'd also just mention that our margin improvement is net of significant investments into people, systems and facilities to strengthen our brands. And then looking at the high-level margin breakdown between education and resourcing, there have been positive shifts in both divisions climbing to 23.8% and 6.5%, respectively. And then breaking down the 23.8% education margin. Schools improved from 21.3% to 21.8%, whilst the tertiary division increased from 25.8% to 25.9%. And it's worth noting that the tertiary number is being tempered by about 0.5% by our university investment in Ghana. And then further breaking down the Schools numbers, South Africa posted an improvement from 20.3% to 20.6%, whilst Rest of Africa increased by 0.7% to 29.4%. And then contextualizing the normalized earnings per share growth of 16% I shared upfront with the compound annual growth rates. As you can see, NEPS is compounding over 5 years at 20% and has more than doubled since 2021. And then looking at NEPS growth in U.S. dollars. The business is up 19% versus the comparable period last year. And if we look at the CAGRs, it's compounding in dollars over 5 years at 13%. And then going into more detail on the Schools division. This slide summarizes our major brands. We're currently in 4 countries with 119 schools and just short of 46,000 students. These numbers exclude the recently announced Regis Runda acquisition in Kenya, which will add 3 schools and around 1,000 students. And then looking at the Schools division in total, revenue is up by 13% versus the comparable period last year to just over ZAR 2 billion, whilst operating profit is up by 16% to ZAR 437 million. And looking at the CAGRs. Over 5 years, we're compounding at 14% on revenue and 19% on operating profit. And moving to Schools South Africa. Revenue is up 11% with operating profit up 12%. And looking at the CAGRs, again, we're seeing consistently strong numbers over 5 years. And then moving on to Rest of Africa Schools. As covered earlier, revenue and operating profit up 31% and 34%, respectively. And looking at the picture, over 5 years, our International division is growing well and now making a significant contribution to group operating profit. And on the back of accelerating growth in our Rest of Africa business, we are strengthening our regional management team. I just wanted to share the forward international school structure, where most of the roles in this chart have already been filled. As I've covered on the slide, the key objectives for this team are delivering superior academic outcomes, optimizing systems, hiring and retaining the best teachers, integrating teaching and learning technology and clearly driving enrollment growth. And I just wanted to expand on a couple of appointments to new positions that have recently been created. The first is Germari Eksteen, who's been appointed as Marketing Director of International Schools. Germari is an internal appointment, having been the schools marketing manager from 2019 until her recent promotion. And the second new position, Godfrey Odhiambo, who's been appointed as General Manager of Makini Schools, which has now hit a certain level of scale that requires a senior manager to be in place. Godfrey is an experienced and well-qualified external hire, who will take over operational management of the Makini brand starting in about 6 weeks. And then moving on to real estate and acquisitions. Just a quick update on our new Pinnacle College at Ridgeview. It opened in January, and it's opened well and it's trading in line with expectation. And then an update on our expansion of Crawford International in Nairobi, where we're increasing student capacity from 900 to 1,300, and that is nearing completion in time for the new academic year. And then an update on Flipper, which, as you may recall, we acquired in November last year, adding Ethiopia to our International operation. It's a good fit with our existing mid-fee African model. We've spoken about the acquisition price and the internal funding previously. But as a reminder, this is 5 well-established schools in Addis Ababa, a strong academic reputation. We bought this group understanding that there was surging market demand, and that's definitely proven to be the case and enrollments have actually grown 5% since we acquired, which is a pretty short space of time. And just in terms of the integration and progress there, significant investment is being made into IT, teaching and learning support systems and academic training for staff. The school, slightly uncomfortably, is now running at 100% of capacity, and we have an 800-plus waiting list, which is a good problem in one way, but we're working hard and urgently to acquire additional sites to accommodate that demand. And in Ethiopia, fees are typically paid upfront, which is a great model. And 97% of first term fees have already been collected. So going well. And also when we enter a new country and a new market, I think relationships with government and the regulator and the parent-teacher association are very important, and those are progressing well. And then a little bit about Regis Runda in Nairobi. So we acquired the operational assets of Regis Runda Academy. Again, a good fit with our existing mid-fee model. We're going to bring this under Makini. The acquisition price was ZAR 172 million, which again was internally funded. This is in a great location in a trade zone that we're not currently in with Makini or Crawford, I'll show you in a second. We have 1,000 students currently in the school, but immediate capacity to accommodate 2,000, so some headroom for growth and ultimate capacity for 3,000. And we will invest on acquisition to upgrade facilities and the academic support systems, and we'll also introduce the high-demand Cambridge curriculum next year. And we assumed operational control of Regis last Wednesday, the 20th of August. And just for context, we paid about 2/3 of the cost of a new Pinnacle school in South Africa. So this is looking like a very positive acquisition for the group. And then just to contextualize geographically, we've got the 5 Makini campuses in the middle of Nairobi. We have Crawford to the North of Tatu City and Regis Runda is in that new trade zone I mentioned, but very well positioned to accommodate the expansion. And then an investment in the Makini in Gong Road site where we've upgraded the facilities in June. We've added new AstroTurf multipurpose sports fields, and we now have the best sports facilities in the area by a significant margin. And then on building capacity, it's a slide we always include. And our utilization of built and ultimate capacity is pretty stable year-on-year at 83% and 71%, respectively, and we're happy with those numbers. And then moving on to the tertiary division. This slide summarizes the major brands in the tertiary part of the group. We currently run 34 campuses with just over 60,000 students. And as you can see on the slide here, we have a comprehensive range of qualifications on offer from skills development to PhDs. And I would just mention in passing that we're moving from paper-based teaching materials at Oxbridge, it's down on the left here, at this point, to a fully digital platform, and that should improve the student experience and also deliver some operational efficiencies. And then as you can see from this chart, investment in pursuit of university accreditation is accelerating. We're driving radical shifts in the number of our staff with doctorates and masters degrees through recruitment and the provision of study bursaries to existing staff. If you look at the numbers on the top left there, staff with doctorates up by 175% over 3 years to 242 and staff with masters climbing by around the same percentage to 1,355. Our per capita research output now ranks amongst the public universities, a big shift there. And postgraduate degrees now account for 8% of our enrollments. We are the only private institution in Varsity College with the DHET accredited research journal that is now well established. And 7 faculties have been established to deliver 140 qualifications spanning from hard certificates all the way through to PhDs. We've got university partnerships established in both Africa and Europe. And running through the numbers, our average minimum time degree completion rates, we believe, are nearly 20% better than the public universities, which is obviously an important thing for both students and parents. And we have also invested in impactful community engagement, establishing law clinics, as one example, across South Africa. And in terms of qualifications we're adding, we've added 17 degree qualifications since 2022 and with 24 more in preparation. And those of you with good memories will note that when we've quoted these numbers before, there's been a big shift from the last presentation in terms of the number of accredited degrees and the strength of our pipeline. So we are very ready to become a university, but frustratingly, governments still haven't published final criteria despite the original court order compelling them to do so by the 16th of August in 2022. Quite remarkable that they still haven't been published. We are looking at all our options to compel them to comply, and I wouldn't rule out further legal action. And then recapping the high-level tertiary numbers. Revenue is up 13%, affected to a degree by the mix shift I mentioned earlier. And despite significant investments to prepare for university status and to prepare in various ways, strengthening of our brands, operating profit is up 14%. And then looking at the compound annual growth rates, revenue and operating profit are compounding at 12% and 15%, respectively, over 5 years. And then doing a quick recap on the real estate and acquisition front. These are some new renderings of our new university campus in Grayston Drive in Sandton. And then just as a reminder, we will be relocating the Varsity College, Sandton and Vega Bordeaux campuses to the new site on Grayston. This is an investment of just under ZAR 420 million over 2 years. It's a huge land area. It will double current capacity in Phase 1 to 9,000 students, but actually, we can accommodate many more over time. We've got lots of space to build and building work is progressing in line with expectations. So going well and a very exciting project. And then the Rosebank college relocation in Cape Town, we have just had our official opening. It's a prime central location. It's a really fantastic building. It's doubled our capacity from 3,000 to 6,000 students. And it's also allowed us to significantly enhance both the teaching and learning facilities and the social and recreational options for students. We've also incorporated a new contact center for distance learning students. And again, going back to our strategy, those of you with good memories will remember that it's a strategic imperative to put distance learning contact centers across our campuses. And then Rosebank College in Bloemfontein. The mega campus build is progressing well. That will increase capacity from 11,500 to 15,000 students. And Rosebank International University College in Ghana. I just note that we're opening as a university in Ghana, but still waiting for the criteria in South Africa. But this adds Ghana to our Rest of Africa operation and extends the Rosebank brand outside SA for the first time. We think we have a very advantaged fee price point, so undercutting the established international universities, but offering a really great experience and product to local students. We've established that there is strong demand for tertiary education. There is a similar kind of shortfall in public places to what we see in South Africa. Our capacity in Phase 1 here is 1,500. We've had great support from the Ghanaian government and the time lines are all on track in terms of buildings, accreditation and marketing. And there's some hot off the press photographs from the grand opening held back end of last week and great representation from the academic fraternity and government in Ghana. And then moving on to resourcing. Just a couple of points here. The unexpected closure of U.S. aid has had a negative impact on our Rest of Africa business. Around 10% of our client base, which is NGOs and the charity organizations that they support was impacted by the sudden withdrawal of their funding, which pretty much happened overnight. But despite that setback, the business delivered a credible performance. You've seen the numbers, and we are focused on securing new contracts. And again, our margin improved slightly over the period. And some good news. It's a tiny part of the business, but the South African resourcing business has returned to profitability, and that's been through rightsizing effort and a focus on efficiencies and cost management. And then recapping those numbers. Revenue down 5% and operating profit down 2%, but with some strong underlying compound annual growth rates. And with that summary, I will hand over to Hannes to talk through some of the other financial numbers.

Good morning from my side to the audience as well as the investor community online. Maybe I just want to start with a graph we did display in March and just our progression on the South African school enrollment. And I'm just going to cover it from both sides where we started in '24 and ended in 2025. Important to note that we do have metric levers, and that's a given every year, but you then got to compare those metric levers to the joiners that you do get every year. And as you can see, it more than 3x make up for that. So the difficult part that we're looking at is more that middle section in terms of the immigration and financial levers that we have. And I must note, in 2025, we've not really experienced the trends that we've seen in 2024, and it's actually going much better on this side. So maybe everybody that's left has left or semigrated. And then there's these other levers that are leaving for various, can I say, product or personal reasons, which I think we can work on. So if one had to just look at a scenario that if you have a slight improvement in the economy, we can drive a little bit better on the immigration and financial as well as our own efforts in terms of the other levers, I've just done a scenario of if these 5,000 students, you can maybe just reduce by 1/3, that would give us a 7% increase in South African enrollment of students. If it reduces by 50%, that will be a 12% increase in South African enrollment. So a little tweaks and work that lies ahead for us, but exciting to work on these opportunities and to confirm that our current student numbers midyear is still on track with regards to what we've actually noted in March. My next point, just on the debtors. This is all displayed on Page 13 of the long-form announcement. I put it all on one slide. So just to go through it. At the top line is our revenue growth over the last 4 years, then also the progression of our gross debtors and then also the progression of our loss allowance. So if you look at it over the period, we've been able to grow our debtors by 11% as well as the revenue. But I think notably for the 2025 year, where we're standing now is that we've had a 10% growth in revenue, but only a 3% growth in debtors, which already starts indicating that there is quite a big improvement in our debtors book. Linked to that as well, the loss allowance has also decreased from the prior year. So if I want to cast your eye to the bottom line, our loss allowance percentage standing as at 30 June is at 21.9% compared to 23.3% -- sorry, 47.6% and 49.5%. And then the ratio of revenue to debtors has also improved to the best in the last 4 years. So I ascribe this to a lot of work that we've done on the financial controls, the debtors controls and especially the impact that we've seen in the tertiary side. I think a lot of those systems and controls are being implemented at school level, and we'll still continue to see the benefit of that coming through in the last 6 months of the year. But another element that I also wanted to subscribe to is that there's been a concerted effort in the last year to define our products, to define our marketing. And I think it already starts with when you enroll a student that a student knows what is the culture and the ethos that he's signing up for. And once you have a client that meets that expectation, I mean, I think the payment term starts from there. So credit to the whole group for actually putting together in terms of defining our products even at a campus level. Then just from the cash flow from operations, this is the pure business side, excluding the working capital, which I'll get to just now, continues to grow in line with our earnings growth over the time and notably a 14% increase for the period year-on-year. And I think it will continue going through that for the full year. If we add the working capital movement, which, of course, bumps the numbers up by nearly ZAR 1 billion in each of the years, we see an 18% increase in the cash generated by operating activities. And then we compare that now to our net borrowing situation. So as at year-end, we're sitting with ZAR 600 million worth of borrowings, but ZAR 570 million worth of cash. Now obvious question is why don't you just offset that? But that's linked to our strategy of also keeping Africa cash in Africa. So approximately ZAR 475 million of that cash balance is sitting in the Africa operations, ZAR 125 million in the resourcing business, but nearly ZAR 370 million sitting in our Nairobi, Kenyan operations awaiting the Regis acquisition as well as the expansion that we've had for the Crawford business. So I think the strategy is working well. We probably didn't get the timing right on the Regis. If it was a bit earlier, I think the picture to 2024 would have been exactly the same where last year this time, we were in a net borrowing situation of ZAR 189 million. I think always an important factor that we do consider is just how are we actually doing on the capital that we've invested and what have we invested on. And as we are transitioning from ROFE to ROIC, and I'll speak a little bit about that, I just still wanted to put down the historic trend that we've seen. And a great performance over the last 4 years by nearly increasing ROFE by 50% from the 2020 base that we were at up to 2024. These, of course, the prior year numbers being annual numbers and the current 2025 number is only a 6-month period. But I do want to give guidance that, that ZAR 327 million is probably going to be in line with what we've seen in the prior year due to the CapEx program that we have and listed there at the bottom, especially on the Grayston opportunity that we've had and some of the Pinnacle that we also completed during the year. I'll get to the CapEx split a little bit later on, but it's important to note that the Grayston opportunity, as mentioned by Geoff, ZAR 420 million, but split over 2 years. So there is an incremental ZAR 200 million extra this year in the tertiary split. So looking at the ROFE, the demand from the market has been that we should maybe consider not just the return on our assets, but we should also consider how do we actually fund a lot of those acquisitions. And hence, we've moved over to the return on invested capital, which I think has been a good metric for the group to consider going forward. The reason for that is that every day when we face new projects, we can either finance internally through borrowings or we can finance perhaps through a lease. And we will consider what is the best outcome for that going forward into the future for that specific project, keeping in mind, of course, the brand ambitions, whereby sometimes it is great to have that lease signed up. It's immediate -- less capital, immediate revenue that is linked to it. But as you can see with the Grayston opportunity, we wanted to get a more specialized building that we can own and actually promote the brand a bit stronger. So yes, on the long term, ROIC will be our metric to measure. And end of the year, hopefully, that graph keeps on improving, which I do think will be the case considering the growth in our earnings and the static CapEx that Geoff just noted. On the capital expenditure, a question I get a lot again is just confirming that we probably only spent 35% to 40% in this first 6-month period. A lot of the bigger physical CapEx projects only comes to fruition in the next 3 to 4 months. And therefore, you will start seeing that number increasing significantly towards the year-end compared to when there is a need to spend money on demand at the moment. And therefore, you see the ZAR 110 million spent on IT, furniture, et cetera, because that's students and demand that needs to be met in a February-March situation. Again, the continuous maintenance CapEx, I think, on all our properties in schools and tertiary, probably sitting at about ZAR 350 million a year. And then our continuous CapEx, which has been a static number for the last 2, 3 years, it's probably ZAR 700 million, ZAR 750 million, which we will continue to invest in to make our properties desirable because we can see the effect that it has on students and just in the social media that promotes the properties quite a lot. So the dividend is always a difficult one to motivate after you've mentioned the cash generation that we've had. I think we're -- must firstly, maybe just take a bow because in the current economic situation, a group that increases its dividend by 18% is a great achievement. And I think we're proud of that at the ZAR 0.45. We continue to evolve to the 2x dividend cover and are confident that, that will be met as at year-end, considering our current cash resources as well as the projections. I get a lot of questions on, but why aren't you increasing the dividend a lot more? And I just want to remind all of us that the dividend cover is a long-term view that we want to give guidance to. And I think there's quite a lot of projects that we are considering at this stage, maybe not disclosed yet to the market. But in 2026, we will disclose it whereas a lot of our capital expenditure projects could be increasing. And we're keeping that in mind with our 2x dividend cover for the year. Then just a progression over the past couple of years on how the dividend has grown. I think, firstly, as with the NEPS that doubled, a great achievement from 2021 when you paid a combined dividend of ZAR 0.50 up to ZAR 1.00 in 2024. Might be difficult to repeat that performance again. Maybe we can relax on the dividend payout. But our objective is still to continue to grow the dividend in line with the growth of the business, and that will definitely be something that we're looking at as there are many opportunities, as I mentioned, that we do have and need to consider on long term and don't want to fluctuate our dividend cover up and down on the short term. I'm going to be back for questions. And then -- yes, just Geoff.

Thanks, Hannes. Just a couple of slides to finish off. This is a reminder of our forward vision, which hopefully we are today demonstrating progress against. But we've set out to lead in every market segment in which we choose to operate and to become the employer of choice in the education and resourcing sectors. And then in terms of our strategic imperatives, I think at the full year, we'll go into some more detail on progress. But just as a reminder, the areas we're focused on. So the addition of new high-demand tertiary qualifications, you saw some of that information earlier. The work to simplify our brand structures continues. A lot of great work being done on optimizing our brand propositions and marketing and also delivery of those brand propositions. Our investment to secure university status, I think, is in fantastic shape compared to the regulatory side of that, but hopefully, that will change soon. And our African operations, we continue to expand successfully. And we are making good progress in terms of aggressively growing distance tertiary, that 40% year-on-year increase in enrollments that I covered before. And then further extending academic advantage across all our brands in terms of delivery at both schools and tertiary levels. And then just in terms of prospects, the South African demographic and supply and demand tailwinds continue, especially in tertiary. Strong demand for quality education persists. I think that joiners number on the slide that Hannes just shared demonstrates that very well. There is strong demand. We are the leaders in teaching and learning across the African continent. We are strengthening the organization, but we also have growing scale and expertise in Africa and great to have John Sikiotis on board. Hannes just covered our strong cash generation, which continues and our sound balance sheet. And we are very focused on extending competitive advantage across the group. And that sets us up, especially with a little bit of caution on the dividend to invest with confidence in areas of opportunity and puts us in a good position to maintain our growth trajectory. So that's it from a presentation point of view. If I could maybe just invite Hannes to come back, and we will take some questions.

I don't know if we want to go online or in the room first. In the room, just get your microphone.

Simon Sylvester from Rezco. If you could just maybe unpack the gap between enrollment growth and revenue growth in this period. I know you mentioned sometimes there's some mix shifts, but it doesn't seem like that's enough. Obviously, there's acquisitions in Africa, there's fee inflation. But could you just kind of unpack more detail why was the lagging effect in the revenue growth still to come through from the higher enrollments or what's happening there?

Do you want to cover that?

Sure. Yes. As you saw, the 13% combined enrollment growth as we published in March, we do have a 10% enrollment growth. So I just want to come back to Geoff's approximate 5% on the tertiary mix. I think that's important to consider that one. Then we also have a reduction in the revenue on the resourcing International, Resourcing Africa revenue. And then again, upside again on the Flipper International acquisition that's come on board. That combined together with the inflation gives you the 10%. But the biggest impact is notably the mix in the tertiary side, which is significant considering the size of our business and then the resourcing International.

And maybe just some comments on fee inflation.

Fee inflation across the schools, I think, was between 5.5%, 6%, and I think we mirrored about the same on tertiary.

Yes. Thanks, Hannes.

Online question. Can you talk a little bit more about the distance learning contact center and does and why it matters in your distance learning execution?

Okay. From a Rosebank perspective, we have a number of distance students that don't have access to the Internet or devices. So we are putting contact centers into our existing facilities. And over time, we'll build some standalone facilities where we don't actually have an operation in some of the rural areas so that those students are able to come in, have access to advice and the Internet. So we think that's an important part of unlocking the rapid growth that we're targeting in distance tertiary.

I think at the Strategy Day, you spoke about kind of unifying the branding in tertiary in South Africa. I just wanted to see if there's an update there. Is it linked to getting university status? Or is it something that you want to do kind of independently?

We are making progress in terms of our brand structures, and we'll be making some announcements in that regard soon.

There's a question on the fast changes in the draft taxation law itself. Have you worked out what impact that might have on your schools business?

You should be answering this question, given that you looked into it first. I don't know if you want to cover that.

No, notably knew that, that question was definitely going to come up, and we've actually recently engaged with our tax specialists. Now for me being new to the industry, it was actually interesting to note that the legislation about a year ago included tertiary on this specific ruling, and it has been taken out because it's probably so difficult to apply it into tertiary knowing that many of the state universities are so big and actually VAT'ble entities. And the latest legislation is very specific that it is a school, schools only. I think in our preliminary view, due to us, the IIE, which is our main operating entity, being a dual schools and tertiary entity, it's going to be very difficult to apply it to say, well, you must deregister completely for VAT because we've got all the universities in there as well. I think also we've always applied a very cautionary input VAT principle, whereby a lot of our, can I say, educational input costs, we haven't claimed the input VAT and neither claimed it on any of the revenue that we've been able to. And there's very little revenue on the school side that is charged, and these are small little items like rental out of school halls, et cetera, et cetera. So for us, we cannot see that this can be properly applied on to the IIE at this stage. If it is going to be deregistration of the VAT component, it will just be meaning that, that revenue from January that we do charge VAT on will just fall away. It shouldn't have an impact. But at this stage, our likelihood of it being applicable to the IIE looks very minimal.

[indiscernible] from FNB. I just have a couple of questions on just expansion in Rest of Africa. I know you guys look at a few metrics when it comes to expansion, macro view is one of them. Since you guys somewhat look at or target the same kind of student when it comes to your schools and tertiary. I know there are some -- you guys have schools in Kenya and Ethiopia, but there aren't any tertiary institutions there, and you've got a tertiary institution in Ghana, but no school there. Just on expansion, can we expect a tertiary institution in the likes of Ethiopia and Kenya and likewise, a school in Ghana?

Yes. So this is going back to our Strategy Day, what we laid out there is that we would like to develop in those 4 countries of operation, premium schools using the Crawford brand, the mid-fee school, which is Flipper, The Gaborone International School Makini model and also university. So we will look to expand Rosebank University into those other territories and to take the schools into Ghana. But we want to scale those 3 brands in the 4 countries.

Okay. And then lastly, when it comes to acquisitions of school, what do you guys look at? Maybe just give us investors an insight as to what metrics you look at just so that you know that you guys aren't overpaying or how do you know that you're buying something at a discount or a premium?

Didier gave Hannes a whole coaching day on this when he joined us. I don't know if you want to cover that?

It is quite a lot. I think when you look at the capital, we've got to see, well, what does -- if it's in South Africa, what does it really cost and compared to, say, in Africa. And that's why Geoff made a comment just now on Regis Runda, looking at the capital and what we bought compared to what we would have built a Pinnacle in South Africa. That's entity one. I think breakeven point, extremely important; payback period extremely important. But I think overriding all of that, which area are you going to, which brand is applicable in that area considering the LSM market that's in there and can you actually build a school that is scalable. So there's quite a lot of qualitative information that even gets to the proposition before we even get to the financial metrics to make sure that it is feasible for us. And I think that's the challenge. That's the art that's in the brands that they know what their brand can deliver and what type of market it can speak to.

I'll take one more in the -- yes, go for it [indiscernible].

Okay. The question is, can we expect tertiary and schools in Africa specifically to grow capacity enrollments at a similar pace in the longer term? Or would other opportunities maybe be at slower pace in the future?

Yes. Listen, we are aggressively looking for opportunities to acquire both more space for expansion on existing sites and to enter new trade zones the way we have with Regis. So it's a bit difficult to predict exactly the path of that, but we are looking hard and hope to continue the momentum that we've built to date.

Okay. This is [indiscernible] from Longmark Securities. Sorry, I'm just going to go back to that fee revenue -- enrollment revenue mix question. So if I see your Rest of Africa schools, enrollments grew by 40%, but then your revenue only went up by 30%. So I know there's a currency issue and probably a mix. Can you please just unpack that for us? And then also just sort of give us a sense of how you think of pricing in terms of price growth in your various countries?

Yes. Well, I can answer the second one first. We're looking to increase fees broadly in line with inflation. That's what we're targeting. There is an opportunity for higher fees where we introduced the Cambridge curriculum, the kind of U.K. syllabus, which can give us another kick. In terms of the organic growth in the African schools, it was 4% on enrollments and the balance was made up of the Flipper acquisition. And then you've got the mix change into more of mid-fee, which is what the Flipper school is relative to the mix of Crawford at a higher fee. So there's a mix shift there. So it's a combination, I think, of organic and acquisitive growth and the mix on fee level that's driving the number that you mentioned. I don't know if you want to add to that, Hannes?